All about Index Funds

Although I have been investing in and studying index mutual funds since 1990, I still learned a few things in this book. I enjoyed Ferri's method of determining his client's risk tolerance. He puts his clients through one of our most recent Bear Markets, 1973-1974, and sees if they can stand the losses to their portfolio with a starting asset allocation. If they can't stand the losses, he adjusts the asset allocation to a lower risk allocation until they can stomach the losses. I also enjoyed his explanation of Modern Portfolio Theory. His hypothetical example shows that a portfolio made up of stocks and bonds actually has a slightly higher return and slightly lower risk than you would expect using simple math. Ferris is also willing to go out on a limb and predict returns for various asset classes and inflation for the next 30 years. He seems to agree with Buffett that stocks will deliver a nominal return of 8% versus the 70 year average of 11%. Of course Buffett predicted stock returns in the 1980's would be in single digits and the S & P returned a compounded nominal of 18%. Ferri does a great job of explaining why index funds outperform actively managed funds over long periods of time. All in all, it is a very informative book. I would suggest companion books to supplement this book including The Richest Man in Babylon, Bogle on Mutual Funds, The Millionaire Next Door, The 4 Pillars of Investing, A Random Walk Down Wall Street, Wealth of Experience: Real Investors on what Works and What Doesn't, The Coffeehouse Investor, and the Armchair Millionaire.

If you're the do-it-yourself investor [cough..Vanguard..cough] that wants to avoid the Wall Street sleaze-and-hype machine and ride the Index wave - this book is definitely for you. The book is very informative and easy to read in comparison to John Bogle's first book - which is very dry and dull. This book gave me the impetus to stop procrastinating and put together my portfolio of index funds. I cannot praise this book highly enough. The book needs an update because a lot has changed over the past few years: the fallout from the tech boom, changes in tax laws, changes in index funds, etc.

This book is a very appropriate mix of theory and technical application. There are too many books that focus on one to the exclusion of the other. There were sound principles that every investor should be familiar with (whether or not you agree with them) and there are some very helpful practical advice on implementing the theories. I think Passive, index fund investing is the ONLY way to properly invest. For those seeking more drama, I recommend dedicating no more than 10% of your portfolio to stock picking and timing or just send your money to me. In the end it will be the same result. This book gives a great overview for a very serious approach to investing in Mutual Funds. I refer to it all the time. For the price of the book, I recommend it.

Many of the details about indexing investments have been around for quite some time. This book is intended to be a primer on the subject, however there are numerous updates as well as individual insights that make this book worthwhile.

This...McGraw-Hill paperback will provide readers with a terrific return on their investment. Author Richard Ferri provides detailed information on all aspects of index funds as well as how to put together a rationale portfolio of index funds depending on your risk parameters.This well organized easy to read 275-page book contains 16 chapters on everything you wanted to know about index funds, including:- Different types of funds and their compositionAll about exchange traded funds (ETFs), their features and advantagesSector index funds, REIT index funds, Merrill Lynch HOLDRSGlobal and international index fundsBond index fundsEnhanced, leveraged and inverse index fundsTax-advantaged index funds- Indexes as benchmarks- Advantages of index funds over standard mutual funds- Comparison of index funds to actively managed funds for 5,10 and 20-year periodsThen Ferri details how to create your own customized index fund portfolio using an Internet server. He covers what you should realistically expect to earn from your portfolio based upon historical returns since 1950. Next, he reviews the critical subject of asset allocation and the necessity of having a diversified index portfolio that should be rebalanced each year.Ferri provided guidance on defining your financial goals. He covers determining your future financial needs, developing your current earnings and earnings power, assigning asset allocation parameters, and then stress testing your bond and stock asset allocation. He provides a 5-step method to help determine your asset allocation (setting goals; making an inflation adjustment; determining a savings plan and required return; deciding on asset allocation; and assessing risk).One chapter pinpoints how to design your index portfolio. He mentions that taxable and non-taxable portfolios should be managed differently. Ferri recommends a simple portfolio for a taxable account. He advises that more complex strategies be used in non-taxable accounts. Ferri illustrates a three-index portfolio and a high-income portfolio using REITs and High-Yield bonds.The appendix contains a list of 28 low-cost index fund families with phone numbers, 14 useful investment advice and index fund websites, and 12 books about index funds. There is also a 9-page glossary and an 8-page index.Overall, this book covers all the bases on index fund investing in an easy-to-read style. I highly recommend this book to investors who need to know about these very useful funds.