Best Investment Books for Beginners
Achieving success in the stock market can take years of research, dedication, and guidance. Whether you’re a young millennial who is just starting, or you’re an experienced saver that’s been putting money away for years, it isn’t a simple task to grow your money through investments.
Here’s the interesting part, though: The stock market is not rocket science. It doesn’t take any sort of advanced knowledge or even a special skill set to get ahead with investing. All it requires is some basic know-how, and following in the footsteps of experienced Wall Street investors who have done it before.
Many of these Wall Street experts have even laid out their investing strategies in books that young investors can easily acquire from the library or Amazon.
By following tips from people like the Oracle of Omaha and Berkshire Hathaway CEO Warren Buffett, you can build a solid investment strategy and become a successful investor.
Keep reading to learn about the best investment books for beginners. I have personally read all of these books, and I cannot overstate the value of reading and digesting all of the valuable advice that you’ll find.
Before diving into the list of recommended reading, it’s a good idea to think about why you are here. Chances are you’re reading this article because you want to make money and get ahead in life.
Maybe you want to save for retirement, pay down credit cards or student loan debt, or save up for a real estate purchase. All of these goals are noble undertakings that can yield great financial results.
Remember that investing can take time before you see results. If you are focused on making a ton of money in a short period, the odds are pretty good that you’ll be tossing your investment dollars out the window. There are plenty of pump-and-dump schemes out there to get novice investors to chase a “hot ticker” that ultimately turns out to be a costly mirage.
But with a smart strategy and the right mindset, the stock market is the greatest wealth-building machine available. By investing and putting your money into the right growth vehicles, you can take a relatively small principal amount and turn it into a sizable figure through the power of compound interest.
Best Investment Books for Beginners
Now that you have a basic idea of why you should be investing, here are some of the best investing books for beginners that can help you build your financial strategy.
- Four Pillars of Investing
- The Little Book of Common Sense Investing
- Beating the Street
- A Random Walk Down Wall Street
- The Little Book of Safe Money
The Four Pillars of Investing: Lessons for Building a Winning Portfolio
William J. Bernstein’s masterpiece “The Four Pillars of Investing: Lessons for Building a Winning Portfolio” teaches the basics of how to take control of your own personal finance strategy (without having to pay for expensive financial advisors in the process).
The book focuses on four main investment concepts, including the relationship of risk and reward, the history of the stock market, having the right mindset for entering financial markets, and why you should avoid taking advice from sales professionals in the financial industry.
In that light, it’s important to reiterate that financial advisors can be very expensive. They can also be difficult to deal with, and pushy about making certain choices. So while everyone should have a trusted advisor that they can turn to for advice from time to time, it makes far more sense to learn how to invest from the ground up.
Use this book to build a strong core and feel confident about your financial decisions.
The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns
John C. Bogle is so revered that his fans are commonly referred to as Bogleheads. This is the man who launched the Vanguard Group, a company that introduced the idea that an investment company should solely benefit investors instead of the organization.
In “The Little Book of Common Sense Investing,” Bogle explains his secret to getting more out of investing using low-cost index funds.
In case you’re new to the idea, index funds track collections of securities. They give investors access to a broad range of investments, providing reduced risk over time.
Bogle explains how investors can build and hold wealth over the long-term using index funds, minimizing risk, and capitalizing on interest.
Beating the Street
It’s often said that you should invest in what you know. In other words, if you consistently shop at Home Depot and love their products, you’ll feel good about investing in the company. The same can be said about any company like Costco, Amazon, Apple — the list goes on.
One famous investor who advocates for this strategy is Peter Lynch. In his book “Beating the Street,” Lynch explains how to become an expert advocate about a company, and how to use your own experiences to drive your investments.
Lynch also explains how to create a mutual fund strategy and build a powerful investment portfolio.
A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing
In “A Random Walk Down Wall Street,” American economist Burton G. Malkiel provides a comprehensive overview of how the market works for investors. He even covers emerging investment opportunities, like cryptocurrency.
Use Malkiel’s book to better understand the landscape and develop a sound financial strategy. By reading his book, you’ll have a clearer idea of what’s out there to explore and how you should be allocating your hard-earned dollars to spur growth.
The Intelligent Investor: The Definitive Book on Value Investing
Benjamin Graham was a world-famous economist and professor and is generally known as the Father of Value Investing.
Graham championed the idea of investing in stocks that are going for less than their book value. This concept is known as value investing. Graham was also a direct mentor to Warren Buffett, who took his ideas and used them to build a financial empire.
The Little Book of Safe Money: How to Conquer Killer Markets, Con Artists, and Yourself
If you’re going to be investing, then you’re going to have to learn how to deal with unexpected downturns. Market volatility is an unfortunate reality of investing, and how you handle it can make or break your overall success.
Fortunately, you don’t have to go it alone. In “The Little Book of Safe Money,” author Jason Zweig explains how to manage down markets. He covers a variety of topics including investor behavior and managing biases. In addition, Zweig provides insight on a variety of important topics like ETFs and hedge funds.
Frequently Asked Questions
Are personal finance books helpful?
Personal finance books can be extremely helpful for beginners and experienced investors alike. The right books can provide strategies and insights that you might not have considered.
For example, maybe your strategy has been based around buying low-cost stocks — and you have been overlooking certain investment opportunities. Reading personal finance books can help you learn new strategies and make better financial decisions.
Take it from me — I was once a beginning investor myself. Most of what I know came from personal finance books and hands-on experience from following the recommended strategies of those books.
How can I judge a good personal finance book?
Look for books that are well-rated and well circulated. Any personal finance book you read should have at least a 4-star average rating (out of 5) and it should have at least 500 ratings. If the book isn’t worth reading, or if it’s misleading, the average customer reviews will probably indicate that.
It’s important to mention that your investing strategy also factors in. If you’re keen on real estate investing, for example, then you should probably look into the best real estate investment books. If you’re more excited about cryptocurrency, then you’ll want to look out for the best-rated investment books about cryptos.
With that in mind, one of the keys to building wealth is learning as much as you can for yourself. There isn’t one best book out there. Start by learning the basics and dive into as many books as you possibly can. Even if you’re all about big-risk, big-opportunity growth stocks, you might still get some important fundamental grounding by reading Graham’s take on slower-growing value stocks.
Should I manage my own finances?
If you have time and patience, then yes. Nobody cares more about your financial situation than you do. However, your approach to financial management is your call to make, and yours alone. Some people prefer to work with financial planners, while others prefer to manage investments on their own. Others prefer to rely on robo advisors.
There is no right or wrong answer here. It largely depends on your knowledge of the market, how much time you have to spend, and your overall financial goals.
The good news is that there are plenty of resources available for new investors who don’t know what they are doing.
What is a Boglehead?
A Boglehead is a fan of Vanguard founder and famous investor John. C. Bogle. In addition to founding the legendary Vanguard company, Bogle has authored numerous books such as “A Clash of Cultures,” “John Bogle on Investing,” and “Common Sense on Mutual Funds” among others.
Bogleheads also tend to be pretty excited about investing in ETFs and the value of sound asset allocation.
Is it too late to start investing?
No. It’s never too late to start investing. It doesn’t matter how much money you have or how old you are. Anyone can start investing, and that’s the beauty of it. Age does play a factor, though.
What changes as you get older is your overall risk tolerance and your financial needs. For example, deciding to invest in common stocks at age 70 might be riskier because you’ll have less time to weather downturns by the time you retire. If you make the wrong investment at age 70, you have less time to make it back. On the other hand, if the market crashes and you’re only 20 or 30, you’ll have several decades to reclaim your money.
Do your research or talk to a financial advisor about forming a strategy that’s right for your unique situation. That way, you can invest with greater confidence.
The Bottom Line
Moving forward with investing is one of the most important financial decisions of your life. Therefore, it’s important to read as much as possible before diving headfirst into the market.
Remember: The best investors never stop learning. In addition, all of them have learned from someone else. Even Warren Buffett (and myself!) learned investing from the ground up — and you can, too.
The books mentioned on this list can provide a solid foundation that you can use to build a strong financial foundation. There are many more out there for you to explore. Hopefully, this lights a fire within you to start learning as much as you can about finance.
It’s an incredible journey that you are undertaking. Pretty soon, you are going to be on the path to getting rich. Now start reading.