The 10 Best Books for Beginning Investors
Do you want to start building your wealth? Consult this short list of the best books for beginning investors before you embark on your journey.
The biggest barrier between people who want to invest, and actually investing, isn't money. With funds and apps that let you get started for as little as $1, you can start investing with your pocket change.
No, the biggest barrier for today's beginning investors is simply knowing how to get started.
Unfortunately, you'll be hard-pressed to find investing as part of most educational curricula, so it's up to aspiring investors to create their own course, so to speak. That's actually quite easy given a plethora of engaging investing books available, but the abundance of choices can be a little overwhelming.
We'll help you narrow it down.
Here are 10 of the best books for beginning investors, from quick reads you can knock out in the time it takes you to drink a cup of coffee, to hefty tomes that leave nothing uncovered. And if you want to buy any of these books for yourself or someone in your life who's just getting started, we've included links to purchase pages.
If You Can: How Millennials Can Get Rich Slowly
If you're short on time and put a premium on simplicity, William Bernstein's primer on investing won't let you down.
The strategy Bernstein outlines in If You Can is so straightforward a 7-year-old could do it. It doesn't take long to learn about it or put it to work, either. The whole process, Bernstein explains, takes only 15 minutes per year, and has been shown to outperform 90% of financial professionals over the long run.
And at less than 50 pages, it won't take you much longer than that to read through this relative pamphlet.
Best of all: It's one of the best books that beginning investors can get for absolutely free. Bernstein's website, Efficient Frontier, allows visitors to download If You Can in Kindle, Adobe Acrobat and Mobi formats at no cost. (But at about six bucks, a paperback version won't break the bank.)
The Financial Diet: A Total Beginner's Guide to Getting Good with Money
If anyone can make managing your money a fun exercise, it's The Financial Diet founders Chelsea Fagan and Lauren Ver Hage.
Their book, also named The Financial Diet, was chosen as one of Real Simple's Most Inspiring Books for Graduates and is the perfect jumping-off point for beginning investors who are also just getting started in their careers, says ShirleyAnn Robertson, a Prudential financial advisor based in Schaumburg, Illinois.
"I always tell my clients that your relationship with money should be a balance, something that is unique to you," Robertson says. "This book conveys similar touchpoints and is a great companion for anyone looking to start getting a better handle on their finances, especially given the unpredictable times we are in now."
You have to learn how to manage your finances and build your relationship with money before you're ready to invest. And that's the focus of the book: personal finance, with an emphasis on budgeting and saving for retirement. But it also provides the steps to start investing ... once you have your financial life in order, of course.
The Little Book That Still Beats the Market
The Little Book series is a collection of books wherein some of the brightest minds in finance share their investing wisdom. In The Little Book that Still Beats the Market, Joel Greenblatt – founder of Gotham Capital, and managing principal and co-chief investment officer of its successor, Gotham Asset Management – shares his "magic formula" to help you outperform the market by buying good companies for bargain prices.
But a formula is only as good as the tools you have to implement it. So after sharing this formula, Greenblatt and team put together Magic Formula Investing, a free resource to readers that does the math and sources the data for you.
The Little Book That Still Beats the Market is an updated version of Greenblatt's classic original text, The Little Book that Beats the Market, published in 2005, which became a New York Times bestseller. As Greenblatt says himself: His goal in writing the first edition of the book was to reduce the intimidation factor that stands between many people and investing. The end result was a book with language so simple that anyone – even his kids – could understand it.
The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness
Money management isn't as math-centric as you might believe. Most financial decisions aren't made by spreadsheets; they're made by people, and people have emotions, biases and unique ways of viewing the world. These feelings and perspectives can cloud people's understanding of finance and ultimately get between investors and long-term success.
Recognizing this is the first step to avoiding the emotional blunders – like panic selling or jumping onto the hot-stock bandwagon right before it derails – that so often thwart beginning investors.
The second step to avoiding emotional biases: Reading Morgan Housel's The Psychology of Money.
As Housel will tell you, successfully managing your money is less about how intelligent you are and a lot more about how you behave. Even the smartest person can make a lousy investor if they can't keep their emotions in check when the market takes a tumble.
Housel's book lays out the 20 "flaws, biases, and causes of bad behavior" that people have concerning money, and how these flaws can lead to bad financial outcomes.
Beginning investors shouldn't think of this as a recipe for how to invest, but a means of sticking with whatever recipe you use to invest.
The Simple Path to Wealth: Your Road Map to Financial Independence and a Rich, Free Life
For everyone who wished their dad had taught them how to invest, there's The Simple Path to Wealth. Compiled from a series of letters JL Collins wrote to his daughter about investing and money, this book offers some of the most comprehensible explanations about how to invest and why doing so is important.
Collins covers the prerequisites to investing, such as how to think about money and what to do about debt, as well as investing topics themselves, like how to choose an investment firm and how the stock market works. He also explains everything you need to know to get started investing and keep investing all the way through retirement and beyond.
But what makes this one of the best books for beginning investors is that Collins does all this in such a simple, down-to-earth way, that you'll feel like you're just having a conversation with your dad.
The Bogleheads’ Guide to Investing
If you've never heard the term before, "Bogleheads" are followers of the investing philosophies of Vanguard founder John C. "Jack" Bogle. Dubbed the "godfather of index investing," the late Bogle's philosophies naturally point toward low-cost index investing, and so does The Bogleheads' Guide to Investing.
But it discusses oh so much more, including many of the most basic types of investments you can make.
The Bogleheads' Guide requires no prior financial knowledge; in fact, its authors prefer a clean slate to prevent any preconceived biases getting in the way.
What more could a beginning investor ask for?
The book will guide you through everything you need to create an index-heavy strategy for yourself. And it does so without overcomplicating the matter or using obscure jargon.
If after reading The Bogleheads' Guide, you want more of Bogle's philosophy, try his own book, Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor. It goes into many of the same concepts as The Bogleheads' Guide but includes a deep dive into fund management so you can get a feel for what's happening behind the scenes in the index funds you own.
The Essays of Warren Buffett: Lessons for Investors and Managers
- Author(s): Warren E. Buffett and Lawrence A. Cunningham
- Purchase: Amazon.com
Have you ever looked at an investment and wondered "What would Warren Buffett do?" Well, this book likely holds the answer.
Any list of the top books for beginner investors should include something from one of Wall Street's most legendary investors. The Essays of Warren Buffett: Lessons for Investors and Managers is a compilation of the "Oracle of Omaha's" letters to shareholders of his Berkshire Hathaway holding company. In these letters, Buffett shares his philosophies on investing, accounting, management and finance.
The core theme throughout is that fundamental business analysis should drive investment decisions. By reading Buffett's essays, you'll better understand why this is the case, and how to use fundamental analysis in making your own investment selections.
You also might see the potential fallacies that lurk beneath conventional investment wisdom, such as the idea that financial markets are perfectly efficient, or the old chestnut that you shouldn't put all your eggs in one basket.
Whatever you take away from this book, one thing is for certain: You won't close it as the same investor you were when you opened it.
Women of The Street: Why Female Money Managers Generate Higher Returns
Investing was long dominated by men, but that's gradually changing as more women take charge of their financial futures. But just because women are playing at a game begun by men, doesn't mean women are playing by men's rules – nor should they.
"For decades, research has revealed that women invest differently than men," says Rachel Anderson, a financial-technology UX/UI designer at RobustWealth, a B2B digital wealth management platform. "Contrary to popular belief, women make exceptional investors and often generate higher returns."
Meredith Jones's book, Women of The Street, will show you why this is the case and how you can use your female advantage to generate your own outsized returns.
"Jones shares a litany of studies, taking readers on an intimate tour of the behavioral and biological factors at play," Anderson says. "She also features the voices of numerous women moving markets" including founders, chief investment officers, and portfolio managers.
"After reading this, you'll be convinced that women are your alpha," Anderson says.
Technical Analysis of the Financial Markets: A Comprehensive Guide to Trading Methods and Applications
If you've ever seen an investor poring over stock charts, it's likely they were employing technical analysis – the study of trading data to identify trends in hopes of discovering future investment opportunities.
Whereas a fundamental investor might delve into a company's revenues, earnings, debt and cash flow to select their holdings, a technical trader will try to predict a stock's next move based on patterns in its share price history.
If that doesn't sound easy, it's because it's not.
Naturally, it's almost impossible to keep things simple when discussing technical analysis, let alone teaching it, but John Murphy manages it as well as anyone. His Technical Analysis of the Financial Markets is one of the most digestible books on "TA," making it one of the best books for beginning investors who want a truly well-rounded market immersion.
Murphy explains the basics necessary to analyze stock charts and understand technical indicators. The book is an expansion of Murphy's previous bestseller, Technical Analysis of the Futures Markets. As such, Technical Analysis of the Financial Markets still emphasizes futures, but not at the expense of covering the financial markets as a whole.
The Intelligent Investor: The Definitive Book on Value Investing
No list of the best books for beginning investors is complete without Benjamin Graham's The Intelligent Investor.
At 640 pages, it might not be the best book to start on. But don't let its length scare you too much. Graham has a way of writing that makes this feel more like a long, casual conversation than a grueling lecture on the ways of the stock market.
In his book, Graham walks readers through the three key principles of value investing, or "intelligent investing." It also includes his famous analogy of "Mr. Market," illustrating the stock market as a hypothetical (and emotional!) person. And it also teaches investors the virtues of "dollar cost averaging," which can help simplify investing and take a few psychological bricks off your shoulders.
There's a reason Warren Buffett has called The Intelligent Investor "the best book about investing ever written."