Unless you have a business degree or work in the world of finance, investing can be intimidating. However, what you don’t know about stocks, bonds and mutual funds can be downright expensive; if you pick the wrong fund for your 401(k), IRA, taxable account or any other, you can put your financial life at risk. It’s best to learn about the influential investing books to reduce these risks.
5 Influential Investing Books We Should All Read
Fortunately, there have been some terrific influential books written that can help distill the art and science of investing into something the average reader can understand. Here are five great books every new investor should add to their library.
This post was written by our talented writer, Will Lipovsky. Enjoy!
1) The Intelligent Investor
If you could only read one book on investing, Benjamin Graham’s 1973 classic is the one to choose. The Intelligent Investor.
This book describes:
- the history and operation of the stock market,
- its inner workings, and
- the forces that affect it.
Once he defines the environment, Graham goes on to explain:
- how to evaluate companies and their stock,
- provides tips on how build an effective portfolio, and
- offers several case histories to clarify what constitutes good and bad investments.
The latest version features annotation by investment expert Jason Zweig, which provides modern context for many of Graham’s original thoughts.
Related: Where Is Your Money REALLY Invested?
2) A Random Walk Down Wall Street
Another classic that was also published in 1973, is A Random Walk Down Wall Street. This book offers an explanation and a spirited defense of the efficient market hypothesis. The author, Princeton’s Burton Malkiel, argues that stock pricing and valuations are so hard to predict that one could consider them almost random. He then proceeds to describe the best ways to build a portfolio to achieve your investment goals. Malkiel’s discussion of mutual funds, and the updates he’s provided to the text over the years since originally publishing this book, are of particular value to today’s beginning investors.
3) The Motley Fool Investment Guide
David and Tom Gardner of the Motley Fool, an internet staple since the time of AOL and telephone modems, published a great beginner’s investment guide in 2001. They have updated it routinely ever since.
While some of their advice is admittedly dated (like the “Foolish Four” dividend stock strategy), their information about how to evaluate companies and choose stocks for the long run is as timely as ever. The brothers write in an irreverent, approachable style too, which makes this book the least dry of all the offerings on this list.
4) The Essays of Warren Buffett: Lessons for Corporate America
Warren Buffett, the Oracle of Omaha (he lives a few miles from me — how awesome is that?), is arguably the most famous investor of all time. In these essays, Buffett lays out all of the ideas that he has developed in his five decades at the helm of Berkshire Hathaway. (This is a company whose growth has averaged nearly 20 percent for 50 years!)
Buffett describes how he evaluates companies:
- to determine if they are worth investing in,
- he discusses assets like real estate, and
- goes into great detail about the things he believes an investor must take into account when taking a chance on a company.
Mr. Buffett also shares a great deal of his philosophy about the role of business and wealth in our society, which is equally worth reading as well.
5) The Millionaire Next Door
The Millionaire Next Door, by Thomas Stanley, is a bit of a counter-intuitive choice for this influential books list, since it does not directly deal with investing. However, Stanley’s detailed analysis of this nation’s wealthy is a must read for anyone who desires to achieve financial security for themselves.
Millionaire looks at the affluent and surmises the traits that they all share. In helping us understand the reason why the rich have achieved their financial success, Stanley offers us a path to follow suit. Many of the habits of the rich (their no-nonsense frugality, for instance) are as invaluable to people seeking to achieve their financial goals as any information about the stock market.
Have you read the influential investing books above? Which is the most influential in your opinion?
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.