5 Best Investing Books For Beginners

5 Best Investing Books For Beginners

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Best investing booksA common question I’ve received over the years is, ‘What are the best investing books for beginners?’ It’s an understandable question as we unfortunately don’t champion investing education in our society. Added to that all the information that’s out there on investing in the stock market and it can be difficult to know where to get reputable information.

While I’d like to think that some of the investing education in the personal finance space is good, many want to go beyond that and are looking for the best investing books to start reading. That said, if you’re new to investing in the stock market, or investing with $1,000 or less, education is vital as you want to make sure you’re making educated decisions.

With that in mind, I thought it would be good to cover some of the top investing books out there, whether you are a beginner or not. As a disclaimer, I have read the majority of the books on the list and the one or two I haven’t, I’ve read major chunks of. This is also not to be meant an exhaustive list, but merely a sampling of my picks for best books on investing.

 

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A Random Walk Down Wall Street

If you are looking for one book to read on investing, then A Random Walk Down Wall Street by Burton Malkiel is one you should choose. What makes Random Walk one of the best investing books? Quite simply, Malkiel takes some very heady information and makes it so anyone can read and understand it – which can be very difficult to do.

What I particularly like about Malkiel’s work is that he basically holds to a buy and hold approach to investing. Stock picking might be considered “fun,” but by and large, most investors are going to be better served by a long term approach to investing that is focused on passively managed index funds that will track the market. That alone is one major reason why I consider Random Walk one of the best investing books for beginners.

The Intelligent Investor

As the title communicates, The Intelligent Investor, by Benjamin Graham, is for someone who wants to be wise about his or her investing. The Intelligent Investor was written by Graham back in 1934, but much of his thoughts on investing still hold true today.

One of the reasons why I believe Investor is one of the best books on investing is that he teaches you to minimize losses and find the real value of a company. Essentially, he argues how to limit risk in the light of long term investing. If that’s not enough to convince you, Graham was Warren Buffett’s mentor.

The Little Book of Common Sense Investing

More experienced investors will notice The Little Book of Common Sense Investing as it is written by the founder of Vanguard – John Bogle. What I believe makes Common Sense of the best investing books is that it’s clear and straightforward. One would think that would be easy to find when it comes to books on investing, but unfortunately it’s not.

The book, in my opinion, is summed up by a quote by Bogle – “Investing is all about common sense.” That quote is simple, yet powerful. We often make investing out to be difficult or follow some silly fad when it really doesn’t have to be any of that. Bogle, argues for straight-forward investing, made up largely of index funds that have a long term view…not following the herd.

The Essays of Warren Buffett

What makes The Essays of Warren Buffett, one of the best investing books is that, well, it’s written by Buffett! Anyone who follows Warren Buffett or Berkshire Hathaway is well aware of his annual shareholder letters. The editor, Lawrence Cunnigham, has taken much of Buffett’s writing and collated it, by topic, so it’s easy to read and follow.

What I appreciate about Essays is that it allows you as an investor insight as to what Buffett looks for in a company. As Buffett has aptly stated, his holding period is forever so if you’re more into active trading then this book may not be for you. But, if you want to read more into the foolishness of investing with the trends and the wisdom in long-term investing then this book is for you.

One Up on Wall Street

The last book on my best investing books is One Up On Wall Street by Peter Lynch. Lynch is known by more savvy investors as he was a higher up at Fidelity and then led the popular Magellan Fund. As with the other books listed here, Lynch discusses how to analyze the merit of a company and investing for the long term…notice a trend here?

What I appreciate about Lynch is that he says “normal” investors can do quite well for themselves when it comes to investing. As opposed to following the hot trends, Lynch encourages investors to invest in what’s right in front of them or what they know. This is all taken with the long-term approach that is meant to build wealth.

If you noticed a trend with my best books on investing, there is. The idea that investing needs to be difficult or that it has to be “sexy” is one that is a fool’s errand for many, especially for those new to investing. Instead of trying to beat the market or follow the latest fad, you’re much better served by making investing as simple as can be for yourself.

While not exciting, I’d much rather be with the market and watch my portfolio grow over time…because that is sexy to me! If you’re new to investing or looking for some resources to help start the education process hopefully one of these books will get you started in the right direction.

 

Do you have any books that you would add to the best investing books list? How did you teach yourself as you started investing? Which is sexier to you – following the hot trend or watching your portfolio grow?

 

Additional resource: If you’re looking for an online broker to start investing but have limited funds check out our favorite brokerage – Motif Investing. You can open an account for as little as $250. I invest with them as they provide instant diversification and make it easy to invest in what you know.

Open an account with Motif Investing today and get up to $150 cash back!

 

Photo courtesy of: StockMonkeys.com

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34 COMMENTS

  1. I’ve only read “A Random Walk” so far but the rest are on my to-do list. What I liked about A Random Walk is its simplicity – it is full of information but it’s very easy to read. I like how Malkiel goes through all the major market downturns and explains the reason why they happened.

    I haven’t read the rest of the books but I will get to them as soon as I can.
    Aldo @ MDN recently posted…Asset Allocation – Where Do I Invest My Money?My Profile

  2. I completely agree with these 5 choices John! All classic books for any investor. I think I enjoyed Peter Lynch’s the most – I like they way he distinguished a few different ‘styles’ of investing (fast growers, stalwards etc), which helps people shape their own portfolios. Such a great explanation of concepts in a simple way.
    Jason @ Islands of Investing recently posted…What’s a ‘P/E ratio’? (Part 3) – Potential pitfalls and a real life exampleMy Profile

    • Thanks Jason! The Lynch book is one of the two that I’ve not read entirely but have read big chunks of it. That said, I think he does a great job of doing it – especially boiling it down in a way many can understand.
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