5 Best Investing Books for Beginners
The word “investing” conjures up a lot of intimidating images. Charts and graphs that only people with PhD in quantum physics engineering can read. Serious looking business people doing intense mathematical analysis behind their computer screens. Stock brokers yelling out buy and sell orders on the trading floor.
If the images of complicated formulas and intense looking people yelling things you can’t understand intimidate you, don’t be. Most importantly, don’t let those images scare you away from investing. I firmly believe that investing doesn’t have to be complicated. Just by educating ourselves with the fundamentals of investing, I believe anyone can learn to manage their money better than most of the so-called professionals out there.
The best way to teach yourself about investing, in addition to reading articles like this, is to read investing books. If you aren’t sure where to begin, no worries. Here, I’ll go over what I believe to be the 5 best investing books for beginners so that you can expand your investing knowledge, start investing and grow your net worth.
The Little Book of Common Sense Investing
The number one on our list is "The Little Book of Common Sense Investing” by John C. Bogle. Mr. Jack Bogle is the founder of a little investment firm called Vanguard. The pioneer of low cost index funds. Sadly he passed away in 2019, but he left behind an impressive legacy. In a way, Mr. Jack Bogle single handedly revolutionized the mutual fund industry.
He pioneered the index fund, which allowed individual investors like you and I to gain diversified exposure to the stock market at a very low cost. The best part is that we are able to do this directly without needing to be hassled and sold unnecessary products by the Wall Street’s so called “professionals.”
His book goes more in depth regarding index funds and explains why low fees are crucial when it comes to maximizing our returns. He also provides recommendations on how to build the ideal index fund portfolio in today’s market. So, if you want to learn more about the ins and outs of index funds and why it stands as the clear winner against complex, fee laden mutual funds, you definitely want to check this book out.
The Bogleheads' Guide to Investing
The number two best investing book for beginners is the "The Bogleheads' Guide to Investing.” If "The Little Book of Common Sense Investing” is a great appetizer to your investing knowledge course meal, the "The Bogleheads' Guide to Investing" will definitely fill the rest of your appetite.
The Bogleheads are investing enthusiasts who honor Jack Bogle and his advice. They are a pretty powerful force to reckon with in the world wide web. They have a forum called Bogleheads that’s been quite active for some time and they live by the principle of diversification, index funds and long term investing. It’s the index investor’s ultimate ‘nerd’ club. Members in the forum actively discuss financial news, market conditions and investing strategies.
"The Bogleheads' Guide to Investing" is written by three Bogleheads enthusiasts and contains all aspects of investing as well as providing practical advice when it comes to your personal finances. For example, what your financial lifestyle is, how to balance your emotions when it comes to mastering your investments and even how to invest for your kids' college. The book will walk you through everything you need to know to put the Boglehead index fund strategy into action. If you want to learn from some of the biggest index fund nerds out there, definitely check this book out.
The Simple Path to Wealth
The number three on our list is my personal favorite, the “The Simple Path to Wealth” by JL Collins. Jim initially started this book out as a collection of letters to his daughter and grew it into a comprehensive financial guide. He firmly believed that money was and is the single most powerful tool we have for navigating this complex world - thus the need to understand it and master it. He spent most of his adult life in this endeavor and wanted to share what he learned with his daughter. However, his daughter had shocking news for him when he tried to talk to her about money.
“Dad, I know money is important. I just don’t want to spend my life thinking about it.” - JL Collins’ Daughter
This led him to simplify the money lessons as much as possible and this book is the amazing product out of that process. If you have time for only one investing book, I’d actually recommend you read this one. I’m not deprioritizing all other books on our list, but given this book was written specifically for the average individual who might have no desire to learn more about investing than what he or she minimally needs to know, I feel it will have the greatest impact.
The book delves into topics like debt, how the stock market works and how to invest in both the good and bad times. My favorite chapter is the one on F-you money. If you want to know what F-you money, don’t wait and check out this book as soon as possible.
A Random Walk Down Wall Street
The fourth best investing book for beginners is “A Random Walk Down Wall Street” by Burton G. Malkiel. It was first published in 1973 and updated editions have been released every few years. Burton Malkiel is a Princeton economist best known for the efficient-market hypothesis. Efficiency means that a company’s share price reflects its current worth, and its price will change when new information alters a business’ worth.
If the “Simple Path to Wealth” is a dish with portions of only your favorite meals, the “Random Walk Down Wall Street” is the whole buffet. It goes into depth of all major investment vehicles, from stocks and bonds to real estate investments and tangible assets. There is even a chapter on behavioral finance and how our emotions affect our financial and investment behaviors.
It’s your one stop book for knowing pretty much everything you want to know about the stock market, Wall Street and the business of investing. He, like Jack Bogle and JL Collins advocate for investing in the market versus. individual stocks but I believe this book gives a much broader context to support his reasoning. If you want to get a better historical context of the stock market as well as how the financial industry has arrived to where it is today, this is definitely a book you want to have on your bookshelf.
I Will Teach You to Be Rich
Number five on our list is not specifically an investing specific book, but still a great book nonetheless. “I Will Teach You to Be Rich,” by Ramit Sethi. The book is focused on teaching young professionals the fundamentals of personal finance, banking, saving, budgeting and investing.
Sethi shares his strategies for eliminating student loans and debt; creating a spending plan and preparing for major purchases like weddings or a house. As regards to investing, he has a whole chapter dedicated to what he calls the ‘pyramid’ of investing. Where based on how “hands on” you want to be with your investing you can essentially ‘choose your own adventure.’ He reviews the basics of target date funds, index funds, mutual funds and even single stocks.
It’s a great book for just getting your general personal finance in order and if you want to learn more about my key takeaways from this book, check out my post here where I do an in depth review.
