It’s essential to start investing as soon as you can. The earlier you begin, the higher total returns you can earn. But you also have to invest wisely, which is where investing books and knowledge come into play.
Whether you’re a complete beginner, a seasoned professional, or somewhere in between, reading investing books can sharpen your knowledge and deepen your understanding of how the market works. If you’re able to learn one new thing to apply the rest of your life from each book you read on finance and investing, you will reap those rewards throughout your life and you will be sure glad you did when it comes time to retire.
These books were written with the absolute beginner in mind, covering the fundamentals of personal investing. You don’t need any prior investing knowledge or experience to understand these books, only a willingness to learn.
These will provide you the foundation required to place you far ahead of the average investor. The three combined offer actionable steps, that are simple and well laid out. Starting with building a spending plan getting rid of bad debt and investing in dependable albeit conservative investments, likely to match the broad market over the long term allowing you to retire rich.
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#1. I Will Teach You To Be Rich
Ramit Sethi, the mind behind I Will Teach You to be Rich — which is also the name of his blog — is an entrepreneur with deep understandings of psychology and personal finance. He’s released several online courses covering sales, psychology, business, personal finance and career development.
I Will Teach You to be Rich operates on the premise of you being in charge of your own life to include your finances. It’s written in a humorous and brash style that is aimed at younger investors looking to optimize their finances.
You’ll learn a lot about what drives spending, saving and investing. The book emphasizes the importance of overcoming “analysis paralysis” — the phenomenon where overthinking a situation can lead to a lack of action. He emphasizes how it is more important that you automatically invest in a good fund with low fees rather that stress out and spend all your time hunting and moving money around for that extra 0.2% when that difference isn’t going to make a significant difference.
While he recommends targets date funds that is a choice for you to decide, but index funds or target date will both get the job done with low fees and minimal effort on your part.
#2. A Random Walk Down Wallstreet
Most proponents of the random walk theory apply it to short- and mid-term trading. They don’t argue that long-term values move unpredictably. they follow trends. However daily, weekly and even monthly stock prices have no consistent basis for prediction. We can see this in practice by looking at the graph on nearly any individual stock as of late, and look at how crazy some of the swings have been in 2020.
Random walk theory says it’s impossible to predict how a stock will move at any given time. In the short- and mid-term, a stock’s price doesn’t have any known relationship with either its historic value or the value of any other assets on the market. The lack of any known pattern means that standard investing tools like market timing and technical or fundamental analysis don’t work.
Most of the book focuses on the many ways used of analyzing the market to find an edge – and goes on to show us how they are largely junk.
This book is very easy to read with a sense a humor within all the great information, and the information itself is presented in a way that’s easily digestible.
If you have any interest in how the stock market works, you should definitely read A Random Walk Down Wall Street. It gives a very critical look at what people are always saying about the stock market – and why a most of it is rubbish.
Of course, there are many other perspectives on the market, and the truth is that the stock market can be exploited by individuals, but that exploitation requires a lot of work, work that is simply not feasible for most people, and in many cases even professionals.
#3. The Bogleheads Guide To Investing
The Bogleheads Guide to Investing contains investing advice based on the philosophy of the founder of Vanguard, John C. Bogle — who is also credited with creating the first index fund, a type of investment fund that tracks a particular market index.
This book was written by Taylor Larimore, a prolific reader of investing books and a big believer in Bogle’s long-term, conservative investment philosophy.
The book starts by instructing you to get your finances in order as well as teaching you the right mindset, (which you already did if you read the first two books) From there, you cover all the basics of investing — from knowing what you’re buying, to allocating your assets, to retirement planning.
It is a fantastic guide for investing for the long term, minimizing the costs and taxes associated with investing, and most of the basic principles of conservative investment (diversifying your portfolio widely, not betting the whole farm on stocks, and so on).
The book basically moves deliberately from the basics behind investing and what you need to get started, then moves from investment to investment, explaining the ins and outs of each and explaining the fundamentals of an overall investment philosophy.
This book offers a clear beginning to end describing an overall philosophy about what to do with your money. Many other books of this type simply provide a bunch of rules to follow; this one is rooted in the basic idea that you should be an investment conservative: low risk with growth targeting the long haul. It’s an interesting approach – and it makes for a very interesting book.
These books read and applied in this order can be extremely powerful in building real wealth in the long term. They will help you save more, smash debt, automate where your money goes, maximize tax advantaged retirement accounts while still doing the things you love. In the end you too can retire rich!