Most of the time, successful investors are avid readers.
As Warren Buffett puts it: “Risk comes from not knowing what you’re doing”.
Buffett and Munger have always said that a lot of their success can be attributed to their reading habits.
So, if you want to be a good investor, you have to start by investing in yourself.
One of the primary things you need to learn when it comes to approaching markets, stocks, commodities, is to eliminate the noise (news, media, word of mouth,…) and forge your own opinions.
The books reviewed below will help you to do just that. They will set a solid foundation for your investment strategies and some of them will even take you one step further with some concrete trading strategies.
To help you, I’ve put together this list of the best Investing books for beginners.
Here’s how I proceeded.
The book selection process
The idea here is to simplify the decision making process and help you go straight to the very best books on each subject, taking into account content quality, quantity of reviews and average ratings. Here’s the process:
- I select the books on Amazon that are relevant to the topic, basically Investment books
- I then eliminated those investment books with reviews below 4 stars or low numbers of reviews (such as all the cheap or free e-books)
- The list is cross-referenced with other leading websites for the books they reference under this subject (goodreads.com, businessinsider.com, cnbc.com, inc.com,…)
- I establish the shortlist and write an independent review taking into account book content, site reviews and above all user reviews
So here they are: my Top 12 Investment Books for Beginners.
The Time-Tested Strategy for Successful Investing, by Burton G. Malkiel
A Random Walk Down Wall Street has sold over 1.5 million copies and it is often cited as THE first book you should read when you are starting your portfolio.
Burton Malkiel has written this real guide to investing, covering everything from the foundations of investment strategies, to an in-depth analysis of the bubbles from the sixties, nineties and early 2000s.
The second and third parts of the book look at technical and fundamental analysis, the new investment technologies and strategies and covers behavioral finance.
The fourth part is extremely practical and will teach you all the steps, tips and tricks you need to setup a successful investment portfolio. The book is straight to the point, gimmick free and extremely well researched, detailed and practical.
Quote from the book: ”Never buy something from someone who is out of breath”
by Peter Lynch
Peter Lynch is the legendary investor who took the Fidelity Magellan fund from $18 million in 1977 to $14 billion in 1990, clocking in a truly astounding 29% average return over the 13-year period.
That performance set a record for mutual funds far beyond anything that had been seen at the time.
Needless to say, the lessons he teaches us are invaluable.
In Beating The Street, he tells us about his strategies to pick stocks and mutual funds and describes his winning methods.
They are summed up in 21 Peter’s principles.
You could also decide to start with his other book “One up on Wall Street” (reviewed below), as both books complement each other well.
Beating The Street is more recent, as it was published in 1993, and so it covers the strategies Peter Lynch conducted with his Magellan Fund.
Quote from the book: “Stick with a steady and consistent performer”
by Robert J. Shiller
Alan Greenspan famously coined the expression Irrational Exuberance to describe the fascination and frenzy behind America’s love for stocks and the unbelievable bull market it is witnessing.
Written in March 2000, this book predicted the market crash that would occur that year, and it remains as relevant as ever, it is also regularly updated.
As a Yale professor, Robert Shiller is a kind of rockstar economist. His main subject is to look at the reasons why markets fail.
In a famous 2013 Nobel prize lecture, he explained the need for democratizing and humanizing finance.
In his mind, that means making financial institutions work better for real people and interact with actual human behavior.
This fascinating book is by far one of the most amazing insights in behavioral economics, explaining that as humans we are pervasively and systematically irrational. We will all crowd in the same boat even as someone screams “sinking !”
This quote from the book is the perfect description of a speculative bubble:
“I define a speculative bubble as a situation in which news of price increases spurs investor enthusiasm, which spreads by psychological contagion from person to person, in the process amplifying stories that might justify the price increases and bringing in a larger class of investors, who, despite doubts about the real value of an investment, are drawn to it partly through envy of others’ successes and partly through a gambler’ s excitement’’ – Robert J. Shiller
Robert J Shiller made a very interesting conference at the London School of Economics on Irrational Exuberance if you’re interested.
Lessons for Corporate America by Warren E. Buffett and Lawrence A. Cunningham
Let’s face it, no one comes close to Warren Buffett when it comes to value creation and the philosophy behind long term investing.
Quotes from his annual shareholder letter are legendary, and here is your chance to profit from the words of wisdom that they contain.
Lawrence Cunningham, a leading proponent of the value investing school, has arranged the essays of Warren Buffett in several categories, ranging from Corporate Governance to Corporate and Finance Investing, Mergers and acquisitions or Accounting & Valuation.
Trust me, once you open this book you will have trouble putting it down. The writing is brilliant, witty, often funny, insightful and in the end such an entertaining read.
Quote from the book: ‘’A horse that can count to ten is a remarkable horse – not a remarkable mathematician.’’
The Definitive Guide to Financial Market Returns & Long Term Investment by Jeremy J. Siegel
Called the ‘’Buy and Hold’’ bible, this book provides us with the strategies and techniques to invest and achieve significant long run returns.
The time horizon here is 20 years, and Jeremy Siegel advocates a well diversified portfolio of equity investments.
The book is extremely well researched, full of graphs, tables and studies, and draws its main conclusions from its analysis of tons of historical data.
The Washington Post actually called it ‘’one of the best investment books of all time’’. It has been regularly revised, with at least 5 editions.
Quote from the book: ’’Over the 210 years I have examined stock returns, the real return on a broadly diversified portfolio of stocks has averaged 6.6 percent per year.’’
The Previously Unexplained Techniques That Have Made Warren Buffett the World’s Most Famous Investor by Mary Buffett and David Clark
If you’re a Warren Buffett fan, this book’s for you.
Buffettology covers most of the concepts and fundamentals used by Warren Buffett in his investing strategies.
How he built his empire from the ground up. The author, as a former daughter in law of Mr Buffett, gained first hand knowledge of some of the secrets that have made him such a wealthy man.
It will help you understand how WB became one of the most famous and successful investors of all times. You will even learn about the mathematical equipment Warren Buffett uses, but also gain an insight on the kind of companies he looks at.
That alone could prove a real revelation in your portfolio strategy.
Quote from the book: ‘’This book is not another cut-and-paste of Warren Buffett’s letters to Berkshire Hathaway shareholders, nor is it a biography filled with anecdotes about Buffett. It is, instead, the most comprehensive case study and detailed explanation ever written on Buffett’s investment techniques.’’
The authors have also published a book around the proven techniques for Investing Successfully in Changing Markets.
What the Rich Teach their Kids About Money, by Robert T. Kiyosaki
Robert Kiyosaki has written one of the most successful books ever on making money and adopting a totally new mindset towards wealth. It has been an absolute bestseller for years.
The story Robert Kiyosaki tells us revolves around what he calls his two dads: his actual father that he calls his ‘’poor dad’’ and the father of his best friend whom he calls his ‘’rich dad’’, two opposing figures with radically different approaches to life and money.
This book will teach you how to distinguish your assets from your liabilities, and challenge the assumption that earning a high salary is the best way to get rich.
The best use of your money (and time) is to start buying property or launching a business. As parents, this book also tells us to forget about relying on the education system to teach our children about money.
It gives fascinating insights on how we should really educate our kids for their future wealth. This book is an absolute classic, it is listed in all top rankings on personal finance and Robert Kiyosaki is considered to be one the most authoritative writers around educating future millionaires.
Rich Dad poor Dad has changed the lives of millions of people, could it change yours?
Quote from the book : ‘’Rule One. You must know the difference between an asset and a liability, and buy assets.”
Robert Kiyosaki also authored a very famous book called the Cashflow Quadrant, the author’s second book around reaching Financial Freedom.
And this is Robert Kiyosaki giving one of his most famous lessons around turning liabilities into assets, find out what he means, it is one of the very best financial lessons you can learn.
The Landmark Bestseller by Napoleon Hill
Napoleon Hill has probably written the most successful, widely reviewed, authoritative book around wealth creation.
It is truly astounding that the original version of this book dates back to 1937. To this day, it remains the single most often cited title in the personal finance literature.
Napoleon Hill dedicated a good part of his life defining the basic Laws of wealth creation, and his teachings have influenced literally millions of people.
He draws on the lives of well known millionaires such as Andrew Carnegie, Thomas Edison, Henry Ford and explains the secrets behind their outstanding successes.
This book actually teaches you tried and tested techniques to get rich, covering not only what you need to do but also how you should do it.
There is a whole philosophy behind this book, which also teaches us that material wealth is central to achieving a form of freedom, but that lasting and loving relationships, friendships, can be just as essential.
Many people have claimed that this book changed their lives, get ready!
Quote from the book: “Remember, too, that all who succeed in life get off to a bad start, and pass through many heartbreaking struggles before they “arrive”. The turning point in the lives of those who succeed usually comes at some moment of crisis, through which they are introduced to their “other selves”.”
The Only Way to Guarantee Your Fair Share of Stock Market Returns by John C. Bogle
Investing is one the best possible ways to get rich, and this book specifically looks at how you can use index funds to devise a safe and solid investing strategy.
Warren Buffet once recommended this book from John Bogle, the legendary founder of the Vanguard Group, the world’s first index mutual fund.
This book is a quick read a provides simple and efficient strategies anyone can apply. Make index fund investing work for you and spend a few hours reading this short book, you will never regret it.
Quotes from the book: “Don’t look for the needle in the haystack, just buy the haystack!” , “The greatest enemy of a good plan is the dream of a perfect plan.” , “Stick to the good plan. Traditional”
The Definitive Book on Value Investing by Benjamin Graham
This book is an absolute classic.
If you only ever read one book about investing, this should be the one. Published in 1949, it has sold more than a million copies and is a collection of unparalleled wisdom principles for any kind of value investor that’s in there for the long run.
This is the book Warren Buffet calls the greatest investment book of all times.
As the father of value investing, Benjamin Graham has become to be known as one of the most influential investment theorists of the 20th century.
Is it necessary to say any more? If you are serious about investing in stocks, that’s you starting point.
Quote from the book: “The Intelligent Investor is a realist who sells to optimists and buys from pessimists”
How to Use What you Already Know to Make Money in the Market by Peter Lynch
This is the second book we review by Peter Lynch, but One Up on Wall Street was actually written prior to Beating the Street.
The idea of this book is to show how average investors like us can actually beat the professionals by acting and thinking smart.
Spot the products you think have an edge, read the company’s financial statements, Peter Lynch gives us numerous tricks to try and find rocket stocks by applying simple principles.
Try this short book (long on advice) and see if you can beat the market, Peter Lynch certainly did!
Quote from the book: “The trick is not to learn to trust your gut feelings, but rather to discipline yourself to ignore them. Stand by your stocks as long as the fundamental story of the company hasn’t changed.”
The major New York Times bestseller by Daniel Kahneman
The last book in this selection received so much applause when it was published, it is impossible to miss.
It has thousands of positive reviews on most online bookstores and remains a major New York Times Bestseller.
When it was published in 2011, it received numerous awards.
Daniel Kahneman is a psychologist and Nobel Prize winner in Economics.
Quite groundbreaking, Thinking Fast and Slow explains the dual system that governs the way our minds work. The first system is fast, intuitive and emotional.
The second system is slower, more deliberative and logical.
Understanding how these systems generate cognitive biases and shape the way we take decisions is truly fascinating.
The author gives so many examples, ranging from failed corporate strategies due to overconfidence, to the way we decide which stocks to invest in or how we plan our next vacation.
Read this book, you will not be able to put it down, but most of all you will understand why us, human animals, are so illogical. Fascinating.
Quote from the book: ‘’Our comforting conviction that the world makes sense rests on a secure foundation: our almost unlimited ability to ignore our ignorance.”
Have you read any book that you believe should be in this list? Share it with us in the comment box below!
You can also read our article about the Top 10 Day Trading Books for 2019.
Safe trading to all.