Investing sounds simple enough — find an endeavor, put your money in the opportunity and let the profits roll in. There are countless varieties of investments from stocks, bonds, options, real estate, commodities, peer-to-peer lending and many more. In contrast with committing money to an insured bank savings account, investing typically involves trading additional risk for the opportunity for greater rewards.
The following are 12 investing-related books to increase your financial knowledge and ultimately your net worth. These books were culled from experts and my own decades as a portfolio manager and investor. The books are listed in no particular order:
“The Elements of Investing” by Charles D. Ellis and Burton G. Malkiel. This is one of my favorites due to its simplicity and clarity, as well as the notoriety of its authors. If you can only read one investing book, this is a wise choice. It’s short, succinct and replete with sound investing information and strategy.
“A Random Walk Down Wall Street” by Burton G. Malkiel. This classic tome is an in-depth look at the randomness of financial asset prices. Malkiel explains why long-term investing in low-cost index funds is likely to outperform sophisticated professional investment portfolios. This highly praised book has been recommended for decades as an investing classic.
“ The Four Pillars of Investing “ by William J. Bernstein. It was difficult to choose just one of Bernstein’s books for the list. Actually, you can’t go wrong reading any of his other investing books. I’ve read them all and continue to profit from his wise and well-researched investment advice.
“The Intelligent Investor” by Benjamin Graham with Jason Zweig. This is the inspiration for Warren Buffett’s investing style. Widely considered the best value-investing book of all time, “The Intelligent Investor” is the bible of detailed stock analysis. This version has been updated with Zweig, the lauded Wall Street Journal columnist, to more accurately reflect the modern investing climate.
“Bogle on Mutual Funds: New Perspectives for The Intelligent Investor” by John C. Bogle. As with several of the other top investment books, you would benefit from reading any of Bogle’s long list of books. Bogle is known as the greatest promotor of the widely-praised index fund investing approach. His landmark investment company, Vanguard, is home to a wide selection of low-cost, diversified index mutual and exchange-traded funds.
“All About Asset Allocation” (second edition Kindle edition) by Richard Ferri. According to Investopedia.com, asset allocation is “an investment strategy that aims to balance risk and reward by apportioning a portfolio’s assets according to an individual’s goals, risk tolerance and investment horizon.” Understand the underpinnings of the crucial investing topic and you’ll learn how to create a portfolio tailored to your own risk comfort level with appropriate diversification. According to Ferri, “When it comes to investing for your future, there’s only one sure bet — asset allocation.” Learn everything you need to know about implementing the best asset allocation strategy for you.
“Triumph of the Optimists” by Elroy Dimson, Paul Marsh and Mike Staunton. This is an ambitious read, recommended by the Journal’s Zweig: “Neither light reading nor cheap (it’s hard to find online for less than about $75), this book is the most thoughtful and objective analysis of the long-term returns on stocks, bonds, cash and inflation available anywhere, purged of the pom-pom waving and statistical biases that contaminate other books on the subject. The sober conclusion here: Stocks are likely, although not certain, to be the highest-performing asset over the long run. But if you overpay at the top of a bull market, your future returns on stocks will probably be poor.”
“The Investment Answer” by Daniel C. Goldie and Gordon Murray. Apart from being a former professional tennis player, Goldie is a top financial advisor. Together with Murray, a Wall Street veteran, “The Investment Answer” is true to its name. The book offers advice on when investors should hire a financial advisor, asset allocation, asset classes, passive versus active management and when investors should sell.
“Contrarian Investment Strategies: The Psychological Edge” by David Dreman. Stock-pickers will appreciate this smart book, ahead of its time in acknowledging the importance of psychological factors in investing. The lauded founder and chairman of Dreman Value Management manages more than $4 billion of individual and institutional funds. His contrarian-value investing approach teaches how to profitably invest and avoid falling prey to manias and panics.
“The Incredible Shrinking Alpha: And What You Can Do to Escape Its Clutches” by Larry E. Swedroe and Andrew L. Berkin. Swedroe and Berkin attack the difficult task of beating the market, or gaining alpha. Their conclusion is that it’s becoming more challenging to invest and beat a passive index investing approach. And you’re better off spending your time on other pursuits instead of trying to beat the market indexes.
“The Only Investment Guide You’ll Ever Need” by Andrew Tobias. This may have been the first investment book I ever read. Tobias is smart, sensible and witty and this book withstood the test of time. More than an investment book, this is a comprehensive money guide. I was thrilled to see it’s been revised again. It’s a fun and informative read.
“Investing Made Simple: Index Fund Investing and ETF Investing Explained in 100 Pages or Less” by Mike Piper. Piper has a gift for distilling the most complex issues into the fewest words. I’ve admired his work for years. A CPA by designation, he is a full-time finance writer with a stable of finance books in his 100-pages-or-less series. If you’re seeking just the meat of the index fund investing information, Piper delivers.
For holiday gift giving or your own personal library, this collection of 12 classic investing books will build a lifetime of wealth for you and yours.
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12 Books That Every Investor Should Own originally appeared on usnews.com
