Best Investment Books For Beginners

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Best Investment Books For Beginners

Dipping your toe into the money market can be scary and intimidating for first-timers who don’t have extensive knowledge of financial principles. The good news is that you do not have to be an expert to enter the investing world. There are many investment books out there that will guide you through the basics of how the market works and what skills you need to make conservative and sound investment decisions.

We’ve selected the most thorough and easy to understand to get you on your journey:  

The Intelligent Investor by Benjamin Graham

The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition)

The Intelligent Investor is one of the most influential investment books in the market. In fact, Warren Buffet criticized it as “by far the best book ever written on investing” – a golden claim by one of the best fund managers in the world. 

The author’s objective was to create an easy to understand investment book for the ordinary investor. He made sure beginners could understand complicated terms and theories.

At the same time, he wanted to illustrate sound portfolio risk management strategies instead of focusing on simply following the market trends. He emphasized how controlling ones emotions is critical for effectively avoiding financial pitfalls. 

The Intelligent Investor is not the flashiest or most complicated book out there. What makes it stand out is its ability to expound on the fundamentals and make the reader understand the ins and outs of the money market. 

Topics Covered: 

  1. Using a margin of safety and valuations analysis in maximizing probabilities
  2. Employing risk management through diversification and asset allocation
  3. Comparing a defensive investor from an enterprising investor
  4. Understanding Inflation, Market History, Speculation, and Market Fluctuation
  5. Concepts of dollar-cost averaging and value investing

 

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The Little Book That Beats The Market By Joel Greenblatt

The Little Book That Still Beats the Market

This masterpiece by Joel Greenblatt offers tips around individual stock picks. What’s unique about the book are the way he explains valuable lessons to his readers using everyday before diving into more complicated stock market principles to help increase understanding.

For example, the first paragraph starts with a story of children on the playground who are selling bubble gum. Greenblatt builds up from there to explain supply and demand and focuses on the fundamentals of investing. 

Much of the book revolves around how the stock market works and how investors should leverage earnings yield and capital to maximize profit and decision on a per stock basis. This is a great book for anyone looking to become successful at picking individual stocks. 

Even if you’re not looking for stocks selections, its straightforward writing and conversational tone make is really easy to understand most economic principles covered. It also teaches you how to evaluate the money market movement and strategies on how to maximize the dollar. 

Topics Covered: 

  1. Why is putting a value on a business important in attracting investor 
  2. Overview of risk-free investment opportunities
  3. Evaluating the stock market movement by analyzing the company’s finances, forecasting the future of the company, and studying competitors
  4. The basics of buying and selling a stock at a given price
  5. Explanation of why companies with a high capital return are preferred than those with a low return on capital
  6. Listing companies and ranking them based on their P/E ratios
  7. Comparing index funds and individual stock picking
  8. The magic formula of the stock market

 

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How To Buy Stocks By Louis Engel

How to Buy Stocks

What’s unique about this book is that it is a thorough review of the stock market but all covers additional basic investment types and information surrounding the market like how to work with brokers, what bonds are and much more.

Engel reviews how the capitalist system works and how investors can take advantage of this to grow their wealth. He also defines some more advanced terms like preferred stocks, value, common stocks, assets, venture capital, and dividends. These concepts are essential to understand if you want to enter the world of investing. 

Topics Covered:

  1. The latest statistics and regulations of the money market
  2. A step-by-step process on how the stock exchange works
  3. How the over-the-counter market works
  4. What are the common and preferred stocks
  5. The basics of risk-free investing (municipal, government, and corporate bonds
  6. What a beginner should know about doing business with a broker

 

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Bogle On Mutual Funds By John C. Bogle

Bogle On Mutual Funds: New Perspectives For The Intelligent Investor (Wiley Investment Classics)

If you’re a beginner, and you feel the tangles of the stock market might be a little too complicated for you, then your best bet may be to focus on Mutual Funds. Mutual funds are handpicked investments such as bonds and stocks by a Mutual Fund Manager with the goal of diversifying and protecting the investor in one convenient package.

This book focuses on the most effective approach to maximum value and manage fees. 

Bogle also tackled the major pitfalls in entering the mutual fund investment. He exposed the most common situations which often lure newbie investors into making unwise decisions. 

To0pics Covered: 

  1. How to come up with the best portfolio of funds to meet your financial goals
  2. Recognizing the common pitfalls: evaluating investment risks, studying excessive fees, minimizing taces, and spotting false advertising claims
  3. The eternal triangle of investing
  4. Getting information about the industry and using these various data to come up with the best investment decisions
  5. Using asset allocation strategies to balance risk and return

 

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If You Can: How Millennials Can Get Rich Slowly By William J. Bernstein

 

If You Can: How Millennials Can Get Rich Slowly

 

This book is just 16-pages choc full of fantastic investment advice tailored for beginners.

Bernstein’s strategy was to create something that a 7-year old could completely understand. According to him, “This book will take you 15 minutes of work per year, outperform 90% of financial professionals in the long run and make you a millionaire over time.”

It’s a huge claim for such a small book and the content is worth the read

If You Can is a great book for younger generations. It teaches the importance of crafting the best financial strategies at an early age. It also discusses hurdles that the Millenials get into, which then affects their spending and saving habits. 

Topics Covered: 

  1. Familiarizing the financial and market history
  2. Coming up with the best investment strategy depending on your risk-level as an investor
  3. The reasons why people spend too much money and how to overcome it
  4. Stocks vs. bonds
  5. The importance of long-term discipline in investing and saving
  6. Recognizing the monsters that are populating the financial industry
  7. What an emergency fund is composed of
  8. 401(k) planning

 

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The Bond Book By Annette Thau

 

The Bond Book

 

If you want to diversify your portfolio, then you should also try out investing in bonds. It is an entirely different approach compared to the stock market, especially in terms of the level of risk it possesses. Understanding the fundamentals of the bond market is essential if you want to create a complete, balanced and de-risked portfolio. 

The author created this book as a response to the financial crisis from 2008. After the recession, many investors were scared of reentering the bond market which had taken a major hit.  To help, Annette Thau used her knowledge as a former bond analyst to debunk their fears. 

The Bond Book is tailored for both newbie and experienced investors who want to try out bonds for the first time. It tackles everything you need to know about bonds – from how you can get started to comparing specific types of bonds to add to your portfolio.

The book also emphasized the importance of this financial vehicle for seniors and individuals nearing retirement, with the author, Annette Thau, stating that bonds are the best investment option for older individuals. 

Topics Covered:

  1. Different types of bonds: individual bonds, ETDs, junk bonds, and municipal bonds
  2. Recommendations on the best financial calculators to assist you in your investment decisions
  3. The new municipal bonds landscape: different rating scales, near demise of bond insurance, the basics of Build America Bonds (BABs)
  4. How to buy treasuries without having to pay commissions
  5. How to assess opportunities and risks in the market
  6. Up-to-date listings of resources online which covers bond prices and other information

 

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The 5 Mistakes Every Investor Makes And How To Avoid Them By Peter Mallouk

 

The 5 Mistakes Every Investor Makes and How to Avoid Them: Getting Investing Right

 

A lot of investment books will focus on the things you should do as an investor. However, Peter Mallouk takes a different approach warning us of the five biggest mistakes made by investors and how to avoid them. 

Mallouk spends a lot of time encourages his readers not to make decisions on emotional bias or misunderstanding of financial performances or news and media. 

Topics Covered:

  1. Major mistakes by everyday investors and professionals
  2. The necessary mindset to cope with the ever-changing market variables and dilemma
  3. Examples of past investment errors and how these individuals were able to get back on track
  4. Investment management and techniques

 

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Final Verdict

The more books you read, the more you will get the hang of investing. The readings mentioned above are only the tip of the iceberg. There is still a wide array of quality investing books that are compatible with beginners. 

If you are looking for the best book to start with, however, we recommend that you go with The Intelligent Investor by Benjamin Graham. It covers a lot of topics but provide a really well rounded overview of the market. It starts with simple lessons that stir the interest of the reader and slowly gets to the complicated discussions after.

With this progression, rest assured that you will be on your way to becoming the best investor out there. 

 

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