The best way to start learning how to invest is by reading some classic investment books written by some of the most successful investors in finance history. Once you go through some of their books, you will already have an investment plan ready in your mind. All you then need to do is to execute it.
5 Must Read Books for Investors
We picked five books that are certified investing classics. These are the books that show up time and again in lists of books recommended by both individual and institutional investors.
We considered several factors when selecting books for this list, such as the author’s expertise, awards, critical acclaim, and online reviews. We also included new and noteworthy titles to provide readers with a diverse range of options and keep up-to-date with the latest trends.
1. Rich Dad Poor Dad
by Robert T. Kiyosaki
Are you a young investor trying to understand the market? Let’s be honest, none of us wants to work till we die. Many of us desire to reach financial independence by a certain age. But how will you reach your financial goals without enough financial education? We know that investment is the key to grow money. But do you know exactly where to invest and where to not?
In this book, which is often recommended as one of the investment books to read, Kiyosaki points out the misleading educational system of America that is designed in such a way that people just cannot escape the Corporate race. Schools don’t teach how to create enough wealth so that you don’t work anymore. We usually understand that a house is an asset because the banks label them as so. But did you know that it can be a liability if you need certain payments to keep it?
Real assets always add cash flow into your pocket. In his book, Kiyosaki suggests that investors must only invest in those assets that generate a yearly or monthly cash flow while providing upside in terms of equity value. Investors must always prefer real estate investments and stocks that provide dividends. There are many other interesting observations about investment in this book, like tax planning.
2. The Essays of Warren Buffett
by Lawrence A. Cunningham
Whether you are still a newbie in the investment world, or you think you know it all, this book will definitely benefit you by improving your investment patterns. Do you want to grow your company’s enterprise value? You first need to learn the interrelation between a company’s management and its stakeholders.
Buffet’s essays address many financing topics like corporate governance, investing, mergers and acquisitions, accounting and valuation, accounting policy, tax matters, and alternatives to common stock. These essays are relevant to the environment of Corporate America. He tries to give us an insight into his business mindset and basic principles he follows in finance through them. After going through his book, you will understand how much he hates blindly following investing trends.
Buffet hires talented managers at portfolio companies and lets them do what they do best. In this book, he has also suggested purchasing shares of businesses when they are being sold out at a price lower than the inherent price, i.e., at a discount. Investment and finance are not all about your common sense. With expert tips and suggestions, you can grow a lot faster, and who can give you better suggestions than one of the topmost successful investors in modern history itself?
3. Beating the Street
by Peter Lynch
Peter Lynch, the writer of this book, has seen immense success in stock market investment and hedge fund management. He was first an intern at Fidelity Investments, and later, he was managing the Magellan Fund, where he raised the assets up to $18 million. Just within 19 years, the funds had risen to a shocking $14 billion in assets.
He almost managed to bring in financial returns of more than 29.2% every year. This book is a sneak peek into his genius investor mind. Are you not curious to know what was his thought process when he made such huge investment decisions? How did he decide whether to buy or sell a stock?
Lynch’s core belief is that investors should always know everything about the assets in which they choose to invest. He feels that a single, individual investor can explore better market opportunities than even Wall Street. There cannot be a better book if you are really interested in understanding the investment mentality and psychology.
4. The Intelligent Investor
by Benjamin Graham
Do you want to learn investment from the father of value investing himself? This is one of the most comprehensive, well-written investment books you will ever come across. Even Warren Buffett has said this to be the best investing book in history. The financing rules discussed in this book are very basic and yet really wise.
Graham suggests us to purchase stocks that appear relatively underpriced compared to investment value, which can be judged by fundamental analysis. He gives us the depth and knowledge of stock markets through this book and teaches us how to conduct a stock’s fundamental analysis.
Do you know the ways in which you can manage your portfolio? He discusses both defensive and positive approaches to do so and explains using illustrations of comparison of stocks of several companies. All the knowledge in this book has been backed by real-life scenarios and it is easily understandable.
5. Think and Grow Rich
by Napoleon Hill
This book is one of those best-selling copies that sold almost a million copies during the “Great Recession.” The author Napoleon had great connections and networks with some of the finest investors and wealthy individuals. He always had conversations with them regarding their money growing strategies, and later on, he used to research the authenticity of these strategies extensively.
Every great investor has said that investment is not just numbers; it is a mentality. To be successful like your role models, the first thing you need to do is understand their psychology. Do you want to develop an investment mentality and understand the rules that successful people swear by? In this book, the author gives you 13 principles that one must follow to achieve personal achievement and success. All of these suggestions are based on his own practical experiences, observations, and research.
All these principles are not just what you have to do but also the way you have to think. They include desire, faith, specialized knowledge, organized planning, persistence, as well as “sixth sense.” His basic thought that he has conveyed through this book is that you should always brainstorm with people with the same financial mentality as yours to always bring out something better from the entire discussion.
Not ready to commit to reading a whole book about investing? That’s OK. You can learn more about the basics on our website:
- How To Overcome The Fear Of Investing
- Investing 101: Investing For Beginners
- How to Calculate Your Risk Profile?
- Asset Allocation: A Strategy to Protect and Maximize Your Investments
- Where to Invest as a First-Time Investor in 2021?
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You will never learn how to invest in a single day. It is a slow process of gradually increasing your financial knowledge and sharpening your skills. Learning proper investment requires a lot of research and practice. These are the best investing books, in our opinion, and they are a great way to start your learning process. But don’t stop there. Expand your knowledge further, and don’t be afraid to put it into practice!