This recommended reading list of beginner investing books provides essential, foundational investing knowledge. This includes conventional, low cost, passive index asset allocation along with an assortment of investment classics covering value investing, growth investing, and risk management. Every investor must master these essentials before advancing to quantitative models… and for some investors the knowledge in these books is more than “enough” for their wealth strategy.
The timeless classic on asset allocation by a well-respected author. Some reviews claim the book is out of date (written in 2000), but the principles taught are perennial and haven’t changed since publication. Of particular note is how the author acknowledges the legitimacy of valuation tilts and momentum, but then he holds the party line by concluding with conventional wisdom (low cost, passive index, buy and hold). You will find this trait in most books promoting conventional asset allocation as the solution. Read the book very closely to find the hidden gems.
Same story line as the previous book – low cost, passive index, buy and hold investing using conventional asset allocation. However, this book explains it differently, cites supporting research, and is more current. By the time you read these two books you will know as much (or more) than most “financial advisors” about passive investment strategy. You will have the background knowledge necessary to manage your portfolio the same way most advisor’s will… but without the costs and conflicts of interest.
There is nothing in this book that you won’t already know after reading the first two on this list, but you can’t claim to understand the low cost, passive index, buy and hold philosophy without having paid homage to the high priest of the religion. Nobody has told this story more times or more clearly than John Bogle. This book is an easy and enjoyable read.
An investment education without Benjamin Graham’s classic book is like a college graduate who never learned to read. Graham is widely considered the father of value investing and was a mentor to Warren Buffett. Need I say more? This book has stood the test of time.
The essence of investing is putting capital at risk into an unknowable, uncertain future. This makes risk management an essential investment discipline; yet, remarkably little has been written on the subject. This book is one of the few, and it is far from perfect. However, it is a pleasant read providing an accessible, foundational understanding about the history of risk management and some core statistical tools, even if it is lacking in actionable advice.
If Benjamin Graham is the father of value investing, then Philip Fisher is widely considered the father of growth investing. This book was the first investing book to make the New York Times bestseller list (long ago) and is cited by Warren Buffett as one of the most influential books affecting his investment style. It is valuable reading for the serious investment student, but it can also be skipped if time is a primary concern because few investors are well served by stock picking and should focus on low cost indexes, asset allocation, and active risk management instead.
Most people today will disagree with this recommendation, but I think it brings balance to the passive index, buy & hold perspective espoused by every other book on this list. Originally written in 1935 following the Great Depression, this book shows how the predominant viewpoint changes with time. Every other book on this list never would have made it to the publisher following the market declines preceding this book’s publication, and the same will be true at some point in the future. It is valuable to understand the cycles of prevailing investment wisdom and not get caught up in believing that something is true just because all the experts agree on it.