To be a successful investor, you’ll need to have a basic understanding of finance. We’ve put together this list of books for beginners to help feed your interest in finance and get you up to speed with some of the fundamentals before you get started. 📚
The Index Card
Written by award-winning financial journalist Helaine Olen and Professor Harold Pollack, the premise behind The Index Card was sparked by Pollack’s idea that everything you need to know about finance and investing can be written on the back of a 4 inch by 6 inch index card. 📇
The rules are simple, things like save 20% of your money, pay your credit card balance in full every month, invest in your pension and take advantage of equivalent employer contributions, pay attention to fees and avoid actively managed funds all feature on Pollack’s original index card. So the pair got together and wrote an easy-to-understand book, which is effectively a personal finance cheat sheet.
The Intelligent Investor
One of the most renowned and cited investing books, Benjamin Graham’s The Intelligent Investor is as relevant today as when it was originally published in 1949. Lauded as ‘by far the best book on investing ever written’, by the world’s most successful investor Warren E. Buffett, The Intelligent Investor has been revised and adapted to fit the realities of today’s market.
Known as the ‘father of value investing’, Graham has been hailed by many as the greatest investment advisor of the 20th century. His philosophy of ‘value investing’ – buying stocks that are undervalued in the market, meaning that the market price is lower than the stock’s actual value – has become a benchmark of many modern-day investment strategies. 📊 Vital to Graham’s philosophy is a long-term mindset, which is something that all budding investors should get familiar with early on in their investment journey.
Boom and Bust
As an investor, it’s important to understand that markets rise and fall, and there’s nothing you can do about it. Exactly when the next big event will happen however is less hard-and-fast, and many people have made and lost fortunes trying to predict it. William Quinn and John D. Turner’s Boom and Bust takes readers through a global history of financial bubbles. 💥
It explains why financial bubbles exist and crashes happen, and why even though it feels as though the sky is going to fall down following a crash, the best thing to do is hold on to your investments to benefit from the rebound. This book helps remove the stigma surrounding market drops, so when the next one eventually happens, you’ll understand that it’s not necessarily something to fear. 📉
The Little Book of Common Sense Investing
John Bogle, founder of Vanguard – one of the world’s largest investment companies – offers an alternative to actively managed funds with this overview of passive investing. Bogle lays out the main ideas behind passive investing – where the fund invests in most of the companies in a given index (like the businesses that make up the FTSE100) at a low cost.
He also explains active investing, where a fund manager decides which individual shares to invest in, in the hope that they perform better than the index benchmark. He thinks that trying to beat the market is a zero-sum game, and after all the costs involved in active investing are deducted, it becomes a loser’s game. 🎲 The book states that the simplest and most effective investment strategy in the long term is passive investing.
The Psychology of Money
Morgan Housel’s The Psychology of Money looks at the behaviours and attitudes that people have around money in a collection of short lessons. 🧠 The book goes through the essential behaviour of successful investors – including the people that manage to hold onto their wealth after they’ve made it.
The book is jam-packed with adages and useful titbits – most notably the effects of compounding on Warren Buffett’s net worth in chapter four. Housel tells us that when he wrote the book, Buffett’s net worth was $84.5 billion – but $81.5 billion of that was accumulated after his 65th birthday. If you take one lesson from this book, it’s that compounding is real – and it’s better to start investing sooner rather than later.
Bonus book
We thought we’d round off with a pocket-sized bonus book. The aptly named Money by Yuval Noah Harari – of Sapiens: A Brief History of Humankind fame – is a background explainer for everything to do with money. 💰 Where did it come from, why do we want it, and what’s it good for? If you’re after a crash course on capitalism, this is it.
If any of these books have stoked an interest, why not check out our investing offering. We offer tracker fundsFunds, also called ‘tracker funds’, are financial instruments that have been set up to match or ‘track’ the price of a market index. Investing in a fund lets you get exposure to different financial assets like shares and bonds, without having to buy them directly. and exchange traded funds (ETFs) for a range of different sectors, and you’ll be able to invest in a tax-efficient way if you choose to open a Stocks & Shares ISA.