The most important step you can take to build wealth and achieve financial independence is to save and invest. However, for many people, investing is the most intimidating aspect of personal finance, and understandably so—it can be complex and overwhelming.
We strive to educate you on many aspects of personal finance, including creating a budget, how to make money quickly, saving money on travel, and the importance of having an emergency fund, in all of our podcast episodes or articles.
There are so many different aspects to investing and so many ways to invest:
- Via the stock market using index funds or individual stocks.
- Retirement accounts leveraging a 401k or IRA.
- Real estate using rental property, REITs, or e-REITs.
Questions to Consider
- Which of your investments should be long-term versus short or medium-term? What should your portfolio allocation be?
- How can you make compound interest work for you?
- What do the world’s most successful investors like Warren Buffett and John C. Bogle do that makes them so rich? Can the average person use the investment strategies they’ve used to get rich?
You see? There is a lot to learn about investing, a lot more than any one podcast episode or article can cover (although over the years, LMM has covered a lot of them), and sometimes you need a really good deep dive into a particular subject.
With that in mind, we’ve curated a list of what we think are the best investing books out there. Some of them are new, and some are old classics but all of them are a must-read if you want to become a successful investor.
Classics are Classics for a Reason
The fundamentals of investing haven’t changed and aren’t going to change. That’s why some of the best books on investing have been around for ages. No individual investor’s bookshelf is complete without these classics.
The Intelligent Investor Benjamin Graham
This book was first published in 1949. You might wonder what a book that is seven decades old can teach today’s investors. As it turns out, plenty. While market conditions might change, what the intelligent investor should do to make money in the market does not.
Benjamin Graham is considered to be the best investment advisor of the 20th Century, preaching value investing, a long-term investment strategy designed to insulate investors from mistakes.
The Intelligent Investor isn’t one of those bombastic, “I’ll show you how to make ONE MILLION DOLLARS in 24 hours!” books which may be the reason it’s stood the test of time.
Instead, Graham teaches investors to avoid the common mistakes that lead to significant losses. And as in a lot of situations, it’s often just as or more important to know what not to do than to know what you should do.
Readers will learn the basics needed to start investing and teaches the strategy of minimizing losses rather than trying to maximize gains.
Vital and indispensable, this HarperBusiness Essentials edition of The Intelligent Investor is the most important book you will ever read on how to reach your financial goals.
Winning the Loser’s Game: Timeless Strategies for Successful Investing Charles Ellis
Winning the Loser’s Game is another book doling out sound but distinctly un-sexy advice. Ellis shows us the common traps investors fall into and how to avoid them. The biggest trap merely is our own bad behavior.
Ellis was one of the first investing experts to write about the emotions behind our investing decisions which are usually not rational. He wants us to take the emotion out of investing.
He warns us against things like trying to time the market and to understand that the only factor in the trade-off between risk and reward is time.
That a long-term investment strategy is the “most powerful antidote to panic.” Ellis points out the danger of active trading, because of the fees and the tax implications, both of which significantly affect your profits over a long period.
With Winning the Loser’s Game, you have everything you need to identify your unique investment objectives, develop a realistic and powerful investment program, and drive superior results.
The Essays of Warren Buffett: Lessons for Corporate America
LMM loves the wit and wisdom of Warren Buffett. If you feel the same, you’ll enjoy The Essays of Warren Buffett. The book is a compilation of Buffett’s Berkshire Hathaway letters to shareholders arranged by theme.
Buffett tells us that all true investing must be based on assessing the relationship between price and value; anything else is speculation. Hoping the price will rise rather than knowing the price paid is lower than the value you’re buying.
When people ask LMM what to buy, we tell them to buy what they know. We stole this from WB, who instructs investors only to consider investing in businesses they are capable of understanding with a small amount of effort.
And our favorite investing advice from WB:
Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees. Those following this path are sure to beat the net results (after fees and expenses) delivered by the great majority of investment professionals.
A modern classic, its popularity and longevity over three decades attest to the widespread appetite for this definitive statement of Mr. Buffett’s thoughts that’s uniquely comprehensive, non-repetitive, and digestible.
There it is, from the font of all investing knowledge himself.
The Richest Man in Babylon George S. Clason
Not every book on investing has to be a long slog full of complicated terms and concepts. If you’d like a bit of lighter reading when it comes to the best investing books, The Richest Man in Babylon is for you.
The book imparts vital money lessons through parables set in ancient Babylon. Clason is credited with coining another favorite LMM phrase, “Pay yourself first.” The book contains general financial lessons, but there is plenty of investing advice.
Make Thy Gold Multiply: “Put each coin to laboring that it may reproduce its kind even as the flocks of the field and help bring to the income, a stream of wealth that shall flow constantly into thy purse.” Translated: Invest
Guard Thy Treasure From Loss: “Everyone is tempted,” Arkad relates, “By opportunities whereby it would seem that a man could make large sums by investing his money in most plausible projects. Often friends and relatives are eagerly entering such investment and urge him to follow.”
Translated: Don’t take investment advice from friends and relatives.
Ensure a Future Income: “No man can afford not to ensure a treasure for his old age and the protection of his family, no matter how prosperous his business and his investments may be.”
Translated: Invest for retirement.
This is probably my favorite of the best books on investing. It’s simple, easy to understand, and fun to read. It’s presented in such a way that it even makes a good “bedtime story” book for parents to share with children.
Providing financial wisdom through parables, 'The Richest Man in Babylon' was originally a set of pamphlets, written by the author and distributed by banks and insurance companies.
The Millionaire Next Door: The Surprising Secrets of America’s Wealthy Thomas J. Stanley William D. Danko
Millionaire Next Door did a lot to demystify millionaires. Many people thought to become a millionaire was this completely unattainable goal until the big one showed us, “Hey, if the wanker next door can do it, I can surely do it too!”
On the list of best-investing books, it’s also perhaps the most widely read. Rather than a book read only by investing nerds like many of the others on this list, Millionaire Next Door was a book club kind of book.
Millionaire showed us that it’s not really how much money someone makes; it’s how much they spend. This was a tremendous service to people. Most of us are not going to earn six-figure salaries, and the book showed us that we didn’t have to become millionaires ourselves.
The book lifted the curtain on the habits of millionaires. They drive old cars; live in modest homes in middle-class or blue-collar neighborhoods; don’t accumulate the “status symbols” their white-collar counterparts often do.
When it comes to investing, the millionaires next door grew their wealth with investments that maximize nontaxable income and minimize taxable income like 401ks and IRAs and they’re not active traders, instead, they use the long-term buy-and-hold approach.
The bestselling The Millionaire Next Door identifies seven common traits that show up again and again among those who have accumulated wealth. Most of the truly wealthy in this country don't live in Beverly Hills or on Park Avenue-they live next door.
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For Beginners
While some of the classic books are suitable for beginning investors, some of them are a little advanced for newbies. All of these books are appropriate for new investors whether they’re new because they’ve been afraid to invest, they just got their first “grown-up” job, or they’ve just not understood the importance of investing until now.
LMM has a real soft spot for beginning investors, so we chose this section of the best investing books carefully.
A Random Walk Down Wall Street Burton G. Malkiel
Does that name ring a bell? If you’ve been an LMM fan for a while, it might. Burton Malkiel is the Chief Investment Officer at Wealthfront, a company we have covered in the past.
A Random Walk Down Wall Street reviews popular investing techniques like technical analysis and fundamental analysis and finds them less successful than passive investment strategies. It also cautions against choosing an actively managed mutual fund based on past performance because a passively managed fund still wins over time.
This might sound like a lot for beginning investors, but it’s explained in a clear, easy-to-understand way. Additionally, the book explains basic investing concepts like indexing, the importance of diversification, and why time is the most important tool when it comes to growing our money through investing. If you don’t know what any of those terms mean, don’t worry! They’re defined for you in the book.
Malkiel also teaches beginning investors what the most common investing mistakes are and how to avoid them.
In A Random Walk Down Wall Street you’ll learn the basic terminology of "the Street" and how to navigate it with the help of a user-friendly, long-range investment strategy that really works.
The Little Book of Common Sense Investing Jack Bogle
RIP to Jack Bogle who died in January 2019. Bogle founded The Vanguard Group, and it’s not hyperbole to say that he democratized investing. Before Vanguard, investing was something only rich people could afford to do, but through Vanguard, he brought investing to the masses.
And he never lost the ability to speak to the lay investor, and there is no better proof of that than his book The Little Book of Common Sense Investing. The book explains index investing which gives investors an average market return while keeping investing fees low.
He explains why trying to beat the market is a fool’s errand because the more managers take, the less investors earn. That a buy-and-hold strategy is the key to long-term gains.
When you finally start investing, whether it’s through Vanguard,
Legendary mutual fund pioneer John C. Bogle reveals his key to getting more out of investing: low-cost index funds. Bogle describes the simplest and most effective investment strategy for building wealth over the long term
Investing Made Simple: Index Fund Investing and ETF Investing Explained in 100 Pages or Less Mike Piper
This one is for those with a short attention span. You can read this little book in one sitting because Mike Piper drills down complex issues into a few key points that any of us can understand. And Mike is the youngest of our authors by about 100 years.
He explains vital investing concepts like asset allocation, how to choose the best mutual fund, how to decide between a Roth and Traditional IRA, the most common mistakes investors make, and how to know how much money you’ll need to retire.
While The Richest Man in Babylon is my favorite of the best investing books on this list, if I had to recommend just one for new investors, this is the one.
A concise guide that demystifies the basics of index fund and ETF investing. Perfect for beginners, this book provides clear, straightforward explanations, helping readers understand the fundamentals of building a low-cost, diversified portfolio in just 100 pages.
The Four Pillars of Investing: Lessons for Building a Winning Portfolio William Bernstein
William Bernstein is a doctor and not the Ph.D. kind like several authors of investing books are; he’s a neurologist. When I’m trying to learn something new, I like things broken down into a few key components, and that’s what I love about this book.
Of course, there are a million and one things to know about investing, but unless investing is your full-time job, you only need to know a few of them. Four to be precise according to the good doctor.
The pillars are Theory, History, Psychology, and Business. The pillars come together to help you create a simple investment strategy including how to build the perfect portfolio
This is a comprehensive guide that explores the key principles of successful investing. The book delves into the history, psychology, and business of investing, providing readers with a deep understanding of how to build a strong, diversified portfolio and achieve long-term financial success.
One Up on Wall Street Peter Lynch
I’ll admit I was put off by the title of this book. We know that even professional investors don’t beat the market so what chance do we little peon investors have? A friend convinced me to read it though, and I’m glad I did.
Lynch isn’t telling you that you can get better results than professional investors, he’s telling you that you don’t need to pay a professional to get positive investing results. And at LMM, we like that message. Why pay someone to do what you can do on your own, especially when they aren’t beating the market anyway?
This book is made for the layperson. You don’t need to understand high-level investing concepts to be a successful investor. Instead, by scrutinizing things in everyday life and noting how various companies and industries affect everyday life, you can make money investing.
Remember earlier when we talked about buying what you know? Lynch takes that a step further by listing the criteria you need to decide if what you know (a product and the company that makes it) is a good investment. He also advocates buy and hold which is a prerequisite to making it onto our list of best-investing books.
America’s most successful money manager tells how average investors can beat the pros by using what they know. According to Lynch, investment opportunities are everywhere.
The Funniest Books on Investing
Yes, we know that investing and personal finance are not the funniest, most bone-tickling subjects in the world but if I can take a moment to pat LMM on the back, I think we present money in a way that is humorous and entertaining. Which isn’t bloody easy I can assure you. Anyone can make you laugh with a dick joke. We have to do with index fund jokes.
That’s why we couldn’t leave a few humorous books off our list of the best books on investing. I mean, you probably won’t pee your pants laughing, but you’ll find a chuckle or two.
Heads I Win, Tails I Win: Why Smart Investors Fail and How to Tilt the Odds in Your Favor Spencer Jakab
Jakab is a former Credit Suisse analyst who has written for the Wall Street Journal. He has seen investors do some really dumb stuff and came to understand that humans tend to overestimate their own abilities whether it comes to renovating the bathroom themselves or investing themselves.
Given that we’re all just dumb primates, he argues that we would be better using a set-it-and-forget-it approach to investing because the more we try to do, the more we screw it up. He tells us when it comes to investing; we should be cheap and lazy.
“That’s really not the greatest advice in other aspects of life, but it is really going to be very much to your advantage. The culprit of poor returns is overconfidence and hyperactivity, not knowledge.”
To that end, Jakab loves index funds describing them as “a plain vanilla product that is extremely straightforward, low-cost, and doesn’t need a lot of attention from you.”
”I’ll
Tweet ThisWhat’s not to like about a book that advises us to be cheap and lazy, something that comes naturally to so many of us!
This is a book that aims to help individual investors navigate the complex world of investing by exposing common mistakes and myths that can derail financial success.
The Only Investment Guide You’ll Ever Need Andrew Tobias
This book isn’t funny in the same way Heads I Win is funny but because the author is witty and knows his way around a good turn of phrase. It’s also more than an investing guide; it’s a pretty comprehensive personal finance book.
But the investing advice is good, simple, and straightforward. Beware of financial advertising. It’s a bit like food advertising. The food that’s good for you (vegetables, fish, etc.) doesn’t have commercials. It’s only the crappy stuff that’s bad for you that gets commercials (cereals, chips, etc.).
Use tax-advantaged accounts to save for retirement and college expenses. Invest a fixed amount of money each month of your working life into a no-load, low-cost index mutual fund.
You can’t consistently achieve higher returns than the market average no matter how much time and effort you devote to the task. Investing in commodities, coins, stamps, cars, collectibles, etc. is not worth it for amateur investors. Do not invest money you’ll need in five years or less. Diversify your portfolio.
All good, straightforward, timeless advice.
Using concise, witty, and truly understandable tips and explanations, Andrew Tobias delivers sensible advice and useful information on savings, investments, preparing for retirement, and much more.
Reading is Fundamental
All of the books on this list are enjoyable in their own way. We deliberately didn’t choose anything too dry, or that was 8,000 pages long. We don’t expect you to read every book on this list but pick one or two. You’ll find something you like, and you’ll learn a thing or two. Happy reading!
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Mark spent over 30 years as a senior finance executive in Private Banking, Asset Management and Alternative Investments. Mark holds a BS in Accounting from Brooklyn College, an MBA in Finance from Pace University as well as being sponsored to attend The Wharton School Executive Development Program.
