Books on Investing

In order to understand investing, I needed to read books on investing written by and about the greatest investing minds. The best protection against making bad investing decisions is to understand investing. I do not believe someone can truly understand investing without reading at least a few high quality investing books.

I've read many investing books and I classify each one with 4 ratings. One rating is related to how much understanding the book can relate to someone - I call this the "quality" rating. The rating most likely to be important to you is the beginner rating -- which is related to how well geared that book is to beginner investors. I will also give the fun rating -- which is basically how enjoyable the book was to read.

Some books on investing are really great at helping understand investing. However, they should not be the first books read by a beginner investor. For example, Benjamin Graham's The Intelligent Investor is, in my opinion, the best investing book out there. Warren Buffett agrees with me. However, it should not be the first investing book read by beginners because it is long, dense, and dry. Therefore, I give it a high quality and overall rating but relatively low beginner and fun rating (even though I enjoyed it immensely).

Below, I will give quick reviews of some of some quality books and give you the appropriate ratings. I also link to a place where you can buy a copy of the book if you like.

The Best Investing Books

The Random Walk Guide To Investing by Burton G. Malkiel

Beginner Rating: 5/5

Understanding Investing Rating: 4.5/5

Fun Rating: 3.5/5

All of the details in this book are great for beginners. He covers all the most important concepts and breaks them down into simple pieces. He does this in a concise and clear manner. If you follow his advice exactly, you would do better than most investors out there.

Burton G. Malkiel is a professor of economics at Princeton. He was also a director of Vanguard 28 years. He, therefore, clearly believes in index funds. Just my kind of guy.

This book is a cleaned up and more concise version of his classic A Random Walk down Wall Street.

I highly recommend this book for any investing beginner. This is the best book for beginner to start with and intermediate investors can probably also get something out of it too.

The Intelligent Investor: The Definitive Book on Value Investing by Benjamin Graham; updated by Jason Zweig; foreword and appendix by Warren E. Buffett

Beginner Rating: 3/5

Understanding Investing Rating: 5/5

Fun Rating: 3/5 (5 for me and anyone else who enjoys reading about investing)

This is the best book on investing that you can buy. Hands down. It's subtitle should be, "The Definitive Book on Investing." Value investing is the style that Benjamin Graham prefers, but he doesn't focus on value investing throughout the whole book. All of the great many investment wisdom is in here apply to investing generally.

There are a few drawbacks, however, to this book -- it is dense and dry. Despite that, since I enjoy the subject matter so much I thoroughly enjoyed this book and couldn't put it down as if it were a gripping thriller. It is so jampacked full of investing wisdom that I kept wanting more and more. I could feel my perceptions change significantly from chapter to chapter. When I was finished with the book, my view of investing had change dramatically.

Benjamin Graham was Warren Buffett's mentor. The basics of Buffett's investing are here in this book. Zweig, a personal finance columnist for the Wall Street Journal, adds a modern context to each chapter. Further pointing out that Graham's principles are timeless.

If you are truly serious about understanding investing, you must read this book. However, unless you truly enjoy reading about investing, this shouldn't be the first investing book you read, but it should definitely be the second or third.

Good Investing Books

The Automatic Millionaire by David Bach

Beginner Rating: 4/5

Understanding Investing Rating: 3/5

Fun Rating: 4.5/5

This is a short book that gets to its points quickly and won't waste your time. A beginner can pick this book up as their first investing book and not feel lost. It is an entertaining and easy read.

He puts forth three basic concepts to make you rich - pay yourself first, have a cash cushion, and own a home. He wraps those concepts into the idea that they can, and should, all be automatic.

This is a good book for beginner, but it's a little bit too much emphasis on owning your own home. Considering this was written during the housing boom, this is not surprising at all. Furthermore, his recommendation to automate as much of your finances as possible becomes more relevant every day.

I recommend this book for beginners, but not before any of the above books unless reading about investing really leaves you bored. In that case, this'll be a good book to get your attention.

The Little Book of Common Sense Investing by John C. Bogle

Beginner Rating: 4/5

Understanding Investing Rating: 4/5

Fun Rating: 3/5

Bogle founded Vanguard -- the best source of low-cost index funds. He was also their CEO, but is now retired. He is not the most unbiased source. He does claim in this book that he does not get money from persuading people to use index funds. His words do, however, ring true.

In this book Bogle touts index funds. He brings up many valid reasons why index fund investing usually beats out every other method. Index funds beat 80% of mutual funds. Index funds are low cost, simple, tax efficient, and require very little effort to manage.

His praise for index funds are high. They are not perfect, but he's right in saying that they are the best option for most people.

This is a good beginner's book, but to someone who's read a lot of investing literature it is mostly redundant.

Buffett: The Making of an American Capitalist by Roger Lowenstein

Beginner Rating: 4/5

Understanding Investing Rating: 4/5

Fun Rating: 5/5

This is an interesting book about Warren Buffett's life with a focus on his business and investment dealings. When I bought this book I thought I was just buying a biography. I was surprised to discover that reading about all the different decisions that Buffett made and why he made them actually teaches about the basics of investing and business.

One huge important thing I got out of the book was that Buffett is incredibly intelligent and this was noticeable even early in his life. On top of being brilliant, he was extremely focused and always worked hard to make money -- even as a young child. Then again, it may be hard to call it work because I'm pretty sure that Buffett tremendously enjoys investing.

The book was originally written in the 90s and, therefore, only goes up to about the mid-90s all the way from when Buffett was born during the Depression. With the latest additions, you do get a brief update up to the mid-2000s.

I thoroughly enjoyed this book because Buffett is an interesting and unique person. He was very little like the person I expected to be before start of the book. He's nothing like the typical playboy billionaire image that we have of super-rich people. I highly recommend this book, but not as one of the first investing books for beginner to read.

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