The Best Books On Investing
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- How You Can Beat The Market
- Why You Need An Investment Strategy
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- Learn From The Stock Market Greats
- The Best Books On Investing
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- How To Buy Foreign Shares
- How to invest in index funds
A great way of improving your investment skills is to read the thoughts of others. The investment scene is littered with books that outline the principles used by many legendary stock pickers. While by no means covering every single publication, this feature will help narrow down the field of best books on investing for the Foolish stock picker.
The Best Investing Books of 2021
First, a word of caution.
Any book, regardless of who wrote it, should not be viewed as gospel. Unfortunately, there’s never been an author yet who has distilled a winning stock-picking strategy into an easy-to-replicate formula. Books can help you develop your own personal investing guidelines, but don’t regard them as a quick route to riches.
One other point to note is that many of the best books on investing are often directed at a US audience. While the important philosophy and strategy parts should be readily translatable, UK readers will have to put up with dollar signs plus some unfamiliar company names and terms.
Best Skill-Building: One Up on Wall Street
For beginners, one of the best investing books is undoubtedly Peter Lynch’s One Up On Wall Street. Lynch run the Fidelity Magellan fund in the US from 1977 to 1990 and generated an astonishing average annual return of 29.2% over that time.
The real beauty of Lynch’s book is the easy-going review of the simplistic stock picking style that brought him so much success.
Low on number crunching but high on anecdotal stories, readers are given a clear picture on how to get off to a good start in the markets.
Best Buffett Books
You’re spoilt for choice for books about the legendary investor Warren Buffett. Unfortunately, the man himself has never summarised his investment secrets in a book of his own. But that’s not stopped many others from looking at his investment record and trying to formulate his approach.
But while books such as The Warren Buffett Way and The New Buffettology give excellent primers on Buffett and his investment philosophy, they mostly lose out on the “how to” part. It’s also worth pointing out that most books about Buffett focus on his most famous long-term investments, such as Coca-Cola, Gillette, and GEICO.
Another useful Buffett book is the Warren Buffett Portfolio. This book concentrates on Buffett’s investment style rather than attempting to dig into his stock- picking secrets.
If you’re interested in Buffett’s life story then The Snowball: Warren Buffett and the Business of Life has everything you want to know and more.
Best Essay Collection: The Essays of Warren Buffett
Another great way to learn from Buffett is direct from the man himself. It’s worth visiting his Berkshire Hathaway website to read his Shareholders’ Letters, which are all available for free.
Alternatively, consider the Essays of Warren Buffett. This is a user-friendly version of Buffett’s letters, it being a book that has rearranged his thoughts into subject order. There have been various editions of this book published over the years so while older versions may be a little cheaper they won’t incorporate Buffett’s most recent letters.
Best Overall: The Intelligent Investor
But do you want to know what Buffett himself calls one of the best books on investing?
Well, the answer is The Intelligent Investor, by Benjamin Graham. In a sometimes difficult-to-read book, Buffett’s mentor lays down what is regarded as the first ever set of investment principles.
Graham’s speciality was that of “value” investing, principally buying companies valued at below their net asset worth. He’s also famous for the concept of “margin of safety”, which aims to improve the odds of investors making a profit on their purchases.
Keeping to the value theme, a book by David Dreman comes highly recommended. Although repetitive in parts, Contrarian Investing Strategies puts forward a sound argument on behalf of shorter-term investments in lowly rated companies, rather than to persist in looking for companies with longer-term growth potential.
Another value argument is supplied by John Neff through his book Neff on Investing.
Runner-Up, Best Overall: The Little Book of Common Sense Investing
Written by the founder of Vanguard, Jack Bogle, The Little Book Of Common Sense Investing is one of many in the Little Book series but arguably one of best investing books ever written. It’s certainly one of the easiest to read.
It tells you how anyone can use index funds to profit from the long-term growth of the stock market.
Best for Beginners: A Random Walk Down Wall Street
Written by Burton Malkeil, A Random Walk Down Wall Street argues the case for investors to forget all about stock picking and plump for an index tracker instead.
Malkiel believes that returns from individual shares and funds are unpredictable and hence take a random walk.
For a UK perspective on the same subject, Tim Hale’s Smarter Investing is well worth checking out.
Best Classic: Security Analysis
The oldest book on this list – first published in 1934 – is another written by Benjamin Graham. It’s still regarded as one of the best books on investing, nearly a century after it was initially written.
It’s been updated several times over the years, of course, and is heavily focused on the numerical analysis of companies and their investment characteristics.
Best Memoir: Rich Dad Poor Dad
First published in the late 1990s, Robert Kiyosaki’s book has sold tens of millions of copies.
It tells the tale of how he learned to invest and build his wealth from lessons taught by a father of a friend (the Rich Dad) rather than his own father (the Poor Dad).
However, this book has many critics who certainly wouldn’t include a list of best investing books, casting doubt both on the methods proposed and how much of the text is fable and how much is based on reality.
Best for Basics: The Only Investment Guide You’ll Ever Need
This is another oldie, first published in the late 1970s.
Written by Andrew Tobias, it also covers a lot of the basics of personal finance, ensuring you have money to invest in the first place, before moving onto what you should invest in and how to go about it.