There is so much to learn when you are learning to invest.
You have to learn everything from where to invest, how to analyze stocks, and even finding your own strategy. There are great resources to help you learn these things, but one of the best ways to learn about finances is through books from people who are advanced investors.
These are five investing books that are great for beginners that will give you all the basic information you need - and even a little more.
Benjamin Graham's The Intelligent Investor is a must-read for any beginner investor.
Graham taught investing and finances to Warren Buffet. This book will give you a very in-depth introduction to investing. This book focuses on laying out a framework for evaluating a business and its stock, based on its financial value.
Graham believes in "value investing," which is a long-term investing strategy that is a fundamental aspect of being a successful investor. While this book was written in 1949, many people find value in Graham's examples, comparing them to current financial news to help you understand these basic principles.
This book is the one you want to make sure you read to understand the basics of investing.
In addition, this information will allow you to use this knowledge when reading other investing books because you'll know what a "margin of safety" is, for example. Investing doesn't have to be difficult, but like math, there are basics that you need to be able to grow your understanding.
Burton Malkiel's book is a great basic book for an investor to read about different investing philosophies.
"The Intelligent Investor" believes in evaluating a business, and Malkiel makes the argument that it might not be the best strategy. Reading two different thoughts can help you to start finding your own strategy.
People determine a company's value, and this allows for a company's stock price to match its worth. Prices change because people determine a company's value based on new information that impacts its wealth.
A Random Walk Down Wall Street is a great read for a new investor because investing is so volatile. You can double your money one day and lose it all the next day. This can be hard to stomach for a new investor, but this book does a great job of reassuring you that this is a normal part of the stock market.
In addition, this book has been updated to discuss modern investing questions like tax-loss harvesting, cryptocurrency, and automated investment advisers. It's a great read to help you go through tough investing moments.
While you may not know the name John Bogle, he left behind a new way to invest through index funds.
Bogle believed that index funds allow people to have a diverse portfolio at a lower cost and allow them to keep more of their money. Index funds like the S&P500 allow you to invest in 500 companies without needing to own an entire share of each.
It's an easier way for an average person to get into investing without risking their money. Bogle also advocates for a common sense approach to investing - a diverse portfolio that you hold for a long time.
The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns is a quick read for a beginner investor, which makes it easier to digest the information. He shares basic investing skills that are good for a beginner to hear.
It's more fun to invest in what is trending and find a way to double your return, but to be successful, you need to use common sense. If you don't want to risk your money, then diversify and hold for a long time.
Peter Lynch is one of the best investors, guiding the average person on how they can beat the professionals on Wall Street.
In One Up on Wall Street, he talks about how an average person can find investment opportunities in their daily lives. As we live, we can pay attention to the brands that we see. Some may even be up-and-coming brands.
If we pay attention, an average person can find companies to invest in before analysts discover them. When you get in early, you can tenfold your stock appreciation. Lynch explains how to find these companies by reviewing their financial statements and going over what information really matters.
This book is easy-to-follow and one that should excite an investor. We all know those stocks that we should have bought when a friend told us about them. Think of Apple in the early 2010s. This stock has grown so much, and if you knew Lynch's analysis techniques, you might have been able to grow your initial investment.
"Learn to Earn" by Peter Lynch pairs nicely with "One Up On Wall Street."
Both books discuss the same principle that there are investment opportunities everywhere. However, in this book, he goes over the basics of "One Up On Wall Street" in more detail. Lynch believes that we need financial education to find the right stocks around us daily.
For example, everyone drinks Coca-Cola, and it is a household brand, but few people invest in this company. Why is that?
Lynch believes we don't have the right education to make financial decisions, and he goes over in more detail what you need to know to find the right stocks that will grow over time.
Reading each of these Peter Lynch books will give you the foundation you need to know how to find stocks that no one is talking about (but ones that everyone might be wearing or drinking) and how to look at these companies' financial information to make an informed decision if you should invest in this company.
It's a fun approach to finances that you can invest in what is popular, but not in the same way as a popular stock.
Investing books can seem daunting, especially for a beginner.
Some of these books may seem like you need years of experience, but give yourself time to digest the information, practice the advice, and even re-read these books.
Investing is a learning process so allow yourself to enjoy it. The key to investing is to buy good stocks or index funds and hold them for a long time. It's not about buying something that will double your money in a day.
These books will teach you these basic principles and more.