Maybe you’re automatically funneling payroll deductions into your 401(k) account. Or you’ve dabbled in crypto or, God forbid, bought a meme stock or two on Robinhood.
But tweets, articles from Google searches and Instagram screenshots of stock charts aren’t enough to make you a good investor; you need to go deeper. And going deeper means reading books.
There are many great books about investing, many fewer about personal finance. But not all are suitable for the novice investor.
I’ve picked four every new investor should read about investing and one must-read on personal finance. They’re all easy to read, too.
‘The Little Book of Common Sense Investing’ by John Bogle
Most of the media and Wall Street call Warren Buffett the most influential investor of the past century. But as Buffett’s star and performance fade, the legacy of John Bogle, pioneer of the index fund and founder of Vanguard (which now manages more than $7 trillion), towers above his. Even Buffett conceded Bogle’s creation had surpassed his own: he recommends investing in index funds and is instructing his heirs to put 90% of their money into them, too.
This compact volume distills Bogle’s decades of investment wisdom into barely more than 200 pages. It sounds the main notes of this investing giant’s philosophy: Choosing winning stocks or actively managed mutual funds is folly; instead, buy the most broadly diversified index funds, keep costs to a minimum and let the twin miracles of steady investing and compounding do the rest.
More on the power of compounding: To get rich investing, the power of time beats a lucky stock pick
‘Winning the Loser’s Game’ by Charles D. Ellis
The eighth edition of this investment classic, originally published in 1985, arrived earlier this year, and its author sat down for a Q&A with MarketWatch. Ellis was a Bogle disciple (he served on Vanguard’s board and co-chaired Yale’s investment committee with the late, great David Swensen) and he makes the argument for low-cost index funds from a different angle: Not only can’t individuals win the loser’s game of beating the market; even professionals can’t.
So-called mediocre index funds beat 75% of all funds. And investors ultimately become winners by not losing.
‘Extraordinary Popular Delusions’ and the Madness of Crowds’ by Charles Mackay and ‘Manias, Panics and Crashes’ by Charles P. Kindleberger
These two investing classics together recount some of the biggest manias in modern market history from Tulipmania to the South Sea Bubble (which almost ruined one of the great minds in human history, Sir Isaac Newton) to the 1929 stock market crash and beyond.
Mackay’s account is historical while Kindleberger, a former professor at MIT, is more analytical, though the book is quite readable. Kindleberger lays out how crises develop,…
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