As the Chinese saying goes, you can find gold in books. Indeed, you can, especially if the book you are reading is on the topic of investment. To become a successful investor, you have to be an avid book reader. Reading will help you pick up vital skills and shapes your thinking that aligns with those of a successful investor. There are six investment books that you must read, especially if you are a newbie investor looking to succeed as an investor.
1. Rich Dad, Poor Dad by Robert Kiyosaki
‘Rich Dad, Poor Dad’ revolves around Robert Kiyosaki’s real father (poor dad) and the father of his best friend (rich dad). In this book, he shows how the different ways in which these two men in his life think about money and investing.
While the legitimacy of ‘Rich Dad, Poor Dad’ might be questionable, the financial concepts Robert Kiyosaki writes about are vital for newbie investors to understand the why they should be investing. The cashflow quadrant concept was one of the financial concepts that stood out most among the many others. Robert Kiyosaki also discussed about the concept of OPM (other people’s money) and how one can leverage on OPM to achieve financial freedom.
Find Rich Dad, Poor Dad on Book Depository here.
2. The Intelligent Investor by Benjamin Graham
Ask anyone who invests, and they can probably talk to you for a day about ‘The Intelligent Investor’. It is a book that almost every novice investor has read. It is also THE book that every novice investor MUST read en route to becoming a successful investor.
‘The Intelligent Investor’ is a book written by Benjamin Graham, i.e. the Father of value investing. He is also the mentor of Warren Buffett, who is THE top investor in the world. Warren Buffett was under the tutelage of Benjamin Graham when Warren Buffett studied under Benjamin Graham at Columbia Business School in 1951.
In ‘The Intelligent Investor’, Benjamin Graham detailed his philosophy about value investing to the world. It teaches you how to buy undervalued stocks that were over-penalized by the market. According to Warren Buffett, he also picked up the mental approach of value investing while reading ‘The Intelligent Investor’.
Find The Intelligent Investor on Book Depository here.
3. One Up On Wall Street by Peter Lynch
Apart from value investing, growth investing is probably the next most famous investing term anyone knows. Growth investing was pioneered by Peter Lynch, who used to be the fund manager of the Magellan Fund. From 1990 to 1997, Peter Lynch’s Magellan Fund returned an average compounded annual growth rate of 29.2%.
In Peter Lynch’s ‘One Up On Wall Street’, he imparts the skill of identifying fast-growing companies using publicly available information. Turnarounds, cyclical and fast-growing companies were amongst his favourite types of investment.
Find One Up On Wall Street on Book Depository here.
4. Principles by Ray Dalio
Ray Dalio is the founder of investment firm Bridgewater Associates, which is currently the largest hedge fund in the world. Throughout the course of his career, he has learnt many soft skills that helped him to turn Bridgewater Associates into the hedge fund with the largest assets under management (AUM). ‘Principles’ is a book where Ray Dalio shares his investment and management philosophy and thinking with the world. Not only does it teach you how to become a better investor, it also shapes your thinking as a manager.
Find Principles on Book Depository here.
5. The ‘Little Book’ series
Most people do not read because they do not have time to read. If you are one of them, then the ‘Little Book’ series is the one for you. The ‘Little Book’ series consists of titles that teach you the basics of investing without beating around the bush. If you are just starting out, you can consider ‘The Little Book of Common Sense Investing’ as your entry book. It gives you an overall understanding of how you should be thinking when viewing investments.
If you wish to explore more niche areas, you can easily find them by googling for ‘The Little Book of (insert your topic here)’. The series teaches you about anything from value investing to commodity investing. Who knows, they might even have one ‘The Little Book of Cryptocurrency’ someday.
Find the Little Book of Common Sense Investing on Book Depository here.
6. Common Stocks and Uncommon Profits by Philip Fisher
Another book that heavily influenced Warren Buffett in shaping his thinking is Philip Fisher’s ‘Common Stocks and Uncommon Profits’. It is another classic investment book that you shouldn’t let it slip through your reading list.
Philip Fisher’s approach is to find a company that is not only good but also cheap. At the same time, the company should also have large growth potential. For Philip Fisher, there are 15 things he looks at in a company to decide if it will help him to uncover winning stocks and achieve huge (uncommon) profits. These 15 things are detailed in his stock checklist which he included in ‘Common Stocks and Uncommon Profits’.
Find Common Stock and Uncommon Profits on Book Depository here.
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