If you’re a beginner investor looking to try your hand in the stock market, the first and most important lesson you’ll learn is likely that educated investing generally results in profits. So naturally, before you get started and as you learn about the stock market, you’ll want to access as much information as possible.
One great way to learn the ins and outs of the stock market, investing strategies, and how to become a successful investor is to read. There are countless books on the topic of successful investing designed for investors of all levels of expertise.
The Best Investing Books for Beginners
Although some books will get into the intricacies of technical strategies that are difficult for even experts to understand, there are plenty of books designed to simplify the path to profits in the stock market that are either geared specifically toward beginner investors, or are written in a way that makes the information easy to understand.
Here are the best investing books that are focused on turning the beginner into a successful investor:
1. “The Intelligent Investor” by Benjamin Graham
“The Intelligent Investor” is often viewed as the definitive book on value investing. Written by Benjamin Graham, the book provides details and guidelines for the value investing strategy from one of the world’s most respected experts on the topic.
In particular, the book focuses on six key principles:
- Know the Business You’re Investing In. The investment strategy outlined by “The Intelligent Investor” is centered around building a deep understanding of the business you’re investing in.
- Know Who Runs the Business. In the book, Graham hammers home the importance of knowing everything you can about the management team leading the companies you invest in.
- Long-Term Investment Opportunities Are the Goal. Value investing is a long-term play. In the book, you’ll learn more about how long-term investing is proven to outperform short-term buys and sells for profits.
- Investments Should Be Chosen Based on Value Rather Than Popularity. Value is at the center of any value investing strategy. Graham hammers home the idea that investments should be chosen based on valuation, rather than how popular a stock is.
- Always Focus on Safety. The Intelligent Investor also outlines strategies for hedging your bets and maintaining a diversified portfolio with proper asset allocation in order to protect yourself from significant losses.
- Have Confidence in Yourself. Finally, Graham reminds you that you are your most valuable asset. Ultimately, an intelligent investor is a confident investor, and a confident investor is a successful investor.
2. “A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing” by Burton G. Malkiel
“A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing” was designed to be an all-inclusive guide to Wall Street. Written by Burton G. Malkeil, a former Princeton economist, the book discusses several different techniques investors, economists, and analysts use to price stocks and is a must-read for all beginner investors.
As with many books on the topic of Wall Street, “A Random Walk Down Wall Street” has undergone various revisions. Most recently, Malkiel added in detailed information about cryptocurrency investments and tax-loss harvesting strategies.
Surprisingly, this is one of those investment books that goes down intricate rabbit holes that would generally be quite complex, hard-to-understand topics reserved for the experts. However, Malkiel’s book does a great job of explaining these highly complex topics in a way that even the most novice of investors can understand.
Where does the “random walk” part of the book’s title come from? Malkiel refers to the random walk theory often in his book, pointing out that prices in the market are random and nearly impossible to predict. Therefore, by focusing on value rather than sporadic movement of stock prices, investors have a much higher probability of success.
3. “One Up On Wall Street: How to Use What You Already Know to Make Money in the Stock Market” by Peter Lynch and John Rothchild
The average investor believes that the institutional players have the advantage. In his book, “One Up On Wall Street: How to Use What You Already Know to Make Money in the Stock Market,” legendary mutual fund manager Peter Lynch aims to challenge that theory.
In the book, Lynch and his co-author John Rothchild explain a long list of advantages the average investor has over the institutional investor. Moreover, the book outlines how investors can play to these advantages to outperform even the most highly regarded experts.
In “One Up On Wall Street,” Lynch urges individual investors to invest in what they know. Rather than following the hot topics of Wall Street, Lynch suggests that investors are better off turning to the brands they know, love, and use on a daily basis for returns in the stock market.
It’s a simple idea: new investors shouldn’t overexert themselves trying to learn about the next hot vaccine or computer chip if they have no intention of getting the vaccine or buying high-end computers. Instead, by focusing on what you know, it’s easy to pinpoint the top performing brands and, therefore, the investments that are most likely to turn a profit for you.
4. “Common Stocks and Uncommon Profits and Other Writings” by Philip A. Fisher
Often regarded as the best investment book for beginner investors, “Common Stocks and Uncommon Profits and Other Writings” by Philip A. Fisher was originally published in 1958. Since then, Fisher’s investment philosophies have been studied and practiced in financial markets by financiers and investors for decades.
Like the vast majority of books on this list, Fisher warns that constantly trading in and out of stocks is a dangerous concept that can lead to significant losses. As a result, whether you’re a beginning investor or an expert, your best bet is to make long-term investments.
In his book, Fisher outlines 15 key points that he uses to evaluate a stock before making a purchase. Some of these points include:
- Whether the company has products that it is selling and generating a profit from.
- Whether management of the company has the determination needed to continue innovation and stay on top of the competition.
- How effective research and development efforts have been in relation to the company’s size.
- What the company is doing in order to improve profit margins.
- In the near future, will the growth of the company require significant financial resources?
Beyond the points Fisher uses to evaluate an investment opportunity, the book outlines 10 major issues that investors should look for before purchasing a stock, an argument for conservative investing, and how you can combine multiple investing strategies to maximize your profits.
5. “The Essays of Warren Buffett: Lessons for Corporate America” by Lawrence A. Cunningham
Warren Buffett is one of the most successful investors to have ever lived. Moreover, he is highly regarded among the investing community from beginner investors to the gurus they follow. So, Lawrence Cunningham hit the nail on the head when he compiled a list of Buffett’s writings on everything business, from investing to management.
In “The Essays of Warren Buffett: Lessons for Corporate America,” Cunningham shares a collection of famous shareholder letters from Buffett to Berkshire Hathaway shareholders. The letters are arranged by topic to make finding Buffett’s view on just about anything related to investing and management relatively simple.
Reading these letters, you’ll quickly find that Buffett is a buy-and-hold investor who believes the best route for the average investor is to invest in low-cost ETFs rather than individual stocks or high-cost hedge funds.
In fact, in various letters to shareholders, Warren Buffett has famously stated that ETFs generally outpace the performance of hedge fund managers in terms of stock market returns.
As yet another long-term value investor, the lessons you’ll learn from Buffett center around finding companies that the overall market has largely undervalued in order to generate outsize stock market returns. Of course, if you don’t have the time or expertise to perform the required research, low-cost ETFs are always a great option.
Moreover, this book isn’t just a book for investors. Corporate managers can learn quite a bit by looking into how one of the most successful investors in the world expects a company to run.
6. “The Little Book of Common Sense Investing” by John C. Bogle
John C. “Jack” Bogle was famous and highly respected in the investing community. As the CEO and founder of the Vanguard Group, he was one of the most highly regarded investors on Wall Street. Where else would you want to learn about index fund investing but from the man who was behind one of the largest index funds on the market?
Sure, the book may be somewhat self-serving, but who cares? It delivers on its promise.
“The Little Book of Common Sense Investing” challenges investors to take the common sense approach of focusing on quality, low-cost index funds, rather than trying to time the market or pick the individual stocks that may outperform the market.
Throughout his book, Bogle used various third-party resources to validate his opinions and hammer them home so investors who read it are more likely to follow his advice. Although the former CEO of Vanguard’s obvious biases toward index funds are clear in the book, young investors stand to learn a lot from the teachings of one of the most successful index fund managers in the world.
7. “Broke Millennial: Stop Scraping By and Get Your Financial Life Together” by Erin Lowry
Erin Lowry is known by her followers as the Broke Millennial, which makes this book on building wealth the perfect option for the young investor. This book is written by millennials, for millennials, and teaches lessons in a way that millennials will understand best.
Often found on lists of the best personal finance books, “Broke Millennial: Stop Scraping By and Get Your Financial Life Together,” discusses a wide range of topics from personal finance to investing, and everything in between.
Ultimately, the book is designed to guide its readers to wealth by cutting down on spending and debt, and shifting their focus to savings and investing in an effort to build overall financial stability.
8. “If You Can Win” by William J. Bernstein
With only 16 pages between the covers of the book, “If You Can Win” by William J. Bernstein is by far the shortest book on this list. Nonetheless, beginner investors have quite a bit to learn in those short 16 pages.
The goal of the book is to break a successful investing strategy down in a way that a 7-year-old would understand it, and Bernstein does a great job of doing just that.
Perhaps most impressively, Bernstein outlines how just 15 minutes of work per year will give you all you need to outperform 90% of investing professionals in the long-run, which will ultimately make you a millionaire over time.
That’s a pretty big promise to make, but the long-term, no-nonsense investing strategy outlined by Bernstein has the potential to fit the bill.
9. “The Behavioral Investor” by Daniel Crosby
Daniel Crosby is a New York Times bestselling author. So it’s no surprise that his book, “The Behavioral Investor,” has garnered quite a bit of attention. But the fact that the book is written by a famous author is far from the only reason for its popularity.
In the book, Crosby — a renowned behavioral and social expert — outlines why human beings simply aren’t wired to be great investors. Unfortunately, much of our thought is driven by emotion, and as beginner investors hear time and time again, emotion can result in devastating losses to an investment portfolio.
In “The Behavioral Investor,” Crosby outlines strategies that can be used by both beginner investors and expert investors to realize when emotions are taking hold and how to set those emotions aside in order to become a more successful investor.
10. “Making the Most of Your Money” by Jane Bryant Quinn
A must-read for beginner investors, “Making the Most of Your Money” by Jane Bryant Quinn is masterfully written. Although this book is not specifically focused on investing, it covers various aspects of investing in an easy to understand way ideal for beginners.
Moreover, following the lessons in the book will lead to an improved state of financial wellness overall. In fact, “Making the Most of Your Money” has been named one of the best personal finance books on the market today.
Throughout the book, Quinn guides readers through every stage of life, from starting your first job to starting a family, and eventually to retirement. Moreover, the book gives a detailed view of the pros and cons of each major financial decision you’re likely to make along the way, including various important investment decisions.
As a beginner investor, the most important activity you can be doing today to prepare for tomorrow is learning. By taking the time to read the books listed above, newcomers to the stock market will have the ability to work their way to becoming expert investors.
These books are only a small selection from the vast universe of investing and personal finance literature — but they give beginners a solid foothold to get started on the path to building wealth and achieving financial independence.