Much has been written when it comes to investing. Many people have written about it far better then I ever will, so here are some suggestions of good books and documents every beginning investor should read.
Investing for Dummies by Eric Tyson
The “For Dummies” books are always a good place to start with any topic. In this case I’ve linked to the English version that caters more to Wall Street. If you live in a different country than the United States, chances are that there is a “For Dummies” version for your country and in your language as well. The advantage of getting the book in your own language is that it will probably handle market specific topics from your national stock market, which is always a good place to start.
Investing for Dummies handles every topic about the stock market in an easy and accessible way. The book is perfect for beginners and explains all the important elements when it comes to investing. It helps with evaluating risk and returns, building a healthy portfolio and choosing a brokerage firm that caters to your needs. Even for more experienced investors it can be a great addition to their collection. Start here if you are completely new to investing.
The Intelligent Investor by Benjamin Graham
An oldie but one of the best books about investing ever written. It shouldn’t be a secret that I’m a huge fan of Benjamin Graham’s principles when it comes to investing. The Intelligent Investor will not tell you what to invest in, but it will teach you sound investing principles that have withstood the test of time. Although the book is old (the first edition was published in 1949) and some information is quite dated, the message it conveys remains solid.
Since 1949 the book has been revised multiple times. The most recent edition (the one I bought) is from 1973 and is a whopping 640 pages thick due to added commentary by Jason Zweig (a finance columnist for The Wall Street Journal). The one I linked in the image is a re-issue of the 1949 version of the book and bit more true to the original text. With 269 pages this edition is also a little less scary…
The Warren Buffett Way by Robert Hagstrom
Warren Buffett is the most successful investor of our time. His investment company Berkshire Hathaway has continuously beaten the market multiple years in a row. It’s a shame he has never written a book himself, but The Warren Buffett Way describes his ideas and philosophies in the best way possible. Warren Buffett is known for his consistent approach when it comes to buying stocks (or in more recent years: complete companies). Principles this book describes are: looking at buying stocks as buying an interest in the company, investing only in what are understandable businesses and demanding a margin-of-safety between the purchase price and the company’s value in the long term.
How to Read a Financial Report by Merrill Lynch
Not a book, but a freely available document about reading financial statements from companies. When investing in stocks, chances are there will come a time you will run into an annual report or two. An annual report describes a company’s activities and results from the preceding year. Annual reports are indispensable to any investor wanting to make well-informed decisions when buying stocks for the long term. One of the most important parts of the annual report is the financial review. The problem is that to any normal person the financial review is nothing more than a bunch of words and numbers in a table…
Luckily the good folk at Merrill Lynch have provided this document about reading financial reports (click on the image to download it). It explains in detail all the information found in a typical report. This document makes it easier to assess how healthy a company actually is, before pouring your hard-earned money into its stock.Bonus for my Dutch readers:
De Basis van het Beleggen by Holland Invest
It is very unfortunate that this book is not available in languages other than Dutch. De Basis van het Beleggen (translated: The Basics of Investing) is an extremely well-written book about investing. It describes three main topics: how to spread your invested money, what to invest in and when to buy and sell. The book is easy to understand and explains complex topics very well. It focusses mainly on long term investing and also describes methods to determine the intrinsic value of a company. Next to stock and bond investments it also discusses investments in real estate, cars and art. In my opinion the best book about investing, next to The Intelligent Investor. Hopefully this book will become available in more languages than one in the not-so-distant future.