As I mention in the about page on the blog, I find it hard to believe that financial education is something that is not at all taught about in schools/colleges in our education system! I strongly believe this would help new graduates immensely in being better with their finances. Most people who come into possession of money without knowing how to utilize it judiciously, spend it as soon as it comes in. So, to be good at anything just as we go and study/research it, I studied personal finance. Below is a list of books I feel have helped me in my journey so far. I suggest everyone try and read these books for a really good introduction to the world of personal finance and investing. I would also request people to try and go through these books in the order. Since I have tried to put them in a way so as to help you learn things step by step in an organized manner:
So, this book has nothing to do with personal finance or investing at all! However, this book has great tips on networking and becoming more affable. Developing a personality that will help you achieve success in your professional and personal life. This book explains how by caring for people in simplest of ways you can bring about a big change in your personality. Lots of successful people form Warren buffet to Bill Gates attribute their success to this book!
This book by Mr. Clason is a classic! Very old book set in very ancient times. Still teaches the most basic principles of finance. For e.g. how you should pay yourself first, spend less than you earn and invest the rest. How to make your money work for you and not the other way around. In a nutshell all what my blog is about and what I want it to be viewed as. This book teaches seven principles on how to live your financial life by and should be something that everyone should live by!
It dismisses your preconceived ideas about famous millionaires you know from everyday news and media. This book shows some real-life studies conducted on millionaires and expands on the concepts discussed in the previous book by giving examples. It shows how your actual millionaires are just simple frugal people living in your neighborhoods who do not really show off their wealth. Live frugally, spend below their means, invest and have different sources of income. The book really makes it look easy to become a millionaire!
This goes onto explain in more detail how you can make your money work for you. It gives a simple explanation of why poor people spend more money on liabilities. How wealthy people keep adding to their assets and keep increasing their overall wealth. This book really changed my perspective on fancy cars, gadgets. I now usually think very carefully when making a big purchase. Take my time to realize weather I am really buying an asset that will help me grow or a liability that will cost me money.
This book really begins discussing more concepts on investing money in the market to make more money. Hopefully by this time you know about the basics of stock market. The book presents cold hard statistics to prove why investing in index funds is the simplest easiest way to go. I definitely agree with how index investing can keep you up with the market. It doesn’t really need a lot of research on picking these funds. You can setup an account with a broker and buy these funds and you are good to go!
This book takes you from the crazy Tulip market madness in 1600’s to markets in 1960’s and even the dot com boom and bust. This discusses the technical and fundamental analysis people usually do before buying a stock, their advantages and disadvantages. It also guides you on your portfolio allocation strategies according to your age. Also introduces you to concepts in market like Beta, 401k’s, IRA’s etc. It gives you generic personal finance advice. This is obviously power packed with a lot of useful info!
Peter Lynch was able to achieve 29% annual returns for more than a decade and he shares how he was able to do so in very simple terms. There is not much technical jargon in this book. Even then it does an excellent job of guiding you to make individual stock purchases. Primarily based on observing the surroundings around you. Looking at insider buying activity, observing small things occurring in your neighborhood. Using your expertise in your industry to identify future winners!
This book goes into details of how to pick individual stocks in a very specific dividend paying stocks category! It explains how dividend paying stocks are usually the most robust and high performing stocks. Shows they how have outperformed non-dividend paying stocks historically. It also explains what attributes of a stock to look at when deciding whether to buy it or not. It also mentions some pitfalls to avoid when looking at such stocks. This is my favorite strategy and I use it to buy individual stocks outside of index funds.
Guy Spier is a value investor which is another strategy some people use in the stock market to find under values depressed stocks. However, his book discusses not about his strategy but his journey in the markets. How he started as a ruthless Gordon Gekko style investor and later changed after meeting visionary like Warren Buffet. How his idea about not just stocks but also life changed significantly for the better. It’s just a very interesting story. Guy throws some valuable tips on investing and how to have a positive attitude on life!
This book is like a summation of everything you have read so far from my list! Title might make you think its about investing in stock market. But you would be surprised to read about lots of awesome tips on saving money everyday. Some really efficient tax strategies! He also discusses tips in the stock markets. Then goes on to discuss how you can talk to your kids about money. How to make sure they end up in a position better than you! I feel this book is really the pinnacle of all you have learnt so far.
So, the books above have different types of strategies when it comes to investing. I believe no one style of investing is wrong and no one style is completely correct. What you choose to do when you have money to invest depends completely on you and your situation. Maybe you are very young and can afford more risk. You may have time to choose individual stocks wisely and gain returns form that. Maybe are about to retire and you want to do bonds or more fixed return investments and less stocks. Or maybe you just want to get index funds and make sure you at least get the standard market returns!
My aim was to raise awareness of all the things you can do to make sure you are on your path to financial freedom. To enable you to focus more on things you like and love and not necessarily worry about money. Getting to just know about these things puts you ahead than your peers. It opens your eyes and the mind to the world in a way you have never thought about before!