Many people have asked me on Twitter and via email how to become a better long-term investor. There is so much noise and so many people talking about their explosive gains in the stock market that it’s difficult to figure out where to begin and how to get good…really good at creating long-term wealth.
This guide is for people who have questions about starting their investing journey. If you are in the same boat, you might find this helpful.
Here I have compiled a list of books that will help you improve yourself. Read them – preferably in the order listed below – to learn personal finance, the art of investing in stocks, managing your behavior, and growing your wealth.
I read books on Kindle Paperwhite, but it doesn’t matter whether you like physical books or digital formats. The important thing is to read and learn.
You can’t become a good investor in just a few days or weeks. Anyone telling you otherwise is lying. It will take you years to get really good…and then you have to keep learning and improving yourself for decades. There is no finish line.
I’m not a master. I’m still learning and trying to improve myself. I can tell you from experience that you will discover various aspects of yourself that you were previously unaware of.
Don’t lie to yourself that you don’t have time for this. You bust your ass off 8-14 hours a day to earn money. Can’t you set aside just 30 minutes a day to learn investing and let your hard-earned money work for you? Make it a daily habit.
- Investing in stocks is not going to transform your life quickly. It would make little difference if your income is barely enough to cover your household expenses or you don’t save money despite earning well.
- Diversify your sources of income. If you don’t have a side hustle, start one. If you don’t have the skills to start a new hustle, acquire the skills. The Internet is a wonderful resource.
- Make sure that you spend no more than 80% of your post-tax income. At least 20% of your monthly income should go towards saving/investing.
- High-interest consumer debt is the financial equivalent of cancer. Whether you have credit card loan, personal loan or honeymoon loan, pay it off at the earliest!
- Buy health insurance and term life insurance. Not the sh*tty products like ULIPs. Just plain insurance.
- If you don’t have emergency savings worth at least 6 months of household expenses, start setting money aside to build it.
Your guide to investing – Book by book
This is not a perfect list. You can add more books if you want. The list below only reflects my personal view – after having read these and many more books – of where a beginner should start and how to proceed to improve themselves as an investor.
After you have read the first five books:
- Create a list of companies whose products you often buy. Start reading their annual reports (from start to end). Maybe alternate between a book and an annual report.
- Start investing small amounts in index funds (more details in the fourth book by John Bogle) and in the stocks of simple and easy-to-understand businesses with healthy financials.
- The Richest Man in Babylon by George Clason
- Let’s Talk Money by Monika Halan
- The Intelligent Investor by Benjamin Graham
- The Little Book of Common Sense Investing by John Bogle
- Warren Buffett and the Interpretation of Financial Statements by Mary Buffett
- One Up On The Wall Street by Peter Lynch
- Common Stocks and Uncommon Profits Philip Fisher
- Value Investing and Behavioral Finance by Parag Parikh
- Your Money & Your Brain by Jason Zweig
- The Psychology of Money by Morgan Housel
- Extraordinary Popular Delusions and the Madness of Crowds by Charles Mackay
- Berkshire Hathaway Letters to Shareholders by Warren Buffett
- Margin of Safety by Seth Klarman. The book available on Amazon is ridiculously expensive. But don’t worry. This summary of the book by James Clear is brilliant and deep.
- The Investment Checklist by Michael Shearn
- Mastering the Market Cycles by Howard Marks
- Fooled by Randomness by Nassim Nicholas Taleb
- The Black Swan by Nassim Nicholas Taleb
- The Little Book That Builds Wealth by Pat Dorsey
- Poor Charlie’s Almanack by Charlie Munger
- Quality of Earnings by Thornton L. O’glove
- The Little Book of Valuation by Aswath Damodaran
- Financial Shenanigans by Howard Schilit
- The Most Important Thing by Howard Marks
Now that you have finished reading them all and have started investing wisely, you are on way to achieve your financial goals.
But remember that in any lifelong process, learning never stops. I’m putting together a list of all the free learning resources that will help you (and me) improve ourselves.
Wish you all the best!
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Full disclosure: I participate in the Amazon Associates Program. If you purchase a book on Amazon using the links on this page, they pay me a small commission. You don’t pay anything extra for the books. 100% commissions go towards charity.