Update: I’m no longer updating this page, but there is a new, updated version which can be found here!

 

Investing is not rocket science, but it is important to be financially literate.  There is no quicker way to do this than to read a few good books on the subject.  The problem is that most books on the subject aren’t very good.  As part of your financial education, I recommend you read, at a minimum,one good book from each of the three categories below-personal finance, investing, and  behavioral finance.  The books are listed in order from easiest to read and digest (usually shortest) to hardest within each category.

Most of these books are available in your local library system, but if you’d like to purchase these books (and I think it is a wise investment) through Amazon, please use the links on this page.  Disclosure: I get a small commission for referring you if you arrive at Amazon from this site.  Actually, I get a small % commission no matter what you buy at Amazon if you go there from here, so feel free to stop by before getting that big screen TV you’ve had your eye on.

 

Personal Finance

The New CoffeeHouse Investor by Bill Schultheis.  The shortest, easiest to read investment book I’ve ever seen.  Entertaining and light on details, if you hate reading about this stuff, this is the book for you.

The Only Investment Guide You’ll Ever Need by Andrew Tobias.  Although the title says the book is about investing (and part of it is), this book is the most readable personal finance book I’ve seen yet.  His wit has lasted through a number of revisions over the last 3 decades and it continues to be a best seller.

Personal Finance for Dummies by Eric Tyson.  Another of Eric’s books, Mutual Funds for Dummies was the book that helped me realize my “adviser” was ripping me off, so I’m a little partial to Eric’s writings.  This is a comprehensive look at the subject in the usual dummies format.

Investing

The Bogleheads Guide to Investing by Taylor Larimore, Mel Lindauer, and Michael LeBoeuf.  This comprehensive, yet easy to read, guide to investing teaches you everything from “What is a stock” to some of the “secrets” to investing that Wall Street doesn’t want you to know.  You know, like why doctors shouldn’t day trade.

The Investor’s Manifesto by William Bernstein MD.  Bill Bernstein is a bit of a hero of mine.  His earlier book Four Pillars of Investing literally changed my financial life.  This book is similar, but updated, shorter, and easier to read.  The fact that it is written by one of us seems to make the information just a little bit more trustworthy.

The Only Guide to a Winning Investment Strategy You’ll Ever Need by Larry Swedroe.  This book assumes you know a little about investing such as what stocks, bonds, and mutual funds are.  It takes you to the next level in developing a comprehensive do-it-yourself investment plan.

Common Sense on Mutual Funds by John Bogle. The best of St. Jack’s books in my opinion.  Not as easy to read as some of the books above, but packed with information from the person who probably knows more about the mutual fund industry than anyone else.

The Intelligent Investor by Benjamin Graham. Perhaps the greatest book ever written for the masses on value investing, Ben Graham was Warren Buffett’s mentor.  Do you need any higher recommendation?

Behavioral Finance

Why Smart People Make Big Money Mistakes and How To Correct Them by Gary Belsky and Tom Gilovich.  One of the first and still one of the best books on the subject.  It is well-known that investors are their own worse enemies.  You’ve got enough enemies on Wall Street already; this book will teach you how to avoid shooting yourself in the foot.

Your Money and Your Brain by Jason Zweig.  Jason was a personal finance columnist at the Wall Street Journal for years.  This book is a mix of investing, psychology, and neurology.  Somehow he takes your least 3 favorite subjects and by combining them, makes them enjoyable to learn.

Other Books

The Millionaire Next Door by Thomas Stanley and Dan Danko.  This is a book worth reading once, or at least until you get the gist of it.  The basic message is that most millionaires are down to earth people who don’t necessarily have a huge income, but rather careful savers and thrifty spenders.  They also point out that most doctors are what they describe as “under accumulators of wealth”, meaning they have a low net worth to income ratio.  They have written several more books in the series, but the message is the same in all of them- wealthy means “high net worth” not “high income.”

Make Your Kid A Millionaire by Kevin McKinley.  This is a gem of a book that you don’t hear about very often.  It describes all kinds of ways to help your kids get a leg up financially.  It discusses all the kiddie type accounts such as Coverdell ESAs (Education IRAs), 529s, UGMAs etc. and contains lots of creative ways to take advantage of the extra decades of compound interest your kids have available to them.  While not one of the first books you should read, if you find you enjoy learning this stuff, this is a great one to add to your collection.

The Bogleheads Guide to Retirement Planning by the Bogleheads.  (Disclosure- I wrote a chapter in this book.  But all proceeds from it go to a charity called the National Constitution Center in Philadelphia, which is a delightful place to spend an afternoon, by the way.)  This is a book written by a committee of a couple dozen people who had previously met only online, none of whom made a cent off the book.  It distills the best wisdom of the Bogleheads with regards to planning for and living in retirement.  If you anticipate retirement in the next decade or so, this book will be well worth your time and effort.  Some chapters can be a little dense compared to other books recommended here, but that is usually just because so much good stuff is packed into them.

The Power of Passive Investing by Rick Ferri.  Rick is a diehard index investor.  He has written several good books including All About Asset Allocation and The ETF Book.  This is his latest.  If you’re not sure you buy into the idea of investing in all or mostly index funds, Rick will convince you.

A Random Walk Down Wall Street by Burton Malkiel.  An investment classic that introduced the now well-known and frequently-cited analysis that monkeys throwing darts could pick stocks better than your financial adviser.  Updated for 2011.

How to Save Thousands of Dollars On Your Home Mortgage by Randy Johnson.  A home is the biggest purchase you’ll ever make, and choosing the wrong way to pay for it can literally cost you hundreds of thousands of dollars.  This is a no-nonsense guide to help you avoid getting swindled by the crooks in the industry.  Consider this required reading whether you’re a first-time homebuyer or have bought a dozen investment properties in the past.

Taxes for Dummies by Sarah Laing.  Whether or not you do your own taxes, a basic familiarity with the tax code will save your thousands.  This book is updated each year or so and is a bit thick because it also includes step by step instructions to doing your taxes yourself (which I highly recommend you do at least once, even if you prefer paying a tax preparer to do them.)  But understanding how the tax code really works can save you thousands.  Tax evasion is illegal, tax avoidance through completely legal means is just being smart.

Taxing Ourselves by Joel Slemrod and Jon Bakija.  A citizen’s guide to the debate over taxes.  The 2nd chapter alone is worth the price of admission.  This book will be most enjoyable by those with at least a passing interest in politics.

The Successful Physician Negotiator by Steven Babitsky and James Mangraviti, Jr.  The list price for this was $60 in 1998.  I picked it up for a fraction of that somewhere along the way.  The cheapest I could find it for recently was $150.  Honestly, it’s probably still worth the price.  The authors point out on the front page that you will negotiate for literally millions of dollars in your life and all your training leads you to do it poorly.  Without specific training in negotiation, you’re likely to leave hundreds of thousands of dollars on the table.  It’s not the prettiest book, but it is packed with useful information and examples.

Rich Dad Poor Dad by Robert Kiyosaki.  I am hesitant to recommend this book because so much of it (and all his other books) are full of non-specific fluff.  But he teaches at least one good principle in the book: you want to convert your active income (think salary) into passive-income producing assets (stocks, bonds, businesses etc) as soon as possible because it is less work and will save you on taxes.  We all know doctors who never learned this lesson.  This one is a good one to grab at the library and just glance through briefly.

Additional Reading Resources

206 Business Books: Recommended by Business Professionals