Top 5 Investment Books for Beginners

Here's How to Get a Read on the Markets

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You may not be able to read a prospectus, annual report or even that stock ticker zipping by the bottom of your TV screen. But if you want to bone up on your investment skills, you can always read a book—or lots of books—to weed your way through the thicket of monetary jargon and find financial wisdom.

The trouble with financial tomes, though, is that they’re a lot like diet books: Lots and lots and lots of them flood the market but there’s never a sticker on the front that screams: “THIS IS THE PERFECT PLAN FOR YOU.” Some authors make outrageous claims; others have seen their strategies turn obsolete, even if their names remain in the limelight.

Whether you want a fatter wallet or a slimmer waist, it’s oh-so-hard to know where to start.

Yet for all those realities, some truths apply on a very consistent basis. For starters, people who’ve made money often excel at teaching others how to do the same. And: The authorities with huge followings don’t get there by being right only a small part of the time. You can also look at the author’s stature in the financial world to get a sense of how much they have to offer you.

Here I’ve listed five investment must-reads. Even if you buy them all, you have a very good chance of making back the total book purchase many times over. (Note: Prices are as listed on Amazon.com)

1) The Intelligent Investor: The Definitive Book on Value Investing (2006 updated, HarperBusiness)

by Benjamin Graham

It’s hard to fathom why this book only earns 4.5 stars on Amazon.com when the review that might count most is from billionaire Warren Buffet.

The Oracle of Omaha lists “The Intelligent Investor” as “the best book on investment ever written.” First published in 1949, Graham explains the concept of loss minimization, which involves investing over the long term. Beginners are encouraged to eschew market trends in favor of “value investing,” which teaches the virtues of research and patience.

Readers will take away solid investment advice that has stood the test of time. Though updated over the years, “The Intelligent Investor” teaches bedrock principles that have survived for decades

Price: $13.68 (paperback), $13.99 (Kindle)

2) One Up on Wall Street (2000, Simon & Schuster)

by Peter Lynch

In his tenure with the Fidelity Magellan Fund from 1977 to 1990, Lynch managed one of the most successful mutual funds of all time. In “One Up,” he stresses the value of common knowledge: that is, taking advantage of what you already know to make sound investments. Readers will learn much from Lynch’s explanation of how he made his own stock picks. This he did through fundamental analysis, which takes into account both qualitative and quantitative study before pulling the trigger. Easy to read and follow, this book will also teach readers the basics of price/earnings ratio, book value and cash flow.

Price: $10.62 (paperback), $11.99 (Kindle)

3) The Richest Man in Babylon (2002 updated, Signet) by George S. Clason

Want to learn how to retire well without robbing a bank? Then put down your water pistol and pick up this book, which dates to the 1920s and teaches finance through parables that have appealed to neophytes and experienced investors alike.

Rich Arzaga, Founder and CEO of Cornerstone Wealth Management in San Ramon, Calif., says it teaches the basics of financial planning through modified spending. “This control starts with some very simple principals of living within you means, keeping reserves and having a strategy to invest savings. Many families talk about wanting to make good choices. This book does a good job outlining the framework to execute on these choices.”Readers will readily absorb the principles here as they’re stated with a sort of “financial bible-speak.” These include “make thy gold multiply” (use powerful investments) and “guard thy treasures from loss” (watch for brokers with their hot tips) Add to the list “thou shalt not miss out on this read.” 

Price: $6.49 (paperback), $1.99 (Kindle)

4) The 5 Mistakes Every Investor Makes and How To Avoid Them (2014, Wiley)

by Peter Mallouk

Peter Mallouk was rated America’s No. 1 independent financial advisor in 2014 by Barron’s. And his company, Creative Planning, was ranked the nation’s top independent wealth management firm by CNBC. In this book, Mallouk explains how investors trip up by getting their own way, or working with the wrong advisor (one who places more emphasis on selling you products than making you money, for example).  Mallouk’s readers will be entertained almost as much as they are educated. He has a major bone to pick with “Mad Money” host Jim Cramer, making a well-reasoned argument for readers to stay away from the self-styled pundit’s advice .He also shows readers how to pick the right financial planner and frequently quotes Warren Buffett on matters such as cash, which the billionaire calls “the worst investment you can have.” 

Price: $17.39 (hardcover), $11.49 (Kindle)

5) The Little Book That Beats the Market (2010, Wiley)

by Joel Greenblatt

Amazon review stars: 4 (392 reviews)

“The Little Book” picks up where the “The Intelligent Investor” leaves off, using the principles of value investing and applying Warren Buffett’s quality criteria for stock selection to create a “Magic Formula.” The idea is to earn returns that beat the market by investing in stocks for the long haul with the expectation that given time, stocks will rise. Greenblatt says to expect bumps and market dips along the way, but to stick to the principle of “buying a group of above average companies but only when they are available at below average prices.” 

Price: $13.74 (hardback), $10.99 (Kindle)

Lou Carlozo is an investment reporter for U.S. News & World Report, a former managing editor of AOL's WalletPop personal finance website, and formerly the "Recession Diaries" columnist at the Chicago Tribune. His work has appeared in Reuters Money, Money Under 30 and H&R Block's Block Talk. You can follow Lou on LinkedIn.