Thirteen Guidebooks for Building and Holding Wealth
Hiring a professional to manage your investments is not akin to hiring a plumber, car mechanic, or even attorney. To hire any of these three professionals it is neither necessary nor likely that to first teach yourself about plumbing, car engines, or the law. Personal Finance & Investing, however, is different. It is not hard to understand. It does not take a lot of time to understand. And, if you don’t take the time to understand it, you are setting yourself up to be susceptible to bad advice – or worse.
So, where do you start? Aside from bookmarking Financial Poise as a favorite website, you can read a few good books. Hitting the books is always a good idea, but which ones should you read? Personal finance books abound, so picking the right ones can feel like searching for diamonds in a pile of cubic zirconia.
We suggest you put some of these top-notch books on your shopping list.
Here are our top picks, for anyone ages 12-92 looking to read their way to financial poise. We suggest the books be read in the following order:
- “The Millionaire Next Door” by Thomas J. Stanley and William D. Danko. “Who is the prototypical American millionaire? What would he tell you about himself?” Re-think your perceptions on the wealthy Americans living next door, say Stanley and Danko. With profiles and stories of how America’s wealthy became that way (hint: most are self-made millionaires, not trust fund babies), learn important money management lessons from people who have made their own success. This is a very short and entertaining read.
- “Rich Dad, Poor Dad” Robert Kiyosaki’s perspective encourages entrepreneurship and, while you may not agree with everything he says, his take on business and earning still resonates today. While these first two books are more about mindset, spending habits, and basic decision-making, the next book is different:
- “The Investment Answer” by Daniel Goldie and Gordon Murray. It teaches that there are five decisions every investor should make – how to allocate among stocks, bonds, and cash; when to sell or buy assets; and whether to invest alone or with a professional. Easy to understand, this primer-style book helps you assess your financial health, as you would your physical well-being.
- “The Investor’s Guide to Alternative Assets: The JOBS Act, ‘Accredited Investing’ and You” by Jonathan Friedland. Although the book’s title suggests it is targeted to accredited investors, it really is for every investor. It continues the explanation of allocation and diversification, and includes incredibly plain English and objective explanations about crowdfunding, angel investing, private shares, private equity, hedge funds, and other “alternatives” to publicly traded securities.
- “Understanding Wall Street” by Jeffrey B. Little is an easy-to-read manual that introduces investors to the ins and outs of the stock market. Totally geared toward the novice investor, it teaches the basics of investing in the stock market. “Understanding Wall Street” is easy to understand and a quick read.
- “A Random Walk Down Wall Street” by Burton Malkiel is a classic on investing. According to Barron’s: ‘Imagine getting a week-long lesson on investing from someone with the common sense of Benjamin Franklin, the academic and institutional knowledge of Milton Friedman and the practical experience of Warren Buffett. That’s about what awaits you in…this must-read by Burton Malkiel.”
- “Think and Grow Rich” by Napoleon Hill, an ‘oldie but a goodie’, penned by the former Franklin D. Roosevelt advisor. Hill’s best-selling book lays out six steps to building your wealth, starting with setting a financial goal and then doing what it takes to achieve it. Called one of “the most important financial books ever written” Hill researched more than forty millionaires to find out what made them the men that they were.
- “The Behavior Gap: Simple Ways To Stop Doing Dumb Things With Money“, by Carl Richards. Richards focuses on the mistakes people seem to repeat in how they manage their money, like spending above their means, buying items with no long-term value and “keeping up with the Jones'” style spending. Furthermore, Richards warns against allowing our natural instinct to maintain the appearance of wealth, rather than living modestly within one’s means.
- “The Richest Man in Babylon” by George S. Clason is written as a collection of parable-style lessons with characters living in ancient Babylon who learn financial wisdom as they navigate business and household financial matters. Originally published as a series of pamphlets, the book was published in full in 1926. In the forward, Clason writes, “This book of cures for lean purses has been termed a guide to financial understanding. That, indeed, is its purpose: to offer those who are ambitious for financial success an insight which will aid them to acquire money, to keep money and to make their surpluses earn more money.”
- “One Up on Wall Street: How to Use What You Already Know to Make Money in The Market” is a New York Times bestseller by Wall Street legend Peter Lynch. Lynch teaches investors to trust themselves and their own observations when looking into potential investments – industries they are already familiar with, what they see going on around them, and focusing on what they know. Following the idea of investors trusting themselves, Lynch dishes out advice based on the fact that an investor’s gut may be the money maker in the end, as long as the knowledge is there, too.
- “The Intelligent Investor,” by Benjamin Graham. The teacher of legendary investor Warren Buffet, Graham is known as the “father of value investing.” This would be #1 on our list if it was ordered by priority or excellence. However, to get the most of it, we want you to read those listed above first. And, finally, two last books that instruct investors on ways to live and think that can impact your financial well being in tremendous ways.
- “The 4-Hour Workweek” by Timothy Ferriss. When Ferriss wrote this, he may not have realized how his ideas could sprout into a life of their own; but this New York Times best-seller grew into a lifestyle brand that has drawn accolades from virtually every sector. The book tosses out long-held ideas of retirement and financial planning to instead teach concepts like how to outsource your life and do whatever you want for a year, only to return to a bank account 50% larger than before you left; how to trade a long-haul career for short work bursts and frequent “mini-retirements”; and the crucial difference between absolute and relative income, among others.
- “Blink: The Power of Thinking Without Thinking,” by Malcolm Gladwell is an exploration of how spur-of-the-moment decisions can have lifelong effects. By profiling various professionals (a psychologist, a tennis coach and an antiquities expert) who have learned to make predictions based on assessing observations and learning to trust first impressions. This “intellectual adventure” book is designed to be an aid for people hoping to learn more about how to hone their own decision making.
[Editor’s Note: Originally Published 12/2/2014 and each of these titles remain relevant and helpful.]