Investing

The Best Investing Books for Stock Market Beginners

Man sitting on a bench in a field reading a book about investing
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It’s essential to start investing as soon as you can. The earlier you begin, the higher total returns you can earn. But you also have to invest wisely — which is where investing books come into play.

Whether you’re a complete beginner, a seasoned professional, or somewhere in between, reading investing books can sharpen your knowledge and deepen your understanding of how the market works. This article features a list of some of the best stock market books for each of those cases.

The first section covers the best investing books for beginners — read these if you want to learn the basics and invest passively, with the goal of saving for retirement. The books in this part of the list will give you the knowledge to beat 90% of investors.

If you’re interested in trying to make money with active investing — with the goal of beating the market — the individual stock trading books will suit you well. Just make sure you understand the basics before moving on to this slightly more advanced reading.

Lastly, if you’re thinking about pursuing a finance career — or if you’re already doing so and want to up your knowledge — read some books from the last section.

The Best Stock Market Books for Beginning Investors

These first few books were written with the absolute beginner in mind, covering the fundamentals of personal investing. You don’t need any prior investing knowledge or experience to understand these books — just an eagerness to learn.

Reading these works will provide you with the foundation required to read the more advanced books further down this list. But even if you don’t want to dive deeper into investing, reading just a few of these will put you far ahead of the average investor.

#1. The Bogleheads Guide to Investing

The Bogleheads Guide to Investing contains investing advice based on the philosophy of the founder of Vanguard, John C. Bogle — who is also credited with creating the first index fund, a type of investment fund that tracks a particular market index (like the S&P 500).

This book was written by Taylor Larimore, a prolific reader of investing books and a big believer in Bogle’s long-term, conservative investment philosophy.

The book starts by instructing you to get your finances in order as well as teaching you the right mindset. From there, you cover all the basics of investing — from knowing what you’re buying, to allocating your assets, to retirement planning. Towards the end, you get a chapter on estate planning as well.

Personally, this was a book that really changed things for me. It was this book that provided that “ah-ha” of seeing the simple path to getting rich.

#2. I Will Teach You To Be Rich

I Will Teach You to be Rich operates on the premise that you are ultimately in charge of your own life — and by extension, your finances. This book, written in a humorous and brash style, is aimed at younger investors who want to optimize their finances.

You’ll also learn a lot about the psychology that drives spending, saving and investing. The book emphasizes the importance of overcoming “analysis paralysis” — the phenomenon where overthinking a situation can lead to a lack of action.

Ramit Sethi, the mind behind I Will Teach You to be Rich — which is also the name of his blog — is an entrepreneur with deep understandings of psychology and personal finance. He’s released several online courses covering sales, psychology, business, personal finance and career development.

#3. Broke Millennial Takes On Investing

If you’re confused by the investment jargon that people throw around, or if you have no idea how to actually purchase a share of stock, you’ll find Broke Millennial Takes On Investing by Erin Lowry to be quite helpful.

As a millennial herself, Lowry keenly understands the financial concerns new millennial investors face. Her book aims to remedy this confusion by breaking things down into simple language and steps that anyone can follow.

Lowry’s book addresses several other common concerns millennial investors have, such as investing while paying down student loans and picking socially conscious stocks.

#4. The New Coffeehouse Investor

Bill Schultheis wrote The New Coffeehouse Investor after quitting his job at the Wall Street firm Smith Barney. He believed that his work at the company wasn’t helping his clients, so he left and began writing a book that explained his investing philosophy.

The New Coffeehouse Investor lays out three principles:

  1. Don’t put all your eggs in one basket: Diversify your portfolio to maximize your chances of achieving your goals while minimizing risk.
  2. There’s no such thing as a free lunch: It’s impossible to outwit the market.
  3. Save for a rainy day: Plan for the long-term, and pay attention to your spending and saving levels.

Based on these three principles, Schultheis advocates for investing in low-cost index funds, which allow for easy diversification and long-term growth with minimal risk.

Schultheis’ investment style is quite conservative, making this book an excellent read for older people seeking less volatile investments. Additionally, Schultheis writes in a conversational style, so the content is easy to follow.

#5. The Little Book of Common Sense Investing

In The Little Book of Common Sense Investing, John C. Bogle lays out his philosophy of investing in index funds. Basically, he argues that it’s impossible to beat the market. For every stock market winner, there is a loser — except that after fees and taxes, the “winner” also tends to lose.

Instead, Bogle advocates passive investing via index funds. Buying and holding these funds will lead to steady, long-term growth while minimizing fees and taxes.  

Bogle starts the book with a parable that demonstrates why paying people to manage your money makes you lose money in the long run. Then, he fills out the rest of the book with plenty of data to illustrate the performance of index funds.

#6. The Simple Path To Wealth

JL Collins wrote The Simple Path to Wealth after his daughter told him she understood the importance of money, but didn’t want to think about it all the time. As a result, this book is excellent if you need to get your finances in order without putting money at the forefront of your life.

Throughout this book, Collins explains his belief that the financial industry has a vested interest in making investing seem complicated in order to take you on as a client — a similar sentiment to the one Bogle expresses in The Little Book of Common Sense Investing. Whether or not that’s true, the other lessons contained within The Simple Path to Wealth are invaluable.

Collins’ teachings boil down to a few simple lessons: avoid debt at all costs, save half of your income, and invest in low-cost index funds.

Saving half your income sounds like a lot, but Collins explains how living frugally and investing most of your money can provide you with financial freedom.

Related: How to save money faster than you thought was possible.

#7. A Random Walk Down Wall Street

If you’ve read one of the above books, A Random Walk Down Wall Street will take you deeper into the data on investing. Authored by economist and Princeton finance professor Burton Malkiel, this classic text explains how the market’s movements appear to follow a “random walk” pattern, making the market impossible to beat.

Malkiel introduces several investing concepts that are crucial to know if you want to read more advanced investing material.

For example, he introduces the two methods of securities analysis:

  • Fundamental analysis: Evaluating a company’s financials, health, competition, and more.
  • Technical analysis: Reading charts and analyzing trends in price and trading volume to identify opportunities.

Malkiel concludes that passive investing, or “buying and holding,” is superior to actively trading stocks in an attempt to profit.

Best Books to Learn Individual Stock Investing

Once you understand the principles of personal investing, you know enough to build your wealth with confidence. You know the importance of planning for retirement and contributing to your retirement accounts.

If you want to go further — which you probably won’t after reading just one of the above books — you may consider investing in individual stocks.

Doing this correctly can earn you high returns, but picking stocks can be risky. So you need to have a plan in place. A good rule of thumb that I use is to put no more than 10% of my available investment funds into individual stocks.

With that said, here are some books that will introduce you to investing in individual stocks.

#1. You Can Be A Stock Market Genius

Joel Greenblatt, a hedge fund manager and academic, wrote You Can Be a Stock Market Genius. He believes strongly in value investing — a philosophy that entails buying stocks that appear to be priced lower than their intrinsic value due to market reactions.

In You Can Be a Stock Market Genius, Greenblatt shows you the types of investments — called “special situations” — he chose that allowed him to earn over 30% annualized returns net of fees between 1985 and 1994 at his hedge fund, Gotham Capital. He uses real-world examples so you can see investing through the eyes of an expert.

Some of the aforementioned special situations include the following.

  • Restructuring: Corporate restructuring.
  • Spin-offs: A spin-off is when a company splits off a section into a separate business.
  • Bankruptcies: When a company has to renegotiate or write off debt because it can’t pay its bills.
  • Recapitalizations: Extensive changes in a company’s capital structure.

Further reading: You Can Be a Stock Market Genius is one of the books recommended by Michael Burry, the investor who first identified the housing bubble that proceeded the 2008 financial crisis.

#2. One Up On Wall Street

One Up on Wall Street was written by Peter Lynch, famous for the tremendous growth of Fidelity’s Magellan Fund — one of the most renowned actively-managed mutual funds — when he was the fund’s manager.

Lynch was able to achieve over 29% returns on average during his tenure, making Magellan the highest-performing mutual fund in the world.

In the book, Lynch explains some of the investing strategies that led to this performance. He holds a similar philosophy to Warren Buffett’s: invest in companies with which you have day-to-day experience.

Additionally, he teaches you to evaluate companies based on their fundamentals, and to avoid trendy stocks.

#3. The Warren Buffett Way 

Robert Hagstrom, director of asset management firm Legg Mason Focus Capital, authored The Warren Buffett Way to give you a look into the life and investments of the famed Berkshire Hathaway CEO.

The beginning of the book briefly overviews Buffett’s investing influences, such as Intelligent Investor author Benjamin Graham. From there, Hagstrom outlines Buffett’s investing strategies, which include investing in what you know, understanding each company’s fundamentals, ignoring the market to keep your emotions in check, and diversifying your portfolio.

Hagstrom also details the types of holdings Buffet had in his portfolio.

  • Permanent holdings: Buffett chose four companies he never planned to sell. These were Geico, The Washington Post, Capital Cities and Coca-Cola.
  • Fixed-Income Marketable Securities: These investments provided maximum post-tax returns.
  • Stocks: Most of Buffet’s other investments were stocks that he knew well.

See also: The Warren Buffett Reading List (His Most Frequently-Recommended Books).

#4. The Intelligent Investor

Benjamin Graham is widely known as the “father of value investing,” thanks to his advocacy of fundamental analysis and long-term investing. He is also famous for being Warren Buffett’s mentor.

Graham’s The Intelligent Investor is considered a classic investing text. In fact, it inspired Warren Buffett to seek Graham out in the first place.

Graham starts the book off with the stock market’s historical returns during the time he wrote it, as well as his commentary. The rest of this text lays out Graham’s philosophy chapter-by-chapter, covering topics like asset selection and securities analysis for average investors.

Today, there are revised editions of this book containing contributions from Buffett and other financial experts. These updates guide you in applying Graham’s original content to today’s market.

Best Books for Those Who Want a Career In Finance

The following finance books are for investors who have mastered the basics and want to learn the nuances and technical details that lead to true expertise. If you’re pursuing a finance career, these texts will be of great help in understanding more advanced topics.

They can also be valuable for people who aren’t interested in a finance career, but perhaps have traded successfully for years as a hobby and want to learn more.

Whether you’re the former or the latter, each of the following books will provide you with investing lessons from some of the world’s brightest financial minds.

#1. Security Analysis

Many years before Benjamin Graham wrote The Intelligent Investor, he partnered with his colleague David Dodd — who, at one point, was also a student of Graham’s — to write Security Analysis.

Security Analysis is an academically rigorous book, akin to a college textbook. It consists of 52 chapters split into seven sections. In the first section, you learn how to — as the name suggests — analyze securities. The next few sections go deep into various types of securities.

After that, the book spends a few sections analyzing income and the balance sheet. The book then concludes with some additional aspects of security analysis you should consider.

Graham and Dodd coined the term “margin of safety” in this book to describe the difference between a stock’s intrinsic value and its current price when trading below said value.

#2. The Essays of Warren Buffett: Lessons for Corporate America

The Essays of Warren Buffett is a collection of Buffett’s letters to Berkshire Hathaway’s shareholders, written over several decades. Within these letters are plenty of business and investing lessons.

The book starts with a chapter on corporate governance, before diving into Buffett’s beliefs and investment philosophies.

Towards the end, Buffett discusses the benefits and drawbacks of corporate accounting policies, focusing on how accounting can be used to manipulate company earnings.

The letters contained within The Essays of Warren Buffet were selected and arranged by Lawrence Cunningham, a scholar in the fields of corporate governance and corporate law. Cunningham also wrote the introduction to the book.

#3. Margin of Safety

Like Buffett, billionaire investor and Margin of Safety author Seth Klarman is a close follower of Benjamin Graham and an advocate of value investing — hence the book’s name.

Margin of Safety is divided into three sections. In the first, Klarman discusses investment strategies that sound appealing but don’t work. Like other books on this list, he also talks about how Wall Street does not have your best interests in mind. Throughout this section, Klarman also shines a light on historical examples of bad investments.

Section Two is where Klarman gets into value investing. Among other topics, he advocates ignoring macroeconomics and the market to focus on individual businesses.

Lastly, Section Three explores “special situations.” Joel Greenblatt’s influence on Klarman can be seen here; Klarman explains where he agrees with the You Can Be a Stock Market Genius author, as well as where their viewpoints differ.

Note: Only 5,000 copies of this book were published. Consequently, it costs around $850 on Amazon, so don’t invest in this book unless you’re serious about elevating your financial career.

#4. Common Stocks and Uncommon Profits and Other Writings

Philip Fisher, credited by Buffett as a major influence, is considered a pioneer in the philosophy of growth investing — a strategy that involves investing in companies that exhibit signs of above-average long-term potential. He’s famous for buying and holding small-capitalization companies that grew immensely over long periods, such as his 1955 investment in Motorola.

In Common Stocks and Uncommon Profits and Other Writings, Fisher discusses how he picked investments utilizing a qualitative approach that included a 15-point assessment he created to evaluate companies.

He also explains his “scuttlebutt” approach to learning about stocks — which entails talking to competitors, suppliers, consumers, and industry experts to become more familiar with the environment in which the company exists.

Summary

It’s no secret that the world’s most successful investors and entrepreneurs read a lot. Warren Buffett says that even today, he spends 80% of his day reading. Bill Gates finishes a book every week. Both of them credit constant learning as an important factor in their success.

Of course, reading the above investment books alone won’t get you to your financial goals — but it will give you a significant advantage compared to those who don’t, and will set you on the best possible path to build wealth through sound long-term financial decisions.

If you’re interested in reading beyond what’s outlined in this post, here are some other recommended reading lists from leading investors and institutions.

R.J. Weiss
R.J. Weiss is the founder and editor of The Ways To Wealth, a Certified Financial Planner™, husband and father of three. He's spent the last 10+ years writing about personal finance and has been featured in Forbes, Bloomberg, MSN Money, and other publications.

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