Recommended reading: Read 'em and reap
Sometime ago folks were asking for recommendations for books on finances and investing. I thought I'd share this. I write a financial column that appears on some newspapers. This is my next column.
Read ‘em and reap
“In my whole life,” Charlie Munger says, “I have known no wise people who didn't read all the time. None, zero!”
A self-made billionaire, Charlie Munger is the partner of super investor Warren Buffett. The two comprise one incredibly successful investing team.
Bookstores are full of financial books and every newspaper dispenses investment advice. Unfortunately, any idiot can write a book. Or a newspaper column, apparently.
One best-selling author predicted in 1998 that the Dow Jones Industrial Average would reach 40,000 by 2010. Baby boomers were going to drive the markets to staggering heights, and all we had to do to was invest and ride the wave to riches. It was a compelling story that turned out to be wildly inaccurate.
The Dow is around 10,000, about as far from the predicted 40,000 level as I am from scoring a Stanley Cup-winning goal. We’ll likely get to 40,000 one day, but not for a very long time. I know I’ll never score that Cup-winning goal.
When it’s apparent how horribly wrong his predictions were, the guy just writes a new version. People with such fabulous market insight would make a lot more money investing than selling books, but I’m sure he’s doing quite well on the book tour.
Unfortunately, many also put great stock in the insights of newspaper writers who may not know any more about money than you do. Why folks care about the money advice of some pimply faced reporter making $60,000 a year who may still live in his parents’ basement is beyond me.
Still, there are many great books that will help you become a smarter investor.
Two good resources for the beginner to intermediate investor are The Wealthy Barber by David Chilton and The Money Coach by Riley Moynes. Barber is written as a novel and is for people who don’t really want to read about money. It’s the spoonful of sugar that helps the medicine go down. I prefer Money Coach, which contains everything that Barber does but isn’t written as a novel. Both will make you a more knowledgeable, comfortable investor.
The Millionaire Next Door by Thomas Stanley and William Danko is a study on how the rich accumulated their wealth. The authors interviewed millionaires to learn that most aren’t who you might expect – doctors, lawyers and corporate executives. They didn’t inherit their wealth but are ordinary folks – teachers, plumbers and government workers. They aren’t seduced by flashy lifestyles, but became prodigious accumulators of wealth by living within their means and diligently investing. The simple message: Being a millionaire can be within your grasp, if you make smart money decisions.
Here are two classics. One Up on Wall Street by superstar mutual fund manager Peter Lynch is a practical how-to guide from one of the brightest investment minds ever.The Richest Man in Babylon by George S. Clason uses parables to impart money lessons. What’s not to like about a great book that you can carry in your pocket.
Years ago I bought copies of Kevin Cork’s The Money Book to give to younger clients. It’s written for the under-35 crowd. Kevin is an associate of mine and years ago my wife was with a friend in a book store. The friend had been browsing a copy of Kevin’s book and was chortling at the humour. Kevin makes this a fun read.
Sometimes you want a book on a specific topic. Sandra Foster’s You Can’t Take it With You is a great guide to estate planning for Canadians. The Tax Freedom Zone by Tim Cestnick has lots of tips for keeping more of your money in your pocket by reducing your taxes.
No recommended list is complete without a mention of Warren Buffett. There are several good books written by or about Buffett, but some of the best Buffett material is in his Berkshire Hathaway annual reports, where his letters to shareholders contain priceless advice and insight. They’re available on the Berkshire Hathaway website.
Benjamin Graham’s The Intelligent Investor may be the best book on investing ever written. This tome can get rather complicated but is a must-read for a serious student of investing.
I own over 100 financial books on various topics in my client lending library. These books recommended here won’t make you rich, but they will give you some tools to make you more financially successful.
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