Best Books For Getting Started In Investing

If you’re just getting started, “best investment book” lists are way, way too long. (We have our own list, too.)

Getting 10 or more recommendations can be overwhelming when you’re just beginning your journey. Where should you start? Do you need to read all of these before buying your first stock?

No.

You can get going a lot quicker. There are a few main topic areas you should be comfortable with, so depending on where you’re starting, you may even be able skip a few of these. Here are the main areas:

5 Main Investing Topics to Feel Comfortable With

Asset allocation

Before you even get started analyzing a specific company, you should know about the different types of investments there are out there: bonds, stocks, commodities, real estate, private equity and so forth.

There are many things that will determine your investment success over time, but the amount of money you put into stocks versus bonds (versus other stuff), international versus domestic, will be one of the biggest determinants.

A really approachable book that I enjoyed is from David Swensen, the famed Yale endowment Chief Investment Officer.

 


Unconventional Success by David Swensen
 

Financial statements & accounting

The typical first step in analyzing a public company is to go to its reported financial statements. As a prospective owner, you need to know how much the company is worth. But before you can figure that out, you need to see how much money it makes and where its money goes. You need to form judgments about the way it does business.

Being able to decipher an income statement, balance sheet and cash flow statement is critical. Yes, this means learning some basic accounting but trust me, you don’t need to be a CPA. At the beginning, you’ll need to work your way through these statements, and that is okay. It gets easier with practice.

A little basic knowledge will help you answer questions like: how fast is the company growing? How profitable is it? How efficient is it? Will it run out of money?

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