Andrew’s Investment Book Recommendations

Here’s something I should have put together ages ago, considering the number of people who have asked me for investment book recommendations. 

I’ve read more than 300 personal finance books over the past twenty years.  Perhaps I’m a bit of an addict.

  • For Beginners

These are the books I’d recommend for people who have never read an investment book before.  But don’t mistake simplicity for something substandard.  Following the strategies espoused in these books will, after all taxes and costs, have you beating at least 90% of professional money managers over your investment lifetime.  That’s a fact. 

The New Coffeehouse Investor: How to Build Wealth, Ignore Wall Street, and Get on with Your Life

In an easy-to-read conversational voice, financial planner Bill Schultheis proves why he’s considered one of the heroes of the financial service industry.  Promoting a low cost, index fund solution to investing, he guides his readers as if he’s your affable neighbour, explaining the process over coffee.  You can enjoy this book from cover to cover in a single afternoon.  I’ve gifted many copies of this book at my index fund seminars.  I think you’ll like it.

The Lazy Person’s Guide to Investing: A Book for Procrastinators, the Financially Challenged, and Everyone Who Worries About Dealing With Their Money

Paul Farrell ably introduces this book as something his wife encouraged him to write.  As a women “whose eyes usually glaze over” when he starts to talk finance, you get the idea, right away, that Dr. Farrell’s book is aimed at a broad audience, peppered with a fun writing style that’s missing in the vast majority of personal finance books.  His message is the same as Bill Schultheis’ but his voice is a tad cheekier.  This could be the first and only investment book you’ll ever have to read.

The Smartest Investment Book You’ll Ever Read: The Simple, Stress-Free Way to Reach Your Investment Goals

Cheekier still, but every bit as good, is Daniel Solin’s book, The Smartest Investment Book You’ll Ever Read.  This immodestly titled book is comprised of only 154 pages, and this leading securities arbitration lawyer guides readers to see that again, index fund investing gives the highest statistical chances of success.  With a spacious format, it’s another book you can read in an afternoon while learning how the industry of actively managed mutual fund investing is rigged against the average investor.  Like The Lazy Person’s Guide to Investing and The New Coffeehouse Investor, it’s going to make you smile from time to time, if you don’t chuckle out loud. 

The Elements of Investing

Perhaps the shortest book of them all, The Elements of Investing was written by investment legends Burton Malkiel and Charles Ellis.  As the bestselling authors of A Random Walk Down Wall Street  (Malkiel) and Winning the Loser’s Game  (Ellis) they’ve teamed together to produce an investment book that’s far simpler to understand than either of their former masterpieces.  From what I’ve learned, giving financial seminars, the average person has difficulty understanding terms and jargon that most financial writers take for granted.  As great as both of these gentlemen’s other books are, this one is far easier for the average reader to understand.

  • For Intermediate Investment Readers

The Only Guide to an Investment Strategy You’ll Ever Need 

I enjoyed Larry Swedroe’s book, The Only Guide to an Investment Strategy You’ll Ever Need  and as the title suggests, I think he’s right, although it’s slightly more academic than the previous four books I mentioned.   After reading one of the four books I listed above, if you’re still not convinced, and/or you want more meat, then this could be the book for you.  Written in 2005, it has the qualities of a great book—because it’s timeless.  Read this book twenty years from now, and the theory behind it will remain the same: solid, academically rigorous, relevant and accessible to the average reader.

Swedroe’s new book, The Quest For Alpha: The Holy Grail of Investing comes out on February 2, 2011.  I haven’t read it yet, but based on the title, you can probably guess the symbolism behind the Holy Grail.

The Little Book of Common Sense Investing : Only Way to Guarantee Your Fair Share of Stock Market Returns (Little Books. Big Profits) 

Written by a man named by Fortune Magazine as one of the four investment giants of the 20th century, Bogle packs a powerful punch with this little 214 page book.  Showing how index funds are superior investment vehicles, he loads the book with evidence and experience drawn from more than 50 years in the investment field.  I’ve gifted more than 40 copies of this little book to my colleagues, but I’ve listed it under “intermediate” as a reader, because it has terms that many of my college educated colleagues couldn’t understand, and it had my dad (a fairly well-read fella) running for the dictionary a number of times.  Bogle is an academic.  But he’s brilliant, a clear writer, and he’s definitely fighting for the little guy.  With some luck, I hope to be having lunch with the great man during the summer of 2011 when I visit my in-laws in Pennsylvania this year.  My fingers are crossed.

The Four Pillars of Investing: Lessons for Building a Winning Portfolio  and The Investor’s Manifesto: Preparing for Prosperity, Armageddon, and Everything in Between.

Written by the legendary finance writer, William Bernstein, these books both give an extremely solid investment foundation.  If we were to ask Mr. Bernstein himself, he’d probably suggest that we read The Four Pillars of Investing first, and The Investor’s Manifesto second.  In the first book, he thoroughly discusses how people madly become euphoric when fad-like investments rise in value without solid fundamentals to back them up.  And in his second book, he shows how the same emotional madness can sabotage investor’s accounts when the markets drop in value.  What’s more, he does it with an ever-improving flair for imagery and humour:

 “Your primary training tool is the rebalancing process, which forces you to sell high in the good years and to buy low when there is blood in the streets.  In the really bad years, such as 2008-2009, this will mean pouring large amounts into falling equities, when your friends and family are running around like decapitated poultry.

Both of these books, of course, promote indexed investing as well.

  • For Advanced Finance Readers

For the most extensively researched books on indexed investing, nothing really compares with John Bogle’s updated 10th anniversary edition of Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor  and David Swensen’s Unconventional Success: A Fundamental Approach to Personal Investment.

These are two of my favourite investment books, but unlike some of the books above, they aren’t entertaining for the average investor.  And that’s fine.  Investing isn’t meant to be fun.  The same message is here that you can read about in Bill Schultheis’ ultra-simple CoffeeHouse Investor books  but the evidence here is simply awe-inspiring.  What’s interesting is that David Swensen, Yale University’s endowment fund manager, didn’t intend to write his book, Unconventional Success, about indexed investing.  But the more he researched, the more he realized that the financial service industry exploited individual investors.  Like the other great authors above, he offered a fabulous solution.

  • More To Come

For those who can’t help but pick a few of their own stocks, I have a few book recommendations that might help.  They’ll be coming up in a follow-up post.  Just keep in mind that the odds of finding the Holy Grail are low.






Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (2nd Ed. Wiley 2017) and The Global Expatriate’s Guide To Investing: From Millionaire Teacher to Millionaire Expat (Wiley 2015). My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I’m happy to comment on your questions. However, please read the Terms of Use, Privacy Policy and the Comments Policy.

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20 Responses

  1. Think Dividends says:

    No Derek Foster book recommendations !?!?!?!? LOL

    My personal favorites are Ultimate Dividend Playbook (Josh Peters), Single Best Investment (Lowell Miller), the Market Wizards series (Jack Schwager) and Hedgehogging (Barton Biggs).

    Good List.

  2. Great list!! I really enjoyed the Investor's Manifesto.

    @Think Dividends – you're funny 🙂 The Single Best Investment is a dandy. I've probably re-read that thing about 5 times since last year. I haven't read the Josh Peters book yet, thanks for that recommendation.

    Andrew, did you get a copy of The Investment Zoo to read yet?

    http://www.amazon.ca/Investment-Zoo-Taming-Bulls-

  3. Great list, Andrew. I would also add "The Gone Fishin' Portfolio" as an intermediate-level book. And even as a guy who's never owned a stock, I have to say that "The Single Best Investment" is an excellent read. 🙂

  4. Think Dividends says:

    I also like It's Not Rocket Science by Tom Bradley available for FREE at http://www.steadyhand.com

  5. @Think Dividends

    Hey Think Dividends,

    Until Mark mentioned Derek Foster, I hadn't heard of him. But recently I did a search online and saw some pretty impressive promotional stuff.

  6. @My Own Advisor

    Hey Mark,

    I also really enjoyed The Investor's Manifesto. And I can tell you that William Bernstein is a first class gent. He has guided me over the past couple of days with some details in my own book, and he has been extremely supportive of the project. He has also written a fabulous blurb for my back cover.

  7. @Canadian Couch Potato

    Thanks Dan,

    I haven't read "The Gone Fishin Portfolio" but thanks for the recommendation. If I see it in the local bookstore, I'll scoop it. I also still need to read the book that Mark has recommended, "The Investment Zoo". I may have to order that one because I haven't been able to find it in Singapore.

  8. @Think Dividends

    Hey Think Dividends,

    Thanks for that. I'm always up for a great freebie. This might be a really naive question, but is there a benefit (promotionally) to offering a free book? It's either an act of altruism, or I'm missing the boat. Altruism is very cool, naturally!

  9. I have a good number of these books. They are all excellent. When is your book due to hit the shelves?

  10. @The Biz of Life

    Hey Biz,

    My book will be out by July at the latest. The reviews are rolling in already and they've really exceeded my expectations, so I'm really pleased and excited about that. I'll share the reviews when we get closer to the pre-order date.

  11. nataliee says:

    Hi,

    Are these books suitable for Singaporeans? Please do recommend some good reads for Singaporeans if the list of books above is most suitable for Americans/ Westerns. Thks!

  12. Andrew Hallam says:

    Hi Nataliee,

    The premise behind these books is internationally suitable for anyone. The fundamentals are exactly the same, but as a Singaporean, you would just buy the products through a different vendor. You could use the brokerage at DBS Vickers and buy exchange traded index funds. I have a post on investing for Singaporeans under "Offshore Investing"

    In July, my book will be published, which has a further chapter on investing for Singaporeans. But for now, one of these books would be great. And you could follow the instructions on my blog, while asking me questions if you get stuck or if there's anything you don't understand. Sound OK?

  13. Steve in Oakville says:

    Hi Andrew – the book that inspired me the most was Malkiel's A Random Walk Down Wall Street. It's a classic. I'd recommend it to anyone who believes there's a way to get the best of the market.

    By the way, The Wealthy Barber is a Canadian gem that is soon coming out with an update. I received that as part of a wedding present in 1997 and have since always made it a staple of my wedding gifts to others. It's a bit dated and fully recommends mutual funds instead of index funds, but the financial planning parts are simple and straightforward. Excellent reading for a beginner.

    Steve

    • Hey Steve,

      You're right about that being a fabulous book. Malkiel just came out with a new edition as well. His first one was written in 1973, and they just keep coming. That's a great thing!

      I have to say this as well: as a very busy man, his time is obviously precious. But he took the time to read my book's manuscript and he said some very nice things about it, which I'll be able to put on the front cover when the editing and formatting is complete. Burton Malkiel is a true gentleman, and I was so honored to have his support for my book http://amzn.to/millionaireteacher

  14. Andrew, I'm wondering what your opinion is of Jeremy Siegal whose "Stocks for the Long Run" clearly advocates index funds and his following book "The Future for Investors" advocates high dividend stock index funds. He is a big proponent of index funds and more specifically an index fund comprised of high dividend paying stocks. Wisdomtree sells dividend paying index funds. Any opinion on Wisdomtree index funds?

    Thanks,

    Leon

    • I think his books are great Leon.

      Considering my tax situation, I like to keep dividends to a minimum personally. But everyone's situation is different. As an expat in Singapore, I don't pay capital gains tax at all, but I pay 30 percent tax on dividends. So I'm not keen on a high dividend yielding index.

      But for many other people, it could be a great option. My suggestion is to find a great plan, and stick to it through thick and thin. Shifting strategies tends to be a bad idea overall. But diversifying, rebalancing and keeping costs low pays off nicely in the end.

  15. Chris D says:

    Hi Andrew,

    I know this is a very basic question, but can you briefly explain on what basis you pay the tax rates mentioned above? Is that because your holdings are in a US brokerage and you are a non-resident, non-US citizen?

    • Hi Chris,

      I can't see tax rates mentioned on this post, but if you're asking, you must have read it somewhere. I am a Canadian non resident, living in Singapore. I don't pay capital gains taxes on equity investments because I'm free from Canadian taxes and Singapore doesn't have a capital gains tax on equities. I do, however, pay a witholding tax on my dividends. I'm not sure if that clarifies your question. If not, feel free to shoot me another question.

      Cheers,

      Andrew

      • Chris D says:

        You answered my question exactly, although I obviously did not word it very well.

        Basically, as a Canadian non-resident (like myself) you are not subject to investment taxes by the Canadian government. The 30% dividend withholding and no capital gains tax are due to Singapore's regulation.

        Now, one final refinement to clarify my thoughts: you have stated that your investments are held in a Singaporean DBS Vickers account, and I assume you are also a legal Singaporean resident. If you had the same status, but your investments were held in a US brokerage, how would that affect your investment taxes?

        My guess is that you would be subject to dividend, interest and capital gains taxes per US non-resident regulations. You may or may not need to declare your overseas assets when filing your taxes in Singapore, but even if you did you wouldn't be subject to double taxation by Singaporean authorities. (I figure there is probably a tax-treaty between the US and Singapore.)

        I'm sorry if this seems a strange line of questioning – I am trying to extract from your situation a reasonable parallel to my own, as a Canadian citizen resident of China. As a new investor, I'm trying to determine where I should open a brokerage account and how it would affect me tax wise. (US? Luxembourg? Singapore? Hong Kong? etc.)

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