Which books can I read to be an investor?

SHARE   |   Sunday, 21 September 2014   |   By Nelson Letshwene
  • Financial literacy comes first

 

Warren Buffett said that if you don't understand what you're investing in, you should probably not invest in it. This means first that investing should not be a complex thing, but also that it is important for you to make sure that you demystify the issues through your own financial education. I believe that everyone would like to see their money grow, but unfortunately too many people are either hoping for magic, or that someone else will do it for them. Even if you give your money to a fund manager to do it for you, it does not absolve you from learning about investing.

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Let us take a look at a few classic books that could enhance your investment muscle. Let me go from the obvious to the not so obvious. Let me be so presumptuous as to assume you have read a copy of my own book, Functional Mastery Over My Finances, (Reach publishers, 2008). Let me assume further that you have read Robert Kiyosaki's Rich Dad, Poor Dad, (2000) as well as The Cash Flow Quadrant; and let me add Rich Dad's Guide to Investing, also by Robert Kiyosaki.

Two important personal finance classics that should also be on your bookshelf are The Richest Man in Babylon, (1926) by George Clason; and Think and Grow Rich (1937), by Napoleon Hill. Now that I have mentioned the obvious, let us move on to the not so obvious. 

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The Intelligent Investor, (1949) by Benjamin Graham. This book has been hailed by Warren Buffett as the best investment book ever written. Benjamin Graham is considered to be "the father of value investing", and investment strategy based on fundamental analysis, and focuses on buying underpriced stocks and holding them over the long term for their value. Graham delves on the history of the stock market, and informs the reader how to do fundamental analysis on a stock. He discusses various ways of managing your portfolio including positive and defensive approach.

The Essays of Warren Buffett: Lessons for Corporate America (1997) by Warren Buffett. In his Essays, Buffett provides his view on a variety of topics. Buffett outlines his basic business principles, corporate governance, finance and investing, common stocks, and alternatives to common stocks. This is a good read for anyone who wants to learn about investing.

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Beating the Street (1994) by Peter Lynch is a book you will benefit from the practical experiences of a man who is considered to be one of the most successful stock market and hedge fund managers of the 20th century. Peter Lynch is reputed to have grown a fund from $18 million to $18 billion. Beating the Street allows the reader to peek into Lynch's mind and thought processes in terms of buying or selling of shares. Lynch encourages investors to invest in what they know.

Peter Lynch also wrote Learn To Earn (1995), and One Up On Wall Street (1989). Learn To Earn is aimed at a younger audience and explains many business basics, One Up On Wall Street makes the case for the benefits of self-directed investing. All three of Lynch's books follow his common sense approach, which insists that individual investors, if they take the time to do their homework, can perform just as well or even better than the experts. 



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