In the quest to find the best finance books available in every niche of the financial world, I’ve developed quite a broad understanding of the finance book market.
In this article, I will share this framework with you.
Due to the many different financial industries, the different investing ideologies, the many asset classes, and the different experience levels book audiences, it can sometimes look like the best investing books seem to cover ‘everything’.
In this guide, I’ll debunk this myth by showing you that every title belongs to five main groups of books. I’ll then carefully and methodically break down each group into sub-categories (and sometimes further still) until I can show you a simple and discrete list of individual finance topics.
I hope that this will serve as a useful guide for any student of finance or new investor who would like to know the answer to the question:
What do the best finance books out there have to teach me?
Primary finance book categories:
The primary genres are:
- Investment & finance principles
- Specialist asset classes
- Professional finance
- Day trading
- Personal consumer finance
- Financial crime
This guide will be divided into sections representing each primary category, and will comprehensively list all of the known secondary and tertiary subgenres within.
Where Financial Expert features a dedicated book guide for a topic, we’ll link to that shortlist, so that you can view some representative examples of that group.
Detailed overview of all finance subgenres:
At a glance, here is the latest definitive guide to finance book subgenres:
- Investment & finance principles
- Corporate finance
- Portfolio management
- Specialist asset classes
- Stocks & shares
- Value investing
- Growth investing
- Dividend investing
- Investing in emerging markets
- Fixed income
- Land & property
- Property investment
- Land & forestry
- Property valuation
- Foreign currency
- Alcoholic beverages
- Structured products
- CFDs / Spreadbetting
- Futures trading
- Private markets
- Angel investing
- Stocks & shares
- Professional finance
- Finance industry guides
- Private equity industry
- Venture capital industry
- Investment banking industry
- Wealth management industry
- Hedge funds industry
- Islamic finance industry
- Mergers & acquisitions industry
- Banking industry
- Financial literacy
- Financial statement analysis
- Corporate tax
- Finance for non-financial managers
- Due diligence
- Financial modelling
- Financial management
- Financial risk management
- Project finance
- Corporate finance
- Treasury Management
- Finance industry guides
- Day trading
- Day trading – general
- Quantitative & technical analysis
- Forex trading
- Investing psychology
- Behavioural investing
- Quantamental investing
- Personal & consumer finance
- Personal finance
- Budgeting & saving
- Saving tax
- Pay off debt
- Financial Planning
- Financial planning
- Retirement planning
- Estate planning
- Get rich quick
- Financial independence & retire early
- Investing in yourself
- Money mindset
- Personal insolvency
- Young investors
- Investing for teens
- Investing for students
- Personal finance
- Financial crime
- Money laundering
- Fraud & forensic accounting
Now I’ll explain each of these categories in detail, highlighting the key topics which fall into each, and making connections between subgenres in terms of a shared audience or school of thought.
1. Investment & finance principles
Investment and finance principles is a genre of book dedicated to the science of investing, how it works, how the market operates and what theories help to explain investor behaviour.
It’s the academic perspective on finance, and is populated with high-level overview guides aimed at beginners, or textbooks for students of finance-related undergraduate degrees.
1.1 Corporate finance
Corporate finance is a wide field which includes many investment concepts such as the flow of capital and risk throughout the financial system.
Key topics include:
- The relationship between risk and reward
- The characteristics and valuation of financial instruments such as bonds, equities and options
- The capital structure (financing) of firms. In particular the use of debt versus equity
Students can major in corporate finance, or combine with the field of accounting in an accounting and finance major.
For the 2021 academic year, The Complete University Guide ranking of UK accounting and finance undergraduate degrees ranked Glasgow University’s Accountancy and Finance BAcc course at #1. This ranking system places more weight on the quality of the student experience, and less on indirect factors such as the research quality of the faculty.
Corporate finance is a useful discipline for students who are interested in working in the banking, venture capital and private equity industries.
The overlap occurs because the corporate finance curriculum includes virtually all of the concepts, mathematics and statistics which underpin real investment and financing decisions.
Read more: The best corporate finance books (coming soon)
1.2 Portfolio management
Portfolio management is the discipline surrounding the creation and management of an investment portfolio.
It’s the science applied by a host of wealth management professionals, such as:
- Pension fund managers
- Mutual fund managers
- Financial advisers
- Private office portfolio managers
- Endowment fund managers
- Sovereign wealth fund managers
Whether you’re investing £1,000 or £1 billion, you are applying a portfolio management framework when you decide how to spend that money.
This is why studying portfolio management principles and techniques is a worthwhile investment of time for individual investors as well as professionals.
Successful portfolio management doesn’t just result in stellar investment returns; it’s also about reducing volatility. A portfolio with lower volatility is one with less risk.
Less risk means a more pleasant and assured investment experience and an increased likelihood that the investment objectives of the portfolio will be met.
Key topics include:
- How to allocate money to the different major asset classes
- How to minimise the volatility of a portfolio
- How to generate the maximum portfolio return for a given level of risk
- Why leverage is sometimes used by investment professionals
Reading the course materials for module R02: Investment principles and risk in the Regulated Diploma in Financial Planning offered by the Chartered Insurance Institute is a neat way to absorb plenty of the training that a financial adviser would be given on how to manage a portfolio.
Portfolio management v Wealth management
So we’ve covered the definition of portfolio management – how does this differ from wealth management?
Wealth management is a broader discipline which can encompass the management of a greater sphere of an individuals’ private wealth. Wealth management strategies could include inheritance tax planning, life insurance and providing access to spending money in a tax-efficient manner.
Portfolio management, in contrast, is a more narrow disciplined which is concerned only with the assets which have been deposited into the portfolio.
Therefore for students interested in making their way into private banking, private offices or financial advice; wealth management books are also worth referencing as these will address the holistic needs of your future clients.
Our own definition of economics states that this subject is a social science which attempts to explain how the world allocates finite resources to those who want to consume them.
Yet any definition that fits in a single sentence will fail to do justice to the sheer breadth and scale of the economics field.
Economics is widely regarded as the most academically challenging finance-related undergraduate degree. Therefore, economics students enjoy an element of prestige after graduating, above and beyond their accounting and finance student counterparts.
Oxford University famously offers a degree called Philosophy, Politics and Economics, which is known as ‘PPE’ for short. PPE is seen to offer a suite of subjects which complement a career in politics, journalism or the government.
The facts appear to back this up: 10 Downing Street has been occupied by a PPE graduate no fewer than three times, and the current Chancellor of the Exchequer at the time of writing (Rishi Sunak) is also a graduate of this hallowed course.
It should therefore come as no surprise that PPE is heavily over-subscribed. The official course page indicates that fewer than 15% of applicants who meet its high entry requirements are successful in securing a place on this course.
What does the study of economics involve?
Economics books usually fit within one of the two frames of reference:
- Macroeconomics (economy-scale decisions)
- Microeconomics (consumer or business-level decisions)
However, you’ll find that introductory books will cover both the macro and micro sides of the subject.
Within macroeconomics you can expect to see topics such as:
- Interest rates
- Unemployment rates
- Inflation rates
- Saving & borrowing
- Household consumption
- Government spending
- International trade
- Foreign exchange rates
Ultimately the study of macroeconomics will allow you to understand how all these variables each help to support or hinder economic growth.
With a microeconomics hat on, you’ll be reading about:
- How buyers and sellers agree on a price
- How changes to market conditions can impact the price and quantity of goods produced and consumed
- How companies make rational decisions regarding expansion, trade and production
Read more: The best economics books
Econometrics is a branch of economics which deals with the statistical analysis of economical problems.
By building financial models and quantifying economic events and scenarios, theorists can use econometrics to ‘solve for’ factors and suggest optimal solutions to markets.
Read more: The best econometrics books
In the broadest possible sense, ‘finance’ is a catch-all term which incorporates elements of each category above.
- The financial markets
- Financial instruments, including shares and derivatives
- Trading and pricing
- Financial institutions & banking
- Global trade
- Flows of capital and the money supply
If someone says that they ‘work in finance’, this refers to the financial sector. Which includes jobs such as:
- Banking activities
- Wealth management
- Lending activities
- Accounting and auditing
- Investing activities such as venture capital / private equity
Read more: The best finance books
2. Specialist asset classes
The majority of finance books sold in bookshops will concentrate upon a single asset class; be it equities, property or more unusual form of investment.
Logically, this is because the content of a book will follow the expertise of the author. Such is the nature of the modern finance professions – most experts have a very narrow field of interest – which will span more than one asset class only rarely.
I also believe that this is a consumer-led phenomenon too. With varied interests that flit between fashionable asset classes over time, readers are looking for something novel and new when scanning a book shelf.
General ‘all-in-one’ investment books will not catch their eye.
Let’s also think practically; how many pages could a paperback spare for each topic if it attempted to convey insights on more than one asset class in a single title. The length of this very article should more than make this point for me!
I’ll now walk through the different subgenres I have observed which cater to a single asset class.
2.1 Stocks & shares
It’s listed first because it’s by far the most written-about asset class. I’m talking about the humble stock or share.
When you consider that the global stock market and corporate bond market are roughly the same size (about $100 trillion each), it may leave you puzzled
The reason is perhaps quite simple:
Some lucky people ‘get rich’ by buying shares
Equities are a high-risk, high-return asset class. The prospect of these greater returns leads investors to focus heavily on this class above all others.
If an investor invested $1,000 at Apple Inc’s initial public offering in 1980, their holding would be worth $167,000 today. Likewise, $1,000 placed at Amazon Inc’s IPO would have yielded $42,000, and the same put into Tesla Motors initial offering would now be worth $90,000. (Source: stockchocker.com. Prices correct at date of publication in Dec 2020).
Corporate bonds, in contrast, have limited upside by design. Corporate bonds either pay a fixed rate of interest, known as a coupon, or they repay an investor through a higher payment at the maturity of the bond. As these cash amounts are capped, there is little opportunity for further upside outside of distressed debt scenarios.
The stock market tends to follow a dramatic cycle of boom and bust, with unpredictable timing. However, over very long periods, they are usually the highest-performing asset class.
It therefore makes sense for long term investors to:
- Spend more time learning about the risks of shares
- Spend more time attempting to pick the right shares
Therefore, it makes sense that the bookshelves of book stores reflect this by stocking this dominant genre heavily.
Read more: The best stocks and shares books
With a subgenre as large as stocks & shares, every facet of investing in the stock market has received a write-up over the years.
This had led to a range of titles that each reflect an investing style, such as:
- Value investing
- Growth investing
- Dividend investing
There are countless more, such as momentum investing, quantitative investing, green/ethical investing however I’ve cut the list short for the sake of brevity.
2.1.1 Value investing
Value investing, as we explain in our beginners guide to value investing, is an investing approach where an investor employs analysis of a companies fundamental performance, condition and prospects.
With reference to factors such as:
- The quality of the management team and corporate governance
- The economic moat, if any, enjoyed by the company
- The power of the companies’ brand
An investor can reach an independent view of the value represented by a company. If the going market price is below this value by a safety margin, then the company is ripe for investment.
Financial guru Warren Buffet is perhaps the world’s most successful value investor.
Read more: The best value investing books
2.1.2 Growth investing
The growth investing strategy throws the concept of value to the wind. Growth investors are prepared to pay a premium to own a piece of the highest growth, market-leading, industry-defining businesses.
Such companies tend to increase revenues at an exponential rate and also trade at a much higher price-to-earnings ratio. This can lead to a wild ride for investors, but one which they hope will justify the risk taken.
Investors who have owned the FANG tech stocks (Facebook, Apple, Netflix & Google) subscribe to the growth investing approach.
As they will surely attest; growth investing has objectively outperformed the value investing approach by an eye-watering margin so far this century, as reported by the Wall Street Journal.
Read more: The best growth investing books
2.1.3 Dividend investing
Dividend investors place a value on the income that shares pay in the form of a dividend.
Therefore, dividend investors scan the market for companies which offer an attractive dividend which meets their criteria.
Dividend growth investors refine this list further, to help them pick companies which have an unbroken track record for increasing their dividend payments year-on-year.
The dividend yield on an investment portfolio of shares can range from 1% to 8% per year, depending on the constituent companies. Therefore, you can see how the selection process can produce a portfolio of companies which have very different characteristics to the FTSE 100, which yields 3.1% at the time of writing or the S&P 500 which currently yields just 1.8%.
Dividend investors are often middle-class retirees, who use the income from their share portfolio as a pension income. This can easily beat the equivalent payments from the purchase of an annuity, albeit with far greater risks.
Because the risk tolerance of retirees is usually much lower than someone of working age, people are advised to only invest a modest portion of their retirement fund in equities.
Read more: The best dividend investing books
2.1.4 Investing in emerging markets
The emerging markets are akin to the ‘wild west’ of global stock markets. Younger, less mature and untested equity markets which hold an untapped potential for growth connected to positive demographic and economic trends in emerging economies.
Many emerging economies have enjoyed average annual GDP increases of 6% – 9% over a period of twenty years.
The implication of this headline GDP growth is that the domestic markets for consumer and industrial goods are also growing at a rapid pace. This leaves the corporate titans of those sectors with a sunny outlook as the economy continues to expand.
Emerging markets aren’t without their risks. The stock market indices which track emerging markets tend to trend upwards and downwards with higher volatility than developed market indices such as the Dow 30 or the MSCI Developed World Index.
This reflects the more unstable political and legal systems in some emerging market economies.
Read more: The best emerging markets investment books
2.2 Fixed income
Fixed income. It isn’t glamourous or sexy, but it’s a terribly important asset class.
Fixed income refers to any financial instrument which pays a contractual payment to investors.
- Corporate bonds
- Sovereign bonds, also known as government bonds, or Gilts in the UK.
- Municipal bonds (the debt of local government bodies)
- Personal loans (such as peer-to-peer lending).
- Preference shares (some carry a contractual dividend amount).
As explained in our corporate bond ultimate guide, corporate bonds are a stalwart asset within most investor portfolios.
Investors with a moderate level of risk tolerance may allocate between 30% and 80% of their portfolio to fixed-income investments.
Pension funds are massive investors in bonds. In fact, they’re legally obliged to hold a significant portion of their funds in low-risk assets such as bonds, to ensure that they can meet their sizeable obligations when they fall due in the distant future.
- The best bond investing books
- The best government & sovereign bond books (coming soon)
2.3 Land & property
After stocks & shares, property investments probably to rank second when it comes to popular appeal.
Beyond the innate desire to own our own homes, the aspiration to build an entire portfolio of properties is quite commonly held among those seeking to build wealth and generate a passive income independent of a salary.
And yet the property market is quite difficult to master. Let’s consider what makes investing in property so challenging for beginners:
- Buyers and sellers do not have equal access to information about a property
- Transactions can take as long as 6 months to formally complete
- Professional fees, estate agent fees and Stamp Duty Land Tax act as a prohibitive tax on each property exchange.
- Hidden costs in the form of expensive faults can surprise the buyer after the purchase.
2.3.1 Property investment
Residential properties are the target of most retail investor monies when investing in property.
Investing in a home can make great sense as an investment, because the investor stands to gain from any increase in the valuation of the property, as well as generate a net rental yield by letting the property out to tenants.
Becoming a landlord is a complicated business, but much of the administration can be outsourced to a letting agents and contractors in return for 10 – 20% of the monthly rent.
This allows investors to add properties to their portfolio at scale while still working a full-time job.
Given the complexity of the property market and the number of potential pitfalls, you’ll find literally hundreds of property investment books on the market today.
With such a saturated market, authors have been targeting ever-narrower niches within the property investment sphere in an attempt to carve out a piece of this publishing pie.
I’ve personally read titles which cover individual topics such as:
- How to build a large property portfolio
- How to successfully let out a property
- How to maximise profits when developing a property
- How to earn income from properties without using your own money
- How to meet your legal and tax obligations as a property investor
- How to invest in properties through a company
- How to get a mortgage (including if you’re self-employed)
2.3.1 Land & forestry
The number of land purchase opportunities available to individual investors is greater than you might think. Particularly in the UK where we don’t seem to have much land to go around.
Forestry investments are a specialist investment for sophisticated investors. This green option combines the qualities of land investment, with the crop yield of a farming investment.
This makes for a very unique investment opportunity which warrants specialist reading material to guide investors through.
Read more: The best land & forestry investment books
2.3.1 Property Valuation
Property valuation is a financial practise used by property buyers, lenders and sellers to make financial decisions about property transactions.
A mortgage provider needs to value a property to calculate the loan-to-value (LTV) of the loan. The higher the value of the property relative to the loan, the higher ‘equity’ the owner will have, which will provide a cushion against any reduction in property values. Given that the property is the asset securing the loan, this reduces the risk of the lender not receiving full repayment should the borrower default.
Property buyers and sellers are also naturally interested in the market valuation of a property to enable them to set a fair offer and bid price for properties on the market.
Read more: The best property valuation books
Commodities represent useful ‘goods’, such as timber, iron, corn, gold and oil. For a full list of commodities, click here.
Widely-traded commodities are homogenous, which means they adhere to exacting international quality standards. This allows buyers and sellers to happily place orders without needing to discern between suppliers. This means that price, not brand, is king in the commodities markets.
Once the staple of day traders and investment bankers, the proliferation of retail derivatives, exchange-traded funds, exchange-traded commodities and CFDs/ spread betting has opened this asset class up to a new generation of retail investors.
One class of commodities which have been held by small investors for centuries are precious metals. These include:
- Gold bullion
- Silver bullion
Investing in gold carries a strong appeal for those people who enjoy collecting beautiful and valuable items. Gold, in particular, is a very alluring object to hold in your hands. It’s also an asset which has seen its price move quite independently of the stock market. This can be a useful property for a component of your portfolio to have.
- The best alternative investment books
- The best commodities investment books
- The best gold & silver investment books
2.5 Foreign currency
We’ve all bought foreign currency such as some Euros when travelling abroad, but have you ever consider foreign currency as a speculative investment?
At the start of June 2016, ahead of the UK referendum on whether to remain in the EU, a US Dollar was worth £0.70. Following the shock result, it rose to £0.80 – a gain of 14.2%.
Capital gains arising on currency transactions tend to be exempt from capital gains tax, which is handy. However, you should perform your own research on local tax rules.
About the foreign exchange market
Currencies are traded as ‘currency pairs’, with one being bought and one being sold. The foreign exchange market is open for business 24/7, so an online trading platform will allow you to trade forex even when the stock markets are closed.
The vast majority of foreign exchange trading volume is carried out by banks on behalf of corporate clients. Each day, billions of dollars of currency are exchanged to enable the movement of cash and goods around the world.
Economic factors are the driving forces behind changes in the relative strength and weakness of currencies against one another.
Read more: The best forex trading books
Cryptocurrencies are a brand-new asset class of the 21st century.
The largest cryptocurrencies by trading volume and market capitalisation in 2021 are:
- Bitcoin Cash (a distinct cryptocurrency to Bitcoin)
Bitcoin is widely regarded as the leading cryptocurrency. Bitcoin began life in 2009 and was worth $0.01. At the time of writing, a Bitcoin was worth close to $25,000.
Bitcoin has minted millionaires and even billionaires. But it would be highly controversial to label it as investment grade.
Due to its high volatility and its prices’ apparent disconnect from fundamental valuation factors, critics argue that Bitcoin is nothing more than a speculative mania. They draw comparisons to the dotcom bubble that gripped the Nasdaq around the turn of the millennium.
It’s fair to say that an investment in cryptocurrencies is more of a gamble or a wager than an investment at this stage. However, it’s a wager that several adventurous investors are choosing to take (with a small portion of their portfolio that they can afford to lose).
Read more: The best cryptocurrency books
Collectables are owned by two types of people: those with a burning passion for a type of possession, and those with an eye for profit.
Of course, it’s possible to be both – to use your keen knowledge on a niche area to carefully select collectible items to invest in.
The market for collectibles is very unique and has the following characteristics:
Low volume – items are exchanged via scheduled auctions or events.
High storage and transaction costs – collectables need to be physically homed and may require security measures and specialist insurance to keep them safe.
Subjective valuation – scarcity can be measured, but beauty is ultimately in the eye of the beholder. Collectables regularly achieve market prices which are dramatically above or below expert valuation estimates.
There are countless forms of collectables, but this list will focus on:
On the basis that these items have some of the deepest and most liquid markets, which enables investment at a larger scale.
Read more: The best collectable investment books (coming soon)
2.7.1 Investing in art
Pieces of art regularly command prices in excess of $50m. The most expensive painting ever bought was Salvator Mundi by Leonardo Da Vinci which changed hands for $450.3m in 2017.
The original works of ascending artists may see their values rise as their creator becomes more widely recognised.
In a busy market with tens of thousands of unique pieces, factors such as prestige and providence can drive a valuation just as much as a piece of art’s broad aesthetic appeal.
Read more: The best art investment books (coming soon)
2.7.2 Investing in vehicles
Vehicles are perhaps the most expensive items that we buy which depreciate over time. But not all. Some investors have generated a handsome return by investing in collectable vehicles with the following characteristics:
Exclusive new vehicles. The value of ultra limited-edition supercars can rise above their list price immediately after purchase. This may occur wherever the number of owners prepared to pay list price exceeds the number of vehicles which leave the production line.
Classic vehicles. In the UK, a vehicle is considered to be a classic car when it reaches its 40th birthday. The authority on this topic? The Government!
That’s right, it awards vehicles which reach 40 years old with a special exemption from MOT. It’s a common-sense idea; the owner of such an old vehicle is clearly maintaining it to a high standard to enable it to remain on the road.
It’s easy to confuse the term ‘classic’ with ‘vintage’. Vintage is in fact a more specific term covering only cars built in the 1920s and 1930s.
Exclusive & classic vehicles. The combination of super-low production numbers, and a fine age, can result in stratospheric valuations. In 2018, a 1962 Ferrari 250 GTO was sold for a world record price of $48.4m
Read more: The best classic vehicle investment books (coming soon)
2.7.3 Investing in alcoholic beverages
Investors tend to favour a few types of beverage when buying bottles for investment purposes, rather than consumption:
- Red wine
- White wine
- Sparkling wine
- Brandy – Cognac in particular
The most expensive bottle of red wine was a bottle of Chateau Margaux 1787 was insured for $225,000.
But that looks like great value compared to the most expensive whisky ever sold at auction. That honour belongs to a bottle of Macallan Fine and Rare 60-Year-Old 1926 which sold under the hammer for a stunning $1.9m.
At the time of writing, a recent headline in the news is speculation that a bottle of Macallan Whisky single malt may reach a world record price.
2.7.4 Investing in memorabilia
Perhaps the most fickle of investments. Memorabilia can jump from worthless to priceless to worthless in the space of a few decades.
What is memorabilia? Well, it could include any of the following:
- Signed books, records, posters
- Authentic props from film & TV
A successful memorabilia investor needs a keen eye for:
- The right item
- In the right condition
- Belonging to the right fandom
- And finally, the right conditions to sell
Luck plays its part too. At purchase, no collector can confidently predict what the demand for a particular item will be in 30 years.
Some franchises, such as Star Wars, have endured over the decades. This is in part due to a thriving fandom, but this demand is also stoked by continuous investment in the intellectual property by their corporate owners.
Not all legacies endure. If a TV show, film or literary series falls out of favour with the general public, all of its associated memorabilia could fall in value too.
When a piece of memorabilia ages beyond living memory, it merely becomes an antique. With that label – the exclusivity and mint condition of the item may not support as high a price as a passionate fan may have once been happy to pay.
Read more: The best memorabilia investment books (coming soon)
Financial instruments which derive their value from another asset are known as derivatives. They don’t represent real ownership of an underlying asset. Instead, they are a contract between two counterparties, which replicates such ownership, by being designed to produce a financial gain or loss to each party.
Derivatives were created to provide a more efficient way to transfer risk and rewards. At the drop of a pen, investors could buy the equivalent of 1,000 barrels of oil without needing to even speak to an oil trader.
The derivatives market has exploded in recent decades. The notional value of all derivatives is said to be as high as $1 quadrillion.
From a retail investor standpoint, derivatives can provide a way to take very specific risks in an efficient manner. Using derivatives can also provide leverage, as the upfront cost of buying a derivative is often only a fraction of its notional value, meaning that a larger position can be achieved with less capital.
In general, derivatives are considered to be high risk products, which are only suitable for sophisticated investors.
Read more: The best derivatives books
2.8.1 Structured products
Structured products are complex investment products created by a financial institution and offered to retail investors.
They take an initial deposit and payout different returns loosely based upon the performance of an underlying index, such as the FTSE 100.
A structured product will usually have several different financial outcomes, and may even return funds to investors early. This all hinges on the level of the reference index at various measurement points along the way.
The product of all this is an investment that might sound simple when described in a single sentence:
“This structured product will pay a fixed return of 40% at the end of five years, so long as the FTSE 100 index ends the five year period above it’s starting level.”
But in reality, the number of other possible scenarios (with unknown probabilities) means that these can be mind-bogglingly complex. To quote structured product literature risk warnings:
‘You are about to purchase a product that is not simple and may be difficult to understand.’
Read more: The best structured product investment books
Options are a form of derivative which gives one party the right to buy or sell an underlying asset at a fixed price agreed upfront.
A practical example might be if a furniture company awarded you with a transferable voucher which gave its holder the ability to buy their top-of-the-range sofa for £300. It’s a steal as the selling price of the same sofa is £1,000. This gives the voucher – an option – an intrinsic value of £700.
You could realise that £700 value immediately by using the voucher to grab the bargain, but you hold onto it instead.
Two weeks later, you return to the shop and notice that the selling price has increased to £1,200. That same option to buy at £300 is now worth £900.
This is an example of a call option. Investors pay an upfront, non-refundable premium to be given an option to buy a share, commodity or currency at a fixed price.
- If the price of the underlying asset rises, the option gains value.
- If the underlying asset price falls, the option loses value.
- If the price of the underlying asset reduces below the price quoted on the option (‘the strike price’), then the option becomes ‘out of the money’. It would be cheaper to buy the underlying asset on the open market than to utilise the option.
However, an ‘out of the money’ option is far from worthless. If it still has plenty of time left until it expires, there’s still a chance that the underlying asset price will recover.
Read more: The best options trading books
2.8.3 Contracts for Difference / Spread betting
Contracts for Difference (CFDs) or spread betting is a two-way bet between a trader and a spread betting platform on whether the price of an asset will go up or go down.
The parties agree on how much the trader will win for every point of increase in the underlying price, and how much they will have to pay for every point the price drops.
When the platform loses, the spread better wins. When the platform wins, the spread better loses. It’s another zero-sum game, like foreign currency trading.
It’s a fairly simple contract to understand, and bears many similarities to bookmaking, in that the platform builds an edge (via the initial pricing it offers) to increase the likelihood that they will win the bet more often than the traders.
Read more: The best spread betting and CFD books (coming soon)
2.8.3 Futures Trading
Futures are a type of derivative contract, in which two parties agree to pay over the net gain or loss arising from an opposing bet on the price movement on an underlying asset.
Futures trading is often used by speculators to gain exposure to commodities.
Read more: The best futures trading books
2.9 Private Markets
The asset classes described above (with the exception of property and collectables) refer to publicly traded securities. The private markets asset class covers ‘off-exchange’ investments into private companies, which tend to be smaller and less regulated.
2.9.1 Angel investing
Angel investing is the making equity investments into start-up companies, and provided additional support in the form of advice. Angel investors are also known as ‘business angels’. The public will be aware of angel investing, because it’s precisely what is happening in the BBCs hit show The Dragon’s Den.
Angel investors face high risks, because the failure of a start-up is quite likely, and this will often wipe out the entire sum invested. However, successful angel investors can see returns in excess of 1000x their original investment if they strike lucky. It therefore takes a high risk tolerance, a sizeable bank balance and mental resilience to pursue angel investing.
3. Professional finance
3.1 Financial industry guides
3.1.1 The private equity industry
Private equity firms team up with banks to buy controlling stakes in small or large businesses, with the aim of generating a return on their equity stake by rapidly increasing the value of that company.
Private equity firms have a reputation for ruthlessness, as two of their common strategies are:
Cost cutting – where jobs are shed and unprofitable parts of the business are shut down to increase margins and create a leaner, more valuable company. It’s the corporate equivalent of a couple deciding to become a one-car family and reducing their monthly outgoings.
Breaking up & spinning off – where prized assets or divisions are separated from the rest of the business with the expectation that the sum of the parts will be greater than the whole.
That being said, private equity firms also play a key role in the health of an economy by buying up unproductive zombie businesses and converting them into more efficient economic machines.
Read more: The best private equity books
3.1.2 The venture capital industry
Venture capitalists are investors with a pile of money, an appetite for risk, and patience.
Venture capital firms in the UK usually setup a venture capital trust which raises funds from investors, who receive tax breaks for contributing.
The venture capital trust, or VCT for short, invest in early-stage or start-up companies in return for minority stakes in those companies.
By participating in the early financing rounds of fledgeling businesses, they get to buy-in at relatively low valuation points. Unlike private equity partners, venture capital investors generally take the back seat.
The downside risks are huge, as start-ups regularly fail, causing a total loss for equity investors.
But venture capital firms diversify across many investments, with the objective of hitting gold enough times to subsidise their failures and earn an attractive return overall to compensate investors for the high level of risk taken.
Read more: The best venture capital books
3.1.3 The investment banking industry
Investment banking is a broad industry which is so multi-faceted that it would be difficult to describe their operations in the same of a few paragraphs. Here are some examples of what investment banks do:
- Underwrite and market the shares of clients during an initial public offering (IPOs)
- Conduct proprietary trading using their own money
- Consult on mergers & acquisitions for a fee
- Arrange or underwrite derivatives
- Produce analyst research to provide intelligence to clients
- Act as market makers – buying and selling the same asset continuously
Read more: The best investment banking books
3.1.4 The wealth management industry
The more successful people are in business, the wealthier they become. The wealthier they become, the more complex their life and financial arrangements become.
Successful people usually like to focus their energy on doing what they do best – not managing their money. That’s where private banking, wealth advisers and family offices come in. This is the high-end of the wealth management industry.
But wealth management also includes the management of pension funds and cheap equity ETFs used by small investors saving up to buy their first home.
Wealth management can be a very rewarding career, providing steady remuneration while avoiding the machismo culture associated with deal-based industries.
Read more: The best wealth management books
3.1.5 The hedge fund industry
Hedge funds have the advantage of a lighter regulatory regime compared to the mainstream schemes listed above.
This gives hedge fund managers the ability to execute practically whatever investment strategy that they can conceive. Hedge funds can borrow money and trade in a variety of financial instruments including derivatives, in addition to buying shares.
Hedge funds carry high minimum deposit amounts compared to mutual funds and are suitable for sophisticated investors who understand the risks.
Retail investors may find that they can invest in a ‘fund of hedge funds’. These are mutual funds which pool retail investor money into a portfolio of hedge funds. They have opened the door to this interesting asset class for the regular investor.
Hedge funds are often seen as their own asset class because they seek to generate a positive return in a variety of market conditions.
Read more: The best hedge fund books
3.1.6 The Islamic finance industry
Islamic finance is growing fast – faster in fact that the Islamic religion itself. It is estimated by the UK government that the Islamic finance industry is growing at 10 – 15% per year. In contrast, the Islamic population is growing at approximately 2.2% per year.
So this is an exciting time to be learning about Islamic finance, or considering a career in this sector.
Islamic finance, in a nutshell, is a banking industry within a banking industry.
Due to teachings in the Qur’an which effectively prohibit the lending of money and collection of interest, the Islamic finance industry has stepped up to provide financing in a compliant fashion.
This typically involves the bank taking a real ownership stake in the asset being financed. It will agree contractually to sell its stake back to the consumer at a higher price than it purchased it. This is only one example of Islamic finance in action.
Read more: The best islamic finance books
3.1.7 The Mergers & Acquisitions (M&A) industry
Mergers and acquisitions are notable events in the year of any industry.
Some corporate groups are highly acquisitive. In February 2021 it was reported that Apple Inc made an acquisition every 2-3 weeks. By acquiring a business, an incumbent can:
- Remove competition from the market
- Acquire patents and intellectual property
- Bring know-how and talented employees into the business
- Expand quickly into a new market or territory
Mergers & acquisitions are exciting come with many risks:
- The business may underperform optimistic projections on which the price was based
- Cultural differences between old and new employees can result in toxic office politics and poor performance
- The integration of the new business into the existing company can trigger a culture clash
Read more: The best mergers & acquisitions (M&A) books
3.1.8 The Banking industry
Banking is the cornerstone of the financial services industry. To some, banking is financial services.
With so much money, so many bright employees and so much turmoil, the banking sector will never be a dull place to work.
Banking books range from textbooks which explain how a bank works, to ‘tell-all’ insider accounts of what really goes on on the trading floor.
Read more: The best banking books
3.2 Financial literacy
Financial skills have an unquestionable value.
Financial qualifications can underpin your salary for the rest of your career, and provide access to a rewarding job with progression opportunities up to the board of directors.
The first step towards financial skills and financial qualifications is attaining financial literacy.
To achieve this, you don’t need an expensive course or a tutor. You just need a decent textbook or detailed guide to help you see numbers, statistics and business information in a new light.
I’ve highlighted below the books which cover three exciting finance professions which revolve around specialist knowledge:
- Financial statement analysis
Accounting is the process of recording business transactions. This is critical for a management team to be able to:
- Measure business performance
- Make management decisions
- Support plans for recruitment
- Hold employees and teams to account
- Demonstrate their ability to increase shareholder returns
Auditing is the process of performing audit procedures, such as collecting evidence, to provide shareholders with the assurance that financial statements are free from material (i.e. significant) errors.
Audit is the proving grounds for many of the worlds most senior accountants. Many CFOs can trace their careers back to an audit internship at one of the prestigious Big Four accountancy firms.
The audit department is a particularly useful place to train and qualify as an accountant because the role exposes an auditor to plenty of real-life examples of what they’ve seen in accounting books.
To effectively audit an accounting estimate or a complex process, the auditor must first understand it. This means that continuous professional development is engrained in the role itself.
By the time they qualify, an auditor will have amassed the cumulative experience of several accountants working in specialist roles, which makes them very attractive candidates for a variety of finance and accounting positions if they decide to move elsewhere.
Read more: The best internal & external audit books
3.2.3 Financial statement analysis
Financial statements are the periodic reports which communicate financial information to internal and external stakeholders.
To a non-analyst – they are an unintelligible set of pages which are difficult to interpret.
To an analyst – they’re an open window that allows the analyst to better understand how a business works and how strong its current financial position is.
An analyst can use financial statements to make meaningful comparisons between companies, and can also use them to place a value upon a business.
Read more: The best financial statement analysis books
3.2.4 Corporate tax
Corporate tax is the broad term for a number of taxes which impact corporations.
This could include corporation tax, (a tax on profits), Value Added Tax or VAT (a tax on transactions), or Payroll taxes.
Due to the complexity of tax, it’s a lucrative field to enter into as a career. If you’re interested in understanding complex sets of rules (much like a lawyer would), this might be the profession for you
Read more: The best corporate tax textbooks
3.2.5 Finance for non-finance managers
Financial literacy isn’t a skill for only accountants, bankers, tax professionals and money-managers.
Accounting and finance is a discpline which bleeds across department lines and interacts with most ‘business-related’ jobs in an organisation. Finance is the language of business.
Finance for non-financial managers is a specific subset of accounting & finance books which targets non-accountants. It doesn’t aim to convert folk into finance experts, but to give them a useful working knowledge of:
- Financial jargon
- Accounting, including cost accounting
- Financial statements
3.2.5 Due diligence
Due diligence is the process of conducting a thorough review of business operations and finances, from an external perspective, to evaluate a company.
This might be performed in advance of a merger or acquisition, or by a lender who is considering extending credit to that business.
Due diligence teams pull together multiple strata of finance skills such as analysing financial statements, processing operational data and understanding the business model in great detail.
Due diligence activities usually culminate in a due diligence report which will allow the decision maker to make a much more informed choice as to whether to invest and lend.
Read more: The best due diligence books
3.2.6 Financial Modelling
Financial modelling is the creation of a simplified calculation, chart or dataset which describes the financial behaviour of a business and attempts to predict the future. Common financial models include budgets and short-term forecasts.
An excellent financial model incorporates multiple datasets and uses sensible assumptions to create a scientific basis for a prediction. The management team of a business will often sign-off on capital expenditure plans or bid decisions on the basis of a simple model in a spreadsheet. Therefore, it’s essential that finance personnel can develop their modelling skills to be able to produce trustworthy information.
Read more: The best financial modelling books
3.3 Financial Management
Financial management is the field of managing and leading a finance team within an organisation. The most senior financial management roles are:
- Chief Financial Officer or Finance Director
- Head of Finance / Financial Controller
- Finance Manager
The responsibilities of a financial manager are to:
- Ensure the quality of the financial reporting and other information prepared by the finance department
- Monitor compliance with the accounting policies and financial accounting controls in place and review the control environment on a regular basis
- Produce robust budgets and forecasts which allow management to make strategic decisions
- Manage cash flow, including the management of equity fundraising or debt issuance.
Read more: The best financial management books
3.3.1 Corporate Finance
Corporate finance covers equity and debt fundraising for private and listed companies.
One of the primary objectives of a financial manager is to reduce the cost of capital. Lower cost of capital, results in higher returns to shareholders, which is the ultimate goal of any corporation.
Achieving a lower cost of capital is achieved by using the right mix of debt and equity.
Debt is a cheaper form of capital. It has tax advantages and represents a lower risk investment opportunity to the investor. However, by over-loading a company with debt, a manager can ultimately raise its total cost of capital by heightening the risk of bankruptcy.
Read more: The best corporate finance textbooks
3.3.2 Project Finance
Project financing is when a company or group raise finance for a specific project, secured only upon the future cash flows of the project itself.
This is in contrast to traditional bond issues, which are still unsecured but can be repaid by the cash flows from the entire operations of a business.
Read more: The best project finance books
3.3.3 Treasury Management
The treasury function of a business will manage the cash and financing of business operations. Sophisticated treasury functions feel like an in-house bank, and treasury teams of any size play a critical role in the survival of any business.
Of all finance teams, treasury demands greatest level of financial control, due to the risks of embezzlement or expensive errors relating to cash payments.
Read more: The best treasury management books
4. Day trading
4.1 Day trading – general
Day trading is the investment strategy of entering and exiting short term investment positions to generate a return.
As we explain in our beginners guide to day trading, successful day traders usually possess a handful of effective traits:
- Knowledge of the financial markets
- An effective trading strategy
- The ability to focus
Some of these traits might be genetic, some can be gained through practice, and some can be learned through good day trading books.
Day trading books can also assist a potential day trader make practical decisions at the beginning, such as:
- How to choose a broker trading platform
- What level of chart and pricing data is essential
- How to determine how much capital to allocate to individual trades
Read more: The best day trading books
4.2 Quantitative & technical analysis
Technical analysis is the science of using historic information – typically pricing data – to make successful projections of future price movements.
Technical analysis books highlight a variety of pricing patterns, alongside the projection they indicate.
Quantitative analysis is the use of data to drive an investment strategy. This might be based upon ratios, news, volume information or one of many other data indicators.
Quantitative traders, or ‘quants’ as they’re sometimes known, are able to automate their trading strategy using an algorithm. This allows them to execute with a lightening-quick pace and beat other professional traders to a trading opportunity.
4.3 Forex trading
Forex trading is quite different from trading stocks and shares:
- Unlike shares, foreign currencies don’t produce a passive income comparable to coupon payments or dividends.
- The FX markets are open 24/7, meaning the value of your portfolio in your currency will constantly fluctuate.
- The foreign exchange market is ‘zero-sum’, which means that the aggregate value of all currencies cannot increase. When one currency appreciates in value, another must depreciate – because all currency values are relative to one another.
- Foreign currencies change in value by relatively small amounts compared to other financial instruments. Experienced traders have adapted to these modest movements by using up to x100 leverage to gear up their positions.
As a result of the stark differences between equity and forex markets, you will find that books will specialise in one or the other, and not attempt to cover both bases in one title.
Read more: The best forex trading books
4.4 Investing psychology
Any financial market, whether it’s the stock market, forex market or property market, is a collection of individuals making financial decisions.
Understanding how these brains work, can provide vital keys to understanding how the markets behave.
Crucially, a better understanding of investing psychology should allow us to master unhelpful impulses that can too often get in the way of our own returns, such as:
- The impulse to overtrade
- The impulse to sell in a bear market
- The impulse to hold onto losses
Investing psychology books represent the collision between finance and psychology. Where experts on the human brain share their theories and the science behind why investors do what they do.
Read more: The best investing psychology books
4.5 Behavioural investing
I like to think of behavioural investing as an essential companion to technical analysis and chart reading, because they complement each other perfectly.
Both are concerned with using information about investor sentiment and actions, to make predictions about price action in the future.
By pairing a technical analysis book with a behavioural investing book, you can understand both the cues from the charts and the science behind why predictions from historic price movements could occur.
Read more: The best behavioural investing books
4.6 Quantamental investing
If you prefer to stick to the facts (and lots of them), then quantamental investing strategies might be up your street.
Quantamental is a new word formed from ‘quantitative’ and ‘fundamental’ combined.
In the same way, quantamental investing is a combination of quant and fundamental investing approaches; taking the fact patterns and analysis of company performance, market trends and individual projections of company growth, and using the medium of big data analysis to arrive at conclusions.
In theory, an insights arising from the crunching of a huge set of (potentially proprietary) should be less likely to be factored into the market price of the assets. It could therefore, yield a trading advantage.
Read more: The best quantamental investing books
5. Personal & consumer finance
5.1 Personal finance
Sometimes you want to just put down the academic books on pricing, theories and case studies, and read something about you.
You, your money. How to spend, how to save it, and how to invest it.
Welcome to the personal and consumer finance genre – a bright world filled with short, attention grabbing titles.
Popular personal finance authors include Martin Lewis, the ‘Money Saving Expert‘ who has been championing consumer rights, savvy spending and top pick savings accounts for over a decade.
Read more: The best personal finance books
5.2.1 Budgeting & saving
Budgeting and saving is the first step on the investing journey because before you can invest, you need to save some cash first.
Picking the right stocks to invest in can turbocharge returns, but the simplest and easiest way to amass considerable invested wealth is to save more cash to invest in the first place.
Getting the basics of a budget right, making sensible financial decisions, and developing a healthy relationship with money are cornerstones to creating, maintaining and growing wealth.
5.2.2 Saving tax
Your accumulated wealth could be described as a function of the following:
- Saved income
- Plus investment returns
- Minus tax
If you want to maximise your wealth, it makes sense to boost returns and minimise the tax you pay.
We are morally and legally obliged to pay our fair share of taxes, and to not evade taxation by disguising the source of wealth, making false returns or engaging in purely artificial transactions designed to reduce tax.
However, there are many legal and ethical techniques to avoid paying more tax than you need to. The best personal tax books will help you begin to understand the minimum legal obligation for an investor in your circumstances.
Read more: The best pay less tax books
5.2.2 Pay off debt
Many investors begin life in the shackles of debt.
Debt isn’t a demon in itself, when funds are borrowed and put to productive use, they can really pay off to the borrower.
But when debt is unsustainable; when the interest becomes a hinderance, it takes on an entirely different and oppressive role.
Books devoted to helping savers pay off their debt are packed with tips to help people pay off their debts quickly.
- Which debts should I pay off first?
- Should I begin investing until all debts are fully cleared?
- Is refinancing a good idea?
Of course, there are other great sources of free financial advice which can also help those who are struggling with their debts. But books could be a large part of the solution.
Read more: The best getting out of debt books
5.2 Financial planning
5.2.1 Financial planning
Financial planning is the trade of the financial adviser. It comprises:
- Reviewing financial objectives
- Understanding tolerance of risk
- Checking financial protections (insurance)
- Building an investment plan
- Monitoring performance
But financial planning doesn’t need to be the preserve of a hired professional. By reading good financial planning books, you can learn the same skills, steps and best practise that a financial adviser will follow.
On my ‘best financial planning books’ page, I actually highlight a few texts that real trainee financial advisers use to study. Why settle for anything less when building your own financial plan?
Read more: The best financial planning books
5.2.2 Retirement planning
The ultimate financial plan is the goal of retirement. For some, retirement marks the sad end of a rewarding and successful career.
For the rest of us, it will come as a welcome relief. A release from the world of work, and an open door to spending more free time on hobbies and our families.
Retirement planning is about speeding up that slow and steady race. When saving for retirement, investors can get access to unique tax-saving opportunities (in the form of pensions) which add some additional choices and complexity into the mix.
After we’ve saved enough, another set of questions emerge at the threshold of retirement – what to do with our savings to produce an income in retirement.
Some people might prioritise the reliability of income, others might want to maximise their income (at the risk of potentially worse outcomes).
Some smart retirees are happy to accept a modest income so long as it is protected against the long term effects of inflation – which can seriously erode the spending power of a fixed amount over 10-30 years.
Read more: The best retirement planning books
5.2.3 Estate planning
For those who look furthest ahead, there is estate planning.
Estate planning is primarily concerned with what happens to our money after we are gone.
This isn’t all about minimising inheritance tax, although that is a significant concern when the going rate in the UK is 40%.
Other issues include:
- Ensuring that family businesses remain intact and functional
- Keeping property with a single owner, rather than it needing to be sold to pay inheritance taxes.
- Having confidence that everyone you wish to bequeath something to in your will, will get a reasonable share of your wealth
Estate planning involves the following topics which aren’t featured in most finance books:
- Trust law
- The laws of intestacy
Read more: The best estate planning books
5.3 Aspirational wealth books
5.3.1 Get rich quick
Get rich quick books are a love-or-hate genre.
Some love them for their powerful messaging, their motivational tone, and engaging language.
Others scoff at what they see as a cynical ploy to sell a book to someone who is financially desperate.
In my list of the best ‘get rich quick’ books, I’ve used the page to highlight what I believe are some of the more useful, well-rounded and factual titles in the category.
Saving money is hard, finding the courage to invest is difficult. If these inspiring books help to encourage someone to put their money to good use, then they were helpful.
5.3.2 Financial independence retire early (FIRE)
Financial independence is the state in which your passive income covers your living costs.
At this wonderful point in life, you are able to make a choice as to whether to work for a salary, or simply do something else.
For many people who gain little satisfaction from their line of work, this is a very attractive prospect.
What’s incredibly empowering about achieving financial independence and retiring early is that it’s within anyones gift.
Financial independence doesn’t require a high salary. Many of the FIRE pros didn’t earn six figures – they simply stuck to the principle of keeping their saving ratio high enough to retire in 15, 10 and sometimes even fewer years.
You’ll find some remarkable stories and case studies in my list of the best financial independence books – I recommend you check them out below.
5.3.3 Investing in Yourself
Where the personal development and financial space collide, you find the books about investing in yourself.
Investing in yourself is about spending time (or money) to develop your own skills. The point being, that valuable skills can generate their own return, through more lucrative job opportunities, promotions at work, or other entrepreneurial pursuits.
It goes without saying, that when investing in yourself you should be cost conscious. This applies equally, whether you’re investing in property or a graduate education.
Read more: The best investing in yourself books
5.3.4 Money Mindset
Money mindset is abotu dissecting the psychology of the wealthy.
In this world there exists hundreds or thousands of discrete personality types. As a result of our different upbringing, nationality, and principles, we are sensitive to different types of information, and react differently to stimuli.
The money mindset book category contains titles from authors attempting to break the code of which type of mindset appears to consistently lead people to riches.
The theory is that if we can identify and understand the mindsets of the wealthy and successful, then we can purposefully encourage ourselves to shift our own mindsets closer to these ideals. If our mindset is more aligned, then hopefully so will our financial success. Or so goes the theory.
Read more: The best money mindset books
5.4 Personal insolvency
Insolvency is a distressing process to go through. Above, I’ve discussed how debt problems can sometimes feel unsurmountable.
The best books about insolvency are designed to guide you through the bankrupty process.
Outside your door, you’ll find an array of debt charities, Citizens Advice and other support to help.
In addition to this, lawyers or insolvency practioners can help to negotiate on your behalf with lenders to cut you a better deal.
The advice from a debt charity is free, so this is always a sound place to start. Next, why not consider a book about debt and insolvency. It’ll set you back only a few pounds, and may give you some useful ideas before you need to try more expensive options.
Read more: The best insolvency books (coming soon)
5.5 Young investors
Parents are placing a great value on financial education for their families.
Although our technologies are rapidly expanding, and humanity seems to develop in leaps and bounds every year, life doesn’t feel like it’s getting any easier.
A rising population, rising affluence and a slowly growing housing stock have led to a surge in house prices over the last 30 years, which has priced many young adults out of the market.
These days, getting a good graduate degree and finding a well-paying job is no guarantee to a young person that they will be able to afford a modest home after working for several years.
This is just one of the reasons why financial education for young people is vitally important. Young people need to bring their ‘A’ game’ to stand a chance at doing better financially than their own parents.
5.5.1 Investing for teens
Teenagers are right on the cusp of achieving financial independence.
They’re also learning about the world at a dizzying rate, and are starting to set life goals for themselves, which may hinge on their bank balance.
There’s perhaps no better time to talk to children about money and investing than when they are teenagers.
Doesn’t it make sense to teach good lessons and inform them about the dangers of debt before they develop bad money habits to begin with!
Many teenagers are already investors, thanks to their junior ISAs which may be invested in stocks and shares. But the vast majority of teenage investors make their first share purchase when they’re 18 and starting to think for themselves.
Read more: The best investing books for teens
6. Financial Crime
Financial crimes is a blight on the capitalist financial system. Whereas title, trade and obligations are held in place by trust and law, financial crime seeks to undermine this.
By diverting resources to those who lie, falsify, extort or steal, financial crime skews the incentives of the markets and rewards activities which in the most part, do not add value to the economy.
Read more: The best financial crime books
6.1 Money laundering
Money laundering is the process of washing the ill-gotten gains of crime to remove traces of their criminal source.
In practical, this is done through disguising the source of money as it enters the legitimate financial system. Enry points could include a bank deposit, a payment for a house or business.
Money laundering used to be associated with piles of cash, however electronic transfers and online banking are common tools of the money launderer. Hiding in plain sight is often the objective.
Read more: The best money laundering books
6.2 Fraud & forensic accounting
Fraud is obtaining wealth through deceptive means, such as forgery, malicious falsehoods or impersonation.
The techniques used by fraudsters are perhaps only bested by the toolkits that anti-fraud investigators (known as forensic accountants) have at their disposal.
Books about fraud and forensic accounting often contain intriguing games of cat and mouse between perpetrators and regulators, as they battle through the medium of corporate identities, paperwork and financial transactions.
Read more: The best fraud & forensic accounting books