This Further Venture Capital Platform Review is a placeholder page in anticipation of our upcoming review of the Further investment platform. The content is a unique article about about different types of investing books.
If you’ve visited a book store recently, you’ll notice that the personal finance section is overflowing with new titles.
Whereas twenty years ago, this quiet part of the store would feature perhaps the ‘Dummies Guide to Investing’ and a serious tome about technical analysis of the financial markets, the range of the best investing books is now truly diverse.
In this article I will talk through some of the main types of investing books, as this list of thousands of titles can be neatly organised into groups of books that try to achieve very different things. We can then reflect upon which investing books are the most helpful in driving financial success.
The reference manual is the closest thing to an academic textbook that you’ll find in the personal finance section. That being said – the target audience will not always be graduate level. Reference books aim to be a comprehensive introduction to a subject matter, and will divide into chapters that cover the essentials such as:
- How the financial markets work
- Who are the main players
- An introduction to the risks and rewards of the main asset classes
- An overview to trading and how to buy and sell shares through a stockbroker
The autobiography is a difficult book to judge from the outset. Being biographical in nature, the stories (and lessons learned) within will be very dependent on the career and ideology of the author.
Part indulgent diary, part sharing of ideas, an autobiography is not a very ‘idea dense’ book in terms of its learning potential. You may disagree with me if you feel like the childhood experiences of a hedge fund trader will have a direct impact upon your own investing strategy!
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The books with the most eye-catching covers and titles are the ‘how to become rich’ category. These books appeal to an inner yearning we all have to increase our wealth quickly and easily, using novel techniques.
I find that these books can be hits and misses. Ironically, the hits are probably those books which actually contain simple and sensible core concepts. They are basically a well-packaged and well-marketed version of the ‘reference manual’ I discuss above.
The misses are those titles which advocate a high-risk or speculative investment strategy which will not be appropriate for a wide section of the population. As these books are mass marketed, and their titles will broadly appeal to most individuals, I find this type of mis-match between the promise and the delivery to be somewhat disingenuous.
In finance and investing, true novel ideas are genuinely profitable. However to print that idea and widely disseminate it through book stores is to remove its novelty (and thus its edge). Therefore, we can say with certainty that any ‘investing secrets’ contained in bestsellers, are neither secret nor will they be particularly effective for that reason.
When a trading idea is over-traded by investors, it may actually become less profitable than just holding a simple index fund which invests in the whole stock market.
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This type of book is usually penned by an ex-fund manager or investment professional who wants to increase their profile and leave a legacy in the investing world.
These will usually be written to appeal to beginners and advanced investors alike, by building up the investing concept quite slowly through the title, so that beginners can ‘hang on’ for the journey.
I find that buying investing books to pick-up on these investing ideas can be good value, depending on the price of the book. At $25 per book, this is an expensive way to generate a list of trading ideas, but at $10 or less (and if you enjoy reading), this can be an excellent way to expand your perspective on investing.
In my opinion, the most helpful book type is the ‘reference manual’ – a simple, condensed distillation of what you need to know to understand the mechanics of the stock market.
Once you can visualise the hidden levers and cogs that drive financial decision making, much of the resulting wisdom is entirely logical and makes a lot more sense. It’s therefore the only type of investing book I would recommend for a complete novice, as you won’t get the maximum value out of other titles until you’ve mastered the basics.