The total range of investment books has grown exponentially over the last 30 years, creating an overwhelming level of choice for personal finance readers.
How can we filter through this enormous list of 1,000s of money-based book titles to arrive at a useful and well regarded book for our circumstance?
In this article, I will explain my own personal approach to finding and reading the best investing books, and I’ll share it with you, along with some tips on which types of books I think would be matched well for different types of investors.
What Type of Investing Book is Right for You?
1. Editorial oversight.
First of all, given the huge number of titles on offer, we can afford to be ‘choosey’ when picking our books. The first easy question is, would you rather read a book which has been through a rigorous editing and vetting process, or one that hasn’t?
If you’d sensibly like to stick with books which have been scrutinised by a team of individuals before publication, then avoid ‘ebook only’ titles. These are also known as self-published ebooks, and are recognisable by their lack of softback or hardback variants on book stores such as Amazon.
I acknowledge that some self-published investment books will be good quality, however I can be confident that the average quality of books published by a publishing house will be higher than the quality of self-published works.
If you consider the causation – usually an author will choose the route of self publishing if they:
- Don’t believe their book will be accepted
- Don’t have the credentials for a publisher to consider their works credible
- Only expect to make low sales, therefore wish to capture a higher % of the sale price of each book sold
Other reasons will factor into the decision, but the fact is that authors fitting the description above will be deterred from being formally published, and will therefore self publish, which waters down the quality of that bracket.
2. Expertise level
It’s important to understand the target audience of an investing book. Are they aimed at beginners? It’s easy to tell; a beginners book will include:
Definitions for every acronym AND every financial concept
An introduction outlining the very basics of how financial markets operate
An explanation of why diversification is necessary
Less depth but a great deal of breadth, to enable a beginner to familiarise themselves with lots of topics without getting bogged down in the detail.
A book aimed at more experienced investors will:
Be less attractively marketed. Expect less colour, less grabby taglines and an altogether more ‘grown up’ feel. Books in this category are judged on their substance, and are generally bought from word-of-mouth not on their call to action printed on the front.
It never pays to read a book aimed at a level above where you’re currently at. Doing so runs the risk of boring you so much that you feel you enthusiasm for investing slipping away. There’s no ‘points’ to be scored for appearing to be reading a high level of investment theory. What matters is how well the concepts and research within, click into your previous understanding of investing and the financial markets.
3. The author
I try to pick up investing books with a variety of authors over time. Variety of what? Backgrounds.
Investing books are authored by academics, financial advisers, fund managers, private investors and banking figures (central banks and commercial banks). These provide a wealth of different perspectives.
An ex-banker can lift the lid on what life is really like on the trading floor of an investment bank. You can find out how the aggressive working culture and late nights produce the types of returns that allow for 6 or even 7 figure bonuses.
That’s all fairly anecdotal though, and sometimes you want to see the evidence and the historic data which backs up the author’s viewpoint. This is where academics excel, as they usually treat their books like a mini-thesis, complete with data tables and charts which helps to support their claims.
Reading around different types of authors will flesh out your understanding in the investing world in a more interesting way than, say, looking for books on different asset classes.
So what type of investing book is right for you? Well, it’s about getting all the different perspectives and using these to inform your own approach.