Education is a step toward financial success.
Where does one begin when trying to come up with the top ten investment books? Here is my list, but be forewarned, this is not a list of books that focus on either fundamental analysis of stocks, nor is it a list of books explaining technical analysis. In fact, the list below is the antithesis of stock picking. My list of the top ten investment books focus on index investing and a passive approach to portfolio management. When I use the term passive, I do not mean that in the tightest definition of that term.
Here is my recommended list.
- Four Pillars of Investing – William J. Bernstein
- Index Funds: The 12-Step Program for the Active Investors – Mark T. Hebner (Available online for free.)
- The Little Book of Common Sense Investing – John C. Bogle
- All About Asset Allocation – Richard A. Ferri
- The Intelligent Asset Allocator – William J. Bernstein
- The Power of Passive Investing* – Richard A. Ferri
- Asset Allocation – Roger C. Gibson
- What Wall Street Doesn’t Want You to Know – Larry E. Swedroe
- Unconventional Success – David F. Swensen
- The Investor's Manifesto – William J. Bernstein
It was not easy to pick which of Bogle’s books to recommend. His First 50 Years is definitely one to substitute for my number 3. In this blog post I replaced Rob Arnott’s book with Bernstein's third investment book, The Investor's Manifesto. Arnott's book advocates actively managed index funds and that philosophy runs counter to the investment strategy laid out in the other recommended books. I figure if you read the ten listed books, you can handle Arnott's book. There are several ways to read these books. 1) Read them from start to finish as one reads most books. This looks like a daunting task if one is going to commit to reading all ten. 2) An alternative approach is to have, say the first seven or eight on your book shelf and you pick themes to read. For example, you might check the index of each and read all about asset allocation or rebalancing. Use them as reference books. If you take this approach, I highly recommend you read Bernstein’s second book, “Four Pillars” from start to finish so you have a sound base from which to begin developing your portfolio plan and eventually a strategy for portfolio management and tracking. Another excellent starter is The Investor's Manifesto. It may be a little easier to read, so take that into consideration. Make the investment in a number of these books and it will reward you over the course of your investing life.
* Number six (6) is a new addition as of 12/8/2010.