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moneysense.ca, 22/06/08
My Top Ten Money Books
Everyone loves lists – there’s the list of 100 greatest movies, 100 best novels, 1000 places to see and even a website devoted to the lists of bests. Lists are very subjective which is why they are endlessly created and debated. I’ve probably read hundreds of money books over the years and here are my picks for the top ten (Please note that the links are affiliate links):
- The Wealthy Barber by David Chilton. Common sense money lessons from a fictional barber.
- The Millionaire Next Door by Thomas Stanley and William Danko. Reveals the seven surprising secrets of millionaires.
- The Intelligent Investor by Benjamin Graham. The book that Warren Buffett called “the best book on investing ever written.”
- The Little Book of Common Sense Investing by John Bogle. The founder of Vanguard Group has penned another ode to indexing. (Full Review)
- Random Walk Down Wall Street by Burton Malkiel. A must-read investment guide for individual investors.
- Stocks for the Long Run by Jeremy Siegel. Why the stock market is the place to be for long-term investors.
- The Four Pillars of Investing by William Bernstein. The theory, history, psychology and business of investing. (Full Review)
- The Warren Buffett Way by Robert Hagstrom. Find out how Warren Buffett picks his stocks.
- Your Money & Your Brain by Jason Zweig. What happens inside our brains when we think about money? (Full Review)
- Unconventional Success by David Swensen. A guide to constructing a portfolio for individual investors.
What would you leave out of your top ten? And what would you include instead?
moneysense.ca, 22/06/08
Are they in order? I’ve read and enjoyed most of these. Haven’t read number 9 but will check it out. The one exception is The Millionaire Next Door. Beyond what I guess are statistical issues I literally found it one of the most boring books ever to cross my lap (and I read a 400 page book about concrete formwork this weekend). I tried a couple of times but am fairly certain I couldn’t finish it.
My dad gave me “Warren Buffett Speaks” last week which was a very fun little collection of his thoughts on family, education and of course investing.
I read 2,3,5,6,7 and would keep them on the list. The others, having not read, can’t comment.
I’d find a place for Andrew Tobias’ “The only investment guide you’ll ever need”, and “Extraordinary Popular Delusions and the Madness of Crowds” by Charles MacKay.
Joe
The Future For Investors by Jeremy Siegel is worth a read. It is a follow up to Stocks For the Long Run, which is on your list.
Guinness: No they aren’t in order. I just put the easier ones first. I included Millionaire Next Door because the picture it paints of millionaires contradicts that of popular perception. I haven’t read “Warren Buffett Speaks”. Sounds like a fun read. I’ll look for it in the library.
Joe: I’ve read the Tobias book but not MacKay’s but I did read Devil take the Hindmost. The trouble with picking only ten is that I had to leave some out. For instance, I had to leave out Winning the Losers Game by Charles Ellis.
Dillon: I’ve read Future for Investors as well but I think Stocks for the Long Run is a more important book.
I would include Erich Bienhocker’s “The Origin of Wealth”. It’s very heavy going but has some very interesting observations which are highly relevant to investors.
Also, David Dreman’s books on contrarian investing are a very useful read for those looking to pick individual stocks.
I would also add a book or two on behavioural finance to the list (although I am not sure which ones as I have not read many yet).
I noticed that you didn’t include any books about saving money on your personal taxes. I have copies of KPMG’s Tax Planning for You And Your Family, Tim Cestnick’s The Tax Freedom Zone and the 10 Things That Revenue Canada Doesn’t Want You To Know. I like KPMG’s book the best, although it reads like a dictionary – boring. The third book, in my opinion, gives dubious and even dangerous advice. Tim Cestnick’s book is a Tax Planning book that reads a bit more like a novel, having a lot more prose in it.
So, if you’re into reading interesting anecdotes and stories relating to tax planning, then Tim Cestnick’s book is for you. If you just want to cut to the chase and get a pure tax reference guide that reads like a dictionary, then the KPMG book would be for you.
When I was young and starting out down the road to saving and investing, these tax planning guides were handy books to help me save money on my taxes. Obviously they don’t tell you how to invest the money that you saved on your taxes – but it certainly helps put more cash in your pocket. They were worth every penny that they cost back then, since they helped me make it all back in spades. Now that I’m already aware of those techniques, it has less value to me than when I was much younger. All of the “low hanging fruit” has already been picked, as it were…
Oh, I also have a Tax Planning for Dummies book as well. It kind of has the same content as the other Tax Planning guides. But I find the Dummies format to be too cutsie and it was also published on cheapo newsprint style paper.
Great list CC! I’m going to save this one and make sure I make my way through the titles. I have to agree, I bought the Wealthy Barber years ago and it’s really what got me interested in personal finance. I take that book with me, wherever I live. Another book which is really good for the under thirty audience is “Rich by Thirty” by Leslie Scorgie. She’s Canadian and makes finance simple for those just starting out. I even have a signed copy!
Cheers,
http://pushingthirtymydebtdeadline.blogspot.com/
I’ve only read 2, 5 and 7. I think your list is missing a book on asset allocation. I was really impressed with “All About Asset Allocation” by Richard Ferri and I would probably include it in my own top ten list before I include “Four Pillars”.
traineeinvestor: I haven’t read “The Origin of Wealth”. I’ll see if our local library has it. I picked “Your Money and Your Brain” to represent behavioural finance.
Phil: Good point about tax books, but I had to leave out something
Pushing30: I haven’t read Rich by Thirty either. I’ll see if our local library has a copy.
Yann: I had to leave out some excellent books and “All about Asset Allocation” belongs in that list. So does “Triumph of the Optimists”.
The Millionaire Next Door is horribly written and an extremely boring read.
That said, it is the BEST book I have ever read on personal finance (and I have read them all) and, in my humble opinion, should be number one if CC’s list was ranked in order. Yes, it is a tough read, but well worth the effort to struggle through it.
I tend to re-read it every few years as it has done more to improve my financial situation than anything else. I can also say, as a financial advisor – the book is bang on in terms of who has money, how they behave, and who does not.
CC going to the library to get these books tells me he is a future millionaire next door (or is already).
Many readers are turned off by how frugally the rich live. Readers want financial freedom, but they also want to enjoy their money also. Readers should NOT think they have to mirror the millionaire’s frugal ways exactly. They should, however, realize how the majority of rich TRULY live, and simply take a few steps in that direction. Properly done, they still have a life and the benefits derived by spending some of their money, and they can improve their financial situation immensely.
I found that The Little Book of Common Sense Investing alone was enough to convince me that indexing is the best investment stragety, but the book with the best specific and practical advice for implementing the strategy was Bernstein’s The Intelligent Asset Allocator.
On the other hand, I was disappointed with The Boglehead’s Guide to Investing. The writers aren’t professionals and it shows. The book needed a strong editor, but as it is, it lacks focus and is often hard to understand, mostly because of the fact it tries to be ‘easy to read.’
Rob: Actually, books are my “latte factor” — I’ve always spent too much on them. In fact, I own every book in this list, except “The Wealthy Barber”. I try hard these days to cut back on books that I wonder why I bought them (a recent example: “Greater Fool” by Garth Turner).
Rob: I haven’t read “The Intelligent Asset Allocator”. Into the “to-read” list it goes.
unrelated..but interesting:
http://www.firstthings.com/onthesquare/?p=1100
Hey CC – why do you wonder about Greater Fool? (Not that I disagree with you, just want to know your reasoning on that)
Novice: I think it is best to buy books that will be referred to more than once. I don’t think “Greater Fool” makes the cut. I purchased the book to write a review but couldn’t even drag myself to finish the book. I should have borrowed it from the library instead.
Like Rob and others, I’m a HUGE fan of “the Millionaire Next Door” (although I cheated by listening to the audiobook so didn’t notice how “boring” it was).
I like your entire list CC, although I’ve not read #6, 9 & 10. Perfect timing for the list as I’m planning to hit the library today for reading material for my upcoming vacaiton.
A couple others that I would add are: “Your Money or Your Life” – an absolute MUST on my list.
“The Automatic Millionaire” and “Smart Couples Finish Rich” by David Bach. A lot of people love to hate this guy but his simple, common sense approach to financial planning is very similar to “The Wealthy Barber” and is great for people just starting out on their journey to financial freedom (or getting out of debt). “Automatic Millionaire” is another one that I listened to on audio and it was delivered by David Bach who has a very motivational voice. Even someone drowning in serious debt would feel optimistic about a new start. I like that.
“Smart Couples” is the only PF book I can think of that involves couples and is a great way to get your spouse more involved in financial matters as it’s a pretty easy read.
Thanks again for the timely list – I had forgotten about Jason Zweig’s book for some reason.
In addition to the list, I would also recommend two more that I like:
The Naked Investor – by John Reynolds
The Pension Puzzle – by Bruce Cohen
Where do you stand on those “positive thinking/attraction” books that Get Rich Slowly was complaining about the other day, CC?
http://www.getrichslowly.org/blog/2008/06/19/50-prosperity-classics-in-a-nutshell/
Guinness: Actually, I wrote this post while reading that very same book (I got a copy from the publisher as well). I’ll write a review but “motivation” books don’t do as much for me either. The reason is that in my opinion, most of them seem to say what people want to hear – just “wish it” and you’ll have it etc. – when reality is far more mundane – it simply takes a lot of hard work and discipline.
But I liked the summary book because now I know which books I can avoid!
Interesting list — as someone who actually has a millionaire living next door to me I probably should read The Millionaire Next Door
Like telly, I am a fan of Your Money or Your Life but its approach to investing is impractical today. Apart from that it’s a useful approach to thinking about time and money.
I like a lot of your choices and have been educated in some way by most of them. There is one book that really motivated me to clean up a few things and be more strict with others. This book has probably effected me the most, as a person and advisor and that is “The Richest Man in Babylon”.
Timeless writing and I can never put the book down till I get to the finish every single time.
I have to say that my favorite would be “The Richest Man in Babylon”.
I have read it about 10 times or more now.
Simple common sense approach.
I agree that “Your Money or Your Life” should be on the list. It can be a life-changing book in terms of making you more conscious of where your money goes and whether the stuff you buy is worth it. I agree that its investment advice isn’t very good, but this is only one of the nine steps in the book.
I also enjoyed many aspects of “The Millionaire Next Door” although I didn’t read it cover to cover.
Two that I liked were “Die Broke”and “Live Rich” by Stephen M. Pollan and Mark Levine. They had some counterintuitive ideas that make you think about making, spending and saving money.
Looks like “The Richest Man in Babylon” and “Your Money or Your Life” are overwhelming picks to be on the list. Actually, I was torn between “The Richest Man” and “The Wealthy Barber” but included the latter because it is more modern and by a Canadian author.
One I would add is:
The Only Three Questions That Count: Investing by Knowing What Others Don’t
I am an audiobook kinda guy so this one was available as an unabridged one at audible.com. Ken Fisher certainly has the accomplishments and pedigree .
This won’t spoil it in anyway but in case you want to know here are the questions:
The three questions are:
(1) What do you believe that is actually false?
(2) How can I fathom what others find unfathomable?
(3) What the heck is my brain doing to blindside me now?
Gave some new ways of thinking about things and although some may find his slightly arrogant sense of humour annoying (I actually did not mind it …) I think there are some interesting concepts in there. One thing I did take away from the book was to benchmark my investments as this was a point he made a fair bit.
I agree with Pluserama on Ken Fisher – it’s an interesting read. I partcicularly liked the concept of creating your own index to benchmark against.
Bogle’s book makes an extremely important point, but it doesn’t amount to much of a book; it could be a three page essay and not lose much.
Siegel’s book is the same way, only it doesn’t make any important points that aren’t in a thousand other books.
i would add “navigate the noise” (can’t think of the author) which emphasizes an important corollary to graham-buffett style value investing.
MND is great.
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Absolutely, “The Richest Man in Babylon”
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the blog title made me chuckle. nice to see someones awake up there. Benjamin
I agree that the richest man in babylon is absent – Michael
Hi CC
I very recently discovered your blog – it makes for good reading.
I would suggest ‘The Entrepeneurial Investor’ by Paul Orfalea et al as required reading after ‘The Intelligent Investor’.
Also, ‘The Halo Effect’ by Phil Rosenzweig and anything written by Niccolas Nassim Taleb should be considered for their unique perspective – both expose falsities about their respective fields, and perhaps life in general.
I would agree that “The Richest Man in Babylon” should be on the list and was glad to see that “Unconventional Success” made the list. These two books and MoneySense’s Couch Potato investing (http://www.canadianbusiness.com/my_money/investing/article.jsp?content=20060405_152254_1452) opened my eyes to what was really happening to my investments and how easy it would be for me to be in control of them.
Since then I’ve been learning all that I can about ETFs and TDs e-Series funds. It’s been a lonely journey though as most of my friends don’t see the value in them and would rather beat the market with their “winning mutual funds”.
Thanks for the list! I’ve just come across this site and have found it very helpful already. I’m glad to see there are others with my same point of view of personal finances!
I ALMOST started indexing early this year but procrastinated… thank GOD I did!
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All those books are great….I also love “What Works on Wall Street” by James O’Shaughnessy….Even if you do not agree with him I found it a good read…and I always go back to it from time to time.
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“The small stock trader” by Mika is also a small unique book that covers almost all the major stock market topics such as the traits of a successful small stock trader, how to choose a few simple focus stocks, market sentiment and industry, fundamental analysis, technical analysis, short selling, your edge and competition, catalysts that move the stock prices, stock trading plan, discipline, risk management and psychology. It is a simple book of about 100 small-sized pages (more like a collection of tips, perhaps 4-5 hours read), but it will answer many of your questions, so, it is a great book to start (no need to mention that about 90% of your lessons you are going to learn from your own experience/mistakes). It is also a fun-to-read book, as it is accompanied by a few jokes and observations from poker, intelligence world, relationships, happiness, Zen, and psychology.
My favorite stock trading books are:
• The small stock trader by Mika
• “Lessons from the greatest stock traders of all time” and “How legendary traders made millions” both by John Boik
• “Reminiscences of a stock operator” and “How to trade in stocks” both by Jesse Livermore
• How I made $2,000,000 in the stock market by Nicolas Darvas
• How to make money in stocks by Willien O’Neil