(Plus a free book to download!)
These are my absolute favourite personal finance books I’ve read this year.
If you’re looking for a holiday read for yourself, or a last-minute present for a loved one, you could do worse than to pick them up one of these. If they love talking about finances or avoid it at all costs, either way, if they read any of them and take the lessons on board it might just change their life.
I’ve picked 3 books that I genuinely think everyone who has an interest in building wealth and investing should read. Honestly, they’ve changed my life and my thinking so much this year. For the better, I should add!
And there are 2 extra bonus books for the geeks out there.
They’re all available on Kindle – which is how I read most of them. The images will take you to Amazon.
Down at the bottom I’ve got the details of how you can get a free book download. I’ve just discovered it and haven’t read it yet, but have heard good things. Let me know if you like it or not.
Investing Demystified – Lars Kroijer
Ex-hedge fund manager Lars Kroijer has made this book both accessible and detailed. He will show you how you can’t have an edge in the markets, and once you can accept that, he shows how all anyone really needs to build wealth is a global stock portfolio and some bonds. He very much follows the efficient market theory and he shows, both in simple form but more complex if you want to dive in, how to build a portfolio.
It might not be for you if you don’t know ANYTHING about investments, but if you’re reading this page then you’ve almost certainly got enough knowledge to enjoy this book.
My top takeaway: How to mix together ‘zero-risk’ assets with more risky ones to build something to suit your risk tolerance.
Clear, concise and making the technical, accessible. Highly recommended.
The Simple Path to Wealth – J.L.Collins
Fast becoming a classic in the personal finance world, J.L.Collins is so easy to read in this book, that I’d almost call it a page-turner! It makes you feel like you’re sitting back with a drink listening to your Old Uncle Jim expound his theories on life and the universe, only this Uncle Jim actually knows what he’s talking about.
The ideas that Mr. Collins shares are really very powerful, and show how it is possible to remain far more aggressively invested than most would believe.
The only downside to this book is that it is very U.S. focussed. It looks almost exclusively at using the Vanguard U.S. stock market trackers to invest. That has worked very well in the past, but who knows if it will in the future. It’s perhaps fine if you live in America, but for us international types, it’s probably more prudent to use all-world trackers. I’ve just replaced his U.S. stock market fund with a global stock market fund in my own portfolio.
It’s easy enough to just zone out or skip over the bits when he starts talking about different types of tax-sheltered accounts available in the U.S.A. if that’s not relevant to you. But what is relevant is the mindset that Mr. Collins brings to our finances.
My top takeaway: “Put all your eggs in one basket, and forget about it.”
A no-nonsense, down-to-earth, refreshing read. It might just be the best investing book of all time.
The Meaningful Money Handbook – Pete Matthew
One for the Brits. Pete Matthew hosts the Meaningful Money podcast which is easily one of the best personal finance podcasts for U.K. nationals. He released this book just recently and it is the perfect one to buy for family or friends in the U.K.
Pete is a financial adviser in the U.K. and freely shares his wealth of knowledge in this book. He almost certainly does himself out of a job, as he gives you most of the tools you would need to manage your finances at almost any stage of your life.
Pete doesn’t just look at investing but takes a much more holistic approach. He teaches you “everything you need to know, and everything you need to do” to get out of debt, budget, insure against disaster and of course, build wealth.
My top takeaway: “Cash is not an investment!”
Whilst maybe not entirely relevant for all expats, for those of you from the U.K. or who are likely to return there in the future, this is definitely worthy of some space on your shelf. And as with J.L.Collins’ book, you can ignore the U.K. focussed bits, and the rest of the principles apply wherever you are in the world.
These are the 2 slightly more advanced or technical books. I’m a self-confessed geek so don’t mind saying that I loved them, and they answered a lot of the more technical questions I had about investment portfolio design.
If you’ve ever found yourself wondering “What proportion of stocks should I have to bonds?” or “How has the permanent portfolio performed historically?” then these are for you.
Deep Risk – William Bernstein
I have to thank J.L.Collins again for pointing out Mr Bernstein. This is the 3rd book out of 4 in his series “Investing for adults”, and really is just like a large academic paper.
It is specifically addressed to deal with the different ways in which we consider risk in our investing lives – short-term or ‘shallow’ risk, and ‘deep’ or long-term risks.
One of the most famous risk-mitigation portfolios is the Permanent Portfolio by Harry Browne. This book takes the permanent portfolio apart and looks at whether it really does what it sets out to. It discusses the best ways to protect against financial threats, by looking at how different assets have performed throughout history.
My top takeaway: Gold has protected better against deflation than inflation.
If you want to know how best to protect yourself against inflation, deflation or any of the other threats out there, read this short book. And if you’re wondering “Is the permanent portfolio right for me?”, definitely read it.
Global Asset Allocation – Meb Faber
A very short book, designed to be read in under an hour. Meb Faber carries out a survey of the worlds top asset allocation strategies. It looks at 10 of the most popular ways of constructing a portfolio and compares them. It looks at how they’ve performed since 1973 and helps you decide on which strategy is right for you. If you’ve ever spent time agonizing over 5% of bonds here or a REIT there, you need to read this.
My top takeaway: “Go live your life and don’t worry about your portfolio!”
It allows you to compare Buffet to Browne, and the S&P500 to the Ivy Portfolio. The conclusion is really surprising and definitely worth an evening of your time to read.
If you do decide to pick one of these books up from Amazon, I’ll get a couple of pennies of commission to help run this site. It won’t cost you any more, so thank you in advance.
Your free book download
Rick Ferri has very kindly shared a copy of his book “Serious Money” on the Bogleheads forum. You can download it for free right here: “Serious Money” Free Download.
Rick has been a long-time champion of low cost investing using index funds and ETFs. Although the book is a few years old now, I’ve just downloaded it and it’s going to be at the top of my reading list for the new year. Let me know if you read it and it’s any good!