Editor’s Note: This is an updated version of an article that originally published in May 2020.
Learning about financial topics can feel:
A. Intimidating
B. Complicated
C. Challenging
D. All of the above.
If you’ve selected any of the answers above, you’re not alone.
Taking the first step toward financial literacy is the hardest. And unfortunately, the internet may not exactly be our friend here. Simply searching an investment term can land you in an alphabet soup of complex financial terms or worse, leave you doomscrolling headlines like “Gen Z is outpacing boomers on income, millennials on home ownership.”
There’s another, less intimidating way to break into the realm of financial topics: Pick up a book. And not just any book, but one of the best investing books for beginners. Whether you’re starting from scratch or looking for a niche read on an investment topic, there’s something for every investor in our book list.
7 Best Investing Books for Beginners
Time and time again, these are the go-to recommendations from investing enthusiasts and Morningstar specialists.
1. The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns, by John Bogle
Investing icon John Bogle left behind an impressive legacy: He revolutionized the mutual fund industry and was a tireless advocate for investors. He pioneered the index fund, which allowed investors to gain diversified exposure to the stock market at a very low cost, helping them keep more of their hard-earned money in their pockets. His book explains why low fees significantly affect returns. It also addresses topics like mean-reversion and tax costs.
The text is accessible and shorter than many other investing books, and it includes quotes from many prominent financial figures who support Bogle’s claims.
2. The Bogleheads’ Guide to Investing, by Taylor Larimore, Mel Lindauer, and Michael LeBoeuf
The advice of The Vanguard Group founder John Bogle is echoed in this comprehensive guide for investors of all experience levels. Packaged into 23 short, lighthearted chapters, this book contains practical advice and explores many aspects of investing, from how to choose the financial lifestyle that fits you to how to balance your emotions to truly master your investments. This guide also provides external resources and other information for readers who want to dive deeper into any of the topics that the longtime Bogleheads cover.
The Bogleheads are investing enthusiasts who honor Bogle and his advice, living by a philosophy to “emphasize starting early, living below one’s means, regular saving, broad diversification, simplicity, and sticking to one’s investment plan regardless of market conditions.” Members actively discuss financial news and theory in a forum.
3. Morningstar’s 30-Minute Money Solutions: A Step-by-Step Guide to Managing Your Finances, by Christine Benz
Even if you understand investing basics, you might struggle to incorporate them into your personal finances. Executing them in manageable steps can prove even more challenging.
That’s the beauty of this book. Christine Benz, Morningstar’s director of personal finance, breaks financial planning down into bite-size chunks that anyone can handle. You start with basics like assessing your net worth and creating an organization system, and you progressively conquer more advanced topics including retirement investing, college savings, and estate planning.
If you want to meld investment basics with tangible advice, this book is a great option.
4. I Will Teach You to Be Rich, by Ramit Sethi
Advisor and The New York Times bestselling author Ramit Sethi outlines a six-week program for 20- to 35-year-olds to learn the four pillars of personal finance: banking, saving, budgeting, and investing. Sethi shares his strategies for eliminating student loans and debt; finding a balance with saving and spending every month; and preparing to purchase a house or car. In the newest edition, he includes stories from readers and insights on the psychology of investing. Sethi strives to demonstrate to investors how to make investments that grow with them and their goals, and how they can spend their money on the things they want without feeling guilty.
5. The Intelligent Investor: The Definitive Book on Value Investing, by Benjamin Graham
Benjamin Graham is known as the father of value investing. He taught Warren Buffett, a modern investing icon. His book lays a framework for evaluating a business’ worth based on financial value, not short-term trading techniques. In his book, Graham defined many important investing concepts such as “margin of safety,” which is an important input in the Morningstar Rating for stocks.
The revised edition includes commentary from The Wall Street Journal’s personal-finance columnist Jason Zweig that contextualizes and modernizes the text. With Zweig’s commentary on every chapter, the book is north of 500 pages, which is a lot; however, it’s a thorough introduction to investing. If getting through means skimming a few chapters, no judgment here.
6. A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing, by Burton Malkiel
If Graham teaches you how to evaluate a business, Burton Malkiel explains why that might not help you. The Princeton economist argues that markets demonstrate efficiency because people are analyzing a company’s value. (Efficiency means a company’s share price reflects its current worth, and its price will change when new information alters a business’ worth.) Malkiel recommends earning the market’s return instead of beating it, which he compellingly argues is good enough.
The book was first published in 1973, but updated editions have added contemporary topics. These include exchange-traded funds and investment techniques like smart beta (which Morningstar prefers to call “strategic beta,” but I digress).
7. The Essays of Warren Buffett: Lessons for Corporate America, by Warren Buffett
Many consider Warren Buffett to be the best modern investor. He has risen to fame as Berkshire Hathaway’s CEO, a position he’s held for over 50 years. Berkshire Hathaway invests in high-quality businesses with strong growth potential. But Buffett only buys such companies when they’re selling at an attractive margin of safety (hat tip to his mentor, Benjamin Graham). This makes Buffett an extreme stock-picker. Under his reign, Berkshire Hathaway’s growth has far surpassed that of the S&P 500, a testament to the success of his approach.
Each year, Buffett writes an annual letter to Berkshire Hathaway shareholders, and all of them are published on the company’s website, so anyone can read them. Buffett writes in a straightforward style that is accessible to investors of all skill levels, and he’s often very funny to boot. The Essays of Warren Buffett weaves together Buffett’s essays into a sequential, cohesive book.
Finance and Investing Books Morningstar Specialists Are Reading
Morningstar employees and investing specialists recently shared their latest book picks. Here’s what they’re recommending:
1. How to Think About Money, by Jonathan Clements
“Jonathan Clements is an honest-to-goodness legend in investment writing, someone who manages to combine extreme clarity of thought with wisdom and wit. I’ve read practically every word that Jonathan has written since discovering him in the 1990s, and his work very much influenced my own career trajectory. Like all of Jonathan’s books, this one recognizes that successful financial plans are invariably rooted in thrift, knowing your values, and good old-fashioned common sense.” Christine Benz, Director of Personal Finance and Retirement Planning
2. Your Best Financial Life: Save Smart Now for the Future You Want, by Ann Lester
“I thought this was a great introduction for younger investors.” Amy Arnott, Portfolio Strategist
3. Just Keep Buying, by Nick Maggiulli
“Just Keep Buying focuses squarely on something that should be obvious but that seems to get criminally underplayed in the financial media: the importance of growing your income as an avenue to greater savings and investing opportunities. It also emphasizes the virtue of staying disciplined about investing by using a dollar-cost averaging program. It’s beautifully written.” Christine Benz, Director of Personal Finance and Retirement Planning
4. Misbehaving: The Making of Behavioral Economics, by Richard H. Thaler
“This is actually a core book for behavioral economics, so I’m a little late to the game, but it’s a good refresher of some core behavioral principles. It’s also interesting to get the ‘economics perspective’ versus the ‘psychology perspective” of some of these principles. Both groups thought about these inconsistencies in human behavior differently, so it’s fascinating to get an insider’s view on how both lines of thought became intermingled.” Samantha Lamas, Senior Behavioral Researcher
More of Our Favorite Best Investing Books
Still have room on your shelf? Check out these titles.
Why Moats Matter: The Morningstar Approach to Stock Investing, by Heather Brilliant and Elizabeth Collins
If you’re looking for a breakdown on the legendary Warren Buffett’s economic moat concept, this is the book for you. With this guide, you will learn how to find great companies at equally great prices, gain a better understanding of Morningstar’s approach, and more.
Thinking, Fast and Slow, by Daniel Kahneman
This book looks at financial planning and decision-making from a psychological standpoint. How do our biases and faults influence our financial plans and judgment of the stock market? To find the answer, psychologist and economist Daniel Kahneman explores how two systems work together. “System 1″ is fast, instinctive, and emotional, while “System 2″ is slow, deliberative, and logical.
Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets, by Nassim Nicholas Taleb
This is another book that addresses how our emotions and past experiences affect how we make decisions, specifically financial ones, in our lives. Nassim Nicholas Taleb also focuses on randomness. He believes that humans look for or come up with explanations when there aren’t any, emphasizing that sometimes things just simply happen. Seeking these explanations then affects our financial decisions and can form certain habits.
The Most Important Thing: Uncommon Sense for the Thoughtful Investor, by Howard Marks
Chairman and co-founder of Oaktree Capital Management Howard Marks shares his journey in investment management and uses his experiences to shine a light on what is going on in the stock market today. Marks challenges readers to resist following the crowd and instead invest with a more critical, contrarian approach.
If You Can: How Millennials Can Get Rich Slowly, by William Bernstein
In this particularly short, 50-page read, financial theorist and neurologist William Bernstein keeps finance simple. He teaches the very basics to help get young individuals off on the right foot with their investments and retirement plans.
Get a Financial Life: Personal Finance in Your Twenties and Thirties, by Beth Kobliner
If your financial to-dos include paying down debt, boosting your credit score, steering clear of financial missteps, and figuring out the world of personal finance in general, then this is the book for you. Beth Kobliner’s goal is to help investors in their 20s and 30s get their financial lives in order. In her words, “It’s time to get a financial life.”
The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness, by Morgan Housel
Money defines a lot in our financial lives, including what you can invest in and when you can retire. It also defines our behavior. In this collection of stories, Morgan Housel explores how money affects the way we make financial decisions from a psychological perspective.
Investing Success, by Lynnette Khalfani-Cox
The best thing about this former The Long View podcast guest’s book? Her advice is simple, straightforward, and works in any financial environment. No matter how familiar—or unfamiliar—you are with investing, Lynnette Khalfani-Cox will help you take the right steps to building a solid financial life.
The author or authors do not own shares in any securities mentioned in this article.Find out about Morningstar’s editorial policies.
