I wanted to see what all the hype was about, so I grabbed a copy of the book, tore through it (it’s a pretty quick read), and compiled my thoughts for you here.

This Rich Dad, Poor Dad review will take a look at Robert Kiyosaki’s real lessons in this book (not just the ones he uses as names for his chapters) and help you decide whether it’s worth reading.

In this post:

• A Rich Dad, Poor Dad Summary
• Robert Kiyosaki’s Best Advice
• Robert Kiyosaki’s Worst Advice
• Is It Worth Reading Rich Dad, Poor Dad?

A Rich Dad, Poor Dad Summary

Right from the jump, Rich Dad, Poor Dad surprised me with its style and narrative framework. I expected more technical insight and investment math, but the book primarily consists of anecdotes that hold nuggets of (supposed) wisdom for the reader to absorb as if through osmosis.

Kiyosaki’s stories revolve around and contrast the lessons he received from his biological father (the educated but financially unsavvy poor dad) and his friend’s salesman father (the uneducated but clever, rich dad).

The book winds through Kiyosaki’s life and the reader witnesses him learning from his rich dad and rejecting the advice of his poor dad (which represents rising above the typical working-class mindset).

The book explains basic wealth generation in an understandable and inspirational way, and it’s a solid enough introduction to these concepts (at least for its time). However, it has issues that make its current relative value questionable.

Important Note: Do not take this book’s recommendations or any of my opinions on them as investment or tax advice.

Robert Kiyosaki’s Best Advice

I’ll start this Rich Dad, Poor Dad review with what I think Kiyosaki does well. Mainly, he makes some solid fundamental financial suggestions in an easily digestible manner.

The ideas might seem a bit shallow and apparent to anyone already engaged in entrepreneurship or investing, but they can be profound if it’s your first exposure to them. Let’s take a look. 

1. Learn Personal Finance (And Teach It to Your Kids)

While this is a pretty obvious suggestion, it’s still a significant one. The book does a great job of showing the reader how meaningful it is to learn how to manage your money. That means saving a high percentage of your earnings and putting the money to work in profitable investments.

Kiyosaki says: “It’s not how much money you make. It’s how much money you keep.” You have to keep your spending down as your income goes up and invest the difference in assets, not liabilities.

While his definitions of assets and liabilities might not follow Generally Accepted Accounting Principles, it’s practical: assets put money in your pocket, and liabilities take money out of it.

He supports learning to cut your taxes, studying accounting, and mastering saving, then teaching all these skills to your children. I love all of these ideas, and I’m glad his presentation of them resonates with so many.

2. Find Ways to Escape the Rat Race (Make Your Money Work For You)

Not only does Kiyosaki cover the fundamental best practices for personal finance, but he also does a great job of painting an inspiring picture of their end goal: financial independence, retirement, security, being rich, or whatever you want to call it.

I’ve always believed that people truly begin to understand the significance of their personal finance decisions when they realize that they constitute a journey that can culminate in holding enough wealth that work becomes optional.

Kiyosaki makes escaping the rat race using investments or a self-sustaining business sound glamorous and inspirational. I’m grateful for anything that gets people to plan for a better future.

3. Master Your Emotions Regarding Money

This one isn’t a personal finance message that you’d typically see today, but I like it a lot. Money is a hugely emotional issue for many people, and we could all probably benefit from understanding why it makes us feel however it does.

People often let their emotions sabotage their finances or let their finances upset their emotional state. They might have a fear of investing, insecurity over their job, or a need for the latest and greatest gadgets.

He urges readers to face their fears, cynicism, laziness, bad habits, and arrogance when it comes to money. That seems like an arbitrary list of emotional issues, but I like the sentiment.

4. Develop a Broad and Valuable Skillset

In a capitalistic society, having a practical and marketable skillset is the key to making money. If you can provide tangible value that people are willing to pay for, you’ll always be able to support yourself.

Kiyosaki recommends learning to manage money, lead teams, build systems, and close sales. More than that, he suggests that people cultivate a habit of continuing to learn throughout their careers so that they never stagnate.

He argues that people can improve their situations most effectively if they keep an open mind, learn from their mistakes, and keep improving. It’s a valuable lesson and one of the best in the book.

Robert Kiyosaki’s Worst Advice

Now that we’ve covered the good stuff, what follows is my Rich Dad, Poor Dad criticism. I hate to say it, but there’s more to talk about here than I’d like.

Honestly, Kiyosaki strikes me as a pretty typical guru. His attitude and tone throughout the book both rub me the wrong way. For example, he comes across as just a little too obsessed with the stereotypical image of a rich and powerful man.

He describes his rich dad as a charismatic manly man of few words, with power behind his statements and smiles. Rich dad is tall, blunt, and always closing deals. He doesn’t do things like the other guys, and he’s pretty smug in his superior knowledge.

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Rich dad and his lessons also come off as manipulative to me. He pulls the protagonists’ strings purportedly to teach them esoteric lessons too complex to be put into mere words.

The book just feels like it’s selling me something, and salesman gurus are by far my least favorite. Here are some of the specific ideas the book tries to sell to the reader that I don’t like.

1. You Should Start a Business and Get Rich Because Employees are Broke and Miserable

As someone who truly loves being self-employed, I hate to admit this, but it’s not the right path for everyone. If you’d rather not branch out on your own, that’s perfectly fine. There are plenty of people who enjoy their jobs, make good or great money, and save responsibly.

But Kiyosaki has a habit of putting down anyone who works for someone else and suggesting that employees are generally broke and unhappy. They just don’t get it.

His poor dad (already an insulting title), who worked a traditional job, couldn’t possibly understand what his rich dad understood thanks to all his business success.

Not only does Kiyosaki fail to address the risks and downsides to business ownership, but he also suggests some definitely-not-okay tax strategies using business entities. For example, he proposes using a corporation to write off vacations as board meetings or deduct health club expenses. Those moves can get you into much more trouble thsan they’re worth.

2. Academic Learning isn’t Valuable (Rich People Don’t Need It)

Kiyosaki also has a bad habit of downplaying the value of academic education and traditional learning. He seems to believe people who follow the general wisdom end up like his poor dad: highly educated but ineffective and stressed about their money. Rich people learn only by doing or from living life.

For example, rich dad says: “All too often business schools train employees to become sophisticated bean-counters. Heaven forbid a bean counter takes over a business. All they do is look at the numbers, fire people, and kill the business.”

Ironically, he promptly contradicts that claims, later saying: “Accounting is possibly the most confusing, boring subject in the world, but if you want to be rich long-term, it could be the most important subject.”

As an officially licensed and certified bean-counter, maybe he just hurt my feelings, but I don’t think so. Kiyosaki also glorifies rich dad’s cruel and unusual teaching methods, which included giving kids the silent treatment for weeks at a time while they work below minimum wage until they can’t take it anymore.

Because that’s how life teaches: “It just sorta pushes you around.”

3. Invest in Real Estate! It’s the Best Way to Get Rich!

At this point, you’ve probably noticed that many of his “worst lessons” have something to do with getting rich. That’s a significant part of what struck me as wrong about this book.

Getting rich isn’t really the point of personal finance. Maybe I need to “overcome my cynicism,” but I generally don’t trust gurus who toss that word around. Kiyosaki does it a bit too much for my comfort, and his suggested strategies for creating said riches aren’t always great either.

Mainly, it bothers me how strongly he doubles down on real estate. Investing in real estate can be a great way to build wealth, but (like self-employment) it’s not for everyone. It’s also not a requirement for a successful and diversified portfolio.

There are benefits to real estate investing, but Kiyosaki borders on implying that it’s a sure way to get rich quickly or inevitably. In reality, it’s a business like any other. There are unavoidable risks involved, and it takes knowledge, experience, and luck to succeed.

4. Jump Off Cliffs and Build Parachutes On Your Way Down

Last but not least, we have one of my biggest pet peeves in the whole book. Kiyosaki legitimately suggests that you pay yourself first (meaning your savings) even if that comes at the cost of paying your creditors, even if one of those creditors is the Internal Revenue Service!

Rich dad says: “So you see, after paying myself, the pressure to pay my taxes and the other creditors is so great that it forces me to seek other forms of income. The pressure to pay becomes my motivation. I’ve worked extra jobs, started other companies, traded in the stock market, anything just to make sure those guys don’t start yelling at me[…] If I had paid myself last, I would have felt no pressure, but I’d be broke.“

Don’t get me wrong, I’m all for prioritizing saving, but paying yourself first shouldn’t mean risking stiffing the people you owe money, wrecking your credit score, and racking up fees and interest. You pay your creditors and essential living expenses first, then you set aside your savings, and then you reverse engineer your remaining budget.

Is It Worth Reading Rich Dad, Poor Dad?

I don’t want this to upset anyone who considers the book to be the Holy Grail of personal finance, but I couldn’t recommend Rich Dad, Poor Dad to someone who asked me how to start managing their money better, let alone someone who already has some experience.

The book has a handful of positive lessons, but there’s nothing more profound in it than what you could find in the average personal finance blog these days. It’s mainly about inspiration, and there are places to get your inspiration these days without a side serving of Kiyosaki’s more troublesome ideas.

The post Rich Dad, Poor Dad Summary & Review (2024) appeared first on FinMasters.

In this post:

• The Millionaire Next Door Summary
• Stanley and Danko’s Worst Lessons
• Stanley and Danko’s Best Lessons
• Is It Worth Reading The Millionaire Next Door?

The Millionaire Next Door Summary

The Millionaire Next Door is rooted in a simple premise: Most wealthy people aren’t pulling up next to you at a stoplight in a BMW. In reality, they’re your next-door neighbor mowing the lawn on Tuesday morning as you pull out of the driveway and go to work.

In other words, being rich doesn’t actually look the way most of us think it does. And if you try to copy the people who outwardly appear to be millionaires, you’ll never become one yourself.

That insight alone is valuable, but the book also meticulously explores the way that wealthy households operate. There are several great lessons in it that can help you and your family duplicate their success.

Being rich doesn’t actually look the way most of us think it does. And if you try to copy the people who outwardly appear to be #millionaires, you’ll never become one yourself.

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However, some of its attitudes don’t exactly hold up in today’s world. For example, all of the millionaires that the authors interviewed were men, and the authors write as though the old-fashioned nuclear family model is a given.

It assumes a male breadwinner and a housewife, with children destined to live out the same pattern. So if you decide to read the book, be aware that it’s outdated in some respects. Try to focus on extracting the broader lessons that can still apply to your life.

Important Note: Do not take this book’s recommendations or any of my opinions on them as investment or tax advice.

Stanley and Danko’s Worst Lessons

Let me start with a quick disclaimer: The authors of The Millionaire Next Door (Thomas Stanley and William Danko) and I have many similar ideas when it comes to wealth generation. I don’t have many negative things to say about the book’s underlying messages.

However, there are some potential takeaways I want to draw to your attention. These points aren’t really instances of bad advice that I want to disagree with. They’re more like ideas that you might absorb that could backfire if you don’t apply them correctly.

1. Self-Employment is the Best Path to Wealth

The authors report that roughly two-thirds of the millionaires they spoke to were self-employed. The point shows up a lot throughout the book, and it’s easy to come away with the idea that starting a business is the best way to become wealthy, especially if you don’t read to the end.

I’ve said it before in other book reviews, but self-employment isn’t for everyone. In fact, despite being happily self-employed myself, I’d argue that it’s probably not for most people. There are a lot of things you give up when you go off on your own, such as:

• Health insurance benefits
• Automatic tax withholding
• A social network of coworkers
• Unemployment benefits

In addition, getting a business off the ground requires so much more time, capital, energy, and risk than getting a job that many will never be able to attempt entrepreneurship safely.

Ultimately, the only requirement for accumulating wealth is that you save and invest a significant portion of your income. There’s no reason you can’t do that through traditional employment.

2. Spend Heavily on Your Children’s Education

I know this next point might sound a bit nitpicky, but it warrants addressing. The authors claim that wealthy people spend heavily on their children’s schooling because they know the value of an education. It’s an exact quote from their imaginary, prototypical millionaire: “We spend heavily for the educations of our offspring.”

What the authors are probably trying to say is that getting an education is valuable. I agree with that, but there’s a potentially dangerous interpretation of their statement: the literal one.

Yes, educations have substantial monetary value, but sinking thousands of dollars into a degree can cripple your finances for life. Don’t be too quick to give your life savings to a university or take out Parent Plus student loans, even for your kids.

There are plenty of ways to get through college without debt, like community college classes, federal grants, and scholarships. Make sure you exhaust them all before you reach for your wallet.

3. Be a “Tightwad”

Don’t get me wrong, I like to save money twice as much as the next guy, and that tendency has done a lot for my finances. However, there is such a thing as pushing for too much frugality, and The Millionaire Next Door treads dangerously close.

I speak from personal experience when I say that saving money can be addictive, and you can easily trap yourself in a troublesome headspace by focusing on it too much.

I hate to admit it, but I’ve struggled to enjoy purchases because I’m too busy calculating what they cost me in foregone compound interest on more than one occasion.

The Millionaire Next Door seems to lead people toward this line of thinking. It notes that most millionaires are self-proclaimed “tightwads.” They hate to let go of a dollar, even when they have enough. To quote their constructed millionaire again:

“I am a tightwad[…] Why else would I spend two or three hours being personally interviewed by these authors? They paid me $100, $200, or $250. Oh, they made me another offer – to donate in my name the money I earned for my interview to my favorite charity. But I told them, “‘I am my favorite charity.’”

I dream of a day where no American lives paycheck to paycheck, but I also caution you not to overcorrect. Being financially responsible doesn’t mean you should be a miserable miser until you can afford to retire.

Stanley and Danko’s Best Lessons

Now that we’ve covered the less favorable aspects of the book, let’s focus on the good stuff. Honestly, I had a hard time narrowing my favorite lessons down to these four, which speaks volumes about the quality of the content.

Many of the best ideas in the book revolve around building a wealthy household and ways to make sure your kids do too, which was refreshing. Financial advice is everywhere these days, but it’s usually about managing your individual funds and lacks practical guidance for family units.

1. Intentional Frugality is Better Than Keeping Up With the Joneses

I know I chided The Millionaire Next Door for its overemphasis on frugality earlier, but there’s a balance to these things. The book still does a great job of driving home the distinction between having a high income and being wealthy, which I appreciate. It’s all about how much you save, not how much you earn.

The authors also coin one of my favorite terms for an emergency fund of all time: a “go-to-hell fund.” The idea is that having months or years of cash saved gives you the power to say no to an employer in a world where the power dynamic often skews the other way.

Central to their notion of frugality is the idea that becoming wealthy requires going against the typical expectations of wealth. If you waste your money accumulating fine trappings like luxury cars and massive houses, you trap yourself.

They mention an interesting anecdote of a millionaire they interviewed who declined a free Rolls-Royce. He felt that it would be more of a burden than anything and would pressure him to inflate his lifestyle further.

The idea that one luxury item leads to another resonates with me. It would feel incongruous to park a Rolls-Royce outside of a modest two-bedroom apartment, after all. Pretty soon, you’d be upgrading everything else in your life to match it. It’s like getting plastic surgery. Not many people can stop at just a nose job.

2. Marry Someone Who Shares Your Financial Values

While not typically a topic of personal finance, your choice of life partner has a massive impact on your ability to accumulate wealth. The Millionaire Next Door reports that most millionaires have spouses who are on board with their frugality.

That helps protect you from two potential pitfalls:

• The overly spendy spouse: No amount of self-discipline will save your finances if your spouse blows your budget every month. You’ll work indefinitely only to finance their spending habit.
• Financial disagreements: Arguments over money are one of the leading causes of divorce, and divorce is one of the leading causes of bankruptcy – the opposite of wealthiness^{[1, 2]}.

If you’re going to marry someone and raise a family, make sure you choose a partner who shares your financial values. Bring up the topic relatively early on in new relationships, even if it feels a bit crass. You’ll be glad you did in the long run.

While not typically a topic of personal finance, your choice of life partner has a massive impact on your ability to accumulate #wealth.

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3. Passive Investors Usually Outperform Active Investors

One of the statistics I found the most shocking in the early days of my financial education was that the vast majority of active fund managers underperform compared to a simple S&P 500 index fund.

Over the 15 years ending in 2019, roughly 92% of large-cap funds failed to beat the market. They also charge significantly higher investment fees than index funds, which erodes a shocking percentage of your portfolio over time.

Stanley and Danko found that most millionaires in America recognize this and take a primarily passive approach to investing:

“Fewer than one in ten millionaires are ‘active investors.’”

If you’ve ever seen The Wolf of Wall Street, you may remember the scene where Matthew McConaughey’s character admits that stockbrokers have no clue what the market is going to do. As he puts it, the market could go up, down, sideways, or in circles – who knows? And he’s mostly right.

If the professionals can’t do it, the average person without the same resources would likely struggle even more. Besides, when passive investment returns are more than enough to become wealthy, why waste the effort or take the risk?

4. Raise Your Children to Be Financially Capable

High-income and wealthy parents face unique financial challenges when it comes to their children. If they’re not careful, they could end up with kids who grow up so privileged that they don’t understand the value of money or hard work.

The authors of The Millionaire Next Door point out that these children tend to underearn, overspend, and remain financially dependent on their parents for much longer than they should.

Not only does that cripple the child’s development, but it also poses a significant drain on the parent’s finances. As you might expect, it’s most common in households with high income and high spending.

The authors write:

“What is expected of children who are exposed to a household environment predicated upon very high consumption, few-if any-economic constraints, little planning or budgeting, no discipline, and pandering to every product-related desire?”

Be careful how you discuss and handle money around your children, as well as how much you give to them. Not only do they listen to the things you say, but they tend to absorb your attitudes as well. It’s easy for that to get out of hand in dangerous ways.

Is It Worth Reading The Millionaire Next Door?

I appreciate many of the lessons in The Millionaire Next Door, and if you’d like to dive deeper into any of the ones I discussed above, I’d say the book is worth perusing. There are some interesting anecdotes and tips in there that you’ll probably find enjoyable.

That said, it’s not a how-to book. It won’t help you learn to do any of the things it suggests, meaning there’s very little practical budgeting, investment, or business advice in there. If you’re looking for that, you should go elsewhere.

It’s also a little old-fashioned in ways that might be upsetting to some people, and it can be repetitive, especially about the importance of frugality.

All in all, it’s probably worth picking up a free copy somewhere and giving it a quick read-through, but you’re not missing out on much by skipping it now that you’ve read this review of the highlights.

The post The Millionaire Next Door Review: Best and Worst Advice (2024) appeared first on FinMasters.

Let’s check out some top options!

1. Passive Income, Aggressive Retirement

by Rachel Richards

“Passive Income, Aggressive Retirement: The Secret to Freedom, Flexibility, and Financial Independence (& how to get started)” may be a mouthful of a title, but it’s one of the most beginner-friendly books on building up a passive income portfolio and setting yourself up for success.

The book is written for anyone who dreads thinking about their nine-to-five job, but it’s primarily aimed at young adults who don’t want to spend their lives penny-pinching and slaving away at the office.

You’ll find practical advice on some of the best passive income opportunities, from collecting songwriting and book royalties to getting into e-commerce, building up your rental income, and more.

Each passive income opportunity is explained in detail, alongside how challenging it is to get into the field and how much time, effort, and resources it would take to make it work, making it ideal for beginners.

None of these approaches are get-rich-quick schemes. They are long-term plans that require the utmost dedication, hard work, and patience. Not all of them will work for any given individual, but you only need one!

What You’ll Learn

“Passive Income, Aggressive Retirement” is filled with detailed guides on unique passive income streams that suit all interests, preferences, and skill levels. Some of the key points include:

• Adopting the SCRIMP approach – Scaleability, Controllability, Regulation, Investment, Marketability, and Passivity;
• 28 passive income models;
• The importance of hard work and continual learning;
• How to negotiate;
• How to play to your strengths.

You’ll find insightful interviews with experts and professionals who’ve successfully built up their passive income portfolios and effectively retired early.

About the Author

“Passive Income, Aggressive Retirement” was written by Rachel Richards, a former financial advisor who retired and started living off $15,000/a month in passive income when she was just 27 years old.

An entrepreneur, investor, and professional speaker, Rachel has written and published another best-selling book on personal finance, titled “Money Honey: A Simple 7-Step Guide for Getting Your Financial $hit Together”.

2. The Automatic Millionaire

by David Bach

It’s all in the title – “The Automatic Millionaire: A Powerful One-Step Plan to Live and Finish Rich” is a simple yet insightful guide on managing your finances until you get seven figures in your bank account.

This is a short book you could easily read in a single sitting, but it takes you through the main challenges and financial opportunities you encounter daily, then teaches you how to take advantage of them.

Right off the bat, the book starts with a short story of a typical American couple whose joint income doesn’t exceed $55,000 annually. Still, even with such a limited budget, the couple manages to provide two children with a college education, own two homes, live debt-free, and retire early with a million in their bank.

Though it sounds impossible, it’s very much a reality as long as you remember to invest in yourself first and identify and eliminate small daily expenses that are eating away at your budget: humorously called your “latte factor”.

This book could prove to be just what you need to ensure that a minor setback doesn’t entirely set you back.

What You’ll Learn

“The Automatic Millionaire” provides an easy-to-follow, practical system that can help you control your finances and build your budget. The book teaches you how to:

• Identify your “latte factor”;
• Automatically set money aside in your retirement or investment account as soon as you get paid;
• Increase your monthly contributions to your retirement account;
• Open brokerage accounts;
• Use apps and new technology to increase your savings.

Originally released in 2004, the book was recently updated to include current information on taxes, investment opportunities, new apps, and modern technological solutions you could use to accumulate wealth.

About the Author

“The Automatic Millionaire” was written by David Bach, an entrepreneur, financial author, motivational speaker, and the founder of FinishRich.com.

He’s written multiple international bestsellers, including “Smart Women Finish Rich”, “Smart Couples Finish Rich”, “The Finish Rich Workbook”, “The Automatic Millionaire Workbook”, and “The Latte Factor”, among others.

His “The Automatic Millionaire” was the number one bestseller upon its release in 2004 on The New York Times, Wall Street Journal, USA Today, and BusinessWeek bestseller lists.

Read key ideas on Blinkist →

3. Everyday Millionaires

by Chris Hogan

Everyday Millionaires” drives home the point that not all millionaires come from old money. Many are ordinary, self-made people who perfected the art of investing, avoiding debt and accumulating wealth.

The book was based on a recently-released study conducted on 10,000 millionaires in the US. The study showed that the majority of them didn’t come from money. They attended state universities, and as many as one in three never made a six-figure salary.

Throughout the book, you’ll find real stories from these self-made millionaires, with detailed explanations of how they achieved success.

While it’s not so much of a practical guide on how to make money, the book can be a great source of inspiration that can point you in the right direction.

What You’ll Learn

“Everyday Millionaires” shares an abundance of helpful information:

• Almost 80% of millionaires in the US didn’t get an inheritance;
• Being disciplined and working hard are the keys to success;
• Avoiding student debt should be your number 1 priority;
• Living below your means can kick-start your financial health;
• Spending money responsibly is critical.

Though it certainly helps to have a safety net provided by parents and family members, it’s not necessary for success. “Everyday Millionaires” highlights how important it is to work on yourself if you want to improve your own financial situation.

About the Author

“Everyday Millionaires” was written by Chris Hogan, a personal finance expert, former radio host, and best-selling author. Working at Ramsey Solutions as a financial coach, Chris has had years of experience teaching others how to achieve their financial goals.

Before he and Ramsey Solutions parted ways in 2021, he hosted “The Chris Hogan Show” podcast, where he offered financial advice to his listeners.

Read key ideas on Blinkist →

4. The Simple Path to Wealth

by J.L. Collins

“The Simple Path to Wealth: Your road map to financial independence and a rich, free life” was created for those who are less interested in making millions and retiring early than in ensuring their financial independence as they pursue other things.

The book came from a series of letters between the author, J.L. Collins, and his daughter. Unlike J.L. Collins himself, his daughter didn’t display much interest in financial matters such as trading or investing. She didn’t want money to be her only concern.

So, Collins created an insightful financial guide for all those who want to do other things in life but need financial stability to pursue their dreams.

The book presents simple, clear approaches to making smart investments that don’t require expertise or extensive time commitment.

The author goes over some of the most common investing mistakes – especially the ones he’s made himself – the best approaches to ensuring financial independence, the basics of the stock market, and so much more.

What You’ll Learn

In “The Simple Path to Wealth”, you’ll learn the basics of accumulating wealth, including:

• Why it’s important to have excess money;
• How and why you should avoid debt;
• How you should think about money;
• How the stock market works;
• How to apply the 4% rule to your spending.

The book finishes off with a detailed case study on how all the financial advice included can be applied.

About the Author

As mentioned, the author behind “The Simple Path to Wealth” is J.L. Collins. He has an extensive professional background, from ad agency founder to sales trainer, investment officer, entrepreneur, radio talk show host, and publisher.

He’s best known for his “JL Collins The Simple Path to Wealth” blog, where he shares financial advice and insights with his readers.

5. Rich Dad, Poor Dad

by Robert T. Kiyosaki

Perhaps one of the best-known finance books is “Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That Poor and Middle Class Do Not”. The book is based on a simple premise: poor people simply think differently about money than rich people.

While this is to be expected, if you want to stop being poor, you first need to change your mindset and start “playing to win,” not simply “playing not to lose”.

The book teaches you to change your perspective and start building wealth instead of living paycheck to paycheck. It provides sound advice on investing in your future, building up your assets, and making smart investments into properties and businesses.

Though it was considered somewhat controversial when it first came out over 20 years ago, as it discusses how going to school and pursuing education isn’t always the road to financial success, the book has stood the test of time.

What You’ll Learn

“Rich Dad Poor Dad” offers interesting insights into building wealth. From the book, you’ll learn:

• Schools don’t provide enough information to children regarding money;
• You don’t need a high salary to become rich;
• How to teach children about money;
• What assets and liabilities are and how you can use them;
• How to educate yourself to achieve financial stability.

The book is filled with financial tips that can help complete novices learn how to manage their wealth more effectively.

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About the Author

“Rich Dad Poor Dad” was written by Robert T. Kiyosaki, a businessman, entrepreneur, and well-respected author. He wrote the book after being inspired by the diverse stories of his father and his childhood friend’s father.

His own father followed the conventional, well-established path, trying to reach wealth by obtaining an education. Still, he ended up struggling financially. On the other hand, his friend’s father was a school dropout and became a self-made millionaire.

Read our full book review | Read key ideas on Blinkist →

6. I Will Teach You to Be Rich

by Ramit Sethi

“I Will Teach You to Be Rich” isn’t just another financial advice book. It’s a full six-week program designed to help you get your finances in order and attain wealth.

The book was written for young adults struggling to grasp the concept of money and will help you realize the financial mistakes you’ve been making and offer practical solutions to help you rectify them. Almost every chapter concludes with an actionable step you can take to turn your financial situation around.

Though you certainly stand to learn a lot from “I Will Teach You to Be Rich”, don’t expect just dry text that feels like reading through a workbook. There’s plenty of lighthearted, humorous content, making this book as entertaining as it is educational. 

What You’ll Learn

“I Will Teach You to Be Rich” covers important financial topics, helping you understand:

• Automate your finances;
• Open high-interest accounts;
• Master investment strategies;
• Negotiate a pay rise;
• Secure finances for large purchases.

Additionally, the book is filled with diverse, real-life stories showing that your situation isn’t unique. Most people encounter the same financial issues, and nearly everyone can turn their finances around.

About the Author

“I Will Teach You to Be Rich” was written by Ramit Sethi, a personal finance advisor, entrepreneur, and author. Ramit is also the founder of GrowthLab.com, a Finance as a Service company, and co-founder of PBworks, a collaborative editing system.

He has years of experience at sharing his financial insights and helping others achieve financial success.

Read key ideas on Blinkist →

7. The Greatest Salesman in the World

by Og Mandino

“The Greatest Salesman in the World” is a unique addition to this list, written back in 1968. It’s not a typical financial guidance book but rather an inspirational story that helps teach you how to develop good habits that can ultimately lead to success.

You’ll follow the story of a struggling camel boy who’s on a pursuit to become the greatest salesman in the world.

Though the book has many religious aspects, that doesn’t take away from the lessons it teaches. You’ll find insightful advice on attaining wealth and improving your life overall.

What You’ll Learn

“The Greatest Salesman in the World” is a story with many touching themes and some fantastic advice. Through the book, you’ll learn:

• The importance of developing good habits;
• The importance of building and nurturing relationships with others;
• How to take charge of your emotions;
• How to improve your negotiation and persuasion skills;
• How to improve all aspects of your life.

You don’t need to be or even aspire to be a salesman to benefit from the lessons this book teaches.

About the Author

“The Greatest Salesman in the World” was written by Og Mandino, an author, former insurance salesman, editor, and professional speaker.

Though Mandino doesn’t have much financial background, his philosophies are almost religiously followed by many investors and businessmen attempting to accumulate wealth.

Read key ideas on Blinkist →

8. The 4-Hour Workweek

by Timothy Ferriss

“The 4-Hour Workweek” is for all those beginners who want to escape their corporate nine-to-five, work less, and enjoy their life more.

It’s a step-by-step book that aims to help you understand the importance of hard work and provide the tools you need to create a business that lets you lead the life you’ve always dreamed of.

It’s not precisely a book on how to become a millionaire because you don’t have to be a millionaire to enjoy a fulfilling lifestyle. It’s a book on creating new opportunities for yourself and developing a lifestyle that suits your wants and needs.

What You’ll Learn

“The 4-Hour Workweek” offers dozens of actionable tips and tricks to help you gain financial independence. Some of the most important lessons you’ll learn from the book include:

• How to find your purpose;
• How to manage your time more effectively;
• How to partner with others to achieve success;
• How to make your life easier by charging a premium;
• How to validate your business ideas.

As it was written in 2007, the book has some outdated advice, but many of the tips and tricks are still valid to this day.

About the Author

“The 4-Hour Workweek” was written by Timothy Ferriss, an author, podcaster, entrepreneur, and investor. He is best known for his “4-Hour” series, publishing books such as “The 4-Hour Workweek”, as well as “The 4-Hour Body” and “The 4-Hour Chef”.

Read key ideas on Blinkist →

9. How Rich People Think

by Steve Siebold

“How Rich People Think” shares some similarities with another title on this list: “Rich Dad Poor Dad”. Though they’re vastly different works, they both center on the idea that rich people have different mindsets, habits, and beliefs that help them ensure better wealth accumulation.

The book was written after extensive research on millionaires and billionaires and their habits. The author believes that it’s possible to achieve financial success by learning how rich people think and behave, then copying them.

It’s an insightful, if somewhat blunt, guide on what it takes to improve your financial standing and accumulate more wealth. 

What You’ll Learn

“How Rich People Think” offers unfiltered advice from some of the most successful people in the world. You’ll learn the following:

• The importance of saving and investing;
• The benefits of taking calculated risks;
• The importance of being fearless;
• How to build wealth;
• The benefits of changing your mindset about money.

Throughout the book, the author is brutally honest and, at times, even harsh. However, there’s no denying that the advice offered can be quite useful.

About the Author

“How Rich People Think” was written by Steve Siebold, an author, speaker, and financial expert. He’s worked as a consultant at numerous renowned businesses, including Johnson & Johnson, Yamanouchi, and GlaxoSmithKline.

To write “How Rich People Think”, Steve interviewed over 1,300 self-made millionaires and billionaires, trying to understand how they think about money and behave.

10. The Psychology of Money

by Morgan Housel

The Psychology of Money” is one of the most astute personal finance books on this list. It highlights the importance of changing your perception of money as a way to ensure your own financial independence.

Wealth isn’t a matter of simple math. It’s about how you behave, think, and interpret the world around you.

The book goes over the common misconceptions about wealth and how many people believe that wealth is inherited rather than earned. This view and personal biases about money can prevent you from achieving your full potential and ensuring your financial success.

What You’ll Learn

“The Psychology of Money” offers insights and advice to help you gain financial freedom. Some of the things you’ll learn from the book include:

• How greed can lead to grave financial mistakes;
• How envy can give you false perceptions about wealth;
• How early life experiences affect your approach to money;
• How important it is to change your mindset about money;
• How important it is to change your behaviors if you want to accumulate wealth.

Making the right financial decisions is only possible when you take control of your emotions, become aware of your biases, and change your behaviors.

About the Author

“The Psychology of Money” was written by Morgan Housel, an author, former columnist at “The Motley Fool” and “The Wall Street Journal”, and a partner at the Collaborative Fund.

He has won numerous awards, including The New York Times Sidney Award and the Best in Business Award from the Society of American Business Editors and Writers.

Read key ideas on Blinkist →

Conclusion

No single book offers a key that guarantees financial success, so you shouldn’t expect to become a millionaire overnight after reading one (or all) of the books mentioned in this list. However, following the advice you’ll find in the aforementioned texts can help get you closer to financial freedom and independence.

It’s worth giving these books a try and combining the hundreds of pieces of advice you’ll read into a set of financial steps that suit you, your interests, and your lifestyle.

The post 10 Best Books on How to Make Money to Read in 2024 appeared first on FinMasters.

How can you become more conscious of risk, act in your best interest, and prevent emotions and biases from getting the best of you? Behavioral finance books can help.

The following titles will teach you how to make rational decisions and fewer mistakes, whether you’re managing personal finance or investments.

1. Thinking, Fast and Slow

by Daniel Kahneman

Thinking, Fast and Slow (2011) by Daniel Kahneman is among the best investment books for beginners. It delves into cognitive biases and people’s two conflicting modes of thinking: intuitive and deliberate.

It explains how processing information instinctively can be helpful but often leads to errors in judgment. Putting emotions aside and allowing time for logical reasoning can help you make rational decisions.

Key takeaways:

• Intuition and deliberation in behavioral economics;
• How overconfidence causes biased, subjective decisions;
• Objectively processing and responding to statistical information;
• Prospect theory.

This best-seller’s primary themes are the exploration of many cognitive biases and heuristics. Grab your copy to understand how to overcome them and take charge of your financial behavior.

Favorite quote from the book:

Our comforting conviction that the world makes sense rests on a secure foundation: our almost unlimited ability to ignore our ignorance.

About the author: Daniel Kahneman is a world-renowned psychologist and economist famous for his findings on behavioral economics, which earned him the 2002 Nobel Prize in Economic Sciences. He developed prospect theory, co-founded TGG Group, and teaches psychology and public affairs at Princeton University.

Read key ideas on Blinkist →

2. Freakonomics

A Rouge Economist Explores the Hidden Side of Everything

by Stephen J. Dubner & Steven Levitt

Freakonomics (2005), by Stephen J. Dubner & Steven Levitt, is an unusual book that correlates economics and sociocultural phenomena. It explains ways for you to apply economic theory to numerous seemingly unrelated subjects, including pop culture.

The book also discusses controversial ideas like abortion and gun violence, for which it has received criticism. However, the authors tie them back to economic principles with behavioral arguments.

Key takeaways:

• Economic knowledge can correct the irrational behavior governing our lives;
• We need economics to understand human behavior;
• Nature and nurture affect how people behave;
• Freeing yourself from conventional thinking can make you a better economist.

Freakonomics might be a challenging read, but it is worth it if you are anything but traditional.

Favorite quote from the book:

Information is a beacon, a cudgel, an olive branch, a deterrent—all depending on who wields it and how. Information is so powerful that the assumption of information, even if the information does not actually exist, can have a sobering effect.

About the authors: Steven Levitt is an economist who won the John Bates Clark Medal in 2003. He co-founded TGG Group and the Center for RISC at the University of Chicago, where he works as an economics professor.

Stephen J. Dubner is a journalist, author, and host of the Freakonomics Radio podcast. He co-authored several Freakonomics sequels and has received many awards for his journalistic work.

Read key ideas on Blinkist →

3. The Psychology of Money

Timeless Lessons on Wealth, Greed, and Happiness

by Morgan Housel

The Psychology of Money (2020), by Morgan Housel, isn’t your ordinary behavioral finance book targeting investing and practical tips. It focuses on perceptions of money and their impact on financial decision-making.

The book contains 19 short stories that expand our understanding of economics, wealth, greed, success, and happiness, highlighting the impact of psychology on financial decisions.

Key takeaways:

• Be reasonable instead of rational;
• Embrace market volatility;
• Save money and wait for lucrative opportunities;
• Leave your ego out of the equation;
• Carefully plan investments and subsequent steps because not all strategies are winning.

This engaging read also tackles personal finance management, teaching the readers about the significance of wise spending and savings decisions on the journey to wealth.

Favorite quote from the book:

A genius who loses control of their emotions can be a financial disaster. The opposite is also true. Ordinary folks with no financial education can be wealthy if they have a handful of behavioral skills that have nothing to do with formal measures of intelligence.

About the author: Morgan Housel is a financial journalist and behavioral finance expert who used to write for the Wall Street Journal and the Motley Fool. He is a partner at the Collaborative Fund and has won numerous awards, including the SABEW’s Best in Business Award and the New York Times Sydney Award.

Read key ideas on Blinkist →

4. Predictably Irrational

The Hidden Forces That Shape Our Decisions

by Dan Ariely

Predictably Irrational (2008), by Dan Ariely. is an excellent book for beginner investors and students studying behavioral finance. It reads like a story, containing personal anecdotes from everyday experiences to help readers delve into an investor’s mind.

Ariely uses exciting experiments and real-life examples to show how people act irrationally, even when intentionally trying to make a rational decision.

Key takeaways:

• Irrational behavior is systemic and predictable;
• Emotions stand in the way of good judgment;
• People put more value on free products than they actually have (the zero price effect);
• We overvalue owned objects due to emotional biases (the endowment effect);
• Predicting irrational behavior can help evaluate market sentiment.

Besides its valuable investment lessons, this book contains examples demonstrating that many people don’t use rational thought when comparing prices. For instance, we may expect a more expensive medicine to be more effective than its affordable counterpart, even if both are placebos.

Get your copy if you are looking for a thought-provoking read that might help you become more rational with finances.

Favorite quote from the book:

The danger of expecting nothing is that, in the end, it might be all we’ll get.

About the author: Dan Ariely is a psychology and behavioral economics professor at Duke University, where he runs the Center of Advanced Hindsight research lab. He taught at MIT, co-founded several companies focusing on behavioral science, and has published several best-sellers, including Predictably Irrational and The Upside of Irrationality.

Read key ideas on Blinkist →

5. Beyond Greed and Fear

Understanding Behavioral Finance and the Psychology of Investing

by Hersh Shefrin

Beyond Greed and Fear (1999), by Hersh Shefrin, looks at how psychology influences financial decisions. Shefrin teaches investors how to prevent emotions, bias, and overconfidence from clouding their judgment.

The book delves into how we let mistakes increase our fear without learning the lessons those mistakes can teach. When we think we see profit, we become greedy and make the same mistakes over and over again. Investors can overcome the cycle of greed and fear by recognizing and avoiding cognitive biases and mistakes.

Key takeaways:

• The concepts of heuristic biases, frame dependence, and market inefficiency;
• Even seasoned professionals let emotions and cognitive biases guide their actions;
• Investment models don’t consider these fundamental elements of human behavior;
• Ignoring the effects of the psychology of investing leads to errors and financial losses.

You may tie this book’s themes to trading, but its primary focus is investing.

Favorite quote from the book:

One of the most striking claims of behavioral finance is that heuristic-driven bias and frame dependence can cause prices to deviate from fundamental values for long periods.

About the author: Hersh Shefrin is an economist focusing on behavioral finance. He is a finance professor at Santa Clara University, where he previously taught economics, and writes for the Wall Street Journal, Forbes, Vox, and Huffington Post. He has published many research articles and books and won the Albert Nelson Marquis Lifetime Achievement Award in 2019.

6. The Behavioral Investor

by Daniel Crosby

The Behavioral Investor (2018), by Daniel Crosby, is among the top must-read books for investors. It delves deep into connections between human nature and finance and offers practical tips for better financial behavior and higher returns.

This book can help you increase self-awareness, avoid common investment pitfalls, overcome natural inclinations, improve your portfolio management and build wealth.

Key takeaways:

• The psychological, neurological, and sociological factors impacting your investment decisions;
• The four psychological tendencies (ego, conservatism, attention, and emotion) influencing investment behavior;
• Practical solutions to these problems and wealth management tips.

The author also proposes a rules-based behavioral investing (RBI) method for moving away from emotional biases and toward rational, evidence-based decision-making.

Favorite quote from the book:

Far from seamlessly assimilating new ideas into our existing belief framework, research shows that we actually tend to get more firm in our cherished beliefs when those beliefs become challenged.

About the author: Daniel Crosby is a psychologist, asset manager, and behavioral finance expert helping companies maximize investment returns and build wealth. He’s a thought leader writing for Investment News and WealthManagement.com and producing the “Irrationality Index,” which measures greed and fear to forecast negative returns.

Read key ideas on Blinkist →

7. Inefficient Markets

An Introduction to Behavioral Finance

by Andrei Shleifer

The efficient market hypothesis (EMH) states that asset prices reflect all available information and have fair fundamental values. It assumes that all investors are rational and that pricing discrepancy is impossible due to arbitrage opportunities.

That is not the case with real-world financial markets. Institutional and psychological evidence challenge the EMH’s assumptions.

In Inefficient Markets (2000), Andrei Shleifer proposes behavioral finance as an alternative, presenting empirical evidence and theories for analyzing actual markets.

Key takeaways:

• Real-world financial markets are inefficient;
• Investors make irrational decisions due to cognitive biases;
• Behavioral finance helps accurately analyze financial data and forecast asset prices.

This book is an excellent read for beginners in behavioral finance. The author’s easily intelligible explanations of various financial market models help newbies understand and apply the knowledge in real life.

About the author: Andrei Shleifer is a financial, behavioral, and development economist, researcher, and author. He won the John Bates Clark Medal in 1999, co-founded LSV Asset Management, and taught at Princeton University and the University of Chicago. He has been an economics professor at Harvard University since 1991.

8. Misbehaving

The Making of Behavioral Economics

by Richard H. Thaler

Richard H. Thaler’s titles are among the most valuable behavioral finance books. The Nobel laureate’s Misbehaving (2017) is a gripping book you’ll want to read in one sitting because the wisdom and often humorous illustrations won’t let you put it down.

Thaler explains how people frequently make irrational financial decisions because they let emotional biases guide their actions. They misbehave, and markets move irrationally as a result.

Key takeaways:

• Investors are irrational and misbehave because of emotional biases;
• Misbehavior can have detrimental consequences;
• Behavioral economics provides a new lens to analyze economic theory;

The author’s personal experiences make the book even more engaging. Grab your copy if you want an entertaining and insightful read that can help you make wiser financial decisions.

Favorite quote from the book:

The purely economic man is indeed close to being a social moron. Economic theory has been much preoccupied with this rational fool.

About the author: Richard H. Thaler is a behavioral economist, author, and columnist for The New York Times. He won the Nobel Prize in Economic Sciences in 2017 for outstanding contributions to behavioral economics. He has been an economics and behavioral science professor at the University of Chicago’s Booth School of Business since 1995.

9. The Little Book of Behavioral Investing

How Not to Be Your Own Worst Enemy

by James Montier

The Little Book of Behavioral Investing (2010), by James Montier, explains how human behavior affects financial markets and offers guidelines on maintaining a profitable investment portfolio.

The author shares insights into investors’ psychological pitfalls, such as emotions, hindsight bias, loss aversion, and overconfidence, and offers solutions to avoid them. He also explains the significance of learning from mistakes and overcoming behavioral challenges.

Key takeaways:

• Careful planning helps maintain investment discipline;
• Guesswork and failing to learn from mistakes can lead to losses;
• Focusing on low-risk assets helps overcome the fear of making investment decisions; 
• Monitoring price fluctuations can help you make profitable decisions;
• Fundamental analysis is crucial to determine fair market values.

This short read is ideal for aspiring investors dipping their toes in financial markets. It offers a useful foundation for making psychology work in your favor and breaking the barriers hindering high returns.

Favorite quote from the book:

Success in investing doesn’t correlate with IQ once you’re above the level of 100. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.

About the author: James Montier is a renowned economist with several behavioral and the author of several investing books. He is a fellow of the Royal Society of Arts and a visiting fellow at the University of Durham. He was the co-head of General Strategy at Société Générale and currently works as an asset allocation manager at GMO.

10. Dollars and Sense

How We Misthink Money and How to Spend Smarter

by Dan Ariely & Jeff Kreisler

Dollars and Sense (2017) is a page-turner that dives into the irrational world of personal finance and provides guidance on overcoming behavioral challenges. It’s a good choice for the reader who is more focused on personal finance than on investing.

The authors explore everyday topics to help us understand how emotions affect our financial choices and may cost us more than we think. They discuss how we perceive money and address the tendencies driving us to spend more than we should, from using credit cards for groceries to overpaying for items on vacation.

Key takeaways:

• How psychology affects your financial decisions;
• How to change your instincts for better financial decision-making;
• Practical advice on improving financial choices, including spending and saving more wisely.

This enjoyable read explains behavioral finance in an easy-to-understand language, infusing humor into real-life examples to help readers relate. It is a fascinating behavioral finance book for beginners.

Favorite quote from the book:

Happiness too often seems to be less a reflection of our actual happiness and more a reflection of the ways in which we compare ourselves to others.

About the authors: Behavioral economist Dan Ariely has partnered with Jeff Kreisler, a lawyer, author, stand-up comedian, and behavioral science advocate. Kreisler is head of Behavioral Science at J.P. Morgan Chace, founding editor at PeopleScience, and an executive humor coach at Stanford Business School.

Read key ideas on Blinkist →

11. Nudge

Improving Decisions About Health, Wealth, and Happiness

by Richard H. Thaler & Cass R. Sunstein

Nudge (2008) is a fantastic read about the behavioral patterns that lead us to poor financial choices, negatively affecting our health, wealth, and happiness. It provides real-world scenarios and tips to improve our financial behavior.

The authors explain how people succumb to biases when making financial decisions and share enlightening examples from extensive research on behavioral science.

Key takeaways:

• “Choice architecture” can change consumer behavior by “nudging” people in the right direction without restricting options;
• Even a minor change can “nudge” people to make better decisions;
• Using the nudge theory to redesign our environment can help us live better lives.

The authors have rewritten this New York Times best-seller to share new research and personal experiences. Nudge: The Final Edition (2021) provides insights on personal finance, credit card debt, mortgages, retirement savings, climate change, medical care, and other areas where we can make better decisions for a more fulfilling life.

Favorite quote from the book:

If you want to nudge people into socially desirable behavior, do not, by any means, let them know that their current actions are better than the social norm.

About the author: Behavioral economist and Nobel laureate Richard H. Thaler has teamed up with legal scholar Cass R. Sunstein in a collaboration for Nudge. Sunstein worked for the Obama administration, won the Holberg Prize in 2018, and taught at the University of Chicago Law School. He currently teaches at Harvard Law School as the Robert Walmsley University Professor.

Read key ideas on Blinkist →

12. The Winner’s Curse

Paradoxes and Anomalies of Economic Life

by Richard H. Thaler

The Winner’s Curse (1991) is a fascinating exploration of irrational economic behavior. Thaler tackles many paradoxes and anomalies of everyday economic life, explaining a common phenomenon in financial markets and value auctions: the winner’s curse.

The winner’s curse is an economic anomaly indicating that the winner is also a loser because they overestimate an item’s value and often overpay for it.

Thaler shares many real-world examples to support his wisdom, including auction bidders and consumers saving money on one product to spend the savings on another.

Key takeaways:

• Why people make irrational financial decisions;
• Economic paradoxes and anomalies, primarily the winner’s curse;
• Financial markets are inefficient.

This book may reveal essential economic wisdom, but it is slightly challenging for readers with no background in economics. It is a dense book with many mathematical examples that make it ideal for academic readers.

13. The Art of Contrary Thinking

by Humphrey B. Neill

Do you follow the pack as an investor or choose an oppositional course? The former can be risky, according to the late Humphrey B. Neill.

“When everyone thinks alike, everyone is wrong.”

This pearl of wisdom is one of many this renowned economist discussed in The Art of Contrary Thinking (1976). He explained the effects of herd mentality on investment decisions and financial markets and proposed a different thinking philosophy he applied when doing business or investing.

Contrary thinking can help investors capture the growing value from others following in their footsteps. It can also help forecast market shifts and prevent financial losses.

Key takeaways:

• The herd is usually wrong;
• Contrary thinking can help you stay on the right track;
• An oppositional strategy can help you prevent or minimize losses.

This book gives you a formula for thinking like a successful investor, making better decisions, leveraging value, understanding how people behave, and generating accurate forecasts. It is still a relevant read after nearly half a century.

Favorite quote from the book:

When governments, including our own, carry great debt loads, it behooves thoughtful citizens to recall occasionally the disastrous inflations of the past, the illusions of bootstrap economics—which always are accompanied by crowd hysteria.

About the author: Humphrey B. Neill was an economist, investment thinker, and World War I lieutenant. He dedicated his life to analyzing and writing about the folly of herd mentality and its effects on investment decisions. Always encouraging people to question the consensus and providing mountains of evidence, he earned the title “father of contrary opinion” from Life magazine.

Other Behavioral Finance Books We Considered

There are many behavioral finance books out there. We’ve rounded up the best, but when you’ve finished reading those, you also might like to read some of the following.

• Your Money and Your Brain by Jason Zweig
• Seeking Wisdom: From Darwin to Munger by Peter Bevelin
• Why Smart People Make Big Money Mistakes by Gary Belski
• Loaded: Money, Psychology, and How to Get Ahead Without Leaving Your Values Behind by Sarah Newcomb
• The Signal and the Noise by Nate Silver
• Behavioral Finance and Wealth Management: How to Build Investment Strategies That Account for Investor Biases by Michael M. Pompian

Conclusion

These behavioral finance books deserve a spot on every financially focused bookshelf, from investors and asset managers to individuals seeking personal finance advice.

Their wisdom and real-world examples can be valuable tools for profitable investments and better economic decisions devoid of emotions and biases.

The post 10+ Best Behavioral Finance Books to Read in 2024 appeared first on FinMasters.

1. Rich Dad Poor Dad – by Robert T. Kiyosaki
2. The Essays of Warren Buffett – by Lawrence A. Cunningham
3. Beating the Street – by Peter Lynch
4. The Intelligent Investor – by Benjamin Graham
5. Think and Grow Rich – by Napoleon Hill

5 Must Read Books for Investors

We picked five books that are certified investing classics. These are the books that show up time and again in lists of books recommended by both individual and institutional investors.

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1. Rich Dad Poor Dad

by Robert T. Kiyosaki

Are you a young investor trying to understand the market? Let’s be honest, none of us wants to work till we die. Many of us desire to reach financial independence by a certain age. But how will you reach your financial goals without enough financial education? We know that investment is the key to growing money. But do you know exactly where to invest and where to not?

In this book, which is often recommended as one of the investment books to read, Kiyosaki points out the misleading educational system of America that is designed in such a way that people just cannot escape the Corporate race. Schools don’t teach how to create enough wealth so that you don’t work anymore.

Real assets always add cash flow into your pocket. In his book, Kiyosaki suggests that investors must only invest in those assets that generate a yearly or monthly cash flow while providing upside in terms of equity value. Investors must always prefer real estate investments and stocks that provide dividends. There are many other interesting observations about investment in this book, like tax planning.

Read our full book review | Read key ideas on Blinkist →

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2. The Essays of Warren Buffett

by Lawrence A. Cunningham

Whether you are still a newbie in the investment world, or you think you know it all, this book will benefit you by improving your investment patterns. Do you want to grow your company’s enterprise value? You first need to learn the interrelation between a company’s management and its stakeholders.

Buffet’s essays address many financing topics like corporate governance, investing, mergers and acquisitions, accounting and valuation, accounting policy, tax matters, and alternatives to common stock. These essays are relevant to the environment of Corporate America. He tries to give us an insight into his business mindset and the basic principles he follows in finance through them. After going through his book, you will understand how much he hates blindly following investing trends.

Buffet hires talented managers at portfolio companies and lets them do what they do best. In this book, he has also suggested purchasing shares of businesses when they are being sold out at a price lower than the inherent price, i.e., at a discount. Investment and finance are not all about your common sense. With expert tips and suggestions, you can grow a lot faster, and who can give you better suggestions than one of the most successful investors in modern history?

Best Investing Books Every Investor Must Read

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3. Beating the Street

by Peter Lynch

Peter Lynch, the writer of this book, has seen immense success in stock market investment and hedge fund management. He was first an intern at Fidelity Investments, and later, he was managing the Magellan Fund, where he raised the assets up to $18 million. Just within 19 years, the funds had risen to a shocking $14 billion in assets.

He almost managed to bring in financial returns of more than 29.2% every year. This book is a sneak peek into his genius investor mind. Are you not curious to know what was his thought process when he made such huge investment decisions? How did he decide whether to buy or sell a stock?

Lynch’s core belief is that investors should always know everything about the assets in which they choose to invest. He feels that a single, individual investor can explore better market opportunities than even Wall Street. There cannot be a better book if you are really interested in understanding the investment mentality and psychology.

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4. The Intelligent Investor

by Benjamin Graham

Do you want to learn investment from the father of value investing himself? This is one of the most comprehensive, well-written investment books you will ever come across. Even Warren Buffett has said this to be the best investing book in history. The financing rules discussed in this book are very basic and yet really wise.

Graham suggests us to purchase stocks that appear relatively underpriced compared to investment value, which can be judged by fundamental analysis. He gives us the depth and knowledge of stock markets through this book and teaches us how to conduct a stock’s fundamental analysis.

Do you know the ways in which you can manage your portfolio? He discusses both defensive and positive approaches to do so and explains using illustrations of comparison of stocks of several companies. All the knowledge in this book has been backed by real-life scenarios and it is easily understandable.

Read our full book review | Read key ideas on Blinkist →

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5. Think and Grow Rich

by Napoleon Hill

This book is one of those best-selling copies that sold almost a million copies during the “Great Recession.” The author Napoleon had great connections and networks with some of the finest investors and wealthy individuals. He always had conversations with them regarding their money growing strategies, and later on, he used to research the authenticity of these strategies extensively.

Every great investor has said that investment is not just numbers; it is a mentality. To be successful like your role models, the first thing you need to do is understand their psychology. Do you want to develop an investment mentality and understand the rules that successful people swear by? In this book, the author gives you 13 principles that one must follow to achieve personal achievement and success. All of these suggestions are based on his own practical experiences, observations, and research.

All these principles are not just what you have to do but also the way you have to think. They include desire, faith, specialized knowledge, organized planning, persistence, as well as “sixth sense.” His basic thought that he has conveyed through this book is that you should always brainstorm with people with the same financial mentality as yours to always bring out something better from the entire discussion.

Read key ideas on Blinkist →

Not ready to commit to reading a whole book about investing? That’s OK. You can learn more about the basics on our website:

• How To Overcome The Fear Of Investing
• Investing 101: Investing For Beginners
• How to Calculate Your Risk Profile?
• Asset Allocation: A Strategy to Protect and Maximize Your Investments
• Where to Invest as a First-Time Investor in 2021?

If you enjoyed this article and would like to be notified of new content going forward, please sign up for our newsletter.

Conclusion

You will never learn how to invest in a single day. It is a slow process of gradually increasing your financial knowledge and sharpening your skills. Learning proper investment requires a lot of research and practice. These are the best investing books, in our opinion, and they are a great way to start your learning process. But don’t stop there. Expand your knowledge further, and don’t be afraid to put it into practice!

The post 5 Best Investing Books Every Investor Must Read appeared first on FinMasters.

If you’re in this position, these finance books for young adults will help you get off on the right foot.

Best Finance Books for Young Adults:

1. How to Money – By Kathryn Tuggle and Jean Chatzky
2. I Want More Pizza – By Steve Burkholder
3. Broke Millennial – By Erin Lowry
4. Get a Financial Life – By Beth Kobliner
5. Rich Dad, Poor Dad for Teens – By Robert Kiyosaki
6. Pay Less for College – By Elizabeth Walter and Debra Thro
7. The Infographic Guide to Personal Finance – By Michele Cagan and Elisabeth Lariviere
8. Why Didn’t They Teach Me This in School? – By Cary Siegel
9. How to Adult: Personal Finance for the Real World – By Jake Cousineau
10. The Simple Path to Wealth – By J. L. Collins
11. A Teenager’s Guide to Investing in the Stock Market – By Luke Villermin
12. I Will Teach You to Be Rich – By Ramit Sethi
13. You Are a Badass at Making Money – By Jen Sincero

1. How to Money

By Kathryn Tuggle and Jean Chatzky

How to Money is an invaluable resource for anyone looking to improve their understanding of personal finance. The authors provide actionable advice on multiple personal finance topics, including budgeting, saving, investing, and managing debt.

The content is divided into five sections: Earn It, Manage It, Use It, Get Schooled, and Look to the Future. Readers learn how to make informed decisions about their money through easy-to-read language and real-life examples.

Key takeaways: This book is designed to introduce young adults to personal finance. It provides the foundation they need to build a better financial future and avoid the pitfalls that put so many young people in a financial hole before they even get started.

About the author: Kathryn Tuggle and Jean Chatzky are financial journalists and authors. Tuggle is the managing editor of LearnVest and a contributing writer for Forbes, while Chatzky is the financial editor of NBC’s TODAY show and the author of several books. They are financial literacy advocates and have collaborated on several projects, including the Money School online course and the How to Money book.

2. I Want More Pizza

By Steve Burkholder

I Want More Pizza, by Steve Burkholder, focuses on the crucial basics of money management, such as budgeting, saving, investing, and credit. It also provides a wealth of practical advice on topics like getting a job, applying for scholarships, and making the most of student discounts.

The book is built around the pizza analogy, which helps younger individuals understand the linkages that connect fundamental financial concepts.

The book is short, only around 100 pages, and is designed to be accessible to teens.

Key takeaways: I Want More Pizza is packed with helpful information but written in a direct, easy-to-follow tone. It’s widely used in school personal finance programs and is an excellent resource for teaching teenagers, students, and young adults more about finances. The book is filled with the author’s real-life examples of his money troubles during his younger years, giving readers real-world lessons that they can relate to.

About the author: Steve Burkholder is a CPA with degrees in finance and accounting. He teaches corporate finance and devotes much of his spare time to providing accessible basic financial education to young people.

3. Broke Millennial

By Erin Lowry

Broke Millennial by Erin Lowry is an insightful and practical guide to financial success for young adults. The book is filled with helpful advice and tips on managing finances, from budgeting and saving to investing and debt management.

With simple language and engaging true stories, learning about finances turns into a fun experience quickly.

Key takeaways: Broke Millennial avoids the common trap of approaching personal finance from the perspective of an older author who is already financially stable. It’s a realistic, sympathetic viewpoint that will resonate with people who have made mistakes (like all of us) and need help, not judgment.

About the author: Erin Lowry is an engaging author who writes in an approachable and straightforward style. She draws on her own experiences and provides examples to illustrate her points. She has written several other outstanding finance books, including Broke Millennial Takes On Investing and Broke Millennial Talks Money.

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4. Get a Financial Life

Personal Finance in Your Twenties and Thirties

By Beth Kobliner

Get a Financial Life: Personal Finance in Your Twenties and Thirties by Beth Kobliner is a comprehensive and easy-to-follow guide to taking control of your finances. Catering primarily to young adults, it covers topics such as setting financial goals, budgeting and saving, investing, understanding taxes, buying a home, insurance, and other critical financial matters for this age.

Kobliner breaks down complex financial concepts into easy-to-understand language, making it an excellent guide for those just starting their journey to financial literacy.

Key takeaways: Get a Financial Life was first published in 1996 and served as a financial bible for young people struggling to get started during the 2001 and 2008-2009 recessions. Despite its age, this New York Times bestseller is as relevant as ever. It is straightforward and accessible and is an ideal pick if you want a general introduction to personal finance.

About the author: Beth Kobliner is a financial journalist, personal finance commentator, and best-selling author. Her primary mission is to help people improve their financial lives by providing valuable insights, tips, and tricks. Her book Get a Financial Life: Personal Finance in Your Twenties and Thirties is a New York Times bestseller, alongside her other book, Make Your Kid a Money Genius.

5. Rich Dad, Poor Dad for Teens

By Robert Kiyosaki

Rich Dad Poor Dad has become a personal finance classic since its publication in 1997. Not everyone agrees with its approach – our review digs deeper into those issues – but it remains one of the most popular personal finance books in the country.

Rich Dad Poor Dad for Teens is an adaptation of a well-known bestseller aimed at younger audiences. Reviews of the book are mixed – some readers found it short, and a bit repetitive – but they are still generally favorable…

Key takeaways: Rich Dad Poor Dad for Teens takes the lessons from Rich Dad Poor Dad and reframes them for a younger audience. Not everyone finds those lessons useful, but if you liked Rich Dad, Poor Dad and you’re looking for a personal finance book for your kids, it’s worth a try!

About the author: Robert Kiyosaki is a businessman, entrepreneur, and author. He’s the founder of Rich Global LLC and the Rich Dad Company. In addition to being a successful businessman, he provides personal finance advice and educates others on managing their finances.

6. Pay Less for College

By Elizabeth Walter and Debra Thro

Paying for college is an almost ubiquitous concern among college-bound young adults. Pay Less for College is a valuable guide that helps students take care of their finances and teaches them how to afford their degree without plunging into a lifetime’s worth of debt.

After seeing how confusing and misleading college financial aid information is, the authors created a guide that will allow young adults to plan their college funds and make the most of the available financial aid. The result is a simple but comprehensive guide to making college affordable.

Key takeaways: Most of the books on this list cover general personal finance topics. Pay Less for College is much more specific and aims at a very specific audience: college students, soon-to-be college students, and their families. It helps students navigate financial aid and take control of various college costs. It also teaches them how to get more free money through scholarships and grants and save tens of thousands of dollars throughout their higher education.

About the author: Debra Thro is an ASCA Certified College Admissions Specialist and a PACAC member. She collaborated with Elizabeth Walter in writing Pay Less for College.

7. The Infographic Guide to Personal Finance

By Michele Cagan and Elisabeth Lariviere

Some people are visual thinkers and find it easier to absorb information when it’s laid out in a graphic form. If that sounds like you, The Infographic Guide to Personal Finance is the perfect personal finance book for you. It contains informative lessons about finances delivered through captivating graphics.

The visually appealing infographics in this book cover a range of personal finance topics, from spending, budgeting, and saving to credit, debt, housing, and investing. If there’s a young person in your life who’s having trouble with traditional finance books – or if you are – this one is worth a try.

Key takeaways: This is not a simple picture book. It takes complex concepts about money and presents them in a visually appealing form that many people will find easier to understand than written explanations.

About the author: Michele Cagan is a CPA, financial mentor, and author with more than 20 years of experience in the field of finance. She has written multiple books and articles about personal finance and investing. She collaborated with Elisabeth Lariviere in writing Pay Less for College.

8. Why Didn’t They Teach Me This in School?

By Cary Siegel

Why Didn’t They Teach Me This in School? 99 Personal Money Management Principles to Live By was written by a business executive who wanted to lay out lessons that would teach his five kids more about finance as they entered adulthood. The book quickly received worldwide fame.

Some readers found some of the advice – especially the suggestion that college students avoid credit cards – dated, but the basic principles have generally been well received.

Key takeaways: Why Didn’t They Teach Me This in School? covers budgeting, spending, investing, insurance, mortgage, credit cards, and many more topics. It’s packed with valuable tips and tricks that most people don’t learn in school.

About the author: Cary Siegel holds an MBA from the University of Chicago and was a business executive at many marketing and sales organizations. He published Why Didn’t They Teach Me This in School? book in 2017, while Why Didn’t They Teach Me This in School, Too? hit the shelves in 2018.

9. How to Adult: Personal Finance for the Real World

By Jake Cousineau

How to Adult: Personal Finance for the Real World has been called “an essential resource for a high school graduate, college student, or any other young adult who needs to prepare for the financial realities of adulthood”. It addresses a range of personal finance topics, from basic budgeting and saving to more complex concepts like investing, retirement accounts, taxes, and insurance.

By equipping young adults with money management fundamentals, this book prepares its readers for the financial realities of adulthood.

Key takeaways: How to Adult: Personal Finance for the Real World is longer and more complex than some of the books on this list. It might not be the right choice for younger readers or reluctant readers, but it is a book that you can keep on your shelf – and keep consulting – throughout the adulting process.

About the author: Jake Cousineau is an author and educator that shares his knowledge about finance to teach others to manage their money more successfully. He taught personal finance classes in high schools for years, gaining a strong appreciation for the financial education needs of young Americans.

With his book How to Adult: Personal Finance for the Real World, Jake Cousineau hopes to reach a wider audience of young adults and provide them with everything they need to know about personal finances in the real world.

10. The Simple Path to Wealth

By J. L. Collins

The Simple Path to Wealth is an investing book for people who know nothing about investing. For young people, investment often seems a remote activity for people who already have money, and that attitude often keeps people from investing early and giving their assets the largest possible time to appreciate.

This book covers everything a young person needs to understand what investing is about and get started early, along with other personal finance knowledge.

Key takeaways: The investment world can be harsh, especially for young adults and beginners who don’t know much about this topic. That’s where The Simple Path to Wealth comes in handy, as it provides readers with a simple map and tools necessary to forge financial stability and build wealth with confidence.

If you’re looking for a general personal finance book, this might not be your top choice, as it is primarily focused on investing. If you’re looking to get started with investments, though, it’s a prime pick.

About the author: J. L. Collins is currently a financial blogger and book author. However, he was also an account executive, consultant, investment officer, entrepreneur, speaker, radio talk show host, and magazine publisher. With so much knowledge and experiences to share, his book The Simple Path to Wealth is an excellent choice.

11. A Teenager’s Guide to Investing in the Stock Market

By Luke Villermin

Luke Villermin’s A Teenager’s Guide to Investing in the Stock Market is focused on the advantages of starting investing early. Just because most people wait until they’re in their 30s to start investing doesn’t mean that’s the best thing to do.

By presenting the benefits of investing as early as their teenage years, Villermin hopes to motivate younger generations to start working on their financial stability today.

Key takeaways: The book’s primary goal is to inspire teenagers and young adults to start saving and investing today. The readers can do so thanks to a step-by-step guide to opening an online account, purchasing stock, and putting money to work. The book also covers the stock market’s basics and how to choose the best investments.

This is a focused book with a single purpose. If that purpose lines up with your objectives, it’s a good choice!

About the author: Luke Villermin is a successful author interested in sharing his knowledge about finances and investing. He is the author of several well-received books. Besides A Teenager’s Guide to Investing in the Stock Market, Luke Villermin wrote On Your Mark, Get Set, Spending Wisely, INVEST: A Kid’s Guide to Saving Money, and several others.

12. I Will Teach You to Be Rich

By Ramit Sethi

Another outstanding read is I Will Teach You to Be Rich by Ramit Sethi. It’s a New York Times Bestseller published in 2009 that tackles the process of becoming rich. Today’s version is completely updated with over 80 pages of new material.

I Will Teach You to Be Rich is written in a light, irreverent style that one reviewer describes as “part frat boy and part Silicon Valley geek, with a little bit of San Francisco hipster thrown in”. Don’t let the style fool you: the advice is entirely serious.

Key takeaways: I Will Teach You to Be Rich makes some pretty ambitious claims, notably of a “no-BS 6-week program”, a pretty quick timeline when getting rich is the goal! With almost 13,000 overwhelmingly positive reviews, though, this book has clearly made an impression on a large number of readers!

About the author: Ramit Sethi is a bestselling author who has been featured by ABC News, CNN, and the Wall Street Journal. He’s dedicated to helping his followers manage personal finances and work on their financial stability. Instead of simply guiding them to becoming financially independent, Ramit Sethi teaches readers how to become rich.

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13. You Are a Badass at Making Money

By Jen Sincero

Last but certainly not least, we complete this reading list with You Are a Badass at Making Money by Jen Sincero. You Are a Badass is one of the most talked-about books in the personal finance world.

Most personal finance books focus on the practical steps we can take to put our finances in order. You Are a Badass at Making Money takes a different approach, focusing on the mindsets and mental blocks that prevent so many people from achieving financial progress.

Key takeaways: The connection between mental attitudes and money is well-documented, and that connection is increasingly seen as a key to breaking out of self-destructive habits and replacing them with constructive ones. You Are a Badass at Making Money takes an easygoing, positive, guilt-free approach to help you unlock your financial potential.

About the author: Jen Sincero is a #1 New York Times bestselling author and speaker who has helped thousands of people transform their lives. With You Are a Badass series of books and Badass Coaching Programs, Jen Sincero motivates people of all ages to improve their lives in different aspects, especially the financial one.

Read key ideas on Blinkist →

The post 13 Best Finance Books for Young Adults appeared first on FinMasters.

To help you get started, I’ve compiled a list of the best investment books.

Best Books to Read as a Beginner Investor

Without further ado, here are the 10 best investment books for beginners:

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1. The Intelligent Investor

The Definitive Book on Value Investing

By Benjamin Graham

If you only ever read one investment book, then let it be The Intelligent Investor by Benjamin Graham.

There’s a reason why Graham is called the “Godfather of Value Investing.” Benjamin Graham was probably the most influential investing figure of the 20th century, and The Intelligent Investor is probably the most influential investment book of all time.

The Intelligent Investor is the value investor’s bible… Keep this one on your bedside table.

Read our full book review | Read key ideas on Blinkist →

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2. One Up On Wall Street

How To Use What You Already Know To Make Money In the Market

By Peter Lynch

Peter Lynch is one of the most successful investors ever – from 1997 to 1990, his Magellan Fund averaged a 29.2% compound annual return.

In One Up on Wall Street, Peter Lynch explains how average investors can beat the pros by using what they know. According to Lynch, investment opportunities are everywhere: from the supermarket to the workplace, we encounter products and services all day long.

By paying attention to the best ones, we can find companies in which to invest before the professional analysts discover them.

Read our full book review | Read key ideas on Blinkist →

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3. Rich Dad Poor Dad

What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!

BY Robert T. Kiyosaki

A bestseller for over 25 years, Rich Dad Poor Dad is one of the most recommended books on investing and managing wealth in general. The book explains basic wealth generation in an understandable and inspirational way, and it’s a solid enough introduction to these concepts.

Kiyosaki points out the misleading educational system of America that is designed in such a way that people just cannot escape the Corporate race. Kiyosaki suggests that in order to escape investors must only invest in those assets that generate a yearly or monthly cash flow while providing upside in terms of equity value.

Read our full book review | Read key ideas on Blinkist →

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4. Stocks for the Long Run

The Definitive Guide to Financial Market Returns & Long-Term Investment Strategies

BY Jeremy Siegel

Jeremy Siegel‘s nickname is the “Wizard of Wharton” (he’s been teaching there for 45 years). His investment book Stocks for the Long Run is sometimes called “the buy and hold Bible.”

The book makes the convincing argument that – after you account for inflation – equities are actually the safest investment in the long run, proving the point that most people should be long-term, passive investors in the stock market.

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5. The Little Book of Common Sense Investing

The Only Way to Guarantee Your Fair Share of Stock Market Returns

By John C. Bogle

Investing is all about common sense. Owning a diversified portfolio of stocks and holding it for the long term is a winner’s game. Trying to beat the stock market is theoretically a zero-sum game (for every winner, there must be a loser), but after the substantial costs of investing are deducted, it becomes a loser’s game.

John C. (“Jack”) Bogle is the founder of the Vanguard Group and creator of the world’s first index fund.

The Little Book of Common Sense Investing is a top recommendation of Warren Buffett’s. There’s actually a funny story that when Jack Bogle first met Warren Buffett, Jack recognized Warren, went up and introduced himself, and he said to Warren, “you know the thing I really like about you is you have rumpled suits just the same as I do” – and Jack and Warren have been good friends ever since.

Read key ideas on Blinkist →

The Motley Fool Stock Advisor has outperformed the S&P 500 3 to 1 over the last 20 years. Join more than 1 million members for just $99/year (that’s $1.90/week), and don’t miss out on their stock picks. Sign Up Now →

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6. A Random Walk Down Wall Street

The Time-Tested Strategy for Successful Investing

By Burton G. Malkiel

Burton G. Malkiel’s classic and gimmick-free investment guide is now more necessary than ever. Rather than tricks, what you’ll find here is a time-tested and thoroughly research-based strategy for your portfolio.

Whether you’re considering your first 401(k) contribution or contemplating retirement, this fully updated edition of A Random Walk Down Wall Street should be the first book on your reading list.

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7. Competitive Strategy

Techniques for Analyzing Industries and Competitors

By Michael Porter

Studying Michael Porter is one of the first things you do in business school. Competitive Strategy by Michael Porter has transformed the theory, practice, and teaching of business strategy throughout the world.

This book introduces Porter’s 5 Forces to help investors analyze industry attractiveness, as well as the 3 forms of a company’s strategy – low cost, differentiation, and focus.

Read key ideas on Blinkist →

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8. The Ascent of Money

A Financial History of the World

By Niall Ferguson

Niall Ferguson follows the money to tell the human story behind the evolution of our financial system, from its genesis in ancient Mesopotamia to the latest upheavals on what he calls Planet Finance. What’s more, Ferguson reveals financial history as the essential backstory behind all history, arguing that the evolution of credit and debt was as important as any technological innovation in the rise of civilization.

This is a great overview of all things money and a nice introduction to the world of finance.

Read key ideas on Blinkist →

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9. Thinking, Fast and Slow

By Daniel Kahneman

Daniel Kahneman is a professor of behavioral & cognitive psychology at Princeton, winner of the 2002 Nobel Prize for economics, and author of the best-selling book on cognitive biases and heuristics: Thinking Fast & Slow.

This book explains the natural biases that affect our judgment in everyday life, as well as in investing. If you want to be a great investor, then it’s critical to be aware of the biases and tendencies.

This is a fascinating book, and Kahneman himself is actually the subject of Michael Lewis’s book The Undoing Project.

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MORE: What Daniel Khenman Thinks Investors Should Know

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10. The Psychology of Money

Timeless Lessons on Wealth, Greed, and Happiness

by Morgan Housel

Morgan Housel is a former columnist at The Motley Fool and The Wall Street Journal. There is no practical investing advice in the book. Instead, The Psychology of Money focuses on all the ways people think about wealth, economics, and success.

The book is comprised of 19 stories that illustrate how people make decisions about money in their life. Instead of pretending that humans are perfect decision-making machines, Housel shows you how your psychology can work for and against you.

Read key ideas on Blinkist →

Did you like this article? Want to know more? You can learn all about value investing by downloading our FREE ebook.

The Ultimate Guide to Value Investing

Do you want to know how to invest like the value investing legend Warren Buffett? All you need is money to invest, a little patience—and this book. Learn more

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The post Top 10 Investment Books for Beginners in 2023: Classics to Latest Releases appeared first on FinMasters.

This collection features a diverse range of titles, including works by financial gurus such as Dave Ramsey, Robert Kiyosaki, and Tony Robbins, as well as value investing classics like ‘The Intelligent Investor’, ‘The Tao of Charlie Munger’, and ‘A Random Walk Down Wall Street’.

Dive into the world of personal finance through these insightful reads!

1. Unshakeable

by Tony Robbins

Tony Robbins, who has coached more than fifty million people from 100 countries, is the world’s #1 life and business strategist. In this book, he teams up with Peter Mallouk, the only man in history to be ranked the #1 financial advisor in the US for three consecutive years by Barron’s. Together they reveal how to become unshakeable—someone who can not only maintain true peace of mind in a world of immense uncertainty, economic volatility, and unprecedented change, but who can profit from the fear that immobilizes so many.

Here’s what is covered in this book

• How to put together a simple, actionable plan that will deliver true financial freedom.
• Strategies from the world’s top investors on how to protect yourself and your family and maximize profit from the inevitable crashes and corrections to come.
• How a few simple steps can add a decade or more of additional retirement income by discovering what your 401(k) provider doesn’t want you to know.
• The core four principles that most of the world’s greatest financial minds utilize so that you can maximize upside and minimize downside.
• The fastest way to put money back in your pocket: uncover the hidden fees and half truths of Wall Street—how the biggest firms keep you overpaying for underperformance.
• Master the mindset of true wealth and experience the fulfillment you deserve today.

Read key ideas on Blinkist →

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2. Rich Dad Poor Dad

by Robert T. Kiyosaki

Rich Dad Poor Dad is the #1 selling Personal Finance book for all time. In this book, Robert Kiyosaki shares the story of his two dad: his real father, whom he calls his ‘poor dad,’ and the father of his best friend, the man who became his mentor and his ‘rich dad.’ One man was well educated and an employee all his life, the other’s education was “street smarts” over traditional classroom education and he took the path of entrepreneurship… a road that led him to become one of the wealthiest men in Hawaii. Robert’s poor dad struggled financially all his life, and these two dads – with two very different points of view of money, investing, and employment – shaped Robert’s own thinking about money.

Rich Dad Poor Dad will:

• Explode the myth that you need to earn a high income to become rich
• Show parents why they can’t rely on the school system to teach their kids
  about money
• Explain the difference between good debt and bad debt
• Teach you to see the world of money from different perspectives
• Discuss the shift in mindset that can put you on the road to financial freedom

Robert has challenged and changed the way tens of millions of people, around the world, think about money and investing. Maybe it will change the way you think, too?

Read our full book review | Read key ideas on Blinkist →

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3. The Millionaire Next Door

 by Thomas J. Stanley & William D. Danko

The Millionaire Next Door is a wonderful book for anyone who wants to grow their wealth. Stanley and Danko break down 7 common traits that show up again and again among those who have accumulated wealth. By the end of the book, you’ll understand that wealth in America is more often the result of hard work, diligent savings, and living below your means than it is about inheritance, advance degrees, and even intelligence.

The authors use over two decades worth of surveys, personal interviews with millionaires, and data to reveal the secrets for building wealth in America. The Millionaire Next Door reveals the common denominators that show up again and again among those who have accumulated wealth.

Read our full book review | Read key ideas on Blinkist →

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4. How to Make Your Money Last

by Jane Bryant Quinn

This book will teach you how to turn your retirement savings into a steady paycheck that will last for life.

One of people’s biggest fears is running out of money in their older age. Luckily you can use a few tricks for squeezing higher payments from your assets, like:

• Your Social Security account (find the hidden values there),
• Pension (monthly income or lump sum?),
• Home equity (sell and invest the proceeds or take a reverse mortgage?),
• Savings (should you buy a lifetime annuity?),
• Retirement accounts (how to invest and—critically—how much to withdraw from your savings each year?).

The right moves will not only raise the amount you have to spend, they’ll stretch out your money over many more years. At a time when people are living longer, yet retiring with a smaller pot of savings than they’d hoped for, this book will become the essential guide

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5. The Total Money Makeover

by Dave Ramsey & Thomas Nelson

Build up your money muscles with America’s favorite finance coach.

Okay, folks, do you want to turn those fat and flabby expenses into a well-toned budget? Do you want to transform your sad and skinny little bank account into a bulked-up cash machine? Then get with the program, people. There’s one sure way to whip your finances into shape, and that’s with The Total Money Makeover: Classic Edition.

By now, you’ve heard all the nutty get-rich-quick schemes, the fiscal diet fads that leave you with a lot of kooky ideas but not a penny in your pocket. Hey, if you’re tired of the lies and sick of the false promises, take a look at this—it’s the simplest, most straightforward game plan for completely making over your money habits. And it’s based on results, not pie-in-the-sky fantasies. With The Total Money Makeover: Classic Edition, you’ll be able to:

• Design a sure-fire plan for paying off all debt—meaning cars, houses, everything
• Recognize the 10 most dangerous money myths (these will kill you)
• Secure a big, fat nest egg for emergencies and retirement!

Includes new, expanded “Dave Rants” sidebars tackle marriage conflict, college debt, and more. All-new forms and back-of-the-book resources to make Total Money Makeover a reality.

Read key ideas on Blinkist →

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6. Make Your Kid a Money Genius (Even If You’re Not)

by Beth Kobliner

Beth Kobliner is the author of the bestselling personal finance bible Get a Financial Life. Make Your Kid a Money Genius is a new, must-have guide showing parents how to teach their children (from toddlers to young adults) to manage money in a smart way.

This book is a easy to understand, step-by-step guide to help parents of all income levels teach their kids—from ages three to twenty-three—about money. It turns out the key to raising a money genius isn’t to teach that four quarters equal a dollar or how to pick a stock. Instead, it’s about instilling values that have been proven to make people successful—not just financially, but in life: delaying gratification, working hard, living within your means, getting a good education, and acting generously toward others.

More specifically, you’ll learn why allowance isn’t the Holy Grail when teaching your kid to handle money, and why after-school jobs aren’t always the answer either. You’ll discover the right age to give your kid a credit card, and learn why doling out a wad of cash can actually be a good parenting move.

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7. The Truth About Your Future

by Ric Edelman

New York Times bestselling author and legendary investment guru Ric Edelman reveals his forward-thinking guide on how science and technology will reshape the way we save, invest, and plan for the future.

The traditional paradigms of how we live, learn, and invest are shifting under our feet. Edelman explains how smart investors can adapt and thrive in today’s changing marketplace and offers sound, practical investment advice through the lens of recent scientific and technological advancements. He illustrates how discoveries in robotics, nanotechnology, 3D printing, solar energy, biotechnology, and medicine will redefine our life expectancies, careers, and retirements. As we live and work longer, Edelman provides clear advice on how to recalibrate the way we save for college, invest during our careers, and plan for retirement.

The Truth About Your Future, featuring Edelman’s proven advice and trademark humor, is a timely, must-have guide for anyone serious about successfully adapting to the ever-evolving financial landscape.

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8. The Automatic Millionaire

by David Bach

The Automatic Millionaire is one of the most popular financial books of our time.  It was a runaway hit when it was first published in 2004, spending thirty-one weeks on the New York Times bestseller list and appearing at at number one simultaneously on the New York Times, USA Today, BusinessWeek, and Wall Street Journal business bestseller lists. It has sold over 1.5 million copies and been translated around the world in over a dozen languages.  This is the first update since 2005 and includes updated information on taxes, investments, technologies and apps to automate your financial life as well as David’s latest systems for making the entire process even easier.

This book starts with the powerful story of an average American couple (he’s a low-level manager, she’s a beautician) whose joint income never exceeds $55,000 a year, yet who somehow manage to own two homes debt-free, put two kids through college, and retire at 55 with more than $1 million in savings. Through their story you’ll learn the surprising fact that you cannot get rich with a budget! You have to have a plan to pay yourself first that is totally automatic, a plan that will automatically secure your future and pay for your present.

David gives you a realistic system, based on timeless principles, with everything you need to know, including phone numbers, websites and apps, so you can put the secret to becoming an Automatic Millionaire in place from the comfort of your own home. This powerful little book has the potential to secure your financial future. Do it once – the rest is automatic!

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9. Pogue’s Basics

by David Pogue

• Want to know where you can buy $100 iTunes gift cards for $85?
• Did you know you can pay your taxes by using a cash-back credit card?
• Why are you still paying $235 a year to rent your cable box?

You’re leaving money on the table every day, with every transaction you make: changing your oil, withdrawing ATM cash, booking flights, buying insurance, shopping for clothes, squirting toothpaste. But in Pogue’s Basics: Money, the third book of this New York Times bestselling series, David Pogue proves that information is money. Each of his 150 simple tips and tricks includes a ballpark estimate of the money you could make or save.

Okay, you won’t use every tip in the book―but if you did, you’d come ahead by $61,195 a year.

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10. The Intelligent Investor

by Benjamin Graham

If you only ever read one investment book, then let it be The Intelligent Investor by Benjamin Graham. There’s a reason why Graham is called the “Godfather of Value Investing.” Benjamin Graham was probably the most influential investing figure of the 20th century, and The Intelligent Investor is probably the most influential investment book of all time. The Intelligent Investor is the value investor’s bible… keep this one on your bedside table.

“By far the best book on investing ever written.” – Warren Buffett
“If you read just one book on investing during your lifetime, make it this one” – Fortune
“The wider Mr. Graham’s gospel spreads, the more fairly the market will deal with its public.” – Barron’s

Read our full book review | Read key ideas on Blinkist →

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11. Money Master the Game

 by Tony Robbins

This is the second book on this list by Tony Robbins. Based on extensive research and one-on-one interviews with more than 50 of the most legendary financial experts in the world – from Carl Icahn and Warren Buffett, to Ray Dalio and Steve Forbes – Tony Robbins has created a simple 7-step blueprint that anyone can use for financial freedom.

Robbins has a brilliant way of using metaphor and story to illustrate even the most complex financial concepts—making them simple and actionable. With expert advice on our most important financial decisions, Robbins is an advocate for the reader, dispelling the myths that often rob people of their financial dreams.

Tony Robbins walks readers of every income level through the steps to become financially free by creating a lifetime income plan. This book delivers invaluable information and essential practices for getting your financial house in order.

Read key ideas on Blinkist →

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12. Ageproof

by Jean Chatzky & Michael Roizen

In this book, two of the world’s leading experts explain the vital link between health and wealth that could add years to your life and dollars to your retirement savings. Learn about how to rollover your HSA funds, etc.

All the money in the world doesn’t mean a thing if we can’t get out of bed. And the healthiest body in the world won’t stay that way if we’re frazzled about five figures worth of debt. TODAY Show financial expert Jean Chatzky and the Cleveland Clinic’s chief wellness officer Dr. Michael Roizen explain the vital connection between health and wealth – giving readers all the tactics, strategies, and know-how to live longer, healthier, more lucrative lives.

The same principles that allow us to achieve a better body will allow us to do the same for our investment portfolio. For instance, physical and financial stability comes down to the same equation: Inflow versus outflow. Do we burn more calories than we ingest? Likewise, are we making more money than we spend? The authors detail scientific ways to improve our behavior so that the answers tilt in the readers’ favor. They also offer ways to beat the system by automating how we do things and limiting our decisions in the face of too much food or too much debt. Chatzky and Roizen provide a plan for both financial independence and biological strength with action steps to get you there.

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13. A Random Walk Down Wall Street

by Burton G. Malkiel

Burton G. Malkiel’s classic and gimmick-free investment guide is now more necessary than ever. Rather than tricks, what you’ll find here is a time-tested and thoroughly research-based strategy for your portfolio. Whether you’re considering your first 401(k) contribution or contemplating retirement, this fully updated edition of A Random Walk Down Wall Street should be the first book on your reading list.

In A Random Walk Down Wall Street you’ll learn the basic terminology of “The Street” and how to navigate it with the help of a user-friendly, long-range investment strategy that really works. Drawing on his own varied experience as an economist, financial adviser, and successful investor, Malkiel shows why, despite recent advice to the contrary from so-called experts in the wake of the financial crisis, an individual who buys over time and holds a low-cost, internationally diversified index of securities is still likely to exceed the performance of portfolios carefully picked by professionals using sophisticated analytical techniques. In this new edition, Malkiel has provided valuable new material throughout the book on exchange-traded funds and investment opportunities in emerging markets, and in a brand-new, timely chapter, Malkiel authoritatively assesses the pitfalls and prospects of the latest investing trend, “smart beta.”

With the prevailing wisdom changing on an almost daily basis, Malkiel’s reassuring and vastly informative volume remains the best investment guide money can buy.

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14. How to Retire With Enough Money

by Teresa Ghilarducci

This is a short book (144 pages) that you can read in a single sitting – but it can change the course of your retirement. It begins with acknowledging what a person or household actually needs to have saved—the rule of thumb is eight to ten times your annual salary before retirement—and how much to expect from Social Security. And then it delivers the basic principles that will make the money grow, including a dozen good ideas to get current expenses under control. Why to “get rid of your guy”—those for-fee (or hidden-fee) financial planners that suck up valuable assets. Why it’s always better to pay off a loan or a mortgage.

There are no gimmicks, no magical thinking—just an easy-to-follow program that works:

• A comfortable nest egg is eight times your annual salary
• “Fire the guy!” Now’s the time to move investments into low-cost index funds—you’ll beat the experts and save a ton of money
• How to get the very most out of Social Security—and why it’s a healthy and dependable system
• The incalculable advantage of paying down debt, starting with your mortgage
• The dual benefit of downsizing before retiring, including ten proven strategies for cutting back on spending

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15. The Tao of Charlie Munger

by David Clark

Words of wisdom from Charlie Munger – Warren Buffett’s longtime business partner and the visionary Vice Chairman of Berkshire Hathaway – collected and interpreted with an eye towards investing by David Clark, coauthor of the bestselling Buffettology series.

Like The Tao of Warren Buffett and The Tao of Te Ching, The Tao of Charlie Munger is a compendium of pithy quotes including, “Knowing what you don’t know is more useful than being brilliant” and “In my whole life, I have known no wise people who didn’t read all the time—none, zero.” This collection, culled from interviews, speeches, and questions and answers at the Berkshire Hathaway and Wesco annual meetings, offers insights into Munger’s amazing financial success and life philosophies.

Described by Business Insider as “sharp in his wit and investing wisdom,” Charlie Munger’s investment tips, business philosophy, and rules for living are as unique as his life story.

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16. Mindful Money

by Jonathan K. Deyoe

Is it possible to be a conscientious citizen of the world and grow wealth? Jonathan DeYoe, a Buddhist and a financial planner, says yes and explains exactly how.

Money drives many of our decisions. We all worry about earning it, spending it, and saving it — regardless of our income level or spiritual perspective. Yet few of us understand money’s true nature. Mindful Money helps you create a unique financial plan that is guided by your deepest beliefs, and shows you how to save, invest, pay off debt, and fund your retirement and dreams by building a lifetime income stream.

With a foreword by Pulitzer Prize–winner Alice Walker, Mindful Money does all this while emphasizing that money is a tool you can use to support your lifestyle, reach your goals, and earn the “happiness dividend” everyone deserves.

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17. The Only Investment Guide You’ll Ever Need

by Andrew Tobias

For nearly forty years, The Only Investment Guide You’ll Ever Need has been a favorite finance guide, earning the allegiance of more than a million readers across America. This completely updated edition will show you how to use your money to your best advantage in today’s financial marketplace, no matter what your means.

Using concise, witty, and truly understandable tips and explanations, Andrew Tobias delivers sensible advice and useful information on savings, investments, preparing for retirement, and much more.

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18. How to Retire Happy, Wild, and Free

by Ernie J. Zelinski

How to Retire Happy, Wild, and Free offers inspirational advice on how to enjoy life to its fullest. The key to achieving an active and satisfying retirement involves a great deal more than having adequate financial resources; it also encompasses all other aspects of life – interesting leisure activities, creative pursuits, physical well-being, mental well-being, and solid social support.

This book guides you to:

• Gain courage to take early retirement; in fact, the earlier the better.
• Put money in proper perspective so that you don’t need a million dollars to retire.
• Generate purpose in your retirement life with meaningful creative pursuits.
• Follow your dreams instead of someone else’s.
• Take charge of your mental, physical, and spiritual health.
• Better envision your retirement goals — including where you want to live.
• Above all, make you retirement years the best time of your life.

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19. The Index Card

by Helaine Olen & Harold Pollack

TV analysts and money managers would have you believe your finances are enormously complicated, and if you don’t follow their guidance, you’ll end up in the poorhouse.

They’re wrong.

When University of Chicago professor Harold Pollack interviewed Helaine Olen, an award-winning financial journalist and the author of the bestselling Pound Foolish, he made an off­hand suggestion: everything you need to know about managing your money could fit on an index card. To prove his point, he grabbed a 4″ x 6″ card, scribbled down a list of rules, and posted a picture of the card online. The post went viral.

Now, Pollack teams up with Olen to explain why the ten simple rules of the index card outperform more complicated financial strategies. Inside is an easy-to-follow action plan that works in good times and bad, giving you the tools, knowledge, and confidence to seize control of your financial life.

Read key ideas on Blinkist →

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20. What Your Financial Advisor Isn’t Telling You

by Liz Davidson

It seems like a foolproof decision: if you want to be smart about protecting and growing your wealth, you should seek guidance from a trained financial advisor.

However, you can never blindly trust that your advisor has your best interests at heart. There are many benefits to working with a financial pro, but there are some things you should know first.

That’s where this book comes in. Drawing on her insider’s knowledge of how the financial advice profession really works, Davidson reveals how to judge whether an advisor is going to help or harm your savings. How should you decide if you really need an advisor? What financial moves can you make without their help? What important questions should you ask before trusting them with your money? What are the red flags you should run from? And what does all their jargon really mean?

This friendly, no-nonsense guide is a must-read if you want to finally take control of your financial well-being, either with a financial advisor or without one.

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21. Worth It

by Amanda Steinberg

From the founder and superstar CEO of DailyWorth.com—the go-to financial site for women with more than one million subscribers—comes a fresh book that redefines the relationship between women, self-worth, and money. Worth It shows women how to view money as a source of personal power and freedom—and live life on their terms.

Worth It outlines the essential financial information women need—and everything the institutions and advisors don’t spell out. Steinberg gets to the bottom of why women are stressed and anxious when it comes to their finances and teaches them to stay away from strict budgeting and other harsh austerity practices. Instead, she makes money relatable, while sharing strategies she uses herself to build confidence and ease in her own financial life. Through her first-hand experiences and the stories from other women who’ve woken up, Steinberg’s powerful and encouraging advice can help women of any age and income view money as a source of freedom and independence—and create bright financial futures.

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22. The Opposite of Spoiled

Raising Kids Who Are Grounded, Generous, and Smart About Money

by Ron Lieber

Written in a warm, accessible voice, grounded in real-world experience and stories from families with a range of incomes, The Opposite of Spoiled is both a practical guidebook and a values-based philosophy. The foundation of the book is a detailed blueprint for the best ways to handle the basics: the tooth fairy, allowance, chores, charity, saving, birthdays, holidays, cell phones, checking accounts, clothing, cars, part-time jobs, and college tuition. It identifies a set of traits and virtues that embody the opposite of spoiled, and shares how to embrace the topic of money to help parents raise kids who are more generous and less materialistic.

But The Opposite of Spoiled is also a promise to our kids that we will make them better with money than we are. It is for all of the parents who know that honest conversations about money with their curious children can help them become more patient and prudent, but who don’t know how and when to start.

Read key ideas on Blinkist →

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23. Investing 101

by Michele Cagan

A crash course in managing personal wealth!

Too often, textbooks turn the noteworthy details of investing into tedious discourse that would put even Warren Buffett to sleep. Investing 101 cuts out the boring explanations, and instead provides a hands-on lesson that keeps you engaged as you learn how to build a portfolio and expand your savings. From value investing to short selling to risk tolerance, this primer is packed with hundreds of entertaining tidbits and concepts that you won’t be able to get anywhere else.

So whether you’re looking to master the major principles of investing, or just want to learn more about stocks and bonds, Investing 101 has all the answers–even the ones you didn’t know you were looking for.

Did you like this article? Chances are someone you know would like it too! It would make my day if you shared this with a friend, and it might just make their day too

The Ultimate Guide to Value Investing

Do you want to know how to invest like the value investing legend Warren Buffett? All you need is money to invest, a little patience—and this book. Learn more

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The post The 23 Best Personal Finance Books to Read In 2023 appeared first on FinMasters.

Is The Intelligent Investor’s Reputation Deserved?

Short answer? Yes!

This book was one of the first investing manuals to be written by a legendary investor like Graham, with a focus on advising retail investors. This made it a foundation stone for future educational material on investing.

While the language can be a bit dated at times, the book remains fairly easy to read. Its ideas and concept are timeless, still as relevant today as in the 50s. Modern editions also include commentaries to keep the book relevant (more on that at the end of this article).

The book is well written and organized and represents a great first book to read about investing. It teaches beginners to have realistic goals and to manage risk properly, which should be the first things they learn about.

Key Idea #1: Mr. Market’s Moods

Graham uses the allegory of Mr. Market to represent the investing world at large. Some days, Mr. Market is overly optimistic and overvalues some stocks. Some days, he is depressed and undervalues them.

The main task of the intelligent investor is to not follow Mr. Market’s moods. He should sell to Mr. Market when he is optimistic, and buy from him when he is depressed.

Because Mr. Market’s moods might take a while to change, this can put a strain on investors’ minds. So a very important skill is to learn to stay calm and focus on fundamentals instead of share prices.

The big money is not in the buying and selling … but in the waiting.

Charlie Munger

Key Idea #2: Investor vs Speculator

Graham’s central investing concept is to buy stocks sold by Mr. Market below their “real” value, determined by the business fundamentals. He differentiates the investor from the speculator.

• Investors are in for the long run and are buying a part of a real business. Their profits will come from the success or failure of that business.
• Speculators buy things expecting to sell them later at a higher price to other speculators. Speculators do not care about the underlying business, only the stock price.

Graham recommends strongly being an investor and not a speculator, as most speculators end up losing money.

Not making mistakes is more important than making good decisions.

It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.

Charlie Munger

Key Idea #3: Margin of Safety

Graham’s fundamental thesis is that investors should buy a business below its “real” value to make money. Because determining that value is half art, half science, an error is always possible. So any purchase should be made significantly below the “real” value.

This “margin of safety“ provides protection when the valuation was calculated wrong, or something unexpected happens. The riskier the investment, the more margin of safety is needed.

Together with an investor’s focus on the business fundamentals, this should provide investors with more consistent and safer returns.

Key Idea #4: Defensive vs Enterprising Investors?

Graham thinks most investors are not mentally equipped to handle the pressure of an aggressive investing style.

He calls these investors defensive investors. So he recommends they must accept lower returns and focus on safer investments. This includes high-quality bonds and only stocks of stable and large companies. This is similar to today’s common recommendation to the bulk of investors to stick to passive investing.

Enterprising investors are the ones with the mindset, skills, and dedication required to obtain higher returns. They must be ready to spend a lot of time analyzing businesses and learning about investing.

Today, we would call them “active investors”.

Is The Intelligent Investor Graham’s Best Book?

I often recommend The Intelligent Investor as the first book a beginning investor should read. This is for two reasons.

• The first one is simply that the book is good, and Graham’s a great teacher. It goes back again and again on risk management and the type of investment you should NOT get involved with. This is such a crucial thing for investing success that it makes sense to learn it early.
• The second one is that the book is a test. If you found that The Intelligent Investor was a boring, tedious read, that’s okay. It’s also a sign that you should stick to passive investing.

This is because becoming a good active investor or stock picker requires a lot of reading and learning. It really only works if you find the topic interesting. In that respect, I personally think the best Graham book is “Security Analysis“.

But this is a much longer book, and it is genuinely hard to read. So “The Intelligent Investor” is the best book for casual investors, and “Security Analysis” is the next step if you want to go deeper.

How to Read The Intelligent Investor?

Because the book is so rich, I recommend reading it at least once to every investor, even passive investors.

For more seasoned investors, I would recommend a regular re-read. As you gain experience, some chapters will take on a new meaning, echoing their past and current investing strategy.

You can also do a more strategic partial reread. For example, the chapter on inflation is relevant today but was not so much in the 2010s.

Which Edition Should I read?

I would recommend the 2006 Edition published by Harper Business. It is based on the 1973 version updated by Graham 3 years before his death, with added commentaries for each chapter by the Wall Street Journal Columnist Jason Zweig. It also contains a preface and appendix by Warren Buffett.

I recommend owning the paper version, as this is a book best read slowly, in a calm environment, so you have time to reflect on how Graham’s advice can apply to your situation.

The commentaries add a lot of value, as they update the companies with more modern examples, like the dot-com bubble instead of companies famous in the 1950s and 1960s. Zweig is also a great market commentator and investor in his own right and explains well the more difficult sections of each chapter.

Conclusion

The Intelligent Investor is rightfully ranked in the top 5 or top 10 books ever written about investing. It encompasses a large range of topics, is very didactic, and is easy to read. It provides retail and beginner investors with the basics they need to succeed.

Because it focuses on timeless and essential advice, it is equally useful to experienced investors. Some famous investors even claim to re-read it every year. Together with Security Analysis, the other Graham masterwork, The Intelligent Investor most likely can help boost the returns of any investors.

The post The Intelligent Investor Review: Key Concepts & Actionable Tips appeared first on FinMasters.

As a result, many modern best practices in personal finance are different from those proposed in previous decades. Analyzing the evolution of personal finance can help you learn some valuable lessons, as can finding the ideas that have stood the test of time.

To that end, I’m going to compare and contrast today’s financial wisdom with the ideas of Sylvia Porter, one of the original finance gurus, in Sylvia Porter’s Money Book: How to Earn It, Spend It, Save It, Invest It, Borrow It – And Use It To Better Your Life.

I know the title is a bit wordy, but the book was one of the most prominent personal finance books in the 70s, and it gives us a convenient framework. Let’s go through her recommendations on those five fundamental skills.

How to Earn

The section in Sylvia’s book that focuses on earning money revolves entirely around optimizing your career path. She spends an entire chapter on how to choose a lucrative, fast-growing occupation, finding job leads, writing cover letters, and nailing interviews.

Sylvia also acknowledges the benefits of a college degree but emphasizes that they’re not necessary for everyone. In fact, she’s quite firm on the stance that you can have a thriving career without higher education, even though credentialism was already on the rise in the 70s.

In some ways, her ideas are familiar. People still love to read about the best career tracks and imagine the possibilities. Modern best job lists focus on the same criteria Sylvia discussed, like potential salaries and the projected growth rate of the market.

Learn More: Incidentally, we have some great occupation suggestions for you. Check out some of our favorite job lists: 10 Best Trade Jobs: Earn a Great Living Without a Degree + 15+ Part-Time, Work From Home Jobs That Pay Well.

However, one difference that jumped out at me was the noticeable absence of side hustle mania that’s rampant today. Sylvia warned readers about going into business for themselves, while modern personal finance is more about building additional income streams than optimizing your primary one.

Side hustling has become mainstream thanks to the invention of rideshare apps, home and auto-sharing platforms, and freelancing websites. More people are branching off on their own than ever before, with roughly 45% of Americans reporting a side hustle in 2021.

Fun Fact: Sylvia also claimed that Americans were shifting toward a four-day workweek and that unions were pushing for 1,600-hour work years. She said, “This is a trend virtually sure to prevail in the years directly ahead.” Whoops.

What’s the Takeaway?

The increased accessibility of side hustles has been a boon for many Americans. It’s never been easier to supplement your income by moonlighting after finishing your nine-to-five job responsibilities.

However, it’s possible we’ve gone a bit too far. Nowadays, people often waste time on income streams that are unscalable at best and outright scams at worst. For example, it’s a tragedy that anyone tries to make money by taking surveys online.

Many of us could benefit from refocusing on optimizing our careers, just as Sylvia suggests. For example, you’d probably be better off fixing up your resume, switching to a new job, and negotiating a $10,000 raise than trying to build a furniture-flipping business in your free time.

There’s another reason why side hustles have become so prominent. Wages have stagnated for many Americans.

Stagnant wages combined with the prevalence of student debt and the high costs of healthcare, housing, and other essentials led to the creation of an environment where many people simply can’t survive on their salaries.

How to Spend

Spending the right amount of money on worthwhile expenses is an underappreciated skill in the United States. It’s not as glamorous as hustling for a higher income, but the ability to live happily with less is one of the best financial superpowers that you can have.

Unfortunately, much of today’s personal finance wisdom takes it for granted that Americans are bad at saving money. Our annual savings rates have been dismal for decades, usually tracking well below the 15% to 20% that most experts agree is the minimum necessary to retire on time2.

Learn More: Raising your savings rate is the key to shortening your time to retirement. Find out our favorite tips and tricks for retiring earlier: How to Retire Early: The Shockingly Simple Path to Freedom.

As a result, most modern budgeting advice comes across as a desperate plea for people to get their spending habits under control. People like me create budget methods, frugality hacks, and temptation avoidance strategies to help trick people themselves into spending less.

While Sylvia spends some time on these ideas, she also emphasizes the importance of addressing the mindset behind your spending habits. In one of my favorite sections of her book, Sylvia suggests: 

“Start from the premise that no income you will earn will ever be large enough to cover all your wants. Accept the theory that the more income you have, the greater will be your desires. Make up your mind that if you want something badly enough, you will sacrifice other things for it.

Take the trouble to think out your own philosophy of living and your ambitions for the future. Develop a plan of control over your spending. Then you will make progress toward the kind of living which means most to you.”

What’s the Takeaway?

It’s possible some people fail to stick to their budget because they’re using the wrong system. However, I find it more likely that most people who struggle with their budget would do so no matter what template they follow. In reality, all budgets work. You just need the discipline to stick to them.

Instead of trying for the umpteenth time to find the perfect tool or trick to get you to stick to a spending plan, you may benefit more from revisiting your needs, motivations, and ambitions. Ask yourself questions like:

• What lifestyle can you realistically afford that would make you happy?
• Which expenses are non-negotiable, and which ones are you willing to sacrifice?
• What goals are dearest to you, and how much do you need to save to reach them?

With these answers in mind, you’ll have a much easier time creating a budget that meets your needs without sacrificing your happiness. Understand yourself and define your goals as Sylvia suggests, and then budgeting becomes easy.

How to Save

Saving money is closely related to spending it. However, there’s enough separation between the two that they deserve their own sections. Sylvia spends a significant amount of time in her book getting into the weeds of saving, including:

• How much you should have saved in cash
• What types of accounts are best for storing cash
• How to shop for a bank or credit union

Some of Sylvia’s ideas are less relevant in the modern world, where you can peruse savings account options online alongside scores from other users and interest rates. However, there’s still a lot of discussion today around optimizing your approach to savings.

For example, the debate around the proper emergency fund size is as contentious as ever. In addition, many are scrambling to find places to store cash that will generate a high enough yield to protect them against inflation without undue risk.

Though Sylvia bases her emergency fund calculations on monthly income instead of using the modern expense approach and recommends banking products that are outdated, the concepts behind her advice are consistent with modern ideas.

In essence, you should keep enough cash on hand to weather emergencies. Store those funds somewhere you can access them quickly and without market risk, but try to minimize your exposure to inflation as much as possible.

Quick Insight: I-Bonds are an attractive option in today’s high-inflationary environment. If you buy before October 22, 2022, you’ll receive a guaranteed yield of 9.62% for the first six months. You can buy up to $10,000 per calendar year online: Individual – Buying Series I Savings Bonds.

What’s the Takeaway?

Though the specifics of Sylvia’s recommendations differ slightly from some of today’s saving wisdom, the principles are the same. My key takeaway is that you can’t overstate the importance of maintaining a healthy emergency fund.

When you live paycheck-to-paycheck, you’re incredibly vulnerable. A single unexpected expense could force you into debt, which can be the beginning of a spiral that’s often very difficult to rectify.

So don’t take that risk. Make it a priority to keep enough cash on hand to cover at least a few months of your expenses. If you ever have to dip into your emergency fund, rebuild it as soon as possible to minimize your exposure.

How to Invest

Investing is arguably the most expansive area of study in personal finance. There are so many different investment accounts, vehicles, and strategies that it’s tough to compare specific best practices. Instead, I’ll focus on higher-level concepts, which are easier to identify.

For example, Sylvia emphasizes the idea that everyone should begin investing for retirement as soon as possible. Compound interest is one of the most powerful forces in existence, and everyone should learn to harness it. This investing concept is still fundamental today.

Sylvia also recommends dollar-cost averaging, which involves purchasing investments regularly over long periods to avoid the chances that you’ll enter markets at unfavorable moments. That’s still the most popular approach to acquiring securities among personal finance experts. 

Beyond these high-level concepts, Sylvia’s suggestions differ from much of today’s leading investment advice. There’s good reason for that, though. Namely, Sylvia wrote for an audience of active investors because that was the only option in the 70s.

In modern times, much of the personal-finance gospel on investing promotes passive investing in index funds instead. Studies have repeatedly shown that active investors struggle to beat market returns and most stock traders lose money. 71% of U.S. investors now say index funds work better than stock picking.

As a result, passive investing in the United States’ domestic equity-fund market overtook active investing in 2018 and accounted for approximately 54% of the market share by 2021. If trends continue, passive investing, in general, is likely to overtake all active investing by 2026.

What’s the Takeaway?

If there’s a lesson to learn from the evolution of investing since the 70s, it’s that you should pay particularly close attention to this aspect of your personal finances. It’s the most complex and the fastest-changing. Market conditions, tax laws, and your risk tolerance will change significantly over time, and you have to adjust.

It’s also breathtakingly easy to lose your hard-earned savings by investing in the wrong assets without sufficient education, so don’t take anybody’s word for granted. Spend the time to do your own due diligence and optimize your investing approach, as it can make or break your finances.

How to Borrow

Last but not least, let’s look at the evolution of the best practices around borrowing money and managing credit. I was pleasantly surprised by Sylvia’s take on the subject, as she approaches it from a noticeably different angle than most modern advice.

Nowadays, there’s a general assumption that most people carry significant amounts of debt. We take student loans, auto loans, and credit card debt as a given, and a lot of personal finance wisdom assumes you have them as a starting point.

As a result, most content on the subject focuses on debt paydown strategies, relief options, and ways to rebuild your credit or finances in the wake of debt. However, there’s a refreshing absence of this attitude in Sylvia’s book.

Instead, she emphasizes the importance of understanding the following:

• The right and wrong reasons to borrow money
• How to recognize when you’re nearing unmanageable debt levels
• The significance of borrowing costs and the value of paying with cash

If you must take on debt to finance an expensive but meaningful purchase like a home, Sylvia also preaches the importance of minimizing its burden on your finances. As she says, there’s always a cost to borrowing money, but you can reduce it significantly by paying more upfront and pursuing shorter repayment terms.

What’s the Takeaway?

Debt is one of the primary reasons people in the U.S. struggle financially despite having a stable income. Too often, we assume that the burden of debt is unavoidable or acceptable, then do our best to dig ourselves out on the back end.

While it’s unrealistic to expect everyone to get through life debt-free, many of us could benefit from working harder to avoid borrowing in the first place. Think twice before you take out a loan or charge something to your credit card.

When possible, try to save up cash and pay for things outright. If you don’t have time to wait, try to look for an alternative good or service that can get you what you need without forcing you to go into debt. If there’s no other option, calculate the price of your purchases after financing costs and ask yourself if it’s still worth it.

Learn More: People assume they have to take on student loans to get an education, but that’s not necessarily the case. You can find other ways to pay your college tuition or attend trade school instead. Check out our guides to both subjects: College Without Debt: Where to Get Help Paying for College + Trade School or College? What’s the Difference? Pros and Cons of Each.

Reality check: One of the most effective ways of wrapping your head around the true price of a purchase is to consider the number of working hours a purchase is worth. Try our price to hours worked calculator to see just how much time you’d have to work in order to pay off a purchase. And then ask yourself if it’s really worth it.

What’s Different?

Sylvia Porter’s Money Book was the personal finance gospel of the 1970s. How well does it hold up today?

Some Things Change

Obviously, some things have changed. For example, modern personal finance discourse revolves heavily around credit scores and how to understand them, improve them, and protect them.

Sylvia doesn’t mention credit scores because they didn’t exist in any organized fashion when she wrote her book: the first FICO score wasn’t introduced until 1989.

Modern personal finance offers many tools that were unknown in the 1970s. You couldn’t prequalify for credit online or open an account with an online discount broker. Today’s methods are very different, even when the goals are similar.

Some of the prevailing assumptions have changed, as have many costs. Housing, health insurance, and student loan payments take up much bigger chunks of the average budget today than they did in the 1970s. We can no longer assume that an average household can survive on one salary, or even two.

Some Things Don’t

Despite the many changes, the core principles of personal finance in the 1970s are in many ways very similar to the core principles today. Budgeting, saving, managing your spending and separating wants from needs are all just as important today as they were in the 1970s.

Investing early is still good advice. Keeping debt to manageable levels and using credit only when you really need it is still a very sound policy. “Spend less than you earn” has been a good idea for centuries.

Overall, while the methods and the environment have changed, the core principles have remained very consistent.

Further Your Education

There’s a lot to learn in the personal finance world, and the landscape is forever changing. However, the American education system doesn’t do the best job of teaching you how to manage your money. That means it’s on you to find and fill the holes in your knowledge.

Fortunately, you don’t have to do it alone. Whether you need to learn how to earn, spend, save, invest, or borrow, FinMasters is here to help. Take a look at our library of resources below, and if you still have a question you’d like us to answer, contact us!

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