Wealth, as defined by the prominent investor and bestselling author Robert Kiyosaki, means the ability to survive a certain number of days forward. The process of wealth creation, however, is complex and fraught with risks. Without proper guidance, even the best can trip. This is where this booklist comes in.
Books on wealth creation can vary considerably. Some are constructed as simple parables designed to teach people the timeless secrets of growing wealthy. Others are based on extensive academic study and research on how wealthy people think and act.
Can reading the best finance books help in wealth creation?
I firmly believe that financial literature can put you on a steady trajectory to wealth creation. But you need to immerse yourself in more than one sphere of knowledge for that.
Reading only the titles with Buffett, Munger mentioned in them is not going to cut it.
Wealth creation comprises many blocks. Reading up on one block could leave with half-baked knowledge. I don’t have to tell you that half-knowledge often boomrangs in tough circumstances.
I have classified the wealth-creation booklist into 5 blocks and each block or genre serves a different purpose:
- Money Management. These books can teach you the art of budgeting and money management to control your debt and start savings.
- Stock Market Investing. The books in this block are some of the best investing books of all time. These can make you a savvy investor with all the tools and knowledge embedded in them.
- Behavioral Finance. Greed, overconfidence, fear are an investor’s kryptonite. This block has two books only. Read them and you will save yourself from your own cognitive biases.
- Decision Making. These books can teach decision making from people who have built enormous wealth in the markets. I recommend three of my favorite books.
- Wealth Management. The books in this block can teach you how to handle your wealth once you have it.
You can read these books in any order. However, it’s good if you cover all these subject areas. Without further ado, let’s dip into this booklist:
1. The Richest Man in Babylon – George Samuel Clason (1926)
Arguably, The Richest Man in Babylon was the first-ever self-help personal finance guide of the twentieth century.
George S. Clason collects information, advice, and insights originally designed for customers of banks and insurance companies into a series of entertaining parables designed for the average person.
These parables are set in ancient Babylon in order to help illustrate certain timeless secrets of growing wealthy.
Chief among these is the belief that a portion of all you earn is yours to keep. In other words, you should designate a portion of your income (at least 10%) in savings
2. Think and Grow Rich – Napoleon Hill (1937)
Ever since it was written during the era of the Great Depression, this timeless classic has gone on to sell over 100 million copies.
In writing Think and Grow Rich, journalist Napoleon Hill studied the habits and mindsets of 500 self-made millionaires to see what they all had in common. Based on this analysis, Hill was able to come up with 13 actionable steps to success.
The book is notable because it analyzed the possible psychological and subconscious factors that might be holding you back from becoming wealthy. People have realized ever since that wealth is not a matter of luck, but a matter of mindset.
3. Rich Dad Poor Dad – Robert Kiyosaki (1997)
This book has become an international bestseller, with nearly 40 million copies sold in over 100 countries around the world. Easily one of the best finance books ever written.
In this book, Kiyosaki argues that rich people teach their kids different lessons than poor people. To illustrate this point, Kiyosaki used the examples of a rich dad who teaches his kids about investment, about starting and owning their businesses, and about becoming financially savvy.
The goal of the book is to show that anyone can build wealth, even if they draw an average salary. The key is simply learning how to become smarter about wealth formation.
4. The Automatic Millionaire – David Bach (2003)
This book promises an easy one-step plan to becoming wealthy.
The plan is so simple that you can describe it in just three words: Pay yourself first.
What this means is that you should always take a portion of whatever you earn and use it to invest in the future. Then, with whatever you have left, you can pay the bills and expenses in your life. This is one of the best personal finance books ever written.
Bach says that an average couple, working hard and saving diligently, can retire as millionaires with little or no debt. This book became an international bestseller and part of Bach’s Finish Rich brand.
5. All Your Worth: The Ultimate Lifetime Money Plan – Elizabeth Warren and Amelia Warren Tyagi (2005)
Long before her first run for public office, Senator Elizabeth Warren had made her mark in writing bestsellers. All Your Worth was a follow up to the mother-daughter duo’s 2004 bestseller The Two Income Trap.
This book demystifies why consumers get sucked into wasteful spending.
It also deciphers the tricks the financial institutions play to entrap the gullible customers. You get to learn how to handle your money without depriving yourself of life’s small pleasures.
And, finally, this book also offers unvarnished insight into the evolution of Warren’s thinking.
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Stock Market Investing
6. Security Analysis – Benjamin Graham and David Dodd (1934)
Benjamin Graham was born in 1894, began working on Wall Street in 1914, wrote the first edition of Security Analysis in 1934 with David Dodd.
Before you read The Intelligent Investor, it is important that you read Security Analysis. Graham spilled the knowledge that he had gained after working on the Wall Street for two decades into the book.
This book helps you understand why Benjamin Graham is considered a man of ideas and why his investment philosophies transcend time.
It’s not only his investment philosophy that mesmerizes, but his writing, too, that consisted of many illuminating gems. Consider the following quote:
‘It may be said, with some approximation to the truth, that investment is grounded on the past whereas speculation looks primarily to the future.’Benjamin Graham
7. Where Are The Customers Yachts? – Fred Schwed (1940)
This hilarious investing book is a mild rebuke of Wall Street operators.
The title refers to a story about a visitor to New York who admired the yachts of the bankers and brokers. Naively, he asked where all the customers’ yachts were? Of course, none of the customers could afford yachts, even though they followed the advice of their bankers and brokers.
Schwed tries to open the eyes of naive investors who unwittingly make their brokers rich and themselves poor. This book brims with contrarian advice and offers a true look at the world of investing.
Where are the Customers’ Yachts has survived the perils of time. Since 1940, it has seen 6 revised editons. So take it as a piece of timeless wisdom on the pitfalls on wealth building.
8. The Intelligent Investor – Benjamin Graham (1949)
This book is an all-time investing classic, as well as a personal favorite of billionaire investor Warren Buffett.
Graham’s book is so noteworthy because it changed people’s views on how to invest in the stock market.
Prior to Graham, people thought you had to invest in fast-growth, sexy companies that could go straight to the moon. But what Graham showed was the opposite – the key to growing wealth was finding all the undervalued stocks, as well as all the companies that were neglected and overlooked.
One of the best investing books for beginners and one of the best finance books of all time.
9. Asset Allocation – Roger Gibson (1990)
If you are determined to create long-term wealth for yourself, you must know the art of asset allocation aka diversification.
The three decades old Asset Allocation follows the principles of modern portfolio theory and explains how and why asset allocation works. You also get a peek into how financial planners assemble portfolios for their clients.
“Successful investing will always be as much of a psychological process as it is a money management endeavor.“Roger Gibson
Roger Gibson’s book is required reading for anyone wanting to understand how diversification works.
10. Value Averaging – Michael Edleson (1991)
Michael Edelson, a former Harvard Professor, first developed the concept of Value Averaging in 1988. A few years later, buoyed by the buzz, he worked up the idea into one of the best investing books called Value Averaging.
Technically, Value Averaging is a way to buy more when market goes low and buy less or even sell when market goes high which is the way it’s supposed to be in financial markets. As an investment technique, it stands in contrast to other popular investment technique called Dollar Cost Averaging.
All investors who are in the market for long-term wealth creation must read this book.
That said, Value Averaging is certainly not a breezy read. For anybody lacking solid undergraduate math skills, reading it long in one go could prove cumbersome.
11. What has worked in Investing – Tweedy, Browne (1992)
Confessions! This is not a book. The century-old American investment advisory company Tweedy, Browne published a paper in 1992 titled What has worked in Investing. It has became a great referential tool for many investors worldwide ever since.
The paper describes over 50 investment studies that support Benjamin Graham’s principles of investing, first described in 1934 in Security Analysis. It also gives empirical evidence that those investment approaches continue to serve investors well.
In 2009, Tweedy, Browne company published a revised edition of the paper. You can read or download it for free.
12. Beating the Street – Peter Lynch (1994)
Peter Lynch became the poster boy of finacial markets in the 80s when Fidelity Magellan fund became the 5-star fund on his watch.
In Beating the Street, he writes about how he grew the Magellan Fund and what he learned along the way. He goes into extreme detail of his thought process for deciding picks, and emphasizes on key statistics to keep in mind for various industries.
This is a good book for informed investors who know the ropes of the stock market. I highly recommend reading Beating the Street in conjunction with Lynch’s other book – One up On Wall Street.
13. You can be a stock market genius – Joel Greenblatt (1997)
Joel Greenblatt is a hedge fund manager, value investor, and writer.
You can be a stock market genius is a great read for anyone who wants to do more than simply save a percentage of their income each month. That said, this is not a book for beginners. Read Graham, Lynch, and Buffett’s essays first.
Those authors will give you the basis for understanding and identifying a good investment but they won’t give you a competitive advantage against the tens of thousands of analysts out there. Greenblatt will.
That said, Greenblatt is no stuffy academic, he walks the talk. Evidently, he can also write quite well. One of the best finance books out there.
14. The Only Guide to a Winning Investment Strategy You’ll Ever Need – Larry Swedroe (1998)
Larry Swedroe’s philosophy is based on the principles of modern portolio theory (MPT) and the efficient market hypothesis (EMH). His book provides a road map to a long term winning investment strategy.
In this book, he describes how you can win the investment game through investing in such instruments as index funds instead of through active buying and selling.
He lays out a strong case against stock picking and market timing and explains why diversification via passive investing is the winning strategy.
One of the best books to learn investing and worth many times whatever you pay to get it.
15. Fortune’s Formula: The Untold Story of the Scientific Betting System That Beat the Casinos and Wall Street – William Poundstone (2005)
William Poundstone’s book is ostensibly about the Kelly Criterion, a formula used to calculate the optimal bet size given one knows their probability of winning and the payout odds for a winning bet.
Unusual for an investing book, Fortune’s Formula spans a wide breadth of topics—information theory, applied mathematics, gambling, the collapse of Long-Term Capital Management—weaving them all into a comprehensive framework.
Make no mistake: this is not a textbook, and you won’t find detailed methodologies here. Instead, Fortune’s Formula seeks to popularize some important investing ideas that aren’t generally understood.
16. The Most Important Thing Illuminated: Uncommon Sense for the Thoughtful Investor – Howard Marks (2011)
Widely followed investor Howard Marks is a name to reckon with in the financial sphere.
Chances are while you are reading this book, you might find yourself uttering, “Damn, that’s right” quite a bit. I’ve read The Most Important Thing and value it as a cornerstone for appreciating risk and riding out market turbulence.
Marks is a deep thinker with loads of financial experience. His memos are considered worth their weight in gold. They are also the source material for this book. Here’s what Warren Buffett has to say about Marks’ writings:
“When I see memos from Howard Marks in my mail, they’re the first thing I open and read. I always learn something, and that goes double for his book.”Warren Buffett
I don’t think it is wise to skip a book extolled by such luminaries as Warren Buffett and John Bogle. Every investor either newbie or established legend must keep this book in his library.
17. The Clash of the Cultures: Investment vs Speculation – John Bogle (2012)
Warren Buffet in his March 2013 letter to his shareholders declared The Clash of Cultures book a recommended reading. Backed with such credentials, this book deserves a place on any well-curated booklist.
Johle Bogle, a proponent of long-term wealth creation, always spurned speculative investing and exotic investing instruments. In this book, he explains in persuasive detail, that 99% of the securities business is nothing but a giant casino.
He makes a solid case for investing in index funds as the best form of wealth creation and backs up his theories with statistical evidence.
It doesn’t matter whether you are new to investing or a veteran, this book should be a must read.
18. The Education of a Value Investor – Guy Spier (2014)
The Education of a Value Investor is an honest, spellbinding account of how the author became a value investor. Guy Spier borrows heavily from the Buffett & Munger school of thought, and from the well-trodden fields of psychology and biology.
What sets this book apart is the fact that the author exposes his own frailties with brutal honesty, and invites us to learn from his mistakes.
Anyone who thinks of investing as a long-term strategic commitment must read this book. Brokers, traders and others of speculative ilk who thrive on noise rather than substance, may want to give it a miss.
19. A Man for All Markets – Edward Thorpe (2017)
Professor Edward Thorpe is a mathematical genius, actually, he is a polymath of science, computing, mathematics, and finance. His interest in mathematics took him to Blackjack tables in Vegas, and from there he began plying his trade on the Wall Street.
A Man for All Markets is at its core a captivating memoir on how he managed to acquire a fortune estimated at around $800-million. I certainly didn’t detect any ego in this book, he shares his mental thought processes and life lessons to underline how he achieved sucess. Here’s Prof Thorpe on life:
“Life is like reading a novel or running a marathon. It’s not so much about reaching a goal but rather about the journey itself and the experiences along the way”Edward Thorpe
This book is dense and detailed. However, it is well-written and teems with valuable information. Any investor, newbie or seasoned, ought to have this book in their library.
20. Invested: How Warren Buffett and Charlie Munger Taught Me to Master My Mind, My Emotions, and My Money – Danielle Town and Phil Town (2018)
For anyone new to value investing, this is truly a good book to read. The author, Danielle Town, does a great job of walking you through the journey of learning to invest covering the psychological challenges, research techniques all the way to several methods for valuing a company.
She recounts her own struggles with handling her fears and reluctance, and in doing so, she imparts the message that you, too can invest and attain financial independence.
Overall, this is an excellent book, giving practical instructions on investing, and will be an invaluable addition to your library of stock market books for beginners.
21. The Millionaire Next Door – Thomas J. Stanley and William D. Danko (1996)
The Millionaire Next Door, which celebrated its 20th anniversary a few years back, has already become a legendary classic on wealth.
The book shattered the illusion that all millionaires lived in the wealthiest neighborhoods of the biggest cities and drove the fanciest cars or took the most expensive vacations.
Instead, the authors argued, the key to becoming a millionaire was rejecting the ostentatious lifestyle typically associated with wealth. This means an emphasis on living on a frugal budget, shopping for bargains, and scaling back the size of vacations that you take.
Most likely, there is a millionaire living next door, and you do not even realize it.
22. The Geometry of Wealth: How to shape a life of money and meaning – Brian Portnoy (2018)
This book takes a close look at the relationship between money and meaning. Brian Portnoy suggests that wealth creation is about funding contentment and underwriting a meaningful life. It’s not about hoarding cash, pursuing materialistic pleasures and losing yourself on the hedonic treadmill.
It is a brilliant summary of how to manage your finances in a way aligned with your values and needs. It talks about avoiding the biases we all suffer, and face down the fact we all need to finance ourselves and our families for a long time.
The Geometry of Wealth is as practical as it is philosophical. It’s a fantastic read and unpacks a lot of emotional baggage around money and wealth.
23. Your Money and Your Brain – Jason Zweig (2007)
Anyone who is interested in widening their horizons and developing a broad outlook on the stock markets should read Jason Zweig’s Your Money and Your Brain.
This book will help you understand your investing selves better than ever before. Zweig takes the help of neuroscience, economics and psychology to explain why investors behave the way they do and why even the worst poundings fail to deter them from making same mistakes.
Your Money and Your Brain teems with chunks of wisdom you won’t stop underlining or highlighting:
“The riskiest moment in the stock market is when you’re right. That’s when you are in most trouble because you tend to overstay the good decisions.”Jason Zweig
24. Thinking, Fast and Slow – Daniel Kahneman (2011)
In Thinking Fast and Slow, the 2002 Nobel laureate Daniel Kahneman writes about how our brain works and how a number individual cognitive biases affect our decision making.
Most investors tend to overestimate their ability to predict the markets or, for that matter, accurately explain the past. This explains why, over a period of time, only a statistically insignificant percentage beats the market.
Kahneman deciphers why we think in certain patterns and why we take certain decisions that are more instinctual than rational. Either way, they are rarely conducive to sound investment.
This book is not an easy read, but it is tremendously important for decision making from the individual investor’s point of view.
25. Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets – Nassim Nicholas Taleb (2001)
Nassim Nicholas Taleb is a polymath who forged a formidable reputation by avoiding bull and bear trends. Instead, he conserves his energy for the black swan events such as systemic crashes and global pandemics.
Fooled by Randomness may not be a typical investing book, yet it’s embedded with inestimable financial wisdom such as this:
“When people get rich, they lose control of their preferences, substituting constructed preferences to their own, complicating their lives unnecessarily, triggering their own misery.”Nassim Nicholas Taleb
There is lot for an individual investor to partake from this book. Fooled by Randomness can help you become a better investor and decision-maker. Read it in conjunction with The Black Swan and Antifragile.
26. The Snowball: Warren Buffett and the Business of Life – Alice Schroeder (2008)
Unless you have lived your life under a rock, there is no way that you won’t have heard of Warren Buffett. The Snowball is the most authentic biography of the legendary investor.
The book chronicles Buffett’s philosophy of business and many of his quirks. It delves into numerous accounts of his investments, spanning from cocoa-beans to textile mills to investment banks to railroads and many more.
This is also the longest book on the list, running to 816 pages. Just one caveat here – this is not a how-to book, this is a rather detailed account of the struggles and accomplishments of one of the most important investors of our time.
27. Principles: Life and Work – Ray Dalio (2017)
When one of the richest men on the planet lets you in on the principles by which he built his enormous success, you should listen to him.
Ray Dalio created the best performing hedge-fund known to man called Bridgewater Associates. It’s a safe assumption that Principles stemmed from experience of leading a successful business for more than 40 years.
The central idea of the book is to treat everything like a machine or an algorithm. When you have set up different algorithms for different types of situations, you can execute fast with less bias. This is the only way for people to plan and achieve long range goals.
Reading even half of these 27 books is a much cheaper form of tuition than the mistakes you will make if you don’t read them.
Over the past century, ideas about how to think and grow rich has continually evolved to take into account new changes in the financial system. For example, the first book on this list – The Richest Man in Babylon – was written at a time when relatively very few people invested in stocks or bonds.
Now, just about everybody realizes that investment in the right stocks at the right time can lead to immense wealth. If you are looking to become wealthy (or would just like insights into the mindset of the wealthy), any of the books on this list are a good place to start with.
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