Investors who are new to the stock markets may find it very intimidating. Learning new terms, concepts, building a portfolio, choosing the right stocks can very easily unnerve a new investor.
Like any other discipline, to master the science of investment, it is necessary to understand the basic concepts. While everything on investment is now available on the internet, it still may not be very clear for beginners.
Going back to books to understand the basics is the better way to go. Books by experts or fellow investors who have successfully mastered this discipline can give you a better understanding of the concepts.
There are a number of 'investment for beginner' books available, let's take a look at 7 must-read books to grasp the concept of investment better.
The intelligent investor by Benjamin Graham
First published in 1949, the teachings of the book are still very apt in today's stock market environment. This book is referred to as the 'bible' of investing by many experts and is one of the favorite investment books of Warren Buffett.
The book has many core principles and the importance of long-term investing and is basically centered around the 'value investing strategy. This is the practice where investors buy stocks undervalued by the market but with good fundamentals and robust growth potential. This book is a layman's guide to value investing.
Even though the book is over 70 years old, the fundamentals explained in the book are still highly relevant. It advises investors to analyze the earnings of a firm and ignore outside noise before investing in a stock. It also explains tools that are essential for such an analysis.
The little book of common-sense investing by John C. Bogle
This is another classic investment guide mainly focused on index funds. For new investors who are scared of taking high risks, index funds are a safer way to go.
The author reveals strategies to get more out of low-cost index funds. Focussing mainly on long-term wealth creation, the book explains a very effective and easy investment strategy.
The book very nicely explains the power of compounding and how it is beneficial in index funds and why it is better to invest in the long term than short term. It gives tips and strategies to make low-cost index funds work for you. Bogle has also written 'Common Sense on Mutual Funds' and 'Enough'.
The Warren Buffett way by Robert G. Hagstrom
This is another very interesting book that in detail explains the investment strategies of one of the biggest investors - Warren Buffet.
It gives deep insight into the ace investor and how you can achieve success in investing like him. It deals in a very simple to understand language, the approach Buffett takes while investing and how a common investor uses it to generate greater returns. It is one of the most popular books for any individual interested in starting investing as well as investors who are already a part of the stock markets.
A few lessons for investors and managers by Warren Buffett
This book, written by the Oracle of Omaha Warren Buffet explains his principles and strategies while investing. It is a collection of his wisdom and philosophies that helps him succeed. The book also explains various investment strategy options and which to use when.
This book not only deals with investment, but it also explores in detail how Buffett works and prefers to run his business.
Stocks to riches by Parag Parikh
It is another must-read book, especially for Indian Investors. Written in a very easy-to-understand language, the book very demystifies investing in a stock market. It explains mistakes any investor, new or old, should avoid. It explains behaviors and philosophies on stock market investment
The book simplifies the whole investment process and provides perspectives for a layman who wants to enter the market. It provides time-tested guidelines to investors in his book which can help in wealth creation for the investors.
The joys of compounding by Gautam Baid
This book is a must-read investment classic. It not only delves into analysis but also relates it with his life experience making it a great read for the investors. The book focuses mainly on value investing and how it is not just an investment strategy but a lifestyle for many investors.
It explains stock market volatility like in 2020 and how investors should respond to it, especially the new investors. It puts in perspective the teachings and wisdom of over 200 major investors in history which have stood the test of time. Going beyond stocks, he also explains business fundamentals to provide valuable insights to all its readers.
How to avoid loss and earn consistently in the stock market by Prasenjit Paul
The book explains the Indian stock market scenarios very well for investors and strategies used by him to get stable returns. It provides insights into the ins and outs of investing behavior and gives a good understanding of how to choose the right stock. It explains how to choose stocks using fundamentals and when to buy and sell, making it very easy for beginners
While it might be a difficult decision to begin investing, these books will provide a clear understanding of the basic concepts of investment. Apart from these, you can also read books like A Random Walk Down Wall Street by Burton G. Malkiel, How to Make Money in Stocks by William J. O’Neil, Common Stocks and Uncommon Profits by Philip A. Fisher, The little book of valuation by Aswath Damodaran, etc.