If you’ve never bought a stock or a mutual fund, investing in the stock market can feel completely overwhelming. But you just need a few essential investor lessons to get started.
Keeping the right resources on hand can mean the difference between feeling too scared to put your money in the market and making investing decisions with confidence. We’ve compiled a list of important lessons to learn — and the must-read books that will help you understand them.
The Most Important Investor Lessons: The Fundamentals
To successfully invest using any strategy, you need to understand the basics. Read Burton Malkiel’s The Random Walk Guide to Investing for 10 fundamental rules for overall financial success.
The book is written in a style that’s enjoyable to read and easy to understand. The jargon is kept to a minimum, so new investors can really grasp the basic principles and guidelines that will set them up to take the right actions with their money.
Once you have a foundational understanding, it’s time to move on to more complex investor lessons.
Use the Right Philosophy to Guide You
Who better to learn investment lessons from than billionaire business magnate Warren Buffett’s mentor? In addition to educating the business magnate, Benjamin Graham wrote The Intelligent Investor. His book is a great guide to value investing in stocks and funds in the market.
“The Intelligent Investor” contains practical advice and strategies that the average investor can use to determine what to buy (or sell). Graham used financial analysis to help formulate his theories and specifically strove to come up with formulas that regular folks, not just big-time hedge fund managers, could use to invest successfully.
Invest in What You Know
If you want to take investments a step further, you have the option of going beyond index funds and choosing individual stocks. This is a riskier route for the average investor, but it’s a potential path to explore if you have the time and energy to devote to understanding additional complexities of the markets.
Sound interesting? Start with Peter Lynch’s Beating the Street. Lynch was one of the most successful hedge fund managers on Wall Street. He details his philosophies in this book, arguing that the average investor can do better at taking advantage of opportunities in the market than Wall Street can, and it starts with investing in what you know.
Make the Most of Your Money
Many of these books contain big-picture investment philosophies and strategies. That’s helpful, but financial success is rarely determined by merely stock picking and marketing timing. It’s about making one good, solid decision at a time.
Sometimes, you just need to know the simple, straightforward answer to complicated situations. Jane Bryant Quinn teaches lessons on how to arrive at those in her book, aptly titled Making the Most of Your Money.
You’ll find simple, practical how-tos within the pages. The book covers everything from how to choose the right asset allocation to figuring out investing for retirement. It even covers important personal financial issues that could affect how much money you have to invest, like buying a home and saving for college.
Between these four books, you’ll learn what you need to know to start investing with confidence. As you go, keep asking questions and seeking the answers, in these titles and beyond.