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The Best Book for Beginners: The Richest Man in Babylon
Sarwa, a UAE-based digital wealth advisor, has launched a Book Club with the intention of pointing investors to some of the best books that have been written about wealth creation and investing to date.
The club has a list that currently contains 20 investing books that can help readers transform their finances and attain their financial goals. In this article, we will highlight some of these books, what they are all about, and how they can help you in your journey towards building wealth in a smarter way.
George Clason’s The Richest Man in Babylon is an all-time classic in the world of personal finance.
It is the best investing book for beginners because instead of starting with how to invest, it begins with how to make money. Then it moves to specific instructions on how to save money for example, by paying yourself first (that is, save first and spend what remains). Only then does he talk about how to grow your money through wise investing.
If you are yet to get your finances in order perhaps because you're overspending, not savings, living from hand to mouth, etc. this is a book that can help you move from disorder to order.
It was Warren Buffett that said that “the most important quality for an investor is temperament, not intellect.”
In The Psychology of Money, Morgan Housel, a partner at The Collaborative Fund, a network of fund managers, confirmed Warren Buffett’s insight through 19 stories he narrated. These stories show that we often make money decisions based simply on emotions (especially fear and greed) rather than rationality.
If you have found yourself making lots of money mistakes, then the root problem is likely an emotional/psychological one. By reading this book, you will be able to identify those underlying problems and learn how to move from emotion-based choices to rational decisions.
Benjamin Graham, the author of The Intelligent Investor, was the tutor of Warren Buffett, considered one of the most successful investors of all time.
In this book, he established some of the principles that have become foundational to investing: diversification, gaining safe and steady returns, and a focus on long-term prospects. Graham was also the father of a method known as value investing, a strategy that aims to maximise investment returns by buying quality stocks when their market price is below their intrinsic value.
If you are a long-term investor, the ideas in this book will help you select better stocks, buy them at the right time, develop the patience to ride short-term price fluctuations, and enjoy huge (compound) returns on your investment.
Many investors have embraced mutual funds instead of buying individual stocks because they believe that expert fund managers can do better than them.
However, Peter Lynch, the author of One Up on Wall Street and a former manager at Fidelity Investments, believes that even ordinary investors can spot very profitable investment opportunities and select “tenbagger” stocks (stocks that increase tenfold in price) before the experts.
In his book, he shows how ordinary investors can do this by first knowing the features of these "tenbaggers" and then paying attention to the goods and services they encounter in their daily lives to identify the ones with such potential.
If you want to select your own stocks instead of (or in addition to) buying a mutual fund or ETF, One Up on Wall Street will give you the information and skills you need.
The average investor does not have the time or skills to evaluate stocks. Also, even professional fund managers struggle to beat the market (earn higher returns than a market index) despite the high fees they charge.
Given these two facts, many financial advisors and established investors advise that ordinary investors should simply embrace passive investing, a strategy that suggests investing in index funds or ETFs that track the performance of an index instead of trying to beat it.
Though passive investing is popular today, its roots go back to John Bogle’s The Little Book of Common Sense Investing. Here, he shows why low-cost passive funds are superior to active investing and how ordinary investors can get started with such funds.
If you are a passive investor or you are curious about what it entails, this is the book to read.
Sarwa Book Club still contains 15 additional books that will help you take charge of your finances and grow your wealth.
Read these books and follow Sarwa’s blog to stay updated on when other books have been included to the list.
Press Release Distributed by The Express Wire
To view the original version on The Express Wire visit Sarwa Book Club: Listing the Best Investment Books