Books on understanding and getting started?

Cashew

Hello,

I've been thinking about giving investing a serious look (once the debts are paid off) and would like to know where to start in terms of research.

A couple of books that were recommend were:

Millionaire Teacher - Andrew Halham

A Random Walk Down Wall Street - Burton Malkiel

Common Sense on Mutual Funds - John Bogle

Any opinions on these books or other suggestions for someone with zero knowledge on the topic of shares, investing and anything financial?

Thanks!

BLB53

Any opinions on these books or other suggestions for someone with zero knowledge on the topic of shares, investing and anything financial?

I have not read any of the three you mention but think they are all based on USA which may not translate well here.

A couple I would recommend are 'Slow & Steady Steps' http://www.amazon.co.uk/Slow-Steady-Steps-Wealth-ebook/dp/B007EBLN3G/ref=sr_1_18?s=digital-text&ie=UTF8&qid=1343146246&sr=1-18

and also Robbie Burns http://www.amazon.co.uk/The-Naked-Trader-trading-ebook/dp/B005OPGDO8/ref=sr_1_4?s=digital-text&ie=UTF8&qid=1343146169&sr=1-4

Should give you a good introduction.

Also check out the Monevator site - lots of good articles (and free!)

Good luck.

Linton

I dont know Millionaire Teacher, the other two are US based. This doesnt make them bad but there are differences between UK and US investing with regards to tax, investment opportunities and culture.

A UK book often recommended here is Tim Hale's "Smarter Investing". If you want to understand more about how the financial world works rather than just investing I would suggest "How to read the financial pages" by Michael Brett. This is a bit heavy to read straight through but explains many of the terms you may hear and read about in investment discussions and the financial news.

Many of the books on the topic of investing seem to have a line to sell, so I suggest you read widely and sceptically.

jamesd

Try Fundology for some background material on how funds work, from the point of view of a successful fund of funds manager.

Money_Saving_Dude

Tim Hale's book is good, but the book the helped me get a handle on investing in the long term (15-20 years+) was The Art of Asset Allocation by David Darst. I know it's American but the first chapters I think excellently describe how you reduce your risks over time.

Of course no one knows the future, and all investment strategies are based on how things have happened in the past. It may never be like that again, but you'll only know that in the future -- and if it actually was like it has been in the past, you'd have missed out.

The bottom line of investing is:

• Always get rid of your debts (maybe the mortgage is an exception?)
• Always make sure once you've invested the money you'll never need it again (if you think you will then build yourself a rainy-day pot of money, and use that instead)
• Compounding is your friend, but only after many years (and ideally you should be looking at a minimum of 15 years)
• Fees are your enemy. And I mean that with some venom. Read Tim Hale's book for an excellent explanation of why they are. (The whole book tries to get that message across.)
• Start now! (If that means removing your debts then do that first.)

gadgetmind

jamesd wrote: »

Try Fundology for some background material on how funds work, from the point of view of a successful fund of funds manager.

That book is without doubt one of the worst books on investing that I have ever read. I couldn't even bring myself to write a review of it as my review would probably be longer than the book itself.

I'm glad I only paid £2 for it second hand!

jamesd

That's perhaps because it's not a book about investing but a book about funds, particularly the differences between active and passive.

gadgetmind

jamesd wrote: »

That's perhaps because it's not a book about investing but a book about funds

It didn't even do that well.

particularly the differences between active and passive.

That part it got spectacularly wrong, which is a shame as that was really what I bought the book for.

Hmmm, maybe I'll take some time this weekend to write a short review.

jamesd

It did a good job of comparing active and passive, particularly some of the flaws in the arguments of passive fund advocates, as might be expected from a person who picks funds for a living. I accept that you didn't find it to your taste, though.

gadgetmind

jamesd wrote: »

It did a good job of comparing active and passive

No, it really didn't. It was superficial and conclusion driven.

I accept that you didn't find it to your taste, though.

Yes, I like things that are evidence-based and tightly-argued. It was neither of these.

Even the sections on choosing funds, which is where one might expect such a book to shine, were of no practical use whatsoever.

I would recommend people read this book BUT only if they also read some Hale, Bernstein and Graham too. The difference between a carefully researched and well-written book versus a shallow pamphlet will be obvious at the end of this exercise.

If there really is a work out there that makes a strong case for active investment, and that shows investors how they can get better long-term results from it, then I'd very much like to read that book.

jamesd

I definitely agree about reading the other books as well. A broad range is useful.

The author was manager of funds of funds which are among the most commonly recommended because they do out-perform.

The book did say how to approach selecting funds. If you found that that lacked formulas that's no surprise, since the focus there was on picking active funds and those aren't well characterised by formulas.