My 7 favourite financial books 📚

 

These are the 7x best (mostly) financial books I’ve read.

Rich Dad, Poor Dad by Robert Kiyosaki, 1997

The most original and best financial book I’ve read. The author tells the story of his two dads; his biological dad who was a teacher and his best friend’s dad who ran his own construction business. The two men had very different outlooks on the financial world; one worked for money, the other had money work for him.

This is an international best seller, it’s easy to read and understand. You will be challenged on the fact that your house in not an asset, it’s a liability, that you don’t need a high income to be rich and many other misunderstood financial concepts.

I couldn’t put this down when I first read it in 2007.

The Richest Man in Babylon by George S Clason, 1926

An absolute classic and at 94 pages not a long read, but a wonderful, timeless story that was likely an inspiration to Rich Dad, Poor Dad. Control your spending, don’t buy “stuff” you don’t need and invest your surplus, month in month out, year in, year out and reinvest your profits.

Simple logic so easily overlooked in an age when the economy thrives on us all spending mindlessly on things we don’t always need.

The Psychology of Money by Morgan Housel, 2020

Financial success is not about knowledge, it’s about behaviour. And that is hard to teach, especially to people who think they’re really clever and already know all the answers.

Elegantly written in 19 short, easy to understand stories, you will soon appreciate that money is taught as a maths-based subject, but people are NOT walking spreadsheets; they are a collection of innate biases, twisted logic and emotions prone to terrible decisions about money. People make strange decisions then support their actions afterwards with sufficient hindsight to satisfy their ego. Money is definitely not a science, and you can’t conduct financial experiments in a laboratory!

This is the personal finance book I wish I’d written myself. Simply superb.

Too Big to Fail: Inside the Battle to Save Wall Street by Andrew Ross Sorkin, 2010

As the financial world began to implode in 2008, the ‘Masters of the Universe’ in Wall Street thought they were too big to fail. Used to earning mega millions, flying in private jets and being immune from criticism, their arrogance and incalculable risks brought the global economy to its knees.

Some of those involved were truly awful human beings, Dick Fuld, CEO of Lehman Brothers being one of them and one of the reasons the company he led was left to collapse.

This is a breath-taking ride in real time through the events of the Credit Crunch and the steps taken by various governments and central banks around the world, including Alistair Darling, Chancellor of the Exchequer at the time, and the Bank of England, to support the entire global financial system.

Gathering Wall Street’s leaders plus the US Treasury Secretary and officials in one room on a Sunday afternoon and not letting them go home till they found a solution is frantic, gripping and one helluva story.

Fooled By Randomness by Nassim Nicholas Taleb, 2007

Taleb clearly has a brain the size of a planet. This book alongside some of his others, notably Black Swan, Antifragile and Skin in the Game, are some of my all-time favourites.

As it relates to investors, most of us confuse luck with skill mainly because we don’t understand probability and seek patterns and reasons to justify what happened where often none exist, and it was just randomness all along.

You can read any chapter in isolation, it’s not necessarily a story, but an amazing and thought-provoking book about the role of chance in life. Most people don’t like chance and randomness, it doesn’t fit neatly into their narrative and understanding of the world that known actions have known consequences.

Prepare to think hard and think differently.

The Little Book of Stoicism by Jonas Salzgeber, 2019

This is the best book I read in the lockdown of Spring 2020. Who knew that 2,500 years of ancient Greek wisdom was so applicable to the modern world?

This is NOT a philosophical or psychological guide to how to think about life, it is a practical and easily implemented guide on how to LIVE life.

The ancient Greeks wrote about how to live a good life, one of the central pillars being to focus on what you can control and forget that which you can’t. Read that sentence again, it’s harder to do than you think.

The author distils centuries old wisdom into the diagram of a triangle and provides plenty of real-life examples of how to apply Stoic philosophy.

I met an idiot driver cycling to work one morning. When I got to the office, I read this book for 15 minutes and felt much better about the world and my actions within it. I re-read sections every now and again and have recommended this book to a number of friends.

The Little Book of Common-Sense Investing by John Bogle, 2007

I have given this book to a number of new clients to help them understand WHY we recommend their investments are managed in a certain way.

John Bogle was the founder of Vanguard Group in 1974 and now it is one of the largest fund managers in the world.

Vanguard pioneered low-cost, index tracking funds that have since transformed the investing world and financial success of countless millions of people. Warren Buffet is a huge fan of Bogle’s approach, and they share similar philosophies on personal investing: spread your risk far and wide, forget fads and marketing hype, buy and hold at as low cost as possible and compound your returns by reinvesting. Buffet even has it written into his Will that his wife should invest all her money in a low-cost, S&P500 index tracking fund.

Simple messages that are so easily lost in marketing hype and most of the media.

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