When it comes to improving your financial situation, there’s no better source of information than books. Over the past century, hundreds of books have been written on investing, personal finance, stock trading, and more, which can make deciding where to start quite overwhelming!
To help clear the mist, presented below are our top five financial books to read in 2022. These books will solidify the fundamentals of personal finance and provide tips to speed up the process of financial independence – making them essential reading for the year ahead.
1. Trading in the Zone
Trading in the Zone was authored by Mark Douglas and released in 2000, yet has consistently been in the best-selling charts for finance and investing books ever since. Mark was known as one of the top trading educators in North America, working with people involved in the stock market for decades before he sadly passed away in 2015. Essentially, Trading in the Zone centres around how we have been given the incorrect tools during education to operate in the financial markets successfully – so we need to ‘forget what we know’ and learn new patterns.
Most of Mark’s book boils down to how trading success is more psychological than anything else. The fear of losing money is a massive factor in many people investing poorly or making losing trades, and Mark presents multiple strategies to counteract this. Importantly, Trading in the Zone teaches us how to embrace the inherent risk that comes with every investment we make and truly ‘accept’ that we may lose money. Overall, Trading in the Zone is an important book to read if you’re looking to prime your mindset for investing – which is a cornerstone to success.
2. Rich Dad Poor Dad
Rich Dad Poor Dad was written by Robert Kiyosaki and is credited with transforming the mindset of hundreds of thousands of people worldwide regarding their financial choices. The book’s core premise follows Robert discussing his ‘two dads’ – his real father, who was poor and his best friend’s father, who was rich. By relaying his experiences with both of his fathers and how they taught him about money, Robert provides insight into how rich people ‘think’ about their finances and how they can make money work for them.
One of the text’s key ideas is how rich people acquire assets whilst poor people acquire liabilities. Much of the book focuses on property acquisition, which Robert is very experienced in. Furthermore, Robert details how education level really doesn’t matter if you don’t have financial literacy – meaning that anyone can become ‘financially free’ if they understand the principles. By reading this book, you’ll gain a firm grasp of these principles and be able to put them into practice right away.
3. The Intelligent Investor
The Intelligent Investor, published in 1949 by Benjamin Graham, is one of the most famous finance books ever written. Benjamin learned numerous key lessons throughout his life before writing this book, as his family lost all of their money during the stock market crash in 1907. However, Benjamin was able to pick himself up and have a great career on Wall Street, after which he wrote The Intelligent Investor to share his knowledge. The ideas taught in the book are timeless, as they all focus on key investment principles.
Much like in Trading in the Zone, The Intelligent Investor emphasises the importance that emotion plays in investment decisions. A large portion of the book is spent discussing value investing, which relates to investing in assets that have a high intrinsic value. Finally, Benjamin details how irrational financial markets can be in the short and medium-term, telling readers to steer clear of searching for crazy profits and instead invest for the long term.
4. Think And Grow Rich
Napoleon Hill, the writer of Think And Grow Rich, is one of the most famous writers of his time due to his thinking style. Published in 1937, the book was a revelation at the time and is more of a ‘self-help’ book than strictly financial. The book’s core concept is related to how we turn our desires into reality – whether that be financial targets or relationship goals.
By switching our mindset from ‘how can I do this?’ to ‘what can I give?’, we can make better choices that will lead to greater success. Although there are numerous chapters dedicated to ideas that some readers may not relate to (i.e. the auto-suggestion chapter), the ideas presented can shape how we approach investment decisions. Due to this, Think And Grow Rich is ideal for people who haven’t yet entered the markets and are looking to improve their mindset before doing so.
5. A Random Walk Down Wall Street
Burton Malkiel, the writer of A Random Walk Down Wall Street, is one of the leading proponents of the efficient-market hypothesis, which states that assets are priced correctly, and markets are efficient. A Random Walk Down Wall Street builds on this idea and relates it to investors in an easy-to-understand way, highlighting how important it is to begin saving and investing as early as possible.
The fundamental tenet of this book is that asset prices exhibit signs of a ‘random walk’, meaning that we cannot predict prices accurately or regularly. Thus, Burton urges investors to invest in broad index funds to beat inflation and set themselves up in the future. Burton also touched on the areas of fundamental and technical analysis, which will be helpful to people interested in the equity markets. Overall, this book is an excellent read for people looking to understand how the financial markets work and optimise their actions within them.
As you can see from the list above, there are plenty of ideas to consider when it comes to financial literature – with some of the concepts presented not necessarily agreeing with each other! Finance books can often have subjective elements, so it’s crucial to read a few and form your own position. However, by reading the ones presented in our list, you’ll be able to improve your mindset right away – and begin making headway towards financial success.