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These 5 great, easy-to-read money books will change the way you think about investing

Maybe you’re automatically moving payroll deductions into your 401(k). Either you got into crypto or, God forbid, bought a meme stock or two on Robinhood.

But tweets, articles from Google searches and Instagram screenshots of stock charts are not enough to make you a good investor; you need to go deeper. And going deeper means reading.

There are many great books on investing, many less on personal finance. But not all are suitable for novice investors.

I’ve picked four new investors to read about investing and one to read about personal finance. All of them are also easy to read.

‘The Little Book of Sensory Investing’ by John Bogle

Most of the media and Wall Street refer to Warren Buffett as the most influential investor of the past century. But as Buffett’s stardom and performance fade, so does the legacy of index fund pioneer John Bogle and founder of Vanguard (now managing more than $7 trillion), his upper tower. Even Buffett admits that Bogle’s creativity surpassed his own: he recommend investing in index funds and is instructing his heirs put 90% of their money on them, too.

This compact volume distills decades of Bogle’s wise investment into just over 200 pages. Seems like the key takeaways from this investment giant’s philosophy: Picking winning stocks or actively managed mutual funds is madness; instead, buy the most widely diversified index funds, keep costs to a minimum, and let the compounding miracle of steady investing and compounding do the rest.

Learn more about the power of compound interest: For wealth investing, the power of time beats a lucky stock pick

‘Winners’ Game’ by Charles D. Ellis

NS eighth edition of this investment classic, first published in 1985, to earlier this year, and its author sit down for a Q&A with MarketWatch. Ellis was a disciple of Bogle (he served on Vanguard’s board and co-chaired Yale’s investment committee with the great, late David Swensen) and he makes arguments for index funds. low cost from another angle: loser’s market beat game; Even professionals can’t.

So-called mediocre index funds beat 75% of all funds. And investors end up being winners not losers.

Than: Investors love to brag about their great stock picks, but beware of those who use fancy math to calculate their returns.

‘Extraordinary Famous Illusions’ and The Madness of the Crowds’ by Charles Mackay and ‘Manias, Panics and Crashes’ by Charles P. Kindleberger

Together, these two investment classics recount some of the greatest frenzys in modern market history from Tulipmania to the South Sea Bubble (which nearly ruined one of the great minds in history). history, Sir Isaac Newton) to the stock market crash of 1929 and beyond.

Mackay’s account is history while Kindleberger, a former professor at MIT, is more analysis, although the book is quite readable. Kindleberger lays out how crises develop, as lending eases and speculation soars, and the anecdotes in both books will provide ample warning of the current excesses in all things.

But since many investors don’t have the imagination to connect the dots, I suspect they won’t. Mackay writes: “The widespread delusions began so soon, spread widely, and lasted so long,” that… fifty volumes were barely enough to detail their histories.

These two things, however, will more than do the job.

‘The Psychology of Money’ by Morgan Housel

However, when I search for good books on personal finance, I feel like Diogenes is wandering the streets of Athens with a candle trying to find an honest man. (Spoiler alert: He’s still looking.)

What’s out there is often promotional and poorly written. Whether it’s “no debt” as in “Dave Ramsey’s”Total compensation“Or drive used Buicks and keep making every penny no matter how rich you are, as in”The Millionaire Next Door,“These books promote a Big Idea that will solve your financial problems. They are like articles in the defunct print magazines Money or SmartMoney spilling out into full-length books.

Writers like Terry Savage and Liz Pulliam Weston, whom I know and respect, as well as Jane Bryant Quinn have written some great personal finance books. These women have pioneered personal finance journalism, and you can’t go wrong with anything they’ve written.

But to read that one book, I recommend “Psychology of money“By Morgan Housel. Rather than a chore, this book is a joy to read. Housel, a columnist for The Motley Fool, offers a lot of conventional wisdom and says how you think about money is just as important as what you do with it.

He also says that luck is a key factor in everyone’s success, the most volatile market events are always unpredictable and the goal of financial planning should be survival. . “The ability to stick around for the long term without being wiped out or forced to give up is what makes the biggest difference,” he writes.

Getting started early is important, Housel explains, and if you’re a new investor, these books are a great place to start.

To add: Become a better investor by Sign up for the MarketWatch newsletter.

Howard Gold writes about investing and retirement for MarketWatch.

See more from MarketWatch’s ‘How to Invest’ series

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