Top 3 Investment Books For Beginners

Nutan Gupta

05 May 2017

New Page 1

"You can learn investing by reading books" - Ben Ackman.

There are a plethora of books that are available on investing. It is quite natural for you to feel to begin your investment but not know how. With each title and author adding to your confusion, here is a list of 3 books you can read as a beginner.

"The Essays of Warren Buffett: Lessons For Corporate America" (1997) by Warren Buffett

This book is credited with the title of the New Testament of value investors. Written by the most successful investor of modern times, it a vast variety of topics. As a young investor, you can get a glimpse of the interaction between the company and its shareholders. It also presents the thought process to enhance a company's enterprise value. His essays include topics such as finance, investing, corporate governance, accounting, valuation, mergers, acquisitions, and tax matters among others. Buffet has been writing these essays for more than 50 years now. His clear prose and direct language are sure to keep you hooked and wanting for more.

"Rich Dad, Poor Dad" (1997) by Robert Kiyosaki

This book has been a classic read since the time it was first published in 1997. Stemming out of Robert Kiyosaki's own life where grew up with two dads and two philosophies. Each of it led to two different outcomes, which ultimately became an experience he shares with all the young investors. The book gives readers and investors a contrasting perspective and aims to offer a new view of money. He points out that while accounting is important, financial literacy and financial independence needs to be the ultimate goal. According to Kiyosaki, stocks and real estate that provide dividends are favorable for investors. He also puts an emphasis on tax planning as an integral lesson every investor must take.

"The Intelligent Investor" (1949) by Benjamin Graham

Written by the 'father of value investing' himself, Benjamin Graham was the most influential investing face of the 20th century. Warren Buffet hailed this book as the best investment book ever written. In this book, Graham asks the investors to conduct a fundamental analysis of a stock. He provides various ways in which one can manage his portfolio and gives multiple examples to validate this. He treats the market as a business partner who's price makes sense at some times but can be way too high or low at other times. He also stressed on having a margin of safety. This allows profit on the upside and saves you from losses when things don't work out. Buffet developed his own strategy of investing but also said that no one ever lost money following Graham's ways too.

Top 3 investment books for beginners (IG content)

  • You can't learn Investment by losing your money

  • Read books to learn from the masters themselves

1. Essays of Warren Buffet

  • A good investor must focus on good businesses, buy them at good prices and hold them for the long term.

  • A good investor must be able to make a distinction between market price and intrinsic value.

  • Investors must be willing to 'look-through-earnings' which can credit better retained and distributed profits.

2. Rich Dad, Poor Dad

  • The rich don't work for money but learning. Hence, they invest money.

  • Financial literacy is important and can lead to independence.

  • Knowledge of tax and accounting is important for manipulating it to one's advantage.

3. The Intelligent Investor

  • If you want to make money, you must think long term.

  • Be interested in fundamentals and have patience. It will pay one day.

  • Diversify your assets and have a margin of safety.

To sum it up

Investment is not a gamble. So, if you are investing for the first time, trust those who have done it before and you may do just fine.

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mutual-fund

Why to Choose Mutual Funds Instead of Directly Investing Into Equities?

Whether to invest in equities or mutual funds is a question that has plagued every investor. As someone who needs the best value for his/her investment should you invest in equity directly or via mutual funds?

Let’s start by first understanding what these two terms ‘equities’ and ‘mutual funds’ stand for-

Equities- Equities generally represent ownership of a company. If you own any equity in a company, you are a part owner of the said company (depending on how much equity you own).

Mutual Funds – It is an investment scheme which is professionally managed by an asset management company. It pools together the resources of a group of people and invests their money in equities, debentures, bonds and other securities.

Why choose mutual funds over equities?

For people who’ve never invested in either stocks or mutual funds, it is hard to know which is better and where to start. Broadly speaking, if you are a novice investor, mutual funds are not only less risky but also way easier to manage. Here are some ways in which investing in mutual funds is beneficial as opposed to investing in equities -

Diversification

Mutual funds provide more diversification as compared to an individual equity stock. When you invest in equity, you are investing in a single company which has its inherent risk. For example, if you invest Rs.20,000 in buying equities of one company, you could face a total loss if that particular company performs poorly in the market.  

If you invest the same amount in mutual funds, it will be invested in different kinds of stocks and financial instruments, high-risk and low-risk both, so you might not face total loss even if one company does poorly.

Scale of Investment and Lower Costs

For an individual investor buying and selling stocks is a difficult task due to its high price. Thus, any gains made from stock appreciation are nullified if the overall trading costs are considered. Comparatively with mutual funds, as the money is pooled from a large number of investors, the cost per individual is lowered.  

Another advantage of mutual funds is that you don’t need to invest large sums of money. Buying equities for a profitable venture needs huge amounts of money, a minimum of few lakhs. With mutual funds, you can start with Rs.1000 and earn profits on that as well.

Convenience

Keeping an eye on the markets everyday is a time-consuming business, especially if you are investing as a side gig. There are people who spend their lives studying the market and still end up sustaining heavy losses. Though investing in mutual funds does not guarantee high returns, it is stress-free and needs less work as compared to investing in equities.

To sum it up

It is important to remember that mutual funds have their own disadvantages as well. Thus, as with any financial decision, educating yourself and understanding the suitability of all the available options is the ideal way to invest. 


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Top 3 Investment Books For Beginners

Nutan Gupta

05 May 2017

New Page 1

"You can learn investing by reading books" - Ben Ackman.

There are a plethora of books that are available on investing. It is quite natural for you to feel to begin your investment but not know how. With each title and author adding to your confusion, here is a list of 3 books you can read as a beginner.

"The Essays of Warren Buffett: Lessons For Corporate America" (1997) by Warren Buffett

This book is credited with the title of the New Testament of value investors. Written by the most successful investor of modern times, it a vast variety of topics. As a young investor, you can get a glimpse of the interaction between the company and its shareholders. It also presents the thought process to enhance a company's enterprise value. His essays include topics such as finance, investing, corporate governance, accounting, valuation, mergers, acquisitions, and tax matters among others. Buffet has been writing these essays for more than 50 years now. His clear prose and direct language are sure to keep you hooked and wanting for more.

"Rich Dad, Poor Dad" (1997) by Robert Kiyosaki

This book has been a classic read since the time it was first published in 1997. Stemming out of Robert Kiyosaki's own life where grew up with two dads and two philosophies. Each of it led to two different outcomes, which ultimately became an experience he shares with all the young investors. The book gives readers and investors a contrasting perspective and aims to offer a new view of money. He points out that while accounting is important, financial literacy and financial independence needs to be the ultimate goal. According to Kiyosaki, stocks and real estate that provide dividends are favorable for investors. He also puts an emphasis on tax planning as an integral lesson every investor must take.

"The Intelligent Investor" (1949) by Benjamin Graham

Written by the 'father of value investing' himself, Benjamin Graham was the most influential investing face of the 20th century. Warren Buffet hailed this book as the best investment book ever written. In this book, Graham asks the investors to conduct a fundamental analysis of a stock. He provides various ways in which one can manage his portfolio and gives multiple examples to validate this. He treats the market as a business partner who's price makes sense at some times but can be way too high or low at other times. He also stressed on having a margin of safety. This allows profit on the upside and saves you from losses when things don't work out. Buffet developed his own strategy of investing but also said that no one ever lost money following Graham's ways too.

Top 3 investment books for beginners (IG content)

  • You can't learn Investment by losing your money

  • Read books to learn from the masters themselves

1. Essays of Warren Buffet

  • A good investor must focus on good businesses, buy them at good prices and hold them for the long term.

  • A good investor must be able to make a distinction between market price and intrinsic value.

  • Investors must be willing to 'look-through-earnings' which can credit better retained and distributed profits.

2. Rich Dad, Poor Dad

  • The rich don't work for money but learning. Hence, they invest money.

  • Financial literacy is important and can lead to independence.

  • Knowledge of tax and accounting is important for manipulating it to one's advantage.

3. The Intelligent Investor

  • If you want to make money, you must think long term.

  • Be interested in fundamentals and have patience. It will pay one day.

  • Diversify your assets and have a margin of safety.

To sum it up

Investment is not a gamble. So, if you are investing for the first time, trust those who have done it before and you may do just fine.

Have Referral Code?