We’ve just come through another Black Friday and Cyber Monday. With a little more than three weeks until Christmas Eve, parents interested in investing might be thinking about gift ideas such as books for young investors.
The last time I wrote about books for young investors in November 2018, Michelle Obama’s new book, Becoming, had just hit No. 1 on Amazon’s bestseller list, three full days before the former first lady’s official book launch.
Four years later, Michelle Obama’s second book, The Light We Carry: Overcoming in Uncertain Times, is number two on Amazon’s bestseller list.
I’ve put together a list of investment books for young investors to put under the tree this holiday season. Even if you don’t celebrate Christmas, they’re books worth giving to your kids to help them learn about money and business.
And who knows, maybe some of these young investors will grow up to be just like Warren Buffett.
The Essays of Warren Buffett: Lessons for Corporate America, 5th Edition, Warren Buffett (Author) and Larry Cunningham (Compiler)
The fifth edition of this excellent book was published in October 2019, 22 years after the original. Larry Cunningham takes Warren Buffett’s annual Berkshire Hathaway (NYSE:BRK-B) shareholder letters and organizes them by themes and messages.
Carol Loomis, the long-time Fortune writer and editor who covered Warren Buffett more than anyone else in media, retired in 2014 after a 60-year career in which she won numerous awards for her financial writing.
Here’s what she had to say about the book:
“Larry Cunningham takes Buffett’s brilliant letters to a still-higher level by organizing them into single-subject chapters. The book begins, moreover, with an excellent introduction by Larry.”
If you want to expose a young investor to arguably the greatest investor of all time, Cunningham’s classic book is an excellent place to start because nothing explains Buffett’s investing and business philosophy better than his annual shareholder letters.
Sure, it doesn’t make Amazon’s top 10 list (it’s 2,161st in Business & Investing), but some of the best books fly under the radar.
Investing in Your 20s & 30s For Dummies, Eric Tyson
This book is by Eric Tyson, the writer behind the hugely successful Investing For Dummies book as well as several others in the Dummies franchise.
His Personal Finance For Dummies book was a Wall Street Journal bestseller. It also won the Benjamin Franklin Award for Best Business Book of the Year.
Investopedia contributor Michelle Lodge, a book review editor at several well-known publications, had this to say about cryptocurrencies in her review of the book.
“Regarding cryptocurrencies, which are popular with younger investors, he [Tyson] expresses extreme caution, as many of the cryptocurrencies have ‘crashed and burned,’ while others have ‘mushroomed over recent years.’ He writes that there’s virtually no inherent value in the currencies, and that investing in them could lead to loss and disappointment by investors.”
With the recent bankruptcy of FTX, the cryptocurrency exchange formerly run by Sam Bankman-Fried, and the subsequent implosion of large parts of the industry, Tyson’s words are very prophetic.
Millennial Money: How Young Investors Can Build a Fortune, Patrick O’Shaughnessy
This book made my 2018 article. It was first published in October 2014. Patrick O’Shaughnessy is the son of Jim O’Shaughnessy, who wrote the book What Works on Wall Street, which was first published in 1996 and has since had three more editions go to print.
Not only is Patrick O’Shaughnessy the CEO of O’Shaughnessy Asset Management, which his father founded in 1987, but he also has an excellent podcast, Invest Like the Best. The podcast covers a lot of ground in business, with O’Shaughnessy interviewing successful business people about how they built their businesses, and other matters.
According to Barry Ritholtz, the Chief Investment Officer of Ritholtz Wealth Management and the man behind the Masters in Business podcast for Bloomberg,
“If someone had given me this book when I was in my 20s, I’d be a billionaire today. Buy this book for someone you love who is in their 20s. They will think kindly of you when they are in their 60s.”
I Will Teach You to Be Rich, Second Edition, Ramit Sethi
Ramit Sethi started the site I Will Teach You to Be Rich in 2004 at Stanford University. He lost money on his first investment, forcing himself to learn how money really works. Over one million people read the information his company puts out every month.
I like the way he views the world. In fact, he states on the homepage of his website,
“Buy all the lattes you want. A $5 coffee is not going to change your financial life. But learning how to automatically invest, how to select the right asset allocation, and how to negotiate a $15,000 raise will. I believe in asking $30,000 questions, not $3 questions.”
The book is a New York Times bestseller for a reason.
The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness, Morgan Housel
Rarely does an investment book sell more than two million copies. This one did. I have yet to read it, but I will be sure to in the coming weeks. It currently ranks first in Amazon.com’s Wealth Management category and 283rd overall.
I first became familiar with Morgan Housel from his writing days with The Motley Fool and The Wall Street Journal. I lost track of him after he left writing to join the seed-stage venture capital company Collaborative Fund as a partner in 2016.
The firm’s founder emailed him out of the blue that he liked Housel’s writing. They had lunch and hit it off. Two years later, Housel joined the firm in a creative capacity. He’s been there ever since.
The man’s always known how to write, so it’s not surprising that his book’s been so successful.
“Few people write about finance with the graceful clarity of Morgan Housel. The Psychology of Money is an essential read for anyone who wants to make wiser decisions or live a richer life,” stated Daniel H. Pink, #1 New York Times Bestselling Author of When, To Sell Is Human, and Drive.
The reading age is 16 years and up. If you’ve got a child younger than that but is a good reader, I wouldn’t hesitate to buy it for them before they turn 16.
The Simple Path to Wealth, JL Collins
This book was first published in June 2018. After writing letters to his daughter about money and investing, the author wrote the book. It covers subjects like debt, wealth building, wealth preservation, social security, how the stock market works, and much more.
Rated 4.5 stars by Amazon buyers (out of 9,053 ratings), the book is currently 10th in the Introduction to Investing category on Amazon and 2,180th overall. Anytime you can write a book that gets near the top of any category, you’re doing something right.
I’ve seen this book recommended by many in the media, but I’ve not had the pleasure of reading it. I’ll be sure to change that in 2023.
On his website, he has a post discussing how most people lose money in the market. Collins gives four reasons for this phenomenon: 1) We buy high and sell low, 2) We believe we can pick individual stocks, 3) We believe we can pick winning mutual fund managers, and 4) We play at the wrong end of the pool.
That last one is the most interesting.
Using a beer analogy, he separates what’s important from what’s not in the markets. The beer is the actual companies and their underlying businesses and profitability, while the foam is the noise from the media. Collins suggests it’s best to ignore the noise and focus on the companies themselves.
Common sense ideas like this make it easy to understand why so many people rate his book so highly.
One Up On Wall Street: How to Use What You Already Know to Make Money in the Market, Peter Lynch with John Rothchild
Peter Lynch was the portfolio manager of the Fidelity Magellan fund from 1977 to 1990. Over 13 years, he grew the fund from $20 million to $14 billion, delivering an annual return of 29%.
This was his first of three books that would make him a successful writer, in addition to his status as one of the best fund managers of all time. Published in November 1988, it was one of the first investing books I read after leaving the safe confines of university for the real world.
He introduced the concept of regular people using what they know to make market-beating investment decisions. I’ve coined this idea “Everyday Investing,” and I couldn’t agree more with Lynch’s approach.
Lynch’s second book, Beating the Street, also co-written with John Rothchild, was published in January 1992. In this book, he takes his “invest in what you know” mantra a step further by showing readers how to evaluate companies that they’re considering for inclusion in their investment portfolios.
These two books were key pieces in my early development regarding investing. I think even younger tweens ought to be able to follow his writing.
One word of caution: there are some who feel his books are badly outdated. That might be the case, but the advice provided is ageless.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.