Must-Read Books for Novice Investors

Buffett and Bogle volumes make the list.


As part of our recent package on 20-somethings and personal finance, I wrote a guide to building a portfolio on the cheap. One of the story's subjects—Jason Barnette, who began investing in stocks after he graduated from college in 2004—told me his investing philosophy was shaped by Peter Lynch's book One Up on Wall Street: How to Use What You Already Know to Make Money in the Market.

Which got me thinking: What are the best books for starting-out investors? Morningstar recently posted a "Beginning Investor's Reading List," which included the following:

The Only Investment Guide You'll Ever Need, by Andrew Tobias: "A classic overview of the essential things of which any investor should be aware ... Tobias covers the basics of stocks, bonds, mutual funds, 401(k)'s, IRAs, real estate, and how to save and invest prudently for the long term. If you feel totally at sea when it comes to investing, this book is a good place to get your footing," says Morningstar.

Buffett: The Making of an American Capitalist by Roger Lowenstein: A Warren Buffett biography with plenty of background on the Oracle of Omaha.

The Bogleheads' Guide to Investing by Taylor Larimore, Mel Lindauer, and Michael LeBoeuf: Written by prominent members of Morningstar's Vanguard Diehards forum, this book covers the investing philosophy of Vanguard founder Jack Bogle.

A Random Walk Down Wall Street by Burton G. Malkiel: "The most entertaining and accessible defense of efficient-market theory, which says that it's impossible to predict what the market will do with any kind of consistency," says Morningstar.

Stocks for the Long Run by Jeremy Siegel: Covers "historical evidence about which types of stocks perform best over the long run, as well as various attempts to beat the market and thus disprove the efficient-market hypothesis," says Morningstar. "A chapter at the end on how best to use stocks in a portfolio is especially valuable for beginners."

All About Asset Allocation by Richard A. Ferri: Focuses on the art of divvying up a portfolio between investments "in a way that's accessible to investors who are just starting out," says Morningstar. "Ferri includes a big-picture overview of asset allocation and why it matters, discussions of the various asset types (U.S. stocks, foreign stocks, bonds, real estate, and alternative investments), and a clear discussion of how to build and maintain a portfolio."

One more idea for your business reading: U.S. News asked 14 business leaders, including Vanguard CEO Jack Brennan, craigslist chief Jim Buckmaster, and former Hewlett-Packard chief Carly Fiorina, to each recommend five books they consider indispensable. The results are sometimes surprising.