Saving alone won't make you rich. As billionaire Mark Cuban once said: "Can you save a million dollars? You can, but you really have to be disciplined."
Investing, on the other hand, takes advantage of compound interest, which dictates that any interest earned accrues interest on itself, so a little money invested now can end up being more than a lot of money invested later. In short: If you want to become a millionaire, the earlier you start investing, the better.
And if you aren't sure where to begin, books are a good place to start. Here are five helpful choices for beginner investors, as recommended by Andrew Hallam, a high school teacher who became a millionaire at 36 years old.
"Don't mistake simplicity for something substandard," Hallam warns on his blog. These books might be a good introduction to the industry but that doesn't mean they don't pack solid advice.
Hallam knows this firsthand. He didn't inherit wealth or win the lottery. Rather, he started investing at 19, after the head mechanic at the bus depot where he worked took an interest in him and taught him the basics of finance.
As he got older, Hallam invested every spare penny. And to better understand the market, he read more than 400 personal finance books. Eventually he even wrote two of his own: "Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School" and "The Global Expatriate's Guide to Investing: From Millionaire Teacher to Millionaire Expat."
Here are a few of Hallam's top picks for those who want to start investing but don't know where to start.
In this book, Schultheis breaks down the complexities of investing into three simple principles: Don't put all your eggs in one basket; there's no such thing as a free lunch; and save for a rainy day. That's it.
"Promoting a low cost, index fund solution to investing, he guides his readers as if he's your affable neighbour, explaining the process over coffee," Hallam writes. "You can enjoy this book from cover to cover in a single afternoon."
Farrell fills this tome with easy-to-understand, actionable investing tips and strategies.
"Dr. Farrell's book is aimed at a broad audience, peppered with a fun writing style that's missing in the vast majority of personal finance books," Hallam says. "This could be the first and only investment book you'll ever have to read."
Solin's book is short but rich. It teaches readers how to set up and monitor investments, assess risks and avoid common mistakes.
"This immodestly titled book is comprised of only 154 pages, and this leading securities arbitration lawyer guides readers to see that again, index fund investing gives the highest statistical chances of success," Hallam says.
"The Elements of Investing" by Burton G. Malkiel and Charles D. Ellis
Best-selling authors Burton G. Malkiel of "A Random Walk Down Wall Street" and Charles D. Ellis of "Winning the Loser's Game" joined forces to write "The Elements of Investing," which breaks down the skills and mindsets needed to invest wisely.
"From what I've learned, giving financial seminars, the average person has difficulty understanding terms and jargon that most financial writers take for granted," Hallam writes. "As great as both of these gentlemen's other books are, this one is far easier for the average reader to understand."
"How a Second Grader Beats Wall Street: Golden Rules Any Investor Can Learn" by Allan S. Roth
In this book, Roth tells the story of how he taught his 8-year-old son, Kevin, the basics of investing, tackling complex topics with a simple approach.
It's also worthy of sharing, according to Hallam. "I bought this book as a gift, initially, but then I had to buy two," he writes. "I simply couldn't give the original book away and be left without a copy myself."
This is an updated version of a previously published article.
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