My Favorite Personal Finance Books

Every once in a while someone asks me to recommend some good books on personal finance. Here are some of my favorites.

General Personal Finance Books

These books cover the waterfront: budgeting, insurance, buying a house, investing, retirement planning, wills -- you name it.
Making the Most of your Money Now, by Jane Bryant Quinn.  This book covers everything; that's why it's over 1000 pages.  A great reference, best used to investigate specific topics as they become priorities.
Wealth Odyssey, by Larry Frank. A short (about 100 pages), but effective, overview. A good introduction that's especially good for those with limited financal backgrounds.

Basic Books About Investing

The Four Pillars of Investing: "This down-to-earth book lays out in easy-to-understand prose the four essential topics that every investor must master--the relationship of risk and reward, the history of the market, the psychology of the investor and the market, and the folly of taking financial advice from investment salespeople." Barnes & Noble review. That about says it. A really good investment book.
Barrons Guide to Making Investment Decisions, by Douglas Sease and John Prestbo: A nice overview of all asset classes (stock, bonds, real estate, etc.), but you may have trouble finding a copy these days.
Bogle on Mutual Funds, by John Bogle, founder of The Vanguard Group. Excellent book on investing in stock and bond mutual funds. Aims "to provide the same sort of framework for investing in mutual funds as Benjamin Graham provided for investing in individual stocks and bonds."
A Random Walk Down Wall Street, by Burton Malkiel. Good explanation of modern portfolio theory (how to construct an investment portfolio) from one of the major proponents of index investing. Some parts are a bit technical.
The Intelligent Investor: This classic, by Benjamin Graham, "the father of value investing," is oriented towards stock, not mutual fund, investing. Nevertheless, it's still relevant background for mutual fund investors.

Books About Behavioral Economics

The biggest financial mistakes I see people make are not caused by their deficiencies in accounting. These books deal with “the psychology of money.” This emerging field is sometimes called behavioral finance.

Why Smart People Make Big Money Mistakes and How to Correct Them, by Gary Belsky and Thomas Gilovich. "A terrific introduction to the emerging science of behavioral finance, which identifies the ways in which investors' minds play tricks on them." (Money Magazine)
Extraordinary Popular Delusions & the Madness of Crowds, by Charles MacKay. This 1841 classic reviews bubbles of all kinds (real estate, stock, ...) from the beginning of time (well, almost).
Irrational Exuberance, by Robert Shiller. This one focuses on more recent real estate and stock bubbles. Apparently, not enough people read Charles MacKay....
Fooled by Randomness, by Nassim Taleb. Fascinating book about the misunderstood role that chance plays "in life and in the markets." Not very well written, but was a best-seller anyway. That ought to tell you something.
Note: the first one is the only one that is "officially" from the field of behavioral economics, but I think the others are equally appropriate.

Happy hunting!


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Last modified: 8/20/2011