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Must Read Books for Young Investors

Dec 05 2011

3400039653_f780a7aeacInvesting can seem like a scary thing to many young people. After all, the global markets are very volatile right now, paving the way for massive sell offs in the market. Global pressures of debt and political unrest in many parts of the world are also adding fuel to the fire - making it seem like a horrible time to start investing.

Well, here’s some news for you: it’s almost never a bad time to start investing. In fact, to quote the ever wise Warren Buffet, “Be fearful when others are greedy, and be greedy when others are fearful.” Markets will always be volatile, and with anything in life there will always be some bad that comes with the good, but even with the rocky nature of the stock market you may still earn a higher return for your investment than you would in a regular savings account. Furthermore, the younger you start, the more time you'll have, allowing you to wait out rough patches in the market and recover from short-term dips.

Unfortunately, young investors have shown to be the first to bail during rough economic times. However, for those of you who are young and want to take advantage of the potential gains there are some great books you can read to get you started.

The Money Book for the Young, Fabulous and Broke, by Suze Orman

If you don’t know the difference between a fixed term deposit and a stock option this book will lay it out for you in a simple easy to read manner. Suze Orman’s philosophy is simple - investing isn’t as complicated as people make it seem - and she strives to show young people that they too can start investing. She even goes through the jargon that tends to trip people up the most so that you don’t end up losing money due to misunderstandings and misconceptions.

I Will Teach You To Be Rich, by Ramit Sethi

I Will Teach To Be Rich is the best-selling book to come from the highly successful blog of the same name. In it Ramit Sethi speaks to the younger generation to explain to them how they can use the internet to their advantage when investing. He even lays out some of the best new ways for young people to invest - including lifecycle funds which automatically allocate your money according to your age.

Ramit’s philosophy is also simple - automate your investments in a way that you don’t have to constantly be on top of them. He teaches you how to "set it and forget it" in a way that will ultimately benefit you.

Investing for Dummies (5th Edition), by Eric Tyson

If you keep hearing terms like “bull market” and “bear market” being thrown around on the news and have no idea what they are talking about, this is the book for you. Investing for Dummies will teach you all the jargon you need to know, and lay out a blueprint of every kind of investment there is. It will also teach you how to diversify your portfolio and conquer investing obstacles like the kind of global recession we’re seeing today.

The Intelligent Investor, by Benjamin Graham

This book may have been published in the 1940s, but the timeless investing wisdom within it is still applicable today. You’d be surprised how simple wisdom like, “Buy low, sell high” has been forgotten over time and this book is a great reminder. This book explains every aspect of the market in a way that the Average Joe can understand it - including property investments. It also teaches you how to determine which stocks are great for the long haul instead of claiming to make you rich quickly. Lastly, it goes through the emotional phases of investing as well - so you don’t end up making a rash decision.

Despite what you may hear, investing doesn’t have to be scary. With the appropriate research you can easily start investing for the future as early as today. The aforementioned books, though they provide very basic wisdom, may form the foundation of the knowledge you'll need to optimize your investment endeavors.

Citations:

This article is by Amanda, a personal finance blogger who shares money tips like how to compare personal loans and lock in good fixed term deposit rates. Her top tip is to take your time with any important financial decisions and never sign an agreement in haste.

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