If you head to your local bookstore, you will find a generously stocked section on ‘Money’ or ‘Personal Finance’. There are several types of books, which could be grouped as follows:
Cost-cutting books: Titles filled with money-saving ideas, frugal habits, or negotiating techniques. Books like these are designed to either get more for your money or to allow you to bring your costs down. Of course, the lower your costs, the higher your savings rate, which will lead to positive financial results.
However, the books themselves don’t usually dwell on what a reader should do with the money; i.e. should they save it in a bank account or invest?
Investing strategy books: These investing books are usually written by an ex-trader or hedge fund manager and will promote a specific investment strategy. These could range from short term day-trading tips, to long term portfolios that should be held for 20 years.
By now, authors are scraping the bucket with regards to new investment strategies, so often a new title will include a token twist on existing concepts and asset allocation strategies, to ensure the content feels fresh for the reader.
Get Rich Quick books: These investing books usually have eye-grabbing headline titles such as “Money Revolution: How to go from Poor to Rich” or “Millionaire by 30” (these are made-up titles). These books often come from ‘financial gurus’ who make a living by selling seminars and courses to people with an aspiration to become rich.
This word: aspiration – is quite key, as this is often the focus of the book itself. Feeding the motivation and mindset to make a change is helpful to the author, who can leverage this by attempting to promote their significantly more expensive courses as an upsell at the end of the book.
Beginners guide to investing books: These investment books, such as the Dummies guide to… series, attempt to give a comprehensive introduction to investing topics to those who are brand new to the topic. These books aren’t always designed to be read cover to cover and maybe dipped into by beginners as a reference source to understand financial jargon or a specific investment type.
This form of investing book is probably the most honest and transparent, in that the author usually has no ulterior motive beyond genuinely trying to educate the reader. However, they don’t tend to be the most compelling read because they usually lack any form of narrative. When contrasted to the ‘get rich quick titles’, a beginner’s guide will feel more like a textbook than the start of a fun journey.
As you will have gathered from my analysis above, each book is published from a very different type of author, with a different motivation, tone, and level of assumed knowledge.
Therefore this means that not every book is well suited to forming part of your investing education. It makes sense, to begin with, a reputable beginner’s guide and works your way up to more specific and opinionated books by esteemed academics or investors.
I wouldn’t say you outright ‘avoid’ get-rich-quick books, but if you are drawn to them, then read them with a degree of skepticism. You could almost visualize that the words are coming from a salesperson rather than the whispered words of a wise elder.
The mindset tips made in these books can be genuinely interesting. My qualm with them is when they encourage unhealthy upfront expenditure for the apparent purpose of achieving your dreams. If an investment strategy begins with you spending thousands of pounds for a short course – that doesn’t sound like an investment to me, that sounds like a frivolous yet fun piece of expenditure.