5 Must Read Books for Beginner Investors in Singapore
We have been taught from a young age that cultivating a habit to read can expand our knowledge and make us wiser. A good way to learn more about investment strategies and improving financial literacy is through reading books. Many times, the reason you are hesitant to start investing is due to the lack of knowledge and the resulting fear that you may make a loss due to a lack of understanding. For those of you who are unsure of where to start reading, the following 5 titles are some of the best investing books around that will serve as a good crash course in helping you build a solid foundation before you start investing in Singapore
1. The Millionaire Next Door: The Surprising Secrets of America’s Wealthy
by Thomas Stanley and William Danko
This is a great starter that teaches you the means of growing your wealth and letting money do the work for you. The authors talk about seven simple traits that you can aspire towards. It challenges the view that wealth is created by sheer luck and talent, and emphasizes the need to work hard and be disciplined in accumulating savings. Often times, it is easy to credit the rich for being rich solely due to inheritance, but what is not portrayed by the media is the boring hours of analyzing and planning for wealth growth. While the rich spend lavishly, they do so well below their means. In essence, the book highlights the importance of buying what you can afford. Without which, you will not even have the capital to invest.
If this book floats your boat, you can try reading other books by Dr. Stanley such as The Millionaire Mind, Stop Acting Rich, and Marketing to the Affluent.
2. The Richest Man in Babylon
by George S. Clason
Similar to the first book recommendation, this book focuses on encouraging you to modify your spending and investments as part of financial planning. This is an easy to digest book about the basics of investing even before you start investing.
It advises you to save minimally 10 percent of your income, invest in self upgrades for a stable future income stream, and to not procrastinate. It tells you to grow your money and guard it, as well as to work hard to attract opportunities. Bearing all these in mind prior to investing is important as it shapes your mentality about wealth growth right from the beginning.
3. Competitive Strategy: Techniques for Analyzing Industries and Competitors
by Michael Porter
Michael Porter’s book is every business student’s compulsory reading material, and it is so for a reason. Read up on the very comprehensive five forces to help you better analyse an industry’s attractiveness. It also summaries the three different types of company strategies- Low cost, differentiation and focus.
As evident, the book does not tell you how to invest exactly, but enlighten you on how businesses function and competitively strategise such that you can better decide on who to invest. While this useful reference guide can be slightly dry, it is a good springboard for you to research more.
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4. Oblivious Investing
by Mike Piper
It is common for a new investor with little time to spare to prefer passive investing. If you would like to dive straight into indexing, try reading Oblivious Investing. This book delves into the strategy behind indexing in an easy to read fashion. As scary and technical as indexing may sound to new investors, it can actually be broken down into digestible bits to facilitate understanding. This book will give you enough information and confidence to start. It urges you to cancel out the noise and ignore the sensationalised, short-term financial news or fluctuations and focus on other relevant characteristics that can help you achieve success in the long run.
5. Your Money and Your Brain
by Jason Zweig
For those interested in the psychology behind investing, this book is for you. It explores comprehensive scientific research revolving around neuroscience, psychology, economics and investor behavior. You can even learn about the pitfalls of overconfidence when planning, why market players act in a certain way, and read up on actual actionable items to avoid mistakes. Biases such as home bias and hindsight bias are also discussed. It is surprising how your brain, specifically your left brain, induces you to see patterns and relationships when there are none. Sometimes, irrational investment decisions are plain biological.
BONUS! 6: All About Asset Allocation
by Richard A. Ferri
At this point in time, you may be unsure of how to split and allocate your money. How much should you save, and how much should be placed on investments such as indexing? How about investments that are in highly volatile markets?
While it depends on your personal risk appetite, you can get a good overview by reading All About Asset Allocation. This book provides you with options to diversify and build your own portfolio with a mix of stocks, bonds, real estate and other asset classes to reduce risk. Interestingly, it also encourages you to rebalance your portfolio periodically, perhaps annually, by relooking at the circumstances that your investments are in. Afterall, your returns and performance depend largely on how assets are allocated in the first place.
The book recommendations above should set you on the right path. Over time, you will be able to figure out what works for you. What are you waiting for? Pick a book from the list and start expanding your knowledge today!
Additional Reading on Investing in Singapore