Your own money manager

Pick any of these four books and you will be well on the road to becoming an investment expert

Today’s column is meant for the DIY folks. A number of young and not so young readers of this column had asked me for inputs to get started in investing. Earlier, we saw that investing in index mutual funds is a no brainer. But some of you may not want to outsource all the adventure that comes with investing. You may want to do the actual investing yourself instead of handing over your money to the “experts” — the professional money managers. You know what? This is actually not such a bad idea.

Today, I am going to recommend four books. Understand the contents of these four books and you will be way ahead of 90% of the crowd — and some of this crowd includes professional money managers.

Take your pick

The first recommendation is The Little Book that beats the Market by Joel Greenblatt. This is really a little book and in this book, the author — a successful hedge fund manager, teaches his schoolgoing son how to invest. It is delightfully simple and yet it doesn’t dumb down the reader. You can start your investing in education by reading this book.

The next book that I recommend is One up on Wall Street by the legendary, now retired fund manger — Peter Lynch. In this book, Peter shows how to use the insights that you have as a consumer of products and as an observer to trends to buy stocks that will make you money. You are seeing Maruti Suzuki cars all over the road? You know what stock to buy! You are impressed with the customer service of XYZ bank? Are you seeing a huge waiting list for buying a particular product? You know these companies are going to be hot investments. This book again offers lot of insights and shows that investing is primarily a common sense game that even school students can excel in. The next book on this list is The Intelligent Investor by Benjamin Graham. This is a book that inspired Warren Buffet to successfully launch his investment career. If it is good enough for Warren, surely it is good enough for us? Once again, you will find a lot of practical wisdom and insights that you can straight away put to use. 

The final book in this list is A random walk down Wall Street by Princeton academic Burton Malkiel. An investment classic that has seen several editions, this book is still evergreen and is full of wicked humour. But with all the jokes in it, it is a really serious book and is a must read if you prize critical thinking.

So, dear readers, hopefully you will be writing to me about the insights that you gained reading these books. Of course, you good people will also thank me for my recommendations. The writer is an alumnus of IIM Bangalore and the co-founder of Money Wizards.