Great Book Ideas For the Investor on Your List

Giving someone a book as a gift can be tricky business, especially when the book is aimed at telling that person what he or she is doing wrong and how to do it better. But when it comes to investing, we could all use a little advice from time to time--OK, maybe more than a little. Fortunately, a lot of good books have been written on the subject, books that some investors will tell you changed their lives.

With the holidays just around the corner, we asked Morningstar.com readers what book on investing they would give as a gift if they had to pick just one. Some suggested books aimed at novice investors while others recommended books aimed at those with more experience--and it wasn't unusual for those who left comments to name three books or more. If there was one prevailing theme, it was the degree to which reading a good book can profoundly affect the way people think not only about investing but about managing their money overall, including their personal spending habits.

If you're trying to come up with a gift for someone--young or old--who you think could stand to benefit from some of the great writing that's been done on the subjects of investing and personal finance, or if you're just looking to expand your own knowledge, the titles mentioned this week on our Personal Finance discussion board should give you a great start. You'll find the full discussion here. It's worth a read in itself.

Popular Picks
Readers mentioned dozens of books as being among the best on investing and personal finance, but there were a few authors and titles that cropped up repeatedly. One of the books mentioned most often by readers was The Millionaire Next Door: The Surprising Secrets of America's Wealthy by Thomas Stanley and William Danko.  

"Shows how sacrifice and discipline can pay off, and [how] you can become wealthy even if you don't have a large annual income," said jadster35.

"For someone just starting out I would suggest The Millionaire Next Door to show that you don't become rich by acting or looking rich," wrote diapason. "Once that idea becomes fixed, they can then sort out the investment stuff."

The book was also high on fritz2's list. He said, "Once you get your mind 'right,' the rest is straightforward. Live within your means and you can be happy. Live below your means and you can be wealthy."

Another author popular with readers was William Bernstein, whose books The Intelligent Asset Allocator, The Investor's Manifesto, and The Four Pillars of Investing were named as favorites.

One reader, dprice, recommended Bernstein's booklet If You Can: How Millennials Can Get Rich Slowly for young investors, saying "[It's very short,] so they might actually read it. Could be life changing, and it's free online, so you can hand it out like Christmas chocolates."

BoomerGuy didn't name any book titles but rattled off a list of his favorite financial writers. "Anything by Andrew Tobias, Burton Malkiel, and (of course) John Bogle. Reading Benjamin Graham wouldn't hurt either!" he wrote.

Cautious2 recommended Bogle's Common Sense on Mutual Funds--"compelling argument to index, and not worry," the commenter wrote--while Aquinas explained why Tobias' The Only Investment Guide You'll Ever Need lives up to its name.

"I've given it as a gift to each of my children," Aquinas said. "It's under 300 pages yet relatively comprehensive, and it offers advice that's practical, easy to understand, and always clear-headed. Tobias is ideal for beginners because he covers basic topics like saving money and using minimal-risk strategies to build a nest egg. But he also gives excellent advice on a wide range of investment topics, even buying individual stocks, which makes his book worth coming back to again and again. Best of all, Tobias writes beautifully and is often entertaining and funny, something extremely rare in investment books."

Listening to Lynch, Buffett, and Others
Another author popular among readers is former Fidelity fund manager Peter Lynch.

"Of all the books and papers I've read, Lynch's observations that no [company] has ever rewarded its [bondholders] for their loyalty, dividends and earnings matter, and the solitary investor has great advantages over the professionals have provided me the confidence to formulate a viable investment plan that, for me, has paid well," wrote phildmet.

For reader bavan, Lynch and Warren Buffett have made for important reading.

"The first book which I would give to anyone is Peter Lynch's outstanding books Learn to Earn and One Up on Wall Street," bavan wrote. "I always read the above books every year as the concepts are applicable forever!! The next book which I would give is Warren Buffett's The Essays of Warren Buffett: Lessons for Corporate America."

For sschullo, there's little question as to the best financial book to give as a gift.

"The Bogleheads' Guide to Investing, hands down," the commenter wrote. "It's well-written, interesting, makes investing simple, focuses on costs and broad diversification, including a bond allocation. To get people to notice their finances, this book takes a look at the topic from 10,000 feet, from a 'layman's' point of view."

But not all readers were so sure there was just one obvious choice. Steve12 narrowed it down to three.

"The first is The Elements of Investing by Burton Malkiel and Charles Ellis. This is a short and easy-to-understand bible of strategies to simplify investing," steve12 wrote. "The second is The Most Important Thing by Howard Marks. Marks does an excellent job of describing key lessons he's learned over the years.  There is a great discussion of risk which all investors should learn more about. The third is The Five Rules for Successful Stock Investing by [former Morningstar equity analyst] Pat Dorsey. He provides understandable lessons about valuation."

A few readers recommended Mutual Funds For Dummies, from the popular self-help book series.

"Mutual Funds For Dummies is my go-to book when I start believing too much in my own opinions and possible investment strategies," wrote armagh36. "... Eric Tyson, the author of the book, brings me back to the reality of what I am--and what I am not."

Another favorite for some readers was Why the Best-Laid Investment Plans Usually Go Wrong & How You Can Find Safety and Profit in an Uncertain World by Harry Browne, first published in 1987.

"I've gone back and reread it several times over the years," said mwleach. "Many of the details are obviously dated now. However, the basic information and the investment philosophy, like that in all the truly great investment books, is timeless."

Readers also mentioned several books written by Morningstar authors, including Why Moats Matter by Heather Brilliant and Elizabeth Collins, The Ultimate Dividend Playbook by Josh Peters, and the Morningstar Guide to Mutual Funds by Christine Benz.

Now that you know which books Morningstar readers say have been most useful to them, you can decide which one(s) will be most useful to those on your gift list. If you choose well, it will be a gift they'll be thanking you for not just this holiday season but for many years to come. 

Some comments have been edited for clarity and brevity.