I Read 87 Books on Investing - Here's What Will Make You Rich

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28 Dec 2024

When I embarked on my journey to understand investing, I didn’t anticipate the sheer volume of wisdom—and occasional misinformation—I’d encounter. Over the span of several years, I poured over 87 books on the subject, ranging from classics like Benjamin Graham's The Intelligent Investor to modern insights from thinkers like Ray Dalio. My goal? To distill timeless principles and actionable strategies that work across market conditions.
Here are the most critical lessons I learned and the actionable steps you can take to build wealth through investing.

1. Understand the Fundamentals of Wealth Creation

Before diving into stocks, real estate, or cryptocurrencies, you must grasp the basic principles of wealth creation:

Earn: Build skills that generate income. Your ability to earn is the foundation of all wealth.
Save: Spend less than you earn. Aim to save at least 20-30% of your income.
Invest: Make your money work for you by growing it through compounding.
Protect: Safeguard your wealth from taxes, inflation, and unforeseen events.

Books like The Richest Man in Babylon emphasize the importance of these fundamentals. Without mastering them, no investment strategy can succeed.

2. The Power of Compounding

Albert Einstein reportedly called compounding "the eighth wonder of the world." It’s the principle that small amounts of money, reinvested over time, grow exponentially.

Key Takeaways:

Start early. A 25-year-old investing $500/month at a 7% return will accumulate significantly more than a 35-year-old investing the same amount.
Reinvest earnings. Whether it’s dividends, rental income, or interest, let your returns generate more returns.
Patience is critical. Compounding rewards those who think in decades, not days.

Books like Common Stocks and Uncommon Profits by Philip Fisher drive this point home. Fisher’s emphasis on high-quality, long-term investments highlights the importance of patience and compounding.

3. Invest in What You Understand

Peter Lynch’s One Up on Wall Street popularized the idea of “investing in what you know.” This doesn’t mean you only buy stocks of companies you’re familiar with but rather that you understand the business model, competitive advantages, and risks of any investment.

Actionable Steps:

Analyze the products and services you use daily. Are there publicly traded companies behind them?
Read annual reports and earnings calls to understand a company’s strategy and financial health.
Avoid investments that are overly complex or opaque.

Warren Buffett’s principle of staying within your “circle of competence” underscores this lesson. If you don’t understand an investment, you’re speculating, not investing.

4. Asset Allocation is Everything

One of the most impactful insights I gleaned was the importance of asset allocation—the mix of stocks, bonds, real estate, and other assets in your portfolio. Research suggests that asset allocation, not individual stock selection, accounts for the majority of portfolio performance.

Key Ratios:

Aggressive (younger investors): 80% stocks, 20% bonds.
Balanced (mid-career investors): 60% stocks, 40% bonds.
Conservative (near retirement): 40% stocks, 60% bonds.

Books like A Random Walk Down Wall Street by Burton Malkiel advocate for diversification and index funds as the backbone of a sound portfolio.

5. The Case for Index Funds

Active investing (picking individual stocks) often underperforms passive strategies like investing in low-cost index funds. Jack Bogle’s The Little Book of Common Sense Investing makes a compelling case for index funds:

They are low-cost and eliminate high management fees.
They provide broad market exposure, reducing risk.
Over the long term, they outperform most actively managed funds.

Actionable Strategy:

Invest in a Total Stock Market Index Fund (e.g., Vanguard’s VTSAX).
Add a Bond Market Index Fund for balance.
Rebalance annually to maintain your target asset allocation.

6. Embrace the Value Investing Philosophy

Benjamin Graham, the father of value investing, introduced principles that focus on buying undervalued stocks with a margin of safety. His protege, Warren Buffett, has used these principles to amass a fortune.

Core Principles:

Look for stocks trading below their intrinsic value.
Analyze financial statements for strong fundamentals.
Avoid emotional decisions based on market volatility.

Books like The Intelligent Investor are essential reads for understanding value investing.

7. Control Your Emotions

Behavioral finance—the study of psychology in investing—reveals that fear and greed are the biggest threats to wealth creation. Books like Thinking, Fast and Slow by Daniel Kahneman explain how cognitive biases lead to poor investment decisions.

Tips to Stay Rational:

Develop a written investment plan to stick to during volatile markets.
Ignore market noise. Short-term fluctuations don’t reflect long-term value.
Avoid frequent trading, which incurs fees and taxes.

8. Build Multiple Income Streams

Many investment books emphasize diversification not just in assets but in income sources. Whether it’s dividends, rental income, or side hustles, having multiple streams reduces reliance on a single source.

Ideas:

Invest in dividend-paying stocks.
Explore real estate for rental income.
Start a business or monetize a hobby.

Robert Kiyosaki’s Rich Dad Poor Dad is a primer on thinking outside the traditional 9-to-5 framework to build wealth.

9. Protect Your Downside

Howard Marks’ The Most Important Thing emphasizes the importance of risk management. Successful investing isn’t just about maximizing returns but also about minimizing losses.

Key Strategies:

Use stop-loss orders to limit potential losses.
Diversify across sectors and geographies.
Maintain an emergency fund to avoid liquidating investments prematurely.

10. The Role of Real Estate

Real estate remains one of the most popular paths to wealth, thanks to its tangible nature and ability to generate passive income. Books like Brandon Turner’s The Book on Rental Property Investing outline strategies for finding, financing, and managing properties.

Pros of Real Estate:

Leverage allows you to control a large asset with minimal capital.
Generates consistent cash flow through rent.
Offers tax advantages like depreciation.

11. Continuous Learning is Non-Negotiable

The world of investing is dynamic, and staying informed is crucial. Make it a habit to read books, follow market news, and learn from successful investors.

Recommended Books:

Principles by Ray Dalio for macroeconomic insights.
The Essays of Warren Buffett for timeless wisdom.
You Can Be a Stock Market Genius by Joel Greenblatt for niche strategies.

12. Take Action and Start Now

Reading 87 books taught me one ultimate truth: knowledge without action is meaningless. You don’t need to master every investment concept to start building wealth. Begin with small, consistent steps and adjust your strategy as you learn.

Your Next Steps:

Open an investment account (e.g., brokerage or retirement).
Automate contributions to index funds or other investments.
Set realistic goals and review your progress annually.

Final Thoughts

Wealth creation is a journey, not a destination. The principles outlined here—grounded in lessons from 87 books—can serve as a roadmap to financial freedom. Remember, the key to getting rich isn’t finding the next big stock but mastering the fundamentals, staying disciplined, and thinking long-term.
Start today, and your future self will thank you.