If you’re serious about building wealth it’s not complex finance strategies that will get you ahead.
Rather, the most effective approach is to focus intensely on the classic, time-proven methods that come up time and time again.
I’ve picked out three books I think do a great job of explaining what works in investing and how to avoid devastating losses.
1. Unshakeable: Your Financial Freedom Playbook – Tony Robbins
Don’t worry, this book isn’t as in-your-face as you may expect and makes for an excellent weekend read.
Robbins advocates heavily for the use of index funds, minimising fees, diversification and being cautious with who you trust for advice. But the book also has valuable insight for choosing individual investments and hunting for big winners like CSL Limited (ASX: CSL) and Cochlear Limited (ASX: COH). An important point is to look for asymmetric returns, where the upside is much bigger than the downside.
Tony Robbins exploits his big-name connections to dig into what we can learn from the some of the world’s best investors like Jack Bogle, Ray Dalio and Howard Marks. Yes, Buffett is in there too.
2. The Millionaire Mind – Thomas J. Stanley
The Millionaire Mind is based on a survey of 638 millionaires in the United States and argues heavily against the idea that you needed to be great at school to make money.
Instead, hard-work, creativity and people skills are common characteristics of millionaires in America, skills anyone can tackle. Wealth is not associated with good grades at school – if you struggled with school don’t let it hold you back from chasing financial freedom.
3. A Wealth of Common Sense: Why Simplicity Trumps Complexity in Any Investment Plan – Ben Carlson
This book does an incredible job of explaining why every investing maxim you’ve heard is not only valid, but essential to building wealth.
Carlson makes a great case that the best investing style is the one you can stick with and offers advice on understanding our own investment behaviour to reduce un-forced errors which can make you your own worst enemy.
Foolish takeaway
The reason I’ve chosen these three books is not because they contain ground-breaking secrets. It’s because they share the basic tools that anyone can use to build significant by keeping it simple, focusing on what works and having the patience to compound returns.
These books explain the details of how to do that and, importantly, how to navigate this path and stick with it when times are tough.
