You can build tremendous wealth by investing as early as possible.
But most new investors have questions about exactly how to get started. After all, we barely learn basic financial literacy in high school and college, let alone the essential financial planning and money management skills that lead to a stable and prosperous financial future.
The good news is this: research shows the key to building wealth isn’t so much about picking the right stocks as it is simply saving and investing more money over time.
Beating the market is hard, and you’re better off not even trying. In general, you’ll get the best results by steadily increasing the amount of money you transfer into your investment portfolio — from 1% this year to 2% next year, and so on.
But that doesn’t mean you won’t benefit from having a solid understanding of key personal finance concepts and strategies.
That’s because as your income grows and your life becomes more complex, you’ll be faced with an increasing number of increasingly complicated financial decisions — from how much house you can actually afford to how to allocate your money between different types of investment accounts (and everything in between).
The more knowledge you have about personal finance and investing, the better positioned you’ll be to make decisions that help you get what you want out of life.
With that in mind, I’ve put together a list of some of the best investing books for young adults. These books are among the most well-read and widely-acclaimed books about money and investing ever written. And even if these are the only financial books you ever read, you’ll still be miles ahead of most people.
Note: I’ve included a link to buy each book on Amazon; if you click and make a purchase, I’ll receive a small affiliate commission.
#1. I Will Teach You To Be Rich by Ramit Sethi
Ramit Sethi’s bestseller I Will Teach You To Be Rich is the best book I’ve come across for helping young adults determine their financial goals and priorities.
The book helps you identify the highest and best use of your money, noting that for many people that’s not investing in stocks.
For many people, the most important aspect of the book will be Ramit’s advice on putting your finances on autopilot — in other words, creating systems and processes that automate good financial behavior.
While there’s a time and a place for theoretical knowledge (such as a few of the books below) Ramit’s advice is very practical. The book is filled with step-by-step blueprints and processes on money management.
Related reading: How to get rich quick — the not-so-secret formula to build wealth.
#2. The Little Book of Common Sense Investing by John C. Bogle
Once young adults get their financial infrastructure in place, they can start to think about investing. John Bogle’s The Little Book of Common Sense Investing is the perfect book for learning the fundamentals.
Written by the late founder of Vanguard — who both invented and popularized the concept of index funds — Bogle describes how to implement a low-cost, tax-efficient investing approach anyone can use to achieve above-average returns.
What I’ve found true about index fund investing (which is a type of investing that mimics the returns of the market as a whole) is that you have to have an “I now get why this works so well” moment in order to truly appreciate the concept.
In turn, this allows you to stick with the strategy through thick and thin, understanding that it’ll almost certainly lead to better outcomes than a more active investing approach.
With his simplification of investing as a whole, as well as decades of great data, this “Aha!” moment is exactly what Bogle is able to provide.
There is one risk with this book: it may seem too simple. But study after study has shown this strategy will continue to outperform other investors.
And if that’s not enough, Warren Buffett included it on his recommended reading list.
Related reading: How to invest $50 in the stock market — a beginner’s guide to investing like a pro.
#3. The Millionaire Next Door by Thomas J. Stanley and William D. Danko
One of the hardest things to wrap your head around, especially for young adults, is this:
“Wealth is what you don’t spend.”
— Morgan Housel
We tend to think that the person driving the nicest car, living in the nicest house and buying the latest toys is the wealthiest person in town.
But what’s true about building wealth is that you can only accumulate it if you don’t spend it.
Written in 1996, The Millionaire Next Door takes a deep dive into the financial behavior of actual millionaires.
And there are many timeless lessons to be learned from this wealth of research — lessons that are particularly applicable when you’re at the beginning of your financial journey.
The most important? Most millionaires live well below their means.
The value in reading The Millionaire Next Door is similar to Bogle’s classic take on index fund investing: it’s not as much of a how-to guide as a book that will shift your mindset in a very positive way.
Related reading: The best personal finance books of all time. (The Millionaire Next Door is high on the list…)
#4. The Total Money Makeover by Dave Ramsey
If you’re struggling with debt or living paycheck to paycheck, Ramsey’s classic book The Total Money Makeover is the one you’ll want to read first.
From it, you’ll get a combination of very practical advice and the motivation necessary to jumpstart your debt payoff journey.
While there’s a lot to say about Ramsey, as I have here, at the end of the day he’s helped get tens of thousands of people out of debt. He has fine-tuned and perfected a message that works — one which has inspired those struggling the most with their finances to take action.
I read this book along with my wife soon after we got married, and it’s helped set a good foundation for how we go about managing money in our household.
Related reading: Dave Ramsey — his 10 best tips (and what to ignore).
#5. Your Money or Your Life by Vicki Robin and Joe Dominguez
A classic book that was updated in 2018, Your Money or Your Life has transformed the lives of many people.
The big idea of the book is that what makes us happiest in life isn’t more stuff or more wealth, but rather freedom of time.
Once this big idea is presented, the book lays out how to gain more time by achieving financial independence — i.e., the point at which passive income from your investments can cover your expenses.
#6. The Defining Decade by Meg Jay
Learning how to save money is a very big aspect of personal finance. But the other side of the coin is making money, and more specifically, finding fulfilling work that will reward you in the right way.
In The Defining Decade, clinical psychologist Meg Jay (who works with young adults) dives deep into the importance of building career capital, which she defines as the skills and connections that can help you build a bigger and brighter future.
Notably, Jay argues that you should pursue the career or job that will optimize your long-term career path (and not necessarily make you the most money today).
The big idea of the book is to create a vision for how you want your career and life to look in your 30s and 40s, and then to work backwards, understanding the steps you need to take today to get there.
Summary
There are so many important financial decisions for young adults — starting careers, taking on or paying down student loans, buying a house, marriage and working on building generational wealth that can be passed down to their kids and grandkids.
The books above can help provide a strong foundation for making not only good financial decisions, but also for good life decisions.
Have a book you read as a young adult that changed your financial life? Let me know in the comments!
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