At my discussion area here we help people use the internet to learn about investing as we take your questions. I am often asked "what books should I read to learn to invest?"
Investing is a life long process where one needs to keep up with new developments even if you have a fully passive approach (i.e. dollar cost average into a few index funds at work with 401k money.) You should devote at least an hour a month to the task just to review your mutual fund statements and total up how you are doing.
After this is taken care of, you can read the books below to get an idea about the key areas where you can spend more time to try and enhance your individual portfolio return (often through better stock or mutual fund selection.)
"What are they talking about?"
When I first wanted to learn about investing, I found that the field was full of unique words and phrases that I didn't understand. Understanding words and phrases like "book-value", "bottom line", "profit margin" and "annualized rate of return" are key to understanding and comparing investments.
Wall Street Words : An Essential A to Z Guide for Today's Investor by David Logan Scott
Synopsis: Wall Street Words features nearly 4,000 terms including hundreds of new entries that accurately and clearly explain the language of the world of finance and investment. Contemporary case histories offer real-world applications of investment concepts, how to manage money in today's market, and more.
This is a great, inexpensive reference book to help you understand investing and follow along with our discussions here at Suite101.com.
Mutual Funds
I recommend that all investors start out with a good, no load, low expense mutual fund as their first investment. At the top of my list of favorite mutual funds are "index funds". Some of the best index funds are found at Vanguard.
John Bogle who wrote "Common Sense on Mutual Funds" founded Vanguard to give investors his vision of how to make money for themselves and not for the investment advisors. Bogle is one of the most respected persons in the industry and his ideas are a MUST READ for all that want to invest.
Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor
by John C. Bogle
Hardcover - 468 pages (April 1999)
Review from Amazon: He begins with primer-like essays on investment strategy, championing mutual funds for their inherent investment value, and then grinding each point home with a bevy of graphs, charts, entertaining anecdotes, and common sense. He repeatedly stresses time as a basic tenet for investing, listing these simple rules: "Time is your friend"; "Impulse is your enemy"; "Stay the course." And then he proceeds to blast fund managers, who have become marketers rather than managers.
The trade-off between the profits that accrue to fund shareholders and the profits that accrue to the fund management companies seems subject to no effective independent watchdog or balance wheel, despite the fact that the shareholders actually own the mutual funds.
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