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The year was 2013 I had just graduated college and as a new Chemical Engineer working in tech. I was now making more money than I ever thought possible. Thanks to very good use of grants and scholarships in college I had decent savings that could cover any emergency expenses. However, I continued to save. It became almost an obsession watching the money grow, I felt so proud “look at me and all this money I have”.
Stop saving your money
Until one day I stumbled on an article talking about how saving will make you broke, how the bank is paying close to nothing, and how you are actually losing money to inflation every year.
I was shocked, after researching I found that this was true my bank was giving me 0.02% interest on my money but inflation was 1.5%, a loss of 1.48% on every dollar.
Although these numbers seem tiny I soon realized the bigger loss is in the opportunity cost. I asked myself:
What could I be doing with this money that not only prevented it from going down in value but made it grow?
You see that same dollar invested instead of saved could be MAKING you 6-8%. The problem was I didn’t know squat about investing I didn’t even know what the heck a stock even was. I was the first in my family to obtain a university education and I knew more than a handful of family who didn’t complete primary school, we didn’t “invest”.
So I continued saving but now every dollar I put in that bank account was filled with fear and doubt, a seed had been planted. I was mortified to invest and I knew the reason for this was fear. I didn’t understand how investing worked. It became my mission to teach myself about this secret world filled with potential. These are the 3 books on investing and personal finances to overcome the fear of the unknown regarding money.
#1. I Will Teach You To Be Rich by Ramit Sethi
THIS BOOK!!! I swear this book is my money bible. I love Ramit’s no BS approach, I love that he gives me exact steps, websites, and numbers to follow. He lists out specific action items to take in each chapter and how long they should take even down to the specific index funds he recommends buying and how much of them. This book is the exact blueprint I followed to actually start purchasing index funds and automatically investing in my future. Investing aside this book to date has already made me over $400 dollars just by teaching me about high yield savings accounts and bankrate.com. But if you need to know anything else about Ramit is his biggest motto is “you do not have to skip the lattes” Hello Starbucks! now that’s finances we can get on board with!
Get this book today and start living your rich life.
#2. The Intelligent Investor by Benjamin Graham
It has been said that Warren Buffett used this book to become one of the richest men in the world as it was written by his mentor, Benjamin Graham. Now I wont make this glamorous, this book is YAAAWN. Yes I’m sorry it IS boring. BUT this book showed me the work that is done by those who do invest for a living (stockbrokers, etc.). Understanding the extensive value analysis required to successfully pick stocks, I realized there was no way any one can find the next big hit with individual stocks. It made me realize the kind of investor I will be (passive vs active) and what it takes to be either. It outlined common terms used and what they really mean, even giving me formulas to calculate it if I wanted.
Lastly, it made me realize I will not be buying STOCKs, but most importantly why and how to purchase Index funds to reduce my risk and avoid having to read a single financial report or proxy statement.
“Once you build a permanent autopilot portfolio with index funds…you’ll be able to answer every market question with the most powerful response a defensive investor could ever have:
“I dont know and I dont care”
Benjamin Graham
#3. Total Money Makeover by Dave Ramsey
There is a lot I disagree with Mr. Ramsey but I will forever be grateful for the clarity he provided around an emergency fund and the clear cut steps that really began my financial journey. In this book he talks about various myths we have around money:
“Savings without a mission is garbage. Your money needs to work for you, not lie around you. “
Dave Ramsey
Exactly what I needed to hear. In another part of the book he goes on to talk about the scarcity in personal finance education we have in school and how it is our responsibility to learn for ourselves. From that point on I realized I could read and google enough to get to where my money COULD work for me. In hindsight I realize this was my first introduction to “live below your means”. I still remember my mom suggesting I get a new car when I graduated so that I could “look like an engineer” but that didn’t make any sense to me. Ramsey described a debt free life that sounded much better than looking like an engineer. So began a burning desire in me to eliminate all my debt, which I did in less than 12 months.
Bonus: best partner to books on investing, podcasts!
Dave Ramsey’s podcast was also very eye opening. I will preface by saying he holds very opposing views on things outside of money. However, listening to this podcast completely flipped the switch on the way I think about money. It provided me the mental strength to make small sacrifices now for stability in the future. It also helped me pay down over 70k in debt in two years, so that’s a plus.
Will these books on investing change your life?
With this small but popular library of books on investing you can jumpstart your financial journey for growth. But the power of the words in these books will only work through action. They say reading can change your life and I disagree, it is the ACTION the reading produces that will alter your future. You can read all these and many other books but unless you take action these books on investing will not magically create wealth for you.
Will you be reading any of these? let me know below!
If you would like to learn more about organizing your personal finances read our post about financial wellness.