TomorrowMakers

Here are some books that will help you understand the investing strategies

6 Books for women to learn the art of investing

Multiple studies have shown women are less aggressive than men when it comes to investing, but does that make them less savvy investors? Far from it; it only reflects common sense. Both private sector and PSU banks have had women chairpersons almost at the same time (from 2013-2017), be it Arundhati Bhattacharya at State Bank, Shikha Sharma at Axis Bank or Chanda Kochhar at ICICI Bank.

So don’t be hesitant about investing simply because you are a woman; if you want wealth, investing is a great way forward. However, you should read up on the subject as much as possible – not because you are a ‘timid’ woman but because you are an amateur; after all, it is your hard-earned money that you will be investing.

But here’s some advice: most globally celebrated books on investment are written keeping the US market in mind, so be careful what you absorb. For example, 529 Plan is a tax-advantaged US savings plan to encourage saving for future education costs, it has nothing to do with us Indians. Similarly, investing in index funds may work in the US, but here in India, it is the other way round. This means an acclaimed book on the subject (The Little Book of Common Sense Investing by Vanguard Group founder John Bogle) may not work for you. And if you don’t know what an index fund is, it’s exactly why you should brush up on your reading.

Moreover, while it is always advisable to take the help of a qualified financial advisor, some knowledge of investing strategies and terms will help you communicate better. So, for starters, here are some books you can browse through; they may not be written exclusively for women, but that hardly matters as wealth creation does not differentiate between genders.

1. The Intelligent Investor

This book was written in 1949 by a British-born American investor, economist, and professor Benjamin Graham, also widely known as the ‘father of value investing’. Some of the content may appear dated, especially when Graham talks of time-bound issues, but you should focus on core investment areas for his invaluable insight. Both John Bogle (who’s also written books on investment strategies) and legendary investor Warren Buffett admit they benefited from The Intelligent Investor as youngsters. And don’t be alarmed by ‘value investing’; it refers to buying undervalued stocks, which is an opportunity for investors to profit. It involves focusing on the business and its fundamentals rather than external influences (good news and bad news) that can – temporarily – impact scrip prices. Graham will tell you more about it.

2. The Warren Buffett Way

No, this book was not written by Warren Buffett but by an admirer with his permission. Author Robert G Hagstrom, an investment strategist himself, talks of Buffett’s ‘secrets’ – strategies and principles that saw the legend’s first investment of $100 in 1958 balloon to $8.3 billion by 1993 (Buffett is estimated to be worth $85 billion today). He did not interview Buffett but quoted from the annual reports of his company, Berkshire Hathaway, to outline his principles such as not worrying about upheavals in the stock market and instead taking a long-term approach, or looking at investment as buying a business, not a stock. The Warren Buffett Way will also give you an insight into how to assess a stock or business to find a good buy.

3. The Warren Buffett CEO

As you may have surmised from the title, the book is less about Warren Buffett the investor and more about Warren Buffett the manager. Written by Robert P Miles, an acclaimed expert on Buffett, the book throws light on how the CEOs for Berkshire’s many subsidiaries were selected and managed. Interestingly, the stories are told through the Berkshire managers. It also shows Buffett as a manager. So if you are looking at The Warren Buffett CEO as an investment manual, you will be disappointed. On the other hand, you will learn a lot about great companies and great management; isn’t that one way to study the fundamentals of a company? That in itself is a lesson you must keep in mind while beginning to invest.

4. Warren Buffett’s works

Probably more has been written on Warren Buffett than anyone else (except perhaps the US presidents collectively and the Dalai Lama), although he himself has never penned a book. However, Buffett has diligently written letters to Berkshire shareholders every year for decades; real and lucid, they offer unmatched insight into his company and the economy as a whole and have been compiled by scholar Lawrence A Cunningham into a book titled The Essays of Warren: Lessons for Corporate America. 

Cunningham has also compiled another volume named Gems from Warren Buffett: Wit and Wisdom from 34 Years of Letters to Shareholders. In his words, “It’s not an investment tutorial or biography of Mr Buffett. It’s a collection of 240 or so of his wittiest and most insightful thoughts ‘gems’) culled from 34 years of his letters.” It is also available online and on the Berkshire website.

5. Indian Mutual Funds Handbook

The books suggested until now have all been foreign publications by non-Indian authors; how about looking at the Indian markets? You could start with Indian Mutual Funds Handbook; as in Japan and the US, mutual funds are becoming an indispensable investment avenue for Indian investors. Beginners spend a lot of time surfing the Internet for information on mutual funds; this book is a one-stop halt for them. Authored by business consultant Sundar Sankaran, the book explains various topics such as the different types of mutual funds (equity funds, debt funds, balanced funds) and the benefits and disadvantages of investing in these, net asset values (NAV), cost of investing, and the associated risks.

6. All Your Worth: The Ultimate Lifetime Money Plan

So far the suggested reading list focused on investments and not personal finance, but without savings, how does one accumulate investible funds? So here’s a great book on the subject of budgeting, jointly written by US Senator Elizabeth Warren, who is also a bankruptcy expert, and her daughter Amelia Warren Tyagi, a business executive. The book All Your Worth: The Ultimate Lifetime Money Plan seeks to break down your monthly take-home salary in the 50-20-30 formula, whereby the authors allocate half your money to ‘essential living’, a fifth to financial goals (i.e. investments), and the rest to personal expenses. 

By ‘essentials’ the authors mean rent or mortgage, utilities (electricity bills, Internet, phone etc.), food, car insurance, daily commutes (train/bus fares or petrol if you use your car), and minimum repayments on loans including credit card bills. ‘Financial goals’, which have been allocated 20%, comprise investments, savings, and repayments above the minimum amounts. ‘Personal spending’ is good old splurging: dining out, holidays, fancy clothes etc. fall into this category. However, to some people, 30% on goofing off could seem excessive; you may want to up your investment funds and lower this. But more than the allocations, it is the principle that is important here.

Further suggestions

There isn't enough space to list all the great books on finance and investment, so here are 15 more suggestions starting with Ramit Sethi, son of Indian immigrants to the US and a darling of the millennials:

  • I Will Teach You to Be Rich by Ramit Sethi
  • On My Own Two Feet: A Modern Girl’s Guide to Personal Finance, by Manisha Thakor and Sharon Kedar
  • Sacred Success: A Course in Financial Miracles by Barbara Stanny
  • Prince Charming Isn’t Coming: How Women Get Smart About Money by Barbara Stanny
  • Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence by Vicki Robin and Joe Dominguez
  • Million Dollar Women: The Essential Guide for Female Entrepreneurs Who Want to Go Big by Julia Pimsleur
  • The Total Money Makeover by Dave Ramsey
  • Worth It: Your Life, Your Money, Your Terms by Amanda Steinberg
  • The Feminine Mistake: Are We Giving Up Too Much? by Leslie Bennetts
  • Spent: Break the Buying Obsession and Discover Your True Worth by Sally Palaian
  • The Debt Escape Plan by Beverly Harzog
  • The Art of Money by Bari Tessler
  • Nudge by Richard Thaler and Cass Sunstein
  • Common Sense on Mutual Funds by John Bogle
  • How to Make a Fortune Through Mutual Funds by Ashu Dutt and Arshiya Dutt
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Last words

It is sometimes advisable to read reviews of books, or you may be disappointed and even given advice unsuitable for your circumstances, risk horizons, and capabilities. One highly cited book is Rich Dad, Poor Dad by Robert T Kiyosaki, a millionaire who himself had to file for bankruptcy once. Celebrities such as Will Smith and Oprah Winfrey swear by it, while businessman and author John Reed says the book “contains much wrong advice, much bad advice, some dangerous advice, and virtually no good advice”. 

So, to repeat what has been said earlier, it is always advisable to seek professional advice – and read up on the side.