Financial education is an often overlooked area in the lives of many individuals. Lots of people grow up without ever receiving any formal education in the financial arena. The educational system even neglects to train students so that they can become financially responsible adults. One of the best ways to learn more about financial topics is by reading personal finance books. Personal finance books can teach you a lot about money management, investing, and other personal finance topics. Today, I would like to take a look at my all time favorite financial book and the worst financial book that I have ever read.
Best Financial Book
My favorite book on finance hands down is, The Intelligent Investor by Benjamin Graham. Graham is one of the greatest investors that ever lived and shares his strategy for selecting investment opportunities. Graham is widely regarded as the father of value investing and has mentored numerous successful investors. Warren Buffett calls, The Intelligent Investor, “by far the best book ever written on investing”.
Graham gives specific criteria on what to look for when investing and explains how to properly value a stock. This is not a get rich quick book. Graham’s primary focus is the preservation of capital and secondarily to earn an adequate return. He introduces investors to a fictional character known as Mr. Market. Everyday Mr. Market knocks at your door and makes you an offer for your investments. The offer should only be accepted when you feel that your investment has reached its true value.
Graham breaks investors into two distinct classes. There is the enterprising investor and the defensive investor. The enterprising investor is willing to take on additional risk whereas the defensive investor is much more risk averse. The book teaches how to take advantage of market inefficiencies and buy securities that are trading below their true value.
I like the fact that Graham gives investors specific criteria to look for when investing. He explains the importance of ignoring the day to day irrational behavior of the stock market and focusing on the fundamentals of investing. The Intelligent Investor was published in 1949 and is still a classic to this day.
Worst Financial Book
The worst financial book that I have ever read is Rich Dad, Poor Dad by Robert Kiyosaki. The book was disappointing because I had heard so many good things about the book from a couple of friends. This book is severely overhyped.
My problem with the book is that the author does not give any practical actionable advice. The book did not contain any information that would help you implement the author’s ideas. It’s easy to say buy income generating assets but how do you do that? Where do you go to buy these assets and what particular assets should you buy? How do you value these assets to know whether you are getting a good deal or not?
I prefer to read books where the author actually accrued wealth by following his own advice. Kiyosaki appears to have gotten rich selling books, tapes, courses, board games, business plans, and workshops. He should be selling books on multilevel marketing and not financial self-help.
Kiyosaki’s information is dangerous because he deemphasizes the importance of hard work and education. You are not going to become a multimillionaire working a few hours a week unless you win the lottery. I would be curious to know how many people have actually gotten rich following his advice. If I followed all of the advice that Kiyosaki gives in his book; I would be a whole lot poorer today.
Have you read either of these books? What was your opinion of them?
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My Favorite Financial Book And The Worst Financial Book That I Have Ever Read is a post from: Buy Like Buffett
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