PERSONAL FINANCE books don’t exactly rank as the most sought-after holiday gifts. Still, if there’s a money nerd in your life—or someone who aspires to be one—below are 10 personal finance book recommendations.
Why Does the Stock Market Go Up? by Brian Feroldi. This book seeks to answer 60 of the most commonly asked questions in personal finance. In so doing, it demystifies many of the concepts, terms and acronyms that we often hear but may not fully understand. The book is presented in a simple Q&A format. Examples include:
In Pursuit of the Perfect Portfolio by Andrew Lo and Stephen Foerster. In the world of personal finance, people debate practically everything. In large part, that’s because there isn’t one “right” way to invest. There are lots of different—and equally reasonable—ways to make money. Lo and Foerster explore 10 of them.
After describing these strategies, the authors provide a framework to help choose among them. Also, each of the philosophies is presented through the lens of its creator, including Harry Markowitz, Robert Shiller and William Sharpe, among others. As a result, the book does double duty, also serving as a history lesson that walks readers through some of the most important financial ideas from the past 100 years.
Just Keep Buying by Nick Maggiulli. Just when it seems like everything that could possibly be written about investing has been written, along comes a book like Just Keep Buying. Maggiulli works as a data scientist at Ritholtz Wealth Management and also writes a blog called “Of Dollars and Data.”
As I’ve noted before, the investment world is driven all too often by stories, sayings and rules of thumb. Maggiulli’s mission is to replace those stories with data, providing investors with a more logical basis for making decisions. To that end, there’s a chart or illustration on virtually every page in this book. It’s both an entertaining and easy read. One of my favorite chapter titles: “Even God couldn’t beat dollar-cost averaging.”
Trillions by Robin Wigglesworth. These days, the name Vanguard is largely synonymous with index funds—and for good reason. For more than four decades, Vanguard Group’s founder, the late Jack Bogle, was easily the most passionate advocate for this approach to investing. But Vanguard didn’t actually invent the index fund.
In Trillions, Wigglesworth traces the earliest history of the index fund movement, starting with a fellow named Alfred Cowles, who in 1933 published a paper titled “Can Stock Market Forecasters Forecast?” Trillions also discusses the influence of index providers—companies like Standard & Poor’s and MSCI. Like the hidden hand controlling a marionette, index providers stay mostly in the background, but it’s important to understand their role. They have outsized influence, and their decisions—in my view—haven’t always been in investors’ best interest.
Inside Vanguard by Charles Ellis. The title of this book is mostly self-explanatory. What makes this history of Vanguard so interesting, though, is the perspective of the author. As author of Winning the Loser’s Game, Ellis was one of the earliest advocates for index fund investing and served on Vanguard’s board of directors for 10 years. Because of that, this book isn’t just about Jack Bogle. Though Ellis—an occasional writer for HumbleDollar—does have plenty to share about Bogle, the book discusses all of Vanguard’s leaders, including current CEO Tim Buckley, who took over in 2018. It also provides a good window into where the company is going. If you’re especially interested in Vanguard, this is the book for you.
How to Adult by Jake Cousineau. This book is a terrific resource for young people. It fills the gap between traditional investment books, which are useful only to people who already have money, and personal finance “101” books, which can often be too simplistic. Cousineau tackles many of the most important real world personal finance questions that young adults face. Among them:
How to Appeal for More College Financial Aid by Mark Kantrowitz. If you’ve ever applied for financial aid, you may have discovered what many parents have learned: that the process can be unforgiving. That’s where this book is helpful. Kantrowitz is widely recognized as the expert on college financing. He explains this fundamental point: While the aid formulas are fixed and inflexible, the inputs to those formulas are very much subject to judgment and to review.
As a result, a college’s first offer isn’t necessarily its best or final offer. The key is to know which arguments to make in appealing for more aid. Kantrowitz does exactly that, and then walks the reader through the process of writing an effective appeal letter. Most valuable: The book provides examples of both good and bad letters to help readers make the most persuasive argument.
Deep Work by Cal Newport. This is a book on personal productivity. You might find that to be out of place on a list of personal finance titles. But remember that saving and investing are just one part of the equation. Income is equally important, and there’s probably no better way to improve your financial situation than by increasing your income. Cal Newport is a computer science professor, but he has been writing about personal productivity since he was a PhD student at MIT 15 years ago.
There are, of course, lots of productivity books out there. Newport’s is different, though, because it addresses the unique challenge workers face today: being productive in the face of ever-present distractions from smartphones, social media and the internet in general. Newport offers six strategies for tuning out those distractions to get more done.
Split the Pie by Barry Nalebuff. This is a book on negotiation. It too might seem out of place on this list. Moreover, negotiation might not seem like a big part of daily life. But there are times when we all need to negotiate—when buying a home, for instance. Getting a good result in those small number of high-value situations can have an outsized effect on our finances.
Nalebuff starts by dismantling the traditional “split the difference” approach to negotiating and instead proposes an approach he calls “splitting the pie.” After explaining the theory, Nalebuff provides several case studies. Probably most interesting is his own personal story. As a co-founder of Honest Tea, Nalebuff negotiated the company’s 2008 sale to Coca-Cola. Another amusing story: how he outwitted a domain name squatter using this same split-the-pie strategy.
After the Death of Your Spouse by Mike Piper. While this isn’t the most uplifting topic, the subtitle explains its importance: “Next Financial Steps for Surviving Spouses.” That’s a position none of us looks forward to. But if it happens, this is the best guide to have on hand. It’s short—a little over 100 pages—and to the point, with clear explanations of what to do and how to do it. Mike Piper is a CPA and the author of several other books with titles such as Investing Made Simple, Social Security Made Simple and Can I Retire? I have several of these short volumes on my shelf and recommend them all. They provide just the right amount of information, and in a very readable format.