“The most contrarian thing of all is not to oppose the crowd but to think for yourself.” — Peter Thiel
And how does someone with an interest in investing develop their own thought-process instead of solely relying on mimicking the moves of others?
The answer is simple.
Reading and gathering knowledge.
The more you read, the more you learn, and your perspective widens. Reading books and online/ newspaper columns by seasoned investors and VCs (venture capitalists) with successful track records can be a valuable tool for individuals looking to become better investors. The knowledge and insights gained from reading about investing can provide a foundation for making informed decisions, the technical know-how required to think outside the box, the confidence to take risks, and the wisdom to avoid common mistakes.
Let’s look at 5 key benefits of reading books and columns for people looking to become investors:
1) Understanding Investing Concepts and Terminology
Reading books can help investors gain a deeper understanding of investment concepts such as diversification, risk management, and portfolio theory. This can help you make informed decisions, minimise risk occurring from lack of knowledge, and increase your chances of success.
2) Learning From Successful Investors
Making your own mistakes is the learning curve you might need, however, it is wise to avoid mistakes made by others in the past. Reading books written by successful investors gives you the privilege to learn from their mistakes and setbacks.
You also get the opportunity to broaden your horizons through their decades of experiences and valuable insights. Investors can really delve deep into how successful investors think and approach investing, as well as learn from their successes and mistakes.
3) Developing A Well-Rounded Investment Strategy
Reading books and going through a wide variety of approaches adopted by seasoned professionals can help new investors develop a well-rounded investment strategy that takes into account both their financial goals and risk tolerance. This can help them create a balanced portfolio that meets their investing needs and matches their risk appetite.
4) Staying Up-To-Date On Market Trends And Changes
The investing world is constantly evolving, and reading columns and pieces of advice by noteworthy individuals with proven track records can help you stay informed about the latest market trends and changes. It gives them the room to be dynamic and change their investment strategy and adjust their portfolios according to historical data, current trends and forecasts for the future.
5) Improving Critical Thinking Skills
Reading books about investing requires active engagement and critical thinking. This can help new investors develop the ability to think critically about investment opportunities, recognise patterns and possess the theoretical understanding needed to practice and thrive in the market.
An Important Note
When reading books about investing, it’s important to consider the author’s background and perspective. Books written by academic economists may focus on theory and data, while books written by successful investors may be more practical and focused on personal experiences.
Furthermore, investors should be cautious of books and people that promise quick wealth or guarantee returns. Investing is a long-term strategy that requires patience and discipline, and there are no shortcuts to success. Anyone offering you the promise of making you a millionaire overnight is trying to dupe you. If something sounds too good to be true, it probably is.
Book Recommendations
Widely appreciated and useful books such as “The Intelligent Investor” by Benjamin Graham, “The Little Book of Common Sense Investing” by John C. Bogle, and “The Psychology of Money” by Morgan Housel are some of the many highly recommended materials for those who are just starting on their journey to become a successful investor
