Recommended Personal Finance Books
Over the last couple years I’ve really enjoyed reading personal finance books. I had a list on Amazon.ca and recently updated it and thought I’d share it here as a post. The following are my top 25 personal finance books, anything from investing and portfolio allocation to taxes and saving money.
The RESP Book by Mike Holman
Mike Holman, the blogger behind Money Smarts Blog, has put together a great resource in The RESP Book: The Complete Guide to Registered Education Savings Plans for Canadians. The book covers all the RESP account details, withdrawal rules and eligibility requirements. Mike even covers the provincial programs available in Alberta (ACES) and Quebec (QESI) and the additional grants for lower income families.
Ultimately, you can get an RESP without knowing every single rule and you’ll still get your CESG without any issue. But the most useful chapters are at the end and deal with how to get your RESP account started and some basic investing information for RESP accounts. In these chapters, Holman discusses the types of investments you could choose from (including my choice, the TD e-Series Funds) and how you go about getting your RESP setup.
I recommend The RESP Book to any new parents that want to help contribute to their child’s post-secondary education but are not sure where to start or how it all works. Mike Holman’s book provides everything you need to know about RESPs in an easy to read 115 pages.
Make Sure It’s Deductible by Evelyn Jacks
Make Sure It’s Deductible points out business expenses that you can write off, including how the home office portion of your housing expenses may also be deductible. Since the rules on what you can claim leave some room for interpretation, some expenses you claim may be a matter of creativity in how you organize your business and personal life. An earlier edition of this book was very helpful to me when I started this blog, realizing that I could claim for my home office and expenses such as domains, hosting, a computer and the business portion of my internet bill.
While at times the book may sound like it advocates starting a business simply for the tax advantages, Evelyn is careful to stress that you must be able to prove that you are actually conducting a business with a reasonable expectation to make a profit in the future.
Evelyn Jacks wrote the book in an easy to read style, often using examples of a typical business owner and referencing both CRA bulletins and precedents set by the courts. I recommend Make Sure It’s Deductible to anyone that either has a small business or has been considering starting one.
Master Your Money Management by Jim Ruta
For Master Your Money Management, The Knowledge Bureau used the expertise of Jim Ruta, who began as a financial advisor in 1977 and is now coaching financial advisors as president of Expert Institute.In it, Jim points out what to look for in an advisor, ensuring that they specialize in you by asking the right questions, know their material and speak in plain language.The chapter on monitoring your advisor and your results includes a lengthy advisor scorecard, with simple yes or no questions to help you decide if your advisor is helping you achieve the results you are hoping for. If they are not cutting it, or if some of the listed danger signs sound familiar, there is also advice on how to fire your financial advisor.
I recommend Master Your Money Management to those that realize they need the help of an advisor, but want to be part of the process. By working with your financial advisors, and not simply handing over your money, you will both be able to work towards the best result for your unique situation.
Master Your Taxes by Evelyn Jacks
While Make Sure It’s Deductible helps readers know about the tax advantages of owning your own business, Master Your Taxes: How to maximize your after-tax returns can benefit anyone by looking at the individual and family tax savings opportunities.The book covers topics like incoming splitting within your family and using the government plans to deffer tax or avoid it entirely. It also covers tackling your tax return and how to ensure your DON’T get a tax refund each year.
I think Master Your Taxes would be a great read for any Canadian since it can open your eyes to the tax system and what you can do to increase the after-tax money available to you.
Money Smart Mom by Sarah Deveau
While Money Smart Mom covers maternity clothes and nesting, it also applies to fathers-to-be who have the same concerns as the moms that want to know about topics like how much a child costs and the government programs available to you.
I highly recommend this book for any Canadians thinking of having their first child and for those with a baby already on the way or recently born. Money Smart Mom covers practically everything you should know but provides it in an easy to read style and packs it into only about 200 pages!
Smart Tips For Estate Planning by Marvin Toy and Jim Yih
Smart Tips For Estate Planning first covers some common terminology and discusses the three main documents in an estate plan; the will, enduring power of attorney and health care directive. Then they dive into leaving money to your spouse and children, the three very important people you’ll need to choose as part of your estate planning, and how to deal with specific assets such as jointly owned homes and bank accounts, as well as a cottage or other real estate holdings.
I recommend Smart Tips For Estate Planning for any Canadians that don’t have a proper estate plan. While the book is only meant to serve as an introduction, it does a great job of getting you to think of all the puzzle pieces that complete your estate planning picture.
The Secret Language of Money by David Krueger and John David Mann
This is as much a psychology book as it is about personal finance. I found this made for an interesting read, since behavioral finance plays a major role in how we make our money decisions.
Much like what I wrote about the psychological effects of risk, many people will make mistakes similar to others. Because of this, you are likely to find your own money habits reflected in a few of the stories in this book. While you may recognize a familiar trait, I’m not completely sold that most are able to fight their natural tendencies.
For example, Dr. Krueger found that most people would say that they would need to make roughly double their current income to feel financially secure. This would happen whether they were currently making $50,000 and wanted $100,000 or if they were making $500,000 and wanted $1 million. While I find it very interesting to read this result, I can’t see it changing my view about how much income I feel I would need.
The Secret Language of Money is a great psychology book and a nice change of pace from most personal finance books. However, this might not be the book for those looking to change how they deal with their personal finances.
Benjamin Graham On Investing by Rodney G. Klein and David M. Darst
Benjamin Graham On Investing offers an interesting look at the events leading up to the stock market crash of 1929. Even more interesting is how some of theses events mirror our recent history.
While his later books would have completely formed and detailed ideas, these magazine articles are more succinct, but also lacking in the clarity that Graham would have after the market crash and into the Great Depression.
This book would not be the best choice for those looking to learn about investing, for that Benjamin Graham’s The Intelligent Investor who be more worthwhile. However, for those familiar with Benjamin Graham’s writing, this is a great read to gain further insight into the creation of value investing theory.
Ideas for Success, Wealth & Happiness by Jim Yih
Ideas for Success, Wealth & Happiness: Great Lessons from Great Minds is an inspiring journey into some of the greatest minds of the ages. Jim Yih has compiled, along with his own thoughts, some amazing quotes from a number of luminaries. Reading this book will uplift and inspire you — and perhaps even give you the insight you need to improve your life and your finances.
Jim’s book breaks the quotes down into sections: Success, wealth, happiness, retirement, investing, planning, tax, and learning are all represented. The book is organized so that you can find inspiration for your life quickly and easily. Many of the quotes are not only insightful, but actionable as well.
The Wealthy Barber by David Chilton
A must read for any Canadian. Simple advice written like a novel teaches you the basics of financial planning.
The Four Pillars of Investing by William Bernstein
Before The Four Pillars of Investing, William Bernstein wrote The Intelligent Asset Allocator. This previous book, by his own admission, was “comprehensible only to those with a considerable level of mathematical training and skill.” This book conveys the same message as the first, but is easier to read and understand the concepts.
Right near the top of my list of recommended personal finance books, The Four Pillars of Investing should be read by anyone that is investing on their own. And for those that are using a commission based financial advisor, this book can open your eyes to the inherent conflict of interest they have and you might also decide to take over your own investments.
The Little Book of Common Sense Investing by John C. Bogle
A compelling argument for following the market through index funds, from the founder of Vanguard.
Smart Couples Finish Rich by David Bach
A worthwhile read that encourages couples to discuss their finances.
The Richest Man in Babylon by George S. Clason
Originally written in the 1920’s, this book is written as a story to get people interested in their personal finances.
Random Walk Down Wall Street by Burton Malkiel
An investment guide that will show you how to build your portfolio.
The Millionaire Next Door by Thomas J. Stanley
An interesting book that shows how the majority of millionaires attain their wealth.
The Intelligent Investor by Benjamin Graham
While not an easy read, a must for anyone serious about investing, by the mentor to Warren Buffett.
The Warren Buffett Way by Robert G. Hagstrom
A great introduction to value investing.
Stocks for the Long Run by Jeremy J. Siegel
Stocks For The Long Run, is a great book that as the name suggests, promotes the superior return of stocks over an extended period of time. The very first chart in the book shows the nominal returns of stocks, bonds, bills and gold from 1802 to 2006. While obviously we can’t count on a 200 year investment horizon, the graph is very convincing. Stocks outperform all other indexes by a wide margin, even The Great Depression is only a slight dip on a upward trend.
When I got to the second chapter on risk, return and portfolio allocation, I realized that this book is very similar to another great title that I’ve reviewed previously, The Four Pillars of Investing. While these books do have a similar take on the same subject, both are worth the read if you’re investing on your own.
Chapter 9 was one of my favorites, where Siegel points out the importance of certain criteria when selecting stocks, including the first two things I look at; price-to-earnings (P-E) ratio and dividend yield. While he cautions that no strategy will always outperform the market, these are great metrics on which to judge the value of a stock.
There are two chapters, that while important reads, I found were slightly contradictory to the theme of the book. The first discusses timing business cycles and another looks into calendar anomalies such as the January Effect.
If you’ve already read The Four Pillars of Investing, Stocks For the Long Run is a worthwhile read as it will reinforce the same historical lessons and the value of a diverse portfolio of index funds, held for the long term.
The Automatic Millionaire by David Bach
Takes the usual “pay yourself first” strategy and adds the extra benefit of setting up your savings to happen automatically.
397 Ways To Save Money by Kerry K. Taylor
Hundreds of ways to save money from the blogger behind squawkfox.com.
Triumph of the Optimists by Elroy Dimson
A wealth of investment data that aids in understanding stock valuations.
Your Money Or Your Life by Vicki Robin
This book will change how you think about spending your money.
The Investment Zoo by Stephen A. Jarislowsky
Goes against the conventional wisdom and makes a case for holding stocks throughout your retirement.
10,001 Ways to Live Large on a Small Budget by The Writers of Wise Bread
Thousands of budget-stretching tips from the writers at wisebread.com.
The Naked Investor by John Reynolds
Criticizes the investment industry for prioritizing their own wealth building over that of their clients.
All About Asset Allocation by Richard Ferri
As the title suggests, this book shows you everything you need to know about having an asset allocation strategy.
Spend Smarter Save Bigger by Margot Bai
An excellent book that covers the major personal finance topics that matter to Canadians.
The Future for Investors by Jeremy J. Siegel
Uses history to show what investors should look for to receive a better return.
Winning the Loser’s Game by Charles Ellis
Winning The Losers Game is another book that stresses the benefits of index investing over a long time horizon.The title is based off a theory from Dr. Simon Ramo that expert tennis players win matches while amateur tennis players lose matches. While the game is the same, it’s played differently. While one game is determined by the winner the other is determined by the loser. The majority of institutional investors do not beat the market, because of this Ellis considers it to be a loser’s game. To win, you just need to not make the same mistakes that the others do.
One of my favorite chapters in the book shows how you can predict the market roughly, not accurately. Be this he means you can look at price/earnings ratios or dividend yields and realize when they are either too high or too low and act accordingly before they revert to their mean value.
In this recently released fifth edition, Ellis has comments on the events of 2008 and early 2009. He points out that losses relating to the Bernie Madoff Ponzi scheme or Iceland’s financial collapse were permanent but the market crash in 2008 is temporary and will recover. Only those that sell during the crash miss any chance for recovery and make their loss permanent.
While I personally prefer the detail provided by previously reviewed books like The Four Pillars of Investing and Stocks for the Long Run, Winning The Loser’s Game might be a better for those who want an easier read and do not want to delve into as many charts and graphs.
Unconventional Success by David F. Swensen
Praises low-cost index funds and ETFs over high MER mutual funds that reduce your wealth building opportunities.
Tax Freedom Zone by Tim Cestnick
Easy to read book about tax saving strategies available to Canadians.
The Pension Puzzle by Bruce Cohen
A book about pensions for Canadians, including CCP, OAS and employer pensions.
Your Money and Your Brain by Jason Zweig
Explains how psychology effects our financial decisions.
Secrets of a Stingy Scoundrel by Phil Villarreal
Secrets of a Stingy Scoundrel: 100 Dirty Little Money-Grubbing Secretsdoes not containthe usual suggestions in frugality.First off, I think this book is hilarious, but it might not be for anyone that’s easily offended. Some of the tips I could see doing, or have done, like clipping coupons, avoiding ATM fees or even going to Costco for a lunch of free samples.
There are other ideas in the book that you probably shouldn’t do, but made me laugh, including stealing office supplies from work, sneaking into sporting events and replacing your own scratched DVDs with a brand new one from Netflix.
Secrets of a Stingy Scoundrel is an easy read, with most of the tips coming in at about two pages. Phil’s writing is cynical and sarcastic, which I guess I should have expected coming from a movie critic. I’d recommend this book to anyone who can enjoy the humor without taking it too seriously.