I am going to share with you 5 books that helped me gain financial knowledge and stop loosing money on trades. I will include a brief explanation and the results I have achieved after reading each book. I believe these books can help you achieve your goals, not only financial but also emotional.
Investing Psychology
by Tim Richards
You must know your internal enemies if you want to succeed as an investor: doubt, panic, fear, impatience, desire to copy others, greed, anger. If you can’t deal with them or negotiate with them, then you’ll definitely fall short and lose money. Inherent in all of us are emotions, but we can learn how to control them.
I have personally identified many of my bad behavioral habits that need to be adjusted. This book offered me a perspective from a psychologist on trading and investing. My goal was to prevent common mistakes, as I was often loosing money on trades.
The Compound Effect
by Darren Hardy
Hardy wrote a book about the importance of the tiny decisions we make every day. Should you eat another serving of dessert? Smoke another cigarette? Walk one more mile? Read a few more lines?
These actions seem so unimportant and impact nothing, but if they are repeated every day, they suddenly start growing into a system. The system which eventually may lead you to success… or to collapse.
After reading The Compound effect I have made quite a few changes in my day-to-date life:
I’ve started tracking the time I spend thinking, researching, and practicing skills (reading books/articles and learning new skills).
Became less dependent on instant gratification — check stock revenue, look at the number of subscribers in medium, fast food, snacks, coffee, etc.
Rearranged the backlog of the things I am working on in the near future
Atomic Habits
by James Clear
This book is based on the four laws of habit creation: obviousness, attraction, simplicity, and pleasure. By following the advice from this book you can not only achieve your goals, but you can also change your identity and system. According to the book goals are not the most important thing, by the way.
Personally, I brought out several thoughts from this book that seemed more vivid and important to me:
You should never skip an action twice. If you miss one day, try to get back in the habit as soon as possible.
Focus on your system (daily activities) rather than your goals if you want the best results.
“Don’t break the chain” is a powerful quote. If you stay in the chain of training, you will become stronger than you can imagine. Never stop creating, and your portfolio will be solid.
All about Asset Allocation
by Richard Ferri
Written for the person who is not very familiar with the stock market and does not have a great deal of experience in it, this book covers the basics of building a diversified investment portfolio and explains the proper asset allocation strategy for passive investors.
From this book I have learned about Portfolio Rebalancing. It is the most difficult element of portfolio management (psychologically) because you have to sell what goes up and buy what goes down. I have learned to do that once a year with my portfolio. Other key points that i took out from this book:
Spread investments over a variety of asset classes to reduce our overall portfolio risk.
Invest broadly in each class in order to reduce the risk of owning a single security
Reduce expenses, including taxes
Periodically restore the balance holdings
Thinking, Fast and Slow
by Daniel Kahneman
It is likely you have read a few different books on psychology. There are fundamental systematic works in each of the areas of knowledge, on the basis of which other authors write their own works or refer to them. This book, I believe, is one of them.
It turns out that people have two systems of thinking: slow (reasonable) and fast (automatic).Kahneman explains how these systems interact and determine human behavior quite easily and with examples (various psychological experiments).
Few quotes that I wrote down for myself, while reading this book:
There is nothing in life that is as important as you think it is when you think about it.
It is almost impossible for a human mind to return to the past, to take a previous position, knowing that future changes are coming. As soon as you build a new picture of the world or part of it, the old one is erased.
It is much easier to achieve perfection if you aren’t bored.
Conclusion
by me
Reading these books you will learn how to master the skill of profitable investing , how to wisely invest money, and how to receive passive income. You can find strategies and ways that will help you to develop a well thought out distribution of capital between financial instruments.
Hopefully, these will be as useful for you as they were for me.
Thank you for taking your time to read this article!