Personal Finance: Want to invest? Read all about it

There are plenty of books that will promise to make you rich quick. But which give genuinely valuable investment advice?

Readers often ask me where they can go to find a simple introduction to the principles of successful investment - one that gives an all-round picture of the objectives of managing your money, in language that is both concise and simple.

The answer is that it is hard to find such a single-volume book. There are now quite a few excellent books about active stock-picking (which, in truth, is just a small subset of the overall subject of investment) and one or two good ones about financial planning, but nothing that gives what, in days long gone, might have been called something like The Intelligent Person's Guide to Overall Investment Policy.

Jim Slater's Investment Made Easy is a typically clear and concise read, though again with a slant towards his own speciality of stock-picking. Bernice Cohen's books are also well planned and presented. (I must declare an interest in that both these books are published by my own publishers, Orion.) I am also an admirer of Stephen Lofthouse's book, Fixing Your Finances (published by John Wiley), which is nothing if not comprehensive and clear-headed. FT Pitmans also publishes a series of excellent but quite weighty books on many different aspects of investment.

The one book that I think imparts the most wisdom per page is, however, perhaps inevitably, written by an American, Charles Ellis. If you held me up against a wall and asked me which single book has most to teach the average investor about the business of managing money, I would have to say that it is his book on investment policy. The first edition appeared many years ago but has just been revised for the third time and reissued with new material, under the title of Winning the Loser's Game.

In the best sense of the word, the book is a classic and, while directed primarily at a US audience, will reward anyone in this country just as well. The book is published by McGraw-Hill and can be found in serious bookshops (if you have difficulty finding it, contact the specialist investment publisher, Harriman House, in Petersfield, on 01730 233870, who should be able to find and post you a copy).

What makes Winning the Loser's Game so good? Well, part of it, I think, has to do with the fact that the book was originally written for professional investment managers and their employers, such as pension-fund trustees.

Mr Ellis has been an investment consultant for many years, and this book is a serious attempt to sum up the state of the world's knowledge about the practice of successful investment management for those for whom managing money is a mainstream business.

It therefore feels unimpulsive to promise its readers that reading the book will make them rich quickly - something which most publishers seem to assume is essential if you are to sell any kind of book about money to the retail market.

Yet the reality, as Charles Ellis demonstrates superbly, is that most of investment is not about making money quickly. It is about making sensible decisions that will preserve and grow your wealth in real terms over the medium and longer term.

The skill and art of it is as much about avoiding making mistakes or irrational or inconsistent decisions as it is about finding that wonder stock or money-making scheme that is going to transform your fortunes overnight. (If your investment strategy consists of putting all your money on the National Lottery, and doing nothing else, then this book is probably not for you.)

The book is not long - it runs to barely 140 pages of text, and is liberally sprinkled with illustrations - but it covers all the main aspects of investment in a marvellously concise and clear-cut way. It includes advice on how to set realistic investment objectives, how to think about risk and when and where to seek advice.

If anyone has any doubts about the wisdom of choosing an index fund for at least part of their portfolio, I defy them to retain those doubts after reading Ellis's masterly discussion of the real nature of stock- market risk. His demonstration of why investment has become a "loser's game" (a world in which you can prosper only by taking advantage of other people's mistakes, not through your own efforts) reads as powerfully today as it did when it was first published more than 25 years ago.

The key to success is knowing your own personality and shaping your investment decisions to match your needs and temperament. This, he reminds us, is a responsibility that only we ourselves can take on. It cannot be delegated.

But nor need it be an onerous task so long as we arm ourselves with a basic understanding of how and why the investment world works. This is something which, I am glad to see, the Government and the Financial Services Authority are both now trying to spread through various educational initiatives.

If they can do half as well at explaining what the eternal verities of investment are as Mr Ellis has done in his book, I will be very surprised.

Jonathan Davis is the author of `Money Makers - the Stockmarket Secrets of Britain's Top Ten Professional Investment Managers', published by Orion Business Books. It is now available in paperback, price pounds 9.99

`Winning the Loser's Game', normally costing pounds 19.99, is available to readers of The Independent at a special discount price of pounds 14.99 (plus pounds 2 p&p) from Harriman House. Call 01730 233870 or fax 01730 233880 for Visa, Mastercard or Amex orders. Or write to Harriman House Ltd, 43 Chapel Street, Petersfield GU32 3DY. Quote the code number (9397) or the title and mention that you want to take up the Independent Offer. Alternatively, go to the following website: http://www. global-investor.com/bookshop and type 9397 in the search box

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Life and Style
ebookNow available in paperback
ebooks
ebookPart of The Independent’s new eBook series The Great Composers
Arts and Entertainment
Frank Turner performing at 93 Feet East
musicReview: 93 Feet East, London
News
Toronto tops the charts across a range of indexes
news

World cities ranked in terms of safety, food security and 'liveability'

Extras
indybest
Voices
A mother and her child
voices
Voices
The veterans Mark Hayward, Hugh Thompson and Sean Staines (back) with Grayson Perry (front left) and Evgeny Lebedev
charity appealMaverick artist Grayson Perry backs our campaign
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs General

    Recruitment Genius: Digital Content Manager

    £26000 - £31000 per annum: Recruitment Genius: A Digital Content Manager is re...

    Recruitment Genius: Senior .Net Application Developer

    £40000 - £60000 per annum: Recruitment Genius: This is a fantastic opportunity...

    Recruitment Genius: Office Administrator

    £14000 - £17500 per annum: Recruitment Genius: The successful applicant will b...

    Recruitment Genius: Continuous Improvement Manager

    £41500 per annum: Recruitment Genius: This company is going through a period o...

    Day In a Page

    Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

    Isis hostage crisis

    The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
    Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

    The runaway buccaneers and the ship full of gold

    Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
    Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

    Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

    Maverick artist Grayson Perry backs our campaign
    Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

    Assisted Dying Bill: 'I want control of my life'

    This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
    Move over, kale - cabbage is the new rising star

    Cabbage is king again

    Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
    11 best winter skin treats

    Give your moisturiser a helping hand: 11 best winter skin treats

    Get an extra boost of nourishment from one of these hard-working products
    Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

    Paul Scholes column

    The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
    Frank Warren column: No cigar, but pots of money: here come the Cubans

    Frank Warren's Ringside

    No cigar, but pots of money: here come the Cubans
    Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

    Isis stands strong as its numerous enemies fail to find a common plan to defeat it

    The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
    Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

    Virtual reality: Seeing is believing

    Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
    Homeless Veterans appeal: MP says Coalition ‘not doing enough’

    Homeless Veterans appeal

    MP says Coalition ‘not doing enough’ to help
    Larry David, Steve Coogan and other comedians share stories of depression in new documentary

    Comedians share stories of depression

    The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
    Has The Archers lost the plot with it's spicy storylines?

    Has The Archers lost the plot?

    A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
    English Heritage adds 14 post-war office buildings to its protected lists

    14 office buildings added to protected lists

    Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
    Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

    Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

    Scientists unearthed the cranial fragments from Manot Cave in West Galilee