While financial advisors take courses or certifications to become adept at offering financial advice to their clients, many also learn important lessons from great books on the topic, often passing on that financial literacy to their clients.
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Financial literacy is, unfortunately, an area of weakness for many Americans. According to GOBankingRates’ 2024 Financial Literacy Survey, over one-third, 36%, of Americans are not up to speed on their financial literacy.
To help round out your financial education, these experts offer some of the books that they feel will help you build wealth, and why.
According to Chad Gammon, a financial planner with Arnold & Mote Wealth Management, “The Millionaire Next Door” demystifies wealth. “It shows that many millionaires aren’t flashy but are disciplined in their financial habits,” Gammon said.
It also provides actionable advice, he said, and practical tips that anyone can apply to build and sustain wealth. “One of the core messages is to spend less than you earn. This allows for consistent saving and investing, which is crucial for building wealth over time.”
Additionally, Gammon said, the book emphasizes the importance of investing in areas you are familiar with and understand, rather than chasing the latest trends or “hot” investments.
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Joseph Carpenito, a financial planner with the Materetsky Financial Group is a “SmartVestor Pro” — a financial advisor recommended by the Dave Ramsey organization for prospective clients seeking a new financial advisor relationship. He admitted that his answer is a bit biased, but truthful.
“The reason I always recommend this book is that it helps the reader build a foundational understanding of wealth-building,” he explained. “After reading this book, one can expect to have an overall baseline of financial literacy, as Dave emphasizes fundamental practices in various areas that together encompass a solid financial plan.”
The most important takeaway, he said, is Dave’s view on paying off debt through a method often referred to as the debt snowball. “This approach focuses less on pure mathematics and more on the psychological aspect of paying off debt, creating little wins in your mind along the way.”
“I believe everyone should read this book if they struggle with basic financial planning concepts,” Carpenito said.
Alec Kellzi, certified public accountant (CPA) at at IRS Extension Online, recommended “The Simple Path to Wealth” because, he said, “[It] cuts through the complexities that often shroud personal finance advice.”
He said, “Collins advocates a straightforward approach centered on living below your means, minimizing fees that erode returns and taking advantage of the immense wealth-building power of consistent investing in low-cost index funds over decades.”
He feels Collins’ philosophy boils down to avoiding get-rich-quick gimmicks and embracing the simple math of wealth.
A couple of other key takeaways include:
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Minor adjustments in savings rates can have a profound impact on long-term wealth accumulation, thanks to compound interest.
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It’s important to avoid the seduction of underperformance by steering clear of actively managed funds and embracing the simplicity and lower costs of total stock market index funds for steady wealth growth.
Justin Godur, CEO and founder of Capital Max, recommended the classic “The Intelligent Investor,” saying that it has not only shaped his financial strategies but also has been a cornerstone recommendation to his clients.
“What sets ‘The Intelligent Investor’ apart is its focus on value investing — a methodology that emphasizes buying undervalued stocks that represent a bargain compared to their intrinsic worth,” he said.
Two tips he’s taken away are:
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The allegory of “Mr. Market” to depict the stock market’s volatility. This has taught him and his clients to view market fluctuations as opportunities rather than threats. For instance, when the market is down, it might be a good time to buy quality stocks at a discount, rather than panic-selling.
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The margin of safety is another principle he found useful that involves ensuring there is a significant difference between the price paid for a stock and its estimated true value. This buffer protects against unforeseen downturns and market irregularities.
Ben Klesinger, founder and CEO at Reliant Insurance Group and Helping Hand Financial, enjoys this popular book that continues to sell decades after its first publication date.
“The book emphasizes the importance of financial literacy and investing in assets that generate passive income,” he said. “One valuable strategy I derived from this book is acquiring income-producing properties — a concept deeply intertwined with my real estate and finance background. Implementing this strategy has been transformative for clients looking to create a steady stream of passive income.”
Whether you read these books or find others on your own, increasing your own financial literacy can go a long way toward building wealth.
Survey methodology: GOBankingRates surveyed 1,008 Americans aged 18 and older from across the country between March 26 and April 1, 2024, asking twenty different questions: (1) Has a lack of financial literacy caused you to struggle with your money?; (2) Which current money hot topic is most confusing to you?; (3) Which money expert do you trust most for teaching you the basics of money?; (4) Since the pandemic started in 2020, do you think you have become smarter about your money?; (5) What poor money habits did you learn during your childhood? (select all that apply); (6) What poor money habits did you develop in your early adult years? (select all that apply); (7) What poor money habits have had an impact on your marriage/partnership? (select all that apply); (8) What poor money habits do you worry about passing on to your kids? (select all that apply); (9) What aspect of buying a car do you find most challenging/confusing?; (10) What aspect of buying a house do you find most challenging/confusing?; (11) What aspect of paying off debt do you find most challenging/confusing?; (12) What concerns you most about planning for retirement?; (13) What best describes your feelings about investing?; (14) How much have you saved in the last year?; (15) How much debt have you acquired in the last year, not including mortgage debt?; (16) Do you currently bring in enough money to cover your bills?; (17) How much do you think about your financial status?; (18) What best describes your feelings about managing your money?; (19) What is your monthly car payment?; and (20) How much income do you think is needed for a middle-class family to live comfortably?. GOBankingRates used PureSpectrum’s survey platform to conduct the poll.
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This article originally appeared on GOBankingRates.com: 5 Books Financial Advisors Recommend That Will Help You Build Wealth
