You may want to learn about investing but you’re not sure what to read or which advice to trust.
You’re not alone. And money expert Clark Howard is here to help. In addition to listening to his financial advice on his podcast and reading Clark.com, you may have a big question: What should you read about investing?
That’s what a listener of the Clark Howard Podcast recently asked.
What Should I Read To Learn About Investing?
What should I read to learn more about investing? That’s what a listener asked on the April 10 podcast episode.
Asked Matthew in Georgia: “My wife and I made a pact that we would take a break from social media. Thinking about how I will fill that time, I decided to try and learn more about [investing]. I get that you advise investing in a Roth IRA, but when it comes down to it, there is a lot of intimidating decisions regarding “target this” or “index fund that,” which I don’t fully understand.
“So while I am forgoing social media, I wanted to occupy that time with some book(s) and wanted to see if you might have suggestions.”
Think of a 401(k) account or an IRA as a house, Clark told Matthew. Traditional vs. Roth is a stylistic decision.
Once you decide on a house, you need to furnish it. That’s the equivalent of choosing a target date fund, a few broad index funds or other investment choices.
The lingo and terminology may make it sound more complicated than it actually is.
Clark’s Recommended Reading About Investing
As far as reading about investing? Start with subscribing to the free newsletter from Humble Dollar, edited by Jonathan Clements, Clark says.
“Jonathan Clements is a brilliant financial writer who writes in language that we can all grasp. You’ll really be able to add understandable meat to the bones of how investing works,” Clark says.
“Also, Fidelity, Schwab and Vanguard all have education centers that explain how various investment accounts and funds work. A lot of it is Investing 201. And if any terminology confuses you, go to Investopedia.com.”
My Personal Recommendations, Including Two Books
I agree with Clark’s advice.
I’ve spent a good amount of time reading Investopedia and it’s probably my personal favorite in terms of online resources. It even allows you to play around with a stock market simulator using pretend (read: fake) money. That way you can make and track investments in real time, which I’ve found to be a great learning tool.
Clark says that Investopedia has great educational tools to teach kids of various ages how investing works. But I think it’s at least as powerful for adults as well.
Clark didn’t mention a book in his answer. But if you really want to stay offline and read a book, I have two personal recommendations. That’s “A Random Walk Down Wall Street” by Burton G. Malkiel and “The Intelligent Investor” by Benjamin Graham.
Both books take a long-term, diversified, rational, retirement-focused look at investing that I think goes hand in hand with Clark’s point of view.
Clark’s Typical Investing Advice
Investing doesn’t need to be complicated. In fact, for most people, putting all your investable dollars into a target date retirement fund inside a 401(k) account is an excellent choice.
Clark calls it the “easy button” of investing. Just pick the year closest to when you think you’ll retire and put your money into that fund.
The further you are from retirement, the more risk it’s appropriate for you to take. (No, that doesn’t mean you should put all your money into some penny stock or unheard-of cryptocurrency. We’re talking about diversified investment in the stock market.) And the closer you get to retirement, the more you want to diversify into bonds and perhaps cash.
A target date fund automatically adjusts your portfolio allocation into something that’s appropriate for you with respect to how close you are to retiring.
“I’ve had a lot of people say, ‘Well, I’m putting part of my money in the target retirement fund, and then I’m putting some of it over here in this and part of it over there in that,’” Clark says.
“The idea of the target retirement fund is it’s a one-stop shop for the year closest to when you expect to retire and that’s what you put all your money in.”
Want To Start Investing For Retirement? Here’s What Clark Says To Do First
From there, you can either contribute to your 401(k) up to the maximum you’re allowed to do this year or fund an IRA (yes, Clark prefers a Roth IRA).
If your overall annual 401(k) plan costs 0.50% or less, go ahead and prioritize contributing to your 401(k) until you reach your maximum contribution limit, Clark says.
We’ve also written a guide on how to save and invest the Clark Howard way.
Investing is fun and exciting. There’s practically an infinite amount of reading and listening material online, in bookstores and in podcasts.
However, it’s important not to get too swept up in the money you can make through speculating, taking excess risks and overly complicating your choices. There’s a well-worn path to wealth that involves spending less than you make and consistently putting money into the stock market every paycheck.