The best books on how to achieve your financial goals

As a loyal Princeton University alum, Jack Bogle often visited us and participated in discussions at the Bendheim Center for Finance, at our investment workshops, and at reunions, as well as lectures in my and others’ courses at Princeton. Jack had a remarkable ability to take a complicated problem and distill it into simple, intuitive, and understandable terms.

This highly readable book provides several topics worth studying for individuals interested in improving their wealth and risk management activities. It shows Jack’s philosophy and his direct attitude to managing money to minimize costs; it provides an excellent starting point for establishing sound investing steps.  

This book is an outgrowth of a course at Stanford University on applying quantitative methods to improve financial decision making. 

Professor Luenberger has a superior talent at writing clear and logical textbooks on optimization topics. He shows the benefits of employing nonlinear programs for several applications, including pricing complex options, and achieving rebalancing gains over time. In his telling, volatility provides an opportunity to improve performance. The linkage of optimization and investing is a special treat.

Ed Thorp is one of the most successful quantitative investors of all time. He proved the advantages of a systematic approach to take advantage of special edges that occur from time to time in markets and even games of chance – such as card counting in Blackjack. 

The underlying strategy is to maximize the expected log of capital – sometimes called the growth optimal or Kelly strategy. This strategy has multiple benefits but can suffer from limitations – as reviewed in this book – including the chances of large drawdown during shorter time periods.

Still, the growth optimal strategy provides an upper bound on pursuing leverage and taking excessive risks, providing a motivation for systematic risk controls and the enduring advantage of long-short strategies such as betting-against-beta.

There is much evidence that individuals often suffer from inertia when it comes to making significant decisions – including investment choices.

This engaging book by Professor Milkman at the Wharton School aims to create a climate in which “change” can be accomplished in an efficient, systematic, and relatively painless way. There are numerous examples of improvements by both individuals and organizations. This highly readable book is a must for anyone interested in creating and sustaining positive change habits, for example, to encourage increased savings and systematic investment policies.

Professor Milkman is one of our successful undergraduate alums and participates on the advisor committee of the ORFE Department at Princeton. She is a terrific teacher and writer. The lessons in this book are most appropriate for investors who are interested in establishing and maintaining sound habits to improve their investment performance.

Danny Kahneman is a colleague (now emeritus) at the Bendheim Center for Finance, Princeton University who has been instrumental in creating the field of behavioral economics and finance – along with Amos Tversky and others.

Professor Kahneman has written numerous and well-cited papers and books on the topic of systematic biases when rendering decisions under uncertainty.

This bestselling book provides a delightful survey of these tendencies and approaches for helping individuals overcome their biases. It behooves every investor to become familiar with these natural tendencies when implementing strategies to maximize the probabilities of attaining their investment goals.