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I'd like to get to get some theoretical knowledge about finance before I start to invest. My goal would be to eventually trade on the stock market.

What are some good books/resources for beginners that cover finance basics without getting too much into the details of investment?

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    Don't wait to start investing until you learn about it... go on Sharebuilder, pick a Vanguard fund, and start putting money in. Then, as you go through the resources others here suggest, you can move the money into investments that are more to your liking. But start right contributing right away. – Benjamin Chambers Jan 28 '11 at 16:13
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A couple of good books I enjoyed and found very understandable (regarding the stock market):

  • How to Buy Stocks by Louis Engel
  • One Up on Wall Street by Peter Lynch

As for investment information you can get lost for days in Investopedia. Start in the stock section and click around.

The tutorials here (free) give a good introduction to different financial topics.

Regarding theoretical knowledge: start with what you know well, like your career or your other interests. You'll get a running start that way.

Beyond that, it depends on what area of finance you want to start with. If it's your personal finances, I and a lot of other bloggers write about it all the time. Any of the bloggers on my blogroll (see my profile for the link) will give you a good perspective. If you want to go head first into planning your financial life, take a look at Brett Wilder's The Quiet Millionaire. It's very involved and thorough.

And, of course, ask questions here.

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If you're looking to invest using stocks and shares, I recommend you set up an account at something like Google Finance - it is free and user-friendly with lots of online help. You can set up some 'virtual cash' and put it into a number of stocks which it'll track for you. Review your progress and close some positions and open others as often as you want, but remember to enter some figure for the cost of the transaction, say $19.95 for a trade, to discourage you from high-frequency trading.

Take it as seriously as you want - if you stick to your original cash input, you'll see real results. If you throw in more virtual cash than you could in real life, it'll muddle the outcome.

After some evaluation period, say 3 months, look back at your progress.

You will learn a tremendous amount from doing this and don't need to have read any books or spent any money to get started.

Knowing which stocks to pick and when to buy or sell is much more subtle - see other answers for suggestions.

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I'd start with learning how to read a company's financial statement and their annual report. I would recommend reading the following:

  1. Financial Intelligence for Entrepreneurs by Karen Berman and Joe Knight, $9.99 for Kindle on Amazon. I'd probably start with this book. It's the longest of my three recommendations at 240 pages, but as stated in the preface the authors "have always tried to present financial material so that people who aren't familiar with the jargon can understand it."
  2. Keys to Reading an Annual Report, 4th ed. by George Friedlob an Ralph Welton, $8.99 in paperback on Amazon. This book is only 208 pages and covers 60 short keys each of which "offers an immediately practical explanation of some vital aspect of annual reporting."
  3. The Interpretation of Financial Statements: The Classic 1937 edition by Benjamin Graham. I'd read this last after reading one or both of the first two books. While it is short—144 pages—and written by the father of value investing, it is a little harder to understand due to its age.

All three books are cheap and readily available. If you really want to enhance your learning, grab a few annual reports from companies' websites to reference as you learn about different aspects of the financial statements.

  • I found a wonderful book on reading statements called "The Secret Language of Financial Reporting' by Mark E Haskins. It explains balance sheets, cash flow and income statements very clearly and actually enjoyably. – chrisfs Jan 30 '11 at 7:24
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I'm going to be a bit off topic and recommend 'The Only Investment Book You'll Ever Need' by Andrew Tobias. It doesn't start with describe the workings of the stock market. Instead, it starts with making sure you have a budget and have your basic finances in order BEFORE going into the stock market. This may not sound like what you are looking for, but it really is a valuable book to read, even if you think you are all set up in that department.

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