The best books and articles on index investing

If you only read one

Our suggestion is to start with one of these two, depending on what you want to know.

• Why index funds? John C. Bogle, The Little Book of Common Sense Investing (2007). Short, and written by the founder of Vanguard.^[1]
• Why do people fail anyway? Morgan Housel, The Psychology of Money (2020). About behaviour, not about products.^[3]

Books for beginners

• The Little Book of Common Sense Investing – John C. Bogle (2007; 10th anniversary edition 2017, Wiley). Buy a low-cost fund that tracks a broad market index and hold it for the long term. Keeping costs down is how you get your share of the market’s return.^[1]
• A Random Walk Down Wall Street – Burton G. Malkiel (1973; 50th anniversary edition 2023, W. W. Norton). Prices largely follow a random walk, so investors cannot consistently beat the market averages. A low-cost broad index fund is the sensible choice.^[2]
• The Psychology of Money – Morgan Housel (2020, Harriman House). Doing well with money depends less on what you know than on how you behave. Nineteen short chapters.^[3]
• The Simple Path to Wealth – JL Collins (2016; revised and expanded edition 2025). Avoid debt, save a large share of your income and invest it in low-cost broad index funds.^[4]
• The Bogleheads’ Guide to Investing – Taylor Larimore, Mel Lindauer and Michael LeBoeuf (2nd edition 2014, Wiley). Start early, live below your means, diversify and hold low-cost index funds for the long term.^[10]

Books that go deeper

• The Four Pillars of Investing – William J. Bernstein (2002; 2nd edition 2023, McGraw Hill). Four things to master: the theory, the history, the psychology and the business of investing.^[5]
• Winning the Loser’s Game – Charles D. Ellis (first published 1985 as Investment Policy; 8th edition 2021, McGraw Hill). Trying to beat the market has become a "loser’s game". You win by setting a long-term policy, using index funds, keeping costs low and staying disciplined.^[6]
• Stocks for the Long Run – Jeremy J. Siegel (1994; 6th edition 2022, McGraw Hill). Over long holding periods, a diversified portfolio of stocks has given higher real returns than bonds.^[7]
• Thinking, Fast and Slow – Daniel Kahneman (2011). Not an investing book. It explains the fast, intuitive thinking that produces systematic errors in decisions, financial ones included.^[8]
• The Intelligent Investor – Benjamin Graham (1949; third edition with commentary by Jason Zweig 2024, Harper Business). The classic on value investing, which is about choosing individual securities, not index funds. Read it for its view of market swings ("Mr. Market") and the margin of safety.^[9]

Two books from Europe

• Investing Demystified – Lars Kroijer (2013; 2nd edition 2017, FT Publishing). Most investors have no edge over the market and do not need one: hold a broad world-equity tracker plus bonds and cash, set to your own risk level. The publisher lists the print edition as out of print.^[11]
• Smarter Investing – Tim Hale (2006; 4th edition 2023, FT Publishing). Written for UK investors. A small set of simple rules – a sensible mix of assets, low-cost diversified funds and the discipline to stay the course.^[12]

Short texts, free to read

• The Arithmetic of Active Management – William F. Sharpe (Financial Analysts Journal, 1991). Three pages. Before costs, the average actively managed dollar earns the same as the average passively managed dollar. After costs, it earns less.^[13]
• Warren Buffett’s letter to shareholders, 2013. His instruction for the money left to his wife: 10% in short-term government bonds and 90% in a very low-cost S&P 500 index fund (page 20).^[22]
• Warren Buffett’s letter to shareholders, 2017. The result of his ten-year bet against Protégé Partners: the S&P index fund gained 125.8%, while the five funds of hedge funds gained between 2.8% and 87.7%.^[23]
• Trading Is Hazardous to Your Wealth – Brad M. Barber and Terrance Odean (Journal of Finance, 2000). Among 66,465 US households from 1991 to 1996, those that traded most earned 11.4% a year while the market returned 17.9%.^[21]
• Do Stocks Outperform Treasury Bills? – Hendrik Bessembinder (Journal of Financial Economics, 2018). Four out of every seven US stocks since 1926 returned less over their lifetime than one-month Treasury bills. The best-performing 4% of companies account for the net gain of the whole market.^[20]
• SPIVA scorecards – S&P Dow Jones Indices. Published twice a year. They compare actively managed funds with their benchmark indices, and keep closed and merged funds in the comparison.^[24]

The research behind it

These are academic papers. The links go to the journals, where access may require a subscription or a library login.

• Portfolio Selection – Harry Markowitz (Journal of Finance, 1952). Choose a portfolio, not single securities, by weighing expected return against risk. This is what makes diversification central.^[17]
• Efficient Capital Markets: A Review of Theory and Empirical Work – Eugene F. Fama (Journal of Finance, 1970). Reviews the evidence on whether prices fully reflect available information, in three forms: weak, semi-strong and strong.^[16]
• Challenge to Judgment – Paul A. Samuelson (Journal of Portfolio Management, 1974). Three pages arguing that there is no solid evidence that portfolio managers systematically beat the market, and calling for a portfolio that simply tracks the S&P 500. John Bogle credited it as an inspiration for the first index fund.^[14][27]
• The Loser’s Game – Charles D. Ellis (Financial Analysts Journal, 1975). The article behind the book. It argues that the premise that professional managers can beat the market "appears to be false".^[15]
• On Persistence in Mutual Fund Performance – Mark M. Carhart (Journal of Finance, 1997). Common factors in stock returns and fund expenses almost completely explain why some funds keep doing well. The results do not support the existence of skilled fund managers.^[18]
• Luck versus Skill in the Cross-Section of Mutual Fund Returns – Eugene F. Fama and Kenneth R. French (Journal of Finance, 2010). Taken together, US equity funds hold something close to the market, so their costs pull returns below it. Few funds earn enough to cover their costs.^[19]

Several of these authors received the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel: Markowitz and Sharpe in 1990, together with Merton Miller, "for their pioneering work in the theory of financial economics",^[26] and Fama in 2013, together with Lars Peter Hansen and Robert Shiller, "for their empirical analysis of asset prices".^[25]