How to Learn Finance from scratch

Motivation

Finance and personal economics is one of those basic subjects which all of us living in today’s world should know about, but one which is mostly skipped by most schools.

Today I will go over how to get started with learning basic level Finance.

My background

I’ll explain my background to give you an idea on what my knowledge was when I started and what it is now. I studied Physics, Chemistry, Maths and Economics (very introductory level) in high school and then computer science in college. So I had absolutely no background in finance. Most of the content here doesn’t require any prerequisites other than being able to read and understand, active internet connection and motivation.

Don’t read this if:

1. You want to become an expert in finance or take it up professionally.
2. You want to get some investment advice. This post is not about that at all and I am not qualified to give any professional advice.
3. You’re already learning it and want to increase your knowledge. This post is only a basic introduction.

Read this if:

1. You have absolutely no background in finance and don’t know how to get started.
2. You want to learn how to read simple financial statements of companies to form your own opinions on those companies.
3. You want to learn the path of better financial decision making for yourself concerning various choices such as buying a house vs renting, what range to spend on buying a car, whether to invest at all or not.

Starter Steps:

1. The first book I will recommend to read has more to do with convincing you on why this is important. “Rich dad poor dad” and “cashflow quadrant”
2. “Learn how to read financial statements”
3. Investopedia’s basic financial ratios and their meaning
4. Analyze actual financial statements and check if you arrive at the same conclusions as some of the reporters writing an article on the company after their earnings reports are announced. This is a way of self verifying your understanding.
5. Intelligent investor: One of the most amazing and holistic books on investing in the stock market. Also maybe complicated to understand, I would suggest buy the version which has the commentary by Jason Zweig. The way to read this book:read a chapter, try to make notes on what you understood, read the commentary of the chapter, compare your notes maybe even go back to the chapter. Also note most chapters are independent, so feel free to skip over and come back when it makes sense.
6. Common sense book of investing:
7. Optional:
8. If you prefer to watch videos and learn, Gautam Kaul’s lessons on foundations of finance.
9. Optional: Dig deeper into a field such as valuation of companies, or how to estimate how much a company is worth by just the financial statements, Corporate Finance, finance related to a company rather than individual, learning about specific markets in more detail such as emerging markets, specific geographies, etc.
10. Other: Liar’s poker, irrational exuberance, Principles by Ray Dalio

Last Tips

One nice way of learning something to form your own opinions is by reading two opposing viewpoints about the same subject. This way you can hear both sides and form an unbiased opinion on the same.

As always, if you’re reading this post and disagree with something or have a better suggestion, please comment below and increase the knolwedge of the world at large.