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Beginning Investing

Book Description

For a beginner, investing can be an overwhelming and intimidating topic, and finding which investment options are right for you is an almost impossible task. Idiot's Guides: Beginning Investing helps the new investor understand all of the most common investment options, how to choose the right ones for your needs and goals, and how to increase your chances for success. This book covers:

- Self-assessment tools that help readers understand their own personal risk tolerance and choose the investment strategies that fit their needs.
- Basics on the each investment type, including stocks, bonds, mutual funds, real estate, and more, with primers on each investment type, the basics on how to invest with each option, and how to improve chances for success.
- The dos and don'ts of real estate investing, including what to pursue, and what to avoid when it comes to real estate.
- Simple strategies for investing in the bond market
- Tips and tricks for investing in stocks, including which types of stocks to avoid and which types to buy
- How to protect assets and invest using time-tested and sensible techniques
- Setting goals and investing for college, retirement, luxury purchases, and other common financial goals
- Managing investments and personal portfolios for both short term and long term gains

Table of Contents

  1. Cover
  2. Title Page
  3. Copyright Page
  4. Contents
  5. Introduction
  6. Part 1: Laying Your Investing Foundation
    1. 1 How Much Can You Invest?
      1. What Can You Invest?
        1. Establishing Your Emergency Fund
        2. Paying Off Debt
        3. A Word on Mortgages
        4. Methods for Paying Off Debt
      2. Assessing Your Spending Needs
        1. Looking at the Percentages
        2. Identifying Your Fixed Expenses
      3. Ways to Cut Fixed Expenses
        1. Reduce Your Housing Costs
        2. Request New Insurance Quotes
        3. Other Money-Saving Tips
      4. Planning for Irregular Expenses
      5. Building Your Savings
        1. Your Workplace Retirement Plan
        2. IRAs and SEP-IRAs
        3. Goal-Based Savings Accounts
      6. Identifying Your Discretionary Expenses
    2. 2 Defining Your Investment Goals
      1. Getting by Versus Getting Ahead
      2. What Types of Investments Interest You?
      3. What Are Your Short- and Medium-Term Goals?
        1. Determining What You Need
        2. Changing Careers or Starting a Business
        3. Where to Put Your Money
      4. What Are Your Long-Term Goals?
        1. Amassing Enough to Retire
        2. Achieving a Specific Net Worth
        3. Having Enough to Leave an Inheritance
      5. What Is Your Definition of Wealthy?
    3. 3 Assessing Your Timeline
      1. Investing in Your 20s
        1. Invest in Yourself
        2. Delay Consumption
        3. Invest in Your Employer’s Retirement Plan
        4. Invest in Addition to Your Retirement Plan
      2. Investing in Your 30s and 40s
      3. Investing in Your 50s and 60s
      4. Plotting a Time Schedule for Your Unique Goals
        1. Planning for College Costs
        2. Retirement Planning with a Sudden Windfall
        3. Retirement Planning with a Guaranteed Income Supplement
        4. Long-Term Investing for a Young Worker
        5. Setting Goals, Meeting Deadlines, Adapting a Plan
    4. 4 How Much Risk Can You Take?
      1. Types of Risk
        1. Investment-Related Risk
        2. Lost Opportunity Cost
        3. Inflation Risk
        4. Market (Systemic or Systematic) Risk
        5. Business Risk
        6. Political Risk
        7. Interest Rate Risk
      2. Ways to Measure Your Personal Risk Tolerance
      3. Choosing an Investment Mix to Match Your Risk Tolerance
        1. Stocks, Risk, and You
        2. Bonds
        3. Mutual Funds
        4. Target Date, Balanced, Fund of Funds, and Life Strategy Funds
    5. 5 Protecting Yourself with Insurance
      1. Protecting Your Home and Your Possessions
        1. Auto Insurance
        2. Homeowner’s or Renter’s Insurance
        3. Liability Coverage
      2. Protecting Your Income
        1. Disability Insurance
        2. Life Insurance
      3. Protecting Your Health
        1. Health
        2. FSAs and HSAs
        3. Long-Term-Care Insurance
    6. 6 Finding Money to Invest
      1. An Overview of Workplace Retirement Plans
        1. 401(k)s, 403(b)s, and 457 Plans
        2. How Much Should You Contribute?
        3. The Drawbacks
      2. Supplementing Your Workplace Plan with IRAs
        1. Traditional IRA
        2. Roth IRA
        3. SEP-IRA
        4. Brokerage Accounts
      3. Dealing with Past Employers’ Plans
      4. Other Investing Considerations
      5. Augmenting Your Investment Money Through Your Own Efforts
        1. Selling Your Junk
        2. Side Income and Part-Time Gigs
        3. Money from Windfalls
        4. Gifts, Rebates, Refunds, and Other Relatively Small Amounts
        5. Settlements
        6. Inheritances
    7. 7 Where to Save Your Money While Planning
      1. Saving in Your Mattress
      2. The Necessity of Banks
        1. Checking Accounts
        2. Savings Accounts
        3. Investment-Building Accounts
        4. Internet Banks
        5. Credit Unions
      3. Mutual Fund Companies and Brokerage Houses
      4. Other Places to Store Cash
        1. Short-Term Bond Mutual Funds
        2. Stable Value Funds
  7. Part 2: Planning Your Investment Strategy
    1. 8 Balancing Risk by Diversifying
      1. Stocks and Bonds: The Basic Asset Allocation Decision
        1. Stocks: Risk Versus Reward
        2. The Pros and Cons of Bonds
        3. Combining Stocks and Bonds Based on Your Age
      2. Further Diversifying Your Assets
        1. Balanced Funds
        2. Life Strategy Funds
        3. Target Date Funds
      3. Choosing Individual Investment Types
        1. Diversifying Your Investments
        2. A Simple Allocation
        3. Diversifying Your Stocks
      4. Market Timing
        1. Can You Time the Market?
        2. Rebalancing
    2. 9 Getting Professional Advice
      1. But First, a Word on the Media
      2. Different Types of Financial Advisers
        1. Brokers
        2. Fee-Based Advisers
        3. Fee-Only Planners and Advisers
        4. Robo-Advisers
        5. Insurance Agents
        6. Accountants, CPAs, Attorneys, and Other Financial Service Providers
  8. Part 3: Where to Invest
    1. 10 Investing in Mutual Funds
      1. What Are Mutual Funds and How Do You Buy Them?
        1. Purchasing a Mutual Fund
        2. Full-Service Companies and Discount Brokers
        3. Load or No-Load?
        4. Choosing a Company
        5. How Many Funds?
        6. Researching a Mutual Fund
        7. The Decision Process
        8. Analyzing the Return
        9. What’s in the Portfolio?
      2. Other Types of Funds
        1. Exchange-Traded Funds
        2. Closed-End Funds and Unit Investment Trusts
    2. 11 Investing in Stocks
      1. Deciding Whether to Invest in Stocks
      2. A Word on Diversification
      3. Choosing a Stock-Purchasing Strategy
        1. The Crazy Methods
        2. Technical Analysis
        3. Fundamental Analysis
    3. 12 Investing in Bonds
      1. Should You Buy Bonds?
      2. Bond Basics
        1. Bond Quality
        2. Other Bond Risks
      3. Buying Bonds
        1. Characteristics of Corporate and Government Bonds
        2. Types of Bonds
    4. 13 Choosing Alternative Investments
      1. Concerns Common to Alternative Investments
        1. The Nontraditional Markets
        2. The Cost of Selling
        3. Taxation Issues
        4. Usage and Ownership Costs
      2. Collecting Collectibles
      3. Gold, Precious Metals, and Gems
        1. Gold as a Disaster Hedge
        2. Gold Coins and Bullion
        3. Gold-Based Investment Shares
      4. Natural Resources and Commodities
      5. Real Estate Investment Trusts and Master Limited Partnerships
        1. REITs
        2. MLPs
    5. 14 Investing in Real Estate
      1. Buying a Home as an Investment
        1. Your Primary Residence
        2. Buy the Worst House on the Best Block
      2. Understand the Real Estate Business
      3. Get an Inspection
      4. Be Canny with Improvements
      5. Don’t Neglect Maintenance
      6. What About Staging?
      7. Have an Exit Timeline in Mind
      8. What’s a Good Profit?
      9. Other Considerations
      10. Purchasing Small Multi-Unit Properties
      11. Apartment Buildings, Offices, and Other Real Estate Investments
  9. Part 4: Investing for Specific Goals
    1. 15 Investing for Retirement
      1. Estimating How Much You Need
      2. Employer Plans
      3. Guaranteed Income
        1. Social Security
        2. Pensions
        3. SPIAs
      4. Realigning Your Portfolio to Produce Retirement Income
      5. Reevaluating Your Risk Tolerance in Retirement
      6. What If It’s Just Not Enough?
    2. 16 Investing for a New Home
      1. How Much Money Will You Need?
        1. Deciding How Much to Invest
        2. Sources of Housing Loans
      2. Lending Institutions
      3. The Bank of Mom and Dad
      4. What Investments Should You Make to Build Funds?
      5. Protecting Your Investment
        1. The Importance of Regular Maintenance
        2. Making Improvements That Increase Value
      6. Selling with a Real Estate Agent Versus Going It Alone
        1. On Your Own
        2. Using an Agent
      7. Deciding When and If to Sell
      8. Should You Pay Off Your Home?
    3. 17 Investing for College
      1. Investigating the Costs of College
      2. Setting a Reasonable Savings Goal and Payment Expectations
        1. Will You Have to Pay Sticker Price?
        2. Applying for Need-Based Aid
        3. Public Colleges and Universities
        4. Private Colleges
      3. The Importance of Saving
      4. Places to Save for College
        1. Workplace Retirement Programs
        2. Traditional IRAs
        3. Roth IRAs
        4. 529 Plans
        5. Coverdell Plans
        6. U.S. Savings Bonds (Series EE or I)
        7. Loans
    4. 18 Investing for Luxury Purchases
      1. Planning for Your Luxury Purchase
      2. Deciding If a Luxury Purchase Is Worthwhile
        1. Developing a Decision Scale
        2. The Yardstick-of-Luxury System
      3. Strategic Ways to Buy Luxuries
      4. “If I Had More Money I Would …”
        1. Travel More for Less
        2. Getting That Car
        3. Vacation Home Strategies
    5. 19 Managing Windfalls and Sudden Life Changes
      1. Understanding Your Spending Power
      2. Protecting Yourself
        1. Assembling Your Team
        2. Choosing Between a Lump Sum or Structured Settlement
      3. Thinking Through Your Spending Priorities
        1. Should You Pay Off Debt?
        2. Should You Pay Off Someone Else’s Debt?
        3. What to Do About the House
      4. Changes to Other Plans
        1. Saving for College
        2. (Early) Retirement
        3. Death of a Spouse
        4. Special Concerns in a Divorce
  10. Part 5: When to Buy and Sell Investments
    1. 20 Good Reasons to Buy and Sell
      1. Bad Reasons to Hold on to an Investment
        1. Waiting Until It Gets Back to the Price You Paid
        2. It’s Gone Up; Maybe It Will Go Up More
        3. “I Can’t Sell Because I’ll Have to Pay Taxes”
      2. Good Reasons to Sell an Investment
        1. You Need the Money
        2. The Investment Isn’t Working Out
        3. It’s Time to Overhaul the Portfolio
        4. A Better Opportunity Has Arisen
    2. 21 Recovering from Mistakes and Bad Markets
      1. Stock Market Disasters
        1. Start Buying
        2. If You’re Retired or Close to Retirement
      2. Personal Disasters
        1. Take Advantage of the Safety Net
        2. Illness
        3. Veterans
        4. Seniors
        5. Bankruptcy
      3. Changing What You Can
        1. Discretionary Spending
        2. Cutting Fixed Expenses
        3. Improving Your Earnings
        4. Delaying Social Security Benefits
    3. 22 Becoming a More Advanced Investor
      1. Knowing Whether the Source Is Reliable
        1. Bias
        2. Magazines
        3. Gurus and Other Personalities
      2. Choose Your Preferred Method of Learning
      3. Find a Group
        1. BetterInvesting
        2. American Association of Individual Investors (AAII)
      4. Exploit Online Resources of Media and Websites
        1. Morningstar
        2. Seeking Alpha
      5. Codify Your Own Path to Investment Selection
  11. Appendixes
    1. A Glossary
    2. B Resources