The True Cost of Happiness: The Real Story Behind Managing Your Money

Chapter 15. Investing for Your Future

Investing tends to shine a bright light on people's attitudes toward money. Some of my past clients come to mind:

• The volunteer fireman, a natural risk taker, who would have put all his money on the roulette wheel in Las Vegas if I'd told him to.

• The young, single professional who told me she never worried about her investments, but what she meant was they scared her so much that she couldn't bear to think about them.

• The corporate manager with a nest egg of $150,000 who wanted to withdraw $100,000 from it every year and wondered what kind of return he'd need. (The answer is about 66 ⅔ percent!)

All of them had past experiences that colored their attitudes toward money in general, and investing in particular.

It's Not Rocket Science

When someone talks to you about investing, does your mind just shut down? Are all the terms hopelessly confusing? Investing is not rocket science, though some of the articles you read might convince you of it. It's my opinion that many investment advisors try to confuse you, so that you won't ask too many questions. To make the right investing decisions you just need to know two things:

1. What's your time horizon?

2. What's your tolerance for risk?

And a few things about the world of investing:

• Types of investments.

• The importance of diversifying your portfolio.

• The kind of investments that work best for you.

The real truth is—the most complicated thing about investing is the vocabulary. So let's talk about some of the basic concepts ...