Chapter 12. An Intro to Personal Investing
"Investment performance doesnât determine real-life returns; investor behavior does.â
Wall Street is filled with jargon and with folks like Jim Cramer shouting at the TV camera, telling you to âBuy! Buy! Buy!â and âSell! Sell! Sell!â But when it comes time to invest your money, itâs hard to know where to start. Stocks? Bonds? Commodities? And what are those things exactly, anyway?
Investing doesnât have to be complicated. In fact, the investing method covered in this chapterâa method recommended by Warren Buffett and scores of other investment prosâtakes just a few hours up front, and then a few hours a year thereafter. This method offers solid returns and you donât need a degree in finance to understand it.
As youâll learn in this chapter, smart investing is simple but not easyâhuman nature gets in the way. And before you invest a penny, you should understand some essential terms and concepts. Letâs get started.
Note
This chapter gives you the basic info you need to get started with investing. For a closer look at investing and to learn more great strategies, check out Bonnie Biaforeâs Personal Investing: The Missing Manual. As with all things financial, the more you know, the better.
Why Invest?
Chapter 5 taught you how to spend less on many kinds of things, and Chapter 6 suggested various ways to increase your income. Together, these two steps can lead to positive cash flow and a monthly surplus ...
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