Forget picking hot stocks as a way to retire rich. A smart investment plan will gradually get you where you want to go.
This chapter will guide you through the major options and how to take advantage of all of them.
What can you expect to learn from this chapter:
Investing: a universe of options
Meet the big guns in your investment arsenal.
Relationship between risk and return
You’ll never summit Mt. Everest by staying toasty warm in your living room, nor will you meet your investing goals without living a little dangerously.
Stocks, bonds, cash, mutual funds
Sexier than CDs and able to leap rampaging inflation in a single bound, stocks, bonds and mutual funds put your cash to work.
Importance of asset allocation
It turns out that the way you spread your money around is as important as the investments it goes to.
Relatively new on the scene but already popular, target-date funds offer one-stop instant diversification.
Index funds vs. actively managed funds
Mutual funds that follow an index aren’t as flashy as funds run by superstar managers, but they’re also a lot cheaper.
Mutual funds vs. ETFs
What do get when you mix the best qualities of mutual funds and stocks? An exchange traded fund.
International investing/emerging markets
Limiting a portfolio to just one stock or one sector doesn’t make sense and neither does investing in companies in only one country.
Individual stocks/company stock
Investing in individual stocks can pay off for those willing to assume the risk. But they’re not without perils.