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