2nd Edition by Eric Tyson, MBA; Brendan Bradley; Kiana Danial; Steven R. Gormley; Robert S. Griswold, CRE; Matt Krantz; Paul Mladjenovic; and Russell Wild, MBA
Investing All-in-One For Dummies®, 2nd Edition
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Library of Congress Control Number: 2022933655
ISBN 978-1-119-87303-7 (pbk); ISBN 978-1-119-87304-4 (ebk); ISBN 978-1-119-87305-1 (ebk)
Book 6: Investing Online
CHAPTER 1: Getting Ready for Online Investing
2: Getting Your Device Ready for Online Investing
CHAPTER 3: Connecting with an Online Broker
CHAPTER 4: Entering and Executing Trades
Book 7:
Getting
Book 8: Investing in Real Estate
Common Real Estate Investments
CHAPTER 3: Identifying Sources of Capital
Location,
Book 9: Investing in Trends
CHAPTER 1: Taking the Nickel Tour of Cannabis Investing
CHAPTER 2: The Political, Cultural, and Regulatory Landscape of Cannabis Investing
CHAPTER 3: What Is a Cryptocurrency?
CHAPTER 4: How Cryptocurrencies Work
CHAPTER 5: Entering the World of ESG Investing
Preferring
Getting Up to Speed with Fundamental Analysis
9: INVESTING IN TRENDS
Introduction
Successful investing takes diligent work and knowledge, like any other meaningful pursuit. Investing All-in-One For Dummies presents basic investing topics — such as building an emergency fund, determining your financial goals, and choosing a broker (if you’re not a do-it-yourself investor) — but also introduces some slightly more advanced subjects, like fundamental analysis, that can enhance your investing strategies. In between, you find the basics of investing in stocks, bonds, mutual funds, exchange-traded funds, real estate, and trends like cryptocurrencies.
This book can help you avoid the mistakes others have made and can point you in the right direction as you build your portfolio. Explore the pages of this book and find the topics that most interest you within the world of investing.
In all the years that we’ve counseled and educated investors, the single difference between success and failure, between gain and loss, has boiled down to two words: applied knowledge. Take this book as your first step in a lifelong learning adventure.
About This Book
To build wealth, you don’t need a fancy college or graduate-school degree, and you don’t need a rich parent, biological or adopted! What you do need is a desire to read and practice the many simple yet powerful lessons and strategies in this book.
This book is designed to give you a realistic approach to making money. It provides sound, practical investing strategies and insights that have been markettested and proven from more than 100 years of stock market history. You’re not expected to read it from cover to cover. Instead, this book is designed as a reference tool. Feel free to read the chapters in whatever order you choose. You can flip to the sections and chapters that interest you or those that include topics that you need to know more about.
Investing intelligently isn’t rocket science. By all means, if you’re dealing with a complicated, atypical issue, get quality professional help. Hiring someone is dangerous if you’re financially challenged. If you do decide to hire someone, you’ll be much better prepared if you educate yourself. Doing so can also help you focus your questions and assess that person’s competence.
Foolish Assumptions
No matter your skill or experience level with investing, you can get something out of Investing All-in-One For Dummies. We assume that some readers haven’t invested in anything other than baseball cards or Pez dispensers and have no clue of where to even start. If that describes you, the first part of the book is custom-made for you and takes extra care to step through all the key points in as much plain English as possible. (When we have no choice but to use investing jargon, we tell you what it means.) But we also assume that more advanced investors may pick this book up, too, looking to discover a few things. The book takes on more advanced topics as you progress through it.
Here are some assumptions we made about you as we crafted this book:
» You have about seven cents in your checking account and you’re working to pay off credit card debt or student loans (or both), but you know you need to start saving for the future.
» You’re debt-free, and you’d like to start a portfolio.
» You may have some investments, but you’re looking to develop a full-scale investment plan.
» You’re tired of feeling overwhelmed by your investing choices and stressed out by the ever-changing economic and investing landscape, and you want to get more comfortable with your investment selections.
» You want to evaluate your investment advisor’s advice.
» You have a company-sponsored investment plan, like a 401(k), and you’re looking to make some decisions or roll it over into a new plan.
If one or more of these descriptions sound familiar, you’ve come to the right place.
Icons Used in This Book
Throughout this book, icons help guide you through the maze of suggestions, solutions, and cautions. We hope the following images make your journey through investment strategies smoother.
We think the name says it all, but this icon indicates something really, really important — don’t you forget it!
Skip it or read it; the choice is yours. You’ll fill your head with more stuff that may prove valuable as you expand your investing know-how, but you risk overdosing on stuff that you may not need right away.
This icon denotes strategies that can enable you to build wealth faster and leap over tall obstacles in a single bound. (Okay, maybe just the first one.)
This icon indicates treacherous territory that has made mincemeat out of lesser mortals who have come before you. Skip this point at your own peril.
Beyond the Book
In addition to the material in the print or e-book you’re reading right now, this product comes with a free access-anywhere Cheat Sheet that can set you on the path to successful investing. To get this Cheat Sheet, simply go to www.dummies. com and enter “Investing All-in-One For Dummies Cheat Sheet” in the Search box.
Where to Go from Here
If you’re a new investor, you may want to consider starting from the beginning. That way, you’ll be ready for some of the more advanced topics introduced later in the book. But you don’t have to read this book from cover to cover. If you have a specific question or two that you want to focus on today, or if you want to find some additional information tomorrow, that’s not a problem. Investing All-in-One For Dummies makes it easy to find answers to specific questions. Just turn to the table of contents or index to locate the information you need. You can get in and get out, just like that.
1 Getting Started with Investing
IN THIS CHAPTER
» Defining investing
» Seeing how stocks and real estate build long-term wealth
» Understanding the role of lending investments and cash equivalents
» Knowing where to invest and get advice
Chapter 1
Exploring Your Investment Choices
In many parts of the world, life’s basic necessities — food, clothing, shelter, healthcare, and taxes — consume the entirety of people’s meager earnings. Although some Americans do truly struggle for basic necessities, the bigger problem for other Americans is that they consider just about everything — eating out, driving new cars, hopping on airplanes for vacation — to be a necessity.
This book is here to help you recognize that investing — that is, putting your money to work for you — is a necessity. If you want to accomplish important personal and financial goals, such as owning a home, starting your own business, helping your kids through college (and spending more time with them when they’re young), retiring comfortably, and so on, you must know how to invest well.
It’s been said, and too often quoted, that the only certainties in life are death and taxes. You can add one more to these two certainties: being confused by and ignorant about investing. Because investing is a confounding activity, you may be tempted to look with envious eyes at those people in the world who appear to be savvy with money and investing. Keep in mind that everyone starts with the same level of financial knowledge: none! No one was born knowing this stuff! The only
difference between those who know and those who don’t is that those who know have either devoted their time and energy to acquiring useful knowledge about the investment world or have had their parents instill a good base of investing knowledge.
Getting Started with Investing
Before the rest of this chapter discusses the major investing alternatives, this section starts with something that’s quite basic yet important. What exactly does “investing” mean? Simply stated, investing means you have money put away for future use.
You can choose from tens of thousands of stocks, bonds, mutual funds, exchangetraded funds, and other investments. Unfortunately for the novice, and even for the experts who are honest with you, knowing the name of the investment is just the tip of the iceberg. Underneath each of these investments lurks a veritable mountain of details.
If you wanted to and had the ability to quit your day job, you could make a fulltime endeavor out of analyzing economic trends and financial statements and talking to business employees, customers, suppliers, and so on. However, you shouldn’t be scared away from investing just because some people do it on a fulltime basis. Making wise investments need not take a lot of your time. If you know where to get high-quality information and you purchase well-managed investments, you can leave the investment management to the best experts. Then you can do the work that you’re best at and have more free time for the things you really enjoy doing.
An important part of making wise investments is knowing when you have enough information to do things well on your own versus when you should hire others. For example, foreign stock markets are generally more difficult to research and understand than domestic markets. Thus, when investing overseas, hiring a good money manager, such as through a mutual or exchange-traded fund, makes more sense than going to all the time, trouble, and expense of picking individual international stocks.
This book is here to give you the information you need to make your way through the complex investment world. The rest of this chapter clears a path so you can identify the major investments, understand the strengths and weaknesses of each, and get information on seeking advice.
