Introduction
The only certainty in investing — and probably in life — is uncertainty.
That can make investing seem like an adventure; however, it’s more like
a transcontinental expedition than a day trip to an amusement park. You
can’t anticipate the turbulent waters or the snowstorms you may encounter
along the way, but you’ll reach your destination if you plan ahead and prepare
for all potentialities.
If you’re feeling uneasy about the current economic environment or your
ability to protect yourself and your nest egg, you’re not alone. You’re living in
truly interesting and uncertain times. Treat this book as your survival guide —
it can help you limit your ris2ks, plan for the long term and the short term, and
invest in ways that let you sleep comfortably at night, no matter what the
markets throw your way.
About This Book
Over 70 professional financial advisors collaborated to bring you Investing
in an Uncertain Economy For Dummies to save you from looking for experts on job search web sites. It’s designed as a reference guide, so
don’t worry if you don’t have the time or inclination to read it from cover
to cover. This one-of-a-kind resource contains over 80 individual strategies
to address the risks you face, plan for life’s certainties, and prepare for the
uncertainties of any economy.
The book contains seven parts, each focusing on an investing theme —
accumulating wealth, preparing for retirement, and so on. Focus on the
strategies or part that addresses your specific need at this time. Then refer
back to this book whenever you have additional questions or areas about
your personal financial life for which you need some guidance.
Conventions Used in This Book
While writing this book, we used a few conventions to make your life just a
bit easier. Here’s what you can expect:
- We use italics when we define a word or phrase that’s important to
understanding a topic. And when we get especially excited, we may
throw in some italics for extra emphasis.
- When you see text in bold, you can expect it to be either a step in a
numbered list or a key word in a bulleted list.
- All Web addresses appear in monofont.
- When this book was printed, some Web addresses may have needed to
break across two lines of text. If that happened, know that we haven’t
put in any extra characters (such as hyphens) to indicate the break. So
when using one of these Web addresses, just type in exactly what you
see in this book and ignore the line break.
- Gray shaded boxes, otherwise known as sidebars, contain interesting but
nonessential information. Feel free to skip ’em if you’re short on time.
Foolish Assumptions
To provide the tools and advice you need, we made some of the following
assumptions:
- You recognize the need to become more informed about the financial
markets and your personal finances. You don’t want to become a victim
of self-serving sales pitches, and you need answers now.
- You have some interest in taking a more active and productive role in
managing your personal financial life, or you at least want to make sure
you don’t do anything really stupid or get ripped off.
- You have access to the Internet, whether at home, work, or your local library.
How This Book Is Organized
Investing in an Uncertain Economy For Dummies is organized into seven distinct
parts, each covering a major area involving your financial life. Here’s a
summary of what you can find in each part.
Part I: Laying a Solid Foundation
Before you start pulling money out of current investments or pouring money
into new ones, you should make sure you have the right mindset toward your
finances, investments, and the market at large. This part gives you an historical
perspective of market cycles, helps you assess your finances and goals, and
reviews some financial strategies to help you get a good foundation in investing.
Part II: Using Investment Vehicles and
Accounts throughout the Economic Cycle
The investment marketplace offers lots of options — as well as futures, commodities,
stocks, bonds, mutual funds, exchange-traded funds, cash accounts, retirement accounts, and more! This part gives you an overview of your choices
and explains when certain types of vehicles or accounts may be right for you.
Part III: Demystifying Risk: Accumulating
and Protecting Wealth
It’s easy to think that the only risk involved with investing is losing value
when the market goes down. However, other risks — emotional reactions,
inflation, job loss, and so on — are major financial risks you have to consider
in your planning. In this part, you explore types of risk, gauge your risk tolerance,
and discover how to design a portfolio that allows you to limit risk
while still getting the returns you need to meet your goals.
Part IV: Investing for Accumulators
This part helps you save and accumulate money for your emergency fund,
major purchases, and goals such as college education and retirement. It also
outlines various investment vehicles and strategies tailored to how much
investment experience you have.
Part V: Heading into Retirement
Your retirement savings may have to support you for 30 years or more, so
this is one investment area you need to get right. In this part, you discover
how to prepare for surprises such as needing long-term healthcare or having
to assist aging parents or adult children. You examine employer retirement
plans, Social Security, and other potential sources of retirement income. You
also take a look at asset allocation and gauge whether you’re on track to have
enough money during retirement.
Part VI: Living on Your Investment
Earnings and Drawing Down Your Assets
This part takes you into retirement, helping you maximize pension and/or
Social Security benefits and reduce your taxes as you decide which retirement
accounts to use first. It also helps you develop a strategy for tapping
into your assets and continuing to invest them so they offer you a steady
stream of income while minimizing the risk that you’ll run out of money
during your golden years.
Part VII: The Part of Tens
The Part of Tens is a classic For Dummies part consisting of top-ten lists. In
this part, you find ten tips for building a solid financial foundation and ten
ways to minimize risk.
Where to Go from Here
This book is organized so you can go directly to the part or strategies that
matter to you right now. Worried about debt and your credit score? Flip to
Strategies #11 and #12. Need information on diversifying your stock portfolio?
Strategies #42 through #45 can help you out.
If you’re just beginning to get your financial house in order, we suggest you
start with Part I and possibly work through to Part IV. If you’re getting closer
to retirement, you may want to peruse Parts I and II and skip to Part V. If
you’re already in retirement, Part VI is specifically for you.
