Investing QuickStart Guide - 2nd Edition
eBook - ePub

Investing QuickStart Guide - 2nd Edition

Ted D. Snow

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eBook - ePub

Investing QuickStart Guide - 2nd Edition

Ted D. Snow

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About This Book

The Best Selling QuickStart Guide, Now In an Updated and Expanded 2nd Edition – Over 100 Pages of New Content, Including Updates to Reflect the Realities of Investing

The ONLY investing book that is written by a CFPÂŽ practitioner with 30+ years of investment experience.

THE ULTIMATE BEGINNER'S GUIDE TO INVESTING!

Do you want to learn how to make your hard-earned money work for you?

Are you interested in learning how to create real wealth by harnessing the power of the stock market?

Have you ever dreamed of using stock market investing to create passive income retire early?

A robust investment strategy forms the basis of any wealth building journey—if your money isn't working hard on your behalf, it's slowly being devalued by inflation. It has never been easier—or more important—for everyday investors to get started investing in the stock market.

Bestselling author, advisor, and financial industry veteran Ted D. Snow CFPÂŽ, MBA brings over 30 years of experience to the pages of Investing QuickStart Guide. Presented in plain English and written with new investors in mind, Investing QuickStart Guide proves that with the right guidance anyone can find investing success and build the financial freedom we all deserve.

WHAT'S NEW IN INVESTING 2ND EDITION?

With over 100 pages of new material, Investing QuickStart Guide is updated and revised for an entirely new investing environment and includes:

  • A deeper dive into the asset classes that make up a robust portfolio including a thorough and expanded examination of investable real estate
  • An increased focus on managing—and reducing—your tax liabilities related to investment activities in light of new tax law developments
  • A tour of the pros and cons of new and emerging finance technologies (aka fintech) and an increased focus on ESG investing—the practice of Environmental, Social, and corporate Governance sustainable investing.

Discover the Secrets of Successfully Investing In:

  • Stocks (Including Dividend Paying Stocks!)
  • Mutual Funds
  • ETFS
  • Bonds
  • Index Funds
  • REITS and Real Estate
  • Commodities

Investing QuickStart Guide is Perfect For:

  • Beginners with Zero Prior Investing Experience

  • Reading alongside other popular financial books such as The Intelligent Investor, A Random Walk Down Wall Street, and The Little Book of Common-Sense Investing

  • Experienced Investors who Want to Go to the Next Level

  • Teaching anyone to invest in the stock market – even kids and teens!

Investing QuickStart Guide Covers:

  • Everything You Need to Know Before You Make Your First Trade!

  • How To Take Advantage of Opportunities in the Market Without Relying on Guesswork!

  • How to Evaluate and Compare Stocks and Other Securities!

  • How Disciplined Approaches to Investing Can Lead to Early Retirement and Financial Freedom!

  • How National and Global Economic and Geopolitical Factors Can Influence Investment Prospects!

This book has been reviewed by The Financial Industry Regulatory Authority (FINRA).

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Information

Publisher
ClydeBank Media LLC
Year
2022
ISBN
9781636100296
Edition
2
Topic
Personal Development
Subtopic
Personal Finance

PART I

KEY ASSET CLASSES

| 1 |

Asset Mix

Chapter Overview

  • Major Investment Categories
  • The Importance of Asset Allocation
  • Determining Your Allocation
  • Allocation in Investment Categories
Everyone is a genius in a bull market.
– Mark Cuban
There are a lot of different ways to invest your money. You can jump into the stock market or purchase government or corporate bonds. You can invest in a cryptocurrency such as bitcoin or buy up all the gold you can find. You can purchase annuities, put your money into a savings account, or buy real some estate. Heck, you can put all your money into vintage Fiesta dinnerware or baseball cards if you want. When it comes to investing, there is no shortage of options.
While all of those investing examples will result in your acquiring some sort of asset, not all assets are created equal, and having too much or too little of any one type of asset can be detrimental to your investment success. One of the most important lessons I hope you’ll take from this book is understanding the importance of acquiring and holding the right asset mix.
You can spend all kinds of energy chasing down the perfect stock and timing your purchase to get that stock at precisely the right time. You can day trade or swing trade or buy and sell foreign currency. But without the right mix of assets, your long-term investment strategy may not succeed.
In this chapter you will learn about the major investment categories—stocks, bonds, real estate, and cash—and how each is vital to your investment success. Once those have been explained, we’ll explore the concept of asset allocation and what you can do to achieve it within each investment category, as well as for your overall portfolio.
I happen to agree with the legendary investor Burton Malkiel, who cites just four relevant investment categories: stocks, bonds, cash, and real estate. In addition, Malkiel states that investments in each of those categories should actively generate value for their owner in the form of real capital.
Burton Malkiel will be mentioned at various times throughout this book, with good reason. The economist, who is eighty-eight as I write this, is best known for his classic book A Random Walk Down Wall Street. First published in 1973, the book is in its twelfth edition and still as relevant as when it first came out. Malkiel is a professor emeritus at Princeton University.
Within each of the above categories are subcategories, and we’ll get into those in more depth in later chapters. But for now, let’s explore those four investment avenues, how each generates value for its owner, and why each one is so important in relation to the others.
The Basics of Stocks
Stocks are a class of assets that companies use to raise money. When you buy stock of a particular company, say Target, you’re buying a little piece of the company and you gain the right to share in its profits and assets. If Target stock, which trades under the ticker symbol TGT (the letters assigned to the stock for trading purposes), does well and grows, its value increases. That means you can sell your shares for more than you paid for them and pocket the difference. Target also distributes dividends, payments a company makes to share profits with its investors, to certain stockholders.
If Target loses its luster for some reason, and customers find new places to buy clothes and dishes and electronics, the price of the company’s stock will fall and may be worth less than it was when you purchased it. If you choose to sell at that point, you may lose money. In addition, companies facing tough times normally cut dividends paid to shareholders, so any income you were getting would be reduced or stop completely.
In a nutshell, that’s the upside and the downside of stocks. When the company in question does well, your investment will too. But if the company loses money or, worse yet, fails altogether, your portfolio may take quite a beating. The riskier your investment, the more you have to gain—but also to lose. It’s important to determine your tolerance for risk and understand that risk and reward are always linked.
Even with its inherent risk, however, the average stock market return has been at 10.9 percent (before factoring for inflation) over the past fifty years, meaning it’s a good place for money that can be invested over a period of time.
The Basics of Bonds
While stocks represent ownership in a company, bonds are considered a loan to a company or other entity. When you buy bon...

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