Introduction

During the financial crisis of 2008, things got scary. Large Wall Street firms were going under, stock prices were plummeting, and layoffs and unemployment rates were soaring. And all this was happening in the midst of the 2008 presidential election. Talk of another Great Depression was in the air. In fact, polls showed a majority of Americans feared that another depression was actually happening. Housing prices were dropping sharply in most communities, and more and more properties were ending up in foreclosure.

Investing didn’t seem so fun anymore. However, even though the downturn was the worst in decades, it had similarities to prior downturns, and people who kept their sense of perspective have enjoyed tremendous returns since the market bottom.

I know from working with people of modest and immodest economic means that the time-tested ways they increase their wealth are by doing the following:

• Living within their means and systematically saving and investing money, ideally in a tax-favored manner
• Buying and holding a diversified portfolio of stocks
• Building their own small business
• Investing in real estate

This book explains each of these wealth boosters in detail. Equally if not more important, however, is the information I provide to help you understand and choose investments compatible with your personal and financial goals.

About This Book

The best investment vehicles for building wealth — stocks, real estate, and small business — haven’t changed. But you still need money to play in the investment world. Like the first edition of Investing For Dummies, the seventh edition of this national bestseller includes complete coverage of these wealth-building investments as well as other common investments, such as bonds. Here are the biggest changes in this edition:

• I’ve freshened up the data and examples in this book to provide you the latest insights and analyses. Having trouble comprehending what “quantitative easing” is and whether the Federal Reserve’s ending it will upset the stock market? Confused about how tax law changes should affect your investment strategies? Wondering about using an advisor to invest in funds that only he can access? Seeking a way to invest in stocks without exposing yourself to the tremendous risks experienced during the financial crisis of the late 2000s? Curious about what an exchange-traded fund (ETF) or hedge fund is and whether you should invest in one? Wondering how to use leveraged ETFs to boost your portfolio’s return? Weighing whether and where to invest in real estate given current market conditions and the severe downturn in the late 2000s? Wondering what the best ways are to invest globally? Having trouble making sense of various economic indicators and what they mean to your investment strategy? Wanting to invest in a Health Savings Account (HSA) but don’t know why, where, or how? You can find the answers to these questions and many more in this edition.
• I offer more information on investing resources. With the continued growth in websites, software, print publications, media outlets, and other sources of investing advice and information, you’re probably overwhelmed in choosing among the numerous investing research tools and resources. Equally problematic is figuring out who you can trust — and who you need to ignore. So many pundits and prognosticators claim excellent track records for their past predictions, but who, really, can you believe? I explain how to evaluate the quality of current investment tools and resources, and I provide tips on deciding who to listen to and who to tune out.

To build wealth, you don’t need a fancy college or graduate-school degree, and you don’t need a rich dad (or mom), 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.

Seriously, investing intelligently isn’t rocket science. By all means, if you’re dealing with a complicated, atypical issue, get quality professional help. But educate yourself first. 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

Every book is written with a certain reader in mind, and this book is no different. Here are some assumptions I made about you:

• You may have some investments, but you’re looking to develop a full-scale investment plan.
• You’d like to strengthen your portfolio.
• 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. I hope the following images make your journey through investment strategies smoother.

In the shark-infested investing waters, you’ll find creatures that feast on novice waders, ready to take a bite out of a swimmer’s savings. This icon notes when and where the sharks may be circling.

If you see this icon, I’m pointing out companies, products, services, and resources that have proved to be exceptional over the years. These are resources that I would or do use personally or would recommend to my friends and family.

I use this icon to highlight an issue that requires more detective work on your part. Don’t worry, though; I prepare you for your work so you don’t have to start out as a novice gumshoe.

I 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.

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 some access-anywhere goodies on the web. At www.dummies.com/extras/investing, you can find a variety of helpful articles on topics such as ways to evaluate your current investments, tips for investing in real estate, myths about entrepreneurship, and ten common investing mistakes to avoid. Check out the free Cheat Sheet at www.dummies.com/cheatsheet/investing for a whopping 20 rules to keep you on the path to successful investing.

Where to Go from Here

If you have the time and desire, I encourage you to read this book in its entirety. It provides you with a detailed picture of how to maximize your returns while minimizing your risks through wealth-building investments. But you don’t have to read this book 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 For Dummies, 7th Edition, makes it easy to find answers to specific questions. Just turn to the table of contents to locate the information you need. You can get in and get out, just like that.

If you’re the kind of reader who jumps around from topic to topic instead of reading from cover to cover, you’ll be pleased to know that this book has a helpful index that points out the pages where investing terms are defined.