Contents
1 Start Investing Early or Start Now
The Retirement Difference: Pensions
Today’s Responsibilities Are Yours
How Financial Planners Evaluate Your Needs
Doing a Retirement Calculation Like a Pro
Imagine Your Life at 65 and 75
Women Live Longer, Need More Money
How Much Security Is Social Security?
Olden Days with Old-Style Pensions
401(k), 403(b), 457, and Profit Sharing
IRAs and Other Savings Accounts
How Do You Turn $25 a Week into $1 Million?
Using Your Calculation: The Advanced Lesson
3 Savings on Steroids: Use a 401(k) and an IRA
The Power of Warding Off Taxes
How to Use Your 401(k) or 403(b)
More Tax Help Than You Imagined
Procrastination—Not Money—Hurts
4 An IRA: Every American’s Treasure Trove
More on the Magical Power of Compounding
5 IRA Decisions: How to Start and Where to Go
Can’t I Wait Until I File My Taxes?
The Choice Between a Traditional IRA and a Roth IRA
The Traditional Tax-Deductible IRA
The Choice Between a 401(k) and a Roth IRA
Pushing IRAs and 401(k)s to the Limit
Can You Get a Tax Deduction from a Traditional IRA?
Is Your Income Too High for a Roth IRA?
Last-Minute Regrets: I Want My Money Back
Special Help for Low-Income People
What Comes First: College or Retirement Saving?
If You Operate a Small Business
Individual 401(k) or Solo 401(k)
SEP-IRA Simplified Employee Pension Plan
Simple IRA (Savings Incentive Match Plan for Employees)
6 Why the Stock Market Isn’t a Roulette Wheel
The 1990s: From Stock Lovefest to Disaster
What to Expect from the Stock Market
Stocks Provide Risks and Rewards
Novices Choosing Stocks Are Gamblers
Your Fund Is Designed for a Purpose
What Happens in a Mutual Fund?
High Stock Prices Can Be Warning Signs
8 Making Sense of Wacky Mutual Fund Names
The Three Main Choices: Stocks, Bonds, and Cash
The Trade-Off Between Seeking Safety and Making Money
9 Know Your Mutual Fund Manager’s Job
Stocks Come in Three Sizes: Know Your Size
Using the Remainder of This Chapter
Recognizing the Tortoise and the Hare: Growth Versus Value
Check Value and Growth Funds for Worst-Case Scenarios
International Stock (Equity) Funds
REITs (Real Estate Investment Trusts)
10 The Only Way That Works: Asset Allocation
The One Proven Way to Success: Asset Allocation
Start the Sorting—It’s Asset Allocation Time
The Logic Behind “Diversification”
Asset Allocation Is Simply Matching
You Don’t Need to Use Every 401(k) Fund
What’s Your Age: 20, 30, 40, 50, or 60?
A Reality Check for Fear: The Losses of the 2007–2009 Crash
12 How to Pick Mutual Funds: Bargain Shop
Tiny Percents Have a Huge Impact
Mind Your Money: Your Broker Might Not
13 Index Funds: Get What You Pay For
What’s the Stock Market, and What’s a Stock Market Index?
Tweak Your Portfolio Once a Year: Rebalance
Indexes Come in Many Varieties: An Advanced Lesson
Some Exchange-Traded Fund (ETF) Ideas
Tinkering with ETFs: For Advance Investors
Beginning Investors: Starting an IRA with Pocket Change
Warning: Not All Index Funds Are Good
14 Simple Does It: No-Brainer Investing with Target-Date Funds
What to Do When 401(k) Funds Lack Target-Date Funds
How to Select a Target-Date Fund
15 Do You Need a Financial Adviser?
Does the Financial Adviser Focus on People Like You?