Interested in index funds? Want to invest your money wisely? Index Investing For Dummies explains a recommended, proven way to use index investments to build a well-diversified, low-cost portfolio. Whether you’re a conservative or aggressive investor, you’ll see how to find the right funds that provide healthy long-term returns and stay afloat in tough economic times.
Introduction:
So you want to be an index investor. Or perhaps you want to be a better index investor. This book is for you — but not for you and you alone. Even an index-investing agnostic has plenty of reason to read Index Investing For Dummies. You see, the lessons of index investing — lessons learned since the first index funds were introduced about 35 years ago — are extremely important to all investors.
Index investing — investing in entire markets or segments of markets, rather than trying to cherry-pick securities — is the financial world’s equivalent of Seward’s purchase of Alaska, Henry Ford’s horseless carriage, or milkshake-machine salesman Ray Croc’s little hamburger stand called McDonald’s. It is a stellar example of something that was expected by nearly everyone (including the alleged high wizards of finance) to be a miserable flop, and yet, by almost any measure imaginable, wound up a rave success. This book explains why index investing has been such a rave success and, more importantly, how you can harness the power of index investing to work for you.
By the time you have spent a few hours — pleasurable hours, I certainly hope — thumbing through the following pages, you’ll know a lot about index investing, even more than some professional investors. For right now, I’d like to bring home just a few of the virtues of index investing that will make reading this book more than worth your while:
- ✓ Versatility: Index investing gives you the opportunity to build a portfolio that is well-diversified, extremely low-cost, and fine-tuned to your particular needs. Are you an aggressive investor looking for exposure to small cap stocks, real estate investment trusts (REITs), or commodities? Are you a conservative investor more content with blue chip stocks, U.S. Treasury bonds, or high-grade municipal bonds? It doesn’t matter. Indexing allows for all flavors of investment.
- ✓ Profitability: Study after study shows that if you invest in index funds or predominantly index funds, your long-term returns are very likely to far exceed those of most of your neighbors’ with their actively managed mutual fund portfolios or individual stock and bond picks. In fact, the odds of an actively managed (cherry-picked) portfolio beating an index portfolio are extremely slim. (I know! I know! You’d think that picking cherries would give you cherry-like returns. Index investing, admittedly, can be as counterintuitive as taking a hot bath to cool off on a steamy August day.)
- ✓ Taxability: Without any question, index investors who buy and hold their index funds (the preferred way to invest in indexes) pay far less to Uncle Sam than do those with mutual fund portfolios, or portfolios of rapidly changing stock holdings. That situation is almost certain to continue to be the case regardless of whether the Democrats or Republicans take control of the White House or Congress, or which football team wins this year’s Super Bowl.
- ✓ Simplicity: You can build a portfolio of index funds that will keep you bobbing merrily along in good times and still stay afloat in bad times — and you won’t need anything more than this book to do it. In fact, you’ll be better off allowing your subscriptions to Easy Money magazine and the Fast Bucks financial newsletter to lapse. This book, a simple handheld calculator, and patience are about all you need to be a successful investor.
Contents:
- What Indexing Is . . . and Isn’t
- A Short History of the Index and Index Investing
- Why Indexing Works — and Works So Darned Well
- Why Everyone Isn’t Indexing
- A New Era Begins: ETFs and Alternative Indexes
- The Basic Index Investing Components
- Investing in Stock Indexes: Your Gateway to Growth
- Investing in Bond Indexes: Protecting Your Principal
- Diversifying Your Portfolio with Commodity, REIT, and Other Indexes
- Finding a Happy Home for Your Money
- Developing Your Broad Investment Goals
- Fine-Tuning Your Index Selections
- Mixing and Matching Passive and Active Investing
- Making Your Final Investment Decisions
- A Bevy of Sample Index Portfolios
- Buying and Holding: Boring, But It Really Works
- Seeking Additional Assistance from Professionals . . . Carefully
- Ten Ways to Deal with the Temptation to Beat the Market
- Ten Ways to Screw Up a Perfectly Good Index Portfolio
- Ten Q & As with John Bogle, Father of Index Investing
Index Investing For Dummies By Russell Wild pdf
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