Table of Contents
Introduction xi
1 The Value of an Education 1
Targeting the Right Career 1
Educational Costs Versus Benefits 2
Paying for College 4
Enhancing Your Marketability 6
2 The Importance of Savings 13
The Wonders of Compounding 13
Inflation 16
Budgeting 17
Automatic Savings Plans 17
Buying Your First Home 19
The Goal of Retirement 24
3 Investments 25
Benchmarks and Indexes 25
Bank Products 28
Fixed Income 29
Equities 37
Mutual Funds 47
Exchange Traded Funds 53
Real Estate 54
Alternative Investments 62
Avoiding Investment Scams 72
4 Principals of Investing 77
Risk Versus Return 77
Diversification 80
Active and Passive Investing 87
Personal Investment Objectives 91
Portfolio Allocation Examples 94
Portfolio Rebalancing 96
5 Debt 99
Good Debt Versus Bad Debt 100
Other People's Money 102
The Importance of Your Credit Score 103
Preventing Identity Theft 105
Credit Cards 106
Key Financing Terms 111
Consumer Product Loans 117
Financing Your First Home 119
Home Equity Loans 123
6 Tax Considerations 125
Ordinary Versus Capital Gain Taxes 125
The Time Value of Money 129
Tax Deferral 130
Tax Avoidance 132
The Benefits of Retirement Accounts 133
The Tax Geek 137
7 Insurance 139
What Is Insurance? 140
Liability Insurance 141
Homeowners' Insurance 142
Automobile Insurance 143
Health Insurance 145
Disability Insurance 146
Life Insurance 147
The Protection of an Umbrella 148
Business Insurance 149
A Cost Versus Benefit Analysis 150
8 The Entrepreneur 153
The Big Idea 155
Creating a Business Plan 156
Finding Financing 161
Protecting Your Investment 165
9 Economics 169
The Economy 169
Recessions and Depressions 170
Budget Deficits and Surpluses 172
Fiscal Policy 174
Monetary Policy 175
Foreign Currencies 177
Booms and Busts 179
Leading Economic Indicators 181
Lagging Economic Indicators 182
10 The 10 Most Common Mistakes to Avoid 185
Appendix: Household Budgeting Model 193
Glossary 197
Bibliography 213
Index 215
