Table of Contents
Introduction v
Takeaways vii
Chapter 1 Savings 1
Why Save? 1
Global Household Savings Rates 1
Compounding 2
Chapter 2 Budgeting, Debt, and Setting Goals 5
Federal Debt and Deficit 5
Consumer Debt 5
Budgeting 6
Chapter 3 Negotiation and Making Deals 9
Tips/Techniques 9
Information is King 10
Chapter 4 Risk V. Reward 13
How Much Risk Should You Take? 13
Investment Horizon 14
Liquidity 14
Asset Allocation 14
Asset Classes 15
Chapter 5 Active V. Passive-Which is Better? 17
Adopt a Low-Cost Strategy-Minimize Expenses 17
Active 17
Passive/Indexes 17
Do Not Try to Time the Market 20
Do Not Chase Returns-Stay the Diversified Course 22
Minimize Costs/Expenses 24
Higher Fees Do Not Mean Better Performance! 25
A Note on inflation 26
Chapter 6 Diversification 29
Building a Diversified Portfolio 30
Step One: Basic Portfolio 30
Step Two: Adjust Bonds 30
Step Three: Add Real Estate Index 31
Step Four: Add Small Cap Stock Index 32
Step Five: Add Value Stock Indexes 32
Step Six: Add International Indexes 33
Chapter 7 Putting It All to Work-Where Do I Actually Invest? 35
How Do I Invest, Where Do I Put My Money, and Do I Need More Advice? 35
How About Financial Advisors-Are They Worth It? 37
When Should You Consider Hiring an Advisor? 38
Emotional Investing Has Its Cost 39
Final Exam Questions 40
Chapter 8 Money Is Not Everything 41
The Parable of the Mexican Fisherman and the Banker 41
Life is Short-Enjoy What You Do (That May Just Lead to Riches Anyway) 42
Takeaways 43
Sources and Credits 45
Index 47
Worksheets and Activities 49
Answer Keys 55
