This section looks at the many investment options available to you. It explains
the fundamentals of stocks and bonds, and helps you discover the best ways to
buy into financial markets through mutual funds and other investment vehicles.
What's more, it examines how you might be able to benefit from investing in
The reason people invest their money is so that it can make more money. That's
called the return on an investment. When you hear talk about investment risk,
that doesn't mean that you might lose your entire savings. The "risk" is the
possibility that your investment will not earn what you planned -- that the returns
will fluctuate. All investments involve a degree of risk, and indeed risk is linked to
potential return. This section explains how to use risk to your advantage.
Diversification & Modern Portfolio Theory
The stock market isn't about making a bundle on a hot stock tip. A smart investor
works to put together a total portfolio -- all his or her investments grouped
together -- that earns the most return with the least possible risk. This section
shows how investing in a variety of assets (asset mixes) influences return, and
how diversification can make your portfolio earn even more money for you.
Finding the right ingredients for the investment pie is a crucial part of investment
planning. Some investments provide strong potential returns, while others may
seem like nothing special in isolation but perform well together with others in a
portfolio to reduce investment risk. Learn how to develop an efficient portfolio --
an investment allocation that provides the best possible return potential for the
amount of risk you take.
Your Place In the Markets: The Importance of Having a Plan
If you want a comfortable retirement you've got to plan for it. You need to figure
out when you plan to retire and calculate how much income you will need per
year. Then make your plan, using investment strategies like dollar cost averaging,
tax deferred investing and compounding (which are all explained in this section)
to make the most of your savings. Most importantly, start saving now.