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Investing for Dummies, 4th UK Edition

Book Description

The easy way to demystify the intimidating world of investing

Think investing is only for the super-rich? Think again! Packed with tons of expert advice, Investing For Dummies UK 4th edition shows you step-by-step how to make sound, sensible investment choices—whatever your budget. All the major investment categories are covered for the smart beginner, while more advanced and alternative investments are presented for the more adventurous and experienced. Wherever you fall on the investing spectrum, there's something for you!

This new UKedition of Investing For Dummies has been updated with the latest financial information, including all the new trends and developments that have affected the world of investment, with an emphasis on the new pensions legislations and changes to Individual Savings Accounts. Whether you're interested in assessing your financial means, gauging risks and returns or increasing your personal wealth, with the help of this friendly guide, you no longer need to work in finance to make sense of the facts and figures behind your investments!

  • Offers tips on how to minimize the risk of investment gambles

  • Covers the FCA's more stringent risk analysis for investors using advisers

  • Contains new sections on pensions, ISAs, the DIY/self-directed investor, and ultra-low interest rates

  • Includes new online templates to help simplify the investing process

  • If you want to go it alone in the investment arena, but need the support of a straightforward, reassuring guide to help you make the best decisions—and get the highest returns from your investments—this is the book for you.

    Table of Contents

      1. Introduction
        1. About This Book
        2. Conventions Used in This Book
        3. Foolish Assumptions
        4. Beyond This Book
        5. Icons Used in This Book
        6. Where to Go from Here
      2. Part I: Getting Started with Investing
        1. Chapter 1: First Steps on the Money Trail
          1. What’s Your Reason for Investing?
          2. What’s Your Personality Type with Money?
            1. Spenders have fun
            2. Savers have cash
            3. Investors build up future funds
            4. Working out where you fit
          3. Surprise! You’ve Probably Been Investing Already
            1. Investing through your pension fund
            2. Investing in your employer
            3. Being part of the economy
          4. Five Basic Investment Choices
            1. You can’t go wrong with cash
            2. Property is usually a solid foundation
            3. Bonds are others’ borrowings
            4. Get your share of shares
            5. Alternatives are a hodgepodge to consider
        2. Chapter 2: Checking Your Personal Life Before You Invest
          1. Assessing Your Personal Wealth
          2. Taking Care of Family before Fortune
          3. Studying How to Save without Sacrificing
          4. Looking After Your Life and Health
          5. Paying into a Pension Plan
          6. Taking Care of Property before Profits
          7. Setting Up a Rainy-Day Fund
        3. Chapter 3: Recognising What Makes an Investor Tick
          1. Understanding Investor Psychology
            1. The psychology of the marketplace
            2. The psychology of the individual
          2. Looking at the Emotions That Drive Investors
            1. Greed is the accelerator
            2. Fear is the brake
          3. Debunking the ‘Stock Market as a Casino’ Psychology
            1. How things work in gambling
            2. How things work in investing
            3. Two dangers investors share with gamblers
          4. Sound Tips for the Cautious Investor
        4. Chapter 4: Squaring Risks with Returns
          1. Examining Two Investing Principles You Should Never Forget
          2. Determining the Return You Want from Your Money
            1. The likely return from shares
            2. The likely return from bonds
            3. The likely return from property
            4. The likely return from a cash account
            5. The likely return from other assets
          3. Increasing Your Chances of Successful Returns
            1. Plenty of factors affect your chances of success
            2. Diversification is your best friend
            3. Patience is your pal
        5. Chapter 5: Being Aware of Small Print – and of Print that Isn’t There
          1. ‘Um, Where Do I Actually Find the Small Print?’
          2. Shares Can Go Down As Well As Up
          3. The Best Bonds Can Go Bust
          4. Great Ideas Don’t Last Forever
          5. Property Investments Can Crumble
          6. Tax-Free Can Be a Dead Loss
          7. Foreign Scam Operations Are Bigger (and Trickier) Than Ever
            1. Beware the boiler rooms
            2. Dealing with boiler-room operatives
            3. Steering clear of onshore boiler rooms
      3. Part II: Shares, Bonds and Other Investibles
        1. Chapter 6: Comprehending How Stock Markets Work
          1. Looking at the Evolution of the Stock Market
          2. Understanding Shares
            1. Why raise money through shares?
            2. How companies get to the stock market
            3. Ways to buy shares
            4. The perks you get when buying ordinary shares
          3. Understanding Bonds
          4. Getting Familiar with the Ups and Downs of the Market
            1. Why do prices rise and fall?
            2. Can anyone predict these moves?
          5. Understanding the Mechanics of the Stock Market
          6. Knowing How Companies Leave the Market
        2. Chapter 7: Taking the Catwalk Route to Investment Success
          1. Exploring Common Investor Styles
            1. Looking at performance: Growth investors
            2. Spotting what others have missed: Value investors
            3. Living for the moment: Momentum investors
            4. Opting for slow and steady: Income investors
            5. Mixing and matching your way to investment sophistication with GARP
            6. Taking it from the top, or building it from the bottom
          2. Getting Up Close and Personal with the UK Stock Market
            1. Understanding market cap
            2. The FTSE 100 (the Footsie)
            3. The FTSE 250: The Mid Caps
            4. Beyond the FTSE 250: The Tiddlers
            5. Smaller than tiddliest Tiddler: AIM
            6. The markets you need a microscope to find
          3. Assessing How Fund Managers Mark Their Styles
        3. Chapter 8: Investing in Markets
          1. Looking at Where the Stock Market Entry Routes Are
          2. Knowing the Trend Is Your Friend
          3. Identifying Two Top Investment Trade Tricks
            1. The passive versus active path to profits
            2. The advantages of exchange-traded funds
          4. Knowing What to Consider When Buying Individual Shares
            1. Knowing the psychological impact of the economy
            2. Knowing the power of interest rates
            3. Knowing the long-term trend
          5. Enjoying the Payments and Perks of Owning Shares
        4. Chapter 9: Analysing Stock-Market-Quoted Companies
          1. Comparing Apples with Apples: The Gospel According to the Market
          2. Identifying the Basic Building Blocks of Companies: Profits
            1. Looking at profits from an accountant’s point of view
            2. Examining a company’s profit-and-loss account
            3. Understanding what company profits and losses actually mean
          3. Knowing What to Look at First: Earnings Per Share
            1. Understanding the price/earnings ratio
            2. What a prospective price/earnings ratio tells you
            3. How to use the price/earnings ratio
          4. Knowing What Dividends Really Mean
            1. Understanding what dividends say about the company
            2. Deciphering the signs that dividends provide
          5. Deciding Whether Forecasts Are Reliable Sources or a Lot of Hot Air
          6. Looking at Takeovers: Good, Bad or Ugly?
          7. Discussing Technical Analysis: The Arcane World of Share Price Charts
        5. Chapter 10: Banking on Bonds
          1. Getting Down to the Bottom Line on Bonds
            1. ‘Do I need bonds?’
            2. ‘Tell me the big differences between bonds and shares’
          2. Looking at UK Government Bonds: All That’s Gilt Isn’t Gold
          3. Identifying What Makes Bond Prices Go Up and Down
            1. The interest-rate gamble
            2. The credit-rating conundrum
            3. The redemption calculation
          4. Knowing Which Way to Buy Your Bonds
        6. Chapter 11: Conquering Commodities and Getting into Gold
          1. Understanding the Basics of Commodities
          2. Getting a Grip on Supply and Demand
          3. Knowing How Commodity Investors Think
          4. Looking at Popular Commodities for Investment
            1. Sizing up soft commodities
            2. Making a mint from metals
          5. Choosing Which Way to Invest
            1. Getting a feeling for futures
            2. Taking a trusting view of commodities
            3. Exploring exchange-traded funds
          6. Steering Clear of Commodity Scams
      4. Part III: Collective Investments and Pension Funds
        1. Chapter 12: Looking at Fund Management
          1. Considering Packaged Funds
          2. Understanding How Fund-Management Companies Operate
            1. Calculating their crust
            2. Examining the role of the marketing department
          3. Evaluating the Worth of Performance Tables
            1. The same figures can tell different stories
            2. Tables that use discrete figures
            3. What tables are strongest at showing
          4. Separating the Good Managers from the Bad
          5. Appreciating the Worth of Fund-Manager Fees
          6. Filling Your Financial Trolley at Fund Supermarkets
          7. Understanding Tax and the Investment Package
            1. Income tax
            2. Capital gains tax
            3. Investing tax free: The Individual Savings Account
        2. Chapter 13: Investing with a Trust
          1. Understanding What Unit Trusts Are
          2. Knowing How Much Unit Trusts Cost
            1. The initial charge
            2. The annual charge
            3. Hidden charges
            4. Using TER to disentangle the real charges
          3. Selecting the Best Unit Trust for You
            1. Unit-trust sectors
          4. Comparing Active and Passive Fund Managers
          5. Taking Ethics into Consideration
            1. Shades of green: Ethical unit trusts
            2. Balancing act: The pros and cons of ethical investing
          6. Going with a Fund of Funds
          7. Delving into Investment Trusts
            1. Seeing how investment trusts differ from unit trusts
            2. Discovering the discount
            3. Gearing: Not just for bicycles
          8. Examining Monthly Investment Plans
        3. Chapter 14: Saving Up for Your Retirement
          1. Seeing How the Pension Situation Has Changed
            1. The state pension
            2. The workplace pension
          2. Knowing When You’ll Retire
          3. Expecting Something from Your Employer
          4. Examining the Investment Deal
          5. Putting Your Marker on the Risk Spectrum
          6. Dealing with the Lifestyle Option
          7. Swallowing the Whole Pensions Glass with a SIPP
            1. Dispelling some common myths
            2. The SIPP shopping list
            3. SIPP suitability – is it for me?
            4. Deciding what to put into a SIPP
            5. Costing a SIPP
            6. Moving your place of work into a SIPP
        4. Chapter 15: Disinvesting During Your Retirement
          1. Deciding What to Do with the Freedom
          2. Considering the Tax on Your Pension Pot
            1. Paying income tax on withdrawals
            2. Factoring in your pension after you die
            3. Leaving money in the pot
          3. Working Out Your Personal Accounts
            1. Determining income
            2. Setting a strategy
            3. Bringing in more than you spend
            4. Balancing present income with current spending
            5. Needing more than is coming in
          4. Taking the Route of Least Resistance with an Annuity
        5. Chapter 16: Selecting a Stockbroker or Financial Adviser
          1. Understanding the Difference between Stockbrokers and Financial Advisers
            1. The few times when you don’t need a stockbroker
            2. Deciding whether you’d like that service with or without advice
          2. Pinpointing the Levels of Service Available
            1. Advisory service
            2. Discretionary service
            3. Execution-only service
          3. Knowing What You Can Expect to Pay
            1. Commission
            2. Platform payments
            3. Based on the level of service
          4. Knowing What to Look at When Selecting a Stockbroker
            1. Considerations with discretionary and advisory services
            2. Considerations with execution-only services
            3. Sticking to one broker
            4. Small print points to ponder
          5. Signing Up with a Stockbroker
          6. Dealing with IFAs
            1. Finding a discount IFA
            2. Signing up with a financial adviser
        6. Chapter 17: Hedging Your Fund Bets
          1. Defining Hedge Funds
          2. Choosing Strategies
            1. Relative-value strategies
            2. Event-driven strategies
            3. Opportunistic strategies
          3. Finding an Easy Way In: A Fund of Hedge Funds
          4. Taking Hedging Some Stages Further
            1. Absolute-return funds: Hedge funds-lite from the mainstream
            2. Making money from yo-yo asset prices
          5. Some Do’s and Don’ts: A Hedge-Fund Checklist
        7. Chapter 18: Investing at Random and with the Intellectuals
          1. Pinning Your Hopes on Chance
          2. Looking at the Worth of Fund Managers
          3. Knowing the Limits of a Random-Choice Portfolio
            1. You need a long time span
            2. Traditionally, you need to select assets
          4. Understanding Modern Portfolio Theory
          5. Trading in the Blink of an Eye
      5. Part IV: Property and Alternatives
        1. Chapter 19: Investing in Bricks and Mortar
          1. Buying Property to Rent: The Pros and Cons
          2. Considering the Affordability Issue
          3. Looking at the Buy-to-Let Mortgage
            1. How much can you borrow?
            2. How much do you actually get?
            3. Items to consider about the mortgage
          4. The Property Yield: A Comparison Tool
          5. Understanding Location, Location, Location
            1. Matching tenants to the property’s location
            2. Considering properties in poor condition
          6. Getting Savvy with Attracting Tenants
            1. Advertising for tenants
            2. Contacting local employers
            3. Using word of mouth
            4. Going online
          7. Buying Overseas
          8. Being Aware of the Tax Issue
          9. Investing in Commercial Property
            1. What’s good about commercial property?
            2. What’s bad about commercial property?
            3. How to invest in commercial property
        2. Chapter 20: Delving into Derivative Investments
          1. Describing the Derivative
          2. Getting into Gear for a Faster Ride
          3. Optioning Your Bets
            1. What’s a stock-market option?
            2. Looking at the two sides of the options contract
            3. Protecting your investment with traded options
            4. Trading good news
            5. What are call prices and put prices?
            6. What is option volatility?
          4. Taking a Gamble with Spread Betting
          5. Limiting Your Betting Losses with Binary Betting
          6. Getting Contracts for Difference – for a Different Kind of Deal
            1. How CFDs work
            2. The benefits and drawbacks of CFDs
          7. Understanding Warrants
      6. Part V: The Part of Tens
        1. Chapter 21: Ten Tips for Fact-Finding
          1. Taking a Look Around You
          2. Going Online
          3. Exploring a Company’s Website
          4. Checking Out Other Sites for More Info on a Company
          5. Signing Up for Stories
          6. Bookmarking the Best Sites
          7. Reading Specialist Magazines
          8. Examining Tipsheets
          9. Following the Regulatory News Service
          10. Sifting through the City Pages
        2. Chapter 22: Ten Helpful Hints for You
          1. Define Where You Want to Be
          2. Protect What You Have
          3. Pay Off the Home Loan
          4. Accept Losses
          5. Take Your Time
          6. Do the Groundwork
          7. Get a Handle on the Odds
          8. Know When to Sell
          9. Read the Small Print
          10. Wake Up without Worries
      7. About the Author
      8. Cheat Sheet
      9. More Dummies Products