Preface

The past few years have shocked and dismayed investors who had been relying on the stock market to pay for their future goals. After 20 years of almost uninterrupted gains, stock prices have declined sharply. Millions of Americans who had believed the mantra that stocks are unbeatable in the long run are now worried about achieving their retirement goals and their hopes of paying college tuition for their children.

Are you one of these worried investors? If so, this book is for you. In these pages you will learn that:

• There is a safe, worry-free way to beat inflation--invest in Consumer Price Index (CPI) linked bonds. In April 1997, the U.S. Treasury began issuing these bonds, which protect investors against increases in the cost of living for up to 30 years. In 1998, the Treasury introduced convenient tax-advantaged CPI-linked saving bonds in denominations as small as $50. The Treasury's stated intention was to encourage personal saving by providing a safeway to invest money for retirement and other long-term goals. Yet today, only a few years after they came into existence, many Americans are not even aware that such securities exist. We provide step-by-step instructions for using them to safely achieve your financial goals.
• There are ways to invest in inflation-protected retirement-income contracts that are guaranteed to last for as long as you live.
• There is a worry-free way to invest your savings for a child's college tuition--buy tuition-linked Certificates of Deposit (CDs). These tax-advantaged, government-insured accounts are even safer than CPI-linked bonds, although they promise a lower rate of interest.
• Buying your own home may be your biggest investment. We show how to use your own home as a means to invest safely for retirement and to pay for your living expenses in old age.
• If you are willing to accept the risk of losing some of your money, there are sensible ways to increase your potential gains by investing in stocks, or in mutual funds, or inrelated securities, such as Exchange-Traded Funds (ETFs). We help you decide if you can afford to take such risk and provide step-by-step instructions for doing so without paying large fees to brokers and money managers.
• Stocks are not safe in the long run. Stocks offer the potential for large gains, but they expose you to the risk of large losses. This is true even when your stock portfolio is well diversified across different companies and industries. Don't believe those who try to convince you that the risk goes away if you hold stocks for more than5, 10, or even 30 years. This is wishful thinking.

Inside these pages, you make some important evaluations and ask yourself the most important question of all in relation to investment and risk, which is, "How much can I afford to lose?" With that in mind, you will consider several ways to substantially reduce your risk to its lowest possible level. The objective, by the end of this book, is for you to understand and implement a plan for worry-free investing.

The simple formula that governs this entire approach is for you to know and use ways to invest that take less chances--ones that are backed by guarantees or that hedge the taking of chances. Why is this important to you? Because investing in ways that take chances (whether in the stock market, 401(k) plans, or mutual funds) can make great gains, but can as readily make great losses(as we all have witnessed). The only way to eliminate worry is to eliminate risk. If making consistent investment gains with as little worry as possible is your objective, then this is the book for you.