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       Investing For Dummies^®, 4th Edition

      Published by: John Wiley & Sons, Ltd., The Atrium, Southern Gate, Chichester, www.wiley.com

      This edition first published 2015

      © 2015 John Wiley & Sons, Ltd, Chichester, West Sussex.

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      ISBN 978-1-119-02576-4 (paperback); ISBN 978-1-119-02577-1 (ebk); ISBN 978-1-119-02578-8 (ebk)

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      Introduction

      So much has happened for investors in almost the twinkling of an eye, it’s certainly time for a new edition of Investing For Dummies.

      Over the past seven or eight years, economic and investment market crises convulsed the world. They include the first ever run on a UK bank in a century and a half; the nationalisation of two of the biggest UK banks; the collapse of some of New York’s biggest investment banks; mayhem in the US housing finance market; the bankruptcy of Icelandic banks; the rescue of the Greek and many other smaller European economies in the Eurozone; record low interest rates almost everywhere, guaranteeing that savers get a bad deal; and the rise of emerging market economies such as India and China. And that’s only scratching the surface of all the recent changes in the world of investing.

      And then, as day follows night, the dark side of financial markets turned sunnier. Share prices in the United States soared to record levels, ‘euro’ and ‘crisis’ no longer automatically always appeared one after the other, UK markets perked up – and investors who had placed their faith in the great emerging markets of Brazil, Russia, India and China were disappointed.

      Dramatic? Yes. But these big ups and downs have existed ever since financial markets came onto the scene.

      On top of all that, UK rules governing what is most people’s biggest and most crucial investment – their pension – have changed out of all recognition. So many restrictions have been introduced that I’ve had to completely rewrite the chapters on what to do about your retirement income for this new edition of the book.

      Knowing about investments could almost have been a hobby when I wrote the first edition of Investing For Dummies nearly a decade ago. Now, you’re out there on your own with pension investment decisions.

      But really nothing has changed in the investment world. No matter how chaotic it may seem, or how complex the hedge fund universe appears to all but those with a double degree in investment rocket science, the essentials remain just as they always were.

      Investment markets are still a battleground between fear and greed. When fear gets the upper hand, most prices fall – the exception being so-called ‘safe haven’ investments such as gold. And when optimism returns, everything moves up – except for those ‘safety first’ assets.

      And how investments will fare from here is anyone’s guess. No one can be trusted to predict the future. So neither Investing For Dummies nor any other source of advice will ever be right all the time. The essential aim is to get more than half of your decisions right and beat the averages. If you can do that then you’re doing as well as you’re likely to. This applies to the so-called experts and professionals as well.

      This book gives you the facts up front and honestly. So you’ll find no magic formula for wealth here. Besides, even if there were a get-rich-quick recipe, I wouldn’t be telling anyone about it; I’d be using it.

      No one can predict which shares will do well (although that doesn’t seem to stop people from asking me for sure-fire tips at parties). But what I can provide is guidance to help you make sensible decisions that suit your circumstances.

      Investing involves more than understanding an economics textbook or balance sheet. It involves understanding a whole lot about human reactions to the ups and downs of money, plus (really important) understanding how you react. And it’s fascinating because it’s where you find all the drama of human life: investment values represent nothing other than the combination of the minds of all the people involved in investment markets.

      Over all the decades that I’ve been writing about money, I’ve continued to find investing a fascinating subject and endeavour, and I’ve become moderately more well off than I would’ve otherwise been. I hope that this book helps you become fascinated with investing too. And I also hope that by reading it you’ll be better off than you would’ve otherwise been.

      This book is designed to be read in several ways. It’s a reference book, so you don’t have to read the chapters in chronological order, from front to back, although of course you can read it cover to cover, like a novel, to gain appreciation for the huge variety of investment opportunities that are available. (If you approach the book this way, I suggest doing so with pen and paper at the ready so that you can note areas for further research on the Internet or from publications such as the Financial Times.) Or you can just pick a topic that interests you or go straight to a section that answers a particular question you have.

      But my preferred way for you to read this

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