Paul Merriman - First Time Investor: Grow and Protect Your Money

"How To Invest""series

FIRST-TIMEINVESTOR:

GROW AND PROTECT YOURMONEY

Paul A. Merriman

with Richard Buck

Published by Regalo LLC atSmashwords

Copyright 2012 Paul Merriman andRichard Buck.

All rights reserved. Except aspermitted under the United States Copyright Act of 1976, no part ofthis publication may be reproduced, or distributed in any form orby any means, or stored in a database or retrieval system withoutprior written permission of the publisher, except by a reviewer whomay quote brief passages in a review.

This publication is designed to provideaccurate and authoritative information in regard to the subjectmatter covered. It is sold and otherwise distributed with theunderstanding that neither the authors nor publisher is engaged inrendering legal, accounting, securities trading or otherprofessional services. If legal advice or other expert assistanceis required, the services of a competent professional person shouldbe sought. From a Declaration of Principles Jointly Adapted by aCommittee of the American Bar Association and a Committee ofPublishers and Associations

To contact Regalo LLC, please email usat info@paulmerriman.com

All profits from the saleof this book and all books in the "How To Invest" series aredonated to educational non-profit organizations. For moreinformation, visit http://www.PaulMerriman.com

Cover Design by Anne Clark

CONTENTS

What you will learn
Three reasons the early years are crucial
Double your income in retirement
Better than winning the lottery
The magic of an extra 1% return

Habits that lead to big returns
The guarantee that can break young investors
The biggest mistake young investors make
Invest like a millionaire
Mutual funds: the bargain of a lifetime
How to triple your income in retirement
Why you cant trust Wall Street
Why you shouldnt trust your friends and neighbors
The single best source of investment advice

Pay taxes now, later or never
The guarantee of lower expenses
How much should you save?
Stocks vs. bonds: A game changer
Home sweet home, or make the world your oyster
How a lifetime vision changes your view of today
How to turn $5,000 a year into a $10 million bonanza

The guaranteed loss that could help you getrich
How much risk should you take? Lower risk and higher returns
How much will you make on your investments?
How much should you allocate to stocks and to bonds?
My formula for the best asset allocation
When to make changes in your portfolio

What cooking and investing have incommon
Let equities be your engine of growth
Little things can make a big difference
Invest where others fear to tread
The expected returns of the best and worst mutual funds
The surprising cost of investing in great companies
The surprising advantage of adding international funds
Does going for the gold make sense?
The myths and realities of investing in high tech

How to select the best and forget about therest
Load vs. no load: The final answer
Passively vs. actively managed funds: The final answer
Diversification: The only free lunch
My favorite fund family for first-time investors
How to pick the best funds at Vanguard and Fidelity
Pros and cons of ETFs
Pros and cons of target-date retirement funds

Prepare for the unexpected
Where to invest emergency funds

Shortsighted investors pay a hugepenalty
Dont invest in insurance products
The lure and risk of your company stock
The high risk of borrowing from your 401(k)
The real cost of investment newsletters
Just say no to market timing
Being the market is better than beating the market
Index Funds: The near-perfect investment

Maximizing tax shelters
Maximizing your 401(k) plan
My recommendations for your 401(k)
The remarkable Roth IRA and Roth 401(k)
Choosing your IRA custodian

The time and place for bonds
The yin and yang of bonds
Three reasons to own bond funds
When safety really counts
Short-term bonds vs. long-term bonds
Should you own international bonds?

Attitude is everything
Keep the faith about the future of capitalism
Never give up
Never lose your cool
Use your common sense
Know exactly where you are going
Greed is not good
Fear not, want not

ABOUT THE "HOW TO INVEST" SERIES

Paul Merriman's "How To Invest" seriesprovides concise and timeless information for a secure future andstress-free retirement. Each book addresses a specific audience orinvestor topic. With almost 50 years of experience as a nationallyrecognized authority on mutual funds and retirement planning, Paulis committed to helping people of all ages and incomes make themost of their investments, with less risk and more peace of mind.All profits from the sale of this series are donated to educationalnon-profit organizations.

The second book in the series will be:101 Reasons I Dont Trust Stockbrokers (And You ShouldntEither)

For articles, podcasts,updated fund recommendations and more, visit: www.PaulMerriman.com

ACKNOWLEDGEMENTS

Over the years I have learned aboutinvesting from many wise people (and a few foolish ones as well),and I am forever indebted to them in more ways than I cansay.

I would be negligent if I didn't tellyou that you would not have this book in your possession withoutthe patience and wisdom of my wife, Suzanne, and the creative,diligent work of Aysha Griffin and Richard Buck. If this book helpsyou, then you should be thankful that they are on myteam.

INTRODUCTION

I want to congratulate you for takingthe first steps toward financial security and freedom in choosingto read this book. As a first-time investor, the knowledge youhave, the choices you make, and the habits you establish now, willmake an enormous difference in the years ahead.

In this book, I will walk you throughthe most important steps to build and maintain a successfulinvestment portfolio. In plain language, you will learn exactlywhat you need to do to set and meet your financial goals. And,after reading this book, you will have the confidence andunderstanding to know how to make the best financial decisions forthe rest of your life.

Planning for the future can bechallenging because, when you're young, retirement seems far awayand hard to imagine. But I can assure you that it will arrive. Youwill age. You will want to retire. And if you have a family, youwill want to help ensure their future. In addition, you may want toleave a legacy to "give back" to those who have helped you or tosupport causes in which you believe.

If you invest wisely, you may be ableto retire while your friends are still chained to their jobs. Thatmay sound unlikely during these difficult economic times, but itsnot magic, and it's not as difficult as you might think.

Regardless of how much money you make,the crucial first step is to put aside a small amount on aconsistent basis. You may be 23 and have just landed your firstjob. Or you may be 40 and have decided to finally get serious aboutinvesting. Whatever the case, if you are new to investing, thisbook is for you.

If you diligently follow the adviceyoull find here, youll have a high probability of enjoyingfinancial independence when your working years are over.

In these pages you willlearn:

~How investing really works

~Where you should get your informationand place your trust

~How much risk you shouldtake

~How to increase your returns withoutincreasing your risk.

You will also learn about the forcesdesigned to rob you of your hard-earned money and how to avoidbecoming the prey of slippery Wall Street salespeople as well asoutright crooks and con artists. Most young investors think thelessons of sound investing dont really matter until they have alot of money. Many spend a decade or more making unsuitableinvestments, taking too much risk or worse, not saving andinvesting at all.