Next to putting money aside for retirement in the first place, deciding where to invest that money is the most important step. Because the bulk of your nest egg’s ultimate value will come from investment growth, rather than from dollars you invest, making the best investment choices is critical to your success.

To put your retirement investments on track and keep them there, you need only master a few financial fundamentals that will influence each retirement investment decision you make. Think of it as operating your own at-home business—Joan & Jim’s Worry-Free Retirement Inc. The purpose is to build as big a nest egg as possible without taking unreasonable risks.

First you’ll need to start thinking about investing your retirement money, not simply saving it. That means learning about the investment choices, deciding where they fit in your “business plan,” weighing the risks and taking action.

Three Fundamental Truths
Investing for retirement boils down to three fundamental truths.

• TRUTH #1: YOUR GOAL—MONEY FOR RETIREMENT
• TRUTH #2: INVESTING SUCCESSFULLY FOR RETIREMENT REQUIRES TAKING SOME RISKS, BUT NOT UNNECESSARY RISKS.
• TRUTH #3: DIVERSIFICATION WORKS.

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TABLE OF CONTENTS
1 Three Fundamental Truths
2 Stocks Promise the Best Long-Term Gains
2 Stock Basics You Should Know
3 The Role of Bonds
4 Different Types of Bonds
6 Plug Into Mutual Funds
7 Choosing the Right Mutual Funds
10 Best Places to Keep Your Investments
17 Plans for the Self-Employed
19 Protect Your Money: How to Check Out a Broker or Adviser
Glossary of Investment Terms You Should Know

About the Investor Protection Trust
The Investor Protection Trust (IPT) is a nonprofit organization devoted to investor education. Over half of all Americans are now invested in the securities markets, making investor education and protection vitally important.

Since 1993 the Investor Protection Trust has worked with the States and at the national level to provide the independent, objective investor education needed by all Americans to make informed investment decisions. The Investor Protection Trust strives to keep all Americans on the right money track.

For additional information on the IPT, visit www.investorprotection.org.

About the Investor Protection Institute
The Investor Protection Insititute (IPI) is a nonprofit organization that promotes investor protection by conducting and supporting research and education programs.

GLOSSARY
Bond— An interest-bearing security that obligates the issuer to pay a specified amount of interest for a specified time, usually several years, and then repay the bondholder the face amount of the bond.

Diversification— The method of balancing risk by investing in a variety of securities.

Dividends— Shares of company earnings paid out to stockholders.

Face value— The amount an issuer pays to a bond holder when the bond reaches full maturity.

Load— A sales commission charged by many mutual funds. Some are front-end loads (fee paid when the shares are purchased) or back-end loads (fees paid when the shares are sold).

Maturity— The amount of time it takes for a bond to pay the face value. Bonds are issued with varying maturity dates.

Mutual Fund— A professionally managed portfolio of stocks and bonds or other investments divided up into shares.

Portfolio— The collection of all of your investments.

Prospectus— A document that describes a securities offering or the operations of a mutual fund.

Risk— The possibility that you may lose some (or all) of your original investment. In general, the greater the potential gain from an investment, the greater the risk is that you might lose money.

Stock— A share of stock that represents ownership in the company that issues it. The price of the stock goes up and down, depending on how the company performs and how investors think the company will perform in the future.

Total return— A measure of investment performance that starts with price changes, then adds in the results of reinvesting all earnings generated by the investment during the period being measured.

Volatility— The degree to which a security varies in price. In general, the more volatile a mutual fund or stock, the more risk is involved.

Yield— In general, the annual cash return earned by a stock, bond, mutual fund or other investment. Bond yields can take many forms. Coupon yield is the interest rate paid on the face value of the bond. Current yield is the interest rate based on the actual purchase price of the bond, which can be higher or lower than the face value.

Yield to maturity is the rate that takes into account the current yield and the face value, with the difference assumed to be amortized over the remaining life of the bond.

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