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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.

About This Book

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 book is to go through Part I and then pick up on the investments that concern or interest you. For example, after reading Part I you may want to go straight to Part III to find out what collective investments are because, say, an advert about collective investments has caught your eye or a financial adviser has suggested one or two of them. Reading this section helps with your pension choices. But you may want to skip the chapter on buy-to-let properties because, say, being a do-it-yourself landlord is the last thought on your mind. Or the one on betting opportunities because they’re simply too scary.

Conventions Used in This Book

I’ve tried to avoid jargon as much as I can, but know that the investment world is full of it. Like all professions and occupations, finance and investment have their own insider language that’s intended to mystify outsiders. When I do use the industry’s language in the text, I italicise the term and define it for you in an easy-to-understand way.

Foolish Assumptions

While writing this book, I made some assumptions about you:

✔ You’re either completely new to investing or have limited information about it, and you want someone to help you understand what investing is really about and what types of investments are available.

✔ You don’t want to become an expert investor at this point in your life. You just want the basics – in informal, easy-to-understand language.

✔ You want to make up your own mind while using a guide through the investment jungle. You want enough pointers for you to risk only what you can afford to lose and for you to make a worthwhile return on your hard-earned cash.

Beyond This Book

Find out more about investing by checking out the bonus content available to you at www.dummies.com. You can locate the book’s e-cheat sheet at www.dummies.com/cheatsheet/investinguk, where you’ll find handy hints and tips.

Be sure to visit the book’s extras page at www.dummies.com/extras/investinguk for further information and articles.

Icons Used in This Book

I’ve highlighted some information in this book with icons:

This icon points out useful titbits or helpful advice on the topic at hand.

I use this icon to highlight important information that you’ll want to keep in mind, so don’t forget this stuff!

This icon points out just that – a warning – so take heed. The investment world is full of sharks and other nasties. I don’t want you to lose your money to crummy schemes and criminals.

You’ll find this icon next to, well, technical stuff that you may want to skip. I’ve been sparing with this stuff because investment can be pretty technical anyway. (Note that even though you may want to skip this material on your first reading, and please feel free to, this info may be worthwhile coming back to later with your greater knowledge of the fundamentals.)

Where to Go from Here

This book is set up so you can dive in wherever you want. Feel free to go straight to Chapter 1 and start reading from the beginning to the end. Or look through the Table of Contents, find your area of interest and flip right to that page. Or better yet, read Part I and then flip right to that page of interest. Your call.

Wherever you go from here, if you find a piece of advice or a warning that you think applies especially to you, copy it down and then fix it to the fridge with a magnet, or pin it on a board.

And as you read through this book, either in part or in whole, why not practise some dry-run investing? Buying a dummy portfolio using pretend money is always a good way of getting familiar with investment without the worry of losing money. You’ll find plenty of resources online to help you establish and plan your pretend portfolio.