Top Highlights

• In this chapter, we will discuss a safe approach to investing that you can use when you are in your 30s and up.   This approach consists of investing around 50% of your money into bonds and 50% into index funds.
• A bond is a type of a lending investment in which you loan money to an entity, typically a corporation or a government. The entity would usually borrow your money for a defined period of time at a fixed or variable interest rate. Bonds are used by private companies, states, sovereign governments, and municipalities to raise money and finance a vari...
• An index fund is a type of a mutual fund that has a portfolio designed to match or track the components of a market index, such as S&P 500.
• Here’s how banks and insurance companies work: customers give them money, which may need to be returned on a short notice. A bank would then invest or lend this money. If a bank lends a lot of money to untrustworthy institutions and customers and the loans go sour, the bank may go bankrupt.   This can’t happen in an index fund because the value of ...