Chapter 12
Investment Tools

This chapter is the toolbox: what each instrument actually is, what it costs, how it is taxed, and when it belongs in your portfolio — stocks and the machinery for trading them, bonds, funds in their many wrappers, and the hybrids the industry keeps inventing. It assumes you arrive with the groundwork done: you know your Whys and have turned them into dated goals, your spending plan routes part of every paycheck to savings, and your emergency fund sits somewhere liquid, earning a real rate. If any of that is missing, fix it first — no instrument in this chapter rescues a portfolio that gets liquidated at the bottom to pay a surprise bill.

One decision precedes every instrument here: which assets belong in your portfolio, and in what proportion. That is asset allocation, covered in chapter “Asset Allocation”. Choose the mix first; pick the vehicles — this chapter — second.