On December 1, 1998, the Diamonds Trust ETF, which mimics the Dow Jones Industrial Average, closed at $91.27.  If you had invested $100,000, you would have ended up with 1,095 shares.  Along the way, you would have collected $22.886 per share in cash dividends.  To make this easy to understand, think of it as a reduction in cost basis.  Your break even point would now be $68.384 per share ($91.27 cost basis - $22.886 dividends received = $68.384 is the point you lose money).

The ETF now trades at $103.14.  That means that your gain is $34.756 per share ($103.14 current market value - $68.384 adjusted cost basis to reflect dividend income).  Compared to your original cash outlay of $91.27 per share, this represents a gain of 38.08% over ten years.  Your investment portfolio would be worth $138,057.82.

What is the compounded rate that represents?  We have to perform a calculation that involves something known as the "X Root" to figure it.  You take the total years (10 in this case) and divide it into the number 1.  The answer, 0.10, is going to be used in the next step.  You then take the gain, expressed as 1.3808 and raise it to the 0.10th power.  The answer is 1.032792505601167.  In other words, your stock investment compounded at 3.279%, or almost exactly the rate of inflation.   Read more...

This guide to investing in stocks was designed for new investors that have no background and want to find out what stock is, how it is issued, how preferred stock is different from plain vanilla common stock, the two ways you can actually earn a profit from investing in stock, and much more.  It's the best place to get started if you are serious about putting your money to work and joining the millions of men and women who own shares of companies throughout the United States and world.

All investing has to begin with saving money.  In this collection of articles about saving money, you'll discover the difference between saving and investing, how to calculate how much money you should be saving, techniques you can use to help you save even more money, and how to save the first $100,000.  It's a wealth of information that you won't be able to get anywhere else so take advantage of the opportunity to start saving money right now ...

In the United States, we pour billions of dollars in bonuses and severance packages on executives that leave their companies in shambles.  In China, they execute them.  This isn't a joke.  According to Reuters, China just executed Yang Yanming, a former securities trader who embezzled millions of yuan, most of which is still missing.

The reason, it seems, is that the Chinese government is aware of the country's massive leaps in wealth and that the journey is going to result in uneven economic disparity.  If the changes are too rapid, the poorer members of the country could result in discontentment, resentment, and uprising.  To help make the transition to a first-world empire easier, they have implemented the death penalty in economic cases where the defendant is guilty of serious, egregious conduct.  (Think Worldcom, Enron, and Madoff.)