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...

Want to know the difference between a market order and a limit order?  How to trade on margin (or, if you do, how much risk there is for your portfolio)?  How shorting stock works?  If you are a new investor and you've always wondered about the simple stock trading techniques such as these, but were too embarrassed to ask, I put together this collection of articles and step-by-step guides to help explain it all to you.  Learn the basics of stock trading ...

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.)

According to a new story by the Associated Press, Vanguard, the nation's premier provider of mutual funds and 401(k) accounts, shows that the customers that did the following three things now have more money in their account than they did before the crash:

• Continued to maintain their regular contributions
• Took advantage of employer matching on 401(k) balances
• Reinvested all of their dividends

It all comes down to what I've told you hundreds, perhaps even thousands, of times: When you combine dollar cost averaging with reinvested dividends and employer matching, the results are far better than the stock charts appear.  You can always tell when someone doesn't know basic finance when they see a chart of the market that goes from 14,000 to 6,000 then back to 10,000 and assume people are still down 4,000 points.  Not when you factor in dividends, dollar cost averaging, and employer matching.  You are likely better off because of your lower cost basis. Almost everyone who falls into this camp has an ulterior motive, such as pushing gold or real estate as an investment (both are very good investments, as a matter of fact, under certain circumstances.  But only fools think they are always, in all circumstances, superior to retirement plans.)  In fact, I felt so passionately about this that a long time ago, I wrote an article called The #1 Secret for Recovering from Big Market Losses.

So: It's official.  Those who did the right things are now better off than before the crash.  I'm sure some corners of the population are going to complain about how the rich keep getting richer, but this is the same, boring advice that has been taught for time eternal.  Most people simply assume that something so boring, and so simple, can't be that powerful.  It's a huge mistake to make.  I hope you aren't one of those people.

Once you're ready to start buying and selling investments, you'll need to know how the process works.  This beginner's guide to online stock trading will walk you through choosing a broker to execute your online trades, the twelve types of stock trades you can make, how to short stock, how to trade on margin, the possible capital gains taxes you'll face, what market makers are and why they are important when trading stocks, and more.  Think of it as your ultimate reference guide to stock trading.

Continue reading The Beginner's Guide to Online Stock Trading ...

The broker and brokerage firm are the two primary relationships you will have when you begin your journey to investing, whether you use a traditional broker, a discount broker, a bank, or a trust company.  Given that this relationship is so important, I put together a collection of articles and resources that will help you:

• Know what to expect when dealing with your broker; you'll see actual copies of real brokerage account statements and trade confirmations
• Find out how to choose a broker and brokerage firm based on your own individual needs and financial resources
• Learn what full service brokers and full service brokerage firms offer their clients that the discount online stock brokers cannot
• Uncover the biggest rip-off fees to avoid from your stock broker
• Discover ways to invest in, buy, and sell shares of stock without a broker or brokerage firm
• Compare the difference between a brokerage account and the now-popular asset management accounts or portfolio management accounts
• Whether or not you may be able to sue your broker if you lose money
• The twelve types of trades that you can place at a brokerage firm to get your stock orders executed
• Find out whether or not you lose everything if your broker and / or brokerage firm declare bankruptcy
• Discover what it means if your assets, including stocks, are held in a street name rather than personally registered to you

If you are new to investing, or are considering making the change to a new financial institution or brokerage firm, you will definitely want to take the time to brush up on the knowledge in this collection.  Continue reading The New Investor's Complete Guide to Stock Brokers and Brokerage Firms.

How to get rich is a comprehensive collection of articles, resources, and guides on investing, building wealth, saving, and money management, all designed to help you with one goal: how to get rich.  You'll learn:

• How to Get Rich Using 8 Secrets to Financial Independence
• How Women Can Get Rich by Building Their Investment Wealth
• How to Become Wealthy by Focusing on 9 Truths About Money
• Six Steps to Retire Rich and Enjoy Your Golden Years
• 10 Secrets of the Super-Rich - How the Top 0.9% of Wealth in America Did It
• 7 Rules for How to Get Rich
• 3 Secrets to Building a Great Fortune
• The Importance of Building Passive Income for Those Asking How to Get Rich
• and Much More!

Continue reading How to Get Rich ...

Did you know that if you had put $10,000 into Series I savings bonds in June 1999, your bond would now have a redemption value of $18,856?  Compare that to the Dow Jones Industrial Average, which is at break-even levels when adjusted for inflation and reinvested dividends,  and suddenly these stodgy investments look like pure gold.  Yet, it took strength of character to own them when the rest of world was bragging about making 400% from their stocks in just a few short years.

That's why Benjamin Graham explained the importance of owning both stocks and bonds in his classic treatise, The Intelligent Investor.

To  help explain some of the basics of I bond ownership for new investors, I put together a collection of articles, all focusing on what I bonds are, how you earn interest with the Series I savings bond, and how you can actually begin investing in them if you decide to take the plunge.   To get started, sit back, relax, and let's jump right into The Beginner's Guide to Investing in Series I Savings Bonds.