The Basics - Investing FAQ for New Investors
Building a Portfolio
Building a portfolio, especially if you are a beginner, might seem overwhelming. The truth is, it is fairly simple and straightforward. This brief overview will point out a few things you might want to consider when you are putting together your first portfolio of investments.
The 5 Second Test to Determine If You Should Pick Your Own Stocks
A new investor probably shouldn't pick stocks for his portfolio unless he can answer a very important question. This question is a test I developed that lets me determine in under five seconds whether or not someone is sophisticated enough to select their own individual stock investments without the guidance of a professional.
What Is Considered a Good Rate of Return on Your Investments?
Many people don't know what they should consider a good rate of return on their investments. What is a good rate of return on stock? What is a good rate of return on real estate? History can provide us some clues as to what might be considered reasonable expectations. This can help you avoid taking on more risk than you should.
The Most Important Rule of Investing
When it comes to investing, there is one major rule that you should remember and avoid violating if you want to arrive at retirement with enough money to enjoy your golden years. What is this investing rule? Simple. Never invest money you can't afford to lose.
Market Capitalization 101
Market capitalization is a term used on Wall Street that is extremely important. Although it is often heard on the nightly news and in financial textbooks, very few new investors know what market capitalization is or how it is calculated. It’s actually really easy and intuitive. After you read about the details of market cap, as it is often called for short, you’ll understand the concept and begin using it when putting together your own portfolio.
The Entire Theory of Investing Using Murano Glass Beads
After having a conversation with one of the jewelry specialists at our luxury retail store, I decided to explain the entire reason investing generates much higher wealth than any other endeavor by creating a small, fictional company that sells nothing but murano glass beads as the product. Working through the numbers will allow you to see in only a few minutes the concept behind every IPO, every business sale, and every merger or acquisition.
If One of the Companies I Invested In Goes Bankrupt, Will I Owe Money?
Have you ever wondered what happens if a stock you owns goes bankrupt? Will you owe money? What happens to your holdings? Get the answers to these often asked, but rarely answered, questions.
Things to Remember Before You Buy Your First Investment
Buying your first investment can be overwhelming. These keys and tips will help you think about some important things to consider before you sign your name to the check. Even though they are designed to be read before you've bought your first investment, they are still useful to even the most experienced financier!
The Four Ways to Make Money
According to research, only 10% of American millionaires inherited their money with the rest going out and earning it. How did they make money? In this article, we'll discuss the four ways to make money that serve as the foundation of nearly every fortune in the history of the world other than inheritance, theft, and other methods that simply aren't practical to the average person.
Think of Your Stocks Like Real Estate
Think of stocks like real estate. People are often rational about the real estate they own but don't bring the same focus on value to the stocks they hold in their brokerage and retirement accounts. That's why so many regular investors do fine when owning real estate and property but fail miserably when it comes to the stock market.
The Number 1 Secret to Coming Back from Big Investment Losses
There is a two part secret formula for coming back from large stock market investment losses that can help you shave years off the process of rebuilding your wealth and moving toward the life of your dreams. In this special feature, we discuss how regular dollar cost averaging and dividend reinvestment can help you recover from painful...
Successful Investing Is Not Sexy
In the world of investing, most of the great gains are made in boring companies or index funds that aren't sexy. That means things like water utilities, power plants, banks, insurance, candy, chocolates. It all comes down to the price you pay for the asset and your focus on low costs and sufficient diversification.
Why It Might Be a Horrible Mistake to Sell Out During a Down Market
If you are more than five years away from retirement, your 401(k) was invested in a broadly diversified, low-cost index fund, and you’ve sold off your assets as the market has collapsed, you have made a very, very stupid long-term decision. Believe me, I wish it could be sugar coated, but you’ve effectively just dumped your ownership of great...
Surviving a Roller Coaster Stock Market
Stock market volatility can be a problem for investors that don't have experience in the financial markets. These tips and tricks can help you survive stock market volatility and reduce your retirement risk.
How Do I Actually Make Money From Buying Stock?
How does an investor actually make money from buying stock? The return an investor makes comes from dividends and an increase in the price of the shares.
Are You Gambling or Investing?
Some people treat Wall Street like a giant casino where luck, and not skill or analysis, is the determining factor in who succeeds and who fails. How do you know if you are gambling or investing?
Does a High P/E Ratio Mean a Stock is Overvalued?
Does a high price to earnings ratio, or p/e ratio, mean a stock is overvalued? Not always. Sometimes a high p/e ratio can be justified if the investor is certain as a result of his or her analysis that the cash flows will increase enough to result in a higher earnings yield in the future.
The Three Primary Types of Financial Capital
There are three categories of financial capital that are important for you to know when analyzing your business or a potential investment. They each have their own benefits and characteristics. They include equity capital, debt capital, and specialty capital.
What is Stock?
Find out what stock is and why companies issue it.
What is a Ticker Symbol?
The I.D. tag for stocks, learn what ticker symbols are and how they can help you research your investments.
Why Stocks Go Up and Down
The stock market is essentially a giant auction - only instead of antiques and heirlooms, it's ownership in businesses that's up for grabs. Find out why the stock market fluctuates.
What is the Dow Jones?
No matter who you are, you've heard of the Dow Jones. It's perhaps the most followed index in the world.
What is the NASDAQ?
The NASDAQ was the star of the bull market in the '90s. As a general rule of thumb, it is where most technology stocks are traded.
What is the S&P 500?
The benchmark that all investments are measured against, the S&P has long been an important indicator on Wall Street.
What is a Broker?
If you are going to invest, you almost always have to have a broker. Just what do they do, and why should you pay them? Find out here.
What are Money Market Accounts?
A checking account meets a bond meets a savings account. Money markets are easy ways to save money and earn a higher rates of interest.
What is a Dividend?
Some stocks pay dividends. This means that for every share you own, you are paid a portion of the company's earnings.
What is a Blue Chip Stock?
A few examples of blue chips are Wal-Mart, Coca-Cola, Gillette, Berkshire Hathaway and Exxon-Mobile. Find out why blue chips are favorable among investors.
What is a Stock Split?
When a stock splits, it seems like everyone gets excited. Discover what stock splits are and their effect on a company!
What is a Reverse Stock Split?
A reverse stock split is used to avoid delisting of a corporation's securities on a stock exchange. Following the Internet bubble, investors saw a flurry of reverse stock splits.
What are Penny Stocks?
They may be cheap, but they are high risk. Read about the appeal and risk of these low-priced stocks.
What is a Certificate of Deposit?
CD's are one of the oldest and most conservative investments around. Get the low down on them.
What are Commodities?
High-Risk, High-Dollar investments, commodities are not for everyone. You can lose your shirt - or become an instant millionaire.
What are stocks? How do they work? What is the Dow Jones? How do bonds make money? If you need simple questions like these answered, the Beginner's Corner is the place for you! Drop in to learn all the basics.
Do Not Despise the Day of Small Beginnings
Feel discouraged about investing small amounts? This short story about the success of Coca-Cola common stock should lift your spirits.
What are the Summer Doldrums?
The summer doldrums is a phenomenon in the stock market where trading volume falls substantially as a result of investor psychology. Typically, the summer doldrums are a result of money managers spending more time on vacation and outdoors rather than inside reviewing financial statements and buying or selling stocks.
Understanding a Holding Company
When you begin investing for the first time, you are going to encounter something known as a holding company quite often. In fact, many of the most successful companies in the world are really holding companies. This basic introduction the holding company will explain what holding companies are, why you need to understand how they work, and some things to consider before investing in one.
The Secret Philosophy of Successful Investing
Whether you are just now realizing that you need to invest for your future mid-career or you are starting out as a recent college graduate, you may get the impression from financial sites, newspapers, and television shows that your highest purpose in life should be to amass as much money as possible. That is foolishness. Here is the real story.
Why Many New Investors Lose Money
New investors often lose money because they are caught between the emotions of greed and fear - often at the wrong time. By learning to control your emotions, you have a better chance of taking advantage of market crashes.
If You Are a Long-Term Investor, You Can Ignore the Economy
The road of life has potholes and one of your jobs as the driver is to manage your finances so that when you hit a bump, whether it is called a “recession”, “job loss”, or “medical crisis”, you aren’t derailed and crash in a ditch.
Why Do Stock Prices Move?
Have you ever wondered why stock prices fluctuate or why the stock market can behave erratically? Here are some of the important basic factors.
How To Build a Stock Portfolio
How do you go about building your own stock portfolio when you are ready to start investing? The first place to start is by making sure you are diversified.
Successful Investing Is Simple
Investing isn't hard but people make it more difficult than it has to be. Wall Street doesn't help because the more complicated people think putting together a portfolio is, the higher the fees it can charge. As Warren Buffett said, there would be no need for the priesthood if people figured out that all you need are the ten commandments.