Investing for Beginners: Most Popular Articles

IRA Contribution Limits
IRA contribution limits vary by year and age. This article charts the maximum allowable contribution to your IRA each year.

Warren Buffett Bio
Read a biography of Warren Buffett, the Chairman of Berkshire Hathaway. Warren Buffett went to Columbia to study under Ben Graham before gaining control of Berkshire Hathaway.

Calculating Gross Profit Margin
Gross Profit Margin can be calculated by dividing gross profit by total revenue. Gross profit margin tells investors the percentage of revenue that is used in the production process.

Net Profit Margin
Net profit margin is a ratio comparing net profit after taxes to revenue. Investors can calculate the net profit margin by using the income statement.

Return on Equity (ROE)
Return on Equity, ROE, tells investors how much profit a company earned in comparison to the total amount of shareholder equity on the balance sheet. A high return on equity means a business is more likely to generate cash internally. Return on equity is calculated by dividing net profit by average shareholder equity for the period.

Straight Line Depreciation Method
The straight line depreciation method is the simplest and most commonly used depreciation method. Straight line depreciation is calculated by spreading the cost of an asset out over its useful life.

Traditional IRA vs. Roth IRA
Deciding whether to open a Roth IRA or Traditional IRA is a major decision with potentially large financial consequences. Both forms of the IRA are great ways to save for retirement, although each offers different advantages. This IRA FAQ lists the pros and cons of each type.

Return on Assets (ROA)
Return on Assets (ROA) tells an investor how much profit a company generated for each dollar of assets. Return on assets is calculated by dividing revenue by average assets for the period.

401k Introduction
401k loans and 401k hardship withdrawals are ways employees can access their retirement funds in the event of an emergency or a financial need. This article discusses the pros and cons of 401k loans and 401k hardship withdrawals.

In this Corner: Investing Cash
Money markets and certificates of deposit are two popular investments for idle cash. This article discusses the benefits and drawbacks of each to help you determine what you should do with your cash reserves.

Avoid IRA Fees
Learn eight ways to avoid the early withdrawal fee on your individual retirement account (IRA) in this article from Investing for Beginners.

Analyzing a Balance Sheet - Investing Lesson 3
Investing Lesson 3 - Analyzing a Balance Sheet

Asset Turnover
The asset turnover ratio calculates the total sales revenue for every dollar of assets a company owns. To calculate asset turnover, take the total revenue and divide it by the average assets of the period.

Double Declining Balance Depreciation Method
The double declining balance depreciation method is an accelerated depreciation method that increases the amount of charges taken during the first few years. The double declining balance depreciation method can be helpful when comparing and analyzing an income statement.

Sample Income Statement
Sample income statement from Abercrombie and Fitch and Walt Disney. Analyzing these sample income statements as an investing lesson will give us insight into expenses and earnings, financial ratios, depreciation methods, and profit.

Investing Lesson 1 Intro
Investing lesson is an introduction to the stock market. The lesson aims to give a basic understanding of the market to new investors.

Income Statement Analysis
The primary purpose of the income statement is to report a company's earnings to investors. Income statement analysis can provide important insights into profit and expenses, operations, financial ratios and margins.

2008_berkshire_hathaway
The Berkshire Hathaway Shareholder Meeting was held this year during the first weekend of May 2008 in Omaha, Nebraska. Warren Buffett and Charlie Munger, the Chairman and Vice Chairman of Berkshire Hathaway, spent hours answering questions. Here are eight lessons learned during this year's shareholder meeting.

Top 10 Investing Books
These top ten investing books will help lay a firm foundation for your personal portfolio management abilities.

Return on Equity DuPont Model
Return on equity, or ROE, is made up of three important components under the DuPont model. Discover how to calculate return on equity using these three components in this article.

Working Capital
Current liabilities include accounts payable, short term and long term obligations, other current liabilities, commercial paper, and consumer deposits

All About Dividends
A company's board of directors declares a dividend and establishes a date of record (the ex-dividend date) and a payment date. The dividend can take several forms including cash, stock or property.

Intro to Stock Trading
This basic tutorial on stock trading provides twelve different types of stock trading orders investors can use to help manage their portfolio.

Long Term Debt and the Debt to Equity Ratio on a Balance Sheet
Long term debt and the debt to equity ratio are important indications of the financial stability of a company. They can be found using the balance sheet.

Current Ratio - Analyzing a Balance Sheet
The current ratio is a test of a company's liquidity. It can be calculated by dividing current assets by current liabilities on the balance sheet

Buying Stock without a Broker
This article discusses the advantages of buying stock without a broker the three primary ways you can begin.

Inventory Turn on the Balance Sheet
Inventory and inventory turn rates can be calculated using the balance sheet

Warren Buffett
Warren Buffett is the arguably the greatest investor in history. Warren Buffett is Chairman of Berkshire Hathaway.

How to Invest in Stocks
Have you ever wondered how to invest in stock but just don't know where to begin? In this quick tutorial on how to invest in stock your investing for beginners guide will walk you through the basics and help you get a better understanding of what you need to do to get the process rolling.

Retained Earnings on the Balance Sheet
Retained earnings are the profits a company has reinvested in itself. Retained earnings are carred on the balance sheet under Shareholder Equity.

Gross Profit on the Income Statement
Gross profit is the total revenue subtracted by the cost of generating that revenue, or cost of goods sold. Gross profit is used to calculate gross margin.

How to Become Wealthy
These nine financial keys will help you get on the road to financial freedom, build wealth, and become rich.

Coca Cola Company Balance Sheet
Coca Cola company balance sheet for 1999 and 2000

Basic Earnings Per Share (Basic EPS) vs. Diluted Earnings Per Share (Diluted EPS)
Basic earnings per share (Basic EPS) is the profit a company made divided by the shares outstanding. Diluted earnings per share (diluted EPS) factor in possible share dilution from stock options, convertible warrants and preferred stock.

Debt to Equity Ratio
The debt to equity ratio measures a company's ability to borrow and repay money.

Accumulated Depreciation
Accumulated depreciation is the write-down of an asset's carrying amount on the balance sheet due to loss of value from usage and age. Accumulated depreciation can best be understood by using a new car as an example.

Depreciation and Amortization on the Income Statement
Depreciation and amortization expense is recorded against earnings on the income statement in order to spread the initial purchase price of a fixed asset out over its useful life. Although depreciation expense requires no immediate cash outlay, it should not be added back to a company's profit.

Accounting Goodwill - Analyzing a Balance Sheet
Accounting goodwill is the premium over book value a company pays during an acquisition

P/E Ratio: Relative Value
The p/e ratio, short for price earnings ratio, was made famous by Benjamin Graham. The p/e ratio is a financial measurement of a company's current earnings per share, eps, compared to the price per share.

Formulas and Calculations for Analyzing a Balance Sheet
Various formulas and calculations used to analyze a balance sheet

Interest Coverage Ratio
The interest coverage ratio is a measurement of the number of times a company can make its interest payments with its earnings before interest and taxes. Interest coverage is calculated by dividing EBIT by interest expense.

The Basics of Shorting Stock
Shorting stock allows speculators to profit from falling stock prices. This article explains the basics of shorting stock, and considerations for those thinking about trying it out.

Operating Income and Operating Profit Margin
Operating income is a measurement of the money a company generated from its own operations. Operating income can be used to guage the general health of the core business or businesses. Operating profit margin is another measurement of management's efficiency. The operating profit margin compares the quality of a company's operations to its competitors.

Revenue and Sales on the Income Statement
Revenue or sales is the amount of money a business brought in during the time period covered by the income statement. Many companies break revenue and sales sources up by division or segment.

Before You Open Broker Account
Before you open a brokerage account, you need to learn the difference between a traditional and discount broker, the benefits and costs associated with each, and which one fits your style or personality.

Current Assets on the Balance Sheet
Cash and cash equivalents and short term investments are carried under current assets on the balance sheet

What is a Balance Sheet
What is a balance sheet? A balance sheet is the record of a company's assets and liabilities.

What is a Bond
Bonds are long term debt sold to investors by companies. The proceeds of the bond issue are used for many purposes, including operational expansion.

Investing in Municipal Bonds
Investing in tax-free municipal bonds can provide many advantages. There are two types of municipal bonds, general obligation and revenue. This article teaches you how to choose between corporate and tax-free munis.

Minority Interest - Analyzing a Balance Sheet
Minority Interest is found on the balance sheet under Liabilities. It is the value of the minority shareholders' holdings in a company's subsidiary or affiliate.

Annual Reports the 10k and 10q
When analyzing a balance sheet, you will need a copy of a company's annual report, 10K, and 10q

Take Action Today
In ten simple steps, you can begin building a complete financial portfolio. The complete financial portfolio includes yoru 401k, brokerage accounts, house, car, student loans, credit card debt, and more.

Learning to Invest - Lesson 2 - Why Stocks Become Over or Under Valued
In this investing lesson, we are going to learn why stocks become over or under valued.

Sum of the Years Digits and Other Accelerated Depreciation Methods
The sum of the years digits depreciation method is an accelerated depreciation method that assumes an asset loses a greater percentage of its value in the earlier years of its useful life. Sum of the years depreciation charges are calculated by adding up the useful years of an asset.

Current Liabilities on the Balance Sheet
Current liabilities include accounts payable, short term and long term obligations, other current liabilities, commercial paper, and consumer deposits

Inventories on the Balance Sheet
Inventories are carried on the balance consist of the merchandise a business owns but has not sold

Mutual Funds 101
Mutual funds have made investing easier for millions of Americans. This article explains mutual fund basics, benefits, and selection.

Interest Income and Expense
Interest income and expense reflects the amount companies pay on their debt or earn on their deposit accounts. Interest income and expense is sometimes reported as net on the income statement.

Minority Interests on the Income Statement, the Cost Method, Equity Method, and Consolidated Method
Depending upon the amount of voting stock owned, minority interests on the income statement will be recorded using the cost method, the equity method, or the consolidated method.

Total Return and CAGR
In order to evaluate investment performance, you must learn to calculate total return and compound annual growth rate, or CAGR for short. Total return and CAGR will allow you to gauge your performance relative to the market, mutual funds and other investors. This article will teach you to calculate the two metrics and put them to work today.

Estate Tax Rate
The estate tax rate and estate tax rate exemptions applied to the assets passed onto your heirs depends upon the year in which you pass away.

Receivable Turns - Analyzing a Balance Sheet
To calculate receivable turns, divide credit sales by the average receivables for the period

Quick Test Ratio
The quick test ratio is the strongest test of a company's liquidity

Cost of Goods Sold - COGS
Cost of goods sold (COGS) is the expense a company incurred in order to manufacture, create, or sell a product. Going back to our Pizza Parlor example, cost of goods sold, COGS, would include items such as flour and tomoto sauce.

Analyzing a Balance Sheet - Receivables
Receivables are money owed to a company by its customers. Receivables are carried on the balance sheet under Current Assets.

SGA - Selling, General and Administrative Expense
Selling, general and administrative expenses, or SGA expenses for short, consist of payroll costs, salaries, commissions, travel expenses, and advertising expenses. SGA expense is recorded as an operating expense on the income statement.

What is a Brokerage Account
A brokerage account is an account at a financial institution that allows an investor to buy, sell, trade and hold stocks, bonds, mutual funds, options, etc. There are a number of different types of brokers and brokerage accounts.

Enterprise Value
Enterprise value is the takeover value of a company. Enterprise value is calculated by adding a corporation’s market capitalization, preferred stock, and outstanding debt together and then subtracting out the cash and cash equivalents

Operating Expense
Operating expenses arise during the ordinary course of running a business. Operating expense consist of salaries paid to employees, research and development costs, and other charges that must be subtracted from revenue.

Shareholder Equity - Analyzing a Balance Sheet
Shareholder equity is the difference between total assets and total liabilities on the balance sheet

Book Value - Analyzing a Balance Sheet
Book Value and Net Tangible Assets are the excees of assets excluding intangible items subtracted by total liabilities. Book Value can be calculated using the balance sheet.

Working Capital per Dollar of Sales - Analyzing a Balance Sheet
Working capital per dollar of sales is a financial ratio that can tell you how much working capital a business needs

Revenue Recognition
Revenue recognition can drastically affect the financial statements. This article explains the difference between revenue recognition methods and the practical implications for the average investor. Revenue recognition methods covered include sales basis, percentage of completion, completed contract, installment and cost recoverability.

7 Rules of Wealth Building
The seven rules of wealth building feature time tested keys to building wealth in your personal life while ensuring your time is spent on the things that really matter. This article is part of the wealth building series on the investing for beginners site.

What is Stock
Stock is ownership in a company. The most popular types are common stock and preferred stock.

Dollar Cost Averaging
Dollar cost averaging is the practice of investing or saving money at specific times, regardless of market conditions or your personal financial outlook. Dollar cost averaging is an effective investment strategy that is practiced by some of the best investors in the world.

Long Term Assets and Investments on the Balance Sheet
Long term investments and carrying values on the balance sheet are easy to understand

Negative Working Capital
Companies that have a high inventory turn or are quickly growing can have negative working capital

Formulas, Calculations and Ratios for the Income Statement
These financial formulas, calculations and ratios can be used when analyzing an income statement.

What is a Blue Chip
This FAQ provides blue chip stock definitions, examples and links.

Flavors of Preferred Stock
Preferred stock is a hybrid between common stock and a bond. There are numerous classes of preferred stock including voting, non voting, cumulative, non cumulative, convertible and participating. This article explains the differences between each type of preferred stock class as well as the financial implictaions. Preferred stock is a mix between regular common stock and a bond that usually pays a high dividend. Preferred stock may or may not make sense for your fixed income portfolio.

Treasury Stock on the Balance Sheet
Treasury stock is listed under shareholder equity on the balance sheet. It represents the stock a company has issued and subsequently reacquired.

How To Buy a Single Share of Stock as a Gift
One of the most common questions I get is

Prepaid Expenses - Analyzing a Balnce Sheet
Prepaid expenses on the balance sheet

Six Steps to Retire Rich
These simple six steps to retire rich will help you ensure your golden years are spent comfortably. This article is part of the investing retirement center.

Warren Buffett Photo Gallery - Warren at Work
Warren Buffett working at his desk

The 3 Types of Investment Risk
Business, valuation and force of sale are the three risks that are present in every investment decision you will ever make. In order to be a successful investor, you must minimize these risks.

Inventory Turn Examples - McDonalds vs Wendy's
Compare McDonalds and Wendy's inventory turn

Who Wants Investing Lesson 1 Quiz Calculate Stock Price
Who Wants Investing Lesson 1 Calculate Stock Price

Make Money from Buying Stocks
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.

Microsoft's Balance Sheet
Microsoft's 2001 Balance Sheet

Comparing Depreciation Methods
Depending on which depreciation method is used, the depreciation charges incurred on the income statement can vary greatly. Comparing depreciation methods can make analyzing companies in asset intensive industries much easier.

4 Things to Look for in an ...
New investors are often interested in purchasing a company's stock but don't know what to look for. Here are the four most important things you should require of each of your investments.

Bonds 101
A bond is simply an IOU in which an investor agrees to loan money to a company or government in exchange for a predetermined interest rate. There are many different types of bonds.

Property Plant and Equipment
Property Plant and Equipment balance sheet analysis

Asset Allocation Intro
Asset allocation is the practice of diversifying assets between different asset classes. This article explains the theory behind asset allocation and provides sample allocation models for various life stages including early career and retirement.

Warren Buffett Timeline
A chronological timeline of the life of Warren Buffett, Chairman and CEO of Berkshire Hathaway. Section 1 covers 1930-1956.

Intangible Assets
Intangible assets are often carried on the balance sheet and nominal prices

Warren Buffett Photo Gallery - Warren and his friend Bill Gates
Warren Buffett and his friend Bill Gates

Starbucks Franchise Value
The Starbucks franchise is an example of an excellent business. This article discusses the value of the coffee company and its performance as an investment.

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)
Earnings before interest, tax, depreciation and amortization, also known as EBITDA, is commonly mistaken for a measurement of cash flow. EBITDA came into existence during the 1980s during the leveraged buyout craze that swept Wall Street.

Preferred Stock
Preferred stock is a mix between common stock and a bond. Preferred stock holders receive a guaranteed dividend in exchange for limited capital gains.

Who Wants to be a Millionaire Lesson 1
Who wants to be Rich Quiz Game

Learning to Invest - Lesson 2 - Mr Market
Mr Market is the famous metaphor created by the father of value investor Benjamin Graham

What is a Dividend
A dividend is a portion of corporate earnings paid out to shareholders. Most dividends are paid quarterly.

Goodwill and Amortization Charges on the Income Statement
Goodwill and other intangible assets must be amortized on the income statement. If the goodwill becomes impaired, management will announce a write-down and reduce the carrying value on the balance sheet.

Buffett Punch Card
Warren Buffett has often told students and investors that they should act as if they have a punch card with only twenty slots and those are the only allocation decisions they can make in their entire life. This punch card has been quoted by famed investor Lou Simpson in helping to account for his success at GEICO.

Warren Buffett Books and Re...
Warren Buffett has made a name as the most successful investor of the twentieth century. A student and friend of Benjamin Graham, the father of value investing, Buffett has managed to amass one of the largest fortunes in history through his company, Berkshire Hathaway. Using these books and resources you can now find out about his biography, investing techniques, and thoughts on business.

Pay Off Your Debt or Invest?
To decide whether to pay off your debt or invest, you must consider the amount of return you expect on your investments, and the type of debt you currently have.

Who Wants Investing Lesson 1 Quiz Calculate Dividend Yield
Who Wants Investing Lesson 1 Calculate Dividend Yield

Blue Chip Benefits
There are a number of benefits to investing in blue chip stocks. These benefits are caused by the franchise value and earnings power of blue chips.

Learning to Invest - Lesson 2 - Vocabulary and Introduction
Learn various investing vocabulary and terms in this second investing lesson

Warren Buffett Photo Gallery - Warren Smiling
Warren Buffett smiling

What the Balance Sheet Can and Cannot Tell You - Investing Lesson 3
Analyzing a Balance Sheet - What the balance sheet can and cannot tell youAnalyzing a Balance Sheet - What the balance sheet can and cannot tell you

Warren Buffett Photo Gallery - Warren and his daughter Susie at the Berkshire Hathaway Annual Meeting
Warren Buffett and his daughter Susie at the Berkshire Hathaway Annual Meeting

What is Dividend Yield
Dividend yield is an easy way to compare the relative attractiveness of various dividend-paying stocks. This FAQ will teach you how to calculate dividend yield.

Recession 411 - What it is ...
This part of the Recession 411 article explains how a recession may affect the way you handle your investments. Useful to investors weathering a recession.

The Fed & Interest Rates
This article is an introduction to the Federal Reserve and interest rates including the funds rate and the discount rate.

Warren Buffett Photo Gallery - Warren Glowing
Warren Buffett Glowing

Who Wants Investing Lesson 1 Quiz Book Issue Stock
Who Wants Investing Lesson 1 Quiz issue stock

Learning to Invest - Lesson 2 - The Difference Between an Investor and Speculator
Learn the difference between an investor and a speculator

Analyzing Microsoft's Balance Sheet
Analyzing Microsoft's balance sheet

Warren Buffett Photo Gallery - Warren Looking Snazzy
Warren Buffett looking Snazzy

Extraordinary and Nonrecurring Items or Events on the Income Statement
Extraordinary and nonrecurring items and events arise in the ordinary course of business. When analyzing an incomes statement, you should ignore them in your valuation.

Who Wants Investing Lesson 1 Quiz Answer
Correct Answer

Warren Buffett Quotes
Quotes and sayings by Warren Buffett, the Chairman of Berkshire Hathaway.

Learning to Invest - Lesson 2 - What Makes Stock Prices Go Up and Down
Learn what makes stock prices go up and down in this free lesson

Investing Lesson 1: An Introduction to the Stock Market - Part 2
Investing Lesson one understanding the stock market

Research and Development - R&D
R&D, short for research and development, costs can range from nothing to billions of dollars depending upon the type of business. Research and development is listed on the income statement as an operating expense.

How to Select a Mutual Fund
When three Boston money managers pooled their money in 1924, the first no load mutual fund was born. In the subsequent eight decades, that simple concept has grown into one of the biggest industries in the world, now controlling trillions of dollars in assets and allowing small investors a means to compound their wealth through systematic investments via a dollar-cost-averaging plan. In fact, the no load mutual fund industry has spawned its own stars such as Peter Lynch.

Other Liabilities
Other Liabilities is a general category found on a balance sheet.

The Benefits of Stock Buy B...
Companies declare stock buy back programs to reduce the number of shares outstanding, effectively increasing the earnings per share. Investors should look for companies that have announced share buy back programs.

"Kiss" - Keep It Simple, Stupi
Two of the greatest investors in history, Warren Buffet and Peter Lynch, are renowned for one single trick that helped them develop investing records of 20% to 30% compounding over long stretches of time. Buffett summed it up in the acronym “Kiss”, which stands for “Keep it simple, stupid!” When you truly understand what it means, it can have big ramifications for your portfolio and help you make sense of a turbulent market.

Analyzing the First Three Lines of the Income Statement
Analyzing the first three lines of the income statement, including total revenue, cost of goods sold, gross profit, and gross profit margin.

How to Think About Share Price
Investors cannot look at the share price by itself to determine the value of a stock. They must consider the relationship to earnings and net assets to share price. Stock splits can affect the actual price of shares.

Accounting for Extraordinary and Nonrecurring Items or Events in Your Analysis of the Income Statement
When analyzing an income statement, you must make an accounting for extraordinary and non-recurring items and events. It is best to leave these one-time events out of the equation, basing your earnings valuation on the predictable income of the business.

Investing in Index Funds
Low cost index funds can be a great investment, providing superior returns to actively managed mutual funds over the long term. This article explains the basics and benefits of investing in index funds.

Deferred Long Term Asset Charges
On a balance sheet, deferred long term asset charges are used to spread out asset charges over longer periods of time, as opposed to having them affect the company's earnings in a single quarter or year

Who Wants Investing Lesson 1 Quiz Raise Money
Who Wants Investing Lesson 1 Quiz Raise Money

Share Repurchase Programs - Increasing Earnings Per Share with Stock Buybacks
Share repurchase programs increase ownership and earnings per share by reducing the number of shares outstanding.

Determining Dividend Payout
In the days of falling stock prices, Board of Directors will often begin to pay dividends to help stabilize the company’s stock. This article discusses when a company should retain its earnings and when it should pay them out as dividends.

Common Preferred and Convertible Shares
Common Preferred and Convertible Shares are carried on the balance sheet. Learn more in Investing Lesson 3

Analyzing a Deteriorating Balance Sheet
Analyzing the balance sheet of Simon Transportation Services could have warned investors of a looming bankruptcy

The Intelligent Investor Fourth Edition by Benjamin Graham - Product Review
Read a product summary and review of The Intelligent Investor by Benjamin Graham

Who Wants Investing Lesson 1 Quiz PE Ration Calculation
Who Wants Investing Lesson 1 PE Ratio Calculation

Warren Buffett Photo Gallery - Warren Speaking at Berkshire Hathaway's Annual Meeting
Warren Buffett speaking at Berkshire Hathaway's Annual meeting

Warren Buffett Photo Gallery - Warren Kidding Around
Warren Buffett Kidding Around

Traditional IRA
Traditional individual retirement accounts, or traditional IRA for short, is a type of investment account which allows money to grow tax-free until the account owner turns 59 1/2. This FAQ explains the benefits and drawbacks of a traditional IRA.

Capital Surplus and Proprietorship Reserves
Capital Surplus and Proprietorship Reserves on the balance sheet

Who Wants Investing Lesson 1 Quiz $4000
Who Wants Investing Lesson 1 $4000