General Investing
If you finally have your bills under control and find yourself with some discretionary income that you'd like to put to work, then you need to understand the basics of investing. This is one area where that old saying "work smarter, not harder" really applies.
If your friends at work or family members are constantly talking about their stock portfolios or the growth of their real estate holdings, and you'd like to get into that game too, then you need to learn how to invest wisely.
- Investing money wisely is something everyone would like to do 100% of the time. Unfortunately, everyone makes mistakes, but the successful investors make more good decisions than bad ones.
- Generally, there are three basic types of investments: stocks, bonds, and cash. Some investors treat cash as something that's only needed for unexpected expenses. But it can, and should, play an important role in nearly everyone's mix of portfolio assets.
- One of the many lessons learned from the Great Recession is that emergency funds should be available to all American households. Not only was unemployment high, many individuals struggled for months to find a job. Unfortunately, there are many myths about rainy day funds. In this article, we're going to be talking about emergency funds. As part of that discussion, we'll first talk about family income versus expenses, and "rules of thumb" that can be misleading. Next, we'll take a close look at some data published by several U.S. government agencies, and turn that data into insights about emergency funds....
- Learning the concept of compound interest is important to achieving financial goals. Retirement planning, as well as investment scenarios, often depends on calculations involving the compounding of interest. It's also important to become skilled at this concept while still young, because time plays a big factor in these calculations too.
- Perhaps you ended up with a $1,000 windfall, or somehow managed to save it – regardless of its origin (we won’t judge), it may be wiser to find a way to put it to work rather than cashing it away.
- The concept of present value doesn't have to be difficult to understand. However, it is an important investment theory to know because it's aligned with a second important concept: the time value of money. Calculations involving present value are used when creating business cases, examining annuities, as well as determining cash flows in perpetuity.
- While the term opportunity cost has its roots in economics, it's also a very important concept in the investment world. It's a model that can be applied to everyday decisions, as individuals are faced with making a choice between the many options encountered each day.
- Nearly every investor holds cash. That's because it can play a vital role in meeting a short-term savings goal or play a larger part in a long-term asset portfolio.
- When the banking industry experiences turbulent times, it's comforting to know that the Federal Deposit Insurance Corporation, or FDIC, is providing depositors with protection against the loss of their money. Even more comforting is the fact this insurance coverage is backed by the United States government.
- In the world of economics, there are two fundamental terms used to describe the price movements of goods and services over time: inflation and deflation. As investors, it's important to understand the impact of inflationary or deflationary times can have on investments too. In this article, we're going to start by defining the two macroeconomic terms: inflation and deflation. Next, we'll talk about how these conditions are measured by the U.S. Bureau of Labor Statistics. Finally, we'll briefly describe some of the best investment options available to leverage these economic states.
- In today's electronic world, it's estimated that over 200 securities firms now offer clients the ability to invest online. Times are changing, and investing over the Internet represents a dramatic transformation in the relationship between the broker and their clients.
- Investors often quote their returns in absolute terms. For example, they might say they earned an 8% return on their portfolio. But if we're really trying to measure the performance of an investment, then we need to understand absolute versus relative returns too.
- The term brokerage house refers to a firm that charges a commission for facilitating a variety of financial and investment services. Through their stockbrokers, brokerage houses allow investors to buy and sell publicly traded securities such as stocks and bonds.
- When buying and selling stocks, the investor generally has three types of orders they can place: market orders, limit orders, and stop orders. When working with a broker, it's important to understand both the trades that are possible as well as the firm's policies and procedures.
- When it comes to buying and selling stocks, investors have several options, including using techniques involving stop loss orders. It's important to understand how this type of order works; because they can limit a loss in a volatile stock market.
- Details Last Updated: Monday, 26 October 2020
- This is the final article in our income statement series. In the sections below, we're going to explain how to build an income statement. Understanding the concepts behind net income, profitability, or corporate earnings helps investors and creditors to gain a better understanding of a company's financial wellbeing.
Getting Started in Investing
If you start investing at an early age, then you also have time working for you. That's one of the reasons we are a big proponent of starting your investment portfolio early in life. To help get yourself, or your children, started down that road, we have the following publications to choose from:
- Nearly everyone says the Roth is a great investment. And nearly everyone is wrong.
- The concept of investing for dummies is just another way of admitting some topics need to be simplified. That's what makes the book series so popular.
- This article is going to review some of the basics of investing. That review will start with a brief discussion of risk and return, and how these two factors should be the basis for most investment decisions.
- If you're a computer geek that thinks a big dollar salary means you're rich, we might have some bad news. It's time to recode your brain, because that particular if / then statement has some serious flaws in its logic.
- Let’s get this straight—millionaires are made, not born. Ramsey Solution’s survey of over 10,000 millionaires revealed that 79% didn’t receive any inheritance from their parents or other family members. They got there through hard work and investing.
Platforms for Investing and Trading
If knowing when and what to invest in is one side of the coin, gearing up with the right tools is the other. Below, we present you our collection of the finest investment and trading platforms available, categorized by their best use cases:
- Looking for a way to avoid swap fees while trading forex?
- Our top beginner's pick for copy trading is eToro. Read on for more details, plus seven good alternatives.
- Trading commodities such as gold, silver, oil, and other natural resources has become increasingly popular in recent years. With the rise of advanced trading systems and tools implemented in commodity trading apps, trading these assets is now easier than ever. Providing users with up-to-date information on market prices and conditions, these apps allow them to make informed decisions when it comes to their investments.
- Trading has never been easier, thanks to the rise of online platforms that enable you to buy and sell various assets at the click of a button. But with so many options available, it can be challenging to decide which platform is right for you.
- By providing instant diversification for your portfolio, investing in ETFs can amplify the potential of any investor, novice or seasoned alike. We scoped the market to curate a list of the best ETF trading platforms available for US investors.
- May not be the longest-standing cryptocurrency exchange, but Binance was definitely instrumental in cryptocurrencies becoming a global sensation. Despite its ongoing legal troubles in the US, its US subsidiary Binance.US has over 2 million active users.
- Coinbase is one of the most prevalent names across cryptocurrency exchanges – offering far-reaching educational materials penned by experts in the industry, an impressive market reach, and a straightforward mechanism that is easy to pick up, Coinbase has become an excellent choice for many.
- An option contract allows traders to buy (call) or sell (put) an underlying asset at a specific price on or before a designated date and hold the right to scrap the contract. The option holder (the trader who buys the contract) pays a premium to the options writer (the trader who sells the contract). Note that premiums are multiplied by $100, the multiplier for standard US equity options contracts. So an option's premium of $1 is really $100 per contract.
- eToro is one of the best Dogecoin crypto exchanges due to various reasons, most notably its exemplary features, highly celebrated interface, and variety of payment options.
- Ladies and gentlemen, in the green corner, we have Robinhood—weighing in at 15 million users. And, in the blue corner, we’ve got the contender, Webull—a relative newcomer with 7 million users.
- You’ve got an eye for art—you can see emotions and meaning, while the rest of us see a slug. If that’s the case, have you ever thought about using your passion to make money?
- Looking for a new investment route to venture down? Yieldstreet and CrowdStreet may not be rival turf gangs, but they’re definitely leading the pack when it comes to online investing platforms.
- The below investment apps have been researched, reviewed, confirmed, vetted, re-vetted, and then ranked based on eight categories: account minimum, trading costs, account fees, selection, ease of use, sign-on bonus, education, and customer service. These are the investment apps that made the grade.
Calculators
Calculators help substantiate your investment strategies and set up your prospects. We have a good selection of helpful calculators for the everyday investor:
- This calculator provides the user with the present value of an investment. That is to say, the value of the investment stated in today's dollars. (Also known as current or nominal dollars, since the calculator does not adjust for inflation.) The calculator only requires three inputs to calculate the present value: the future value of the investment, the total number of time periods, and the discount rate.
- You can use this intrinsic value and return on equity (ROI) calculator to help you evaluate a stock you might be researching. The calculator only requires three inputs: the current market price of the stock you're examining, the stock's earnings per share estimate, and the risk free interest rate.
- This calculator provides the user with the future value of an investment. That is to say, the tool will calculate the value of the investment at a future point in time. The calculator only requires three inputs to compute the future value: the present value of the investment, the total number of time periods, and the interest rate.
- This calculator provides the user with the net present value of a series of cash flows. The difference between this tool and our present value calculator is its ability to handle cash flows of varying amounts. This calculator only requires three types of inputs to compute the net present value: the discount rate, cash flows coming in, and cash flows going out.
- This bond yield calculator can help you figure out the current bond yield, as well as the bond yield to maturity. The calculator requires several inputs including the current bond price, par value, coupon rate and years until maturity.
- This calculator provides the user with four of the more common market ratios. Using information such as the current market price per share, dividends per share, earnings growth rate and EPS data; the calculator provides the price to earnings, PEG ratio and dividend yield.
- This calculator provides the user with the present value of a perpetuity, or growing perpetuity. The calculator only requires four inputs: the present value type, cash flow amount, discount rate, and expected growth rate. Using this information, the calculator provides the present value of the cash flow.
- This Black-Scholes calculator allows you to figure out the value of a European call or put option. The calculator uses the stock's current share price, the option strike price, time to expiration, risk-free interest rate, and volatility to derive the value of these options. The Black-Scholes calculation used by this tool assumes no dividend is paid on the stock.
- A time value of money calculator helps investors to see the effect that opportunity costs have on the cash flow they get from an investment. This time value of money, or TVM, calculator allows the user to enter an initial investment, cash flows, and opportunity cost to calculate the net present value of the money. This allows the investor or analyst to see the affect that time has on the actual value of the money returned.
- This online tool is able to calculate the risk of ruin, which is also referred to as a drawdown calculation. The calculator takes into consideration the funds placed at risk, the dollars per transaction, the investor's threshold for ruin, as well as their probability of a positive outcome.
- This profitability index calculator can be used to figure out the benefit to cost ratio of an investment. Profitability index is the present value of future cash flows divided by the initial investment. When the profitability index is greater than 1.0, the present value of cash flows must be greater than the initial investment. Therefore, the investment must also have a positive net present value.
- This free compound interest calculator allows you to see the impact of compound interest on your long term investment. The calculator takes your investment or savings amount, interest rate before compounding, and investment duration to calculate the daily, weekly, monthly, quarterly, semi-annual, and annual effective interest rate. The calculator also returns the future value of the investment at each of the compounded interest rates
- This asset allocation calculator contains an automated risk tolerance questionnaire, which can help you determine a possible allocation of stocks, bonds, and cash for your investment portfolio. The calculator bases its allocation recommendation on your answers to six different measures of risk contained in the quiz. The calculator's output includes a description of the portfolio, as well as the percentages of stocks, bonds and cash.
- You can use this return on investment calculator to figure out your gain or loss on an investment. The calculator provides the overall ROI, as well as an annualized ROI. This return on investment calculator only requires three pieces of information, the original investment, the present or future value of the investment, and time elapsed or term.
Investing Strategies
Once you get up to speed with the basics of investing, you can and should employ a strategic approach. From the simplest buy-and-hold strategy to more complex applications, we list the most lucrative strategies for investors of all levels:
- The Oxford Club is a premier financial research provider and exclusive investor network that serves to educate and empower its members. Founded in Baltimore, Maryland, the organisation has gained notoriety for promoting Alexander Green's "3 Dollar Stock" retirement strategy. This particular strategy has been promoted by the team at The Oxford Club since 2018 and is still highly regarded. In this guide, we will discuss what the strategy entails to help you decide whether it's something you should consider for your retirement plan.
- Investors have an important choice to make when deciding on the size and number of investments to hold in their portfolio. On the one hand, investors can lower the risk of their portfolio through diversification. On the other, transaction costs increase with the number of stocks purchased.
- The term aggressive strategy refers to building an investment portfolio that attempts to increase returns by purchasing a larger proportion of higher-risk securities. It typically involves allocating a large portion of the portfolio's funds to equities.
- As its name implies, the Arbitrage Pricing Theory, or APT, describes a mechanism used by investors to identify an asset, such as a share of common stock, which is incorrectly priced. Investors can subsequently bring the price of the security back into alignment with its actual value.
- Investments do bring profitable returns to investors, but these are associated with some form of risk that may incur losses to investments. A defensive investment strategy saves investors by minimizing these losses and rebalancing the portfolio.
- One of the ways a company can protect itself from a hostile takeover bid is by adopting a poison pill defense. Generally, this term is used to describe several approaches the target company can employ to make the potential acquisition less desirable. In this article, we're going to talk about a strategy that target companies can use to protect themselves from hostile takeovers. As part of that discussion, we're going to provide a definition of the term "poison pill," as well as present some history of the phrase. Since the term is often used to describe one or more...
- Economists, scholars, and market analysts have been searching for ways to predict the movement of individual stocks for many years. Chartists and technical theorists believe historical patterns can be used to project future prices. While the random walk hypothesis claims that such movements cannot be accurately predicted. In this article, we're going to explain the principles behind the random walk theory. As part of that discussion, we'll start by comparing random walk to other popular theories such as the efficient market hypothesis, fundamental analysis, and technical analysis. Next, we'll talk about the modern history of this theory. Then we'll...
- The buy-and-hold strategy is a long-term, passive investing strategy in which shareholders continue to hold onto their stocks regardless of market conditions. This is in stark contrast with an active investing strategy, which involves almost constant monitoring of market conditions and frequently entering and exiting positions.
- Socially responsible investing is a phrase used to describe several types of investment strategies: Ethical, Green, and even Faith-Based Investing. These types of investment strategies are usually limited to individual stocks or mutual funds.
- Investing can often be a complex topic. Fortunately, every so often a shortcut comes along like the rule of 72, which is a way to estimate the time it takes to double an investment.
- The investing term swing trading refers to individuals who buy securities intending to capture gains in a matter of days or weeks. A swing trader looks to profit from stocks, options, and futures contracts exhibiting short-term price momentum.
- The investing term day trading refers to individuals that buy and sell securities throughout the day, closing out their positions before the markets close. Trades include several standard securities, including stocks, options, and futures (currencies, commodities, interest rates).
- The investing term scalping refers to individuals that hold a large number of securities for a very short period of time with the hope of profiting from small movements in the price of the security. Scalpers will conduct these trades in common stocks, bonds, derivatives, commodities as well as foreign currency.
- One often-misunderstood investment strategy is dollar cost averaging. While some financial planners insist the approach is a great way to save for the future, others say there is no advantage to using this technique. We've examined both sides of this story, and have concluded that advocates, as well as opponents, are correct in their thinking.
- Collateralized debt obligations take an asset and slice it into an investment that offers various levels of risk and reward. These asset-backed securities consist of bank loans as well as fixed income issues such as bonds and similar debt instruments. In this article, we're going to be discussing the topic of collateralized debt obligations, or CDOs. As part of that discussion we'll talk briefly about the history of these investments. Next, we'll talk about how CDOs are structured, including an example that demonstrates how the tranches might be sold to investors. Then we'll finish up with the pros and cons...
- Investing oftentimes involves closely examining numbers. Investors rely on data, and trends in that data, to provide insights into what's happening with their investments. Numbers can sometimes look odd to analysts too; which is certainly true with Simpson's Paradox.
- When the stock market is bullish, investors seem to take more risk. At least that's the experience with stock accumulators. These financial derivatives provide buyers with a lot of upside potential when prices are on the rise. Unfortunately, when stock prices fall, the losses can be devastating.
- The term short-selling stock refers to the practice of selling securities that are not owned. Investors will short stocks when they believe a stock's market price is going to decline. In this article, we are going to cover the stock market investment strategy referred to as short selling.
- The practice of paying delinquent property taxes for another party is known as tax lien investing. When an investor purchases a tax lien certificate, they become a lien holder on the property. This gives the investor a legal right to foreclose on the property under certain conditions. In fact, the property cannot be sold, or refinanced, until the lien is satisfied.
Derivatives
Explore the versatile and dynamic realm of financial derivatives, where opportunities for hedging, speculation, and risk management abound. We have resources for seasoned investors and novices alike that can help demystify the complexities of options and futures.
- In this article, we're going to provide an introduction to futures trading. As part of that discussion, we're going to first talk about the structure of these contracts, delivery of commodities, and pricing of options. Then we'll explain some of the common industry terms such as hedges, straddles, calls, puts, and stop loss orders. There are two basic reasons that trading in futures has grown in popularity. First, and foremost, these contracts can be used as a hedge against the movements in a commodity's price. For example, a company can purchase a contract to "lock in" the price paid for...
- The financial investing term futures contract refers to a standardized agreement between two parties to buy and sell a commodity or security at a pre-determined price on a future date. Futures contracts are traded on an exchange, and can be settled in either cash or physical delivery of the commodity or financial instrument.
- In the world of options trading, there is a word that is used to describe the relationship between the current trading price of the security and the strike price of the option: moneyness. Whether an option is in-the-money or out-of-the money tells the holder of the option if the security they own has value.
- The term contract size refers to the deliverable quantity of a commodity or security named as the underlying asset in a futures or options contract. The deliverable quantity, and therefore the contract size, for futures and options contracts are standardized but vary according to the underlying asset.
- The investing term European option refers to contracts that give the investor the right to buy or sell an asset at a specific price on a certain date. A European call option provides the investor with the right to purchase an asset, while a put option provides the investor with the right to sell it.
- In addition to buying and holding securities, investors can also purchase stock options to either protect an investment or leverage price volatility. Puts and calls are the most basic forms of these contracts, and provide the foundation for more complex contracts.
Investing in Stocks
Let's face it, we've all been to the local bank and opened up a savings account. But the stock market is another matter altogether. Yes, purchasing a stock is pretty straightforward, but researching a stock is another matter altogether. Once again, we start by offering simple advice such as stocks for dummies and add to the mix more complex topics such as buying preferred stocks.
If you want to become a serious investor, then you need to understand what investing in stocks is all about. Over time, the stock market has provided investors with a fair balance of risk and reward. So if you're thinking about buying a share of a company's stock, here's the place to start.
- Serious investors do their research before buying a stock. After all, it's their hard earned money, and they want to make sure they maximize their return on investment. In this article, we're going to provide insights into an approach that should help individuals to read through online stock reports and snapshots more effectively and efficiently.November 6th, 2024
- The typical stock quote contains more information than just the current market price per share. It often reveals where the price has been in the past and where it might be heading in the future. A quote can also help the analyst to understand the current stock price relative to historical prices.November 6th, 2024
- Anyone learning how to invest in the stock market has probably seen terms like price to earnings and leverage. These are financial ratios, and understanding what they say about a company can mean the difference between picking a winning stock and a loser.November 6th, 2024
- One of the variables investor-analysts should understand when conducting research is the reporting of stock ownership figures. This data provides not only a glimpse into the major shareholders in a company, but also the recent changes in shares held by those same institutions or individuals over time.September 21st, 2023
- The economic recession that began in late 2007 brought about an end to the boom of leveraged buyouts (LBO). The same problems that plagued the mortgage industry, slowly made their way to private equity firms operating in the financial markets. As the economy began to lift in 2009, the return of the LBO would not be far away.January 23rd, 2024
- Individuals new to the concept of investing often want to start trading stocks, but don't understand where to begin. This article is structured to be a simple introduction to stock trading basics. We'll explain what takes place when trading a stock, and what to look out for when calculating the return on investment.September 21st, 2023
- Playing a stock market game is a great way to gain a better understanding of the inner workings of the stock market without the risk of losing real money. We did some research, and found several online games that are very good. We also took a look at several board games that might help with the learning process too.September 21st, 2023
- Wondering how to buy VTI? And do you need a Vanguard account to buy VTI? These are common questions for new investors that either aren't familiar with ETFs, or they're just having trouble navigating Vanguard's website (and I don't blame you for that! I still get lost on their site once in a while!).April 17th, 2024
- Investing can be a complicated venture, with lots of uncertainty. It can also fundamentally change your money future for the better. Being smart and strategic with a long term focus is generally the touted advice, but it gets a little murkier as you wade into the specifics. Whether you’re already a knowledgeable investor, or you’re researching to make your first step, there’s always something to learn. This guide to investing in VOO will help you feel cool and confident as you work on your investment portfolio. This post was written by our amazing staff writer, Lindsey Smith!April 17th, 2024
- Investing in mutual funds, index funds, stocks, bonds, or real estate is sometimes so convoluted, many people give up. Even if you already know how to invest, where and how much can leave you second guessing yourself in the middle of the night.April 17th, 2024
- Deciding where to invest your money can be overwhelming even when you’re only focusing on the United States. The question that inevitably comes up is, “should I invest outside the U.S.?” "And if so, how?" The search often leads people toward the best European index funds.April 17th, 2024
Researching Stocks
While some people may be successful in picking stocks based on a gut feeling, we're not convinced that long-term, sustainable, results are possible with that approach. If you've never researched a stock before, then take a read through our four-part series on this topic.
By the time you're done, you should feel confident and a little more comfortable that you picked a stock with your head and not your heart, or your stomach:
- This is the first in a four-part series of articles that will cover the topic of stock research. In this article, we're going to discuss the fundamentals of investing, how to find excellent stocks, and the types of companies to avoid.
- The first article in this series explained how to identify the types of companies that are worth owning. This included companies that were in businesses that are understood as well as owning "excellent" companies with expanding value.
- This is the last in a four part series aimed at explaining a fundamental approach to selecting stocks. In this article, we'll summarize what was learned; then use an example to review the information appearing in each of the earlier articles in this series.
- Previously, we learned how to calculate two important financial measures: intrinsic value relative to a risk-free investment, and return on equity. In this article, we'll be examining both earnings stability and earnings growth.
- Generally, investors buy common stocks for two reasons: they offer a cash dividend, and they also have the potential to provide a capital gain. In this article, we will present a method for calculating stock prices based on a constant growth model, leveraging a discounted cash flows approach which considers both dividends and capital gains.
- One of the models that can be used to project the expected return from a common stock, or any type of asset, is the capital asset pricing model or CAPM. In general, the capital asset pricing model describes the relationship between the risk of a particular asset or stock, its market price, and the expected return to the investor.
- Perhaps the single most important measure of stock risk or volatility is a stock's beta. It's one of those at-a-glance measures that can provide serious stock analysts with insights into the movements of a particular stock relative to the overall market. In this article, we're going to first attempt to define the concept of beta values, including some of the theory upon which it's based. Next, we're going to talk about the pros and cons of the measure, while providing insights into the correct use of beta values when analyzing a stock. Finally, we're going to finish up with...
- One of the most respected names in the investment community is Value Line. Their research is an outstanding resource to both new and seasoned investors. While a subscription might seem expensive, publications are often available for free at local libraries.
- Today's stock market is more than just a place to buy and hold securities. Many investors prefer to move quickly in and out of the market. That's just one reason technical strategies, such as price momentum, have grown in popularity.
- Details Last Updated: Friday, 24 April 2020
- A stock market downturn is often the best time to identify potential takeover targets. Fortunately, investors can use the same valuation techniques as corporate raiders when searching for stocks that are undervalued.
- We've already explained how to put a business case together based on a cash flow analysis. In this article, we're going to be focusing on how to interpret the results of a business case by examining the most common financial measures derived from a cash flow analysis.
- The history of the stock ticker and ticker symbols begins with the ticker tape machine invented by Thomas Edison. The original need for symbols no longer exists, but stock tickers are still alive today.
- This is the last, and final, article in our series describing cash flow concepts. In the paragraphs below, we’re going to explain how to go about building a cash flow statement. While many investors will never need to create this financial report, understanding the concepts provides a greater appreciation for its value when evaluating the financial health of a company.
- Cash flow is an important concept to understand when evaluating a company's overall financial health. It removes the effects of accounting methods, and delivers a clearer picture of the inflows and outflows of money. It's also useful when trying to understand the impact a new investment or project can have on a company's finances.
- Anyone owning shares of stock in a company that's involved with a proxy contest needs to understand how that contest can affect the price of their securities. Over the last ten years, there have been notable examples of proxy contests such as Carl Icahn's attempt to replace Yahoo Inc.'s board of directors.
- The income statement is an accounting report that allows a business, as well as investors, to understand if a company is operating successfully. The income statement is often used to help value a company's stock, and it's also used by credit rating agencies to determine its creditworthiness. In this article, we're going to first review some of the basic information that appears on an income statement. Then we're going to talk a little bit about the limitations, or weaknesses, of this report. Finally, we're going to summarize what we believe are the strengths of the income statement, and how this...
- Perhaps the most important metric to understand before investing money in the stock market is earnings per share. In fact, because of the importance of this ratio to shareholders, a great deal of time is spent by market analysts developing and evaluating earnings per share estimates.
- Anyone learning how to invest in the stock market has probably seen terms like price to earnings and leverage. These are financial ratios, and understanding what they say about a company can mean the difference between picking a winning stock and a loser.
- Serious investors do their research before buying a stock. After all, it's their hard earned money, and they want to make sure they maximize their return on investment. In this article, we're going to provide insights into an approach that should help individuals to read through online stock reports and snapshots more effectively and efficiently.
- While the income statement helps the analyst to understand the profitability of a company, the balance sheet helps them to understand how much a company is worth. The balance sheet does this by reporting how much a company owes (liabilities), how much it owns (assets), and the money held in retained earnings (equity).
- When a stock analyst wants to understand how other investors value a company, they look at market ratios. These measures all have one factor in common; they're evaluating the current market price of a share of common stock versus an indicator of the company's ability to generate profits or assets held by the company.
- One of the more interesting measures of a company's financial performance is the DuPont Equation. This model allows stock analysts and investors to examine the profitability of a company using information from both the income statement as well as the balance sheet.
- Shareholders are part owners of a company. The money received from the sale of common stock can be used to produce additional profits, and provide shareholders with a return on their investment. As analysts, we can examine efficiency ratios to determine if a company is using this capital competently.
- Investors have a wealth of financial ratios they can examine to better understand the health of a company. One of the most important measures of management efficiency is the cash conversion cycle, which tells the analyst how much cash the company has tied up in inventory, its ability to collect money owed from customers, as well as the time it takes to pay certain creditors.
- The balance sheet provides investors with a summary of a company's financial position at a point in time. This accounting report contains a listing of assets owned and debts owed, thereby allowing the reader to understand the company's worth as well as the money borrowed from lenders and owed creditors.
Types of Stocks
For many, stock investing is the core and entirety of their investing journey. But no two stocks are the same – find out what types of stocks suit your investment goals and personal circumstances the most below:
- Investors are constantly faced with the decision between risk and return. The same logic applies to growth versus value stocks. Rationale investors will agree that picking a quality stock is important, but not everyone agrees that value is more important than growth.
- During economic recessions, or market downturns, investors typically add defensive stocks to their portfolios. These stocks can be expected to perform relatively well during all phases of a business cycle, even during difficult economic conditions. In this article, we're going to help define what is meant by a defensive stock. As part of that definition, we're going to explain how to identify these companies. We're also going to talk about the pros and cons of investing in these stocks, including the best time to buy them.
- There is no doubt the stock market presents individuals with a variety of investment opportunities every trading day. One of the opportunities investor should be familiar with is cyclical stocks. As consumers, we are at the mercy of large economic swings or cycles. As investors, we realize these same economic cycles provide us with a chance to grow our investment returns or protect ourselves; if we know what signals to look for.
- As investors, it's important to know how to go about finding the best stocks to buy. Before it's possible to successfully choose these stocks; however, it's essential to understand some of the fundamentals of evaluating securities.
- When interest rates are low, retirees and other investors turn to dividend paying stocks to provide them with a reliable source of income. In fact, investing in companies paying high dividend yields is often viewed as the "sensible" or "rainy day" approach to creating an investment portfolio.
- Stocks can provide an individual with two returns on their investment. The stock's price can increase over time, and selling shares results in a capital gain. Companies can also pay shareholders dividends, which are usually received periodically throughout the year. In this article, we're going to cover the topic of stock dividends. As part of that discussion, we'll explain about why some companies pay dividends, and why some investors value them. Next, we'll talk about the dividend payment process, including an explanation of the terms ex-dividend and date of record. We'll finish up with a brief overview of related...
- When investors talk about buying stocks, they're typically referring to shares of common stock. But preferred stock offers the investor the advantages of both common stock and bonds, and is oftentimes a compromise worth pursuing. In terms of financing, preferred stock usually occupies a relatively small percentage of the overall mix of a company's capitalization; typically accounting for less than 10% of a company's overall source of funds. That's because from a tax standpoint, preferred stock is treated as equity, but the requirements for dividends are more like bond payments.
- When investors talk about quality stocks, they'll often use the phrase "blue chip." Unfortunately, even seasoned market analysts can't agree on a definition of this term. But they do agree that blue chip stocks have some very desirable attributes.
- With stock ownership, it's certainly possible to have too much of a good thing. Diversity of stock holdings is important, just ask any former employee of Enron. When that company filed for bankruptcy, thousands of employees lost nearly all their savings. In this article, we're going to explain why experts feel investors should avoid putting more than 10% of their portfolio's assets into one company's stock. We'll also explain how to go about diversifying a portfolio, as well as providing an example to demonstrate the positive impact holding an assortment of stocks can have on your return on investment.
- The term small cap stock is used to categorize common stocks issued by companies that are considered "small" as measured by their total market capitalization. There is a great deal of investor interest in these securities, because they offer some noteworthy advantages. For example, these stocks can provide investors with growth opportunities that are beyond those of large cap stocks; research studies indicate the return on investment for small cap stocks is oftentimes greater than their larger counterparts.
- In this article, we're going to talk about a class of stocks that are frequently mentioned in the news, but not always completely understood. In the United States, investors often associate penny stocks with issues that are not traded on one of the more prestigious stock exchanges; but that's not the complete story.
- Playing a stock market game is a great way to gain a better understanding of the inner workings of the stock market without the risk of losing real money. We did some research, and found several online games that are very good. We also took a look at several board games that might help with the learning process too.
- The term cost of preferred stock refers to a calculation that allows the investor-analyst to understand how expensive it is for a company to issue preferred stock. The cost of preferred stock is also one of three metrics used to calculate a company's cost of capital.
- The term cost of preferred stock refers to a calculation that allows the investor-analyst to understand how expensive it is for a company to issue preferred stock. The cost of preferred stock is also one of three metrics used to calculate a company's cost of capital.
- The term cost of preferred stock refers to a calculation that allows the investor-analyst to understand how expensive it is for a company to issue preferred stock. The cost of preferred stock is also one of three metrics used to calculate a company's cost of capital.
Stock Picks
We applied our practices for researching and evaluating stocks to curate collections of top-performing equities available. Explore our top picks below:
- Swing trading stocks can be a great way for investors to take advantage of short-term stock market movements and gain significant returns. If you're interested in swing trading, the key to success lies in selecting the right stocks to buy and sell quickly for a profit.
- This section will highlight the best EV-trading penny stocks available in the United States.
- The table below lists the best stock picks under $2, listed on public exchanges.
- The demand for sustainable energy has grown rapidly in recent years. This has resulted in increased scrutiny of the automotive market. As a result, the electric vehicle (EV) industry has made significant advancements.
- Intelligent Bio Solutions Inc. is a life sciences company, founded in 2016 with headquarters in New York and is engaged in performing diagnostic tests, real-time monitoring, and non-invasive surgery for its patients. The firm has developed a CoV-2 Biosensor, which can be used in RNA virus detection.
- Hour Loop was founded in 2013 with headquarters in Redmond, Washington. It’s an online retailer involved in e-commerce in the United States that hit the public markets on Jan 7th of 2022. The company sells home/garden decor, electronic products, kitchenware, and apparel through walmart.com, amazon.com, and hourloop.com.
- The table below lists the best stock picks under $1, listed both on public and OTC exchanges.
- This comprehensive guide to the cheapest penny stocks will give you the walkthrough of the top 10 best low-cost securities you can trade today, along with the leading trading platforms you can use. We understand that it can take a long time to research the best options, so we have made an attempt to save your time by performing all the research.
- Hydrogen is an energy source that doesn't emit any greenhouse gases when it's burned. The only thing that comes out of it is water vapor, which makes it way cleaner than fossil fuels like natural gas, oil, and coal. The US is committed to reaching net-zero emissions by 2050, and hydrogen is a huge part of that.
Stock Indexes
A stock market index represents a specific segment of the financial market, often reflecting the performance of a selected group of companies, such as the top 100, 200, or 500, or sometimes even specific commodities or sectors. Essentially, indexes provide a benchmark that allows investors to gauge the performance of these segments and, through various financial products like index funds or ETFs, to mirror these segments in their portfolios, effectively allowing them to participate in the movements of the overall market or that specific segment. We discuss the iconic indexes below:
- The Dow Diamonds offer investors a unique opportunity to "own" the Dow Jones Industrial Average. In this article, we'll discuss the structure of this fund, its advantages, how it's traded, as well as recent performance statistics in terms of annual returns.
- The history of the Dow Jones Industrial Average, or DJIA, goes back to May 26, 1896. Charles Dow, Wall Street Journal editor and founder of Dow Jones and Company, first compiled and published the average as an indicator of stock market performance.
- The term equity index refers to a sample of equities used to measure the performance of a sector of equities. An equity index is a tool investors use to understand how individual equity performs relative to its peers.
- While the Dow Jones Industrial Average might be the most well known, it's not the oldest index assembled by Charles Dow. That title goes to the Dow Jones Transportation Index, which also plays an important role in something called the "Dow Theory."
Stock Market & Exchanges
Perhaps the most recognizable stock exchange in terms of name and trading floor is the New York Stock Exchange. But did you realize that the NASDAQ currently holds the single day trading volume record?
We cover the two most noteworthy exchanges in America, as well as exchanges from around the world. We've even thrown in some information about holidays and trading hours:
- We live in a global economy; however, some of the largest stock markets in the world are located in the United States, and they do follow an American holiday schedule. There are currently nine holidays on which these stock markets are closed, as well as special rules that often indicate the early close of these exchanges.
- At one time, the American Stock Exchange, or Amex, was the third largest exchange in the United States, positioned behind the New York Stock Exchange and the NASDAQ. Prior to the merger with NYSE Euronext, over 570 companies were listed on the Amex, with a market value in excess of $565 billion.
- The Australian Stock Exchange Limited (ASX) operates Australia's national exchange for equities, derivatives, and fixed interest securities such as bonds. The exchange also provides comprehensive market information and data to a wide range of traders, brokers, and commissions.
- The Toronto Stock Exchange is just one of two national stock exchanges operating in Canada, the other being TSX Venture Exchange. Both of these companies are held by TMX Group, Inc., which is considered the cornerstone of the Canadian financial markets and the center of Canada's equity market.
- The term after-hours stock trading refers to the exchange of shares on a market between the hours of 4:01 p.m. and 8:00 p.m. Eastern Time. After-hours trades include the buying and selling of shares at an agreed-upon price, just like the trades that occur during normal market hours.
- The Tokyo Stock Exchange, or TSE, is one of the largest stock markets in all of Asia, with over 3.9 million shares exchanging hands each trading day. The exchange supports the trading of bonds and derivatives in addition to equities.
History of the Stock Market
If you're going to start investing in stocks, it helps to understand how stock markets evolved, and learn something from their history. Many analysts often look for parallels between today's market and the crashes of 1929, 1987, and 2008.
If you want to understand what happened back then, and have a deeper understanding of what could happen in the future, then we have a primer on these three significant points in the history of the stock market:
- Only time will tell the full story of the stock market crash of 2008, but on Monday October 6, the stock market would start a weeklong decline in which the Dow Jones Industrial Average would fall 1,874 points or 18.1%. While the exact cause of this crash may differ from those of 1929 and 1987, they share one common element - they all began in October. In this article, we're going to provide a summary of the market movements between October 1st and October 10th, 2008. We'll also discuss some of the events leading up to this market collapse....
- Learning about the Stock Market Crash of 1987 is just as important as understanding what happened during the Stock Market Crash of 1929. Many historians argue there were similarities between the two crashes, and that appears to be true. There also seem to be several distinct differences between these historic events.
- Nearly every investor has heard of the Stock Market Crash of 1929. For market historians, it's important to understand the circumstances that existed in 1929. A deeper understanding of what happened in the past can possibly prevent this type of event from occurring in the future.
- Individuals researching the history of the stock market often focus on the events leading up to the stock market crash of 1929. Admittedly, this event had a huge impact on the market as well as the world's economy. But the real history of the stock market goes back to the formation of the modern stock exchanges.
Investing in Mutual Funds
If you're not quite sure that investing in individual stocks is right for you, then mutual funds is a simple way to get your feet wet in the equities market. There are many advantages to starting off with mutual funds. For example, they offer the investor the ability to create an instant portfolio, with a minimum of financial commitment and expense.
Unfortunately, not all mutual funds are created equally. So even if you've decided on this simplified approach, you still need to familiarize yourself with the terminology you're likely to encounter when researching a fund.
- If you're not quite sure that investing in individual stocks is right for you, then mutual funds is a simple way to get your feet wet in the equities market. There are many advantages to starting off with mutual funds. For example, they offer the investor the ability to create an instant portfolio, with a minimum of financial commitment and expense.
- This is the first article in a four-part series dedicated to buying mutual funds. In this first installment, we're going to discuss the popularity of mutual funds, their risks, and some of the terminology an investor will encounter.
- In this final article in a four-part series dedicated to buying mutual funds, we'll be discussing both management fees and fund loads. We'll also discuss information about the fund's manager, which appears in the prospectus literature.
- In part two of this four-part series, we're going to explain how to start the process of researching a mutual fund. In this step, the investor will be looking to align their financial objectives with that of the mutual fund.
- This article, so insensitively named Mutual Funds for Dummies, completes our "dummies" series in this section of the website. We have already covered topics such as stocks and investing, and are rounding out this section with this article on mutual funds.
- In this article, we're going to take a closer look at Federated Mutual Funds, also known as Federated Funds. The Federated family is known for producing top performing mutual funds, which are aimed at the institutional as well as the individual investor. Let's see if that holds true in this review.
- Fidelity Mutual Funds is the next family of funds we're going to discuss in this series. We'll start that discussion with a brief history of Fidelity. Next, we'll talk about their fee structure. Finally, we'll identify some of their top performing mutual funds.
- Real estate mutual funds provide investors with one of the easiest ways to get started in this market. These specialized funds oftentimes allow investors to participate with as little as $1,000. Real estate funds also offer the investor the advantages of a mutual fund, which includes a portfolio with lower overall risk, as well as professional management of the investments.
- In part three of this four-part series, the topic will be evaluating mutual funds. In this article, we're going to help investors to better understand the information they're likely to encounter when reviewing performance reports. This includes Morningstar as well as other publishers of mutual fund ratings data.
- The approach to researching mutual funds is similar to that used when selecting stocks. But since a mutual fund is a pre-packaged portfolio of securities; the process is a little simpler. The universe of mutual funds is also much smaller than that of common stocks, so there are fewer options to evaluate.
- The approach to researching mutual funds is similar to that used when selecting stocks. But since a mutual fund is a pre-packaged portfolio of securities; the process is a little simpler. The universe of mutual funds is also much smaller than that of common stocks, so there are fewer options to evaluate.
- The approach to researching mutual funds is similar to that used when selecting stocks. But since a mutual fund is a pre-packaged portfolio of securities; the process is a little simpler. The universe of mutual funds is also much smaller than that of common stocks, so there are fewer options to evaluate.
- The approach to researching mutual funds is similar to that used when selecting stocks. But since a mutual fund is a pre-packaged portfolio of securities; the process is a little simpler. The universe of mutual funds is also much smaller than that of common stocks, so there are fewer options to evaluate.
- The approach to researching mutual funds is similar to that used when selecting stocks. But since a mutual fund is a pre-packaged portfolio of securities; the process is a little simpler. The universe of mutual funds is also much smaller than that of common stocks, so there are fewer options to evaluate.
- The approach to researching mutual funds is similar to that used when selecting stocks. But since a mutual fund is a pre-packaged portfolio of securities; the process is a little simpler. The universe of mutual funds is also much smaller than that of common stocks, so there are fewer options to evaluate.
- The approach to researching mutual funds is similar to that used when selecting stocks. But since a mutual fund is a pre-packaged portfolio of securities; the process is a little simpler. The universe of mutual funds is also much smaller than that of common stocks, so there are fewer options to evaluate.
- The approach to researching mutual funds is similar to that used when selecting stocks. But since a mutual fund is a pre-packaged portfolio of securities; the process is a little simpler. The universe of mutual funds is also much smaller than that of common stocks, so there are fewer options to evaluate.
Mutual Funds Reviews
Our mutual fund reviews give you a quick feel for relative size and strength of each company's offerings. We'll also provide you with a list of the top performing funds within each family, as well as the associated fees and performance over the last five years:
- In this article, we're going to discuss AIM Mutual Funds. As we've done in previous articles in this series, we're going to first provide some information on the overall family of funds from AIM Investments. Next, we're going to discuss their mutual fund fee structure. Finally, we'll finish up with a listing of the top three performing mutual funds available from AIM.
- As we continue our series on mutual fund families, we're going to discuss Janus Mutual Funds. As we've done before, we'll first comment on the overall family of funds offered. Next, we will talk about the fee structure of Janus, including loads as well as fund expenses. Finally, we'll finish up with a listing of their top rated funds.
- Putnam Investments has a heritage that dates back to the 1830's. That's quite a history, even when compared to the other mutual fund giants reviewed. Putnam mutual funds also reflect the balance you'd expect with such a long investment history. They produce an excellent mix of both stock and bond funds.
- We've already talked about the mutual funds that are available from Van Kampen and their relationship to Morgan Stanley. In this article, the focus is going to be on the Morgan Stanley family of mutual funds. This includes a brief background of their fees and loads as well as the performance of the funds offered to investors.
- In this article, we'll be reviewing Hartford Mutual Funds, which is a very well-known name in the insurance industry too. The insurance and investment services industry is skilled at managing money, which means there is a good fit for these same companies to offer investors the opportunity to purchase mutual funds too.
- Franklin Mutual funds bears the name and image of one of America's greatest citizens. In this article, we're going to provide a review of this company to see if it lives up to the legacy he's left behind. We're also going to take some liberties with the name of this mutual fund, since the company's formal name is Franklin Templeton Investments.
- Unlike some of the other families of funds reviewed, PIMCO Mutual Funds focuses on serving the institutional money manager. This difference will become apparent later on, when we discuss minimum investments. That does not mean individuals should ignore PIMCO funds. In fact, they should be very interested.
- In this article, we're going to take a closer look at Federated Mutual Funds, also known as Federated Funds. The Federated family is known for producing top performing mutual funds, which are aimed at the institutional as well as the individual investor. Let's see if that holds true in this review.
- Fidelity Mutual Funds is the next family of funds we're going to discuss in this series. We'll start that discussion with a brief history of Fidelity. Next, we'll talk about their fee structure. Finally, we'll identify some of their top performing mutual funds.
- In this article, we're going to be providing a review of Rydex Mutual Funds. At one time, Rydex was geared more towards the elite investor, since their minimum investment for any fund was $25,000 (it is now $100). It's also a relatively small player in the mutual fund space, with only a little over $25 billion in assets under management.
- In this article, we're going to be discussing Oppenheimer Funds mutual funds. The correct spelling of the fund is actually one word: OppenheimerFunds. As part of this discussion, we'll start with a brief history of the company. Next, we'll talk about their fee structures and investment returns. Finally, we'll provide a short list of the top performing mutual funds at Oppenheimer.
- In this article, we'll be discussing Van Kampen mutual funds. This review will include a brief background of the company, and the services Van Kampen provides to its clients. Next, we'll talk about fee structures and investment returns. Finally, we'll review some of the top performing funds found at Van Kampen.
Investing in Other Assets
Of course, investing is not limited to stocks and mutual funds — there are many types and categories to explore.
- The term bonds issued at a premium refers to newly issued debt that is sold at a price in excess of its par value. When a bond is issued at a premium, the company will typically choose to amortize the premium paid over the term of the bond using a straight-line method.
- The term bonds issued at a discount refers to newly issued debt that is sold at a price that is less than its par value. When a bond is issued at a discount, the company will typically choose to amortize the discount over the term of the bond using a straight-line method.
- A bond is a debt security commonly issued by government agencies as well as large corporations. Regardless of the issuing entity, all securities fall into two overarching categories: secured and unsecured bonds. Investors thinking about buying bonds need to understand the risks, rewards, advantages, and disadvantages of these securities.
- A collateralized mortgage obligation, or CMO, is a type of bond that is structured using mortgage-backed securities. The performance of these investments depends on the quality of the home mortgages on which they're based. Traditional lenders package these loans, and pass them on to an intermediary company. Principal and interest payments from homeowners are eventually passed on to investors in the CMO. In this article, we're going to cover the topic of collateralized mortgage obligations. We'll start with a review of the history of these investments, as well as how they're typically prepared. Finally, we'll talk about the challenges of...
- One of the niche offerings in the debt securities market is the zero coupon bond. It's possible to find these investments issued by the U.S. Department of the Treasury, corporations, as well as municipalities.
- Inflation has the subtle ability to erode what are otherwise reliable sources of income. That's certainly been the case with corporate bonds. As interest rates rise, the value of a bond will fall; unless they're inflation-linked bonds. With these investments, the coupon rises with inflation, as does the payment provided to the bondholder. In this article, we're going to be talking about the topic of corporate inflation-linked bonds. That discussion will include a brief explanation of how these investments work, including an example. Next, we'll review the pros and cons of these specialized bonds. Finally, we'll talk about how to...
- One of the more interesting developments in the world of derivatives is the credit default swap, or CDS. First used by bond investors as protection against nonpayment by the issuer of a bond; today these instruments are used by investors to fine tune their overall exposure to corporate credit, as well as for speculation. In this article, we're going to first provide a broad definition of a credit default swap. Next, we're going to talk a little bit about how the market works, including the typical structure / characteristics of these contracts. Finally, we'll talk about some of the innovative...
- Many investors are familiar with stock options, but trading in bond options is possible too. In fact, the way these contracts are traded is very similar to stocks; investors familiar with one process shouldn't have any trouble adapting to the other.
- Every day the world becomes a little bit smaller. Because of the requirements of a global marketplace, the need for currency trading is growing. In fact, even consumers traveling to other countries need to have a fundamental understanding of foreign currency exchange, or forex rates.
- Back in 1999, the European Union introduced the euro as their new currency.
- Anyone interested in the oil and natural gas industry should be familiar with two very interesting exchange-traded funds: DIG and DUG. Given the historical volatility in the prices of crude oil and natural gas, investing in these two industries is a speculative play. But that's the intriguing part of DIG and DUG. In this article, we're going to talk about two ETFs that allow investors to trade in two energy products without taking a position in the commodities market. Part of that discussion will include a brief explanation of exchange-traded funds, followed by a specific discussion of DIG and DUG....
- Also known as TruPS, trust-secured preferred securities were popular issues with bank holding companies until the credit crisis of 2007. TruPS contained features of both debt as well as equity, and can yield more than traditional bonds or preferred stock, making them attractive to investors too.
- The term asset-backed security, or ABS, is used to describe a variety of securities that rely on a collection of assets as collateral, and provide a cash flow back to lenders. The most common pools of assets include home equity and automobile loans, credit card receivables, student loans, and even leases. In this article, we're going to talk about a special class of investments: asset-backed securities. We'll start by providing a definition of the term; describe how these investments are typically structured, and how they're traded. Next, we'll describe the most common types of securities offered on the market. Then...
- The term ‘variable-income security’ refers to investments that provide their owners with a rate of return that is dynamic and determined by market forces. Variable-income securities provide investors with both greater risks and greater rewards.
- Current estimates indicate there are between 150 and 200 real estate investment clubs across the United States, representing somewhere in the neighborhood of 40,000 individual members in 2019. The real estate market is a thriving environment, where the new and the old come together to share ideas and discuss investment opportunities.
- Passive real estate investing sounds like a ticket to a life of relaxing on the beach, watching those dollars roll into your bank account. If only it were that easy.
.jpg)
.jpg)