How do you know if you should invest in a stock? There are some standard ways that you can use to evaluate a stock. Start with the ticker symbol or the letters that identify a stock on a stock exchange. You can usually find out the following:
last traded value - most recent per share prince that it was purchased at
net change - how much it has gone up or down
bid price - most recent amount offered for it
ask price - most recent amount someone has offered to see the stock for
day high and low - highest and lowest price for the day
volume traded - number of shares trade in the last day
52 week high and low - highest and lowest price for the year
price
Plus the really important stuff:
P/E- Price to earnings ratio. The lower the number is usually the better.
EPS - amount of earnings the company generates per each share of stock that exists. The more generated the better.
Dividend & % - shows the current dividend and the percent of earnings that the dividend represents. Not all companies issue dividends.
Capitalization - the total number of outstanding shares times the price per share. There are large and small cap companies. Generally the smaller the market cap of a stock the riskier it is.
When you examine this information along with company listings of financial information you see if the company is financially sound and if its revenues and earnings have been increasing on a regular basis.
You'll need to look at how much debt or loans the company has. In general, less debt is better than a lot of debt. Also look at how well the company is doing in comparison to its competitors and the industry too.
There are print and online resources that provide financial information on individual stocks and industries.
Thursday, November 17, 2011
Tuesday, November 15, 2011
Investing - Sectors
Experts divide stock into categories based on industries. These industrial categories are called sectors. Most financial advisors recommend that a diversified portfolio should include from five to teen stock in different industries. Familiar examples of industrial categories are retail, health care, technology and energy.
Sectors are important because many factors effect the economy in different ways. Some industries do well while others do poorly. For example, when the economy is doing well and wages are up, retail stores do well. When the economy is doing poorly, companies that provide necessities like health care or food do well, but retail stores do poorly. People have less money to spend on non-essentials. In this way, diversification helps protect your against large overall losses.
Sectors are important because many factors effect the economy in different ways. Some industries do well while others do poorly. For example, when the economy is doing well and wages are up, retail stores do well. When the economy is doing poorly, companies that provide necessities like health care or food do well, but retail stores do poorly. People have less money to spend on non-essentials. In this way, diversification helps protect your against large overall losses.
Monday, November 14, 2011
Investing - Diversitfication
The key to protecting your money when you invest is diversification. It means to have a variety of investments. Why should you diversify?
If you have all your money in stocks and the stock market goes down, your collection of investments will most likely decline at a rate that's similar to the market. Your collection of investments is called your portfolio.
But if two thirds of your money is invested in stocks and one third is in bonds, then you profolio will most likely decline less than the stock market. Putting some of your money ni stocks and some in bonds is an example of diversification.
You can diversity even more by putting together a combination of different categories of investments such as stocks, bonds, CDs and cash. You need to select a variety of investments within each category. You'll want to make as much money as possible while protecting the money that you invest.
If you have all your money in stocks and the stock market goes down, your collection of investments will most likely decline at a rate that's similar to the market. Your collection of investments is called your portfolio.
But if two thirds of your money is invested in stocks and one third is in bonds, then you profolio will most likely decline less than the stock market. Putting some of your money ni stocks and some in bonds is an example of diversification.
You can diversity even more by putting together a combination of different categories of investments such as stocks, bonds, CDs and cash. You need to select a variety of investments within each category. You'll want to make as much money as possible while protecting the money that you invest.
Tuesday, November 8, 2011
How Stocks Earn Money
Stocks earn money in two ways: increasing in value and dividends. When a company's revenues (money earned) and profit are increasing, the value of a share of its stock increases. As a result, buyers are willing to pay more for it. Capital gain is the difference between what you originially paid for a share of stock and its present value. If its value decrease, that's a capital loss.
Stocks also may pay dividends. The key to growing investments is reinvesting your captial gains and dividends. When you reinvest the money you make from investments, you buy more share with it instead of spending it. Over time, you own more and more shares and have more and more gains and dividends.
Stocks also may pay dividends. The key to growing investments is reinvesting your captial gains and dividends. When you reinvest the money you make from investments, you buy more share with it instead of spending it. Over time, you own more and more shares and have more and more gains and dividends.
Monday, November 7, 2011
Investing - Exchanges, Brokers & Stocks
A share of stock represents a tiny share of a company. Stocks are sold in different stock markets or exchanges. The two major exchanges are the New York Stock Exchange (NYSE) and NASDAQ or the National Association of Securities Dealers Automated Qutation system.
To buy stock, you place an order with a broker. A broker is someone who completes transactions between buyers and sellers. There are different types of brokers:
full service- provide investment advice and recommendations
discount- place orders at a low price but limited advice
electronic- place orders over the Internet
In addition, some mutual fund companies offer brokerage services.
There are two types of stocks: common and preferred. There are two difference between the two types of stocks. A company will decide whether or not to pay a dividend or a percentage of it's earnings to stockholders. Preferred stock pays a guaranteed dividend. If a company goes out of business, their assets are used to pay off bond and stockholders. Preferred stockholders are paid before common stockholders. If there is no money left then common stock holders will not be paid.
To buy stock, you place an order with a broker. A broker is someone who completes transactions between buyers and sellers. There are different types of brokers:
full service- provide investment advice and recommendations
discount- place orders at a low price but limited advice
electronic- place orders over the Internet
In addition, some mutual fund companies offer brokerage services.
There are two types of stocks: common and preferred. There are two difference between the two types of stocks. A company will decide whether or not to pay a dividend or a percentage of it's earnings to stockholders. Preferred stock pays a guaranteed dividend. If a company goes out of business, their assets are used to pay off bond and stockholders. Preferred stockholders are paid before common stockholders. If there is no money left then common stock holders will not be paid.
Sunday, November 6, 2011
Bonds
A bond is a loan to a company or government. When a company or government needs to raise money, it will often issue a bond. When you buy a bond, you are paid interest at regular intervals such as monthly, quarterly or annually. There are several different types of bonds:
Treasury bonds - issued by the federal government. they are available in two, five and ten year periods. The periods are when the bonds mature or the money is payed back to you.
Municipal bonds - issue by state or local governments. Interest earned is not taxed as long as you live in the state where the bond is issued.
Corporate bonds - issued by a company. Interest rates vary. Riskier companies often pay higher rates in order to get people to buy their bonds.
Treasury bonds - issued by the federal government. they are available in two, five and ten year periods. The periods are when the bonds mature or the money is payed back to you.
Municipal bonds - issue by state or local governments. Interest earned is not taxed as long as you live in the state where the bond is issued.
Corporate bonds - issued by a company. Interest rates vary. Riskier companies often pay higher rates in order to get people to buy their bonds.
Saturday, November 5, 2011
Investing - Rish and Reward
You invest because you think that you can make money. However, you can lose money too. That's risk. For example, you could buy a share of stock for $10 and it could increase in value to $50 or decrease in value to $0.
Some stocks are riskier than others. Often the riskier an investment is, the greater it potential gain. A larger potential gain can also mean a larger potential loss. How much risk is appropriate? It depends on three factors:
Your age. The younger you are, the longer yo have to gain back money you lose because you'll be working and investing for many years.
Your financial situation. If you support a family or your saving for a specific short term goal then you will want to take less risk.
Your personality. Some people are adventurous while others are nervous when they feel their money is at risk.
Some stocks are riskier than others. Often the riskier an investment is, the greater it potential gain. A larger potential gain can also mean a larger potential loss. How much risk is appropriate? It depends on three factors:
Your age. The younger you are, the longer yo have to gain back money you lose because you'll be working and investing for many years.
Your financial situation. If you support a family or your saving for a specific short term goal then you will want to take less risk.
Your personality. Some people are adventurous while others are nervous when they feel their money is at risk.
Friday, November 4, 2011
Why Invest?
Why invest? There are two major reasons for investing: retirement and increasing your wealth.
Nobody wants to work forever! One of the most important things you can do financially is invest for retirement. If you start now while you are young, the longer your money has to make a profit and the more you get from compounding.
There are two main types of accounts used for retirment investing: 401 (k) plans and individual retirement accounts (IRAs)
The 401 (k) plan takes its name from the section of the tax code that describes it. A company sets up this type of plan for its employees. Then the employees can contribute up to a certain percentage of their salary. In most cases, the company will match, dollar for dollar, the amount of oney that the employee contribues.
An IRA is established by an individual. You can have both an IRA and a 401 (k) plan. The amount of money that you can contribute is adjusted annually. There are two different types: traditional and Roth IRAs. In the tradition IRA, the money that you contribute is subtracted from your earnings before you pay taxes. Payment of taxes is deferred or put off until you withdraw the money later in life. This is great for people who expect to earln less money when they retire than while working. They will be taxed at a lower rate. Roth IRAs are contributions that are already taxed. You will not pay taxes on it when you withdraw it.
You should also invest to increase your wealth and gain financial security. Having money gives you the ability to realize many different goals. Put a little away on a regualar basis. You can build up savings to one day do what you want.
Nobody wants to work forever! One of the most important things you can do financially is invest for retirement. If you start now while you are young, the longer your money has to make a profit and the more you get from compounding.
There are two main types of accounts used for retirment investing: 401 (k) plans and individual retirement accounts (IRAs)
The 401 (k) plan takes its name from the section of the tax code that describes it. A company sets up this type of plan for its employees. Then the employees can contribute up to a certain percentage of their salary. In most cases, the company will match, dollar for dollar, the amount of oney that the employee contribues.
An IRA is established by an individual. You can have both an IRA and a 401 (k) plan. The amount of money that you can contribute is adjusted annually. There are two different types: traditional and Roth IRAs. In the tradition IRA, the money that you contribute is subtracted from your earnings before you pay taxes. Payment of taxes is deferred or put off until you withdraw the money later in life. This is great for people who expect to earln less money when they retire than while working. They will be taxed at a lower rate. Roth IRAs are contributions that are already taxed. You will not pay taxes on it when you withdraw it.
You should also invest to increase your wealth and gain financial security. Having money gives you the ability to realize many different goals. Put a little away on a regualar basis. You can build up savings to one day do what you want.
Thursday, November 3, 2011
Mutual Funds & Indexes
Mutual funds are a type of investment in which many people pool their money to buy an assortment of stocks. By investing in a mutual fund, you get to invest in a variety of companies without having to buy share of each one individually.
It also allows you to buy share in companies that you cannot afford to buy alone. Mutual funds are offered by many investment firms. They are managed by a professional fund manager. They pick stocks for the fund. They make the buy and sell decisions.
You buy shares in a mutual fund in the same way that you would purchase shares of stock. They are many different types of mutual funds that specialize in different industries or countries. There are two basic types: load and no load. "Load" referes to a percentage of the invested amount that the mutual fund company keeps as a fee when you buy shares.
When there is no charge for investing, it's called a no load fun. Mutual fund companies provide a prospectus for each fund that they offer. It's basically a booklet about the fund, explains its investment strategies, etc... Read the prospectus carefully before investing.
An index is a standard meausre of the performance of the stock market as a whole. It's based on the stocks of companies traded on major stock markets. You can find out how well your mutual fund is performing by comparing it to an index.
It also allows you to buy share in companies that you cannot afford to buy alone. Mutual funds are offered by many investment firms. They are managed by a professional fund manager. They pick stocks for the fund. They make the buy and sell decisions.
You buy shares in a mutual fund in the same way that you would purchase shares of stock. They are many different types of mutual funds that specialize in different industries or countries. There are two basic types: load and no load. "Load" referes to a percentage of the invested amount that the mutual fund company keeps as a fee when you buy shares.
When there is no charge for investing, it's called a no load fun. Mutual fund companies provide a prospectus for each fund that they offer. It's basically a booklet about the fund, explains its investment strategies, etc... Read the prospectus carefully before investing.
An index is a standard meausre of the performance of the stock market as a whole. It's based on the stocks of companies traded on major stock markets. You can find out how well your mutual fund is performing by comparing it to an index.
Money Market Accounts
A money market account is another type of savings account offered by some banks. These accounts require that you deposit a specific amount of money. They have a higher rate of interest. They are considered very safe investments because like a savings account they are insured by the government. The FDIC insures money market accounts up to $100,000.
Money market accounts allow you to withdraw your money at any time. Often, the account comes with a checkbook. You can write a check on the money market account. It's not meant to be a checking account or one that you would withdraw from regularly.
Money market accounts do not have a fixed interest rate. It can change from day to day.
Money market accounts allow you to withdraw your money at any time. Often, the account comes with a checkbook. You can write a check on the money market account. It's not meant to be a checking account or one that you would withdraw from regularly.
Money market accounts do not have a fixed interest rate. It can change from day to day.
Wednesday, November 2, 2011
Certificates of Deposit
Certificates of Deposit or a CD is an agreement between you and the bank or a credit union. You agree to keep your money in an account for a specific amount of time. They agree to pay you a higher rate of interest than you could get by depositing your money into a savings account. The agreement states:
How much money you deposited
The interest rate of the CD
The amount of time you must keep your money in the account
Financial instutions offer different kinds of CDs. The interest rate, the amount of money you deposit and the lenght of time of the deposit vary. All CDs are insured by the FDIC. This ensures that your money is safe.
CDs are less liquid than a saving account. They are based on a set time period. You are required to keep your money in the account for that time period. If you take you money out before the time has passed, then you'll have to pay a fee.
How much money you deposited
The interest rate of the CD
The amount of time you must keep your money in the account
Financial instutions offer different kinds of CDs. The interest rate, the amount of money you deposit and the lenght of time of the deposit vary. All CDs are insured by the FDIC. This ensures that your money is safe.
CDs are less liquid than a saving account. They are based on a set time period. You are required to keep your money in the account for that time period. If you take you money out before the time has passed, then you'll have to pay a fee.
Tuesday, November 1, 2011
UR $ 4 Life, November 8, Princess Anne Library
Everybody needs a little help understanding money. It's hard to figure it all out. Your library offers programs and resources just for teens to help you get more bang for your buck. Snacks and prizes too!
Sign up for UR $ 4 Life on November 8, 6 to 7 p.m. at the Princess Anne Area Library to have some fun and learn something new. It's your money for your life – we’ll help you be smart about it. Call (757) 385-2610 to register.
Sign up for UR $ 4 Life on November 8, 6 to 7 p.m. at the Princess Anne Area Library to have some fun and learn something new. It's your money for your life – we’ll help you be smart about it. Call (757) 385-2610 to register.
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