Let's start with this basic truth: At its core, investing is about laying out money today with the expectation of getting more money back in the future — which, accounting for time, adjusting for risk, and factoring in inflation, results in a satisfactory compound annual growth rate, particularly as compared to standards considered a "good" investment.
You can think of investing in bonds as lending money to the government or a corporation, and in exchange, they pay you interest. Treasury bonds are very “safe” in that they are backed-up by the U.S. government. They also pay very little to hold them. Corporate bonds pay more interest, but they are more risky because just like stocks, the company could go bankrupt.
Another key metric to look at is return on equity, which measures a company's ability to turn capital into profits. Return on equity is calculated by taking a year's worth of earnings and dividing that figure by the average shareholder equity for that year. If that number is 15%, for instance, then 15 cents worth of assets are generated for every dollar investors put in. Again, you'll want to compare that number to other companies in the industry to see how it stacks up.
If you’re considering getting started investing in collectibles, make sure you do a lot of homework and get educated first. This is also an area where there are a lot of investing scams. It’s also important to remember that collectible investment gains are taxed at a much higher rate that other investments – which is your ordinary income tax rate (not the special 20% for capital gains).
Andrew:                              00:50                     Yeah, I love it. So maybe I’m recording this because this is something I need to tell myself more than anything else. Having people around and having them influence your life can do a lot of things for you. Very, very well. They say the five people closest to you are the most important because they impact how you live your life and the big, big way. So I, I kind of present this topic and this idea based on some personal context. I guess I didn’t mean to get like super personal, but there’s a saying that as you get close to the turn of a decade you start to make big moves, right? So we’re here close to the end of 2020 and that full decade before.
This concept comes from a BNN interview with Thomas Cameron where he mentioned that his stock picks must past the 10/10 rule. The rule is essentially a really strong filter to select companies with the ability to grow their earnings consistently and at a certain rate by paying a dividend with a minimum growth rate. There are 2 criteria to the filter:

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It’s a tumultuous time for online stock brokers. The players have largely remained the same, but between significant cuts in commissions and a few major acquisitions (E*TRADE acquired OptionsHouse; TD Ameritrade and Scottrade merged; Ally Invest now lives under Ally Bank), the competition is on its toes. We leveraged seasoned expertise to dig into 13 of the most popular online stock trading sites; here's what we found important.
Do not day-trade, swing-trade, or otherwise trade stocks for very short-term profits. Remember, the more frequently you trade, the more commissions you incur, which will reduce any gains you make. Also, short-term gains are taxed more heavily than long-term (more than one-year) gains. The best reason to avoid ultra-short-term trades is that success in that area requires a great deal of skill, knowledge and nerve, to say nothing of luck. It is not for the inexperienced.
"In a bygone era, there would be an investing club or a group getting together for breakfast at Denny's," Reeves says. These would allow new investors to learn from more experienced ones. Today, people may have to look elsewhere, such as in Facebook groups, to get that type of mentoring and education. Other resources, such as Online Trading Academy and the mobile app invstr, let people participate in simulated stock trading so they can experience the process firsthand without putting any money on the line.
How much liquidity (i.e. resources that can easily be converted to cash) do you need for your shorter-term goals and to maintain a proper cash reserve? Don't invest in stocks until you have at least six to twelve months of living expenses in a savings account as an emergency fund in case you lose your job. If you have to liquidate stocks after holding them less than a year, you're merely speculating, not investing.
How much money do I need to get started investing? Not much. Note that many of the brokers above have no account minimums for both taxable brokerage accounts and IRAs. Once you open an account, all it takes to get started is enough money to cover the cost of a single share of a stock and the trading commission. (See “How to Buy Stocks” for step-by-step instructions on placing that first trade.)
Dave:                                    00:36                     All right folks, welcome to the Investing for Beginners podcast. This is episode 99 tonight we are going to talk about a stock that Andrew recently had some bad walk with and has sold. And we’re going to talk a little bit about some of the lessons that he learned from his investment with this company, including things like activist investors, divestitures and board resignations, and how those can affect what happens with a stock. So Andrew, why don’t you go ahead and tell us about the company and a little bit about your experience.
It’s a quick and simple formula to assess growth and you just need to decide what value is important to you. What this method does is include any stocks with a lower dividend yield as a low dividend yield stock may have a spectacular dividend growth setting you up for a good total return on your investment. My filter for the Chowder Score is 12% but that’s really up to you to decide what your cut off is.
If you're going to be investing in individual stocks, or mutual funds and ETFs that aren't commission-free, you need to find a broker that allows you to trade for free. Both M1 Finance and Robinhood are potential options. Robinhood is no-frills, but free. M1 Finance is closer to full-service, but doesn't have all the options of a major broker does.
Figuring out how to invest in stocks starts with learning the fundamentals of investing. Once you are comfortable with how investing works, the next step is to choose the companies you wish to buy. This is the step that can make or break you as an investor, and we will cover later how you can go about choosing companies that will bring you success.
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"Here's the trap for the new person," Seiden says. "They will focus on the stocks where the news is good, but by the time they get the news, everyone else [in the know] has already bought it." This cycle means new investors are often buying when prices are highest. A better route is to watch a stock price and buy when it's down, a tactic Seiden encourages as a way to buy shares at a sale price.
If people see that companies are doing more or less manufacturing, or hiring more or fewer people, that can influence the way people feel about the economy. If people think things are good, they tend to buy stock on the thought that companies are hiring (or doing more manufacturing, which leads to hiring because people are needed to make things) which gives people jobs and disposable income. People with disposable income buy more goods and services, which is good for company stocks.
Investing as soon as possible in a Roth IRA is important. The earlier you begin investing, the more time your investment has to grow. If you invest just $20,000 in a Roth IRA before you're 30 years old and then stop adding any more money to it, by the time you're 72 you'll have a $1,280,000 investment (assuming a 10% rate of return). This example is merely illustrative. Don't stop investing at 30. Keep adding to your account. You will have a very comfortable retirement if you do.

Do not day-trade, swing-trade, or otherwise trade stocks for very short-term profits. Remember, the more frequently you trade, the more commissions you incur, which will reduce any gains you make. Also, short-term gains are taxed more heavily than long-term (more than one-year) gains. The best reason to avoid ultra-short-term trades is that success in that area requires a great deal of skill, knowledge and nerve, to say nothing of luck. It is not for the inexperienced.


Always compare a company to its peers. For example, assume you want to buy Company X. You can look at Company X's projected earnings growth, profit margins, and price-to-earnings ratio. You would then compare these figures to those of Company X's closest competitors. If Company X has better profit margins, better projected earnings, and a lower price-to-earnings ratio, it may be a better buy.
Because index funds take a passive approach to investing by tracking a market index rather than using professional portfolio management, they tend to carry lower expense ratios — a fee charged based on the amount you have invested — than mutual funds. But like mutual funds, investors in index funds are buying a chunk of the market in one transaction.
To the inexperienced investor, investing may seem simple enough - all you need to do is go to a brokerage firm and open up an account, right? What you may not know, however, is that all financial institutions have minimum deposit requirements. In other words, they won't accept your account application unless you deposit a certain amount of money. With a sum as small as $1,000, some firms won't allow you to open an account.
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