Where To Invest

There are many ways to evaluate a company, but one of the ways is by looking at the P/E ratio. A P/E ratio will help make your decision. If you're not careful, it can come back and bite you in your wallet.

The P/E ratio - the price of a stock divided by the company's annual profits per share - is a guideline used by most investors to value equities. It tells you how much you're paying for each dollar of earnings. Usually the lower the P/E, the cheaper the stock will be.

While P/Es are based on estimated earnings (also known as forward P/Es) are common, they're not always the numbers that are used, some analysts use past earnings. While others may rely on "current year" estimates, which are a mix of actual and projected profits for a given year.

Which is most useful? It depends on what type of company you are valuating Any company that is economically sensitive you would need to use forward P/E, since the company's outlook could change quite quickly. Just look at how the home builders were effected. Yes its risky and analysts are often wrong, but looking backward can be just as dangerous (past performance doesn't really mean anything for the future).

So when you're trying to figure out which P/E is best to use for the different stocks that you may invest in. Make sure you know which measure - future, trailing or current year - you're dealing with. Then, when valuing one stock vs. another, be careful to compare apples with apples. Many times if you're not careful, you could lose a lot of your capitol.

Author: Billy Akerman
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Are you interested in building long term wealth in the stock market but not interested in trying to figure out which stocks to pick for your portfolio? There's no need to worry. You can still capitalize on the power of the stock market without learning how to select individual stocks for your portfolio. All you need to do is learn how to invest in mutual funds, give yourself time to grow and you can build a net worth of over a million dollars over the long haul with mutual funds.

When you are investing in the stock market, timing is everything. You absolutely don't want to sit on a stock that is dropping in price. With mutual funds it's a completely different strategy. The best way to create wealth when investing in mutual funds is to employ a buy and hold strategy. Trying to time the market with mutual funds the way you try to time stocks will only result in massive frustrations and consistently losing money in the process.

So what type of mutual fund should you purchase? One of the best types of mutual funds to invest in is an index fund. An index fund is a mutual fund that seeks to replicate the performance of one of the general market indexes, such as the Dow Jones, the S&P 500 or the Nasdaq Composite Index. Why an index fund? Believe it or not, 85% of the mutual funds available in the open market today fail to outperform the S&P 500 index. As the old saying goes "if you can't beat them, join them!" Purchasing an index fund allows you as the individual investor to get a full exposure to the general market trends, providing you with the ultimate form of diversification.

Some financial advisors recommend that you diversify into multiple mutual funds. I disagree. A mutual fund by nature is already diversified unless the fund you select is a fund that is geared towards companies in a certain industry, such as technology or pharmaceuticals. Why would you diversify your diversification? I've never understood that advice and I suspect that this advice was giving out for the purposes of increasing revenues for the mutual fund companies by being able to charge different management fees for different funds. Unless you have over a million dollars invested into mutual funds you don't need anymore than 1-3 mutual funds to invest in.

The best strategy for investing in mutual funds is to start off with an initial cash investment. Ideally you should start off with at least $10,000 so you can enjoy maximum growth. However, anything is better than nothing. Find out what the minimum amount is that is required for the mutual fund that you are interested in investing in. Once you save up the initial amount you can go ahead and start off with that. You then want to add to your initial amount on a monthly basis. Understand that it takes 10, 20 even 30 years of investing in mutual funds before you can build a million dollar portfolio. However, if you have the patience and the discipline you can make it happen.

Author: S Mcleod
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Want to make money on the stock market? In that case you must plan wisely and execute the plan carefully. No doubt about it - stock trading is an option for the wise investor to make fast money. Financial institutions use stock trading to maximize profits, but as an individual you really need to take care. The stock market and the stock trading system is made for large financial players, but with constant care you too can make money on the stock market.
The following advice will help you to make a profit while not being too risky. Obviously you could contact an investment firm, who can help you analysing stock, but the following advice will set you off to a good start.

* Analyze one stock at the time thoroughly. In what industry does the company belong? Is this industry in growth or in crisis as a general? How does the company make its money? Require and read the company's press releases, financial news and reports. Check the competitors in the market and the general trend in the industry.

* Keep a journal. Whether you decide to sell, buy or hold a particular stock make a note about the reasons for doing so. Analyze your notes and learn from them. Which decisions were good, which were bad and which were absolutely brilliant?

* Analyze and analyze again the stocks you have chosen the same way. Compare and contrast the stocks and you will gain important and valuable knowledge about the stock market.

* Build and use a brain trust. A group a like-minded friends with whom you can share ideas and thoughts. Explain why you reached certain conclusions and how you expect the stock to perform. Very often the brain trust will keep its rationale when you are not.

* Forget about emotions and loyalty (when it comes to trading). You need to be platonic and rational in your decisions, while the stocks are volatile. Review your buy, sell, hold decisions whenever new information hits the market. Are your reasons still valid?

* Reevaluate you portfolio on a weekly basis. Are you exposed to the risk you have decided to accept? Observe market trends - how do they correspond with your portfolio?

* Do not rely on media quoted rates - do not expect to be able to buy or sell at the same price.

* Remember that high valuations entail high risks.

Tools that will help you in the stock market

Information is the most valuable asset when trading stocks and for that the desktop stock ticker is excellent. The desktop stock ticker will provide you with the latest trading prices and in many cases also the latest data on the company. For real time stock quotes you need to have a paid subscription to a broker, the free desktop stock ticker does not have real time quotes, only near real time quotes, which mean a delay of 15 to 20 minutes.

Author: Mike Meyers
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When you are beginning the search for your first (or next) online stock broker, you must first decide which category of brokers you are going to choose from. You need to determine which is going to be the best fit for your trading style and the costs you are willing to pay.

There are three categories of online stock brokers to pick from. They vary depending on their service levels, trading costs and the type of access to stock information.

1. Full Service Brokers - These are mostly the traditional big name firms who offer their own research, a very broad product portfolio and a staff of stock brokers to advise you on your trades.

While these brokers offer the most service, you pay more in commissions and fees. For most online traders, they want to do most of this work themselves. To pay the extra commission for the services of their broker staff then is not worthwhile

2. Direct Access Brokers - This category of brokers is very different than the traditional stock brokerages both in terms of what they offer and who their typical customer is. These brokers offer traders direct access to market data and for making their transactions. They often have their own software that you download onto your computer to make the direct connection and there are few extra services offered.

This category is important to day-traders and others who do serious trading and where minutes and seconds can make a big difference in their success.

3. Discount Brokers - Most online traders and especially beginners choose from the category of discount brokers. They are called discount brokers because when they first started, they focused on providing the tools for individuals to make their trades, but without the involvement of human stock brokers. This obviously saved a lot of cost and so the commissions they charged were a lot less.

Today, these are some of the most well-known and visible stock brokers including e*Trade, TD Ameritrade, TradeKing, Zecco and Scottrade. As their business has evolved, they now offer more advanced services like phone-in trades, branch offices, broker consultations and research.

Author: Daniel B. Johnson
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Trust funds are becoming more and more commonplace amongst not only the super-rich class of citizens, but in average families as well. As the property value on homes increases and people make more and more money off the stock market, people are increasingly turning to trust funds for their children (and even grandchildren) as a way to preserve their own wealth, establish some financial security for their children, and minimize death taxes.

Who Benefits from Trust Funds?

Trust funds benefit not only the beneficiaries of the trust fund (usually, the children of the trustors), but the individuals who establish the trust, as well.

When a trust fund is set up for a child, the money or property is handled by a trustee-usually, someone who has experience and is responsible with handling money. Assigning a trustee to handle and control the money in a trust fund ensures that the beneficiary cannot recklessly spend all of their property.

For the parents, grandparents, or other individuals setting up the trust fund, there are numerous income, gift tax, and estate benefits that come with establishing a trust. In the case of grandparents establishing trusts for their grandchildren, they can establish a trust fund for their grandkids while they are still living, or they can arrange to have money put into a trust after their death.

What Type of Trust Fund Should I Choose?

When deciding to set up a trust fund for your child, it is important that you choose a trust fund that will qualify your investment for the annual gift tax exclusion. Currently, there are two types of trust funds you can set up (for a minor) that qualify for the gift tax exclusion:

· Section 2503(b) trust-with this trust, money must be annually given to the beneficiary while they are a minor. If your child (or grandchild) is too young to responsibly handle the money, it can be put into a separate account for them.

· Section 2503 trust-the section 2503 trust allows for all money and property in the trust to be used for the child until their 21st birthday. Once the beneficiary turns 21, all money left in the trust is given to the child, and it is their decision to either take the money or to extend the trust.

Remember....

It is important to remember that a trust fund is significantly different than a bank account. Once you put money into a trust for your child (or grandchild), you cannot get the money back-even if you really need it! Be sure to think about this decision before allocating money for a trust fund, and be sure to consult a legal professional before making this type of investment.

Author: Joseph Devine
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The best way to make investment in the gold market and get involved in it is the buying of e-gold. A person buying e-gold can use it in the same way as real gold as the price of e-gold is same as that of the price of real gold. So, buying e-gold is considered to be same as buying real gold. However, an e-gold holder is provided with the facility to move the gold value on his own through the internet. This facility is simpler in comparison to the moving of the real money. Besides, a person can easily use his e-gold to invest in other investments.

It is possible that in near future, e-gold will be considered as the worldwide money, and a person possessing e-gold will be able to make any kind of online transaction with it. At present e-gold is used for making online investments like HYIP. But experts believe that soon e-gold will be used even in the conventional investment programs. E-gold can also be used for the purchase of stock worldwide.

E-gold is basically a system of electronic payment that instead of money uses gold. This system of electronic payment is mainly used for the online buying and selling of goods and services. This system is managed by Gold & Silver Reserve Inc. The chief function of this system is to enable the payments between the account holders of e-gold. Besides, this system also makes it possible for the e-gold account holders to make payments to those people do not have e-gold accounts. Though the opening of these accounts is absolutely free, a small amount is charged for the different transactions that take place between people who have e-gold accounts.

Author: Matthew Tutt
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The economy is suffering from the credit crisis and rising energy and food prices. We thought everything would clear by the mid of 2008, but it looks like the downturn would stay with us for a little longer. Our money gets eroded by inflation daily. Zimbabwe is coming up with 100 billion dollar notes. In times like these, it is good if we have money invested, to beat inflation. When should we start investing?

The following paragraphs will focus on the optimal times to commence investing and how to carry it out smoothly.

There are two good times to start investing. One, either you start when you are still in higher education, or when you got your very first paycheque.

Only a few per cent of people do financial planning during school. Some spot the lack of financial knowledge as a reason. The others have insufficient funds to invest.

Investment or money management websites supported by the money or relevant authorities in most countries will help ratify the problem of insufficient knowledge. One can also expect good investing knowledge provided from websites of financial advisory firms. One thing is sure. Sufficient research is necessary before investing.

As for the lack of funds, some savings plans allow an investor to invest regularly about a minimal hundred dollars per month. Thus, there is no excuse not to invest, other than laziness to prepare for the future.

After graduating, if you have not started investing yet, the next best time to start will be when you have just started working. Contrary to popular belief, one does not need a whole lot of excessive cash in order to invest. Only a little will go a long way. Three to four months of cash for emergencies is sufficient. The rest can be used partially for investing.

Before one starts investing, he must know what his long term or short term aims are. For instance, for the long term, the investor might be looking at financial independence. An example of short term aim might be to accumulate enough money for some personal events. No matter what the aims are, always try to be more precise. Instead of wanting to have a lot of money, come up with a specific amount to have at the end. This will allow for more specific and thus, achievable goals. In addition, one has to weigh the risks of the investments and goals against the time horizon that she has.

On a final note, it does not matter how old you are. You can start anytime. You only have to set precise goals, start to save or invest with the right investing knowledge, maintain the discipline for a good number of years, usually more than three years, to reach your goals or to retire comfortably.

Author: Benji Foo
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