Mutual Funds: A Practical Guide to Investing for Beginners

9 minutes

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Mutual Funds are currently the backbone of our retirement system. Just about everyone one of us a mutual fund in our 401k or invest in them directly as a means of making more money.

Did you know that currently as of 2015 there is $15.7 Trillion in assets invested in the US in mutual funds. Also there are 54.9 million households that are invested in mutual funds. Additionally, there are 93.1 million individuals investing in mutual funds. Needless to say mutual funds are a incredibly important vehicle of our retirement system.

In this post we are going to discuss what a mutual fund is, how they are organized and whether or not we should be so heavily invested in them. I think with such a reliance on this vehicle that it is paramount to understand them.

So what is a mutual fund?

According to our old friend Investopedia a mutual fund is an “investment vehicle made up of a pool of fund collected from many investors for the purpose of investing in securtities such as stocks, bonds, money market instruments and similiar assets.”

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ETFs: Learn How Easy It Is To Invest in Them

8 minutes

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One of the hottest investing options out there right now is the ETF. It has taken the industry by storm,especially in the last few years. They have become the go-to choice for the beginners as  well as seasoned investors looking for a no-frills way to get a good return without a lot of effort.

In 2007 Warren Buffett gave this advice to individual investors who don’t have the time to research individual companies. He suggested that cheap index funds were the best way to invest in the stock market.

The best way in my view is to just buy a low-cost index fund and keep buying it regularly over time, because you’ll be buying into a wonderful industry, which in effect is all of the American Industry.

If you buy it over time, you won’t buy at the bottom, but you won’t buy it all at the top either.       Warren Buffett

What is an ETF?

An Exchange Traded Fund or ETF is a marketable security that tracks and index, a commodity, bonds, or a basket of assets like an index fund.

The ETF differs from a mutual fund in that it trades on the stock exchange like an individual stock. The price of an ETF will fluctuate up and down during the course of a day. ETFs typically have higher liquidity than mutual funds and much lower fees, which makes them an attractive investment for investors, particularly ones that are newer to investing or those looking for lower fees.

Because it trades like a stock, it’s price will fluctuate during the day, unlike the mutual fund that is calculated at the end of the day.

One advantage of an ETF is that you get the advantage of an index fund in regards to the diversification, plus an ability to short sell, buy on a margin or buy a single share (there are no minimum requirements for deposits).

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Bonds: 20 Interesting Questions Answered to Help You Invest

13 minutes



Bonds are one of the least understood instruments used in investing today by the general public. I admit I was unsure what exactly they were and how they work at first. But I have come to understand them and utilize them in my personal portfolio.

Did you know that in September of 2016 there was $773 billion of bonds traded? This is the average traded daily in the US. In the 3rd quarter of 2016 there were $1878 billion in bonds issued. I couldn’t believe that much was traded. That is just a huge number.

A large portion of that number is government traded bonds, some of which is purchased by the government the rest by us.

1. What is a Bond?

Have you ever borrowed money before? Like most of us, probably. That is what a bond is. It is a debt instrument that companies use to raise capital for projects or other needs of the business.

In simple terms, it is a device that is used to raise money for the business that needs the money to help fund a project or other expansions in other markets.

Bonds are issued by both companies and governments, either local or federal. Typically these are done by businesses that are too large to go to a bank to borrow a few billion or so. So the solution is to issue bonds to raise that money. These are done to public markets.

Thousands of people will give money to these institutions in the form of a loan. Bonds are really a loan in which you and the other investors are the lender. The bond issuer will or the company raising the money will issue you a bond as an IOU for the money that you lended them.

2. How do Bonds Work?

Naturally, you don’t lend your money for nothing so the company issuing you the bond must pay you something for the use of your money. The “something” comes in the form of interest payments. These would be set at a predetermined rate and schedule of payments. The interest rate would commonly be referred to as a coupon.

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Breaking Down the Revealing Secrets to a Stock

5 minutes


October: This is one of the peculiarly
dangerous months to speculate in stocks.
The others are July, January, September,
April, November, May, March, June,
December, August, and February.

Samuel Langhorne Clemens,
better known by his pen name Mark Twain

What is a stock?

A stock is a kind of security to indicates that a person owns a piece of that business. It also signifies that there is ownership of the business’ assets and earnings.

Business’ that are set up as corporations have stock issued to show ownership in the business. The articles of incorporation that a business has to setup defines the number of shares authorized to be issued for the business. These are the shares that can be offered to the public at the board of directors consent.

Stocks used to be issued in paper form but now they are all handled electronically. It is fun once in a while to see the old stocks. It brings a feeling of nostalgia.

Public companies are the only ones that can issue stocks shares for ownership in their business. Think of Target, Walmart and so on. Companies can go from public to private as well such as Petsmart recently. In a case like this, the public shares all have to be liquidated so that ownership can return to the private party.

Private companies such as Uber, the ride-sharing business can go public or offer shares in their company. This is called an IPO or initial public offering. These usually receive a lot of hype and tend to be very expensive. I would counsel you to avoid these if at all possible. More on this later.

Shares are stock in the company. So when you own 100 shares of Amazon you own 100 stocks of the company. Once you have purchased shares of a company you are considered a shareholder and these shares give you certain rights of ownership.

Why companies issue stock.

Reason number one for a company to issue stock is to raise MONEY!! When a company decides to sell shares of its company, those shares have a value that someone will decide upon. When those shares are purchased it generates capital for said company.

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Learn How the Stock Market Works: A Beginners Guide

10 minutes

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photo courtesy of

What is the stock market?

Did you know that the average daily trades on the S&P 500 is over 700 million? The average for the NYSE is 3.6 billion and the average for the NASDAQ is 10 million! That is a lot of trading. No wonder these guys are tired at the end of the day.

That is an incredible amount of money moving back and forth. The market cap for the S&P 500 is $19 million and for the Dow Jones it is $5.2 million. This indicates the total amount of money the companies that are listed on these exchanges are valued at.

The daily average of trading equates to $134 billion a day. Which is a lot of shekels to be throwing around. The world’s largest financial market currently is the currency market which has an average trading volume of $4 trillion. This dwarfs the U.S. stock market.

The stock market is a place where shares of a company are bought and sold. Back in the old days it was done face to face but now it is done electronically. There were trading floors in places like New York City, London and Tokyo. Prices are basically put up in a bidding type of auction.

Buyers are looking for a certain price as are sellers. They are looking to exchange companies for different prices. An easy way to think of this an Ebay for selling stocks. There are online brokers that are looking to connect buyers and sellers for that particular company.

You must think of stocks as an ownership in a business. When you buy and sell a stock you are really buying and selling a company. Like Apple or Amazon. When you buy 10 shares of Amazon you are purchasing a part of that company. More on this later.

All of these exchanges interact with millions of individuals looking to buy or sell their shares. Because this would be virtually impossible if done face-to-face these trades are now done electronically through stock brokers.

These brokers help manage these purchases and process them thru the different exchanges. These orders are passed down to the floor traders who will go to that specific area on the floor that the stock is trading. They will connect with a specialist at the trading post who will connect buyers and sellers.

According to Warren Buffet “in the short term, the market is a voting machine. But, in the long term, it is a weighing machine.” By this he means that the stock market is fickle and it can a popularity machine at first. Investors will get excited about the latest and greatest new company, CEO or tech. They will pile into this stock irregardless of any analysis or due diligence. Over time the enthusiasm will wane and the popularity will diminish and with it the price of the stock will drop.

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6 Proven Ways You Will Grow Rich from Dividend Investing

10 minutes


What is a dividend?

According to Investopedia “A dividend is a distribution of a portion of a company’s earnings, decided by the board of directors, to a class of its shareholders.”

Dividends can be issued as cash, shares or other property.

So why are we interested in dividends? And how can they help us? Well according to Standard & Poor’s report dividends are responsible for 44% of the last 80 years of returns of the index. I don’t know about you but that caught my eye. Almost half of the returns people earned was due to dividends! I thought this might bear some looking into.

How do stock dividends work?

Dividends are a payout that a company will give back to people that own a part or share of their company. It can be in a form of cash, more stock or other property.

Dividends are usually paid out every three months and are declared before they are paid out. When a dividend is declared they also include the size of the dividend, the ex-dividend date and payment date.

To break these down a little bit. The size of the dividend will be declared which means that for example last quarter Wells Fargo announced they would be issuing a $.37 dividend for the quarter. So each quarter they announce the amount of money they are going to pay out.

The ex-dividend is typically two days prior to the record date, which is the date that you must own the stock. Investors need to buy the stock three days prior to the record date because it usually takes three days to settle any trade on the stock market. Since the ex-dividend date is two days before the record date the investor must hold the stock one day before the ex-dividend to received the payout.

The payment date is pretty obvious. This is the day that we get the money, stock, etc. It will be deposited into your brokerage account on that date. This is our favorite day!

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