Investing in Stocks and Bonds - Articles
Bond Definition and Concepts
Many financial experts recommend the combination of stocks and bonds in investment portfolios. Bondholders are classified as creditors, whereas stockholders are referred to as company owners.
30-Year Long US Treasury Bond
In October 2001 the US Treasury’s 30-year bond was again issued. This bond is commonly called the “long bond”. The long bond is preferred by many investors for its security.
Municipal Bonds Tax Dilemmas
A recent trial held in the US Supreme Court is about to endanger one of the benefits of purchasing a municipal bond. Namely, if an investor purchases an issue from the state of which s/he is a resident of, the bond is free from state income tax.
Zero Coupon Bonds Basics
Zero coupon bonds (also known as zeros) don’t give their holders interest rate payments on regular basis. However, the interest rate is accumulated and paid at maturity.
Zero Coupon Bonds Tax Implications
Even though zero coupon bonds provide many opportunities to their holders they lack tax efficiency. Therefore, you should deal with them with great caution.
Bond Ladder Basics
In order to protect yourself against the fluctuations of interest rates while you continue to manage the cash flow from the bond investment the bond ladder can be applied.
Convertible Bonds Basics
In order to decide whether you should own convertible bonds or not you should make a careful consideration of both the negative and positive sides and see whether they represent the tool that coincides with your financial goals.
US Treasury I Bonds Basics
If you want your principal to be guaranteed and to exempt yourself from taxes on the generated income, I Bonds may be the investment solution you need.
Bond Prices and Bonds-Interest Rates Relationship
Bonds represent a good investment tool for investors that are not comfortable with risk. However, investors should pay special attention to the levels of interest rates since they play an important role in the determination of the value of bonds.
Investing in Both Stocks and Bonds
Almost every financial expert recommends the inclusion of both stocks and bonds in investment portfolios. Since bonds are characterized by higher security, whereas stocks with higher volatility the first can be used as a tool to balance the negative effects of the latter.
Bond Tax Rules
Most financial advisors recommend the inclusion of bonds in every investment portfolio since they provide security in volatile market conditions. However, there are certain tax implications that you should keep in mind when you decide to purchase bonds.
US Treasury Bonds vs US Treasury Notes
While US treasuries are offered through qualified financial institutions or brokers, treasury notes are directly offered by the US Treasury at auctions.
Types of Bonds
By definition, bonds represent a way for borrowing money from the public. Bonds are famous among investors for the high level of stability and security they offer.
Bond Default Risk
Even though they are characterized by high levels of security, bonds do bring their dangers and risk of bond default exists.
Real Rate of Return on Investment Calculations
Everyone is interested in the real rate of return on the investments that have been made. However, many investors forget to adjust the rate to inflation and taxes, and as a result don't get real numbers.
Pick the Best Stock Type for You
Stocks carry their risks in terms of volatile prices, but over the long term they bring returns offered by no other investment solution and it is only a matter of the right stock pick for your needs.
Stocks and Inflation Rate
Inflation can eat up a substantial part of your earnings. So, whenever the levels of inflation go out of control you should be very careful about the negative impacts it may have on your investments.
Stock Basics
In order to get a clear view of how the stock market operates you should become familiar with the essence of stocks themselves.
Preferred Stocks Disadvantages
Despite their name, preferred stocks are less preferred than common stocks. So, unless you have firmly decided that a particular preferred stock exactly meets your financial goals, you should get familiar with their disadvantages.
Cyclical vs Non-Cyclical Stocks
In order to achieve a balanced portfolio of stocks both cyclical and non-cyclical stocks should be included. This should be done in order to be able to better face the changing cycles of the economy and the market as a whole.
Long-Term Stock Investment vs Short-Term Trading
If you a long-term investor you should not pay attention to the pennies you can save from purchasing a particular stock. However, if you are trader interested in quick profit making every penny should matter.
Dividend Yield Calculation and Drawbacks
In order to evaluate whether a particular stock represents a good investment in dividend terms, investors often use dividend yield as a measurement. It represents the percentage that the stock returns as compared to its price.
Dividend Payout Ratio Calculation
The meaning behind Dividend payout ratio (DPR) is the money that is paid out in the form of dividends by the company to its shareholders. Some financial experts say it is an important measurement, whereas others strongly disagree.
Price to Book Ratio Calculation
Value investors search for companies that have been overlooked by the market. When deciding on a particular company, value investors look at such indicators as earnings growth, price to book ratio (P/B) and several others.
Return on Equity Calculation and Drawbacks
A measurement for evaluating the efficient use of resources by a company in producing earnings for its shareholders is the Return on Equity (ROE). Many investors successfully apply ROE as a tool for finding competitively advantageous companies.
Earnings per Share EPS Calculation
When deciding on the investment in certain stocks, many times investors are facing the challenge of comparing stocks from different industries and types. A useful tool for comparison can be earnings per share or EPS.
PEG Ratio Calculation
A major characteristic of the stock market is that it is directed toward the future performance and projections. Aside from the P/E for measuring the future earnings growth is the PEG ratio.
Simple Return vs Compound Annual Growth Rate Formula
The simple return and compound annual growth rate formulas will help you calculate the returns on your investment. This will further facilitate the identification of your current position as compared to where you should be regarding your financial goals.
Price to Cash Flow Ratio vs Free Cash Flow
Both free cash flow and price to cash flow ratio present a useful way to find out the valuation the market assigns to the stocks of a particular company.
Company Valuation Methods - Debt Evaluating
One of the factors you should consider when evaluating a stock is interest rates. This is especially important if the company from which you possess stocks has a debt which it should cover.
Company Valuation Methods - Management Effectiveness Ratios
Before you purchase a stock, you should make an evaluation of it using many different criteria. One of them concerns the management of the company and its way of using the company’s resources.
Company Valuation Methods - Debt Evaluation Formulas
When evaluating the possibility of purchasing a particular stock, debt of the company may represent a factor that can influence your decision.
Determining the Right Stock Price
Many times the market doesn’t price a stock in a realistic way. One way to find whether the market has undervalued or overvalued a particular stock is by using the price/sales ratio.
Price to Sales Ratio Calculation
Evaluating the stocks of a particular company is required before you jump with both legs into investing with it. The Price to Sales (P/S) ratio comes to assistance when you need a measurement of the worthiness of young companies just coming on the market .
Price to Earnings Ratio Calculation
When evaluating a stock, most investors refer to the Price to Earnings (P/E) ratio in order to make more reasonable investment decisions. It is the ratio most often used by investor when it comes to evaluating stocks.
Calculate Return on Investment
In order to better understand the return you get from your stocks, you need to master several formulas. The formulas will help you calculate the returns on your investment.
Relative Strength Indicator
Relative strength represents an indicator that assists investors in their stock picking. Additionally, it helps them evaluate the investments they hold relative to other investments.
Value Stocks vs Growth Stocks
Growth and value stocks are commonly used terms related to stock investing. The following article provides clarification on the meaning and characteristics of these stocks so that you are facilitated in your choice of each of them.
Tax-Free Investments
There are some ways in which you can legally minimize the tax burden you have to carry when you make an investment. There are certain investments that free form taxes and this article aims to familiarize you with these options.
The Simplified US Tax Code Proposals
The Simplified Income Tax Plan has made some changes in the tax code that would have an influence on the investment decisions of investors.
Identifying a Value Stock
If you are a value investor there are some important financial numbers and business fundamentals you should look at when examining a potential value candidate.
Stock Value Focus
You should be aware that price and value are different concepts and they should not be confused. For investors value is what matters.
Foreign Stocks Basics
As part of your investment portfolio you should not overlook foreign stocks. Depending on your conservativeness regarding investing include the appropriate percentage of foreign stocks in your portfolio.
Asset Allocation Basics
In order to protect your assets from sustaining losses when a sector suffers a decline you should practice asset allocation, meaning you spread your resources among different categories of investments.
The Importance of Portfolio Rebalance
In the course of investing the portfolio may go out of balance. If a significant change in your asset proportions has occurred take immediate actions in order not to expose yourself to higher level of risk than you can face.
Determining the Number of Stocks to be Included in Your Portfolio
The number of stocks an investor should own is determined mainly by the situation in which the investor is in.
Earnings Reports and Their Importance
Every quarter companies issue a report on the earnings they have generated. The failure to meet the expectations of the market analysts may result in a fall of the stock price of the company.
Government Deficit and Stock Investors
Is the government deficit good for stock investors or not? And how can investors determine the effect of such a deficit on their investing?
Stock Portfolio Balance Maintenance Techniques
When you establish your investment portfolio you should balance it among the different asset classes. If you fail to do so you may expose yourself to higher levels of risk.
Mega Cap Stocks in Your Investment Portfolio
If you expect that bad economic times are nearing you should make sure that you put mega cap stocks in your portfolio in order to benefit from the relative security provided.
Time, Risk and Investment Goals
When you begin stock investing you should clearly determine your goals for doing so. However, you should expect that your goals and the risk you are willing to take change over time because your way of life changes as well.
Investing in REITs - Advantages and Disadvantages
REITs stand for Real Estate Investment Trusts. REITs are most often viewed as alternative to bonds and trade much like stocks on the major stock markets.
Introduction to Stocks
Stock represents a piece of ownership of a particular company. Though stock investing carries a certain degree of risk, it can be very profitable for an educated investor.
Large Cap Stock Characteristics
The biggest players in the stock market are companies that have large market capitalization. Due to their large market capitalizations, such companies tend to have a major influence over the economic activities.
Small Cap Stocks Characteristics
In order to classify a stock as of small cap character its market value should be below $1 billion. Small cap stocks are generally considered to be highly volatile and if market conditions are not stable, they can carry a high level of risk.
Foreign Stock Characteristics
In today’s global economy investors are given the opportunity to purchase stocks of foreign companies. Foreign stocks provide an additional piece of diversification to your portfolio.
Technology Stock Characteristics
Technology stocks represent one of the most attractive investment solutions. However, technology stocks are not deprived of their drawbacks.