The Beginning Investor's Kit |
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Chapter 2: Be a Web Savvy Investor
Where do you turn to find out about stocks and mutual funds? Not long ago, your only sources would have been the reference library, information provided by your full service broker, or a subscription to Investor's Business Daily and Value Line. The Internet has changed all of that.
Financial information readily available on the Web gives you the ability to track your portfolio, get quotes, read earnings estimates or earnings reports, and more.
Virtually all the information you need to research a stock or mutual fund is available online. And once you've satisfied your investment criteria, you can trade over the Internet for just a few dollars a trade. It's no wonder that online investing has exploded.
Focus Your Efforts
While it's never been easier to access information on a prospective stock or mutual fund, the fundamentals of an attractive investment have not changed. For example, when deciding if a stock is a good buy, here are a few things you should consider:
- Earnings per share growth
- Price to earnings ratio
- Dividends
- Debt to equity ratio
- Return on equity
- Volatility
In addition, you should be fluent in the business or industries of the companies you own or want to buy. If you are interested in investing in a mutual fund, first research the industries or specialization of the fund.
If you do not have a grasp of such basic knowledge, then perhaps you should step back from investing until you become more informed. When it comes to investing, greater knowledge typically equals greater returns.
Next: How to Read a Stock Quote >
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