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Investing 101 Archive

  • Everyone knows investing in blue chips for the long haul is the way to make money in stocks. The problem is, finding these blue chips isn't as easy as it sounds. Stock valuation is subjective at its very core. The best an investor can hope to do is cut through the noise with some guiding metrics to help lead them to relative safety and potential returns.

    John Schwinghamer's book, "Purple Chips" provides a decent way to help newcomers start the process of building a portfolio while learning valuable lessons about long-term shareholder value creation. In this edition of Investing 101, Schwinghamer walks through three steps for finding what he calls "purple chip" stocks. "A purple chip is the royalty of blue-chips stocks," Schwinghamer explains, "That's why we call them purple, because purple is the royal color."

    Schwinghamer's three steps for discovering stock royalty are:

    1) Smooth Earnings

    The sign of a good stable company is steady growth, not explosive moves from quarter to quarter. Schwinghamer suggests looking at a few year's worth of earnings statements to find companies that have been built step by step, not in explosive leaps.

    Read More »from Purple Chip Stocks: What They Are and Why You Should Own Them
  • The goal of most investors is to make as much money as a you can, while taking the least amount of risk. But what if your objective was entirely different? What if, for example, you wanted others to benefit from your investments?

    That's the objective for a growing slice of the socially responsible investing universe. For this installment of Investing 101, we sought insight from Shari Olefson, an advisor and author of the book Financial Fresh Start, who says its not just about the bottom line, it's about impact and responsibility too.

    1) What is socially responsible investing?

    There are two distinct types of socially responsible investing, or "SRI" as it is often called. The first kind tends to focus on only owning stocks that are deemed to be "green" and pose no societal threats. As you might expect, the debate over what is - or isn't - environmentally harmful, or trying to reach consensus over which industries or companies qualify as SRI's, can be quite fierce.

    The other, newer type of SRI takes a more proactive approach. As Olefson explains in the attached video, "it's investing for an impact," not just investing to grow your wealth. Instead of looking for personal gains, she explains, the objective tends to be more "outward facing" and supportive of a particular cause or country or class of people.

    These miniature aid programs are called microcredit or microfinance and offer an opportunity to "really put your money where your mouth is," and for as small a commitment as $25.

    Read More »from Socially Responsible Investing: Putting Your Money Where Your Heart Is
  • History suggests that the home you live in is likely to be the largest investment you will ever make. But because the costs and barriers to get into the real estate market are so high, many investors look no further than their front door.

    But as Phil DeMuth of Conservative Wealth Management explains in this installment of Investing 101, REITs (or Real Estate Investment Trusts) make it possible to buy properties you couldn't even dream of owning yourself.

    1) What Exactly Is a REIT?

    "A Real Estate Investment Trust is a business that buys real estate. Typically they specialize in one particular slice of the commercial market," he explains, pointing out that a REIT buys a series of properties, manages them, collect rents, and then passes that money along to shareholders.

    Here's how REIT.com explains their purpose:

    "They were created by Congress in 1960 to give all Americans – not just the affluent – the opportunity to invest in income-producing real estate in a manner similar to how many Americans invest in stocks and bonds through mutual funds."

    2) What Kind of Real Estate Do REITs Own?

    If you can build it, chances are there's a REIT that owns it. This includes such diverse offerings as apartments, shopping malls, storage facilities, hotels, nursing homes, office space, hotels, industrial parks and even prisons. In fact, DeMuth says, one of the newer additions, this year, to the stable of offerings, is residential real estate or single family homes. It allows investors to partake in a timely trend, without forking out tens of thousands of dollars.

    Related: Housing on the Rebound: Is it Better to Rent or Buy?

    "People who have been priced-out of the housing market," he says "can still participate in the residential market by buying one of these REITs."

    One such new offering is American Residential Properties (ARPI), which just came public in May.

    Read More »from Investing in Real Estate Without Buying Property

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(56 Stories)

ABOUT INVESTING 101

Breakout’s Investing 101 helps you gain insight on money management and trading. Whether you’re managing your own retirement account, just beginning, or an advanced investor in need of a good refresher, Investing 101 will help you learn, grow, and keep you informed of the basic steps to effectively manage your money. Expect investing tips that focus on trading strategies, asset allocation, and portfolio management.





Investing 101

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