Remember that when you invest in a stock, you are buying a business.  You are becoming a business owner.

No smart business person would buy a business without doing some serious research first.

They would want to know what the sales were, if the sales were increasing every year, how much profit those sales were creating, if profits were increasing every year, if the company was badly in debt, and many other things.

You need to know this too before you buy a stock.

Don’t get discouraged about all this research because there is an easy way to get this done for you.  Let someone else do it.  This is what I do.

I don’t have hours per week to spend researching the companies I want to invest in, so I get the Read the rest of this entry »

When I was in my early twenties I began wondering how people made money.  No, not “made money” as in at a job.  I had a job as a computer programmer back then.  So I knew how to earn a wage.

But I was trying to figure out how people accumulated real wealth.

I knew virtually nothing about investments back then, so the only thing I could think of was savings accounts earning interest.  After all, I had seen plenty of bank advertisements on TV about how customer’s who opened a savings account were paid interest; their savings accounts grew; and they would get a free toaster.

Okay, so the free toaster idea probably wasn’t that relevant to wealth creation.  But with that scanty idea of earning interest planted in my brain, I started Read the rest of this entry »

If you’re tired of paltry savings account interest, and anemic stock dividends, you’ll want to pay attention to this post.  Because I’m going to tell you about a type of stock-like investment that pays some of the richest dividends out there.

As a matter of fact, since 2003, they have been the best performing asset class in the world.  And I’m also going to tell you the name of one of these I’ve had great investing success with since 2009.

I’m talking about Master Limited Partnerships, also known as MLP’s.

Now don’t let the name throw you.  While they are structured differently than stocks in corporations, for our purposes they trade just like stocks.  By that I mean they have a Read the rest of this entry »

Watching the news the other night, I heard the old saw about getting a good education to get a good job.  Most of us were told that.  Our parents told us.  Our school councilors told us.  And I’ll bet if you’re a parent, you’ve told your children this too  – repeatedly.

The news commentator reminded me how much I disagree with this – how I take great exception to this mantra.  Because I think it promotes a falsehood and is incomplete.

No, I am not saying that getting a good education is a waste of time.  I think education is extremely important.

And I’m not saying getting a good job is unimportant either.  A good job can help people achieve their goals.

But it’s that goals thing I focus in on.  Because that’s what the “Get a good education to get a good job,” mantra totally misses.  It stops short.  It says the ultimate financial goal is to get a good job.

Which it is not.

Your ultimate financial goal, whether you have been aware of it or not, has always been to attain your Read the rest of this entry »

In our last post we talked about the ABC Company, a small fashion clothing store that had $500,000 in profit for the quarter (three months).

And we said there were a number of things they could do with that profit.  In our last example, they divided the entire $500,000 profit among the 10,000 shares outstanding and paid all of the profit out to the owners of those 10,000 shares.

In the real world they would probably do something a bit different.

For example, they probably would not Read the rest of this entry »

Simply put, dividends are when a company you own stock in sends you money from the profits they have made.

That has a nice sound to it, doesn’t it?

So let’s look into this a bit deeper.

Every day, people go to work at that company.  And they are paid wages  to do this for one reason.  That is to help the Read the rest of this entry »

S&P 500 Historical Dividend versus Non-Dividend Returns

I mentioned in an earlier post how a dividend paying stock investment I made gained over half of its value from the dividends alone.  The remainder was from the increase in the stock price.

Okay, but that was just one stock investment.  Maybe I just got lucky, right?  That’s a fair question.

Here’s the answer.  It works out that dividends quite often Read the rest of this entry »

I was looking at one of my trading accounts the other day and noticed a dividend of $59.50 had been paid into it.

Now $59.50 will not make you wealthy in and of itself.  I’m sure we can agree on that.  But something in the back of my mind told me that this stock investment paid dividends monthly instead of quarterly like most dividends are paid.  And this got me thinking about dividends and their wealth effect.

So I looked through Read the rest of this entry »

Those of you who have never traded options, or are just getting into them may find this interesting.  It illustrates how knowing and applying the right technique can be profitable.

And it is a true story.

But first, a brief bit of background.

I placed my first options trade years ago and made a quick and handsome profit of 300% within six weeks.  You may gather from that statement that I was hooked and never looked back.

That’s because it illustrates one of the unique aspects of options trading versus stocks.  And that is that prices can move far and fast in a short period of time.  Just think about it.  It is virtually unheard of for a stock to Read the rest of this entry »

I hear this question quite often.  My first answer is no, investing is not necessarily the same as gambling.

However, the way most people invest, for all intents and purposes, is gambling.  That’s why you hear of them giving up because they lose money all the time.

Let’s think about true gambling for a moment.  When you are flipping a coin and betting on the result – that is gambling.

Why?

Because there is no amount of research you can do to discover if this flip is more likely to be heads (or tails).  And there is no action you can take in advance that will influence the outcome.  The odds are always 50-50 for every coin flip.

Now consider a stock investment.  There is all kinds of research you can do in advance that can Read the rest of this entry »