If you finally have your bills under control and find yourself with some discretionary income that you'd like to put to work, then you need to understand the basics of investing.  This is one area where that old saying "work smarter, not harder" really applies.

Investing money wisely is something everyone would like to do 100% of the time.  Unfortunately, everyone makes mistakes, but the successful investors make more good decisions than bad ones.

Generally, there are three basic types of investments: stocks, bonds, and cash. Some investors treat cash as something that's only needed for unexpected expenses. But it can, and should, play an important role in nearly everyone's mix of portfolio assets.

One of the many lessons learned from the Great Recession is that emergency funds should be available to all American households.  Not only was unemployment high, many individuals struggled for months to find a job.  Unfortunately, there are many myths about rainy day funds.

Learning the concept of compound interest is important to achieving financial goals. Retirement planning, as well as investment scenarios, often depends on calculations involving the compounding of interest. It's also important to become skilled at this concept while still young, because time plays a big factor in these calculations too.

The concept of present value doesn't have to be difficult to understand. However, it is an important investment theory to know because it's aligned with a second important concept: the time value of money. Calculations involving present value are used when creating business cases, examining annuities, as well as determining cash flows in perpetuity.

While the term opportunity cost has its roots in economics, it's also a very important concept in the investment world. It's a model that can be applied to everyday decisions, as individuals are faced with making a choice between the many options encountered each day.

In the world of economics, there are two fundamental terms used to describe the price movements of goods and services over time: inflation and deflation. As investors, it's important to understand the impact inflationary or deflationary times can have on investments too.

Nearly every investor holds cash.  That's because it can play a vital role in meeting a short-term savings goal or play a larger part in a long-term asset portfolio.

When the banking industry experiences turbulent times, it's comforting to know that the Federal Deposit Insurance Corporation, or FDIC, is providing depositors with protection against the loss of their money. Even more comforting is the fact this insurance coverage is backed by the United States government.

In today's electronic world, it's estimated that over 200 securities firms now offer clients the ability to invest online. Times are changing, and investing over the Internet represents a dramatic transformation in the relationship between the broker and their clients.

Money-Zine is an investing newsletter, and the website is broken down into three distinct areas or sections: Investing, Career Development, and Financial Planning. Each of these sections is further separated into categories.

If given the choice between working until the age of 70 and retiring early, many of us would pick this second option. But what choices do we really have? Planning to invest for an early retirement is certainly one smart option.

This is going to be the first in a series of investor articles, aimed at helping individuals prepare themselves for a financially-secure retirement.  When we talk about beginners, we're talking about individuals that are just starting their careers, and have considerable time before reaching retirement age.

This article is going to review some of the basics of investing. That review will start with a brief discussion of risk and return, and how these two factors should be the basis for most investment decisions.

The topic of investing for kids is popular for two reasons. First, parents believe it's important to teach their kids about the value of money. Second, children are often curious about money and investments. That's good news, because teaching kids how to invest is a lesson that will last them a lifetime.

The concept of investing for dummies is just another way of admitting some topics need to be simplified. That's what makes the book series so popular.

If you're a computer geek that thinks a big dollar salary means you're rich, we might have some bad news.  It's time to recode your brain, because that particular if / then statement has some serious flaws in its logic.

High-growth startup companies often look for non-traditional sources of funding.  That's a gap angel investors are eager to fill.  The additional risk they're willing to absorb is balanced with expectations of high returns on investments.

High-growth, start-up companies are often looking for money and management experience.  That's a void venture capital firms are willing to fill.  As is the case with angel investors, venture capital firms are willing to absorb the higher risk associated with start-up companies in exchange for higher returns on their investments.

Successful investors conduct thorough research, especially when it comes to initial public offerings or IPOs. It's hard enough to select good stocks when evaluating companies with a long history of excellent performance. But investing in the right IPO not only takes considerable research, but also an individual willing to take on a great deal of risk too.

Serious investors do their research before buying a stock. After all, it's their hard earned money, and they want to make sure they maximize their return on investment. In this article, we're going to provide insights into an approach that should help individuals to read through online stock reports and snapshots more effectively and efficiently.

The typical stock quote contains more information than just the current market price per share. It often reveals where the price has been in the past and where it might be heading in the future. A quote can also help the analyst to understand the current stock price relative to historical prices.

Perhaps the most important metric to understand before investing money in the stock market is earnings per share. In fact, because of the importance of this ratio to shareholders, a great deal of time is spent by market analysts developing and evaluating earnings per share estimates.

Anyone learning how to invest in the stock market has probably seen terms like price to earnings and leverage. These are financial ratios, and understanding what they say about a company can mean the difference between picking a winning stock and a loser.

The ability of a company to pay off its debt obligations is measured by liquidity ratios. These are important indicators of a company's health, because the inability to pay back creditors can result in a company seeking protection under bankruptcy law, or even forcing companies to cease operating.

The primary goal of most companies is to make profits for their owners, which in its simplest form can be described as income minus expenses. Profitability ratios help analysts, and investors, to understand just how efficiently a company generates these profits.

Generally, companies have two options when they wish to raise money. They can issue shares of stock, which are also known as equities. Alternatively, they can issue bonds, which are also known as debt instruments. Leverage ratios tell investors how much debt a company has outstanding relative to the equity in their capital structure.

Shareholders are part owners of a company. The money received from the sale of common stock can be used to produce additional profits, and provide shareholders with a return on their investment. As analysts, we can examine efficiency ratios to determine if a company is using this capital competently.

When a stock analyst wants to understand how other investors value a company, they look at market ratios. These measures all have one factor in common; they're evaluating the current market price of a share of common stock versus an indicator of the company's ability to generate profits or assets held by the company.

One of the more interesting measures of a company's financial performance is the DuPont Equation. This model allows stock analysts and investors to examine the profitability of a company using information from both the income statement as well as the balance sheet.

It's unfortunate, but the publicity around the Martha Stewart scandal has resulted in a misunderstanding of insider trading.  In fact, not all insider trading information is bad news for a company, and it can even be useful when researching stocks.

One of the variables investor-analysts should understand when conducting research is the reporting of stock ownership figures.  This data provides not only a glimpse into the major shareholders in a company, but also the recent changes in shares held by those same institutions or individuals over time.

Anyone owning shares of stock in a company that's involved with a proxy contest needs to understand how that contest can affect the price of their securities.  Over the last ten years, there have been notable examples of proxy contests such as Carl Icahn's attempt to replace Yahoo Inc.'s board of directors.

The economic recession that began in late 2007 brought about an end to the boom of leveraged buyouts (LBO). The same problems that plagued the mortgage industry, slowly made their way to private equity firms operating in the financial markets. As the economy began to lift in 2009, the return of the LBO would not be far away.

The buy and hold strategy is a passive investment technique in which shareholders continue to hold onto their stocks, regardless of market conditions. It's an interesting approach, with some market theory to back it up; but the effectiveness of the strategy is worth exploring too.

There are many ways the average investor can participate in the real estate market. This can range from the purchase of commercial office space to shares in real estate investment trusts (REITs). In this article, we're going to discuss three different ways to invest in real estate.

Investing in real estate is appealing to many individuals. Unfortunately, those that are new to the real estate market don't always know all of their options when it comes to financing a real estate purchase.

Current estimates indicate there are between 150 and 200 real estate investment clubs across the United States, representing somewhere in the neighborhood of 40,000 individual members in 2015. The real estate market is a thriving environment, where the new and the old come together to share ideas and discuss investment opportunities.

A real estate investment trust, or REIT, is a company or entity that invests in different forms of real estate.  These investments can include shopping malls, commercial office buildings, as well as hotels.  These trusts can also invest in real estate related assets such as mortgages.

The stock market's low return on investment in recent years has many individuals evaluating alternatives such as real estate.  In fact, there are at least three ways investors can get into this market:  purchasing a home or apartment as a primary residence, owning investment properties, and buying into a real estate mutual fund or investment trust.

Participating in a tax lien auction is a non-traditional way to invest in real estate.  Auctions are held throughout the United States, and applicants have the opportunity to purchase properties at significant discounts.

The practice of paying delinquent property taxes for another party is known as tax lien investing. When an investor purchases a tax lien certificate, they become a lien holder on the property. This gives the investor a legal right to foreclose on the property under certain conditions. In fact, the property cannot be sold, or refinanced, until the lien is satisfied.

Many investors easily make the transition from mutual funds to common stocks. That's a great start, because finding high quality bonds requires the same rigorous process as stocks.

In our first article in this series, we described how companies used bonds to fund their growth. We also described the four basic types of bonds issued by companies or government agencies. In this next article, we will review bond terminology, as well as the process for calculating bond yields.

So far in this series, we've discussed the reasons companies or government agencies issue bonds, and the different types of bonds issued. We also covered some of the more common bond terms, and how to calculate bond yields. In this article, we are going to finish this series with a discussion of redemption features and quality ratings.

Many investors are familiar with stock options, but trading in bond options is possible too. In fact, the way these contracts are traded is very similar to stocks; investors familiar with one process shouldn't have any trouble adapting to the other.

When an investor or institution buys bonds, they're lending the issuer money. Bond ratings were developed to help these creditors to understand the relative risk involved with the purchase of a bond. They enable the investor to evaluate, and balance, the risk of default with the interest rate, or yield, paid on the security.

Bond investors have a large selection of securities to choose from in the market. One of those options includes high yield debt, more commonly referred to as junk bonds. But as we'll see, the greater returns of these securities are a direct result of their greater risk of default.

There are two ways that individuals can invest in fixed-income securities: bond funds or individual bonds. The vast majority of securities are held by large institutions such as banks, pension plans, and insurance companies. Roughly 10% of all bonds are held directly by individuals.

First authorized in 1997, Treasury-Inflation Protected Securities, or TIPS, are securities issued by the U.S. Treasury whose principal is linked to the Consumer Price Index. TIPS offer investors the opportunity to buy bonds, while at the same time protect themselves against inflation.

One of the niche offerings in the debt securities market is the zero coupon bond. It's possible to find these investments issued by the U.S. Department of the Treasury, corporations, as well as municipalities.

When a government or corporation needs to raise money, they have the option of issuing bonds. As the need for flexibility has increased over the years, so has the variety of securities found in the marketplace. They can vary in length of issue, payment terms, tax implications, as well as risk.

A bond is a debt security commonly issued by government agencies as well as large corporations. Regardless of the issuing entity, all securities fall into two overarching categories: secured and unsecured bonds. Investors thinking about buying bonds need to understand the risks, rewards, advantages, and disadvantages of these securities.

Inflation has the subtle ability to erode what are otherwise reliable sources of income. That's certainly been the case with corporate bonds. As interest rates rise, the value of a bond will fall; unless they're inflation-linked bonds. With these investments, the coupon rises with inflation, as does the payment provided to the bondholder.

One of the more interesting developments in the world of derivatives is the credit default swap, or CDS. First used by bond investors as protection against nonpayment by the issuer of a bond; today these instruments are used by investors to fine tune their overall exposure to corporate credit, as well as for speculation.

The term asset-backed security, or ABS, is used to describe a variety of securities that rely on a collection of assets as collateral, and provide a cash flow back to lenders. The most common pools of assets include home equity and automobile loans, credit card receivables, student loans, and even leases.

Collateralized debt obligations take an asset and slice it into an investment that offers various levels of risk and reward. These asset-backed securities consist of bank loans as well as fixed income issues such as bonds and similar debt instruments.

A collateralized mortgage obligation, or CMO, is a type of bond that is structured using mortgage-backed securities. The performance of these investments depends on the quality of the home mortgages on which they're based. Traditional lenders package these loans, and pass them on to an intermediary company. Principal and interest payments from homeowners are eventually passed on to investors in the CMO.

Also known as TruPS, trust-secured preferred securities were popular issues with bank holding companies until the credit crisis of 2007. TruPS contained features of both debt as well as equity, and can yield more than traditional bonds or preferred stock, making them attractive to investors too.

Back in 2008, the monetary settlements associated with auction-rate securities (ARS) were frequently in the news as brokerage houses agreed to refund billions of dollars to clients. This occurred shortly after this $330 billion market collapsed, and millions of investors found themselves with securities they could not sell.

It's possible to compare bond yields to other investments using only four data points: par value, market price, maturity date, and the coupon rate. That's all the information needed to calculate the return from a bond. But as will be discussed later on, understanding the value derived from a bond is more complex than just calculating a yield to maturity.

The price of high quality bonds is directly related to interest rates. Investors looking to expand the diversity of a portfolio of stocks need to understand the relationship between prices and interest rates before buying bonds.

According to the Securities and Exchange Commission, international investing continues to be a popular, and expanding, area for American investors.  As early as 1985, the total capitalization, or market value, of foreign stocks surpassed the value of U.S. stocks for the first time.

With the decline in the dollar's value relative to other currencies, there has been a surge of interest in the euro. This article explains the various investment options available, an exchange rate example, as well as the risks associated with the euro.

An investor's access to information, or a consumer's rights, is considerably different when investing in a foreign company or opening an offshore bank account. It's important to understand the specific protections offered by each country before entering into any purchase agreements or contracts.

For individuals living in the United States, an offshore bank account would be defined as those held outside of North America. In this article, we'll talk about the advantages offshore accounts offer the investor in terms of personal finance, privacy, and taxes.

Investors may trade commodities for either speculative purposes or as a hedge against a future price change.  People familiar with stock-trading techniques may be curious about this investment option too.  But as we'll explain later on, the strategies and risks associated with commodities are quite different than common stocks.

In this article, we're going to provide an introduction to futures trading. As part of that discussion, we're going to first talk about the structure of these contracts, delivery of commodities, and pricing of options. Then we'll explain some of the common industry terms such as hedges, straddles, calls, puts, and stop loss orders.

Every day the world becomes a little bit smaller. Because of the requirements of a global marketplace, the need for currency trading is growing. In fact, even consumers traveling to other countries need to have a fundamental understanding of foreign currency exchange, or forex rates.

A hobbyist that collects gold coins is known as a numismatist.  While some of these collectors might realize that gold coins can be a very good investment, that's not why they're collecting them.

Not long after its discovery, people realized the value of gold; it was both beautiful and scarce.  In fact, according to the U.S. Mint, it's so rare that all the gold ever mined could fit into a cube that is just 60 feet on each side.

The term DRIP is an abbreviation for dividend reinvestment plans, which offer investors the opportunity to reinvest all, or a portion, of their dividend payments back into a company's stock. Oftentimes, companies will allow investors to purchase additional shares of stock through these programs too.

The exchange traded note, or ETN, was introduced to the investment community back in mid-2006 by Barclays Bank; the largest provider of exchanged traded funds, or ETFs.  These two fund types have a lot in common, and the difference is important to understand.

Socially responsible investing is a phrase used to describe several types of investment strategies:  Ethical, Green, and even Faith-Based Investing.  These types of investment strategies are usually limited to individual stocks or mutual funds.

While some investors are inclined to take more risk than others, there is always a place for low risk investments as part of a properly-balanced portfolio. This need is particularly evident when the stock market turns volatile.

Investors have an important choice to make when deciding on the size and number of investments to hold in their portfolio. On the one hand, investors can lower the risk of their portfolio through diversification. On the other, transaction costs increase with the number of stocks purchased.

One often-misunderstood investment strategy is dollar cost averaging. While some financial planners insist the approach is a great way to save for the future, others say there is no advantage to using this technique. We've examined both sides of this story, and have concluded that advocates, as well as opponents, are correct in their thinking.

Cash flow is an important concept to understand when evaluating a company's overall financial health. It removes the effects of accounting methods, and delivers a clearer picture of the inflows and outflows of money. It's also useful when trying to understand the impact a new investment or project can have on a company's finances.

We've already explained how to put a business case together based on a cash flow analysis. In this article, we're going to be focusing on how to interpret the results of a business case by examining the most common financial measures derived from a cash flow analysis.

This is the last, and final, article in our series describing cash flow concepts.  In the paragraphs below, we’re going to explain how to go about building a cash flow statement.  While many investors will never need to create this financial report, understanding the concepts provides a greater appreciation for its value when evaluating the financial health of a company.

Perhaps the single most important measure of a company's profitability is net income. That's because generating profits is the most important responsibility that for-profit companies have to their shareholders. In fact, it's the very reason that many companies exist.

The income statement is an accounting report that allows a business, as well as investors, to understand if a company is operating successfully. The income statement is often used to help value a company's stock, and it's also used by credit rating agencies to determine its creditworthiness.

This is the final article in our income statement series. In the sections below, we're going to explain how to build an income statement. Understanding the concepts behind net income, profitability, or corporate earnings helps investors and creditors to gain a better understanding of a company's financial wellbeing.

One of the key measures of a company's financial wellbeing is its profit margin. This measure is useful because it gives investors insights into a company's ability to control its costs. It's also a concept often confused with mark-up. But as we'll soon see, while the calculation of each measure is different, the two formulas are very much related.

One of the best measures of a company's ability to use capital efficiently is its return on invested capital, or ROIC. It's a measure that can also provide insights into a company's ability to generate "excess" returns, which increase the overall value of a company.

While the income statement helps the analyst to understand the profitability of a company, the balance sheet helps them to understand how much a company is worth. The balance sheet does this by reporting how much a company owes (liabilities), how much it owns (assets), and the money held in retained earnings (equity).

The balance sheet provides investors with a summary of a company's financial position at a point in time. This accounting report contains a listing of assets owned and debts owed, thereby allowing the reader to understand the company's worth as well as the money borrowed from lenders and owed creditors.

Investing can often be a complex topic. Fortunately, every so often a shortcut comes along like the rule of 72, which is a way to estimate the time it takes to double an investment.

Investing oftentimes involves closely examining numbers. Investors rely on data, and trends in that data, to provide insights into what's happening with their investments. Numbers can sometimes look odd to analysts too; which is certainly true with Simpson's Paradox.

Investors often quote their returns in absolute terms. For example, they might say they earned an 8% return on their portfolio. But if we're really trying to measure the performance of an investment, then we need to understand absolute versus relative returns too.

While managers are responsible for the efficient operation of a business, accountants are responsible for reporting the results of that effort to the investment community. With these two key points in mind, the difference between financial and managerial accounting is much easier to understand.

Investors have a wealth of financial ratios they can examine to better understand the health of a company. One of the most important measures of management efficiency is the cash conversion cycle, which tells the analyst how much cash the company has tied up in inventory, its ability to collect money owed from customers, as well as the time it takes to pay certain creditors.