Online Investing For Dummies

Description

Build a winning portfolio―and reduce your risk―with this bestselling guide Online investing has never been easier―or more potentially confusing. Now that every broker or finance site has its own app, data, or approach, it can be all too easy to be misled and make a bad decision. Online Investing for Dummies helps you reduce risk and separate the gimmicks from the gold, pointing investors of all experience levels to the pro-tips, calculators, databases, useful sites, and peer communities that will lead to success.  Updated to include information on mobile trading and the influence of social media on the markets, the book also covers the basics―showing you how to figure out how much to invest, find data online, and pick an online broker. It then progresses through to more advanced topics, such as calculating returns, selecting mutual funds, buying bonds, options, commodities, and IPOs, taking you and your money wherever you want to go in the global market. Set expectations and assess your risk Analyze stocks and financial statements Assemble the suite of tools to calculate your performance Get tips on choosing the right online broker and on protecting your information online  It’s time to get a pro strategy, and Online Investing for Dummies has all the inside information you need to build up that winning portfolio. Title Page Copyright Page Table of Contents Introduction About this Book Foolish Assumptions Icons Used in This Book Beyond the Book Where to Go from Here Part 1 Getting Started Investing Online Chapter 1 Getting Yourself Ready for Online Investing Why Investing Online Is Worth Your While Getting Started Measuring How Much You Can Afford to Invest Turning yourself into a big saver Using desktop personal finance software Perusing personal finance websites Capitalizing from personal finance apps Saving with web-based savings calculators Relying on the residual method Using web-based goal-savings calculators Deciding How You Plan to Save To Be a Successful Investor, Start Now! Learning the Lingo Setting Your Expectations Keeping up with the rate of return The power of compounding Determining How Much You Can Expect to Profit Studying the past What the past tells you about the future Gut-Check Time: How Much Risk Can You Take? Passive or Active? Deciding What Kind of Investor You Plan to Be How to know if you’re a passive investor Sites for passive investors to start with How to know whether you’re an active investor Sites for the active investor to start with Chapter 2 Getting Your Device Ready for Online Investing Turning Your Device into a Trading Station Using favorites to put data at your fingertips Putting key mobile apps a touch away Compiling a list of must watch sites Tracking the Market’s Every Move Getting price quotes on markets and stocks Slicing and dicing the markets Your crystal ball: Predicting how the day will begin Getting company descriptions Keeping tabs on commodities Tracking bonds and U.S. Treasurys Monitoring Market-Moving News Financial websites Traditional financial news sites Checking In on Wall Street Chatter Everyone is an expert: Checking in with blogs Finding blogs Getting in tune with podcasts Taming Twitter Keeping Tabs on the Regulators Executing Trades Searching the Internet High and Low Keeping the Bad Guys Out: Securing Your PC Mastering the Basics with Online Tutorials and Simulations Online tutorials Simulations Chapter 3 Choosing the Best Account Type for You Knowing How Different Accounts Are Taxed Taxable accounts Retirement accounts Education savings accounts Plain Vanilla: The Taxable Brokerage Account The importance of dividends How capital gains are taxed The high tax price of being short-term How long-term capital gains are taxed When you can win from your losses What to do with your worthless stock Using technology to measure your capital gain Measuring your capital gains if you’ve lost your records How dividends are taxed Retirement Accounts: Knowing Your 401(k)s from Your IRAs 401(k)s: A great place to get started Managing your 401(k) plan online Getting in tune with IRAs Setting up an IRA Going Back to School with Education Savings Accounts Three numbers you need to know: 529 Getting up to speed on 529 plans online Understanding 529 fees Living in the 529’s shadow: The Coverdell Chapter 4 Connecting with an Online Broker Finding the Best Broker for You The nine main factors to consider Gotchas to watch out for Separating the Types of Brokerages Paying the minimum with a deep discounter Get more with a discounter Full-service traditional Avoiding Hidden Fees Finding Out What Reviewers Think Is Your Money Safe? Checking Out Your Broker Cutting the Cord: Mobile Trading Pay Attention to Where Your Cash Is Parked: Money Market Funds Buying Stocks and Mutual Funds without a Broker Stocks: Direct investments Mutual funds: Straight from the mutual fund company Opening and Setting Up Your Account The checklist of what you need to know The checklist of what you need to have Chapter 5 Getting It Done: How to Enter and Execute Trades Understanding How Stock Trades and Shares Are Handled Ways you can hold your investments A second in the life of a trade Getting It Done: Executing Your Trades Types of orders Costs of different orders Tailoring your trades even more Going off the Beaten Path with Different Trading Techniques Cashing in when stocks fall: Selling stock short Tracking the short sellers Living on borrowed time: Buying stock on margin The call you don’t want to get: The margin call The nightshift: Trading in the extended hours Knowing Your Options: Basic Ways to Best Use Options The different types of options Basic options strategies How to get option prices online How to buy options online Discovering more about options online Stepping Through Placing a Trade Using the brokerage’s website Using the brokerage’s mobile app Using the brokerage’s PC software Part 2 Using Online Investment Resources Chapter 6 Why Stock Prices Rise and Fall How Stocks Get into the Public’s Hands Step 1: An idea becomes a company Step 2: The company expands and grows Step 3: The company goes public Step 4: The new shares trade Why Stocks Move Up and Down in the Short Term Tracking the market’s every move Getting in tune with earnings reports Companies and the company they keep in their industries Monitoring the big cheese Where it all begins: Tracking prices of raw materials Getting with the mo’ Mania over merger chatter Why bond yields aren’t boring The heartbeat of the economy: Economic reports What they know that you don’t — Insider buying and selling Knowing how investors are feeling: Tracking market sentiment What Moves Stocks in the Long Term? Going back to school with academic research Learning from the wise men Chapter 7 Connecting with Other Investors Online Finding Kindred Investment Spirits Online Getting the Message with Stock Message Boards Stock message boards aren’t for everyone Understanding the types of stock message boards Knowing the ulterior motives of some online stock message board members Determining what exchange or market a stock trades on A penny saved: Beware of penny stocks Connecting with an Investment Club How to find an investment club that suits you Understanding the drawbacks of investment clubs Social Networking Comes of Age What’s the fuss about Twitter? Getting a read on the market with Twitter Giving Facebook some face time The Brave New World: Social Networking Meets Online Investing Social investing sites as a higher form of stock message boards? Plugging into social investing sites Starting to get social: Trying social investing sites Chapter 8 Measuring Your Performance The Importance of Tracking Your Performance Why it’s worth the trouble to measure your returns Why you want to measure your risk, too Calculating Your Performance Yourself The easiest way to calculate returns An easy way to calculate returns if you’ve deposited or taken out money The hardest way to calculate returns Calculating How Risky Your Portfolio Is A simple way of calculating your average return Calculating your risk What does it all mean? Sizing up your portfolio Finding other things to compare your returns to Using Online Tools to Calculate Your Performance Looking at online performance- measurement tools Using personal finance and performance-tracking software Using stock simulation and social investing sites Using portfolio-tracking websites Using performance-analytics websites Chapter 9 Choosing an Asset Allocation The Recipe for Your Online Investing: Asset Allocation What’s so great about diversification? Zig-zag: The second element of diversification Bigger isn’t always better: Understanding size Picking investments with the right styles How rebalancing steadies your portfolio How discipline can save your portfolio from getting punished Using and Finding Your Perfect Asset Allocation Determining your current asset allocation Using guidelines Picking an asset allocation based on your risk tolerance Picking an asset allocation based on your goals Chapter 10 Finding and Buying Mutual Funds The Feeling Is Mutual: Understanding Mutual Funds Considering the pros of mutual funds Drawbacks of mutual funds worth considering Types of Investment Companies Categorizing Mutual Funds Stock funds Bond funds Money market funds Hybrid funds What to Look for in a Mutual Fund Deciphering the morass of mutual fund fees Finding mutual funds that work for you Buying mutual funds with an online broker How to buy mutual funds without a broker Comparing Mutual Funds Putting funds’ characteristics side by side Analyzing a mutual fund’s risk Getting the Full Story: Reading a Mutual Fund’s Prospectus Getting More Information about Funds Chapter 11 Finding and Buying Exchange-Traded Funds Getting to Know ETFs Invest in Popular Indexes with ETFs How to Find the Right ETF for the Job Tracking ETFs’ every move ETF fees can vary Finding out how pricey an ETF is Using ETF-Recommending Robo-Advisors What the heck is a robo-advisor? Robo-advisors that hold your hand Robo-advisors that are completely automated ETFs That Go off the Beaten Path ETFs Have Issues, Too A Few Final Things to Consider about ETFs Using ETFs as a way to invest in themes Betting on commodities and currencies with ETFs Reading the fine print: The prospectus Part 3 Maximizing Investment Knowledge Chapter 12 Putting Companies Under the Microscope Understanding Financial Statements Downloading financial statements Reading the income statement Basics about the balance sheet Understanding the cash flow statement Putting it all together Spotting trends in financial statements Using financial statements to understand the company Unearthing Details about the Company from Regulatory Filings Finding the nitty-gritty description of the company Getting the details on company announcements Finding out whether the company is being sued Getting the truth from management Seeing whether the company got into a tiff with its auditors Weighing the risk of failure Seeing what the company is worried about Assessing how much the company’s management is getting paid Determining the independence of the company’s leadership Chapter 13 Evaluating Stocks’ Prospects Finding Out How to Not Overpay for Stocks Quick ways to determine how pricey a stock is Ways to interpret valuations Studying stocks using automated tools Shortcomings of studying stocks’ valuation ratios The armchair investor’s way to not overpay Evaluating Stocks’ Potential Return and Risk Measuring a stock’s total return Finding out more about risk and return online Digging Even Deeper: Advanced Valuation Techniques Using the dividend discount model to see whether a stock is on sale The value hunter’s favorite weapon: The discounted cash flow analysis Chapter 14 Finding Investment Ideas with Online Stock Screens Getting Familiar with Stock Screens Creating an online screen General characteristics you can use to screen stocks Choosing an online screening site Knowing What You’re Looking For: Popular Screening Variables The basics: Because you have to start somewhere Getting more particular: More advanced variables to screen for Finding stocks using trading-pattern variables Getting Started with Premade Screens Designing a Custom Screen Finding different industries’ best companies by using Yahoo! Finance Finding value or growth companies by using Morningstar’s Stock Screener Chapter 15 Analyzing the Analysts and Stock Pickers Picking Apart Professional Analyst Reports Accessing analyst reports online Determining which Wall Street analysts are worth listening to What to look for in an analyst report Pssst . . . understanding the whisper number Accessing and understanding credit ratings Connecting with Online Stock Ratings Putting quant stock models to work for you Sharing stock ratings with other investors online Evaluating Stock- and Mutual Fund–Picking Newsletters and Websites Before you sign up for a stock-picking service . . . Using newsletters to your advantage Chapter 16 Researching and Buying Bonds Online Getting Acquainted with Bonds Knowing who issues debt Online resources to find out more about bonds Common traits of bonds Finding and Buying Bonds Online Finding individual bonds online Sealing the deal: Buying individual bonds online Considering Bond Alternatives Money market funds and certificates of deposit Wall Street’s lost child: Preferred stock Part 4 The Part of Tens Chapter 17 Ten Top Mistakes Made by Online Investors Buying and Selling Too Frequently Letting Losers Run and Cutting Winners Short Focusing on the Per-Share Price of the Stock Failing to Track Risk and Return Taking Advice from the Wrong People Trying to Make Too Much Money Too Quickly Letting Emotions Take Over Looking to Blame Someone Else for Your Losses Ignoring Tax Considerations Dwelling on Mistakes Too Long Chapter 18 Ten Ways to Protect Your Investments and Identity Online Beware of Pyramid Schemes Steer Clear of Ponzi Schemes Avoid Tout Sheets and Know Whom You’re Taking Advice From Don’t Fall for Investment Spam Emails Understand Loopholes Scammers Can Use Familiarize Yourself with the Fingerprints of a Scam Learn to Be an Online Sleuth Know How to Complain If You Suspect a Fraud Make Sure That Your Computer Is Locked Down Be Aware of Online Sources for More Information Chapter 19 Online Investors’ Ten Most Common Questions How Do I Find Out Which Companies Are Going to Split Their Stock? Can I Use Options to Boost My Returns? Can I Still Lose Money If I Invest in Bonds? What’s the Easiest Way to Invest in Commodities? How Long Will It Take for Me to Double My Money? Do I Have a Say in How a Company I’m Invested in Operates? How Can Deep-Discount Online Brokers Make Money Charging $5 or Less for Trades? How Are Hedge Funds, Private-Equity Funds, and Venture Capital Funds Different? If a Company Is Buying Back Its Stock, Does That Mean the Stock Is Cheap? If I Own a House, Do I Need to Hold Real-Estate Investment Trusts in My Stock Portfolio, Too? Index EULA