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  • The median age in the U.S. is 36.8
  • The median income in the U.S. is $51,939
  • The average 401k match is $1 for $1 up to 6%

A 36.8 year old investing 10% of their $51,939 income with a $3,116.34 match:
With just average stock market returns of 10% would have $1,114,479.31 by retirement.

Join 13,800+ other readers who have learned how anyone, even beginners, can easily make this desire a reality. Download the free ebook: 7 Steps to Understanding the Stock Market.




Investing for Beginners 101: 7 Steps to Understanding the Stock Market

Welcome to this 7 step guide to understanding the stock market. I’ve created this easy-to-follow Investing for Beginners guide to simplify the learning process for entering the stock market.

By leaving out all the confusing Wall Street jargon and explaining things in simple terms, I’m hoping you’ll find this as the perfect solution, if you are willing to learn.

Before we get started, here is a breakdown of the 7 categories for the official Investing for Beginners guide.

1. Why to Invest?
2. How the Stock Market Works
3. The BEST Stock Strategy and Buying Your First Stock
4. P/E Ratio: How to Calculate the Most Widely Used Valuation
5. P/B, P/S: The Single Two Ratios Most Correlated to Success
6. Cashing In With a Dividend Is a Necessity
7. The Best Way to Avoid Risk, and Putting it all Together!!

Why is investing so important?

Let’s imagine a life without investing first. You work 9-5 for a boss all your life, maybe get a couple raises, a promotion, have a nice house, car, and kids. You go on vacation once a year, eat out regularly, and attempt to enjoy the finer things in life as best you can.

Now since you haven’t invested, you get old, become unattractive for hiring, and live with a measly social security allowance for the rest of your life. You might’ve made good money when you were young, but now you have nothing to show for your lifetime of work.

Now let’s say you did save some money for retirement, but again this money wasn’t invested and won’t be invested.

Let’s even stay optimistic and assume you saved $1400 a month for 26 years. This would leave you with $403,200 to live on, which on a $60,000 a year lifestyle would only last you 6.72 years. You’re retiring at 65 only to go broke at 71 and you’ve been a good saver all your life.

Well then what’s the point of saving you may ask? Now let me show you the same numbers but add investing into the equation.

The Power of Saving + Investing

Again, lets say you saved $1400 a month for 26 years. BUT, this money was invested continuously as part of a long term investment plan, solid in the fundamentals you learned from this investing for beginners guide.

Now, including dividends in long term stock market investments, I can confidently and conservatively say that you can average a 10% annual return on these investments.

The same $1400 a month compounded annually at 10% turns your net worth into $2,017,670.19 in 26 years!

But the story gets even better.

With this large sum of money at your retirement, again conservatively assuming a 3% yield on your dividends, you can collect $60,530 a year to live on WITHOUT reducing your saved amount.

investing for beginners

Answer: Compounding Interest

By letting the power of compounding interest assist you in saving, you leverage the resources available in the market and slowly build wealth over time.

It’s not some mystified secret or get rich quick shortcut; this is a time tested method to become wealthy and be financially independent, and it’s how billionaires like Warren Buffett have done it all their life.

For those who don’t want to think about tomorrow, I can’t help you. But tomorrow will come, it always does.

Would you rather spend the rest of your life with no plan, dependent on others and unsure of your future? Or would you rather be making progress towards a goal, living with purpose and anticipating the fruits of your labor you know you will one day reap for years after you sow?

The choice is yours, and only YOU will feel the consequences of that choice.

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Investing, Finance, and Money Memes that are Actually Funny or Useful

These finance, stock market, investing, and money memes that you see here have been posted on the Investing for Beginners Facebook Page that I run. I recommend liking/ following that page to get more memes into your feed.

7 Steps to Wealth:

Nobody talks about this

Posted by Investing for Beginners 101 on Wednesday, February 13, 2019

What a side hustle looked like in 1989:

Mowing uphill both ways

Posted by Investing for Beginners 101 on Tuesday, February 5, 2019

We all have no money:

This man keeping it real

Posted by Investing for Beginners 101 on Sunday, February 10, 2019

Budgeting meme:

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IFB90: Using the SEC Form 4 to Find Insider Buying with Maj Soueidan

Announcer:                        00:00                     You’re tuned in to the Investing for Beginners podcast. Finally, step by step premium investment guidance for beginners led by Andrew and Dave to decode industry jargon, silence crippling confusion, and help you overcome emotions by looking at the numbers, your path to financial freedom starts now.

Dave:                                    00:35                     All right folks, we’ll welcome to Investing for Beginners podcast. This is episode 90. Tonight we have a special guest back from a very popular episode 38. We have a full time a micro cap investor who is the CO-founder of Geoinvesting.com, and he’s going to talk to us about his special brand of investing, and he’s a really smart dude, and he’s got some great insights for us. So why don’t we go ahead and start chatting a little bit about what you wanted to talk about tonight Maj.

Maj:                                       01:04                     Yeah. I appreciate the opportunity, and I want to congratulate you on the success you’re having with your podcast. It’s, I think we’ve been over a year since we chatted and it’s really good to see your kind long educating investors, and young investors and how to navigate the market and I appreciate that.

Andrew:                              01:22                     Yeah, thank you. We talked off the air before we started to record this, how we just said a million dollars today, so I’m going to be popping a bottle of champagne after this.

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IFB89: Reading the Annual Report (10-k) to Understand a Stock

Announcer:                        00:00                     You’re tuned in to the Investing for Beginners podcast. Finally, step by step premium investment guidance for beginners led by Andrew and Dave to decode industry jargon, silence crippling confusion, and help you overcome the emotions by looking at the number, your path to financial freedom starts now.

Dave:                                    00:36                     Welcome to the podcast, this is episode 89. Tonight Andrew and I are going to do a little more of a deep dive into the 10 K, and that’s one of our favorite things to talk about. I know I like to geek out about 10 ks and so does Andrew, so we’re going to talk a little bit more about them. So Andrew, why don’t you go ahead and start us off there. Big Guy.

Andrew:                              00:56                     Yeah, sounds good. So 10 k, another way of saying a company’s annual report, this is the document that every company, every public company is required to file. And this is where you will find all of the information about accompany. We’ve talked about some of the important ratios and some of the important metrics that you’ll find on there, some of the important numbers. So I think today maybe we talk a little bit more about some of the qualitative side. I’ve been reading a lot of 10 k’s lately and have seen some similarities, some, some things that have stuck out and you know, based on some of the previous discussions we’ve had the last couple episodes, you know, on the last episode with Braden.

Andrew:                              01:42                     Now we’re talking about, trying to find a qualitative factor and how that, how that helps you make a decision on whether you want to buy a stock a talked about kind of this whole idea of buying stocks with products that are either commodity products or a versus maybe one where a product is priced at a premium. Maybe it’s a value add and the differences there. So that’s maybe where I can start something I can shed some light on. Basically when you want to look at a stock and you want to determine, okay, how do I look at this outside of just what the numbers are telling me? What kind of common sense things or how what can I observe in my day to day life that can help me when I’m looking at stocks and making these tough decisions? You know, we talked about previously about that listener who had a question about, well, I got a list of stocks.

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IFB88: How to Buy Canadian Stocks Guide and Rules with Braden Dennis

Announcer:                        00:00                     You’re tuned in to the Investing for Beginners podcast. Finally, step by step premium investment guidance for beginners led by Andrew and Dave to decode industry jargon, silence crippling confusion, and help you overcome emotions by looking at the numbers. Your path to financial freedom starts now.

Andrew:                              00:36                     All right, so we have Braden Dennis on from Stratosphere Investing.com, remember Braden have had. He’s basically Canada stocks expert, so I’ve had him on the show before. We had a good discussion about FANG stocks and some of the evaluations that he was seen with Canadian stocks at the time. We also had some listener questions about Canadian stocks that he was gracious enough to answer and we shared some of those on the podcast as well.

Andrew:                              01:04                     And now, you know, we’re trying to a, make this episode as something where it can be a complete star, the guy for some of someone who’s in Canada looking to invest in Canadian stocks, looking to invest in the Canadian market and B, for those listeners who aren’t Canadian, we’re going to dig in maybe at the end if we have time. Uh, I definitely want to dig into at least a couple of Braden’s buy and sell rules when it comes to buying stocks. I think there’s some good discussion in there and a lot of it aligns with a lot of the things that I like to teach and the things that I think people should look for when they’re buying stocks. So that can definitely give insight for people kind of seeing different ways that maybe people approach stocks and how it can be similar and how it can be different. So Braden. Thanks for coming on today.

how to buy canadian stocks
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IFB87: Buying Stocks in a Downtrend, Selecting From a List of Stocks

Announcer:                        00:00                     You’re tuned in to the Investing for Beginners podcast. Finally, step by step premium investment guidance for beginners led by Andrew and Dave to decode industry jargon, silence crippling confusion, and help you overcome emotions by looking at the numbers, your path to financial freedom starts. Now.

Dave:                                    00:33                     All folks, we’ll work up for beginners podcast. This is episode seven tonight. Andrew and I are going to answer a few. Yes, we got a couple of great ones and we thought there would be really interesting to talk about and they’re kind of relevant to what’s going on in the market as of today. So I’m going to go ahead and read the first question and then Andrew and I will talk a little bit about it. And then Andrew, read the second question and then we’ll talk a little bit about it so that you go ahead and start.

downtrend

Dave:                                    01:05                     So the first question, hello Andrew and Dave, thank you for doing the podcast and helping beginners were in the basic principles of investing and value investing. You guys have fueled my interest to learn more and they’ve given me more confidence when it comes to investing. I have a question for you too. I know Andrew has mentioned a past experience with fl. Hitting is trailing stop and he was forced to sell. He said that he underestimated how far fl would bottom out. I’ve experienced this with a few stocks that have been affected by the current trade war slash terrorists with China, so my question for you too is whether you have any strategy buying stocks that you feel are on a temporary downtrend. How long do you wait before you buy and how can you make the call when you think the stock’s won’t get anymore? Thanks, Josh. Andrew, why don’t you go ahead and answer that first and then I’ll throw in my two cents.

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IFB86: Graham and Doddsville Superinvestors + An Announcement

Announcer:                        00:00                     You’re tuned in to the Investing for Beginners podcast. Finally, step by step premium investment guidance for beginners led by Andrew and Dave to decode industry jargon, silence crippling confusion, and help you overcome emotions by looking at the numbers, your path to financial freedom starts now.

Dave:                                    00:36                     Welcome to podcast episode tonight. We’re going to have an interesting discussion. We’re going talk about several things tonight. So first off we’re going to talk a little about the market and the conditions that it’s in today, and so what we’re doing tonight is we’re recording on. We’re going to discuss the market on December 20th, 2018. Talk a little bit about the market conditions. Then we’re going to segue and talk about my buddy Warren Buffet and one of probably the best speeches you’re ever going to learn about in regards to investing. And then we have a listener question that Andrew wanted to discuss towards the end, and then we also have a special announcement that we’ll talk about at the end as well. So why don’t we go ahead and start off by talking about the market conditions. Andrew, why don’t you go ahead and tell us how good or how bad things are right now.

Andrew:                              01:31                     Yeah, it’s really bad right now. Everybody’s freaking out and so I think it’s something we need to address and when I mean everybody, I mean the media, obviously there’s all these reasons for why, why it is basically, I don’t know how the rest of the year is going to end up what I’ve seen historically in December, even if there’s been a strong area you will generally see some selling off in December because people have this crazy idea that you should lock in losses in order to save on taxes. I’ll get like two to a deep into a tangent. That’s one of those stupid things that people use as this conventional wisdom, this idea that you should take a loss to save money on taxes, but so, so you’ll have some of this December selling off. You’ll see as a result of that and we have had so many other factors in play, but essentially where we closed at the end of 2017 last year with the S&P 500, we’re about 200 points under that this year as we record this December 20th.

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IFB85: Finding Good Dividend Stocks By Using Better Ratios

Announcer:                        00:00                     You’re tuned in to the Investing for Beginners podcast. Finally, step by step premium investment guidance for beginners led by Andrew Sather and Dave Ahern to decode industry jargon, silence crippling confusion, and help you overcome emotions by looking at the numbers, your path to financial freedom starts now.

Dave:                                    00:34                     All right folks. Welcome to the Investing for Beginners podcast. This is episode 85. So tonight Andrew and I are going to talk about dividends, our favorite subject. Andrew over the weekend had some revelations on some thoughts on dividends and some metrics and he’s got some great blog posts that are going to be coming out here shortly that we’ll talk a lot about what we’re going to talk a little touching on tonight. So some of the metrics that we’re going to talk a little bit about. We’re going to be current yield, recent dividend growth, consecutive years of dividend growth and yield on cost. And I’m going to have Andrew go ahead and start us off and he’s going to be kind of the lead guy tonight and I’ll throw in my two cents on occasion when I feel it’s relevant. So Andrew, why don’t you go ahead and take us away.

Andrew:                              01:21                     Alright, I’ll take the wheel. So by the way, by the time this goes live, those posts will be on the blog. So if you go on, they’re going to be a four post series and uh, you can go in depth and really get deep into the weeds so it’s actually useful and you can actually use it when you’re trying to look at dividend stocks. I figure we would talk about some of the ways that people currently trying to find good dividend then stocks. It’s a great primer for beginners and, and there’s some good metrics that we really haven’t touched on much and any of the episodes that we’ve recorded a and stuff you’ll see in financial websites when you’re sifting through dividend stocks, trying to find, you know, the ones that will really drip and do really well give you outsize returns for your portfolio. But you know, some of these metrics also have some things missing with them. And so that’s what all kind of get deeper into.

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IFB84: Dupont Analysis Lesson from the CFA Level I Test

Return on Equity is a quick and easy way to discover how well a company turns its assets into equity. The Dupont analysis goes even further into discovering how the company grows its return on equity. Be it through leveraging debt or growing revenue.

Announcer:                        00:00                     You’re tuned in to the Investing for Beginners podcast. Finally, step by step premium investment guidance for beginners led by Andrew Sather and Dave Ahern to decode industry jargon, silence crippling confusion, and help you overcome emotions by looking at the numbers, your path to financial freedom starts now.

Dave:                                    00:35                     All right, folks, we’ll walk up to testing for beginning podcast. This is episode eighty-four tonight. Andrew and I are going to do a two-parter here. So what we’re gonna do is we’re going to talk about the Dupont analysis and the reason why we’re going to talk about this is we got a great question from Facebook that Andrew and I wanted to answer on air, but we wanted to talk you guys through what the Dupont analysis was so that when we answered the question and it kind of makes sense to you guys. So for those of you who are not familiar with Dupont analysis, all raise your hand. Okay? That’s everybody. All right, so this is something that is not talked about a lot and it’s a very interesting analysis and what it is in a nutshell is the breakdown of the return on equity. And Andrew, I’m going to have you talk a little bit about return on equity and then we can kind of talk a little bit about how this analysis kind of that.

dupont analysis

Andrew:                              01:31                     Yeah, sure. If you’re the asked me that question yesterday, I would’ve had my hand up to. So definitely not aware of it. I’m definitely aware of the return on equity. So that obviously helps a lot. We’ve turned. Oh, we’ve talked about return on equity before we had an episode in the archives or we talked about some of the efficiency ratios, return on assets, return on equity, so that episode might be a good supplement to this one and maybe if you listen to those back to back get a better understanding. I know it’s not that easy to learn these kinds of advanced topics through a podcast, but I think the more exposure you get to it, whether that’s through a podcast or through reading or just writing out some exercises, is trying to do them with some companies and stocks are out there. Then the more and more you can learn and kind of digest it.

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Dividend Ratios Pt. 1: Evaluating the Dividend History of a Stock

One of the most disturbing trends on Wall Street that I’ve noticed over the last 100 years is the movement away from an emphasis on dividends and a thorough examination of a stock’s dividend history.

There’s several reasons for this. One, a stereotype has been perpetrated that dividend stocks are only for risk averse investors, or those close to or in retirement.

Two, investors and speculators are so fixated on short term price appreciation and the use of charts as a benchmark that the effect of compound interest through reinvested dividends is hardly considered.

dividend history

Of course, those of us from the “dividend growth” community are well aware of the power of reinvested dividends and are well versed in some of the facts that drive its success.

Most DGI investors know the sort of stats that show 44% of the total return of the S&P 500 over the last 80 years has been because of reinvested dividends, not strictly from positive movements in price. Or the impact of reinvested dividends on the total return from holding a single stocks through many years or decades.

But because the universe of dividend growth is quite small, and there are no “real authorities” on dividend growth (compared to say, Benjamin Graham or Warren Buffett on value investing or Jesse Livermore on trend trading), there subsequently aren’t many established financial metrics that focus on measuring the true success or failure of a company to reward its shareholders with dividends.

The common ones I can think of to evaluate the dividend history of a stock include: Current Yield, Recent Dividend Growth, Consecutive Years of Dividend Growth, and Yield on Cost (of course payout ratio is somewhere in the mix).

These are all fine metrics to evaluate how a stock’s dividend has historically rewarded shareholders– to a degree.

However, they miss a few key details that could have major impacts to a shareholder’s overall return from dividends and dividend reinvestment.

Additionally, these metrics don’t consider the other characteristics of a business’s financials that usually lead to management’s decision on how much to pay for a dividend– for example, analyzing the earnings growth potential from reinvesting into the business vs. giving the money back to shareholders.

Each of the widely accepted metrics for dividend history are missing one piece or another.

In this dividend mini-series I will introduce two dividend metrics of my own that hopefully paint a better picture of stocks that have provided investors with better overall return on their investment through returned cash vs. price appreciation and the uncertainty of that continuing.

We’ll examine each of the dividend history metrics mentioned above to show what they miss and how these two new metrics address that problem.  [continue reading…]