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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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5 Frugal Living Tips that Only Take Seconds to Implement

Who says you can’t have fun AND save money? Contributor Andy Shuler is back with some great frugal living tips that keep money in your wallet without killing your lifestyle.

Best part? They take almost no time at all…

For the last two years, I lived with my wife in Lincoln Park, a downtown neighborhood in Chicago.  We paid $1800/month in rent for a 1 BR/1 BA, 800 sq. ft. apartment.  We paid outrageous taxes.  We paid crazy prices for food and drinks.  We had to pay for soooo many things that I never thought I would have to pay for.  For instance, this was the process of going to buy a two liter of diet coke at the store:

  1. Walk to my car, where it was parked somewhere on the street as close to my house as possible, usually at least a few minutes away.  The monthly cost to STREET PARK was about $10.
  2. Drive to Walmart.  Pay to street Park.
  3. Buy a two liter of diet coke.  Pay $.68 in the sweetened beverage tax ($.01/ounce).  Pay over 10% in sales tax.
  4. Put the two liter in a plastic grocery bag.  $.07 tax for the bag.
  5. Drive home.  Hope that I find a place close to my apartment to street park, that I pay $10/month for that privilege.  Spoiler – I never did find a good spot.

Based off this introduction, you might think that I hated living in Chicago….you’d be wrong.  There were so many amazing things to do.  The restaurants, bars, festivals, access to all kinds of entertainment, the ability to be on a beach and in a city within a five-minute walk, and so many others…were absolutely incredible.  But nothing was ever easy.  Everything was always a hassle. 

We knew that living in Chicago was going to be a short-term as my company typically moves us around every 2-3 years, so we wanted to make the most of it and truly experience all the city had to offer. 

Chicago is extremely expensive, so I did every possible thing that I did to save as much money as possible on our activities, and I was the most frugal person you could ever imagine. 

I would literally go to Walmart and look at Kleenex, then pull out my phone and check the price on Amazon, and then buy the cheaper option. 

My wife would laugh at me, but even if I could save $5, that was then $5 that I could use doing a Chicago activity that I might not have the ability to do every again without having to travel back to Chicago.  When we moved from Cincinnati to Chicago, we were used to spending money as we pleased and spending money with no regard – we both quickly learned that had to change if we wanted to fully enjoy Chicago, so it did. 

I’m purposefully not going to list out a ton of specific applications that you can use, but more so talk about some of my logic and then you can find your own ways to make it work for you…below are some “hacks” to living frugally:

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Calculating Your Retirement Number Goal Based on Your Retirement Plan

What’s your retirement number? Everyone has different needs, desires, and goals for retirement– and guest contributor Andy Shuler tries to unpack each of those so you can calculate your own retirement number.

RETIREMENT!  Retirement, from the viewpoint of myself and a vast majority of my acquaintances, is something that a lot of people aren’t proactively planning for.  You can pretty much narrow it down to one of three different situations:

  1. You’re proactively planning and have a retirement number
    • This might mean you’re actively contributing to a 401K, IRA, high-yield savings account, etc.
  2. You’re not planning for retirement
    • You’re living paycheck to paycheck, spending all of your extra money, or just letting it sit in a bank account and earn the ever gracious, .01% that my old savings account gave me.  I don’t want to sound ungrateful, but if I put $100,000 in that account when I was 25 years old, I would’ve made $400.80 in interest by age 65…. talk about getting rich, quick!  (sarcasm).
  3. You’re late planning for retirement
    • You’re starting to save for your retirement number, but you might be late in your career.  To quote the generational leader that he is, Lil “Weezy” Wayne, he says “better late than never, but never late is better.”  And yes, I know he’s not referring to retirement investing when he says this…but it STILL FITS!

If you’re not planning for retirement, start.  If you’re late planning for retirement, amp up your saving.  If you are proactively planning for retirement, good, but are you sure you’re saving enough? 

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IFB102: Risks, Individual Bonds, and Becoming a Financial Advisor

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:                                    00:36                     All right folks. We’ll welcome to Investing for Beginners podcast. This is episode 102 tonight. Andrew and I are going to answer a couple of listener questions we got recently. They were really, really good questions. They were really good questions and it had some great potential for us to talk about some things that we maybe don’t always get to talk about. So Andrew and I thought that there would be a lot of fun for us to talk about. You guys could take away some great stuff from those as well. So Andrew, why don’t you go ahead and read the first question to us.

Andrew:                              01:05                     Yeah, sounds good. So this is from Sam, Sam s he says, Hey Andrew and Dave, I listened to your guys’ podcasts in September, 2018 have been caught up for a while. Love the content that you put out every week. Also, I’ve been subscribed to the Eletter since December, 2018 and love the and say I get from that as well. Thank you. I can’t thank you enough for helping me take that leap into the wild, the unknowns or the stock market and help me see what a valuable tool it can be to reach financial security.

Andrew:                              01:33                     I love that. Just as a side note, okay, he’s got two questions. First one, let’s, let’s tackle that one first. He says this first one deals with thoroughly reading the 10 K I have a business background so I am lucky enough to be able to understand income statements, balance sheets and most of the 10 k but when it comes to the risks portion of the 10 k how do you decipher which risks really stand out or caused enough concern to not purchase that stock compared to other risks that may, that seem to be found in many other 10 k’s? I may not be as critical to the future of the company. So let me like kind of intro this and then I want to hear what they have has to say. So basically if you don’t know what the 10K is, this is the annual report that Istock has to file.

Andrew:                              02:18                     If you’re a public stock traded on the public exchange, you’re going to have to file a 10 K at least here in the United States. So what, it’s a very long document. It can go over a hundred pages. Um, we, we’ve talked at length in past episodes about some of the parts of the 10 k that you can really focus in on. But just like as a general overview, there’s usually the first sections like the business overview. So they kind of summarize, hey, we’re at lemonade stands and we sell premium lemonade. Okay. And then there’s the risks and that’s what he’s asking about here. So the company will have to be about, hey, you know, if there are, you know, if we have a political meltdown, that could be a risk to our business model. If there is any sort of recession that could have that could be a risk to our business model as well.

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IFB101: Are Value Stocks the Right Investment For a 61-year-old?

Announcer:                        00:00                     Your tuned in to the Investing for Beginners podcast. Finally, step by step premium investment guidance for beginners led by Andrew Sather and Dave Ahern too 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, welcome to Investing for Beginners podcast. This is episode 101 tonight. Andrew and I are going to talk about a listener letter that we got, and it is a fantastic letter, and she has a great questions, and so Andrew and I wanted to just kind of read through her letter and then just answer those questions for her on the air. So I thought this would be a lot of fun. So Andrew, why don’t you go ahead and start talking about the letter and then we’ll just do our little back and forth thing.

Andrew:                              01:02                     Yeah, I love it. That’s a great letter. This is from Susan G so she starts off. Dear Andrew, I’m on episode 16 of the podcast and I’ve learned more about finance from your program than I did in my years. At B school in the late seventies, Wharton for two years, then decided to switch to a psych degree on the liberal arts side. Wow. That’s quite a compliment. Thank you. I got serious about investing when I returned full time to work in 2009, um, basically built up a four one k summarizing here, uh, until from 2009 to 2017. Okay. And then stopped building out the 401k.

Andrew:                              01:45                     She says I am 61 single and only about a third of the way to where I need to be to even have a modest retirement. I am currently on disability and I’m not sure what his next workwise. So 370 k 401k 62 K and Roth Ira, a hundred k and cash can value investing be part of my solution for current or future and come it appeals to me is consistent with the process part of my brain. Um, maybe, uh, maybe we address this part first. There’s a bunch of questions here.

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What Does Your Credit Score Start at and What Can You Do to Raise it?

A person’s credit score can have a major impact on big financial purchases in someone’s life, and this guest contribution by Andy Shuler discusses common questions about credit such as: what is credit? What does your credit score start at? What can you do to raise it?

Let’s let Andy answer that first question first…

What is credit?

If you asked me this question when I was 18, I would’ve said that this is the little piece of plastic that I keep in my wallet that I use to buy as much as I want, whenever I want, and only must make a minimum payment each month. 

If you’re asking me this now, at 28, recently married and first-time homeowner, I would say it’s the single-most important thing that I have that shows I’m a credible lendee.  It shows that I’ve borrowed money in the past.  It shows that I’ve paid it back.  It shows that I’ve paid it back on time. 

And most importantly, it shows that I can be trusted. 

Having a solid credit score will allow you a greater opportunity to borrow money for things that might not normally be purchased out of pocket, such as a house, car, boat, anything, or even just simply when applying for a credit card.  Credit, in my opinion, is really showing exactly how reliable someone is with their money.

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IFB100: What happens if you own stock in a company that gets bought out?

Announcer:                        00:00                     You’re tuned in to the Investing for Beginners podcast. Finally, step by step premium investment guidance for beginners lead 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 welcome to the Investing for Beginners podcast. This will be our podcast episode 100 Ooh; we made it. That’s awesome. All right, so today we’re going to talk about the basics of spinoffs and acquisitions, and we’re going to, we’ve talked a lot about these from the aspect of the company buying, but today we’re going to kind of go over some generalities of the other side. So the company that’s being acquired or spun off. So Andrew, why don’t you go ahead and take us off. I know we have a listener question regarding this as well as some are our general thoughts on this.

Andrew:                              01:12                     Yeah, so that fits right in and yeah, episode 100 let’s do something not special at all and just treat it like any other episode. I’m down for that. Had a question from a  listener to the podcast, and this is about acquisitions. So Hi Andrew. Just started listening to your podcast and the impulsively dove into the stock market through the Robin Hood and Mobile App.

Andrew:                              01:35                     We should slap this person on the wrist. I’m cautiously putting it in a mere $600 into a variety of stocks. I was wondering if you could cover how a company’s stock gets affected if they get acquired by a larger company. Is it a good time to buy when that happens? Is it the worst time to buy? So something that you know we can cover and then we’ll try to keep it short because these things can be very, very complicated. But it’s important to know just as a generality what goes on in an acquisition if you’re the company being acquired and also what happens in spinoffs so you can kind of lump them all together because they are these special situations that you’ll see with stocks for a company being acquired. Let’s say you’re a shareholder. And you know, I believe when I did the back to the basics series episodes ago, right?

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The Best Free Value and Dividend Stock Screeners Compared: Example Screen

The competition for which tool is the best stock screener is intense. Like brokers—there’s many to choose from. Because I’m a proud dividend value investor, I want to compare some of the most popular free value and dividend stock screeners to see if there’s an overwhelming favorite.

An easy way to do this is by running an example screen. Let’s consider a popular screen, a Peter Lynch “Fast Growers” screen that is run by value investors and DGI (dividend growth investors). I’ll provide the initial feedback and make observations as we run it through these stock screeners.

An obvious criteria before we start is that these tools must have an option to screen for dividends and value stocks.

The value component is expected—any stock screener with fundamental analysis data is almost guaranteed to include it. But if a value stock screener doesn’t have the option to sort for dividends, we won’t include it.

Last note before we get started: I have to admit that out of all the stock screeners on this list, I currently only use Finviz, so I might be a little biased.

However, since we’re going to just run some example screens and make our observations, I will try to be as fair in my conclusions as I can be as we search for the best dividend stock screener tool on the web.

Peter Lynch’s Fast Growers Screen

  • Market capitalization
  • 5 Year EPS growth
  • Current ratio
  • PEG ratio
  • P/E ratio
  • Debt to Equity ratio

For each dividend stocks screener that we examine, we will check to see if these options are available to run, and how detailed each screener allows you to go.

Dividend Stock Screener Criteria (yes/no)

  1. Dividend Yield
  2. Payout Ratio

To quality as an adequate dividend stock screener, we want to ensure that a screener also includes these 2 options as well.

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IFB99: How Acquisitions, Goodwill, and Divestitures All Work Together

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:                                    00:36                     All right folks, welcome to the Investing for Beginners podcast. This is episode 99 tonight we are going to talk about a stock that Andrew recently had some bad walk with and has sold. And we’re going to talk a little bit about some of the lessons that he learned from his investment with this company, including things like activist investors, divestitures and board resignations, and how those can affect what happens with a stock. So Andrew, why don’t you go ahead and tell us about the company and a little bit about your experience.

Andrew:                              01:08                     Yeah, sure. So I think when you talk about stock picks from the past, it’s much more useful to talk about your mistakes rather than your successes. Um, we can, we can all buy stock. I can go out for a multitude of reasons, but you know, if you can look at how you kinda messed up and maybe you can avoid that in the future and maybe some people can kind of recognize a situation like this and maybe stay clear or in the case of, of my, like my personal kind of experience with this and the way that maybe I wish I would have played it is I would have waited longer to, to get into this stock because it was clear that the fallout from the stock hadn’t completely finished. And so I’m keeping this stock on my radar and I’m watching to see how it progresses.

Andrew:                              02:04                     I’ll talk a little bit more about the details as we go along here, but it’s one of those where I would have wished for the dust to settle kind of a thing before, before I bought and one that’s a hold it. So it was by no means like a portfolio killer. I lost maybe 25 to 30% think a lot. So I’ve definitely had gains that have more than made up for that. But, uh, it’s still something that you still want to examine your mistakes and try them group from home. So the stock I’m going to talk about today is Noel brands, ticker symbol and w l. So one of the brand or one of the type of stocks that I really like to purchase, it has, you know, the brand names. It was one of those that kind of picked up a lot of different brands.

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What makes a Good Income Stock, and Are They Better than Growth Stocks?

An income stock is appealing to investors thinking about retirement because they can provide a consistent stream of income and are seen as more safe investments.

But, not every income stock is built the same.

Some income stocks end up being much better investments than others, and how investors can determine the difference often depends on how much they understand about what makes a good income stock and how they understand investing in the stock market in general.

Let me talk about the basics so that you can spot the difference between a good income stock and bad income stock, and hopefully point you in the right direction to achieving better returns for your income portfolio.

What’s an Income Stock

When you hear the words income stock in the stock market, the overall definition is any stock that pays a dividend. A dividend is simply an income stream on your investment.

The way that dividend payments are expressed in the stock market are through yields. A yield is the percentage of income you will receive if you buy a certain stock right now (at the price it’s currently trading at).

Let’s say you buy a stock that is currently trading in the stock market at $100, and it pays a $3 dividend. Since you need to invest $100 to get $3 in dividends per year, that investment is considered having a 3% yield ($3 / $100) = (0.03) = 3%.

The stereotype about income stocks is that they are “boring”, in mature industries, and have little potential for growth.

That’s absolutely not true, but it’s the reason why you’ll often see them trading at less expensive prices (lower P/E ratios).

Note: A P/E ratio is one of the most common ways to determine whether a stock is cheap or expensive, but it’s not the only way. Learning about P/E ratios is beneficial, as they help us understand the general difference between many income stocks and growth stocks.

Are Income Stocks Better or Worse Than Growth Stocks?

When you hear about income stocks, you’ll often also hear about growth stocks and how they are seen as the counter opposite to each other.

A growth stock is generally a company that it is in the beginning stages of its life on Wall Street, and often doesn’t pay a dividend because the company is so concerned with reinvesting their profits for higher growth.

Investors seeking income often shy away from growth stocks because they usually offer little or no yield.

Now, while it’d be nice to say that either growth stocks or income stocks are better than the other, that’s not really the case.

With growth stocks, you tend to see stocks that are very expensive compared to what they are currently earning in profits.

Some of these expensive stocks (and their high P/E ratios) end up being worth the price as they continue to skyrocket from superior innovation and business success.

However, the thing about growth stocks is that most don’t justify their high prices and eventually see their share price crash or their business completely fail.

It’s for that exact reason that I generally prefer an income stock over a growth stock, all things being equal.

A stock that is in a financial condition where they can afford to pay a dividend often have a stable and proven) business model that should continue to be profitable and thus continue giving the investor and income stream that even grows over time.

In fact, and this runs against what many people on Wall Street generally believe, you can find businesses that have the characteristics of both an income stock and a growth stock—and it’s happened many times before.

Some smart managements out there understand that investors should receive an income for their investment even while a company is growing their revenues and profits, and do pay dividends even as rise through their “growth stage”.

I’d like to show you some ideas for how you can find both.

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Budgeting for Beginners: An Easy 5-Step Plan to Making a Budget in Excel

One of the most common things that I hear from people is “I don’t have any money”.  The advice from most personal finance people is “just budget”, but there’s countless “budgeting for beginners” templates that are anything but for beginners. It’s not helpful to someone just starting out.

So I’ve written this guide. If you like Excel and making spreadsheets, you’ll probably like it. This is how I personally manage a budget and how I’d recommend many beginners to budgeting and personal finance to start.

So, if we really examine why most people have any money… we can come up with some observations…

I oftentimes see my friends blow money mindlessly and then when it comes time for them to do something to benefit themselves, they claim to not have money.  I know people that will go out and spend hundreds of dollars at restaurants, at bars, on sporting tickets, video games, and other unnecessary items but claim that they are not able to save money each paycheck. 

When it comes down to it, this is nothing more than an excuse.  I used to be one of these people.  I was in awful credit card debt when I was in college, but I did the best thing that anyone can do…

Stop.  Spending.  Money.  Mindlessly.

I sat down, confronted my fears, and wrote down everything that I was spending money on.  You know that person I described earlier?  That was me.  Nowadays I have different priorities. 

Before my money even touches my checking account I have already had part of my check direct deposited into my savings account, my 401k, my Roth IRA and my Brokerage account. 

Those four accounts are never touched as all my bills and “fun money” are used from the remaining funds in my checking account.  A number one way that I was able to grab control of my finances was to begin budgeting. 

I tried many ways and failed, but it’s not how many times you fail, it’s that you continue to get back up and keep trying.  I finally found a method that works for myself and I think it will work for you too.  Below are five beginner steps that I followed that really helped me get a hold of my spending habits:

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