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HEY! DID YOU KNOW…


  • 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 10,300+ 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.




IFB49: The Massive Potential of Undervalued Dividend Aristocrats

dividend aristocrats

Welcome to episode 49 of the Investing for Beginners podcast. In today’s show, Andrew speaks to Nick McCallum from Sure Dividend.

You might remember Ben Reynolds from episode 7; Ben’s the founder of suredividend.com.  Nick writes for him, and together they are starting a new podcast called the sure investing podcast. And so you know I’m kind of friends with Ben, and we’ve been going back and forth so I thought it’d be a good time to release this episode.

This interview that I’m going to do here with Nick around the same time that Ben and Nick are releasing their podcasts out into the world. It would be a great opportunity for you guys to check them out and if you’re at all interested in dividends you can listen to Ben’s interview, we did in episode 7.

Listen to today’s interview and get a lot of insights on the power of basically combining value stocks and dividend stocks and creating the best types of compounding interest and wealth that you can.

Andrew: To start off first off thank you, Nick, for coming on.

Nick: my pleasure I’m excited to be here.

Andrew: and one of my favorite articles you wrote it is called the better investment dividend stocks or growth stocks. I love that idea because especially in today’s environment everybody, and it doesn’t matter what asset class we’re talking about. Everybody wants to gravitate towards capital appreciation everybody wants to talk about what has doubled what’s tripled what’s could triple. [click to continue…]

Analyzing U.S. GDP Growth After 40 Years and 7 Presidents

Every year the U.S. Bureau of Economic Analysis releases data on U.S. GDP and real GDP growth. It’s widely accepted as the leading metric to determine the growth or deterioration of the U.S. economy, and cited by publications and media to evaluate a president’s ability to create prosperity.

It’s interesting how most sources fail to reveal a second critical component of analyzing the U.S. economy– and it stems from the relationship of real GDP growth to this second component.

This article will describe that second critical component while also showing how each president fared over the last 40 years. The numbers may surprise you, and may help you shed some political biases and realize that oftentimes there’s more going on beyond what is commonly reported and shared. I don’t have a political agenda here, I just love looking at the numbers.

gdp growth presidents

Here’s what everyone is missing regarding those numbers. While it’s true that GDP estimates the flow of goods and services pretty well, by itself it’s not looking at the entire picture.

What we all need to understand is how the fluctuations of the credit cycle relate to economic growth, as this is a more accurate representation of real economic prosperity.

What’s the Credit Cycle?

I won’t cover this too extensively as anyone could easily write a doctorate thesis on the topic. Like the economy and the markets, the impact of credit (particularly interest rates) is so widespread in its reach that it’s impossible to estimate with any certain accuracy.

Think about how the economy works for a second.

It behaves like a living, breathing organism. All parts have a butterfly effect on each other.

When customers flood into a business and buy a bunch of their products, this creates profits for the business. The business has a financial incentive to expand and grow, and must hire more workers to make that happen. As more workers get hired, more disposable income reaches the hands of the common man to allow for more spending at businesses and increased profits.

It’s a beautiful compounding cycle, when it is working well. Of course on the flip side, the opposite is true. When unemployment is high, disposable incomes shrink and businesses see less inflow to their bottom line. This makes them less likely to hire more with the possibility of needing to downsize their workforce.

The Benefits of a Low Interest Rate Environment

Now, the credit cycle has a major influence on these moving parts of the economy. The two ways for companies to have enough money to hire employees is through either profits or debt.

Most companies in the stock market have some level of debt. The amount of debt they are willing to carry oftentimes depends on current interest rates.

When rates are low, companies tend to borrow more because the interest they’ll have to pay isn’t as high.

When rates are high, companies tend to be more conservative in their leveraging because it becomes very expensive.

You see the effect of various levels of interest rates in the consumer world as well.  [click to continue…]

IFB48: When a Falling Stock Indicates a Failing Business

falling stock

 

Welcome to Investing for Beginners podcast this is episode 48. Andrew and I are going to talk about distressed businesses or negative earnings, negative shareholder equity we’ve never really delved into that aspect of investing and kind of what to look for in companies that having falling stock prices.

We’re going to talk a little bit about maybe some cautionary tales as you’re looking for companies to invest in for your potential retirement,

  • The importance of the price to cash ratio
  • The impact of declining shareholder’s equity
  • The impact of declining earnings
  • What to look for in the financials of a falling company
  • Not every falling company is failing

Without any further ado, I’m going to turn it over to Andrew as always and let him start us off.

Andrew: yeah so I mean we did a bunch of episodes on beginning with the basics. I think let’s dive in we haven’t done anything pretty technical in a while, and I always love to talk about I know some at least some of our listeners like to hear about it.

I thought maybe we could like stay relevant. Obviously there’s been a couple of things that have happened lately, and I realized in the podcast world by the time this comes out it’s going to be months old news. But we had Tesla lose taxpayers billions of dollars we’ve talked about Tesla before so I’m not going to talk about that story with the whole SpaceX thing.

But there is another one, and it’s Sears Holdings it’s on CNBC, and the media and everybody talks about the fall of retail and talks about how Amazon’s taken over that space. And then made a lot of businesses fail and it is very true, and I thought this could be one that we’ll look at a little bit deeper and see.

Because obviously if you look at the stock chart it’s been beaten down and with stocks that are being down sometimes that comes an opportunity. Because then you can buy a low price for Sears, in particular, I will look at like a basic price to cash. The price of cash is 1.8 which means if you’re buying this stock you’re almost getting the cash if the price the cash was 1.

That means let’s say you’re paying a hundred million dollars to get a hundred million dollars in cash like that’s like almost getting like free cash.

It sounds like a like a great value play, but I think you’ll find as we dig deeper into the numbers that there’s more to this story and that even though you see a couple of good metrics from a value standpoint. Because the complete picture isn’t all there than it is a cautionary tale and there are several different symptoms with Sears right now that signal a business in decline.

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IFB47: Back to the Basics Pt 5: Dividend Stocks and Value Investing

This is part 5 of the 5 episode “Back to the Basics” series from The Investing for Beginners Podcast. Each episode covers the fundamentals of the stock market and investing to provide a solid foundation for those who are looking to compound their wealth over time.

Here are the links to each of the episodes:

Back to the Basics Pt 1: The Anatomy of Stocks and Shares
–Defining what a stock is
–Talk about the big 3: the cash flow statement, balance sheet, and income statement
–Earnings manipulation

Back to the Basics Pt 2: Share Dilution on Wall Street
–What is a stock
–What are stock buybacks and how they affect us
–What are share dilutions
–What happens when we buy or sell a stock

Back to the Basics Pt 3: Stocks vs Other Investments
–Peer to peer lending
–Real Estate
–Gold and other precious metals
–Bitcoin and other cryptocurrencies
–Bonds

Back to the Basics Pt 4: Investing 101 and Compound Interest
–The importance of buy and hold
–Compound interest and how it can make you wealthy
–Using a compound interest calculator
–The power of dollar cost averaging

Back to the Basics Pt 5: Dividend Stocks and Value Investing
–The advantages of buying low and selling high
–Dividends and the power of compounding

dividend stocks

Welcome to Investing for Beginners podcast this is episode 46. Andrew and I are going to continue talking about back to the basics. Today we’re going to follow up on we’ve finished last week talking about compound interest, dollar cost averaging and we’re going to talk a little bit more about dividends today.

Of course, that’s Andrews favorite thing to talk about, and we’ll also talk a little bit about buying low and sell high.  Without any further ado, I’m going to turn it over to Andrew to get our chat started, and we’ll just go from there.

  • The advantages of buying low and selling high
  • Dividends and the power of compounding

Andrew: cool so dividends yes let me get started because we were looking at the backbones of it. We’re looking at you know we talked about the anatomy of stocks and what shares represent. Whether dividends and how do they relate and why are they powerful for us. Dividends are pieces of earnings that companies are going to pay out to shareholders.

It’s in my opinion which is it’s debatable because of a lot of people kind of look past this. But I see investments as the whole point of having an investment is to receive an income. When you buy an investment you are taking on a certain amount of financial risk there’s a chance that you could lose all of your capital.

[click to continue…]

IFB46: Back to the Basics Pt 4: Investing 101 and Compound Interest

This is part 4 of the 5 episode “Back to the Basics” series from The Investing for Beginners Podcast. Each episode covers the fundamentals of the stock market and investing to provide a solid foundation for those who are looking to compound their wealth over time.

Here are the links to each of the episodes:

Back to the Basics Pt 1: The Anatomy of Stocks and Shares
–Defining what a stock is
–Talk about the big 3: the cash flow statement, balance sheet, and income statement
–Earnings manipulation

Back to the Basics Pt 2: Share Dilution on Wall Street
–What is a stock
–What are stock buybacks and how they affect us
–What are share dilutions
–What happens when we buy or sell a stock

Back to the Basics Pt 3: Stocks vs Other Investments
–Peer to peer lending
–Real Estate
–Gold and other precious metals
–Bitcoin and other cryptocurrencies
–Bonds

Back to the Basics Pt 4: Investing 101 and Compound Interest
–The importance of buy and hold
–Compound interest and how it can make you wealthy
–Using a compound interest calculator
–The power of dollar cost averaging

Back to the Basics Pt 5: Dividend Stocks and Value Investing
–The advantages of buying low and selling high
–Dividends and the power of compounding

 

investing 101

Welcome to Investing for Beginners podcast this is episode 46. Andrew and I are going to continue our series on back to the basics, and today we’re going to talk about buy and hold and why that’s important. As well as compound interest and some other interesting topics. So without any further ado, I’m going to turn it over to Andrew, and he’s going to start off our chat.

  • The importance of buy and hold
  • Compound interest and how it can make you wealthy
  • Using a compound interest calculator
  • The power of dollar cost averaging

Andrew:  If you’ve read any investing books and gotten involved with the whole scene, these are a lot of the things that are similar themes. I’m hoping with these episodes that we’re going at such an in-depth level that you’re still picking up things that are valuable.

The whole goal of this is to get things to stick. Because it’s one thing to hear something but if you can take these basics and master them– give yourself the reasons why and give yourself not just the how but the why. Give yourself a firm foundation and understanding on why these things are applicable and why, when things get tough, you’re going to have these values to stick to. It’s important to get this mastery rather than just floating through the wind, and when adversity comes, if you don’t have this foundation you might forget about all these lessons or you just might be stubborn and not listen to what’s been proven.

And this kind of like conventional logic when it comes to the stock market and investing and so I think it really can have a big impact on your final results as you navigate through the stock market.

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