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Financial Goals Investing: Start small, but start now! $2,000 can turn into almost $100,000 after 40 years (at 10% return a year). Investing in stocks can help you pay for your biggest goals. That 10% average increase may not sound like much, but given time, this interest compounds to produce incredible returns. Imagine someone told you that you could turn $2,000 into $100,000 with no work whatsoever? It sounds too good to be true, but it’s completely possible if you understand compound interest (which will be discussed in the next lesson). The key element to remember here is time. The longer you have your money invested, the more powerful compounding becomes. That means the younger you get started, and the more patient you are, the greater returns you will reap in the future. However, you don’t need $2,000 to get started. You can start small and keep adding to your investment over time. You’ll be amazed how quickly your investment can grow. In fact, if you added $100 a month to that i...

Three Steps To Saving Every dollar is an investment in the quality of your life. Build a cash cushion of 3-12 months of income before you invest. Track your spending by writing it down or using online tools to help you. Having a cash cushion is an important step before you start investing. Though it’s natural to want to jump right in and get your money in the market, this can be dangerous. A successful investor understands that over the short term your investments may lose money. We recommend a long-term buy and hold philosophy when it comes to investing. If you put all your cash into the market, you may end up needing it in the near future. The market could be down at that stage, meaning you’ll have to sell your investments for a loss. If you have a cash cushion, you can leave your investments intact and wait for a recovery. You should therefore try to build up a cash cushion of at least three months salary. This may sound difficult, but it’s easy to train yourself to save money, and ...

Company Culture Company culture refers to a company’s overall philosophy - how it treats its customers, how it rewards its employees, how it deals with environmental issues. Studies have shown that companies with good culture greatly outperform the market. Websites like Glassdoor.com can give you great insights into a company’s culture.  Ask any Wall Street analyst what they look for in a good investment and they’ll rattle off earnings figures, growth numbers and ratios until you find a reason to excuse yourself. Of course, financial analysis is also important in choosing the right companies to invest in, but something that is very often overlooked is company culture. Company culture covers so many aspects of a business; from its overall philosophy, to how it treats its customers, to how it rewards its employees - and it’s far more than just a nice idea. A recent study by Glassdoor.com found that company culture is incredibly important when it comes to returns for investors. The st...

Balance Sheets Balance sheets may appear complicated at first, but a few key figures can give you a good idea of a company’s financial health. In general, you want to see cash increasing, while debt and total shares should be decreasing. If something appears unusual, investigate a little deeper - it’s important to understand the companies you are investing in. Each quarter, every public company is required to release a number of financial documents to give investors an overview of how the company is performing. One such document is the balance sheet, which lists all the company’s assets and liabilities. You can find this on the company’s website (usually under Investor Relations) or on financial websites like Yahoo Finance. Many people get scared off by the prospect of having to read financial documents, but it doesn’t take a degree in business to be able to understand a few key figures. The first time you look at one, you may be overwhelmed, but as you grow as an investor, you’ll grow...

Risk Versus Reward Risk is the price you pay for returns. A diverse portfolio should include some risky investments along with safer large-caps. The younger you are, the more risk you should be willing to take. Having a diverse portfolio means more than just picking stocks from different sectors. You have to be willing to balance those big companies with more risky investments. That will depend a lot on your tolerance for risk, something your age should play a big part in. The younger you are, the more risk you should be willing to take when it comes to investing. Someone in their early twenties has another four decades to make money, as opposed to someone in their late fifties, who is gearing up for retirement. Peter Lynch, one of the greatest investors of our time, coined the phrase “ten bagger.” This is a stock in which you make ten times your original investment. It sounds crazy, but actually these are fairly common in the world of investing. The problem is that you have to be will...

First Glance Invest in companies that you understand and believe in. Use your own knowledge and that of your friends and family to discover great investing opportunities Once you have a few companies in mind, you have to dig deeper to ensure they are well run businesses before investing. The following chapters will give you some insight into how you can find great companies to invest in. These chapters are here to guide you as you start to think like an investor. Before you actually buy shares, you’ll need to do a little more research to ensure they are well run businesses. Peter Lynch is widely regarded as one of the best investors of all time. He coined the idea of investing in what you know. This mantra is central to the MyWallSt investing philosophy, but we take it one step further and say: “Buy what you believe in.” As a consumer, you’ve spent your whole life interacting with businesses, whether it be large multinationals like Coca-Cola or your local grocery store. Your first step...

. An Old Man Lived in the Village An old man lived in the village. He was one of the most unfortunate people in the world. The whole village was tired of him; he was always gloomy, he constantly complained and was always in a bad mood. The longer he lived, the more bile he was becoming and the more poisonous were his words. People avoided him, because his misfortune became contagious. It was even unnatural and insulting to be happy next to him. He created the feeling of unhappiness in others. But one day, when he turned  eighty years old , an incredible thing happened. Instantly everyone started hearing the rumour:   “An Old Man is happy today, he doesn’t complain about anything, smiles, and even his face is freshened up.”   The whole village gathered together. The old man was asked: Villager: What happened to you?   “Nothing special. Eighty years I’ve been chasing happiness, and it was useless. And then I decided to live without happiness and just enj...

Sales Growth Don’t compare this month’s sales to the previous, compare them to the same month last year. Scope out companies experiencing 15% year over year (YOY) sales growth. You can find YOY sales figures in a company’s quarterly earnings report. Grow, stock, grow! For your investment to grow, the company’s sales have to grow. And just like other criteria we use when looking at stocks to buy, we think it’s important to set a benchmark for the minimum year over year (YOY) sales growth. While 12% is a pretty impressive number, we here at MyWallSt say shoot for the stars and scope out companies experiencing 15% YOY sales growth. “How do I Figure out This Percentage?” (Current Period Sales – Previous Period Sales) ÷ Previous Period Sales = Year Over Year Percentage Sales Growth (Multiply that final number by 100 or just move the decimal point two places to the right to get the percentage) "How Can I Use This Formula?" Businesses can be seasonal, so if a company is doing more s...

Margins Margin accounts allow investors to buy stocks using borrowed funds. Margin is a cash cow for brokers, but can cost an investor a lot in interest. A broker can force you to liquidate your margin positions before you are ready to sell. After you’ve been with your broker for a while, they may offer you the chance to buy stocks on margin. A normal cash account only lets you buy as much stock as you have cash on hand to pay for. A margin account lets you purchase stocks with borrowed money. Cue the red flags and warning sirens! While margin accounts can increase your returns, they also greatly increase your risk. “But my broker suggested margin!” No surprise there. Brokers stand to make a lot of money off margin accounts. How? By charging interest on the borrowed funds. And since margin gives you more (borrowed) money with which to buy stocks, it generates greater commission fees. Don’t bite if you’re told that margin accounts increase your "buying power." Buying on margin...