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Investing in Gold (I)
I will not be the first, and probably also will not be the last, who spoke about the Gold Rush that shakes down the world for the last few years. Just in this time it is a little different than in the days when desired f
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Investing in Gold (II)
The upper limit of the price is even more difficult. In our times gold is not founded in streams as was shown in the movies. Now gold is mined from the deep earth and separated from gold dust, metal ore or rock. In natur
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Investing in Russia
Investing in Russia has gotten really widely promoted for the last period. I can remember the talks that stocks in Russia are the cheapest over the world for not less than year. The fact, that those stocks are st
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Investing in Land - Agricultural REITs
Investing in land I have noticed an increased interest in agricultural land investments during the last period. And I can it understand completely. When stocks are so volatile and bonds may offer such low return
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Where Are the Investment Markets Moving Now?
Some of the market participants call the current situation a “crisis” others are starting to be convinced that we are in a bear market. While others just don’t know how to call it. Well, I call
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Bond Investment: Government Bonds and Corporate Bonds
Corporate Bonds and Government Bonds Today I want to discuss another untraditional topic. However, this topic concerns the most traditional investments – bonds. Bonds been used for very long time a
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European Dividend Stocks
Before getting to the exact stocks, at first, please let me explain why I have chosen European dividend stocks as a topic. For the beginning, lets solve the question why dividend stocks. The true is that many inv
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Is the Bubble of Commodities Going Down?
It can be said that commodity bubble already went down. The prices of the most commodities have slumped significantly during several last months. But was there really a bubble? Yes, the prices have
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BRIC Countries
BRIC countries are the largest emerging economies over the world. The first letters of every country make a name of B R I C and those countries are: Brazil (population - 192m) Russia (population - 143m) Indi
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Investing for Beginner
Many people are prepared to invest, and understand that investing would help to achieve many important goals of life.However, most of those people do not even start to invest, because do not know exactly how to do that,
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Derivatives
Derivative Financial Instruments Derivatives are so called because they are constructed from other traditional securities, and operate the rights to them. Apart from the fact that there are some basic derivative instrum
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Investment in Stocks
Stocks (shares) are investments that attract the most attention in financial markets, and perhaps stocks are worth it, because investors can expect the highest return from stocks among the range of traditional investme
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Investment in Cash
Bank (saving) Accounts, Deposits, Deposit Certificates, Treasure Bills, Money Market Funds When we are talking about investment, cash is not only the real paper (or metal) money that are held in the wallet or under the
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Investment in Mutual Funds
Investment Funds (Collective Investment) Investment in mutual funds is one of the most popular types of investment. A mutual fund is just a large and well diversified investment portfolio of many securities, in which ca
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Investment in Collectibles
Many kinds of collectibles may also be considered as investments, but their value and benefits are much more elusive, than more serious traditional investment instruments. Works of art, stamps, antiques, coins,
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Direct Investment
Investment in Tangible Assets Direct investment are very wide issue to study, but it‘s not so close to traditional investing. Direct investments are more related with business development and would depend
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Investment in Fund of Funds
If each normal investment fund invests in underlying assets directly, the fund of funds is investing solely in other funds that invest directly in shares, bonds or other assets.If such funds distributors would ar
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Investing in Unprofitable Companies
Investment Strategy - Unprofitable Companies Investing in companies that are still unprofitable is more difficult than investing in profitable companies, but may also be very successful. If the company will turn around
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Investing in Funds
Investment Funds Strategy Indeed, investing in mutual funds is not complete investment strategy, but only a part of it, or more precisely, only the choice of investment instrument. For example, if the strategy d
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Investing Benefits For Beginners
Is the investment really worth it? Many investing beginners ask a question: why to invest? There can be different answers. Some might even say that is not worth to invest. Why let your money into uncertainty if yo
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Investment Book:
Investing for Beginners Exposed: Or What Investment Consultants Hide from You Rokas Lukosius (Author of the book and this website) No matter whether you are a seasoned inv
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Online Investing
Few decades ago all the investors was acquiring stocks calling to broker by phone or using some other way to contact him. However, computerization of the world has changed investing significantly. Online investing became
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Investment in Short ETF
Investment in Short ETF is very different from regular investing. “Short” – means short selling transactions when securities are loaned and sold with obligation to return it after some pre-agree
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Speculation
Speculation is an investment action made under intentions to earn large profits in short term. Usually such actions are very risky and lays somewhere between investing and gambling. It is hard to say where exactl
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Investment Industry
An investment industry is a part of whole financial industry of the world. Finance sector includes not only investment industry but also other financial services: corporate finance, public finance, insurance
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Global Financial Market
A global financial market is a totality of all worlds’ financial markets. Every decent country has a Security Exchange and larger states have few or several of them. As financial markets includes not o
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Bond Market
A bond market includes all the bonds (debt securities) that are issued and traded or just held. Bond market is a part of a whole financial market. This market covers all the fixed income securities that are
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Investor
An investor is an individual or corporate unit that invests in any class of investments on purpose to earn some return from invested capital. There may be more criteria to distinguish very small investments
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Dividends
Dividends are capital payments from companies to theirs shareholders. Normally dividends are paid by cash and usually but necessary once a year. Every company’s common share of the same class gets equal div
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Market Capitalization
Market capitalization (market cap) is a company’s value (price) on the stock exchange. Market capitalization is calculated by multiplying the outstanding share number by the last share price on the exchange
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Diversification
A diversification is an investment technique or a part of an investment strategy, which is used to reduce the investment risk of the portfolio, including in it larger number of different securities or other inves
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Private Equity Fund
A private equity fund is a fund that invests in a stakes of non-listed companies (private equity). Investment in private equity funds is much different from investment in mutual funds. They are illiquid, riskier
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Mutual Fund
A mutual fund is a collective investment vehicle that is consisted of fund units, which are sold for retail investors. Practically, mutual fund is a large investment portfolio, in which can take a part even small
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Institutional Investment
Institutional investment is an investment that is made by an organization/institution. Usually, institutional investments are large scale and has important role in financial markets. Most institutional investment
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Institutional Investor
An institutional investor is an investor that is a corporation/institution. Institutional investors have high impact to investment markets and sometimes decisions of most known institutional investment manag
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large Cap Stocks
large cap stocks are stocks of those companies that have the highest market capitalization. All the stocks can be classified to large cap, mid cap and small cap (if ignoring modern classifications that include mo
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Small Cap Stocks
Small cap stocks are stocks of lower market capitalization. All stocks may be classified to large cap, mid cap and small cap (if ignoring mega, nano and other modern classification caps). There is no united class
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Blue Chip Stocks
Blue chip stocks are stocks of the biggest large cap companies. Blue chip stocks usually are safer than average investment in stocks, have stable cash flow and pay stable dividends according dividend policy. Blue
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Investment Bank
An investment bank is a financial institution that has a license of bank and specializes exclusively on investment services. In the USA investment banking services was separated from other banking activity u
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Investment Banking Services
Investment banking services are corporate finance services provided by investment banks. Investment banking includes such services like capital rising, securities issuing, IPO’s running, mergers and acquisitions
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Publicly Owned Corporation
A publicly owned corporation is a company, which has its shares listed on the stock exchange. A publicly owned companies normally are medium or large scale corporations owned by a large number of investors (both
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Money Market
A money market is the market, in which money market investments are traded. Such money market investments can be deposits certificates, bills or other short term high grade fixed income securities.
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Penny Stocks
Penny stocks used to be described as stocks which price on stock exchange are lower than 1$ or 5$ (there is no officially approved norm). However, it is not very fair to judge a company for its share price on exc
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Dividend Growth Stocks
Dividend growth stocks are stocks that are hard to find in reality. Because the stock must be either value stock (large dividend payments) either growth stock (small dividend payments) or either something in betw
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Value Penny Stocks
Value penny stocks are stocks that have characteristics of both: value stock and penny stock. Investment in value penny stocks isn’t very popular, because stock investors who seek for safety invest in norma
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Operating Leverage
An operating leverage is a company’s EBIT (earnings before taxes and financial operations) sensitivity to changes of sales. As the sensitivity is measured to operating income (close to EBIT), the
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Investment Strategies
Investment (investing) strategy – often discussed by both amateur and professional investors, but in fact very rarely encountered. Amateurs usually imagine that they has an investment strategy only after th
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Financial Leverage
A financial leverage is a use of borrowed money to achieve more efficient capital structure. A borrowed capital is cheaper than equity capital most of the times. So usage of loaned money makes weighted average ca
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Direct Investments in Stocks
Direct investments in stocks are investments made without financial intermediaries (only theoretically). It means an investor buys stock directly from the company without intermediation of stock exchange or broke
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Investment Management Fees
Investment management fees (fees that are paid straight to investment manager) basically are one of these types: Performance based fee. Performance based fee is calculated according to increase of inve
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INVESTMENT MANAGEMENT HOW TO MANAGE YOURS INVESTMENTS PROPERLY
Investment management is a complete science and if you are expecting to become a professional investment manager in few hours you should get disappointed. However, there are several most important guidelines at i
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Foreign Direct Investment
Foreign direct investment (FDI) traditionally was understood as investment that is made by foreign country in direct assets, for example factory, including land, building and machinery. When financial markets evo
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EV/EBITDA Ratio
EBITDA Multiple EV/EBITDA ratio shows how expensive firm is compared to its EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization). EV to EBITDA multiple is mostly used by professionals because
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EV/EBIT Ratio
EBIT Multiple EV/EBIT ratio is identical to EV/EBITDA ratio. The only difference is that EBIT instead of EBITDA is used. EBITDA differs from EBIT at depreciation and amortization (DA). So EBITDA i
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Stock Valuation
Stock valuation is very important part of investing in stocks, and this part is the most time consuming and knowledge requiring. Stock valuation is a necessary and main step at stock picking process. The only way
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Hedge Funds
Hedge funds are investment funds that use financial leverage and derivatives to achieve better investment results. The name of hedge fund came from hedging, which originally is a defensive investment strategy, bu
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Free Float
Free float is a proportion of company’s shares that are really traded in the market. Normally, free float is lower than the total outstanding number of shares, because most of the largest shareholders do no
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Target Capital Structure
Target capital structure is a mix of equity and debt capital that maximizes value of the shares. Target capital structure may be achieved when WACC (Weighted Average Capital Cost) is minimal. If proportion of equ
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Profit Margin
Profit margin normally refers to net profit margin, which is net profit divided by sales. But one should remember that profit might be of different kinds (net profit, pretax profit, EBIT, EBITDA and gross profit)
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Financial Investment
Financial investment is any financial asset that should provide a return for investor. Financial asset is an asset that doesn’t have tangible form and has some financial obligations to its owner. All securi
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M&A
M&A (mergers & acquisitions) is a field of corporate finance in which corporations are acquiring other companies or are merging in between. Theoretically it doesn’t sound very impressive, but in rea
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Merger
A merger is a deal when two (theoretically possible more) companies are merging in between to achieve synergy. Mergers are part of M&A market and differ from acquisition by payment method for the stake. In me
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Hostile Takeover
A hostile takeover is an acquisition of a target company when its management doesn’t want the company to be overtaken by another corporation. The target of a hostile takeover may be only listed company whic
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Organic Growth
An organic growth is a growth of the company when inner resources are used to get larger market share. Also organic growth may be achieved together with growth of the whole market segment or entering new markets
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Go Public
Go public means to get company’s shares listed on the stock exchange; the process also called floatation. To go public, company has to hire some investment banking firm that would help to execute an IPO (in
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Risk Tolerance
Risk tolerance is a characteristic that describes the investor and his ability to withstand losses from investments. The higher risk tolerance of investor the more losses he/she may handle. Investm
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Fund Manager
A fund manager is an employee of investment management company which is responsible for the management of the fund’s assets. Most of the times, more than one person is involved in fund’s management bu
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Small Business Valuation
Small business valuation is not much different from standard business valuation. However, small business valuation is faster to perform because there is less financial and business data to analyze and less time c
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Stock Price
A stock price is the last price of a share (stock) that was traded in a stock exchange for a particular stock. If stock exchange is closed at the moment, then the last stock price will be closing price for that s
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Liquidity
(1) Market liquidity is a characteristic of a security or other traded investment that shows how easy it is convertible in to cash at a market value. Usually when investor decides to sell some investment and
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Broker
A broker is an intermediary that helps for retail or other investors buy their investments. Broker can be as a person (job title) or a brokerage company that acts as a financial intermediary between the seller an
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Investment Fund Management
Investment fund management is not much different from simply investment management or asset management. Investment fund is large investment portfolio and the composition of that portfolio depends on particular fu
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Bid Price
Bid price is the highest price at which buyer is willing to buy specific amount of securities. Investors often leave their buy orders through their brokerage account while each buy order that stays in the exchang
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Investment Management Business
Investment management business is a large part of a financial industry and is very important for investment banks and other investment companies because investment management business has quite good profitability
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Angel Investors
Angel investors are investors that have capital for investments and are investing in young companies that are in start-up stage and are needed for capital to exploit growth potential. The source of funding from a
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Financial Statements
Financial statements are periodically by the companies issued reports that provide the most important financial information about company’s financial condition and success of activity. There
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Income Statement
Income statement (also called statement of operations, profit and loss statement, P&L or other) is one of three main financial statements reported by the companies periodically. Income statement exposes compa
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Profit
Profit is a term used in various finance fields and may have many meanings. Basically profit is the positive difference between the income and costs. If costs are higher than income, then instead of profit loss w
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Gross Income
Gross income (gross profit) is equal to company’s revenue minus all cost of goods sold (COGS). Gross income is just one type of income; other types of income are operating income, pre-tax income or net inco
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Profitability Analysis
The main purpose of profitability analysis is to determine the profit margin and compare it to the appropriate financial data. Profitability should not be confused with return because profitability is based on so
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Debt to Equity
Debt to equity ratio (also known as D/E ratio, Debt/Equity) measures how big is company’s debt compared to its book capital (equity). The higher is the debt to equity ratio the higher is the insolvency risk
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Financial Planning
Financial planning is a type of financial analysis of which goal is to predict financial situation of the object in the future. There are two main trends where financial planning can be applied: in corporate fina
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Cash Debt Coverage Ratio
‘Cash debt coverage ratio’ (also known as ‘current cash debt coverage ratio’) measures company’s ability to repay its debts. Basically, it compares cash flow that is received from op
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Financial Forecasting
Financial forecasting is a part of financial planning and also a part of a DCF valuation. But usually financial planning covers only a period of year or two while financial forecasting regularly covers about five
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Asset Turnover Ratio
Asset turnover ratio compares company’s sales and assets in order to identify the efficiency of assets used in the business. In simple words, it shows show much of sales are generated by company’s ass
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Working Capital Management
Why Working Capital Is Important? Working capital is one of the main parts of company’s finances and every manager, even of the small company, manages working capital despite the fact he knows about that o
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Working Capital Calculation
There are few modifications of working capital calculation. All data that are needed for working capital calculation can be found in balance sheet (which is one the three main financial statements).
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Investments in Blue Chip Stocks
Stock investments require high degree of financial knowledge and the understanding of market realities, but only if you are seeking for the most efficient result. Yet, the reality is that there are millions of pe
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Investments in Small Cap Stocks
Investments in Small Cap Stocks Investments in small cap stocks could be compared to penny stock investments but the term ‘penny stocks’ is not specific enough. The thing is that the determination of
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Pro Forma
Pro forma is a type of financial statement that reflects financial information under some conditional basis. For example, if company has discontinued some activity, it may provide normal income statement and pro
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Cost of Debt Calculation
The cost of debt is easy to calculate if they are required data. Actually, there are few methods to get the cost of debt, but some of those are more accurate some less. If you want that your result would be more
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Capex
Capex (capital expenditure) is company’s investment in long-term assets that are needed to continue the business or for future’s growth. The perfect examples of capital expenditure can be an acquisiti
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Operating Cash Flow
Operating cash flow or ‘cash flow from operations’ (CFFO) is one of the most important among financial indicators and is used to measure company’s results in cash terms. While net income or oper
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Sector
Sector is a segment of an economy that distinguishes oneself by some characteristics that belongs to that segment. There are a lot of different classifications used in practice to classify different business segm
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Beta
What is beta? Beta is a ratio that measures volatility of an investment in relation to the whole market. In other words, it shows how the price of stock was changing compared to the whole market. Theoretically,
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Annual Report
Annual report is a report on company’s activity issued each year. Not every company issues an annual report and mostly such reports are issued by public companies or those that are preparing going public.&n
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Intangible Assets
All assets can be classified to three main groups: tangible assets, financial assets and intangible assets. Intangible assets are those assets that aren’t financial and don’t have a real physical form
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Average Collection Period
Average collection period is a financial ratio that is used to measure how fast company collects its receivables. ‘Average collection period’ shows what is the average time period till company gets ca
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Cash Ratio
Cash ratio is a financial ratio that measures company’s financial liquidity over short term. It compares company’s cash reserves to short-term liabilities. If ‘cash ratio’ is high, it may
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Net Interest Margin
Net interest margin shows the profitability of the lending business for a bank or other financial institution. Lending business is the core business for most of the banks, and the profitability of this operational segmen
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Negotiable
(1) Negotiable means the description of the price when it is or can be flexible depending on other conditions. All sold goods or services may have negotiable or fixed prices, and it depends on the sales strategy
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Leverage
Leverage definition In finance leverage means usage of debt capital in addition to the equity capital in order to increase the profit. Increase in leverage is understood as increase in riskiness and volatility.
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Front-End Load
Front-end load (sales fee) was a very popular load fee in investment market for decades. This fee is paid by investors during the acquisition of mutual fund units and is some percentage (0%-5%) on the invested am
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Load Fee
'Load fee' is a fee that is paid during the selling process of the mutual fund. The sales load fee is also called as sales fee or distribution fee because normally it is paid by investor during sales-distribution
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About Us
The website INVESTING FOR BEGINNERS EU was created in order to educate investors and other participants of the financial markets in accordance to the highest standards. Investment process is not re
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