Investing for Beginners .EU, investing Wealth is the slave of a wise man. The master of a fool.

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Investing in Uncertain period
Investing always has some uncertainty, but there are some situations when rise even more questions than usually. The current situation is just like one of those uncertain periods. When the economic cycle so inconclusive,

Investing in Africa
Investing in Africa even sounds a little extreme. But investing in Africa not only sound extremely - it is like this in fact. If we would distinguish developed and emerging markets, then most of the Africa’s countr

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

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

US Debt Relief
  Let me give you few facts at first that we would now what are we talking about: The General government gross debt in percent of GDP in the United States was reported at 83.21 percent of GDP in 2009 (90% of GDP

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

Stocks Riskier than Bonds?
  It is so common that stocks are riskier investments than bonds; nobody is even considering this question. Would I doubt it? Of course not, stocks are stocks and bonds are bonds. But I would like to look at it fro

Problems in Greece: Is It Going to End?
  Greece sounds like a curse for all investors and all other participants of the financial market. Yes, it is a small country compared to the global or European economy by the size of a GDP or other economical indi

How to Beat the Stock Market
  Investing is good, but the real challenge for every portfolio manager is to beat the stock market, or beat the market. Of course the term ‘market’ is not very exact. In reality to beat the market is t

Baltic Investment
  Baltic Stock Exchange   Baltic stock exchange now belongs to the world gigantic stock exchange NASDAQ OMX, and now is called NASDAQ OMX Baltic. Historically Lithuania, Latvia and Estonia had their own nati

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

What means long term in investing?
When I talk to non-professional investors, I often get surprised on their interpretation of ‘long-term investment’. Of course, everyone wants to enjoy their lives and to do it fast, while not many are ready t

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

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

(Are you looking for investment definition?)   Investments are instruments that allow us to receive a higher amount of money than was spent. If someone spends 10 euros or dollars and he knows that he will receive

Interest Coverage Ratio
  Interest coverage ratio shows company’s ability to pay interests for its financial debts. Interest coverage ratio is a ratio between operating profit (EBIT to be more exact) and expenses for interests. The

Sortino Ratio
  Sortino ratio is a financial ratio that is used to measure the performance of investment portfolio and is very similar to a Sharpe ratio. The main difference between Sortino ratio and Sharpe ratio is that Sharpe

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,

Investing for Retirement
Investing for retirement may be one of the most reasonable investment objectives. Sometimes, people invest so they can afford expensive things that they otherwise could not afford without investing. For example

Investment in Bonds
Debt (fixed income) securities Bonds are fixed income securities and the principle of them is simple - the issuer of the bonds attracts the money from the investors and commits to pay back for the investors until end of

Terminal Value
  Terminal value is a value of the business (or other asset) used in discounted cash flow (DCF) method that is added after the discontinuing of the cash flow forecasting.   DCF valuation is based on the sum

Investment in Actively-Managed Funds
Active Mutual (Investment) Funds Actively managed investment funds usually are those mutual funds that choose not copy the index (benchmark), but is trying to beat it, so could give for investing person a higher return,

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

Investment Strategy by Age
  It is very popular to allocate asset classes in investment portfolio according to investor’s age. And it has some reasonable justification: when investor’s age is changing – his risk tolerance a

Investments in Ultra ETF
  Ultra ETF by most characteristics is similar to normal ETF but there is one main difference: if Ultra ETF follows the same index as normal ETF does, it makes it twice. For example, if normal ETF follows index tha

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

Investment in Ultra Short ETF
  Investment in Ultra Short ETFs combines characteristics of both: Ultra ETF’s and Short ETF’s. The value of Ultra Short ETF changes twice in opposite direction to the value of index which is followed b

Investing Definition
  Investing definition is similar to investment definition. Shortly, it is an acquisition of asset made on purpose to profit from it over time.   Investing is a process that may last from very short period a

FOREX Market
  FOREX market (foreign exchange market) is a global network of trading in different currencies. It is the most liquid financial market with huge turnovers continuously without breaks. Lot commercial banks, central

Bull Market
  A bull market is a market trend when investment market is increasing over longer period and is believed to increase in the future. Bull market is a well known term among investors and is opposite to bear mar

Bear Market
  A bear market is a market trend when investment market is decreasing over longer period and is believed to decrease in the future. Bear market is a well known term in the investment world and is opposite to bull

Preferred Stock (Preferred Shares)
  A preferred stock or preferred shares are other type of shares than common shares. They are called preferred only because of priority over common shares in case of a firm’s termination.

Stock Market Crash
  A stock market crash is a investing term used to describe fast and sharp decrease of all or almost all stock prices on the exchange. However, there is no exact definition how long and how strong market fall shoul

Dividend Payout Ratio
Payout ratio is a percentage that shows a portion of company’s income distributed as dividends.    Formula Dividend payout ratio = common shares dividends / net income   *For the sam

Ex-Dividend Date
  Ex-dividend date is a first day when investor does no longer receive dividends paid by company’s shares. This is important factor because the period of shares' settlement after transacti

Hedge (Hedging)
  Hedge (hedging) is protection of investment portfolio against fluctuations using financial instruments. Hedge is very popular at investment theory, but not so popular at investment practice. In theory everything

Business Valuation
  The goal of business valuation is to determine the correct market value of a business. Usually business valuation is performed by professional valuators / assessors who have required qualifications for the job.&n

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

Holding Company
  Holding company is a type of a company which main activity is to invest in other companies. Holding as itself does not do any activity instead of managing their subsidiary companies and searching for new investme

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

Net Present Value (NPV)
  Net present value (NPV) is a value calculated by discounting all future net cash flows (net cash flow is calculated taking all the forecasted future income and subtracting from them forecasted expenses in every p

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

  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

Investment Performance Measurement
  Many investors are happy about investment managers until the stock market is growing, but when the decline starts investment managers gets only the worst words about their job. However, this is wrong attitud

Treynor Ratio
  Treynor ratio is another popular ratio that is used to measure the performance of investment portfolio. This ratio compares the excess return (above risk free return) of a portfolio to beta of that portfolio. Whi

Jensen’s Alpha
  Jensen’s alpha is used to measure the performance of an investment portfolio. The higher ratio means better performance of portfolio manager. Basically, this Jensen’s ratio shows the above market port

Sharpe Ratio
  Sharpe ratio measures the above risk free performance of investment portfolio in relation to its risk. This ratio was developed by William F. Sharpe which introduced the ratio in 1966. Now Sharpe ratio is the mos

Return on Investment
  Return on investment (ROI) is a percentage that shows profitability of an investment or investment portfolio. Return on investment calculation:   CALCULATION:   Return on investment = net in

Investment Finance
  Investment finance is finance that is related to investment. Investment market is a part of financial market, so we can say that investment is a part of finance.    Investment finance specializes on f

  Stagflation is an economical situation, when high inflation and stagnation of the economy come together. It is very difficult situation, because it not allows using monetary politics efficiently to revitalize the

Inflation Linked Bonds
  Inflation linked bonds (or inflation indexed bonds) are bonds that have their principal linked to inflation, which means the value of the bond principal increases together with inflation. Such bonds are offering

P/E Ratio
  P/E ratio is the most popular valuation multiple that is used for stock analysis. This ratio shows the price of the stock compared to its earnings. The multiple is so popular because of its simplicity and im

PEG Ratio
Price-to-Earnings to Growth Ratio   PEG ratio is quiet popular among retail investors, however professionals do not use it often because of this ratio subjectivity. PEG ratio shows how expensive is stock compared

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

Inventory Turnover Formula
  Inventory turnover formula helps to calculate inventory turnover ratio. There are few possible ways to calculate inventory turnover that are used in financial practice. You may see the formulas below:

DCF Valuation
Discounted Cash Flow Analysis   DCF valuation might be applied to any asset that generates positive free cash flow or is expected to generate that cash flow in the future. DCF valuation might be directly applied t

Power of Compounding
  Power of compounding (compound interest) is a known description for fast increase in value when investment brings steady interests and interests are reinvested. The principle of the growth is the geometric progre

  CAPM (Capital Asset Pricing Model) is method widely used for equity cost calculation. Equity cost should show the return that investor should expect/seek from an investment that contains specific level of risk.&n

  OIBDA or also called operating income before depreciation and amortization is a financial measure used to represent specific type of an income. There are many types of income and each of those has some advantages

Days Sales Outstanding
  Days sales outstanding (DSO) shows how quickly company collect its money from sales. Usually company doesn’t get paid immediately; depending on business and distributors network such period may be from seve

  EBITDA margin is a profitability margin that shows how much of EBITDA earns company’s revenue relatively. The EBITDA margin is the best for profitability comparison of the companies if you want to measure e

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)

Costs of Buying Stocks on Margin
  Buying on Margin Costs of Buying Stocks on Margin Margin Call The Pros and Cons Psychology: Is it worth?     We won’t talk about the possible losses in here. The goal of this paragraph is t

Trading Stocks
  Trading stocks is a process when stocks are bought and sold on the stock market. How differs trading stocks and investing in stocks? Well, it is the same, just is common to think that investing is a long term pro

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

  Bullish is an investor's attitude when he believes that the investment market is going to rise in the near future. Most of the times this term is applied for investments in stocks, when is believed that stock mar

Par Value
  Par value also is called face value or nominal value, and is a nominal amount of money that shows how much of money is related to the security nominally. Par value is used most commonly for two types of securitie

Financial Assets
  There are two main investment (asset) classes: financial assets and non-financial (tangible) assets. Both of them may have similar characteristics as yielding or increasing in value over long period; but financia

Index Options
  Index options are derivative financial instruments that provide for the buyer of the option the right (possibility) to make profits from index value changes. It may be a good investing instrument for the investor

High Return Investments
  High-return investments (or high-yield investments) are investments that can provide the higher return than average investments, and of course such investments are riskier. The reality is that people have differe

Day Trader
  A day trader is a speculator that trades in stocks, currencies or some other securities within a very short period. Most of the trades are made by the trading in one day period. Day trader is a pure speculator, e

Stock Trader
  A stock trader is a speculator that is trying to make profits from quick changes in value of stocks or other securities that he trades. Stock trader have few differences from normal investor and the main differen

Investment Bubble
  Investment bubble is a jump in price of particular investment when price starts increasing faster and faster as long as the price reaches its peak and falls down to a similar to previous level, if there are no ot

Active Investment
  Active investment (management) is opposite to passive investment and means that investments are managed by some investment professional that picks the securities according to investment market tendencies and

Short-Term Investments
  Short term investments are investments that are suited for short term investing. There can be different understanding of short term investing but it is normal that investments for period till one year can be cons

Stock Market Trading
  Stock market trading is similar to stock market investing; however, it is not exactly the same. At first, stock trading refers to a stock trader who trades stocks very often and do not invests for a long term. Lo

Trading Volume
  Trading volume is an amount of securities that was traded in the market over some period. Usually volume is measured for a trading session (day), week or month but other periods also may be used. Higher number of

  (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

Equity Investors
  Equity investors are investors that are investing in equity investments: listed stocks or similar ownership securities, stock funds, unlisted stock stakes or other half-equity strategies (equity loan, mezzanine f

Target Price
  Target price is a calculated price that should represent the market value of the stock and also can be called target value. Target price normally is calculated by analysts of investment banks of brokerage compani

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

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

Balance Sheet
  Balance sheet is one of the three main financial statements (others are income statement and cash flow statement). Balance sheet also might be called a statement of financial position because this statement expla

  The term income may have several meanings. In corporate finance it basically means profit or earnings that are equal to revenue less expenses. But in some cases income may also indicate company’s revenue bu

Net Income
  Net income (net profit) is a financial indicator of the company that shows the real profitability of the business in accordance to its capital structure. Net income is equal to all revenue and gains less all expe

  Loss (net loss) is a financial situation of the company when its revenue is lower than expenses. It is natural that every company tries to receive a profit instead of a loss, but not every succeeds that. Some com

Gross Margin
  Gross margin is profitability percentage that shows the ratio between gross income and revenue. Gross margin is usually calculated when there is a need to compare company’s competiveness and effectiveness i

Operating Margin
  Operating margin is a profitability percentage that shows what company’s profit margin is before it pays interests and taxes. Operating margin simply ignores capital structure (because ignores financial act

  EBIT (also called Earnings Before Interest and Taxes) is a financial indicator of the company that provides information about company’s profitability while ignoring the impact of capital structure and corpo

Financial Analysis
  Financial analysis is an important part of investing, especially if investor wants better results from his investments. Of course it is possible to ignore financial analysis and make investment decisions based on

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

  Return analysis is different from profitability analysis because usually return is measured as a profitability of the assets, investments, capital or other similar asset group but not as a profitability of the re

Turnover Ratio
  (1) Turnover ratio of mutual fund shows how quickly assets of the fund are changing. Actively managed investment funds have higher turnover ratio than passively managed funds, and normally turnover ratio is measu

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

Asset Turnover Ratio Formula
  There are many modifications of ‘asset turnover ratio’ formulas.    These are the most popular forms of this ratio formula:   (1) Asset turnover ratio = Sales revenue / Total averag

Strategic Financial Planning
  Strategic financial planning is a bit different from standard financial planning because standard financial planning focuses on a budget which is detailed estimation of financial statements when strategic financi

Working Capital Ratio
  Working capital ratio may have several meanings in practice:   (1) Working capital ratio = Working capital / Sales (2) Working capital ratio = Current ratio = Current assets / Current liabilities (3)

Stocks and Commodities
  You may ask how stocks and commodities related are. And the answer is simple: everything is related and especially in financial markets. Normally, if some of the main asset class (as stocks) looses or gains

Earnings Estimate
  Earnings estimate is a forecast for income of the closest future period. Earnings estimate usually is calculated by the employees of analyzed company or analysts of other financial companies. Normally, earnings e

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

Minority Interest
  Minority interest (non-controlling interest) is a part of net income or of an equity that does not belong to the shareholders of the main group. Basically there are two types of the minority interest:

Free Cash Flow
  Free cash flow of the company shows how much of cash business has earned in the reality over the period. There are many ways to determine the free cash flow of the company, and most often this indicator is provid

  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

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

Cash Investments
  Cash investments are the safest investments over short-term period. Such investments include saving accounts, certificates of deposit, money market instruments (treasury bills, money market funds). The main crite

Asset Performance
  Asset performance is a return of an asset over some period. Usually performance is measured on annual basis. But basically performance of any asset depends on its riskiness and the period (most of the stocks and

Economic Cycle
  What is economical cycle? An economic cycle means the repeated changes of the economical trends. While during very long economical period economy always has up-trend because of technological evolution and increa

  What is volatility? Volatility definition can be short: volatility is the size of the amplitude in investment’s value changes over time. In simple words, it describes the riskiness of the security because

Real Estate Flipping
  Real estate flipping always gets popular when economical cycle is increasing. It usually coincides with the period of real estate prices boom. It looks very simple when real estate prices are raising and some peo

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

Financial Ratios
  Financial ratios are ratios that are used in financial analysis or in other words that are using financial data of a company. Such financial data usually is found in financial statements (income statement, balanc

Accounts Payable Turnover
  Accounts payable turnover ratio shows how quickly company is paying to its suppliers for services or goods and materials. If payables turnover is very low, it may signify different reasons behind it: Company i

Fundamental Analysis
  Fundamental analysis is the type of financial analysis that relies on company’s fundamentals. Those fundamentals depend on the target of the analysis. For example, fundamental analysis of stock depends on i

Receivables Turnover
  Receivables turnover ratio (also called as accounts receivable turnover) is a financial ratio that measures how efficiently company collects its receivables. If receivables turnover is very low, it means company

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

Quick Ratio
  Quick ratio (also called ‘acid test ratio’) is a financial ratio that measures company’s financial liquidity. This ratio compares company’s most liquid assets and short-term liabilities. I

Current Ratio
  Current ratio is a financial ratio that measures company’s financial liquidity in short term. In simple words, this ratio compares company’s short-term assets to its short term liabilities. If short-t

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

Return on Capital Employed
  Return on capital employed ratio (ROCE) measures company’s return compared to its employed capital. Return in this case is some kind of profit (mostly EBIT or NOPAT) and the capital employed means equity ca

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

Cost/Income Ratio
  Cost/income ratio is very popular financial ratio in bank analysis. This ratio measures the relation of bank’s operating costs to operating income. Basically, lower ratio is better because means higher prof

Non-Performing Loan Ratio
  Non-performing loan ratio measures the quality of the loan portfolio of the financial institution. This financial ratio compares non-performing loans to the total loan portfolio (loans are assets for the bank), a

Loan to Deposit Ratio
Loan to deposit ratio is financial ratio used for banks or other financial institutions. This ratio compares bank’s loan portfolio to deposit portfolio and measures financial liquidity of the institution.  &n

Days Payable Outstanding
  ‘Days payable outstanding’ ratio shows how long it takes the company to pay its liabilities to the suppliers. The longer period means that company is not in a hurry to settle up its debts to the suppl

Days Inventory Outstanding
  ‘Days inventory outstanding’ measures how efficiently company manages its inventory. Inventory often is the main part of working capital and it is very important to managed inventory efficiently. Ther

Liquidity Ratio
  Liquidity ratio is a ratio that measures company’s liquidity. At first, it is needed to mention that liquidity may have two meanings: financial liquidity of a company or market liquidity of some asset. Liqu

CAGR Formula
  CAGR formula is used to calculate 'compound annual growth rate':   CAGR = (Value at the end / Value at the beginning) ^ (1 / Years) - 1 * Can be multiplied by 100%. Where: Value at t

  CAGR is used to measure return and means compound annual growth rate. This type of return measurement is very popular in investment finance because interest also earns interest and power of compounding cannot be

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.

Market Risk Premium
(Equity Risk Premium)   Every investment carries some level of risk and some level of potential return. Those two measures are closely related in investment finance and are used in CAPM which calculates cost of eq

Back-End Load
  Back-End Load (redemption fee) is a load fee which is similar to ‘front-end load’ but is paid when investor sells his mutual fund units instead of during the acquisition as in case of ‘front-end

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

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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