What Type of Financial Investing Person Are You?

Have you taken the time to consider your financial goals in terms of investing? Financial investing has a lot to do with what is available, such as stocks and bonds. However, it also has a lot to do with the overall risks you are willing to take and the type of investor that you are. When you take a close look at financial management options available to you, it is important to consider what your goals are and what types of investments you are best suited for.

Some investors have very well defined investing methods. They know just what they are looking for and they see the decisions they need to make in black and white. On the other hand, some highly successful financial investors do not have a strategy that is set in stone. Some of the less successful investors would have a hard time making decisions because they are not sure where they are going or how they will get there.

Take some time to consider a few important elements of this. Learn what your options are and how you can define your goals better.

• Do you like to purchase stocks at a low price and then sell them quickly, even within a week or so, when the price has increased? If this is how you would define yourself, you are a trader rather than an investor. You likely do not spend a lot of time researching the stocks before you buy them but rather go the options that you have.
• Investors, on the other hand, spend a great deal of time learning as much as they can about the stocks they are likely to purchase. They also hold on to these stocks for at least a few months, if not longer, before they sell them at a higher price.

If you are an investor, then you can further clarify yourself as a value investor or a growth investor. If you are a value investor, this means that you are looking for a good deal in the market. You want to find a good company to invest with who just happens to have stock prices that are lower than what they normally are or what they are likely to be in the future. If you are this type of investor, then you will want to use a wide range of factors to help you determine if a stock is a good investment including the P/E ratio and book value.

If you are a growth investor, then you are looking for companies that are growing, with accelerated revenue and earnings. You look at things like the earnings growth ratio and the revenue growth rate when making a decision about which stock to invest in.

What difference does all of this make to you? If you define the type of investor you are, you can make financial management decisions that fit better into your goals. Financial investing is never an easy process, but it can be highly successful with clear goals.

Ask Joseph Leonard and Coastal Investment Advisors for additional personal finance advice or learn money management tips on financial management by downloading this free financial management guide.

Don't forget to see Joseph Leonard in person during an upcoming financial management seminar!

How To: Research a Stock Purchase Before You Buy

I have previously written about doing your due diligence in researching stock purchases online and I wanted to dive in and provide a few additional points to consider when researching what stocks to pursue in this volatile market.

To make smart financial management decisions, you should research a potential stock purchase before you actually make one. The good news is that this is easy to do, in most cases, because companies provide you with all of the information you need in advance. Though you can go with a hunch or just following your instincts, it is helpful to have a bit of clear research behind any stock decision you make.

What do you look for? When it comes to smart financial investing in stocks, there are a variety of factors that you need to consider prior to purchasing any type of stock. Consider the following:

• Learn about the company’s history and its foundation. A company that has a good history of growth, smart financial decisions and good earnings is likely to be a safer choice. Of course, the company’ stock price will be higher for it, but it still may be a clearly beneficial choice.
• Learn the Price to Earnings Ratio, or the P/E Ratio. This is the most popular ratio to use to evaluate a stock. It will tell you how much investors like yourself are willing to pay for the company’s earnings. Look for this ratio to be between 10 and 30 for the most optimal purchases.
• Consider the company’s dividends. If the stock pays a dividend, this means that when the company has a profitable year, the company gives some of those profits to stockholders. Find out if the company’s stock pays this and how much it pays.
• Look at the company’s cash flow. You may know from your own budget that if your cash flow is positive, then you have money to pay your bills. You want to learn if the company has a positive cash flow as well as how much of a profit it is turning. Profit means that the stock is a good choice, of course, but you also want to look at how much cash flow the company has and if that excess cash is being invested wisely. This also indicates that the company is less likely to file for bankruptcy.

There are numerous other factors to consider through good financial investing. This includes how volatile the stock is (check its past performance) and the market capitalization or market cap. Further, many stock investors like to look at who is running the company, especially if it is a newer company or one with more risk involved. This way, they can learn if the management team has the resources and skills to deliver for them.

If you fail to take the time to research financial investing options like this, you could not only lose money on a bad decision but you may miss a great option available to you. It is always a good idea to verify any information that you obtain, too, to ensure your source is reputable and that the information you are counting on is accurate. By doing this research, you position yourself for long term success with financial management.

Ask Joseph Leonard and Coastal Investment Advisors for additional personal finance advice or learn money management tips on financial management by downloading this free financial management guide.

Don't forget to see Joseph Leonard in person during an upcoming financial management seminar!