U.S. Savings Bonds—Series EE Bonds
Series EE bonds are Savings bonds are issued by the United States Treasury Department, and are reliable, low-risk products that you can use toward financing education.
Dividend Reinvestment Plans (DRIPs)
Many new investors look for a way to invest a small amount of cash into the stock market without paying huge commissions. To meet this increasing demand, more companies are offering dividend reinvestment plans, also known as DRIPs. DRIPs are offered by a corporation and allow investors to reinvest their cash dividends by purchasing additional shares or fractional shares of some of the most well known publicly-traded companies for as little as $10 at a time. As a result, DRIPs have become heavily promoted as viable solutions to new investors entering the stock market
Don’t Put All Your Eggs in One Basket
Many sectors are negatively correlated, so by diversifying your portfolio you may be able to better weather a market downturn.
Dealing with Investment Risk
Every investor needs to know investing in the stock market requires a thorough understanding of the risks involved. With any investment there is a risk-return trade off based on a degree of uncertainty—the greater the risk, the greater the potential for return if that risk pays off.
Margin Trading
When an investor purchases securities, the securities may be paid in full, or part of the purchase price can be borrowed from a brokerage firm. If funds are borrowed, an investor is trading “on margin.” In order to trade on margin, an investor must open a margin account.
Spin-Offs
A spin-off occurs when a parent company divests itself of a subsidiary or a division of the company. The subsidiary or division then becomes a separate, independent company.
Employee Stock Purchase Plans (ESPP)
An employee stock purchase plan (ESPP) is a plan that allows a company to compensate a broad group of employees with options to buy the company’s stock at a specified price, usually at a discount. Many large companies use these plans as an employment incentive, giving employees an opportunity to share in the growth potential of the company’s stock. Generally, the employee is not taxed at the time the stock is purchased.
I Bonds
The I Bond is a type of savings bond, issued directly by the U.S. government. I Bonds are available through banks, most financial institutions or directly over the Internet at www.treasurydirect.gov.
Fixed-Income Investment Selection
Fixed-income investments are designed to bridge the gap between after-tax income and your desired after-tax spending.
Cost Basis Consideration
When determining your capital gains and losses, cost basis information is essential.