Investing Online for Dummies, 5th Edition PDF
Preview Investing Online for Dummies, 5th Edition
01_584561 ffirs.qxd 3/10/05 7:13 PM Page i Investing Online FOR DUMmIES ‰ 5 TH EDITION by Kathleen Sindell,PhD 01_584561 ffirs.qxd 3/10/05 7:13 PM Page ii Investing Online For Dummies®, 5th Edition Published by Wiley Publishing, Inc. 111 River Street Hoboken, NJ 07030-5774 www.wiley.com Copyright © 2005 by Wiley Publishing, Inc., Indianapolis, Indiana Published by Wiley Publishing, Inc., Indianapolis, Indiana Published simultaneously in Canada No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except as permit- ted under Sections 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600. Requests to the Publisher for permission should be addressed to the Legal Department, Wiley Publishing, Inc., 10475 Crosspoint Blvd., Indianapolis, IN 46256, (317) 572-3447, fax (317) 572-4355, or online at http://www.wiley.com/go/permissions. Trademarks:Wiley, the Wiley Publishing logo, For Dummies, the Dummies Man logo, A Reference for the Rest of Us!, The Dummies Way, Dummies Daily, The Fun and Easy Way, Dummies.com, and related trade dress are trademarks or registered trademarks of John Wiley & Sons, Inc. and/or its affiliates in the United States and other countries, and may not be used without written permission. All other trademarks are the property of their respective owners. Wiley Publishing, Inc., is not associated with any product or vendor mentioned in this book. LIMIT OF LIABILITY/DISCLAIMER OF WARRANTY: THE PUBLISHER AND THE AUTHOR MAKE NO REP- RESENTATIONS OR WARRANTIES WITH RESPECT TO THE ACCURACY OR COMPLETENESS OF THE CON- TENTS OF THIS WORK AND SPECIFICALLY DISCLAIM ALL WARRANTIES, INCLUDING WITHOUT LIMITATION WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE. NO WARRANTY MAY BE CRE- ATED OR EXTENDED BY SALES OR PROMOTIONAL MATERIALS. THE ADVICE AND STRATEGIES CON- TAINED HEREIN MAY NOT BE SUITABLE FOR EVERY SITUATION. THIS WORK IS SOLD WITH THE UNDERSTANDING THAT THE PUBLISHER IS NOT ENGAGED IN RENDERING LEGAL, ACCOUNTING, OR OTHER PROFESSIONAL SERVICES. IF PROFESSIONAL ASSISTANCE IS REQUIRED, THE SERVICES OF A COMPETENT PROFESSIONAL PERSON SHOULD BE SOUGHT. NEITHER THE PUBLISHER NOR THE AUTHOR SHALL BE LIABLE FOR DAMAGES ARISING HEREFROM. THE FACT THAT AN ORGANIZATION OR WEBSITE IS REFERRED TO IN THIS WORK AS A CITATION AND/OR A POTENTIAL SOURCE OF FUR- THER INFORMATION DOES NOT MEAN THAT THE AUTHOR OR THE PUBLISHER ENDORSES THE INFOR- MATION THE ORGANIZATION OR WEBSITE MAY PROVIDE OR RECOMMENDATIONS IT MAY MAKE. FURTHER, READERS SHOULD BE AWARE THAT INTERNET WEBSITES LISTED IN THIS WORK MAY HAVE CHANGED OR DISAPPEARED BETWEEN WHEN THIS WORK WAS WRITTEN AND WHEN IT IS READ. For general information on our other products and services, please contact our Customer Care Department within the U.S. at 800-762-2974, outside the U.S. at 317-572-3993, or fax 317-572-4002. For technical support, please visit www.wiley.com/techsupport. Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books. Library of Congress Control Number: 2005923224 ISBN-13: 978-0-7645-8456-5 ISBN-10: 0-7645-8456-1 Manufactured in the United States of America 10 9 8 7 6 5 4 3 2 1 5B/SZ/QT/QV/IN 01_584561 ffirs.qxd 3/10/05 7:13 PM Page iii About the Author Kathleen Sindellis the author of Managing Your Money Online For Dummies (Wiley, 2004), Safety Net: Protecting Your Business on the Internet(Wiley, 2002), Loyalty Marketing for the Internet Age(Dearborn, 2000), The Unofficial Guide to Buying a Home Online(Hungry Minds, 2000), and A Hands-On Guide to Mortgage Banking Internet Sites, a separate directory published by Mortgage BankingMagazine(2000, 1999, 1998, 1997). Dr. Sindell is a contributing author to the Encyclopedia of Computer Science(Groves Dictionaries Inc., 2000) and the online investing columnist for Investor Directmagazine (1999). She is the author of The Handbook of Real Estate Lending(McGraw-Hill Professional Publishing, 1996). Dr. Sindell is an expert on electronic commerce and is an adjunct faculty member at the Johns Hopkins University MBA program. She is the former Associate Director of the Financial Management and Commercial Real Estate Programs for the University of Maryland, University College Graduate School of Management & Technology. Dr. Sindell provides consulting and publications about management, finance, security, and real estate in the e-commerce environment. Her goal is to improve the quality of life and economic well-being of people and business organizations by providing information that they might not otherwise have or understand. She received her B.A. in Business from Antioch University, an MBA in Finance from the California State University at San Jose, and a PhD in Administration and Management from Walden University, Institute for Advanced Studies. 01_584561 ffirs.qxd 3/10/05 7:13 PM Page iv 01_584561 ffirs.qxd 3/10/05 7:13 PM Page v Dedication This book is dedicated to my dear friends Arlene Meilich and Gail Pasternack. Author’s Acknowledgments Investing Online for Dummies,5th Edition, illustrates the latest trends in online investing and represents my desire to help people take control of their finances by accessing high-quality Web-based investing information. My grati- tude and thanks to Bob Woerner, senior acquisitions editor, for his guidance. Development editor Mark Enochs made working on this book a joy. My appre- ciation to Andy Hollandbeck and Teresa Artman for their excellent copy edit- ing. It was a pleasure to work with technical editor Dan Chesler. I am also grateful to the many folks who work behind the scenes at Wiley Publishing. It was a delight to work with my literary agent, Carole McClendon, and all the folks at Waterside Productions on this fifth edition of Investing Online For Dummies. A very special thank you to my brother-in-law, Gerald Sindell, for his pro- found counsel on everything relating to the business of publishing. 01_584561 ffirs.qxd 3/10/05 7:13 PM Page vi Publisher’s Acknowledgments We’re proud of this book; please send us your comments through our online registration form located at www.dummies.com/register/. Some of the people who helped bring this book to market include the following: Acquisitions, Editorial, Composition Services and Media Development Project Coordinators:Emily Wichlinski, Project Editor:Mark Enochs Nancee Reeves Senior Acquisitions Editor:Bob Woerner Layout and Graphics: CarlByers, Andrea Dahl, Lauren Goddard, Copy Editor:Andy Hollandbeck Denny Hager, Joyce Haughey, Technical Editor:Dan Chesler Barry Offringa, Lynsey Osborn, Editorial Manager:Kevin Kirschner Melanee Prendergast, Heather Ryan Media Development Manager: Proofreader: Kelly Ewing, Leeann Harney, Laura VanWinkle Jessica Kramer, Carl Pierce Media Development Supervisor: Indexer: TECHBOOKS Production Services Richard Graves Special Help:Teresa Artman Editorial Assistant:Amanda Foxworth Cartoons:Rich Tennant (www.the5thwave.com) Publishing and Editorial for Technology Dummies Richard Swadley,Vice President and Executive Group Publisher Andy Cummings,Vice President and Publisher Mary Bednarek,Executive Acquisitions Director Mary C. Corder,Editorial Director Publishing for Consumer Dummies Diane Graves Steele,Vice President and Publisher Joyce Pepple,Acquisitions Director Composition Services Gerry Fahey,Vice President of Production Services Debbie Stailey,Director of Composition Services 02_584561 ftoc.qxd 3/10/05 5:52 PM Page vii Contents at a Glance Introduction.................................................................1 Part I: Online Investing Fundamentals ...........................9 Chapter 1: Finding Investor Stuff on the Net................................................................11 Chapter 2: No Experience Required: Getting Started with Online Investing............31 Chapter 3: Making Your Money Work Harder...............................................................47 Chapter 4: Selecting an Online Broker That’s Right for You.......................................63 Chapter 5: Getting Ahold of Trading Online.................................................................81 Part II: Finding the Right Investments .........................97 Chapter 6: The Keys to Successful Internet Mutual Fund Investing..........................99 Chapter 7: Online Analysis, Buying, and Selling of Mutual Funds............................121 Chapter 8: The Basics of Stocks and Rates of Return................................................141 Chapter 9: Internet Stock Screening............................................................................159 Chapter 10: Using Company Information to Make Investment Decisions ..............175 Chapter 11: Digging Deeper: Advanced Stock Analysis ............................................195 Chapter 12: Going with Fixed-Income Securities: Which Type of Bond Is for You?.................................................................................221 Chapter 13: Valuing, Buying, and Selling Bonds Online.............................................243 Part III: Expanding Your Investment Opportunities......263 Chapter 14: Going International Online.......................................................................265 Chapter 15: Looking for the Next Big Thing: IPOs, DPOs, and DRIPs......................281 Chapter 16: Taking the Option: Alternative Investing...............................................301 Chapter 17: The Internet and Managing Your Portfolio............................................315 Part IV: The Part of Tens...........................................337 Chapter 18: Ten Warnings About Cyberfraud.............................................................339 Chapter 19: Ten Important Selling Points ..................................................................353 Chapter 20: Ten Green Flags for Buying......................................................................365 Index.......................................................................373 02_584561 ftoc.qxd 3/10/05 5:52 PM Page viii 02_584561 ftoc.qxd 3/10/05 5:52 PM Page ix Table of Contents Introduction..................................................................1 Who Are You?...................................................................................................1 About This Book...............................................................................................3 How to Use This Book.....................................................................................4 How This Book Is Organized...........................................................................4 Part I: Online Investing Fundamentals.................................................5 Part II: Finding the Right Investments.................................................5 Part III: Expanding Your Investment Opportunities...........................5 Part IV: The Part of Tens........................................................................6 What’s New.......................................................................................................6 Icons Used in This Book..................................................................................7 Feedback, Please..............................................................................................7 Part I: Online Investing Fundamentals............................9 Chapter 1: Finding Investor Stuff on the Net . . . . . . . . . . . . . . . . . . . . . .11 Building Your Own Online Information System..........................................11 Identifying new investments...............................................................12 Analyzing investment prospects........................................................13 Purchasing investments......................................................................14 Monitoring investments......................................................................15 Selling investments..............................................................................15 Setting Up Your Basic Investment Search Strategy...................................16 Metasearch engines.............................................................................16 Popular search engines.......................................................................17 Selecting the best search engine........................................................19 Understanding How Newsgroups Can Help You........................................20 Finding the perfect newsgroup...........................................................21 Finally, some investor news reading..................................................21 Getting the Message from Investor Message Boards................................22 Uncovering Investor Information from Mailing Lists.................................23 Using Free and Fee-Based Online Investor Databases...............................24 Totally free databases..........................................................................24 When all else fails — fee-based databases........................................25 Getting Online Investor Information Geared to Your Needs.....................26 Investor Web sites for children..........................................................27 Web sites for young investors............................................................27 Other investor special-interest sites..................................................28
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