buy stocks

Dividend reinvestment plans, or DRIPs, let shareholders reinvest dividends to buy additional shares (or fractions of shares) of the company. DRIPs bypass brokers, so shareholders save on commissions. DRIPs also eliminate the nuisance of depositing or reinvesting small cash dividend cheques. As well, many DRIPs allow optional commission-free share purchases on a monthly or quarterly basis. (Dividend reinvestment plans are just one of the many investment topics we cover in our free report, Canadian Stock Market Basics: How to Trade Stocks and Make Good Investments in Canada. Click here to download your copy right away.)...

CurrencyShares Euro Trust, $122.55, symbol FXE on New York (Shares outstanding: 6.7 million; Market cap: $815.1 million), is one of a number of CurrencyShares exchange-traded funds (ETFs) offered by Maryland-based Rydex. These ETFs rise in value when the U.S. dollar falls, and drop when the U.S. dollar rises. CurrencyShares Euro Trust is designed to track the price of the euro, net of the trust’s expenses, which are paid from interest earned on the deposited euros. After these costs, the shares yield 0.08%. The fund’s MER is 0.40%. Buying one share of this fund is equal to owning 100 euros. Here’s a list of the other eight CurrencyShares ETFs:...

Here are three common mistakes many investors make when selecting Canadian stock picks. All three can seriously hinder — or eliminate — your portfolio’s long-term profit potential. 1. Buying low-quality investments: Most of the bad deals in Canadian stock picks exhibit the usual tip-offs. For example, many lack a history of earnings or dividends. They may also spend way too much time publicizing themselves, and too little time building their businesses. To increase your stock market returns, we feel you should invest mainly in high-quality, dividend-paying companies. We also feel you should diversify by spreading your money out across the five main economic sectors (Resources & Commodities, Finance, Manufacturing & Industry, Utilities and Consumer)....

The p/e ratio (the ratio of a stock’s price to its per-share earnings) is one of many handy investing tools. Typically, you calculate p/e’s using a stock’s current price and its earnings for the previous 12 months. The general rule is that the lower a stock’s p/e, the better. And a p/e of less than, say, 10, represents excellent value. A low p/e implies more profit for every dollar you invest. There’s no doubt that p/e ratios are an important part of many investors’ decision making. These financial ratios are published regularly on the Internet and in newspapers, and are widely followed....

Online stock investing can look like a great way to build wealth, but it has many hidden dangers. Trading too frequently: The main risk is that the lower costs and higher speeds of online stock investing can quickly lead otherwise conservative investors to trade too frequently. That can lead you to sell your best picks when they are just getting started. Trading stocks online may even prompt conservative investors to take up short-term trading or day trading. That’s just another danger of trading stocks online, because there’s a large random element in short-term stock-price fluctuations that you just can’t get away from....

We analyze a wide range of investments in Canadian Wealth Advisor, our newsletter for safety-conscious investors. These include the 19 common stocks we’ve selected for our “Safety-Conscious Stock Portfolio.” All these stocks are well-established companies with bright prospects and strong positions in healthy industries. As well, almost all offer dividend reinvestment plans, or DRIPs. DRIPs let shareholders reinvest dividends to buy additional shares (or fractions of shares) of the company. DRIPs bypass brokers, so shareholders save on commissions....

CurrencyShares British Pound Sterling Trust, $158.99, symbol FXB on New York (Shares outstanding: 950,000; Market cap: $151.0 million), is one of a number of CurrencyShares exchange-traded funds (ETFs) offered by Maryland-based Rydex. These ETFs rise in value when the U.S. dollar falls, and drop when the U.S. dollar rises. CurrencyShares British Pound Sterling Trust is designed to track the price of the British pound, net of the trust’s expenses, which are paid from interest earned on the deposited British pounds. After these costs, the shares yield 0.1%. The fund’s MER is 0.40%. Buying one share of this fund is equal to owning 100 British pounds. Here’s a list of the other eight CurrencyShares ETFs....

Lowering the costs of investing has an immediate, obvious benefit: it leaves you with more money. But some cost-cutting investment techniques can wind up costing you money in the long run. For instance, participating in dividend reinvestment plans, or DRIPs, is a good idea if you only use it to cut commission costs on stocks you would have bought anyway.

It pays to look beyond dividend reinvestment plans

...

There’s no doubt that p/e (price-to-earnings) ratios are a major part of many investors’ stock research. They are published regularly on the Internet and in newspapers, and are widely followed. The p/e is the ratio of a stock’s market price to its per-share earnings. Generally, the rule is that the lower the p/e, the better, and a p/e of less than, say 10, represents excellent value. A low p/e implies more profit for every dollar you invest. Typically, when you do stock research, you calculate p/e’s using a stock’s current price and its earnings for the previous 12 months.

P/e ratios are just one measure of value

...

Over the years, we’ve met a number of investors who favour investing in stocks only when economic and financial conditions seem good, if not ideal. If these investors hear talk of a drawn-out recession or rising interest rates, for example, they are inclined to stay out of the market, or get out if they’re in. In contrast, when they think conditions are ripe, these same investors are relatively casual about what they buy. They readily accept recommendations from brokers, or they buy stocks that are spotlighted by public-relations firms. They give dicey insiders the benefit of the doubt. You might say these investors are highly sensitive to stock market timing risk, but relatively insensitive to investment-quality risk. This is pretty much the opposite of our approach to investing....