{"appState":{"pageLoadApiCallsStatus":true},"categoryState":{"relatedCategories":{"headers":{"timestamp":"2023-06-06T20:01:14+00:00"},"categoryId":34288,"data":{"title":"Investing","slug":"investing","image":{"src":null,"width":0,"height":0},"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34288"},"slug":"investing","categoryId":34288}],"parentCategory":{"categoryId":34273,"title":"Personal Finance","slug":"personal-finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"}},"childCategories":[{"categoryId":34289,"title":"Energy","slug":"energy","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34289"},"image":{"src":"/img/background-image-2.fabfbd5c.png","width":0,"height":0},"hasArticle":true,"hasBook":true,"articleCount":85,"bookCount":1},{"categoryId":34290,"title":"Investment Vehicles","slug":"investment-vehicles","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34290"},"image":{"src":"/img/background-image-1.daf74cf0.png","width":0,"height":0},"hasArticle":true,"hasBook":true,"articleCount":1073,"bookCount":32},{"categoryId":34299,"title":"Real Estate","slug":"real-estate","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34299"},"image":{"src":"/img/background-image-2.fabfbd5c.png","width":0,"height":0},"hasArticle":true,"hasBook":true,"articleCount":36,"bookCount":6},{"categoryId":34300,"title":"General Investing","slug":"general-investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34300"},"image":{"src":"/img/background-image-1.daf74cf0.png","width":0,"height":0},"hasArticle":true,"hasBook":true,"articleCount":292,"bookCount":19},{"categoryId":34353,"title":"Day Trading","slug":"day-trading","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34353"},"image":{"src":"/img/background-image-2.fabfbd5c.png","width":0,"height":0},"hasArticle":true,"hasBook":false,"articleCount":71,"bookCount":0}],"description":"Ever heard the expression, \"It takes money to make money\"? We'll teach you how to go from rags to riches (or from riches to even more riches) in stocks, bonds, real estate, and more.","relatedArticles":{"self":"https://dummies-api.dummies.com/v2/articles?category=34288&offset=0&size=5"},"hasArticle":true,"hasBook":true,"articleCount":1559,"bookCount":58},"_links":{"self":"https://dummies-api.dummies.com/v2/categories/34288"}},"relatedCategoriesLoadedStatus":"success"},"listState":{"list":{"count":10,"total":1558,"items":[{"headers":{"creationTime":"2017-07-21T15:55:05+00:00","modifiedTime":"2023-06-06T16:45:13+00:00","timestamp":"2023-06-06T18:01:04+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34288"},"slug":"investing","categoryId":34288},{"name":"General Investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34300"},"slug":"general-investing","categoryId":34300}],"title":"The Difference Between Passive and Active Investors","strippedTitle":"the difference between passive and active investors","slug":"passive-active-deciding-kind-investor-plan","canonicalUrl":"","seo":{"metaDescription":"Investing might not seem controversial, but it shouldn’t surprise you that anytime you’re talking about money, people have some strong opinions about the right ","noIndex":0,"noFollow":0},"content":"Investing might not seem controversial, but it shouldn’t surprise you that anytime you’re talking about money, people have some strong opinions about the right way to do things. The first way investors categorize themselves is by whether they are passive or active. Because these two approaches are so different, the following information helps you think about what they are and which camp you see yourself in.\r\n<h2 id=\"tab1\" >How to know if you’re a passive investor</h2>\r\nPassive investors don’t try to beat the stock market. They merely try to keep up with it by owning all the stocks in an <em>index.</em> An index is a basket of stocks that mirrors the market. Passive investors are happy matching the market’s performance.\r\n\r\nYou know you’re a passive investor if you like the following ideas:\r\n<ul>\r\n \t<li><strong>Not picking individual stocks:</strong> These investors buy large baskets of stocks that mirror the performance of popular stock indexes like the Dow Jones Industrial Average or the Standard & Poor’s 500 index so they don’t worry about whether a small upstart company they invested in will release its new product on time and whether it will be well received.</li>\r\n \t<li><strong>Owning mutual and exchange-traded funds:</strong> Because passive investors aren’t looking for the next Microsoft, Google, or Apple, they buy mutual and exchange-traded funds that buy hundreds of stocks. (We cover mutual and exchange-traded funds in more detail in Book 5.)</li>\r\n \t<li><strong>Reducing taxes:</strong> Passive investors tend to buy investments and forget about them until many years later when they need the money. This can be lucrative because by holding onto diversified investments for a long time and not selling them, passive investors can postpone when they have to pay capital gains taxes.</li>\r\n \t<li><strong>Not stressing about stocks’ daily, monthly, or even annual movements:</strong> Passive investors tend to buy index or mutual funds and forget about them. They don’t need to sit in front of financial TV shows, surf countless financial websites, read magazines, or worry about where stocks are moving. They’re invested for the long term, and everything else is just noise to them.</li>\r\n</ul>\r\n<h2 id=\"tab2\" >Sites for passive investors to start with</h2>\r\nOne of the toughest things about being a passive investor is sitting still during a bull market when everyone else seems to be making more than you. Yes, you might be able to turn off the TV, but inevitably you’ll bump into someone who brags about his or her giant gains and laughs at you for being satisfied with 10 percent market returns.\r\n\r\nWhen that happens, it’s even more important to stick with your philosophy. Following the crowd at this moment undermines the value of your strategy. That’s why even passive investors are well served going to websites where other passive investors congregate:\r\n<ul>\r\n \t<li><strong><a href=\"http://www.bogleheads.org/\">Bogleheads</a></strong> is an electronic water cooler for fans of Vanguard index funds and passive investors to meet, encourage, and advise each other. They call themselves Bogleheads in honor of the founder of Vanguard, John Bogle.</li>\r\n \t<li><strong><a href=\"http://www.stanford.edu/~wfsharpe/art/active/active.htm\">The Arithmetic of Active Management</a></strong> is a reprint of an article by an early proponent of passive investing, William Sharpe, who explains why active investing can never win.</li>\r\n \t<li><strong><a href=\"http://www.vanguard.com/\">Vanguard’s website</a></strong> contains many helpful stories about the power of index investing and offers them for free, even if you don’t have an account.</li>\r\n</ul>\r\n<h2 id=\"tab3\" >How to know whether you’re an active investor</h2>\r\nActive investors almost feel sorry for passive investors. Why would anyone be satisfied just matching the stock market and not even try to do better? Active investors feel that if you’re smart enough and willing to spend time doing homework, you can exceed 10 percent annual returns. Active investors also find investing to be thrilling, almost like a hobby. Some active investors try to find undervalued stocks and hold them until they’re discovered by other investors.\r\n\r\nYou’re an active investor if you\r\n<ul>\r\n \t<li><strong>Think long-term averages of stocks are meaningless:</strong> Active investors believe they can spot winning companies that no one knows about yet, buy their shares at just the right time, and sell them for a profit.</li>\r\n \t<li><strong>Are willing to spend large amounts of time searching for stocks:</strong> These are the investors who sit in front of financial TV shows, analyze stocks that look undervalued, and do all sorts of prospecting trying to find gems.</li>\r\n \t<li><strong>Believe you can hire mutual fund managers who can beat the market:</strong> Some active investors think that certain talented mutual fund managers are out there and that if they just give their money to those managers, they’ll win.</li>\r\n \t<li><strong>Suspect certain types of stocks aren’t priced correctly and that many investors make bad decisions:</strong> Active investors believe they can outsmart the masses and routinely capitalize on the mistakes of the great unwashed.</li>\r\n \t<li><strong>Understand the risks:</strong> Most active traders underperform index funds, some without even realizing it. Before deciding to be an active trader, be sure to test out your skills with online simulations, or make sure that you’re measuring your performance correctly. If you’re losing money picking stocks, stop doing it. Be sure to know how dangerous online investing can be when you’re trying to be an active investor by reading a <a href=\"http://sec.gov/investor/pubs/onlinetips.htm\">warning from the Securities and Exchange Commission</a>.</li>\r\n</ul>\r\n<h2 id=\"tab4\" >Sites for the active investor to start with</h2>\r\nEver hear of someone trying to learn a foreign language by moving to the country and picking it up through “immersion”? The idea is that by just being around the language, and through the necessity of buying food or finding the restroom, the person eventually becomes proficient.\r\n\r\nIf you’re interested in active investing, you can do the same thing by hitting websites that are common hangouts for active investors. By lurking on these sites, you can pick up how these types of investors find stocks that interest them and trade on them. These sites can show you the great pains active investors go through in their attempt to beat the market. A few to start looking at include the following:\r\n<ul>\r\n \t<li><strong><a href=\"http://www.thestreet.com/\">TheStreet.com</a></strong> collects trading ideas and tips from writers mainly looking for quick-moving stocks and other investments.</li>\r\n \t<li><strong><a href=\"http://www.tradingmarkets.com/\">TradingMarkets</a></strong> explores the details of complicated trading philosophies. The site highlights stocks that have moved up or down by a large amount, which is usually something that catches the attention of traders.</li>\r\n \t<li><strong><a href=\"http://seekingalpha.com/\">Seeking Alpha</a></strong> provides news and commentary designed for investors of all skill levels who are trying to beat the market.</li>\r\n</ul>","description":"Investing might not seem controversial, but it shouldn’t surprise you that anytime you’re talking about money, people have some strong opinions about the right way to do things. The first way investors categorize themselves is by whether they are passive or active. Because these two approaches are so different, the following information helps you think about what they are and which camp you see yourself in.\r\n<h2 id=\"tab1\" >How to know if you’re a passive investor</h2>\r\nPassive investors don’t try to beat the stock market. They merely try to keep up with it by owning all the stocks in an <em>index.</em> An index is a basket of stocks that mirrors the market. Passive investors are happy matching the market’s performance.\r\n\r\nYou know you’re a passive investor if you like the following ideas:\r\n<ul>\r\n \t<li><strong>Not picking individual stocks:</strong> These investors buy large baskets of stocks that mirror the performance of popular stock indexes like the Dow Jones Industrial Average or the Standard & Poor’s 500 index so they don’t worry about whether a small upstart company they invested in will release its new product on time and whether it will be well received.</li>\r\n \t<li><strong>Owning mutual and exchange-traded funds:</strong> Because passive investors aren’t looking for the next Microsoft, Google, or Apple, they buy mutual and exchange-traded funds that buy hundreds of stocks. (We cover mutual and exchange-traded funds in more detail in Book 5.)</li>\r\n \t<li><strong>Reducing taxes:</strong> Passive investors tend to buy investments and forget about them until many years later when they need the money. This can be lucrative because by holding onto diversified investments for a long time and not selling them, passive investors can postpone when they have to pay capital gains taxes.</li>\r\n \t<li><strong>Not stressing about stocks’ daily, monthly, or even annual movements:</strong> Passive investors tend to buy index or mutual funds and forget about them. They don’t need to sit in front of financial TV shows, surf countless financial websites, read magazines, or worry about where stocks are moving. They’re invested for the long term, and everything else is just noise to them.</li>\r\n</ul>\r\n<h2 id=\"tab2\" >Sites for passive investors to start with</h2>\r\nOne of the toughest things about being a passive investor is sitting still during a bull market when everyone else seems to be making more than you. Yes, you might be able to turn off the TV, but inevitably you’ll bump into someone who brags about his or her giant gains and laughs at you for being satisfied with 10 percent market returns.\r\n\r\nWhen that happens, it’s even more important to stick with your philosophy. Following the crowd at this moment undermines the value of your strategy. That’s why even passive investors are well served going to websites where other passive investors congregate:\r\n<ul>\r\n \t<li><strong><a href=\"http://www.bogleheads.org/\">Bogleheads</a></strong> is an electronic water cooler for fans of Vanguard index funds and passive investors to meet, encourage, and advise each other. They call themselves Bogleheads in honor of the founder of Vanguard, John Bogle.</li>\r\n \t<li><strong><a href=\"http://www.stanford.edu/~wfsharpe/art/active/active.htm\">The Arithmetic of Active Management</a></strong> is a reprint of an article by an early proponent of passive investing, William Sharpe, who explains why active investing can never win.</li>\r\n \t<li><strong><a href=\"http://www.vanguard.com/\">Vanguard’s website</a></strong> contains many helpful stories about the power of index investing and offers them for free, even if you don’t have an account.</li>\r\n</ul>\r\n<h2 id=\"tab3\" >How to know whether you’re an active investor</h2>\r\nActive investors almost feel sorry for passive investors. Why would anyone be satisfied just matching the stock market and not even try to do better? Active investors feel that if you’re smart enough and willing to spend time doing homework, you can exceed 10 percent annual returns. Active investors also find investing to be thrilling, almost like a hobby. Some active investors try to find undervalued stocks and hold them until they’re discovered by other investors.\r\n\r\nYou’re an active investor if you\r\n<ul>\r\n \t<li><strong>Think long-term averages of stocks are meaningless:</strong> Active investors believe they can spot winning companies that no one knows about yet, buy their shares at just the right time, and sell them for a profit.</li>\r\n \t<li><strong>Are willing to spend large amounts of time searching for stocks:</strong> These are the investors who sit in front of financial TV shows, analyze stocks that look undervalued, and do all sorts of prospecting trying to find gems.</li>\r\n \t<li><strong>Believe you can hire mutual fund managers who can beat the market:</strong> Some active investors think that certain talented mutual fund managers are out there and that if they just give their money to those managers, they’ll win.</li>\r\n \t<li><strong>Suspect certain types of stocks aren’t priced correctly and that many investors make bad decisions:</strong> Active investors believe they can outsmart the masses and routinely capitalize on the mistakes of the great unwashed.</li>\r\n \t<li><strong>Understand the risks:</strong> Most active traders underperform index funds, some without even realizing it. Before deciding to be an active trader, be sure to test out your skills with online simulations, or make sure that you’re measuring your performance correctly. If you’re losing money picking stocks, stop doing it. Be sure to know how dangerous online investing can be when you’re trying to be an active investor by reading a <a href=\"http://sec.gov/investor/pubs/onlinetips.htm\">warning from the Securities and Exchange Commission</a>.</li>\r\n</ul>\r\n<h2 id=\"tab4\" >Sites for the active investor to start with</h2>\r\nEver hear of someone trying to learn a foreign language by moving to the country and picking it up through “immersion”? The idea is that by just being around the language, and through the necessity of buying food or finding the restroom, the person eventually becomes proficient.\r\n\r\nIf you’re interested in active investing, you can do the same thing by hitting websites that are common hangouts for active investors. By lurking on these sites, you can pick up how these types of investors find stocks that interest them and trade on them. These sites can show you the great pains active investors go through in their attempt to beat the market. A few to start looking at include the following:\r\n<ul>\r\n \t<li><strong><a href=\"http://www.thestreet.com/\">TheStreet.com</a></strong> collects trading ideas and tips from writers mainly looking for quick-moving stocks and other investments.</li>\r\n \t<li><strong><a href=\"http://www.tradingmarkets.com/\">TradingMarkets</a></strong> explores the details of complicated trading philosophies. The site highlights stocks that have moved up or down by a large amount, which is usually something that catches the attention of traders.</li>\r\n \t<li><strong><a href=\"http://seekingalpha.com/\">Seeking Alpha</a></strong> provides news and commentary designed for investors of all skill levels who are trying to beat the market.</li>\r\n</ul>","blurb":"","authors":[{"authorId":8975,"name":"Eric Tyson","slug":"eric-tyson","description":" <p><b>Eric Tyson, MBA,</b> has been a personal finance writer, lecturer, and counselor for the past 25+ years. He is the author or coauthor of numerous For Dummies bestsellers on personal finance, investing, and home buying.</p> <p><b>Bob Nelson, PhD,</b> is considered one of the world&#8217;s leading experts on employee engagement, recognition, and rewards. He is president of Nelson Motivation, Inc., a management training and consulting company that helps organizations improve their administration practices, programs, and systems. ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/8975"}}],"primaryCategoryTaxonomy":{"categoryId":34300,"title":"General Investing","slug":"general-investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34300"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[{"label":"How to know if you’re a passive investor","target":"#tab1"},{"label":"Sites for passive investors to start with","target":"#tab2"},{"label":"How to know whether you’re an active investor","target":"#tab3"},{"label":"Sites for the active investor to start with","target":"#tab4"}],"relatedArticles":{"fromBook":[{"articleId":242621,"title":"How to Find Company Regulatory Filings on the Securities and Exchange Commission’s Website","slug":"find-company-regulatory-filings-securities-exchange-commissions-website","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/242621"}},{"articleId":242617,"title":"How to Evaluate Neighborhoods when Investing in Real Estate","slug":"evaluate-neighborhoods-investing-real-estate","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/242617"}},{"articleId":242614,"title":"How to Determine How Much You Should Save for Retirement","slug":"determine-much-save-retirement","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/242614"}},{"articleId":242611,"title":"Mastering Seller’s and Buyer’s Markets to Invest in Real Estate","slug":"mastering-sellers-buyers-markets-invest-real-estate","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/242611"}},{"articleId":242608,"title":"What You Should Know about the Government’s Effect on Real Estate When Investing","slug":"know-governments-effect-real-estate-investing","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/242608"}}],"fromCategory":[{"articleId":296168,"title":"DeFi For Dummies Cheat Sheet","slug":"defi-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/296168"}},{"articleId":295944,"title":"How Factor Investing Puts You in Charge","slug":"how-factor-investing-puts-you-in-charge","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/295944"}},{"articleId":295921,"title":"The Advantages of Factor Investing","slug":"the-advantages-of-factor-investing","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/295921"}},{"articleId":295850,"title":"What Is Factor Investing?","slug":"what-is-factor-investing","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/295850"}},{"articleId":295683,"title":"Factor Investing For Dummies Cheat Sheet","slug":"factor-investing-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/295683"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":282303,"slug":"investing-all-in-one-for-dummies","isbn":"9781119873037","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"amazon":{"default":"https://www.amazon.com/gp/product/1119873037/ref=as_li_tl?ie=UTF8&tag=wiley01-20","ca":"https://www.amazon.ca/gp/product/1119873037/ref=as_li_tl?ie=UTF8&tag=wiley01-20","indigo_ca":"http://www.tkqlhce.com/click-9208661-13710633?url=https://www.chapters.indigo.ca/en-ca/books/product/1119873037-item.html&cjsku=978111945484","gb":"https://www.amazon.co.uk/gp/product/1119873037/ref=as_li_tl?ie=UTF8&tag=wiley01-20","de":"https://www.amazon.de/gp/product/1119873037/ref=as_li_tl?ie=UTF8&tag=wiley01-20"},"image":{"src":"https://www.dummies.com/wp-content/uploads/9781119873037-203x255.jpg","width":203,"height":255},"title":"Investing All-in-One For Dummies","testBankPinActivationLink":"","bookOutOfPrint":true,"authorsInfo":"<p><p><b><b data-author-id=\"8975\">Eric Tyson</b>, MBA,</b> has been a personal finance writer, lecturer, and counselor for the past 25+ years. He is the author or coauthor of numerous For Dummies bestsellers on personal finance, investing, and home buying.</p> <p><b>Bob Nelson, PhD,</b> is considered one of the world&#8217;s leading experts on employee engagement, recognition, and rewards. He is president of Nelson Motivation, Inc., a management training and consulting company that helps organizations improve their administration practices, programs, and systems.</p>","authors":[{"authorId":8975,"name":"Eric Tyson","slug":"eric-tyson","description":" <p><b>Eric Tyson, MBA,</b> has been a personal finance writer, lecturer, and counselor for the past 25+ years. He is the author or coauthor of numerous For Dummies bestsellers on personal finance, investing, and home buying.</p> <p><b>Bob Nelson, PhD,</b> is considered one of the world&#8217;s leading experts on employee engagement, recognition, and rewards. He is president of Nelson Motivation, Inc., a management training and consulting company that helps organizations improve their administration practices, programs, and systems. ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/8975"}}],"_links":{"self":"https://dummies-api.dummies.com/v2/books/"}},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;general-investing&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119873037&quot;]}]\" id=\"du-slot-647f74604e9c8\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;general-investing&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119873037&quot;]}]\" id=\"du-slot-647f74604f228\"></div></div>"},"articleType":{"articleType":"Articles","articleList":null,"content":null,"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0},"sponsorAd":"","sponsorEbookTitle":"","sponsorEbookLink":"","sponsorEbookImage":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Advance","lifeExpectancy":"Five years","lifeExpectancySetFrom":"2023-06-06T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":242574},{"headers":{"creationTime":"2019-07-31T20:40:47+00:00","modifiedTime":"2023-06-06T15:56:16+00:00","timestamp":"2023-06-06T18:01:03+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34288"},"slug":"investing","categoryId":34288},{"name":"Real Estate","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34299"},"slug":"real-estate","categoryId":34299}],"title":"How To Learn about International Real Estate","strippedTitle":"how to learn about international real estate","slug":"how-and-where-to-educate-yourself-on-international-real-estate","canonicalUrl":"","seo":{"metaDescription":"If you're investing in real estate, internationally or at home, you must educate yourself before you make any investment and continue to seek knowledge.","noIndex":0,"noFollow":0},"content":"Knowledge is power, as the saying goes. But knowledge also is a tool — a tool for building wealth and personal freedom. A bit like a spanner or a wrench, only slightly more glamorous.\r\n\r\n[caption id=\"attachment_263178\" align=\"alignnone\" width=\"535\"]<img class=\"size-full wp-image-263178\" src=\"https://www.dummies.com/wp-content/uploads/international-real-estate-education.jpg\" alt=\"real estate continuing education\" width=\"535\" height=\"357\" /> ©goshutter/Shutterstock.com[/caption]\r\n<p class=\"article-tips remember\">In most professions, continual education is key to staying on top of your game. The people who progress well and succeed are the ones who are continually evolving. Real estate is no different, and if you want to become (and remain) a successful real estate investor, you need to invest time in your education and improvement.</p>\r\n<p class=\"article-tips tip\">Even as your real estate portfolio becomes more established, never be fooled into thinking you know it all. You’ll be missing out on so many important opportunities to grow and learn. I love learning from those who know more than I do, whether that comes from networking, reading books, or wherever. Even if I only get one useful nugget from a book — a tidbit that changes my mind-set or improves the way I do something — it’s well worth my time.</p>\r\n\r\n<h2 id=\"tab1\" >Tap into a wide variety of educational sources</h2>\r\nWell, real estate is a very accessible industry with little in the way of formal qualifications needed to succeed, so you’ll have to think outside the formal education box when looking at ways to continually learn and grow.\r\n\r\nThankfully, these days it’s easier than ever to access information quickly and easily, often for free or extremely cheap. Your mission is to make like a sponge and soak up all that information. This may include\r\n<ul>\r\n \t<li><strong>Reading as many books as you can get your hands on about your chosen real estate strategy:</strong> If you struggle to find time to read, try listening to audiobooks in the car or while you’re at the gym. If you commute to work every day for 30 minutes each way that’s a potential hour of audiobook training time every day, which equates to 240 hours a year! It soon adds up… .</li>\r\n \t<li><strong>Becoming a general business, entrepreneurship and self-help book junkie, like me:</strong> I love reading both the practical how-to-succeed-in-business types of books and the more mind-set/self-help kinds, and even autobiographies by business leaders and entrepreneurs. I find it particularly inspiring to read about how people became successful and their personal formula for success. You’ll be surprised how many similar traits successful people have — and you can learn these traits and techniques, so keep reading!</li>\r\n \t<li><strong>Staying alert to potential new real estate strategies that are a good fit with your portfolio, skills, and passion.</strong></li>\r\n \t<li><strong>Keeping up to date on the latest technology developments, from social media platforms to productivity apps and software for managing your real estate investments:</strong> You don’t need to be a tech genius to thrive in real estate, but you don’t want to miss out on opportunities to connect with people more easily and streamline your processes.</li>\r\n \t<li><strong>Harnessing the wealth of information available for free online by joining <a href=\"http://www.propertyforum.com/\">property forums</a>, delving through relevant thread archives on forums, signing up for relevant industry newsletters, and subscribing to blogs.</strong></li>\r\n \t<li><strong>Attending education seminars held by property investment and development companies:</strong> These seminars often free to attend because the goal of the seminar is usually to sell you a product or investment. So, although I wholeheartedly encourage you to tap into these free sources of education, never buy anything on the day. Always go away and do your homework after the seminar because there are plenty of paid courses not worth the paper they’re printed on.</li>\r\n \t<li><strong>Signing up for online real estate and business courses, such as those available through <a href=\"http://www.udemy.com/\">Udemy</a> and <a href=\"http://www.coursera.org/\">Coursera</a>.</strong></li>\r\n \t<li><strong>Attending big annual property shows and exhibitions:</strong> These shows provide fantastic educational and networking opportunities and are a great way to immerse yourself in the market and to learn what others are doing.</li>\r\n \t<li><strong>Being open to new mind-set-related, self-help techniques and approaches (for example, positive affirmations, visualization, the law of attraction, and meditation).</strong></li>\r\n \t<li><strong>Taking the time to build mind-set-related, self-help techniques into your daily routine:</strong></li>\r\n</ul>\r\n<p class=\"article-tips warning\">As in any industry, there are operators out there looking to make a quick buck from inexperienced real estate investors who are keen to learn. So, don’t automatically believe everything you’re told by someone in a seminar where the end goal is to sell you something. Soak up their information; then assess that information against other sources as well. If multiple different sources are telling you that Morocco is a great place to invest, that’s very different from one guy pushing Moroccan investments at a seminar.</p>\r\n\r\n<h2 id=\"tab2\" >Take time for education before you put your real estate investment money on the line</h2>\r\nAlthough continual education is an important part of success, take the time to immerse yourself in real estate and learn as much as you can <em>before</em> you embark on your first investment. Learning as you go is great, but mistakes in your early days can be costly.\r\n<p class=\"article-tips tip\">Immerse yourself in property education for at least six months before you put your money on the line with an investment. Why not set yourself some education targets to hit before you start seriously scouting for investment opportunities? For example, you can set yourself a target of reading one inspirational book a month, attending six property shows this year, and participating in property forums once or twice a week.</p>","description":"Knowledge is power, as the saying goes. But knowledge also is a tool — a tool for building wealth and personal freedom. A bit like a spanner or a wrench, only slightly more glamorous.\r\n\r\n[caption id=\"attachment_263178\" align=\"alignnone\" width=\"535\"]<img class=\"size-full wp-image-263178\" src=\"https://www.dummies.com/wp-content/uploads/international-real-estate-education.jpg\" alt=\"real estate continuing education\" width=\"535\" height=\"357\" /> ©goshutter/Shutterstock.com[/caption]\r\n<p class=\"article-tips remember\">In most professions, continual education is key to staying on top of your game. The people who progress well and succeed are the ones who are continually evolving. Real estate is no different, and if you want to become (and remain) a successful real estate investor, you need to invest time in your education and improvement.</p>\r\n<p class=\"article-tips tip\">Even as your real estate portfolio becomes more established, never be fooled into thinking you know it all. You’ll be missing out on so many important opportunities to grow and learn. I love learning from those who know more than I do, whether that comes from networking, reading books, or wherever. Even if I only get one useful nugget from a book — a tidbit that changes my mind-set or improves the way I do something — it’s well worth my time.</p>\r\n\r\n<h2 id=\"tab1\" >Tap into a wide variety of educational sources</h2>\r\nWell, real estate is a very accessible industry with little in the way of formal qualifications needed to succeed, so you’ll have to think outside the formal education box when looking at ways to continually learn and grow.\r\n\r\nThankfully, these days it’s easier than ever to access information quickly and easily, often for free or extremely cheap. Your mission is to make like a sponge and soak up all that information. This may include\r\n<ul>\r\n \t<li><strong>Reading as many books as you can get your hands on about your chosen real estate strategy:</strong> If you struggle to find time to read, try listening to audiobooks in the car or while you’re at the gym. If you commute to work every day for 30 minutes each way that’s a potential hour of audiobook training time every day, which equates to 240 hours a year! It soon adds up… .</li>\r\n \t<li><strong>Becoming a general business, entrepreneurship and self-help book junkie, like me:</strong> I love reading both the practical how-to-succeed-in-business types of books and the more mind-set/self-help kinds, and even autobiographies by business leaders and entrepreneurs. I find it particularly inspiring to read about how people became successful and their personal formula for success. You’ll be surprised how many similar traits successful people have — and you can learn these traits and techniques, so keep reading!</li>\r\n \t<li><strong>Staying alert to potential new real estate strategies that are a good fit with your portfolio, skills, and passion.</strong></li>\r\n \t<li><strong>Keeping up to date on the latest technology developments, from social media platforms to productivity apps and software for managing your real estate investments:</strong> You don’t need to be a tech genius to thrive in real estate, but you don’t want to miss out on opportunities to connect with people more easily and streamline your processes.</li>\r\n \t<li><strong>Harnessing the wealth of information available for free online by joining <a href=\"http://www.propertyforum.com/\">property forums</a>, delving through relevant thread archives on forums, signing up for relevant industry newsletters, and subscribing to blogs.</strong></li>\r\n \t<li><strong>Attending education seminars held by property investment and development companies:</strong> These seminars often free to attend because the goal of the seminar is usually to sell you a product or investment. So, although I wholeheartedly encourage you to tap into these free sources of education, never buy anything on the day. Always go away and do your homework after the seminar because there are plenty of paid courses not worth the paper they’re printed on.</li>\r\n \t<li><strong>Signing up for online real estate and business courses, such as those available through <a href=\"http://www.udemy.com/\">Udemy</a> and <a href=\"http://www.coursera.org/\">Coursera</a>.</strong></li>\r\n \t<li><strong>Attending big annual property shows and exhibitions:</strong> These shows provide fantastic educational and networking opportunities and are a great way to immerse yourself in the market and to learn what others are doing.</li>\r\n \t<li><strong>Being open to new mind-set-related, self-help techniques and approaches (for example, positive affirmations, visualization, the law of attraction, and meditation).</strong></li>\r\n \t<li><strong>Taking the time to build mind-set-related, self-help techniques into your daily routine:</strong></li>\r\n</ul>\r\n<p class=\"article-tips warning\">As in any industry, there are operators out there looking to make a quick buck from inexperienced real estate investors who are keen to learn. So, don’t automatically believe everything you’re told by someone in a seminar where the end goal is to sell you something. Soak up their information; then assess that information against other sources as well. If multiple different sources are telling you that Morocco is a great place to invest, that’s very different from one guy pushing Moroccan investments at a seminar.</p>\r\n\r\n<h2 id=\"tab2\" >Take time for education before you put your real estate investment money on the line</h2>\r\nAlthough continual education is an important part of success, take the time to immerse yourself in real estate and learn as much as you can <em>before</em> you embark on your first investment. Learning as you go is great, but mistakes in your early days can be costly.\r\n<p class=\"article-tips tip\">Immerse yourself in property education for at least six months before you put your money on the line with an investment. Why not set yourself some education targets to hit before you start seriously scouting for investment opportunities? For example, you can set yourself a target of reading one inspirational book a month, attending six property shows this year, and participating in property forums once or twice a week.</p>","blurb":"","authors":[{"authorId":21941,"name":"Nicholas Wallwork","slug":"nicholas-wallwork","description":" <p><b>Nicholas Wallwork</b> is a leading international real estate market commentator, entrepreneur, business leader, investor, developer, and author. In addition to heading several real estate and investment companies, he wrote <i>Investing in International Real Estate For Dummies</i> and has produced and presented real estate TV shows on the UK&#39;s Sky TV.</br> www.nicholaswallwork.com ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/21941"}}],"primaryCategoryTaxonomy":{"categoryId":34299,"title":"Real Estate","slug":"real-estate","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34299"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[{"label":"Tap into a wide variety of educational sources","target":"#tab1"},{"label":"Take time for education before you put your real estate investment money on the line","target":"#tab2"}],"relatedArticles":{"fromBook":[{"articleId":263187,"title":"3 Main Real Estate Valuation Methods","slug":"3-main-real-estate-valuation-methods","categoryList":["business-careers-money","personal-finance","investing","real-estate"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/263187"}},{"articleId":263182,"title":"What Is Real Estate Value and Valuation","slug":"what-is-real-estate-value-and-valuation","categoryList":["business-careers-money","personal-finance","investing","real-estate"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/263182"}},{"articleId":263174,"title":"Real Estate Investment Strategies for a Credit Crunch","slug":"real-estate-investment-strategies-for-a-credit-crunch","categoryList":["business-careers-money","personal-finance","investing","real-estate"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/263174"}},{"articleId":263171,"title":"Real Estate Investment Strategies for a Boom Market","slug":"real-estate-investment-strategies-for-a-boom-market","categoryList":["business-careers-money","personal-finance","investing","real-estate"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/263171"}},{"articleId":263160,"title":"The Role of Finance in International Real Estate Investments","slug":"the-role-of-finance-in-international-real-estate-investments","categoryList":["business-careers-money","personal-finance","investing","real-estate"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/263160"}}],"fromCategory":[{"articleId":296220,"title":"Real Estate Investing All-in-One For Dummies Cheat Sheet","slug":"real-estate-investing-all-in-one-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","investing","real-estate"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/296220"}},{"articleId":291208,"title":"Foreclosure Investing For Dummies Cheat Sheet","slug":"foreclosure-investing-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","investing","real-estate"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/291208"}},{"articleId":274970,"title":"How Home Ownership Can Help You Achieve Financial Goals","slug":"how-home-ownership-can-help-you-achieve-financial-goals","categoryList":["business-careers-money","personal-finance","investing","real-estate"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/274970"}},{"articleId":274965,"title":"Simple, Profitable Real Estate Investments","slug":"simple-profitable-real-estate-investments","categoryList":["business-careers-money","personal-finance","investing","real-estate"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/274965"}},{"articleId":266690,"title":"Public and Private Real Estate Investment Trusts","slug":"public-and-private-real-estate-investment-trusts","categoryList":["business-careers-money","personal-finance","investing","real-estate"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266690"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":282313,"slug":"investing-in-international-real-estate-for-dummies","isbn":"9781119527527","categoryList":["business-careers-money","personal-finance","investing","real-estate"],"amazon":{"default":"https://www.amazon.com/gp/product/111952752X/ref=as_li_tl?ie=UTF8&tag=wiley01-20","ca":"https://www.amazon.ca/gp/product/111952752X/ref=as_li_tl?ie=UTF8&tag=wiley01-20","indigo_ca":"http://www.tkqlhce.com/click-9208661-13710633?url=https://www.chapters.indigo.ca/en-ca/books/product/111952752X-item.html&cjsku=978111945484","gb":"https://www.amazon.co.uk/gp/product/111952752X/ref=as_li_tl?ie=UTF8&tag=wiley01-20","de":"https://www.amazon.de/gp/product/111952752X/ref=as_li_tl?ie=UTF8&tag=wiley01-20"},"image":{"src":"https://www.dummies.com/wp-content/uploads/investing-in-international-real-estate-for-dummies-cover-9781119527527-203x255.jpg","width":203,"height":255},"title":"Investing in International Real Estate For Dummies","testBankPinActivationLink":"","bookOutOfPrint":false,"authorsInfo":"<p><b data-author-id=\"21941\">Nicholas Wallwork</b> is a successful entrepreneur, multimillionaire real estate investor, developer, and property and business mentor. He is known across all media channels as a highly respected authority in the real estate investment world and has an extensive and proven track record for delivering successful, high-return investments for his clients and students. Wallwork is dedicated to helping educate investors. Visit www.propertyforum.com/ real-estate-courses for upcoming companion courses to this book. </p>","authors":[{"authorId":21941,"name":"Nicholas Wallwork","slug":"nicholas-wallwork","description":" <p><b>Nicholas Wallwork</b> is a leading international real estate market commentator, entrepreneur, business leader, investor, developer, and author. In addition to heading several real estate and investment companies, he wrote <i>Investing in International Real Estate For Dummies</i> and has produced and presented real estate TV shows on the UK&#39;s Sky TV.</br> www.nicholaswallwork.com ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/21941"}}],"_links":{"self":"https://dummies-api.dummies.com/v2/books/"}},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;real-estate&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119527527&quot;]}]\" id=\"du-slot-647f745fec0fb\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;real-estate&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119527527&quot;]}]\" id=\"du-slot-647f745fecadf\"></div></div>"},"articleType":{"articleType":"Articles","articleList":null,"content":null,"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0},"sponsorAd":"","sponsorEbookTitle":"","sponsorEbookLink":"","sponsorEbookImage":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Advance","lifeExpectancy":"Five years","lifeExpectancySetFrom":"2023-06-06T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":263177},{"headers":{"creationTime":"2019-12-14T00:36:28+00:00","modifiedTime":"2023-06-06T15:31:16+00:00","timestamp":"2023-06-06T18:01:02+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34288"},"slug":"investing","categoryId":34288},{"name":"Real Estate","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34299"},"slug":"real-estate","categoryId":34299}],"title":"How to Vet Property Inspectors for Real Estate Investments","strippedTitle":"how to vet property inspectors for real estate investments","slug":"how-to-qualify-property-inspectors-for-real-estate-investments","canonicalUrl":"","seo":{"metaDescription":"Learn how to inspect and qualify property inspectors before you hire one to look over your real estate investments—from Dummies.com.","noIndex":0,"noFollow":0},"content":"Many real estate investors pick inspectors as an afterthought or simply take the recommendation of their real estate agent. But inspect the property inspectors before you hire one. As with other service professionals, <a href=\"https://www.dummies.com/personal-finance/real-estate/select-property-inspector/\" target=\"_blank\" rel=\"noopener\">interview a few inspectors</a> before making your selection. You may find that they don’t all share the same experience, qualifications, and ethical standards. For example, don’t hire an inspector who hesitates or refuses to allow you to be present during the inspection or won’t review the findings with you upon completion of the inspection.\r\n<p class=\"article-tips tip\">The inspection is actually a unique opportunity for most property owners and, because you’re paying, we strongly recommend that you join the inspector while he’s assessing your proposed purchase. What you learn can be invaluable and may pay dividends throughout your entire ownership. When an unscrupulous contractor later tries to tell you that you need to completely replumb your property, you can recall that your property inspection revealed only isolated problems that can be resolved inexpensively. (Of course, inspectors, especially ones who aren’t good, can make mistakes, so you should also dig into discrepancies raised by different real estate–related people. In other words, get a second opinion.)</p>\r\n<p class=\"article-tips warning\">About half of the states now have a license or certification requirement, whereas a few only have trade practice guidelines. This regulation is all relatively new because in 2000 virtually no governmental licensing or supervision of inspectors existed. Regardless of whether your state has strict licensing or certification requirements, every real estate investor needs to look out for her own interests and look for telltale signs of potential problems. Red flags include inspectors who are affiliated with a contractor, offer a special discount if you call who they recommend, or credit their inspection fee toward work.</p>\r\nOnly consider full-time, professional inspectors. Hire an inspector who performs at least 100 comprehensive inspections per year and carries errors and omissions insurance. Such coverage isn’t cheap and is another key indicator that the person is working full-time in the field and is participating in ongoing continuing education.\r\n<p class=\"article-tips tip\">Many inspectors are licensed general contractors, but not all home inspectors have designations or credentials specifically relating to inspecting real estate. One of the best certifying trade associations for professional property inspectors is the American Society of Home Inspectors (ASHI), which was founded in 1976. In addition to home inspections, many ASHI members are qualified and experienced enough to assist you with your due diligence physical or structural exterior and interior inspection of multifamily residential properties and all types of commercial properties. You can find certified inspectors and more info about the inspection process including tips and checklists at <a href=\"https://www.homeinspector.org/\" target=\"_blank\" rel=\"noopener\">the ASHI website</a>.</p>\r\n<p class=\"article-tips warning\">Some individuals or companies adopt names that at first glance may indicate adherence to certain professional practices. For example, a fictitious but potentially misleading name is “Professional Property Inspection Association.” Do some research to find the best state or regional association and one whose qualified members adopt a code of ethics. For example, in California, the <a href=\"http://www.creia.org/\" target=\"_blank\" rel=\"noopener\">California Real Estate Inspection Association</a> is the group that offers education and designations for real estate inspectors.</p>\r\nReview a copy of inspectors’ résumés to see what certifications and licenses they hold. A general contractor’s license and certification as a property inspector are important, but also find out whether they’ve had any specialized training and whether they hold any specific sublicenses in areas such as roofing, electrical, or plumbing. These can be particularly important if your proposed property has evidence of potential problems in any of these areas. For example, if a property has a history of roofing or moisture intrusion problems, an inspector who’s a general contractor and roofer is an extra plus.\r\n\r\nThe inspection report must be written. To avoid surprises, request a sample of one of the recent inspection reports that has been prepared for a comparable property. This simple request may eliminate several potential inspectors but is essential so that you can see whether an inspector is qualified and how detailed a report he will prepare for you. Check out the following figures for a sample interior inspection checklist.\r\n\r\n[caption id=\"attachment_266685\" align=\"alignnone\" width=\"556\"]<img class=\"size-full wp-image-266685\" src=\"https://www.dummies.com/wp-content/uploads/real-estate-investing-interior-unit-inspection1.jpg\" alt=\"Interior unit inspection checklist, page 1\" width=\"556\" height=\"806\" /> Robert S. Griswold<br /><br />Sample interior unit inspection checklist Robert uses for large multifamily apartment communities (page 1 of 2).[/caption]\r\n\r\n \r\n\r\n<img class=\"size-full wp-image-266684\" src=\"https://www.dummies.com/wp-content/uploads/real-estate-investing-interior-unit-inspection2.jpg\" alt=\"Interior unit inspection checklist, page 2\" width=\"556\" height=\"823\" />\r\n\r\nSource: Robert S. Griswold\r\n\r\nSample interior unit inspection checklist (page 2 of 2).\r\n<p class=\"article-tips tip\">The advent of digital photography is a boon to property inspectors and makes their sometimes mundane and difficult-to-understand reports come to life. Select a technologically savvy inspector and require her to electronically send you her report, including digital photos documenting all the conditions noted. Recently, some inspectors have begun using advanced, non-invasive technology via an infrared or thermal imaging camera to produce images of heat radiation and identify energy efficiency concerns and electrical issues, as well as moisture intrusion scans inside walls or around plumbing fixtures. With the report in the electronic realm, it’s a simple process to email this information as needed.</p>\r\nAlthough the cost of the inspection should be set and determined in advance, the price should be a secondary concern because inspection fees often pay for themselves. Just like many other professional services, there is a direct correlation between the pricing of your inspection and the amount of time the inspector takes to conduct the inspection and then prepare the report. If the inspector only spends a couple of hours at your new 20-unit apartment building, the report will surely be insufficient and your money not well spent.\r\n\r\nFinally, require the finalists to provide the names and phone numbers of at least ten people who used the company’s services within the past six months. Randomly call and make sure that these clients were satisfied and that the inspector acted professionally and ethically.","description":"Many real estate investors pick inspectors as an afterthought or simply take the recommendation of their real estate agent. But inspect the property inspectors before you hire one. As with other service professionals, <a href=\"https://www.dummies.com/personal-finance/real-estate/select-property-inspector/\" target=\"_blank\" rel=\"noopener\">interview a few inspectors</a> before making your selection. You may find that they don’t all share the same experience, qualifications, and ethical standards. For example, don’t hire an inspector who hesitates or refuses to allow you to be present during the inspection or won’t review the findings with you upon completion of the inspection.\r\n<p class=\"article-tips tip\">The inspection is actually a unique opportunity for most property owners and, because you’re paying, we strongly recommend that you join the inspector while he’s assessing your proposed purchase. What you learn can be invaluable and may pay dividends throughout your entire ownership. When an unscrupulous contractor later tries to tell you that you need to completely replumb your property, you can recall that your property inspection revealed only isolated problems that can be resolved inexpensively. (Of course, inspectors, especially ones who aren’t good, can make mistakes, so you should also dig into discrepancies raised by different real estate–related people. In other words, get a second opinion.)</p>\r\n<p class=\"article-tips warning\">About half of the states now have a license or certification requirement, whereas a few only have trade practice guidelines. This regulation is all relatively new because in 2000 virtually no governmental licensing or supervision of inspectors existed. Regardless of whether your state has strict licensing or certification requirements, every real estate investor needs to look out for her own interests and look for telltale signs of potential problems. Red flags include inspectors who are affiliated with a contractor, offer a special discount if you call who they recommend, or credit their inspection fee toward work.</p>\r\nOnly consider full-time, professional inspectors. Hire an inspector who performs at least 100 comprehensive inspections per year and carries errors and omissions insurance. Such coverage isn’t cheap and is another key indicator that the person is working full-time in the field and is participating in ongoing continuing education.\r\n<p class=\"article-tips tip\">Many inspectors are licensed general contractors, but not all home inspectors have designations or credentials specifically relating to inspecting real estate. One of the best certifying trade associations for professional property inspectors is the American Society of Home Inspectors (ASHI), which was founded in 1976. In addition to home inspections, many ASHI members are qualified and experienced enough to assist you with your due diligence physical or structural exterior and interior inspection of multifamily residential properties and all types of commercial properties. You can find certified inspectors and more info about the inspection process including tips and checklists at <a href=\"https://www.homeinspector.org/\" target=\"_blank\" rel=\"noopener\">the ASHI website</a>.</p>\r\n<p class=\"article-tips warning\">Some individuals or companies adopt names that at first glance may indicate adherence to certain professional practices. For example, a fictitious but potentially misleading name is “Professional Property Inspection Association.” Do some research to find the best state or regional association and one whose qualified members adopt a code of ethics. For example, in California, the <a href=\"http://www.creia.org/\" target=\"_blank\" rel=\"noopener\">California Real Estate Inspection Association</a> is the group that offers education and designations for real estate inspectors.</p>\r\nReview a copy of inspectors’ résumés to see what certifications and licenses they hold. A general contractor’s license and certification as a property inspector are important, but also find out whether they’ve had any specialized training and whether they hold any specific sublicenses in areas such as roofing, electrical, or plumbing. These can be particularly important if your proposed property has evidence of potential problems in any of these areas. For example, if a property has a history of roofing or moisture intrusion problems, an inspector who’s a general contractor and roofer is an extra plus.\r\n\r\nThe inspection report must be written. To avoid surprises, request a sample of one of the recent inspection reports that has been prepared for a comparable property. This simple request may eliminate several potential inspectors but is essential so that you can see whether an inspector is qualified and how detailed a report he will prepare for you. Check out the following figures for a sample interior inspection checklist.\r\n\r\n[caption id=\"attachment_266685\" align=\"alignnone\" width=\"556\"]<img class=\"size-full wp-image-266685\" src=\"https://www.dummies.com/wp-content/uploads/real-estate-investing-interior-unit-inspection1.jpg\" alt=\"Interior unit inspection checklist, page 1\" width=\"556\" height=\"806\" /> Robert S. Griswold<br /><br />Sample interior unit inspection checklist Robert uses for large multifamily apartment communities (page 1 of 2).[/caption]\r\n\r\n \r\n\r\n<img class=\"size-full wp-image-266684\" src=\"https://www.dummies.com/wp-content/uploads/real-estate-investing-interior-unit-inspection2.jpg\" alt=\"Interior unit inspection checklist, page 2\" width=\"556\" height=\"823\" />\r\n\r\nSource: Robert S. Griswold\r\n\r\nSample interior unit inspection checklist (page 2 of 2).\r\n<p class=\"article-tips tip\">The advent of digital photography is a boon to property inspectors and makes their sometimes mundane and difficult-to-understand reports come to life. Select a technologically savvy inspector and require her to electronically send you her report, including digital photos documenting all the conditions noted. Recently, some inspectors have begun using advanced, non-invasive technology via an infrared or thermal imaging camera to produce images of heat radiation and identify energy efficiency concerns and electrical issues, as well as moisture intrusion scans inside walls or around plumbing fixtures. With the report in the electronic realm, it’s a simple process to email this information as needed.</p>\r\nAlthough the cost of the inspection should be set and determined in advance, the price should be a secondary concern because inspection fees often pay for themselves. Just like many other professional services, there is a direct correlation between the pricing of your inspection and the amount of time the inspector takes to conduct the inspection and then prepare the report. If the inspector only spends a couple of hours at your new 20-unit apartment building, the report will surely be insufficient and your money not well spent.\r\n\r\nFinally, require the finalists to provide the names and phone numbers of at least ten people who used the company’s services within the past six months. Randomly call and make sure that these clients were satisfied and that the inspector acted professionally and ethically.","blurb":"","authors":[{"authorId":33252,"name":"Robert Tyson","slug":"robert-tyson","description":"","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/33252"}},{"authorId":8975,"name":"Eric Tyson","slug":"eric-tyson","description":" <p><b>Eric Tyson, MBA,</b> has been a personal finance writer, lecturer, and counselor for the past 25+ years. He is the author or coauthor of numerous For Dummies bestsellers on personal finance, investing, and home buying.</p> <p><b>Bob Nelson, PhD,</b> is considered one of the world&#8217;s leading experts on employee engagement, recognition, and rewards. He is president of Nelson Motivation, Inc., a management training and consulting company that helps organizations improve their administration practices, programs, and systems. ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/8975"}}],"primaryCategoryTaxonomy":{"categoryId":34299,"title":"Real Estate","slug":"real-estate","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34299"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[],"relatedArticles":{"fromBook":[{"articleId":266690,"title":"Public and Private Real Estate Investment Trusts","slug":"public-and-private-real-estate-investment-trusts","categoryList":["business-careers-money","personal-finance","investing","real-estate"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266690"}},{"articleId":266678,"title":"10 Steps to Real Estate Investing Success","slug":"10-steps-to-real-estate-investing-success","categoryList":["business-careers-money","personal-finance","investing","real-estate"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266678"}},{"articleId":266673,"title":"10 Ways to Increase a Property’s Value","slug":"10-ways-to-increase-a-propertys-value","categoryList":["business-careers-money","personal-finance","investing","real-estate"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266673"}},{"articleId":266668,"title":"Risk Management Plan for Real Estate Investments","slug":"risk-management-plan-for-real-estate-investments","categoryList":["business-careers-money","personal-finance","investing","real-estate"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266668"}},{"articleId":207572,"title":"Real Estate Investing For Dummies Cheat Sheet","slug":"real-estate-investing-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","investing","real-estate"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/207572"}}],"fromCategory":[{"articleId":296220,"title":"Real Estate Investing All-in-One For Dummies Cheat Sheet","slug":"real-estate-investing-all-in-one-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","investing","real-estate"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/296220"}},{"articleId":291208,"title":"Foreclosure Investing For Dummies Cheat Sheet","slug":"foreclosure-investing-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","investing","real-estate"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/291208"}},{"articleId":274970,"title":"How Home Ownership Can Help You Achieve Financial Goals","slug":"how-home-ownership-can-help-you-achieve-financial-goals","categoryList":["business-careers-money","personal-finance","investing","real-estate"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/274970"}},{"articleId":274965,"title":"Simple, Profitable Real Estate Investments","slug":"simple-profitable-real-estate-investments","categoryList":["business-careers-money","personal-finance","investing","real-estate"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/274965"}},{"articleId":266690,"title":"Public and Private Real Estate Investment Trusts","slug":"public-and-private-real-estate-investment-trusts","categoryList":["business-careers-money","personal-finance","investing","real-estate"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266690"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":282530,"slug":"real-estate-investing-for-dummies-4th-edition","isbn":"9781119601760","categoryList":["business-careers-money","personal-finance","investing","real-estate"],"amazon":{"default":"https://www.amazon.com/gp/product/1119601762/ref=as_li_tl?ie=UTF8&tag=wiley01-20","ca":"https://www.amazon.ca/gp/product/1119601762/ref=as_li_tl?ie=UTF8&tag=wiley01-20","indigo_ca":"http://www.tkqlhce.com/click-9208661-13710633?url=https://www.chapters.indigo.ca/en-ca/books/product/1119601762-item.html&cjsku=978111945484","gb":"https://www.amazon.co.uk/gp/product/1119601762/ref=as_li_tl?ie=UTF8&tag=wiley01-20","de":"https://www.amazon.de/gp/product/1119601762/ref=as_li_tl?ie=UTF8&tag=wiley01-20"},"image":{"src":"https://www.dummies.com/wp-content/uploads/real-estate-investing-for-dummies-4th-edition-cover-9781119601760-203x255.jpg","width":203,"height":255},"title":"Real Estate Investing For Dummies","testBankPinActivationLink":"","bookOutOfPrint":true,"authorsInfo":"<p><p><b><b data-author-id=\"8975\">Eric Tyson</b>, MBA,</b> has been a personal finance writer, lecturer, and counselor for the past 25+ years. He is the author or coauthor of numerous For Dummies bestsellers on personal finance, investing, and home buying.</p> <p><b>Bob Nelson, PhD,</b> is considered one of the world&#8217;s leading experts on employee engagement, recognition, and rewards. He is president of Nelson Motivation, Inc., a management training and consulting company that helps organizations improve their administration practices, programs, and systems. <p><b>Eric Tyson</b> is a five&#45;time bestselling author, real estate investor, and syndicated columnist who gives people the tools to better manage their personal finances and investments. <b><b data-author-id=\"9293\">Robert S. Griswold</b>,</b> author, teacher, and a successful real estate investor, is an active, hands&#45;on property manager with a large portfolio of residential and commercial rental properties.</p>","authors":[{"authorId":8975,"name":"Eric Tyson","slug":"eric-tyson","description":" <p><b>Eric Tyson, MBA,</b> has been a personal finance writer, lecturer, and counselor for the past 25+ years. He is the author or coauthor of numerous For Dummies bestsellers on personal finance, investing, and home buying.</p> <p><b>Bob Nelson, PhD,</b> is considered one of the world&#8217;s leading experts on employee engagement, recognition, and rewards. He is president of Nelson Motivation, Inc., a management training and consulting company that helps organizations improve their administration practices, programs, and systems. ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/8975"}},{"authorId":9293,"name":"Robert S. Griswold","slug":"robert-s-griswold","description":" <p><b>Eric Tyson</b> is a five&#45;time bestselling author, real estate investor, and syndicated columnist who gives people the tools to better manage their personal finances and investments. <b>Robert S. Griswold,</b> author, teacher, and a successful real estate investor, is an active, hands&#45;on property manager with a large portfolio of residential and commercial rental properties. ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/9293"}}],"_links":{"self":"https://dummies-api.dummies.com/v2/books/"}},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;real-estate&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119601760&quot;]}]\" id=\"du-slot-647f745f07348\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;real-estate&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119601760&quot;]}]\" id=\"du-slot-647f745f07baa\"></div></div>"},"articleType":{"articleType":"Articles","articleList":null,"content":null,"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0},"sponsorAd":"","sponsorEbookTitle":"","sponsorEbookLink":"","sponsorEbookImage":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Explore","lifeExpectancy":"Two years","lifeExpectancySetFrom":"2022-07-19T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":266683},{"headers":{"creationTime":"2016-03-26T22:50:01+00:00","modifiedTime":"2023-04-25T18:42:24+00:00","timestamp":"2023-04-25T21:01:03+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34288"},"slug":"investing","categoryId":34288},{"name":"Investment Vehicles","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34290"},"slug":"investment-vehicles","categoryId":34290},{"name":"Precious Metals","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34297"},"slug":"precious-metals","categoryId":34297}],"title":"Different Styles of Precious Metals Investing","strippedTitle":"different styles of precious metals investing","slug":"distinguishing-between-styles-of-precious-metals-investing","canonicalUrl":"","seo":{"metaDescription":"Before you start investing or trading in precious metals, you need to understand the concepts of saving , investing , trading , and speculating ; otherwise, the","noIndex":0,"noFollow":0},"content":"Before you start investing or trading in precious metals, you need to understand the concepts of <i>saving</i>, <i>investing</i>, <i>trading</i>, and <i>speculating</i>; otherwise, the financial pitfalls could be very great. The differences aren't just in where your money is but also why and in what manner.\r\n\r\nRight now, millions of people live with no savings and lots of debt, which means that they are speculating with their budgets; retirees are day-trading their portfolios; and financial advisors are telling people to move their money from savings accounts to stocks without looking at the appropriateness of what they're doing.\r\n\r\nMake sure you understand the following terms — knowing the difference is crucial to you in the world of precious metals:\r\n<ul>\r\n \t<li><b>Saving:</b> The classical definition of <i>saving</i> is \"income that has not been spent,\" but the modern-day definition is money set aside in a savings account for a \"rainy day\" or emergency. Ideally, you should have at least three months' worth of gross living expenses sitting blandly in a savings account or money market fund. Although precious metals in the right venue are appropriate for most people, including savers, you need to have cash savings in addition to your precious metals investments. A good example of an appropriate savings venue in precious metals is buying physical gold and/or silver bullion coins as a long-term holding.</li>\r\n \t<li><b>Investing:</b> Investing refers to the act of buying an asset that is meant to be held long-term (in years). The asset will always run into ups and downs, but as long as it's trending upward (a bull market), you'll be okay. Investing in precious metals may not be for everyone, but it is an appropriate consideration for many investment portfolios. The common stock of large or mid-size mining companies is a good example of an appropriate vehicle for investors.</li>\r\n \t<li><b>Trading:</b> Trading is truly short-term in nature and is meant for those with steady nerves and a quick trigger finger. There are many \"trading systems\" out there, and this activity requires extensive knowledge of market behavior along with discipline and a definitive plan. The money employed should be considered risk capital and not money intended for an emergency fund, rent, or retirement. The venue could be mining stocks, but more likely it would be futures and/or options because they are faster-moving markets.</li>\r\n \t<li><b>Speculating:</b> This can be likened to financial gambling. Speculating means making an educated guess about the direction of a particular asset's price move. Speculators look for big price moves to generate a large profit as quickly as possible, but also understand that it can be very risky and volatile. A speculator's appetite for greater potential profit coupled with increased risk is similar to the trader, but the time frame is different. Speculating can be either short-term or long-term. Your venue of choice could be stocks, but more likely, the stocks would typically be of smaller mining companies with greater price potential. Speculating is also done in futures and options.</li>\r\n</ul>","description":"Before you start investing or trading in precious metals, you need to understand the concepts of <i>saving</i>, <i>investing</i>, <i>trading</i>, and <i>speculating</i>; otherwise, the financial pitfalls could be very great. The differences aren't just in where your money is but also why and in what manner.\r\n\r\nRight now, millions of people live with no savings and lots of debt, which means that they are speculating with their budgets; retirees are day-trading their portfolios; and financial advisors are telling people to move their money from savings accounts to stocks without looking at the appropriateness of what they're doing.\r\n\r\nMake sure you understand the following terms — knowing the difference is crucial to you in the world of precious metals:\r\n<ul>\r\n \t<li><b>Saving:</b> The classical definition of <i>saving</i> is \"income that has not been spent,\" but the modern-day definition is money set aside in a savings account for a \"rainy day\" or emergency. Ideally, you should have at least three months' worth of gross living expenses sitting blandly in a savings account or money market fund. Although precious metals in the right venue are appropriate for most people, including savers, you need to have cash savings in addition to your precious metals investments. A good example of an appropriate savings venue in precious metals is buying physical gold and/or silver bullion coins as a long-term holding.</li>\r\n \t<li><b>Investing:</b> Investing refers to the act of buying an asset that is meant to be held long-term (in years). The asset will always run into ups and downs, but as long as it's trending upward (a bull market), you'll be okay. Investing in precious metals may not be for everyone, but it is an appropriate consideration for many investment portfolios. The common stock of large or mid-size mining companies is a good example of an appropriate vehicle for investors.</li>\r\n \t<li><b>Trading:</b> Trading is truly short-term in nature and is meant for those with steady nerves and a quick trigger finger. There are many \"trading systems\" out there, and this activity requires extensive knowledge of market behavior along with discipline and a definitive plan. The money employed should be considered risk capital and not money intended for an emergency fund, rent, or retirement. The venue could be mining stocks, but more likely it would be futures and/or options because they are faster-moving markets.</li>\r\n \t<li><b>Speculating:</b> This can be likened to financial gambling. Speculating means making an educated guess about the direction of a particular asset's price move. Speculators look for big price moves to generate a large profit as quickly as possible, but also understand that it can be very risky and volatile. A speculator's appetite for greater potential profit coupled with increased risk is similar to the trader, but the time frame is different. Speculating can be either short-term or long-term. Your venue of choice could be stocks, but more likely, the stocks would typically be of smaller mining companies with greater price potential. Speculating is also done in futures and options.</li>\r\n</ul>","blurb":"","authors":[{"authorId":9001,"name":"Paul Mladjenovic","slug":"paul-mladjenovic","description":" <p><b>Bryan Borzykowski</b> is an award-winning financial journalist, who writes mostly about investing, personal finance and small business. He’s the co-author of <i>Day Trading For Canadians For Dummies</i> and contributes to the <i>Globe and Mail</i>, <i>Business</i> magazine, the <i>Toronto Star</i>, MoneySense and other leading Canadian publications. You can find Bryan at www. bryanborzykowski.com or on Twitter @bborzyko.</p> <p><b>Andrew Bell</b> was an investment reporter and editor with The Globe and Mail for 12 years. He joined Business News Network as a reporter in 2001. Bell, an import from Dublin, Ireland, was for 10 years the main compiler of Stars & Dogs in Saturday’s Globe. The roundup of hot and damp stocks and mutual funds was an invaluable therapeutic aid in relieving his own myriad jealousies, regrets, and resentments. He has also taken to the stage, where he practises a demanding \"method\" that involves getting the audience and other performers as off-balance and upset as possible. He lives in Cabbagetown, Toronto, with his wife and daughter.</p> <p><b>Christopher Cottier</b>, BSc, MBA, is a senior investment advisor based in British Columbia. In 1982, he left the world of banking to join the investment industry in Vancouver so he could continue to pursue his love of rugby. More than twenty five years later, he’s still managing money and playing rugby. With Betty Jane Wylie, Christopher is the co-author of <i>The Best Is Yet to Come: Enjoying a Financially Secure Retirement</i> (Key Porter). Christopher was ably assisted by Daniel Quon, BA, who has been awarded the Queen Elizabeth 11 Golden Jubilee Medal.</p> <p><b>Andrew Dagys</b>, CMA, is a best-selling author who has written and coauthored several books, including <i>Stocking Investing For Canadians For Dummies</i> and <i>Investing Online For Canadians For Dummies</i>. He has appeared on Canada AM and several popular CBC broadcasts to offer his insights on the Canadian and world investment landscapes. Andrew has contributed columns to <i>CanadianLiving</i>, <i>Forever Young</i>, and other publications. He has appeared on Canada AM and several popular CBC broadcasts to offer his insights on the Canadian and world investment landscapes.</p> <p><b>Matthew Elder</b> is a writer and communications consultant based in Toronto. Previously he was vice-president, content and editorial, of Morningstar Canada. A Montreal native, he was a columnist and editor specializing in personal finance with <i>The Gazette</i> for 10 years before moving to the Financial Post in 1995, where he was mutual funds editor and columnist until joining Morningstar in 2000.</p> <p><b>Lita Epstein</b>, who earned her MBA from Emory University's Goizueta Business School, enjoys helping people develop good financial, investing, and tax planning skills. She designs and teaches online courses and has written more than 20 books, including <i>Bookkeeping For Dummies</i> and <i>Reading Financial Reports For Dummies</i>, both published by Wiley.</p> <p><b>Douglas Gray</b>, B.A., LL.B., formerly a practicing lawyer, has extensive experience in all aspects of real estate and mortgage financing. He has acted on behalf of buyers, sellers, developers, investors, lenders and borrowers. In addition, he has over 35 years of personal experience investing in real estate. He is the author of 26 best-selling real estate, business and personal finance books, as well as a consultant and columnist.<br />Mr. Gray gives seminars on real estate throughout Canada to the public, as well as for professional-development programs for the real estate industry. He has presented to more than 250,000 people and is frequently interviewed by the media as an authority on real estate and small business entrepreneurship. Mr. Gray is president of the Canadian Enterprise Development Group Inc. and lives in Vancouver, BC. His website is www.homebuyer.ca.</p> <p><b>Michael Griffis</b> became an active trader in the mid 1980s. He first traded commodities and precious metals after taking a commodities trading class as part of his MBA program at Rollins College. He became a stockbroker in 1992, where he helped businesses and individuals manage investments in stocks, bonds, mutual funds, retirement plans, 401(k) employee-savings plans, and asset management programs. Michael is an author and business owner and has written about stock trading for online audiences.</p> <p><b>Ann C. Logue</b>, MBA, is the author of <i>Day Trading For Dummies</i> and <i>Emerging Markets For Dummies</i>. She has written for <i>Barron's</i>, <i>The New York Times</i>, <i>Newsweek Japan</i>, <i>Wealth Manager</i>, and the <i>International Monetary Fund</i>. She is a lecturer at the Liautaud Graduate School of Business at the University of Illinois at Chicago. Her current career follows 12 years of experience as an investment analyst. She has a B.A. from Northwestern University and an M.B.A. from the University of Chicago, and she holds the Chartered Financial Analyst (CFA) designation.</p> <p><b>Peter Mitham</b> has written on Canadian real estate for publications in Canada and abroad. He contributes a weekly column of real estate news for Business in Vancouver and writes regularly for <i>Western Investor</i>, a sister publication focused on real estate investment opportunities in Western Canada, as well as Canadian Real Estate Magazine. He has also collaborated with Douglas Gray on <i>The Canadian Landlord's Guide: Expert Advice for the Profitable Real Estate Investor</i> (Wiley).</p> <p><b>Paul Mladjenovic</b>, CFP is a certified financial planner practitioner, writer, and public speaker. His business, PM Financial Services, has helped people with financial and business concerns since 1981. He is the author of <i>Stock Investing For Dummies</i> (Wiley) and has accurately forecast many economic events, such as the rise of gold, the decline of the U.S. dollar, and the housing crisis. Paul’s personal website can be found at www.mladjenovic.com.</p>","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/9001"}}],"primaryCategoryTaxonomy":{"categoryId":34297,"title":"Precious Metals","slug":"precious-metals","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34297"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[],"relatedArticles":{"fromBook":[{"articleId":208993,"title":"Precious Metals Investing For Dummies Cheat Sheet","slug":"precious-metals-investing-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","precious-metals"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/208993"}},{"articleId":200969,"title":"Mining the History of Precious Metals","slug":"mining-the-history-of-precious-metals","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","precious-metals"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/200969"}},{"articleId":199921,"title":"Investment Strategy: Stagger Your Entry to Limit Your Risk","slug":"investment-strategy-stagger-your-entry-to-limit-your-risk","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","precious-metals"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/199921"}},{"articleId":199072,"title":"Understanding the Difference between a Correction and a Bear Market","slug":"understanding-the-difference-between-a-correction-and-a-bear-market","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","precious-metals"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/199072"}},{"articleId":192367,"title":"Questions Before You Begin Precious Metals Investing","slug":"questions-before-you-begin-precious-metals-investing","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","precious-metals"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/192367"}}],"fromCategory":[{"articleId":275885,"title":"How to Sell Collectible Coins","slug":"how-to-sell-collectible-coins","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","precious-metals"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/275885"}},{"articleId":275879,"title":"The Basics of Numismatic (Collectible) Coins","slug":"the-basics-of-numismatic-collectible-coins","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","precious-metals"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/275879"}},{"articleId":275874,"title":"10 Reasons to Have Gold and Silver","slug":"10-reasons-to-have-gold-and-silver","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","precious-metals"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/275874"}},{"articleId":275869,"title":"Investing: Seeking Out Silver Physical Bullion","slug":"investing-seeking-out-silver-physical-bullion","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","precious-metals"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/275869"}},{"articleId":275861,"title":"Investing: Going for Gold Physical Bullion","slug":"investing-going-for-gold-physical-bullion","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","precious-metals"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/275861"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":282499,"slug":"precious-metals-investing-for-dummies","isbn":"9780470130872","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","precious-metals"],"amazon":{"default":"https://www.amazon.com/gp/product/0470130873/ref=as_li_tl?ie=UTF8&tag=wiley01-20","ca":"https://www.amazon.ca/gp/product/0470130873/ref=as_li_tl?ie=UTF8&tag=wiley01-20","indigo_ca":"http://www.tkqlhce.com/click-9208661-13710633?url=https://www.chapters.indigo.ca/en-ca/books/product/0470130873-item.html&cjsku=978111945484","gb":"https://www.amazon.co.uk/gp/product/0470130873/ref=as_li_tl?ie=UTF8&tag=wiley01-20","de":"https://www.amazon.de/gp/product/0470130873/ref=as_li_tl?ie=UTF8&tag=wiley01-20"},"image":{"src":"https://www.dummies.com/wp-content/uploads/precious-metals-investing-for-dummies-cover-9780470130872-203x255.jpg","width":203,"height":255},"title":"Precious Metals Investing For Dummies","testBankPinActivationLink":"","bookOutOfPrint":false,"authorsInfo":"<p><b data-author-id=\"9001\">Paul Mladjenovic</b> is the owner of Prosperity Network and www.Super MoneyLinks.com. He is also the author of <i>Stock Investing For Dummies</i>, 2nd Edition. </p>","authors":[{"authorId":9001,"name":"Paul Mladjenovic","slug":"paul-mladjenovic","description":" <p><b>Bryan Borzykowski</b> is an award-winning financial journalist, who writes mostly about investing, personal finance and small business. He’s the co-author of <i>Day Trading For Canadians For Dummies</i> and contributes to the <i>Globe and Mail</i>, <i>Business</i> magazine, the <i>Toronto Star</i>, MoneySense and other leading Canadian publications. You can find Bryan at www. bryanborzykowski.com or on Twitter @bborzyko.</p> <p><b>Andrew Bell</b> was an investment reporter and editor with The Globe and Mail for 12 years. He joined Business News Network as a reporter in 2001. Bell, an import from Dublin, Ireland, was for 10 years the main compiler of Stars & Dogs in Saturday’s Globe. The roundup of hot and damp stocks and mutual funds was an invaluable therapeutic aid in relieving his own myriad jealousies, regrets, and resentments. He has also taken to the stage, where he practises a demanding \"method\" that involves getting the audience and other performers as off-balance and upset as possible. He lives in Cabbagetown, Toronto, with his wife and daughter.</p> <p><b>Christopher Cottier</b>, BSc, MBA, is a senior investment advisor based in British Columbia. In 1982, he left the world of banking to join the investment industry in Vancouver so he could continue to pursue his love of rugby. More than twenty five years later, he’s still managing money and playing rugby. With Betty Jane Wylie, Christopher is the co-author of <i>The Best Is Yet to Come: Enjoying a Financially Secure Retirement</i> (Key Porter). Christopher was ably assisted by Daniel Quon, BA, who has been awarded the Queen Elizabeth 11 Golden Jubilee Medal.</p> <p><b>Andrew Dagys</b>, CMA, is a best-selling author who has written and coauthored several books, including <i>Stocking Investing For Canadians For Dummies</i> and <i>Investing Online For Canadians For Dummies</i>. He has appeared on Canada AM and several popular CBC broadcasts to offer his insights on the Canadian and world investment landscapes. Andrew has contributed columns to <i>CanadianLiving</i>, <i>Forever Young</i>, and other publications. He has appeared on Canada AM and several popular CBC broadcasts to offer his insights on the Canadian and world investment landscapes.</p> <p><b>Matthew Elder</b> is a writer and communications consultant based in Toronto. Previously he was vice-president, content and editorial, of Morningstar Canada. A Montreal native, he was a columnist and editor specializing in personal finance with <i>The Gazette</i> for 10 years before moving to the Financial Post in 1995, where he was mutual funds editor and columnist until joining Morningstar in 2000.</p> <p><b>Lita Epstein</b>, who earned her MBA from Emory University's Goizueta Business School, enjoys helping people develop good financial, investing, and tax planning skills. She designs and teaches online courses and has written more than 20 books, including <i>Bookkeeping For Dummies</i> and <i>Reading Financial Reports For Dummies</i>, both published by Wiley.</p> <p><b>Douglas Gray</b>, B.A., LL.B., formerly a practicing lawyer, has extensive experience in all aspects of real estate and mortgage financing. He has acted on behalf of buyers, sellers, developers, investors, lenders and borrowers. In addition, he has over 35 years of personal experience investing in real estate. He is the author of 26 best-selling real estate, business and personal finance books, as well as a consultant and columnist.<br />Mr. Gray gives seminars on real estate throughout Canada to the public, as well as for professional-development programs for the real estate industry. He has presented to more than 250,000 people and is frequently interviewed by the media as an authority on real estate and small business entrepreneurship. Mr. Gray is president of the Canadian Enterprise Development Group Inc. and lives in Vancouver, BC. His website is www.homebuyer.ca.</p> <p><b>Michael Griffis</b> became an active trader in the mid 1980s. He first traded commodities and precious metals after taking a commodities trading class as part of his MBA program at Rollins College. He became a stockbroker in 1992, where he helped businesses and individuals manage investments in stocks, bonds, mutual funds, retirement plans, 401(k) employee-savings plans, and asset management programs. Michael is an author and business owner and has written about stock trading for online audiences.</p> <p><b>Ann C. Logue</b>, MBA, is the author of <i>Day Trading For Dummies</i> and <i>Emerging Markets For Dummies</i>. She has written for <i>Barron's</i>, <i>The New York Times</i>, <i>Newsweek Japan</i>, <i>Wealth Manager</i>, and the <i>International Monetary Fund</i>. She is a lecturer at the Liautaud Graduate School of Business at the University of Illinois at Chicago. Her current career follows 12 years of experience as an investment analyst. She has a B.A. from Northwestern University and an M.B.A. from the University of Chicago, and she holds the Chartered Financial Analyst (CFA) designation.</p> <p><b>Peter Mitham</b> has written on Canadian real estate for publications in Canada and abroad. He contributes a weekly column of real estate news for Business in Vancouver and writes regularly for <i>Western Investor</i>, a sister publication focused on real estate investment opportunities in Western Canada, as well as Canadian Real Estate Magazine. He has also collaborated with Douglas Gray on <i>The Canadian Landlord's Guide: Expert Advice for the Profitable Real Estate Investor</i> (Wiley).</p> <p><b>Paul Mladjenovic</b>, CFP is a certified financial planner practitioner, writer, and public speaker. His business, PM Financial Services, has helped people with financial and business concerns since 1981. He is the author of <i>Stock Investing For Dummies</i> (Wiley) and has accurately forecast many economic events, such as the rise of gold, the decline of the U.S. dollar, and the housing crisis. Paul’s personal website can be found at www.mladjenovic.com.</p>","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/9001"}}],"_links":{"self":"https://dummies-api.dummies.com/v2/books/"}},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;investment-vehicles&quot;,&quot;precious-metals&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9780470130872&quot;]}]\" id=\"du-slot-64483f8f10a92\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;investment-vehicles&quot;,&quot;precious-metals&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9780470130872&quot;]}]\" id=\"du-slot-64483f8f11261\"></div></div>"},"articleType":{"articleType":"Articles","articleList":null,"content":null,"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0},"sponsorAd":"","sponsorEbookTitle":"","sponsorEbookLink":"","sponsorEbookImage":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Advance","lifeExpectancy":"Five years","lifeExpectancySetFrom":"2023-04-25T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":200454},{"headers":{"creationTime":"2021-03-17T15:20:38+00:00","modifiedTime":"2023-04-25T17:43:35+00:00","timestamp":"2023-04-25T18:01:03+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34288"},"slug":"investing","categoryId":34288},{"name":"Investment Vehicles","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34290"},"slug":"investment-vehicles","categoryId":34290},{"name":"Stocks","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34298"},"slug":"stocks","categoryId":34298}],"title":"Strategies for Investing in Cannabis Stocks","strippedTitle":"strategies for investing in cannabis stocks","slug":"investing-in-cannabis-spotting-opportunities-to-buy-or-sell","canonicalUrl":"","seo":{"metaDescription":"Learn how investors spot opportunities to buy (upward momentum) or sell (downward momentum) cannabis stocks.","noIndex":0,"noFollow":0},"content":"Momentum investors (speculators) lean toward technical analysis instead of fundamental analysis when choosing which stocks to buy, when to buy, and when to sell. <a href=\"https://www.dummies.com/personal-finance/investing/frontier-markets/investing-in-cannabis-for-dummies-cheat-sheet/\">Investors</a> who rely on technical analysis spend most of their time looking at charts to spot patterns in an attempt to predict the future movement of a stock’s price.\r\n<h2 id=\"tab1\" >Upward momentum</h2>\r\nWith momentum investing, you basically want to buy stocks that show sustainable upward momentum and sell them before the price starts to trend downward.\r\n\r\nThe key word here is <em>sustainable,</em> which means you’re looking for a pattern that you have reason to believe will continue for the foreseeable future. One way to identify a stock with sustainable upward momentum is to look at its 50-day and 100-day simple moving averages in relation to one another.\r\n\r\nA <em>simple moving average (SMA)</em> shows the change in a stock’s <em>average</em> price over a certain number of days. For example, to calculate the five-day SMA of a stock for a given day, you total the stock’s closing prices over the past five days and divide by five. To calculate the 50-day moving average, you total the stock’s closing prices over the past 50 days and divide by 50.\r\n\r\nTo create an SMA chart, you calculate the SMA for the desired period (for example, for each of the past 50 days) and plot those points on a chart, as shown. You end up with a line or curve that smooths out the daily fluctuations in the share price (which reduces the “noise”) to make the stock’s overall momentum clearer and easier to visualize and understand.\r\n<p class=\"article-tips remember\">The good news is that you don’t have to calculate simple moving averages and chart them. Nearly every online broker features moving average charts as part of its service. I explained how to calculate the SMA and create a chart just so you would have a clearer understanding of how this investment strategy works.</p>\r\n\r\n\r\n[caption id=\"attachment_283101\" align=\"alignnone\" width=\"556\"]<img class=\"size-full wp-image-283101\" src=\"https://www.dummies.com/wp-content/uploads/cannabis-invest-moving-chart.jpg\" alt=\"moving average chart\" width=\"556\" height=\"342\" /> A 50-day moving average chart for Curaleaf[/caption]\r\n<p class=\"article-tips tip\">As a momentum investor, you look for times when the short-term upward trend is strong enough to trigger a positive shift in the long-term trend. The most common way to spot such a shift is to chart a stock’s 50-day and 100-day moving averages and look for points where the two lines cross. When the 50-day SMA line moves from below to above the 100-day SMA line (see the following figure), this is a sign that the short-term trend <em>may</em> be strong enough to trigger an upward shift in the long-term momentum — a buy signal.</p>\r\nHowever, if you look at enough of these moving averages charts, you start to notice that this technique doesn’t always work. You’ll notice plenty of instances where the 50-day SMA line moves from below to above the 100-day SMA line that corresponds with a sell-off. Likewise, you’ll notice plenty of instances where the 50-day SMA line dives down below the 100-day SMA line corresponds to an upward shift in share price. In other words, don’t blindly follow this technique.\r\n\r\n[caption id=\"attachment_283100\" align=\"alignnone\" width=\"556\"]<img class=\"size-full wp-image-283100\" src=\"https://www.dummies.com/wp-content/uploads/cannabis-invest-sma.jpg\" alt=\"upward momentum\" width=\"556\" height=\"347\" /> Look for points where the 50-day SMA moves above the 100-day SMA.[/caption]\r\n\r\nMomentum investors may examine the SMA over longer periods or use other types of charts to gauge a stock’s momentum and identify buy and sell opportunities, but this basic method enables you to wrap your head around the concept and try it if you so desire.\r\n<p class=\"article-tips warning\">Be careful buying into an apparent rally, because short sellers can quickly inflate a stock’s price when they exit their positions in anticipation that the stock price will soon tank.</p>\r\n\r\n<h2 id=\"tab2\" ><a name=\"_Toc54539134\"></a>Downward momentum</h2>\r\nAfter buying a cannabis stock with upward momentum, your next decision is when to sell it. At this point, monitoring the stock’s SMA is even more important, because at any time in the future, the trend can flip from upward to downward. You want to sell your stock as close to the stock’s peak as possible, and as you feel comfortable doing. As is commonly said among investors, “Pigs get fat, and hogs get slaughtered.” Don’t be too greedy when deciding the right time to sell.\r\n<p class=\"article-tips tip\">If you’re unsure whether a stock has peaked, consider cashing out your principle (the initial amount you invested) and riding to the top with your gains (the remaining shares). As you become more familiar with cannabis stocks, you may want to consider taking bigger risks. Deciding when and how much to sell depends on your personal risk tolerance and how much you can afford to and want to gamble.</p>\r\nNow, instead of looking for points where the 50-day SMA moves from below to above the line for the 100-day SMA, you want to watch for when that 50-day line crosses down from above to below the 100-day line (see Figure 13-3). How far that 50-day line dives down before you pull the trigger is up to you, but if you want to remain true to this strategy, the sooner you sell, the better.\r\n\r\n[caption id=\"attachment_283099\" align=\"alignnone\" width=\"556\"]<img class=\"size-full wp-image-283099\" src=\"https://www.dummies.com/wp-content/uploads/cannabis-invest-downward.jpg\" alt=\"downward momentum\" width=\"556\" height=\"344\" /> Sell when the 50-day SMA drops below the 100-day SMA.[/caption]","description":"Momentum investors (speculators) lean toward technical analysis instead of fundamental analysis when choosing which stocks to buy, when to buy, and when to sell. <a href=\"https://www.dummies.com/personal-finance/investing/frontier-markets/investing-in-cannabis-for-dummies-cheat-sheet/\">Investors</a> who rely on technical analysis spend most of their time looking at charts to spot patterns in an attempt to predict the future movement of a stock’s price.\r\n<h2 id=\"tab1\" >Upward momentum</h2>\r\nWith momentum investing, you basically want to buy stocks that show sustainable upward momentum and sell them before the price starts to trend downward.\r\n\r\nThe key word here is <em>sustainable,</em> which means you’re looking for a pattern that you have reason to believe will continue for the foreseeable future. One way to identify a stock with sustainable upward momentum is to look at its 50-day and 100-day simple moving averages in relation to one another.\r\n\r\nA <em>simple moving average (SMA)</em> shows the change in a stock’s <em>average</em> price over a certain number of days. For example, to calculate the five-day SMA of a stock for a given day, you total the stock’s closing prices over the past five days and divide by five. To calculate the 50-day moving average, you total the stock’s closing prices over the past 50 days and divide by 50.\r\n\r\nTo create an SMA chart, you calculate the SMA for the desired period (for example, for each of the past 50 days) and plot those points on a chart, as shown. You end up with a line or curve that smooths out the daily fluctuations in the share price (which reduces the “noise”) to make the stock’s overall momentum clearer and easier to visualize and understand.\r\n<p class=\"article-tips remember\">The good news is that you don’t have to calculate simple moving averages and chart them. Nearly every online broker features moving average charts as part of its service. I explained how to calculate the SMA and create a chart just so you would have a clearer understanding of how this investment strategy works.</p>\r\n\r\n\r\n[caption id=\"attachment_283101\" align=\"alignnone\" width=\"556\"]<img class=\"size-full wp-image-283101\" src=\"https://www.dummies.com/wp-content/uploads/cannabis-invest-moving-chart.jpg\" alt=\"moving average chart\" width=\"556\" height=\"342\" /> A 50-day moving average chart for Curaleaf[/caption]\r\n<p class=\"article-tips tip\">As a momentum investor, you look for times when the short-term upward trend is strong enough to trigger a positive shift in the long-term trend. The most common way to spot such a shift is to chart a stock’s 50-day and 100-day moving averages and look for points where the two lines cross. When the 50-day SMA line moves from below to above the 100-day SMA line (see the following figure), this is a sign that the short-term trend <em>may</em> be strong enough to trigger an upward shift in the long-term momentum — a buy signal.</p>\r\nHowever, if you look at enough of these moving averages charts, you start to notice that this technique doesn’t always work. You’ll notice plenty of instances where the 50-day SMA line moves from below to above the 100-day SMA line that corresponds with a sell-off. Likewise, you’ll notice plenty of instances where the 50-day SMA line dives down below the 100-day SMA line corresponds to an upward shift in share price. In other words, don’t blindly follow this technique.\r\n\r\n[caption id=\"attachment_283100\" align=\"alignnone\" width=\"556\"]<img class=\"size-full wp-image-283100\" src=\"https://www.dummies.com/wp-content/uploads/cannabis-invest-sma.jpg\" alt=\"upward momentum\" width=\"556\" height=\"347\" /> Look for points where the 50-day SMA moves above the 100-day SMA.[/caption]\r\n\r\nMomentum investors may examine the SMA over longer periods or use other types of charts to gauge a stock’s momentum and identify buy and sell opportunities, but this basic method enables you to wrap your head around the concept and try it if you so desire.\r\n<p class=\"article-tips warning\">Be careful buying into an apparent rally, because short sellers can quickly inflate a stock’s price when they exit their positions in anticipation that the stock price will soon tank.</p>\r\n\r\n<h2 id=\"tab2\" ><a name=\"_Toc54539134\"></a>Downward momentum</h2>\r\nAfter buying a cannabis stock with upward momentum, your next decision is when to sell it. At this point, monitoring the stock’s SMA is even more important, because at any time in the future, the trend can flip from upward to downward. You want to sell your stock as close to the stock’s peak as possible, and as you feel comfortable doing. As is commonly said among investors, “Pigs get fat, and hogs get slaughtered.” Don’t be too greedy when deciding the right time to sell.\r\n<p class=\"article-tips tip\">If you’re unsure whether a stock has peaked, consider cashing out your principle (the initial amount you invested) and riding to the top with your gains (the remaining shares). As you become more familiar with cannabis stocks, you may want to consider taking bigger risks. Deciding when and how much to sell depends on your personal risk tolerance and how much you can afford to and want to gamble.</p>\r\nNow, instead of looking for points where the 50-day SMA moves from below to above the line for the 100-day SMA, you want to watch for when that 50-day line crosses down from above to below the 100-day line (see Figure 13-3). How far that 50-day line dives down before you pull the trigger is up to you, but if you want to remain true to this strategy, the sooner you sell, the better.\r\n\r\n[caption id=\"attachment_283099\" align=\"alignnone\" width=\"556\"]<img class=\"size-full wp-image-283099\" src=\"https://www.dummies.com/wp-content/uploads/cannabis-invest-downward.jpg\" alt=\"downward momentum\" width=\"556\" height=\"344\" /> Sell when the 50-day SMA drops below the 100-day SMA.[/caption]","blurb":"","authors":[{"authorId":33497,"name":"Steven R. Gormley","slug":"steven-r-gormley","description":" <p><b>Steven Gormley</b> is CEO at Radiko Holdings. He&#39;s a celebrated expert in the legal marijuana sector and his analyses have been featured prominently in media outlets like <i>Forbes,</i> the <i>Wall Street Journal</i> , and <i>Marketwatch.</i> Steven is also Chief Operating Officer of Silverback Investments, Inc, a management company in the cannabis space. ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/33497"}}],"primaryCategoryTaxonomy":{"categoryId":34298,"title":"Stocks","slug":"stocks","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34298"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[{"label":"Upward momentum","target":"#tab1"},{"label":"Downward momentum","target":"#tab2"}],"relatedArticles":{"fromBook":[],"fromCategory":[{"articleId":283116,"title":"10 Reasons Not to Invest in Marijuana Stocks","slug":"10-reasons-not-to-invest-in-marijuana-stocks","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/283116"}},{"articleId":283111,"title":"11 Criteria for Choosing a Cannabis 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Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34288"},"slug":"investing","categoryId":34288},{"name":"Investment Vehicles","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34290"},"slug":"investment-vehicles","categoryId":34290},{"name":"ETFs","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34295"},"slug":"etfs","categoryId":34295}],"title":"ETFs For Canadians For Dummies Cheat Sheet","strippedTitle":"etfs for canadians for dummies cheat sheet","slug":"exchange-traded-funds-for-canadians-for-dummies-cheat-sheet","canonicalUrl":"","seo":{"metaDescription":"Learn about exchange-traded funds, how to incorporate them into your investment portfolio, and how to choose the best ETFs.","noIndex":0,"noFollow":0},"content":"An exchange-traded fund (ETF) is something of a cross between an index mutual fund and a stock. It’s like a mutual fund but has some key differences you’ll want to be sure you understand.\r\n\r\nHere, you discover how to get some ETFs into your portfolio, how to choose smart ETFs, and how ETFs differ from mutual funds.","description":"An exchange-traded fund (ETF) is something of a cross between an index mutual fund and a stock. It’s like a mutual fund but has some key differences you’ll want to be sure you understand.\r\n\r\nHere, you discover how to get some ETFs into your portfolio, how to choose smart ETFs, and how ETFs differ from mutual funds.","blurb":"","authors":[{"authorId":34416,"name":"Bryan Borzykowski","slug":"bryan-borzykowski","description":"<b>Bryan Borzykowski</b> is an award-winning financial journalist, who writes mostly about investing, personal finance and small business. He’s the co-author of <i>Day Trading For Canadians For Dummies</i> and contributes to the <i>Globe and Mail</i>, <i>Business</i> magazine, the <i>Toronto Star</i>, MoneySense and other leading Canadian publications. You can find Bryan at www. bryanborzykowski.com or on Twitter @bborzyko.","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/34416"}},{"authorId":9023,"name":"Russell Wild","slug":"russell-wild","description":" <b>Russell Wild,</b> MBA, an expert on index investing, is a fee-only financial planner and investment advisor and the principal of Global Portfolios. He is the author or coauthor of nearly two dozen nonfiction books.","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/9023"}}],"primaryCategoryTaxonomy":{"categoryId":34295,"title":"ETFs","slug":"etfs","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34295"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[],"relatedArticles":{"fromBook":[],"fromCategory":[{"articleId":283082,"title":"How to Track Cannabis Investment Funds","slug":"how-to-track-cannabis-investment-funds","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","etfs"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/283082"}},{"articleId":208512,"title":"Exchange-Traded Funds For Dummies Cheat Sheet (Australia/New Zealand Edition)","slug":"exchange-traded-funds-for-dummies-cheat-sheet-australianew-zealand-edition","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","etfs"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/208512"}},{"articleId":207441,"title":"Investing in ETFs For Dummies Cheat Sheet","slug":"investing-in-etfs-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","etfs"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/207441"}},{"articleId":191854,"title":"How to Find the Price-to-Earnings Ratio of an ETF","slug":"how-to-find-the-price-to-earnings-ratio-of-an-etf","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","etfs"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/191854"}},{"articleId":164395,"title":"Canadian Brokerages Offering ETFs","slug":"canadian-brokerages-offering-etfs","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","etfs"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/164395"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":282183,"slug":"exchange-traded-funds-for-canadians-for-dummies","isbn":"9781119894902","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","funds"],"amazon":{"default":"https://www.amazon.com/gp/product/1119894905/ref=as_li_tl?ie=UTF8&tag=wiley01-20","ca":"https://www.amazon.ca/gp/product/1119894905/ref=as_li_tl?ie=UTF8&tag=wiley01-20","indigo_ca":"http://www.tkqlhce.com/click-9208661-13710633?url=https://www.chapters.indigo.ca/en-ca/books/product/1119894905-item.html&cjsku=978111945484","gb":"https://www.amazon.co.uk/gp/product/1119894905/ref=as_li_tl?ie=UTF8&tag=wiley01-20","de":"https://www.amazon.de/gp/product/1119894905/ref=as_li_tl?ie=UTF8&tag=wiley01-20"},"image":{"src":"https://www.dummies.com/wp-content/uploads/etfs-for-canadians-for-dummies-2nd-edition-cover-9781119894902-203x255.jpg","width":203,"height":255},"title":"ETFs For Canadians For Dummies, 2nd Edition","testBankPinActivationLink":"","bookOutOfPrint":true,"authorsInfo":"<p><b><b data-author-id=\"34416\">Bryan Borzykowski</b></b> is an award-winning financial journalist, who writes mostly about investing, personal finance and small business. He’s the co-author of <i>Day Trading For Canadians For Dummies</i> and contributes to the <i>Globe and Mail</i>, <i>Business</i> magazine, the <i>Toronto Star</i>, MoneySense and other leading Canadian publications. You can find Bryan at www. bryanborzykowski.com or on Twitter @bborzyko. <b><b data-author-id=\"9023\">Russell Wild</b>,</b> MBA, an expert on index investing, is a fee-only financial planner and investment advisor and the principal of Global Portfolios. He is the author or coauthor of nearly two dozen nonfiction books.</p>","authors":[{"authorId":34416,"name":"Bryan Borzykowski","slug":"bryan-borzykowski","description":"<b>Bryan Borzykowski</b> is an award-winning financial journalist, who writes mostly about investing, personal finance and small business. He’s the co-author of <i>Day Trading For Canadians For Dummies</i> and contributes to the <i>Globe and Mail</i>, <i>Business</i> magazine, the <i>Toronto Star</i>, MoneySense and other leading Canadian publications. 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He is the author or coauthor of nearly two dozen nonfiction books.","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/9023"}}],"_links":{"self":"https://dummies-api.dummies.com/v2/books/"}},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;investment-vehicles&quot;,&quot;etfs&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119894902&quot;]}]\" id=\"du-slot-6438435ebb637\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;investment-vehicles&quot;,&quot;etfs&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781119894902&quot;]}]\" id=\"du-slot-6438435ebbd5c\"></div></div>"},"articleType":{"articleType":"Cheat Sheet","articleList":[{"articleId":164399,"title":"Some Interesting Facts about ETFs in Canada","slug":"some-interesting-facts-about-etfs-in-canada","categoryList":[],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/164399"}},{"articleId":164395,"title":"Canadian Brokerages Offering ETFs","slug":"canadian-brokerages-offering-etfs","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","etfs"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/164395"}},{"articleId":164369,"title":"4 Top Canadian Websites for ETF Advice","slug":"4-top-canadian-websites-for-etf-advice","categoryList":[],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/164369"}}],"content":[{"title":"Talking to a financial professional about ETFs","thumb":null,"image":null,"content":"<p>If you’re willing to spend time reading quality resources about exchange-traded funds and portfolio construction, you can create for yourself a portfolio that balances risk and potential return and aims toward your investment goals.</p>\n<p>However, many people find that they want at least a bit of guidance from a financial pro before making investment decisions. If that describes you, look for a <em>fee-only </em>financial planner (someone who does not earn commissions on your investments).</p>\n<p>Here are some questions to ask when you meet that person:</p>\n<ul>\n<li>Given my personal economics, how much risk should I be taking with my money? Specifically, what percent of my portfolio should be in stock ETFs and what percent in bond ETFs?</li>\n<li>Given the size of my portfolio, how many individual ETFs would you suggest?</li>\n<li>Which brokerage house do you recommend for housing my ETF portfolio?</li>\n<li>What is the historical rate of return on the ETF portfolio that you are suggesting, and just how volatile can it be?</li>\n<li>Given my age, my tax bracket, and my employment, what kind of account — RRSP, TFSA or non-registered account – do you suggest for my ETFs?</li>\n<li>What selection of ETFs would you advise for an optimally diversified portfolio?</li>\n<li>Do I keep my present investments, or sell them? If I keep them, how are you going to choose ETFs that best complement those investments?</li>\n<li>Can you help me juggle the investments in my RRSP to complement my new ETF portfolio?</li>\n</ul>\n"},{"title":"Choosing the best ETFs","thumb":null,"image":null,"content":"<p>With about 1,000 Canadian-listed exchange-traded funds available — and many more internationally — where do you start to shop? The answer depends on your objective.</p>\n<p>If you&#8217;re looking to round out an existing portfolio of stocks or mutual funds, your ETFs should complement your existing investments. Your goal is always to have a well-diversified collection of investments.</p>\n<p>If you&#8217;re starting to build a portfolio, you want to make sure to include stocks and bonds and to diversify within those two broad asset classes.</p>\n<p>There&#8217;s not much in the world of stocks, bonds, and commodities that can’t be satisfied with ETFs. Keep the following guidelines in mind as you make selections:</p>\n<ul>\n<li><strong>Mix and match your holdings appropriately. </strong>You not only want a well-diversified portfolio, but you also want one that includes various asset classes that tend to go up and down in value at different times. There’s no point to holding four different ETFs that all invest in large-cap stocks. Hold a Canadian large-cap ETF <em>and</em> a small-cap, a U.S. stock ETF <em>and </em>an international stock ETF.</li>\n<li><strong>Go for lowest cost. </strong>As with any other investment vehicle, be careful of paying more than you need to. Although most ETFs are very economical, some are more economical than others. You may not always want to pick the cheapest, but certainly aim in that direction.</li>\n<li><strong>Don’t sweat the small stuff. </strong>Two ETFs that track similar indexes (such as, say, large value stocks) are not going to be all that different from one another. Spend some time researching your options, but don’t agonize over your selection. Much more important — perhaps worth <em>a little</em> agony — is choosing ETFs that track dissimilar indexes so your eggs are in different baskets.</li>\n<li><strong>Go passive. </strong>A handful of ETFs promise “active management.” Know that active management has an awfully spotty track record. The bulk, if not all, of your ETF portfolio should be in passively managed (indexed) ETFs.</li>\n<li><strong>Look for breadth. </strong>Examine the holdings of the ETF. As a rule, no one security (such as, for example, Shopify or Apple) should represent more than 10 percent of the ETF’s total assets.</li>\n</ul>\n"},{"title":"How ETFs differ from mutual funds","thumb":null,"image":null,"content":"<p>At first glance, an exchange-traded fund (ETF) may seem awfully similar to a mutual fund. After all, like ETFs, mutual funds also represent baskets of stocks or bonds.</p>\n<p>The two, however, are certainly not twins. Maybe not even siblings. Cousins are more like it. Here are some of the significant differences between ETFs and mutual funds:</p>\n<ul>\n<li>ETFs are bought and sold just like stocks (through a brokerage house, either by phone or online), and their price can change from second to second. Mutual fund orders can be made during the day, but the actual trade doesn’t occur until after the markets close.</li>\n<li>ETFs tend to represent indexes — entire markets or market segments — and the managers of the ETFs tend to do very little trading of securities in the ETF. (The ETFs are <em>passively</em> managed.)</li>\n<li>Although they require you to pay small trading fees, ETFs usually wind up costing you much less than a mutual fund because the ongoing management fees are typically much less, and there is never a <em>load</em> (an entrance or exit fee, sometimes an exorbitant one) as there is with some mutual funds.</li>\n<li>Because of low portfolio turnover and also the way they are structured, investment gains on ETFs usually are taxed more gingerly than the gains on mutual funds.</li>\n</ul>\n<p>The following table provides a quick look at some ways that investing in ETFs differs from investing in mutual funds.</p>\n<table>\n<tbody>\n<tr>\n<td width=\"159\"></td>\n<td width=\"151\"><strong>ETFs</strong></td>\n<td width=\"153\"><strong>Mutual Funds</strong></td>\n</tr>\n<tr>\n<td width=\"159\">Are they priced, bought, and sold throughout the day?</td>\n<td width=\"151\">Yes</td>\n<td width=\"153\">No</td>\n</tr>\n<tr>\n<td width=\"159\">Do they offer some investment diversification?</td>\n<td width=\"151\">Yes</td>\n<td width=\"153\">Yes</td>\n</tr>\n<tr>\n<td width=\"159\">Do you have to make a required minimum investment?</td>\n<td width=\"151\">No</td>\n<td width=\"153\">Yes</td>\n</tr>\n<tr>\n<td width=\"159\">Do you purchase through a broker or online brokerage?</td>\n<td width=\"151\">Yes</td>\n<td width=\"153\">Yes</td>\n</tr>\n<tr>\n<td width=\"159\">Do you pay a fee or commission to make a trade?</td>\n<td width=\"151\">Often</td>\n<td width=\"153\">Very rarely</td>\n</tr>\n<tr>\n<td width=\"159\">Can you buy/sell options?</td>\n<td width=\"151\">Yes</td>\n<td width=\"153\">No</td>\n</tr>\n<tr>\n<td width=\"159\">Are they indexed (passively managed)?</td>\n<td width=\"151\">Typically</td>\n<td width=\"153\">Atypically</td>\n</tr>\n<tr>\n<td width=\"159\">Can you make money or lose money?</td>\n<td width=\"151\">Yes</td>\n<td width=\"153\">Yes</td>\n</tr>\n</tbody>\n</table>\n<p>&nbsp;</p>\n"}],"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0},"sponsorAd":"","sponsorEbookTitle":"","sponsorEbookLink":"","sponsorEbookImage":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Advance","lifeExpectancy":"Five years","lifeExpectancySetFrom":"2023-04-13T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":207916},{"headers":{"creationTime":"2016-03-27T16:57:58+00:00","modifiedTime":"2023-04-12T20:56:04+00:00","timestamp":"2023-04-12T21:01:04+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & 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Analysis For Dummies, 3rd Edition","testBankPinActivationLink":"","bookOutOfPrint":true,"authorsInfo":"<p><p><b>Matt Krantz,</b> a nationally known financial journalist, has been writing for <i>USA Today</i> since 1999. He covers financial markets and Wall Street, concentrating on developments affecting individual investors and their portfolios. Matt also writes a daily online investing column called &#34;Ask Matt,&#34; which appears every trading day at USATODAY.com.</p>","authors":[{"authorId":33279,"name":"Matthew Krantz","slug":"matthew-krantz","description":" <p><b>Matt Krantz,</b> a nationally known financial journalist, has been writing for <i>USA Today</i> since 1999. He covers financial markets and Wall Street, concentrating on developments affecting individual investors and their portfolios. Matt also writes a daily online investing column called &#34;Ask Matt,&#34; which appears every trading day at USATODAY.com. ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/33279"}}],"_links":{"self":"https://dummies-api.dummies.com/v2/books/"}},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;general-investing&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781394159697&quot;]}]\" id=\"du-slot-64371c101dfe5\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;general-investing&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[&quot;9781394159697&quot;]}]\" id=\"du-slot-64371c101e894\"></div></div>"},"articleType":{"articleType":"Cheat Sheet","articleList":[{"articleId":194786,"title":"Gathering the Key Documents for Fundamental Analysis","slug":"gathering-the-key-documents-for-fundamental-analysis","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/194786"}},{"articleId":194827,"title":"6 Things in an Annual Report Necessary for Fundamental Analysis","slug":"six-things-in-an-annual-report-necessary-for-fundamental-analysis","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/194827"}},{"articleId":194785,"title":"Top Sources for Fundamental Analysis Data Online","slug":"top-sources-for-fundamental-analysis-data-online","categoryList":["business-careers-money","personal-finance","investing","general-investing"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/194785"}}],"content":[{"title":"Gathering the key documents for fundamental analysis","thumb":null,"image":null,"content":"<p>Companies create plenty of financial documents, so you need to know which ones are most important to fundamental analysis.</p>\n<p>The following list helps you determine which documents can help you the most with fundamental analysis:</p>\n<ul>\n<li><strong>Earnings press release:</strong> Curious how a company’s just-completed quarter went? That’s exactly what a company must spell out in a press release it provides investors, called the earnings report. These reports are pored over by investors and the media, as they trickle out during earnings season. Key financial measures such as revenue, expenses, and profit are often first presented to investors in the earnings press release, making them a critical document for fundamental analysis.</li>\n<li><strong>Quarterly financial report (10-Q):</strong> Weeks after the earnings press release is given to investors, companies provide an official version called the quarterly report or 10-Q. In these documents, companies spell out the finalized numbers for the quarter. The 10-Q contains much of the same information as in the earnings press release, but usually to a much greater level of detail. For instance, many companies leave a statement of cash flows out of their earnings press release, but must include it in their 10-Q.</li>\n<li><strong>Annual financial report (10-K):</strong> The annual report, formally known as the 10-K, is the most important and complete document fundamental analysts receive. The 10-K spells out in detail all the relevant developments at the company and full-year financial statements. Some companies also produce a more colorful version called the annual report to shareholders.</li>\n<li><strong>Income statement:</strong> Want to know how much a company is making? Then the income statement is for you. This document shows you how much business the company is bringing in, revenue, and how much it keeps in profit after paying all its costs.</li>\n<li><strong>Balance sheet:</strong> The balance sheet is the corporate version of an individual’s net worth statement. It shows what the company owes and what it owns.</li>\n<li><strong>Statement of cash flows:</strong> There’s nothing more valuable than cold hard cash in business. A company may report huge profits on its income statement, but it is the cash that’s coming in the doors that matters most to fundamental analysts. While many investors start their fundamental analysis with the income statement and balance sheet, the statement of cash flows is critical because it is subject to fewer distortions from accounting rules.</li>\n</ul>\n"},{"title":"6 things in an annual report necessary for fundamental analysis","thumb":null,"image":null,"content":"<p>After a huge annual report arrives in the mail, you may not know where to begin. So here are six things you should always consider when you get an annual report to make sure you are picking up the key elements needed in fundamental analysis:</p>\n<ul class=\"level-one\">\n<li>\n<p class=\"first-para\"><b>Compare this year’s annual report with last year’s annual report.</b> The best way to read this year’s annual report is side-by-side with last year’s. Make sure the company achieved the goals it set for itself. If the company missed its goals, that’s a good place to start using your fundamental analysis skills to figure out why management fell short and whether it’s a reason to be concerned about the company’s future.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>See how cash flow compares with net income.</b> Accounting rules give companies a fair amount of leeway in how they report profits. Cash, however, is cash, and this line item is particularly important in fundamental analysis to assess when making investing decisions. You want to make sure that the company is bringing in roughly the same amount of cash as it reports as profit.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Consider operating and gross margins.</b> Too many investors get overly consumed with a company’s bottom line. However, the amount of profit a company generates should be considered in comparison with its revenue. Operating and gross margins, two financial measures fundamental analysts pay close attention to, let you do this analysis.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Look for any deterioration.</b> If you’re investing in a company because you think it has great growth prospects, make sure it’s actually growing. A basic analysis of a company’s fundamentals, including revenue and earnings, will show you how to do this pretty quickly.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Take a look at the CEO’s paycheck.</b> Most annual reports come packaged with a so-called proxy statement. These statements typically tell you how much the top executives are paid. Sometimes this information is found in the annual report. You want to be mindful that excessive compensation could be a sign that top management is out for itself, not you. Paying attention to executive pay is a way to look beyond financial statements to perform a complete analysis of a company.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Sleuth for potential conflicts of interest.</b> The proxy statement also allows investors to vote on key matters. Don’t just rubber-stamp directors the company recommends for the board. Check the proxy to see if those people have any business dealings with the company. If so, you might withhold your vote for them. Voting for members of a company’s board of directors is a way to use fundamental analysis to safeguard your interest in the company.</p>\n</li>\n</ul>\n"},{"title":"Top sources for fundamental analysis data online","thumb":null,"image":null,"content":"<p>You don’t have to subscribe to costly online services to get the data you need for fundamental analysis. Much of the fundamental analysis data you need is available from high-quality sites including:</p>\n<ul class=\"level-one\">\n<li>\n<p class=\"first-para\"><b><a href=\"https://www.sec.gov/\" target=\"_blank\" rel=\"noopener\">U.S. Securities and Exchange Commission (SEC)</a>:</b> If there’s one site you, as a fundamental analyst, need to know about, it’s this one. SEC.gov is a massive repository of financial information provided by the regulator, the Securities and Exchange Commission. The top function you’ll want is the ability to download all companies’ financial statements.</p>\n</li>\n<li>\n<p class=\"first-para\"><b><a href=\"http://www.nasdaq.com\" target=\"_blank\" rel=\"noopener\">Nasdaq</a>:</b> Nasdaq is best known for being a leading stock market exchange, a forum where traders buy and sell shares of certain stocks. But Nasdaq has built out a respectable Web site, containing loads of information for fundamental analysts. You’ll find summaries of companies’ financial statements, trading information, and stock quotes.</p>\n</li>\n<li>\n<p class=\"BulletItem\"><a href=\"https://www.investors.com/\" target=\"_blank\" rel=\"noopener\"><b><i><span style=\"color: windowtext;\">Investor’s Business Daily</span></i></b></a><b><i><u>:</u></i></b> If you’re looking for business news, <i>Investor’s Business Daily</i> contains everything from business trends to economic reports. The site also contains a sophisticated stock charting feature that will tell you what a stock’s price was in the past. There’s also a Stock Checkup, which tells you how a stock measures up on a number of technical and fundamental gauges.</p>\n</li>\n<li>\n<p class=\"first-para\"><b><a href=\"https://www.msn.com/\" target=\"_blank\" rel=\"noopener\">MSN Money</a>:</b> If you’re trying to find stocks that meet certain fundamental criteria, moneycentral.msn.com has a powerful screening tool. You can tell the system what traits you’re looking for, and it returns a list of all the stocks and companies that meet your criteria.</p>\n</li>\n<li>\n<p class=\"first-para\"><b><a href=\"http://Morningstar.com\" target=\"_blank\" rel=\"noopener\">Morningstar</a>:</b> Morningstar is best known as being a research firm that tracks mutual funds. But Morningstar.com contains quite a bit of information on stocks, including fundamental data. It’s also interesting to look up mutual funds and see which stocks they own, especially if the funds have skilled fundamental analysts.</p>\n</li>\n</ul>\n"}],"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0},"sponsorAd":"","sponsorEbookTitle":"","sponsorEbookLink":"","sponsorEbookImage":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Advance","lifeExpectancy":"Two years","lifeExpectancySetFrom":"2023-04-12T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":209357},{"headers":{"creationTime":"2016-03-27T16:58:22+00:00","modifiedTime":"2023-04-12T20:41:15+00:00","timestamp":"2023-04-12T21:01:03+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34288"},"slug":"investing","categoryId":34288},{"name":"Investment Vehicles","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34290"},"slug":"investment-vehicles","categoryId":34290},{"name":"Stocks","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34298"},"slug":"stocks","categoryId":34298}],"title":"Stock Investing For Canadians For Dummies Cheat Sheet","strippedTitle":"stock investing for canadians for dummies cheat sheet","slug":"stock-investing-for-canadians-for-dummies-cheat-sheet","canonicalUrl":"","seo":{"metaDescription":"Quick introduction to stock investing in Canada, including some essential resources and financial measures.","noIndex":0,"noFollow":0},"content":"Stock investing can be exciting, but it shouldn’t be a rollercoaster ride for Canadian investors. 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Investing For Canadians For Dummies, 6th Edition","testBankPinActivationLink":"","bookOutOfPrint":true,"authorsInfo":"<p><b><b data-author-id=\"34409\">Andrew Dagys</b></b> is a professional accountant and the bestselling author of over a dozen books on investing, financial planning, and technology.</p>","authors":[{"authorId":34409,"name":"Andrew Dagys","slug":"andrew-dagys","description":"<b>Andrew Dagys</b> is a professional accountant and the bestselling author of over a dozen books on investing, financial planning, and technology.","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/34409"}}],"_links":{"self":"https://dummies-api.dummies.com/v2/books/"}},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = 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Canada","slug":"the-ten-most-important-points-about-stock-investing-in-canada","categoryList":[],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/195563"}},{"articleId":195564,"title":"Mandatory Reading List for Canadian Stock Investors","slug":"mandatory-reading-list-for-canadian-stock-investors","categoryList":[],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/195564"}},{"articleId":195561,"title":"Top Ten Web Sites for Canadian Stock Investors","slug":"top-ten-web-sites-for-canadian-stock-investors","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/195561"}},{"articleId":195560,"title":"Company Data Every Stock Investor Should Examine","slug":"company-data-every-stock-investor-should-examine","categoryList":["business-careers-money","personal-finance","investing","investment-vehicles","stocks"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/195560"}},{"articleId":195509,"title":"The Best Financial Measures for Stock Investing","slug":"the-best-financial-measures-for-stock-investing","categoryList":[],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/195509"}}],"content":[{"title":"The ten most important points about stock investing in Canada","thumb":null,"image":null,"content":"<p>Stock investing is a great way for Canadians to build wealth, but it can have its pitfalls. This list spells out the essentials every stock investor should remember.</p>\n<ul class=\"level-one\">\n<li>\n<p class=\"first-para\">You’re not buying a stock; you’re buying a company.</p>\n</li>\n<li>\n<p class=\"first-para\">The primary reason you invest in a stock is because the company is making a profit.</p>\n</li>\n<li>\n<p class=\"first-para\">If you buy a stock when the company isn’t making a profit, you’re not investing — you’re speculating.</p>\n</li>\n<li>\n<p class=\"first-para\">A stock (or stocks in general) should never represent 100 percent of your assets.</p>\n</li>\n<li>\n<p class=\"first-para\">In some cases (such as a severe bear market), stocks aren’t a good investment at all.</p>\n</li>\n<li>\n<p class=\"first-para\">A stock’s price is dependent on the company, which in turn is dependent on its environment, which includes its customer base, its industry, the general economy, and the political climate.</p>\n</li>\n<li>\n<p class=\"first-para\">Your common sense and logic can be just as important in choosing a good stock as the advice of any investment expert.</p>\n</li>\n<li>\n<p class=\"first-para\">Always have well-reasoned answers to questions such as “Why are you investing in stocks?” and “Why are you investing in a particular stock?”</p>\n</li>\n<li>\n<p class=\"first-para\">If you have no idea about the prospects of a company (and sometimes even if you think you do), always use stop-loss orders.</p>\n</li>\n<li>\n<p class=\"first-para\">Even if your philosophy is to buy and hold for the long term, continue to monitor your stocks and consider selling them if they’re not appreciating or if general economic conditions have changed.</p>\n</li>\n</ul>\n"},{"title":"Mandatory reading list for Canadian stock investors","thumb":null,"image":null,"content":"<p>With so much information on newsstands and in your local library, it’s hard to know what are the best sources for stock investing information in Canada. This handy list tells you the five top resources you should consult as a stock investor:</p>\n<ul class=\"level-one\">\n<li>\n<p class=\"first-para\">The company’s annual report, including its financial statements</p>\n</li>\n<li>\n<p class=\"first-para\">The reports that the company files with Canadian and U.S. securities regulators</p>\n</li>\n<li>\n<p class=\"first-para\"><i>Investor’s Digest of Canada</i></p>\n</li>\n<li>\n<p class=\"first-para\"><i>Investor’s Business Daily</i></p>\n</li>\n<li>\n<p class=\"first-para\"><i>The Globe and Mail </i>and<i> National Post</i></p>\n</li>\n</ul>\n"},{"title":"Top ten websites for Canadian stock investors","thumb":null,"image":null,"content":"<p>The web is full of sites promising great stock investing information, but who can you trust? Here are ten sites that offer Canadian stock investors reliable, trustworthy stock investing news and commentary.</p>\n<ul class=\"level-one\">\n<li>\n<p class=\"first-para\"><a href=\"http://www.adviceforinvestors.com\" target=\"_blank\" rel=\"noopener\">Advice for Investors</a></p>\n</li>\n<li>\n<p class=\"first-para\"><a href=\"http://www.bloomberg.com\" target=\"_blank\" rel=\"noopener\">Bloomberg.com</a></p>\n</li>\n<li>\n<p class=\"first-para\"><a href=\"http://www.csi.ca\" target=\"_blank\" rel=\"noopener\">Canadian Securities Institute</a></p>\n</li>\n<li>\n<p class=\"first-para\"><a href=\"https://canoe.com/category/business/\" target=\"_blank\" rel=\"noopener\">Canoe Money</a></p>\n</li>\n<li>\n<p class=\"first-para\"><a href=\"http://www.money.cnn.com\" target=\"_blank\" rel=\"noopener\">CNNMoney.com</a></p>\n</li>\n<li>\n<p class=\"first-para\"><a href=\"http://www.newswire.ca\" target=\"_blank\" rel=\"noopener\">CNW Group</a></p>\n</li>\n<li>\n<p class=\"first-para\"><a href=\"http://www.marketwatch.com\" target=\"_blank\" rel=\"noopener\">MarketWatch</a></p>\n</li>\n<li>\n<p class=\"first-para\"><a href=\"http://www.stockhouse.com\" target=\"_blank\" rel=\"noopener\">Stockhouse</a></p>\n</li>\n<li>\n<p class=\"first-para\"><a href=\"http://www.tmx.com\" target=\"_blank\" rel=\"noopener\">TMX Group</a></p>\n</li>\n<li>\n<p class=\"first-para\"><a href=\"http://www.finance.yahoo.com\" target=\"_blank\" rel=\"noopener\">Yahoo! Finance</a></p>\n</li>\n</ul>\n"},{"title":"Company data every stock investor should examine","thumb":null,"image":null,"content":"<p>Before you invest in a company’s stock, get a hold of its annual report and search out the following information. This data will let you know if a company’s stock is worth investing in.</p>\n<ul class=\"level-one\">\n<li>\n<p class=\"first-para\"><b>Cash flow:</b> The company should be a cash generator.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Debt: </b>The number should be lower than, or about the same as, the previous year’s.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Earnings:</b> The bottom line should be higher than the previous year’s.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Equity:</b> The number should be higher than the previous year’s.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Sales:</b> This top-line number should be higher than the previous year’s.</p>\n</li>\n</ul>\n"},{"title":"The best financial measures for stock investing","thumb":null,"image":null,"content":"<p>Financial ratios help investors find stocks that offer good value by giving numbers meaning and putting them into perspective. If you’re considering investing in a company’s stock, ensure that the company passes these ratio tests.</p>\n<ul class=\"level-one\">\n<li>\n<p class=\"first-para\"><b>Price-to-earnings (P/E) ratio:</b> For large-cap stocks, the ratio should be under 20. For all stocks (including growth, small-cap, and speculative issues), it shouldn’t exceed 40.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Price-to-sales (P/S) ratio:</b> This ratio should be as close to 1 as possible (or below 1).</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Return on equity (ROE):</b> The ROE should be going up by at least 10 percent.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Earnings growth:</b> Earnings should be at least 10 percent higher than in the year before. This rate should be maintained over several years.</p>\n</li>\n<li>\n<p class=\"first-para\"><b>Debt-to-asset ratio:</b> Debt should be 30 percent or less compared to assets.</p>\n</li>\n</ul>\n"}],"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0},"sponsorAd":"","sponsorEbookTitle":"","sponsorEbookLink":"","sponsorEbookImage":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Advance","lifeExpectancy":"Two years","lifeExpectancySetFrom":"2023-04-12T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":209426},{"headers":{"creationTime":"2020-12-17T03:36:00+00:00","modifiedTime":"2023-03-22T16:01:32+00:00","timestamp":"2023-03-22T18:01:02+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34288"},"slug":"investing","categoryId":34288},{"name":"Real Estate","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34299"},"slug":"real-estate","categoryId":34299}],"title":"Simple, Profitable Real Estate Investments","strippedTitle":"simple, profitable real estate investments","slug":"simple-profitable-real-estate-investments","canonicalUrl":"","seo":{"metaDescription":"Explore a couple of the simpler yet still profitable methods of investing in real estate, such as home ownership and real estate investment trusts.","noIndex":0,"noFollow":0},"content":"Investing in rental real estate that you’re responsible for can be a lot of work. Think about it this way: With rental properties, you have all the headaches of maintaining a property, including finding and dealing with tenants, without the benefits of living in and enjoying the property.\r\n<p class=\"article-tips tip\">Unless you’re extraordinarily interested in and motivated to own investment real estate, start with and perhaps limit yourself to a couple of the much simpler yet still profitable methods discussed here.</p>\r\n\r\n\r\n[caption id=\"attachment_274966\" align=\"alignnone\" width=\"556\"]<img class=\"size-full wp-image-274966\" src=\"https://www.dummies.com/wp-content/uploads/investing-real-estate.jpg\" alt=\"real estate investment\" width=\"556\" height=\"371\" /> © AlexMX / Shutterstock.com[/caption]\r\n<h2 id=\"tab1\" >Find a place to call home</h2>\r\nDuring your adult life, you need to put a roof over your head. You may be able to sponge off your folks or some other relative or friend for a number of years to cut costs and save money. If you’re content with this arrangement, you can minimize your housing costs and save more for a down payment and possibly toward other goals. Go for it, if your friend or relative will!\r\n\r\nBut what if neither you nor your loved ones are up for the challenge of cohabitating? For the long term, because you need a place to live, why not own real estate instead of renting it? Real estate is the only investment that you can live in or rent to produce income. You can’t live in a stock, bond, or mutual fund! Unless you expect to move within the next few years or live in an area where owning costs much more than renting, buying a place probably makes good long-term financial sense. In the long term, owning usually costs less than renting, and it allows you to build equity in an asset.\r\n<h2 id=\"tab2\" >Think carefully before converting your home into a rental</h2>\r\nIf you move into another home, turning your current home into a rental property may make sense. After all, it saves you the time and cost of finding a separate rental property.\r\n\r\nUnfortunately, many people hold on to their current home for the wrong reasons when they buy another. Homeowners often make this mistake when they must sell their homes in a depressed market (such as the one that existed in many areas in the late 2000s). Nobody likes to sell their home for less than they paid for it, so some owners hold on to their homes until prices recover.\r\n\r\nIf you plan to move and want to keep your current home as a long-term investment property, you can. But turning your home into a short-term rental is usually a bad move for the following reasons:\r\n<ul>\r\n \t<li>You may not want the responsibilities of a landlord, yet you force yourself into the landlord business when you convert your home into a rental.</li>\r\n \t<li>If the home eventually does rebound in value, you owe tax on the profit if your property is a rental when you sell it and you don’t buy another rental property. You can purchase another rental property through a 1031 exchange to defer paying taxes on your profit.</li>\r\n</ul>\r\n<h2 id=\"tab3\" >Real estate investment trusts</h2>\r\n<em>Real estate investment trusts</em> (REITs) are entities that generally invest in different types of property, such as shopping centers, apartments, and other rental buildings. For a fee, REIT managers identify and negotiate the purchase of properties that they believe are good investments, and then they manage these properties, including all tenant relations. Thus, REITs are a good way to invest in real estate if you don’t want the hassles and headaches that come with directly owning and managing rental property.\r\n\r\nSurprisingly, most books and blogs that focus on real estate <a href=\"https://www.dummies.com/personal-finance/investing/investing-for-dummies-cheat-sheet/\">investing</a> neglect REITs. Why? I’ve come to the conclusion that they overlook these entities for the following reasons:\r\n<ul>\r\n \t<li><strong>If you invest in real estate through REITs, you don’t need to read a long, complicated book on real estate investment or keep coming back to a blog.</strong> Therefore, books often focus on more complicated direct real estate investments (where you buy and own property yourself).</li>\r\n \t<li><strong>Real estate brokers write many of these books.</strong> Not surprisingly, the real estate investment strategies touted in these books include and advocate the use of such brokers. You can buy REITs without real estate brokers. Blogs and websites aren’t much better as they are often run by folks selling something else like a high-priced seminar or other direct investment “opportunity.”</li>\r\n \t<li><strong>A certain snobbishness prevails among people who consider themselves to be “serious” real estate investors.</strong> These folks thumb their noses at the benefit of REITs in an investment portfolio. One real estate writer/investor went so far as to say that REITs aren’t “real” real estate investments.</li>\r\n</ul>\r\nPlease. No, you can’t drive your friends by a REIT to show it off. But those who put their egos aside when making real estate investments are happy that they considered REITs, and have enjoyed annualized gains similar to stocks in general over the decades.\r\n\r\nYou can research and purchase shares in individual REITs, which trade as securities on the major stock exchanges. An even better approach is to buy a mutual fund or exchange-traded fund that invests in a diversified mixture of REITs.\r\n\r\nIn addition to providing you with a diversified, low-hassle real estate investment, REITs offer an additional advantage that traditional rental real estate doesn’t: You can easily invest in REITs through a retirement account (for example, an IRA). As with traditional real estate investments, you can even buy REITs, mutual fund REITs, and exchange-traded fund REITs with borrowed money. You can buy with 50 percent down, called <em>buying on margin,</em> when you purchase such investments through a non-retirement brokerage account.","description":"Investing in rental real estate that you’re responsible for can be a lot of work. Think about it this way: With rental properties, you have all the headaches of maintaining a property, including finding and dealing with tenants, without the benefits of living in and enjoying the property.\r\n<p class=\"article-tips tip\">Unless you’re extraordinarily interested in and motivated to own investment real estate, start with and perhaps limit yourself to a couple of the much simpler yet still profitable methods discussed here.</p>\r\n\r\n\r\n[caption id=\"attachment_274966\" align=\"alignnone\" width=\"556\"]<img class=\"size-full wp-image-274966\" src=\"https://www.dummies.com/wp-content/uploads/investing-real-estate.jpg\" alt=\"real estate investment\" width=\"556\" height=\"371\" /> © AlexMX / Shutterstock.com[/caption]\r\n<h2 id=\"tab1\" >Find a place to call home</h2>\r\nDuring your adult life, you need to put a roof over your head. You may be able to sponge off your folks or some other relative or friend for a number of years to cut costs and save money. If you’re content with this arrangement, you can minimize your housing costs and save more for a down payment and possibly toward other goals. Go for it, if your friend or relative will!\r\n\r\nBut what if neither you nor your loved ones are up for the challenge of cohabitating? For the long term, because you need a place to live, why not own real estate instead of renting it? Real estate is the only investment that you can live in or rent to produce income. You can’t live in a stock, bond, or mutual fund! Unless you expect to move within the next few years or live in an area where owning costs much more than renting, buying a place probably makes good long-term financial sense. In the long term, owning usually costs less than renting, and it allows you to build equity in an asset.\r\n<h2 id=\"tab2\" >Think carefully before converting your home into a rental</h2>\r\nIf you move into another home, turning your current home into a rental property may make sense. After all, it saves you the time and cost of finding a separate rental property.\r\n\r\nUnfortunately, many people hold on to their current home for the wrong reasons when they buy another. Homeowners often make this mistake when they must sell their homes in a depressed market (such as the one that existed in many areas in the late 2000s). Nobody likes to sell their home for less than they paid for it, so some owners hold on to their homes until prices recover.\r\n\r\nIf you plan to move and want to keep your current home as a long-term investment property, you can. But turning your home into a short-term rental is usually a bad move for the following reasons:\r\n<ul>\r\n \t<li>You may not want the responsibilities of a landlord, yet you force yourself into the landlord business when you convert your home into a rental.</li>\r\n \t<li>If the home eventually does rebound in value, you owe tax on the profit if your property is a rental when you sell it and you don’t buy another rental property. You can purchase another rental property through a 1031 exchange to defer paying taxes on your profit.</li>\r\n</ul>\r\n<h2 id=\"tab3\" >Real estate investment trusts</h2>\r\n<em>Real estate investment trusts</em> (REITs) are entities that generally invest in different types of property, such as shopping centers, apartments, and other rental buildings. For a fee, REIT managers identify and negotiate the purchase of properties that they believe are good investments, and then they manage these properties, including all tenant relations. Thus, REITs are a good way to invest in real estate if you don’t want the hassles and headaches that come with directly owning and managing rental property.\r\n\r\nSurprisingly, most books and blogs that focus on real estate <a href=\"https://www.dummies.com/personal-finance/investing/investing-for-dummies-cheat-sheet/\">investing</a> neglect REITs. Why? I’ve come to the conclusion that they overlook these entities for the following reasons:\r\n<ul>\r\n \t<li><strong>If you invest in real estate through REITs, you don’t need to read a long, complicated book on real estate investment or keep coming back to a blog.</strong> Therefore, books often focus on more complicated direct real estate investments (where you buy and own property yourself).</li>\r\n \t<li><strong>Real estate brokers write many of these books.</strong> Not surprisingly, the real estate investment strategies touted in these books include and advocate the use of such brokers. You can buy REITs without real estate brokers. Blogs and websites aren’t much better as they are often run by folks selling something else like a high-priced seminar or other direct investment “opportunity.”</li>\r\n \t<li><strong>A certain snobbishness prevails among people who consider themselves to be “serious” real estate investors.</strong> These folks thumb their noses at the benefit of REITs in an investment portfolio. One real estate writer/investor went so far as to say that REITs aren’t “real” real estate investments.</li>\r\n</ul>\r\nPlease. No, you can’t drive your friends by a REIT to show it off. But those who put their egos aside when making real estate investments are happy that they considered REITs, and have enjoyed annualized gains similar to stocks in general over the decades.\r\n\r\nYou can research and purchase shares in individual REITs, which trade as securities on the major stock exchanges. An even better approach is to buy a mutual fund or exchange-traded fund that invests in a diversified mixture of REITs.\r\n\r\nIn addition to providing you with a diversified, low-hassle real estate investment, REITs offer an additional advantage that traditional rental real estate doesn’t: You can easily invest in REITs through a retirement account (for example, an IRA). As with traditional real estate investments, you can even buy REITs, mutual fund REITs, and exchange-traded fund REITs with borrowed money. You can buy with 50 percent down, called <em>buying on margin,</em> when you purchase such investments through a non-retirement brokerage account.","blurb":"","authors":[{"authorId":8975,"name":"Eric Tyson","slug":"eric-tyson","description":" <p><b>Eric Tyson</B> is the best-selling author of <i>Personal Finance For Dummies, Investing For Dummies,</i> and co-author of <i>Real Estate Investing For Dummies </i>and <i>Taxes For Dummies.</i> Tyson is a nationally recognized personal finance counselor, writer, and lecturer.</p> ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/8975"}}],"primaryCategoryTaxonomy":{"categoryId":34299,"title":"Real Estate","slug":"real-estate","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34299"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[{"label":"Find a place to call home","target":"#tab1"},{"label":"Think carefully before converting your home into a rental","target":"#tab2"},{"label":"Real estate investment trusts","target":"#tab3"}],"relatedArticles":{"fromBook":[],"fromCategory":[{"articleId":296220,"title":"Real Estate Investing All-in-One For Dummies Cheat Sheet","slug":"real-estate-investing-all-in-one-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","investing","real-estate"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/296220"}},{"articleId":291208,"title":"Foreclosure Investing For Dummies Cheat Sheet","slug":"foreclosure-investing-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","investing","real-estate"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/291208"}},{"articleId":274970,"title":"How Home Ownership Can Help You Achieve Financial Goals","slug":"how-home-ownership-can-help-you-achieve-financial-goals","categoryList":["business-careers-money","personal-finance","investing","real-estate"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/274970"}},{"articleId":266690,"title":"Public and Private Real Estate Investment Trusts","slug":"public-and-private-real-estate-investment-trusts","categoryList":["business-careers-money","personal-finance","investing","real-estate"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266690"}},{"articleId":266683,"title":"How to Qualify Property Inspectors for Real Estate Investments","slug":"how-to-qualify-property-inspectors-for-real-estate-investments","categoryList":["business-careers-money","personal-finance","investing","real-estate"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266683"}}]},"hasRelatedBookFromSearch":false,"relatedBook":{"bookId":0,"slug":null,"isbn":null,"categoryList":null,"amazon":null,"image":null,"title":null,"testBankPinActivationLink":null,"bookOutOfPrint":false,"authorsInfo":null,"authors":null,"_links":null},"collections":[],"articleAds":{"footerAd":"<div class=\"du-ad-region row\" id=\"article_page_adhesion_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_adhesion_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;real-estate&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[null]}]\" id=\"du-slot-641b425eeb1eb\"></div></div>","rightAd":"<div class=\"du-ad-region row\" id=\"article_page_right_ad\"><div class=\"du-ad-unit col-md-12\" data-slot-id=\"article_page_right_ad\" data-refreshed=\"false\" \r\n data-target = \"[{&quot;key&quot;:&quot;cat&quot;,&quot;values&quot;:[&quot;business-careers-money&quot;,&quot;personal-finance&quot;,&quot;investing&quot;,&quot;real-estate&quot;]},{&quot;key&quot;:&quot;isbn&quot;,&quot;values&quot;:[null]}]\" id=\"du-slot-641b425eeb95b\"></div></div>"},"articleType":{"articleType":"Articles","articleList":null,"content":null,"videoInfo":{"videoId":null,"name":null,"accountId":null,"playerId":null,"thumbnailUrl":null,"description":null,"uploadDate":null}},"sponsorship":{"sponsorshipPage":false,"backgroundImage":{"src":null,"width":0,"height":0},"brandingLine":"","brandingLink":"","brandingLogo":{"src":null,"width":0,"height":0},"sponsorAd":"","sponsorEbookTitle":"","sponsorEbookLink":"","sponsorEbookImage":{"src":null,"width":0,"height":0}},"primaryLearningPath":"Explore","lifeExpectancy":"Two years","lifeExpectancySetFrom":"2023-03-22T00:00:00+00:00","dummiesForKids":"no","sponsoredContent":"no","adInfo":"","adPairKey":[]},"status":"publish","visibility":"public","articleId":274965},{"headers":{"creationTime":"2020-12-17T03:55:59+00:00","modifiedTime":"2023-03-22T15:33:23+00:00","timestamp":"2023-03-22T18:01:02+00:00"},"data":{"breadcrumbs":[{"name":"Business, Careers, & Money","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34224"},"slug":"business-careers-money","categoryId":34224},{"name":"Personal Finance","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34273"},"slug":"personal-finance","categoryId":34273},{"name":"Investing","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34288"},"slug":"investing","categoryId":34288},{"name":"Real Estate","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34299"},"slug":"real-estate","categoryId":34299}],"title":"How Home Ownership Can Help You Achieve Financial Goals","strippedTitle":"how home ownership can help you achieve financial goals","slug":"how-home-ownership-can-help-you-achieve-financial-goals","canonicalUrl":"","seo":{"metaDescription":"Home ownership can help you accomplish important financial goals: retiring, running a small business, and pursuing higher education.","noIndex":0,"noFollow":0},"content":"Even though your home consumes a lot of dough (mortgage payments, property taxes, insurance, maintenance, and so on) while you own it, it can help you accomplish important financial goals:\r\n<ul>\r\n \t<li><strong>Retiring:</strong> By the time you hit your 50s and 60s, the size of your monthly mortgage payment, relative to your income and assets, should start to look small or nonexistent. Lowered housing costs can help you afford to retire or cut back from full-time work. Some people choose to sell their homes and buy less-costly ones or to rent out the homes and live on some or all of the cash in retirement. Other homeowners enhance their retirement income by taking out a reverse mortgage to tap the equity that they’ve built up in their properties.</li>\r\n \t<li><strong>Pursuing your small-business dreams:</strong> Running your own business can be a source of great satisfaction. Financial barriers, however, prevent many people from pulling the plug on a regular job and taking the entrepreneurial plunge. You may be able to borrow against the equity that you’ve built up in your home to get the cash you need to start your own business. Depending on what type of business you have in mind, you may even be able to run your enterprise from your home.</li>\r\n \t<li><strong>Financing college/higher education:</strong> It may seem like only yesterday that your kids were born, but soon enough they’ll be ready for an expensive four-year undertaking: college. Of course, there are alternatives. Borrowing against the equity in your home is a viable way to help pay for your kids’ higher-education costs.</li>\r\n</ul>\r\nPerhaps you won’t use your home’s equity for retirement, a small business, educational expenses, or other important financial goals. But even if you decide to pass your home on to your children, a charity, or a long-lost relative, it’s still a valuable asset and a worthwhile <a href=\"https://www.dummies.com/personal-finance/investing/investing-for-dummies-cheat-sheet/\">investment</a>.\r\n\r\nThe decision of if and when to buy a home can be complex. Money matters, but so do personal and emotional issues. Buying a home is a big deal — you’re settling down. Can you really see yourself coming home to this same place day after day, year after year? Of course, you can always move, but doing so, especially within just a few years of purchasing the home, can be costly and cumbersome, and now you’ve got a financial obligation to deal with.\r\n<h2 id=\"tab1\" >The pros and cons of ownership</h2>\r\nSome people — particularly enthusiastic salespeople in the real estate business — believe everybody should own a home. You may hear them say things like “Buy a home for the tax breaks” or “Renting is like throwing your money away.”\r\n<p class=\"article-tips remember\">The bulk of home ownership costs — namely, mortgage interest and property taxes — are tax-deductible, subject to limitations. However, these tax breaks are already largely factored into the higher cost of owning a home. So, don’t buy a home just because of the tax breaks.</p>\r\nIf such tax breaks didn’t exist, housing prices would be lower because the effective cost of owning would be so much higher. I wouldn’t be put off by tax reform discussions that mention reducing or even eliminating home-buying tax breaks — the odds of such changes passing are slim to none.\r\n\r\nRenting isn’t necessarily equal to “throwing your money away.” In fact, renting can have a number of benefits, such as the following:\r\n<ul>\r\n \t<li><strong>In some communities, with a given type of property, renting is less costly than buying.</strong> Happy and successful renters I’ve seen include people who pay low rent, perhaps because they’ve made housing sacrifices. If you can sock away 10 percent or more of your earnings while renting, you’re probably well on your way to accomplishing your future financial goals.</li>\r\n \t<li><strong>You can save money and hopefully invest in other financial assets.</strong> Stocks, bonds, and mutual and exchange-traded funds are quite accessible and useful in retirement. Some long-term homeowners, by contrast, have a substantial portion of their wealth tied up in their homes. (<strong><em>Remember:</em></strong> Accessibility is a double-edged sword because it may tempt you as a cash-rich renter to blow the money in the short term.)</li>\r\n \t<li><strong>Renting has potential emotional and psychological rewards.</strong> The main reward is the not-so-inconsequential fact that you have more flexibility to pack up and move on. You may have a lease to fulfill, but you may be able to renegotiate it if you need to move on. As a homeowner, you have a major monthly payment to take care of. To some people, this responsibility feels like a financial ball and chain. After all, you have no guarantee that you can sell your home in a timely fashion or at the price you desire if you want to move.</li>\r\n</ul>\r\n<p class=\"article-tips warning\">Although renting has its benefits, renting has at least one big drawback: exposure to inflation. As the cost of living increases, your landlord can keep increasing your rent (unless you live in a rent-controlled unit). If you’re a homeowner, however, the big monthly expense of the mortgage payment doesn’t increase, assuming that you buy your home with a fixed-rate mortgage. (Your property taxes, homeowners insurance, and maintenance expenses are exposed to inflation, but these expenses are usually much smaller in comparison to your monthly mortgage payment or rent.)</p>\r\nHere’s a quick example to show you how inflation can work against you as a long-term renter. Suppose you’re comparing the costs of owning a home that costs $200,000 to renting a similar property for $1,000 a month. (If you’re in a high-cost urban area and these numbers seem low, please bear with me and focus on the general insights, which you can apply to higher-cost areas.)\r\n\r\nBuying at $200,000 sounds a lot more expensive than renting for $1,000, doesn’t it? But this isn’t an apples-to-apples comparison. You must compare the monthly cost of owning to the monthly cost of renting. You must also factor the tax benefits of home ownership in to your comparison so you compare the after-tax monthly cost of owning versus renting (mortgage interest on up to $750,000 of mortgage debt and property taxes up to $10,000 worth per year when combined with other state and local taxes are tax-deductible). The figure does just that over 30 years.\r\n\r\n[caption id=\"attachment_274971\" align=\"alignnone\" width=\"556\"]<img class=\"size-full wp-image-274971\" src=\"https://www.dummies.com/wp-content/uploads/investing-renting-costs.jpg\" alt=\"renting versus buying costs\" width=\"556\" height=\"268\" /> Because of inflation, renting is generally more costly in the long run.[/caption]\r\n\r\nAs you can see in Figure 10-1, although owning costs more in the early years, it should be less expensive in the long run. Renting is costlier in the long term because all your rental expenses increase with inflation. <strong><em>Note:</em></strong> I haven’t factored in the potential change in the value of your home over time. Over long periods of time, home prices tend to appreciate, which makes owning even more attractive.\r\n<p class=\"article-tips tech\">The example in Figure 10-1 assumes that you make a 20 percent down payment and take out a 4 percent fixed-rate mortgage to purchase the property. It also assumes that the rate of inflation of your homeowners’ insurance, property taxes, maintenance, and rent is 3 percent per year. I’ve assumed that the person is in a moderate federal income tax bracket of 24 percent and about half their mortgage interest and property taxes are effectively reducing their tax burden. In the absence of having enough such deductions to be able to itemize deductions, federal income tax filers now qualify for larger so-called standard deductions.</p>\r\n<p class=\"article-tips tech\">If inflation is lower, renting doesn’t necessarily become cheaper in the long term. In the absence of inflation, your rent should escalate less, but your home ownership expenses, which are subject to inflation (property taxes, maintenance, and insurance), should increase less, too. And with low inflation, you can probably refinance your mortgage at a lower interest rate, which reduces your monthly mortgage payments. With low or no inflation, owning can still cost less, but the savings versus renting usually aren’t as dramatic as when inflation is greater.</p>\r\n\r\n<h2 id=\"tab2\" >Recouping transaction costs</h2>\r\nFinancially speaking, I recommend that you wait to buy a home until you can see yourself staying put for a minimum of three years. Ideally, I’d like you to think that you have a good shot of staying in the home for five or more years. Why? Buying and selling a home cost big bucks, and you generally need at least five years of low appreciation to recoup your transaction costs. Some of the expenses you face when buying and selling a home include the following:\r\n<ul>\r\n \t<li><strong>Inspection fees:</strong> You shouldn’t buy a property without thoroughly checking it out, so you’ll incur inspection expenses. Good inspectors can help you identify problems with the plumbing, heating, and electrical systems. They also check out the foundation, roof, and so on. They can even tell you whether termites are living in the house. Property inspections typically range from a few hundred dollars up to $1,000+ for larger homes.</li>\r\n \t<li><strong>Loan costs:</strong> The costs of getting a mortgage include items such as the <em>points</em> (upfront interest that can run 1 to 2 percent of the loan amount), application and credit report fees, and appraisal fees.</li>\r\n \t<li><strong>Title insurance:</strong> When you buy a home, you and your lender need to protect yourselves against the chance — albeit small — that the property seller doesn’t actually legally own the home you’re buying. That’s where title insurance comes in — it protects you financially from unscrupulous sellers. Title insurance costs vary by area; 0.5 percent of the purchase price of the property is about average.</li>\r\n \t<li><strong>Moving costs:</strong> You can transport all of your furniture, clothing, and other personal belongings yourself, but your time is worth something, and your moving skills may be limited. Besides, do you want to end up in a hospital emergency room after being pinned at the bottom of a staircase by a runaway couch? Moving costs vary wildly, but you can count on spending hundreds to thousands of dollars. (You can get a ballpark idea of moving costs from a number of online calculators.)</li>\r\n \t<li><strong>Real estate agents’ commissions:</strong> A commission of 5 to 7 percent of the purchase price of most homes is paid to the real estate salespeople and the companies they work for. Higher priced homes generally qualify for lower commission rates.</li>\r\n</ul>\r\n<p class=\"article-tips remember\">On top of all these transaction costs of buying and then selling a home, you’ll also face maintenance expenses — for example, fixing leaky pipes and painting. To cover all the transaction and maintenance costs of home ownership, the value of your home needs to appreciate about 15 percent over the years that you own it for you to be as well off financially as if you had continued renting. Fifteen percent! If you need or want to move elsewhere in a few years, counting on that kind of appreciation in those few years is risky. If you happen to buy just before a sharp rise in housing prices, you may get this much appreciation in a short time. But you can’t count on this upswing — you’re more likely to lose money on such a short-term deal.</p>\r\nSome people invest in real estate even when they don’t expect to live in the home for long, and they may consider turning their home into a rental if they move within a few years. Doing so can work well financially in the long haul, but don’t underestimate the responsibilities that come with rental property.","description":"Even though your home consumes a lot of dough (mortgage payments, property taxes, insurance, maintenance, and so on) while you own it, it can help you accomplish important financial goals:\r\n<ul>\r\n \t<li><strong>Retiring:</strong> By the time you hit your 50s and 60s, the size of your monthly mortgage payment, relative to your income and assets, should start to look small or nonexistent. Lowered housing costs can help you afford to retire or cut back from full-time work. Some people choose to sell their homes and buy less-costly ones or to rent out the homes and live on some or all of the cash in retirement. Other homeowners enhance their retirement income by taking out a reverse mortgage to tap the equity that they’ve built up in their properties.</li>\r\n \t<li><strong>Pursuing your small-business dreams:</strong> Running your own business can be a source of great satisfaction. Financial barriers, however, prevent many people from pulling the plug on a regular job and taking the entrepreneurial plunge. You may be able to borrow against the equity that you’ve built up in your home to get the cash you need to start your own business. Depending on what type of business you have in mind, you may even be able to run your enterprise from your home.</li>\r\n \t<li><strong>Financing college/higher education:</strong> It may seem like only yesterday that your kids were born, but soon enough they’ll be ready for an expensive four-year undertaking: college. Of course, there are alternatives. Borrowing against the equity in your home is a viable way to help pay for your kids’ higher-education costs.</li>\r\n</ul>\r\nPerhaps you won’t use your home’s equity for retirement, a small business, educational expenses, or other important financial goals. But even if you decide to pass your home on to your children, a charity, or a long-lost relative, it’s still a valuable asset and a worthwhile <a href=\"https://www.dummies.com/personal-finance/investing/investing-for-dummies-cheat-sheet/\">investment</a>.\r\n\r\nThe decision of if and when to buy a home can be complex. Money matters, but so do personal and emotional issues. Buying a home is a big deal — you’re settling down. Can you really see yourself coming home to this same place day after day, year after year? Of course, you can always move, but doing so, especially within just a few years of purchasing the home, can be costly and cumbersome, and now you’ve got a financial obligation to deal with.\r\n<h2 id=\"tab1\" >The pros and cons of ownership</h2>\r\nSome people — particularly enthusiastic salespeople in the real estate business — believe everybody should own a home. You may hear them say things like “Buy a home for the tax breaks” or “Renting is like throwing your money away.”\r\n<p class=\"article-tips remember\">The bulk of home ownership costs — namely, mortgage interest and property taxes — are tax-deductible, subject to limitations. However, these tax breaks are already largely factored into the higher cost of owning a home. So, don’t buy a home just because of the tax breaks.</p>\r\nIf such tax breaks didn’t exist, housing prices would be lower because the effective cost of owning would be so much higher. I wouldn’t be put off by tax reform discussions that mention reducing or even eliminating home-buying tax breaks — the odds of such changes passing are slim to none.\r\n\r\nRenting isn’t necessarily equal to “throwing your money away.” In fact, renting can have a number of benefits, such as the following:\r\n<ul>\r\n \t<li><strong>In some communities, with a given type of property, renting is less costly than buying.</strong> Happy and successful renters I’ve seen include people who pay low rent, perhaps because they’ve made housing sacrifices. If you can sock away 10 percent or more of your earnings while renting, you’re probably well on your way to accomplishing your future financial goals.</li>\r\n \t<li><strong>You can save money and hopefully invest in other financial assets.</strong> Stocks, bonds, and mutual and exchange-traded funds are quite accessible and useful in retirement. Some long-term homeowners, by contrast, have a substantial portion of their wealth tied up in their homes. (<strong><em>Remember:</em></strong> Accessibility is a double-edged sword because it may tempt you as a cash-rich renter to blow the money in the short term.)</li>\r\n \t<li><strong>Renting has potential emotional and psychological rewards.</strong> The main reward is the not-so-inconsequential fact that you have more flexibility to pack up and move on. You may have a lease to fulfill, but you may be able to renegotiate it if you need to move on. As a homeowner, you have a major monthly payment to take care of. To some people, this responsibility feels like a financial ball and chain. After all, you have no guarantee that you can sell your home in a timely fashion or at the price you desire if you want to move.</li>\r\n</ul>\r\n<p class=\"article-tips warning\">Although renting has its benefits, renting has at least one big drawback: exposure to inflation. As the cost of living increases, your landlord can keep increasing your rent (unless you live in a rent-controlled unit). If you’re a homeowner, however, the big monthly expense of the mortgage payment doesn’t increase, assuming that you buy your home with a fixed-rate mortgage. (Your property taxes, homeowners insurance, and maintenance expenses are exposed to inflation, but these expenses are usually much smaller in comparison to your monthly mortgage payment or rent.)</p>\r\nHere’s a quick example to show you how inflation can work against you as a long-term renter. Suppose you’re comparing the costs of owning a home that costs $200,000 to renting a similar property for $1,000 a month. (If you’re in a high-cost urban area and these numbers seem low, please bear with me and focus on the general insights, which you can apply to higher-cost areas.)\r\n\r\nBuying at $200,000 sounds a lot more expensive than renting for $1,000, doesn’t it? But this isn’t an apples-to-apples comparison. You must compare the monthly cost of owning to the monthly cost of renting. You must also factor the tax benefits of home ownership in to your comparison so you compare the after-tax monthly cost of owning versus renting (mortgage interest on up to $750,000 of mortgage debt and property taxes up to $10,000 worth per year when combined with other state and local taxes are tax-deductible). The figure does just that over 30 years.\r\n\r\n[caption id=\"attachment_274971\" align=\"alignnone\" width=\"556\"]<img class=\"size-full wp-image-274971\" src=\"https://www.dummies.com/wp-content/uploads/investing-renting-costs.jpg\" alt=\"renting versus buying costs\" width=\"556\" height=\"268\" /> Because of inflation, renting is generally more costly in the long run.[/caption]\r\n\r\nAs you can see in Figure 10-1, although owning costs more in the early years, it should be less expensive in the long run. Renting is costlier in the long term because all your rental expenses increase with inflation. <strong><em>Note:</em></strong> I haven’t factored in the potential change in the value of your home over time. Over long periods of time, home prices tend to appreciate, which makes owning even more attractive.\r\n<p class=\"article-tips tech\">The example in Figure 10-1 assumes that you make a 20 percent down payment and take out a 4 percent fixed-rate mortgage to purchase the property. It also assumes that the rate of inflation of your homeowners’ insurance, property taxes, maintenance, and rent is 3 percent per year. I’ve assumed that the person is in a moderate federal income tax bracket of 24 percent and about half their mortgage interest and property taxes are effectively reducing their tax burden. In the absence of having enough such deductions to be able to itemize deductions, federal income tax filers now qualify for larger so-called standard deductions.</p>\r\n<p class=\"article-tips tech\">If inflation is lower, renting doesn’t necessarily become cheaper in the long term. In the absence of inflation, your rent should escalate less, but your home ownership expenses, which are subject to inflation (property taxes, maintenance, and insurance), should increase less, too. And with low inflation, you can probably refinance your mortgage at a lower interest rate, which reduces your monthly mortgage payments. With low or no inflation, owning can still cost less, but the savings versus renting usually aren’t as dramatic as when inflation is greater.</p>\r\n\r\n<h2 id=\"tab2\" >Recouping transaction costs</h2>\r\nFinancially speaking, I recommend that you wait to buy a home until you can see yourself staying put for a minimum of three years. Ideally, I’d like you to think that you have a good shot of staying in the home for five or more years. Why? Buying and selling a home cost big bucks, and you generally need at least five years of low appreciation to recoup your transaction costs. Some of the expenses you face when buying and selling a home include the following:\r\n<ul>\r\n \t<li><strong>Inspection fees:</strong> You shouldn’t buy a property without thoroughly checking it out, so you’ll incur inspection expenses. Good inspectors can help you identify problems with the plumbing, heating, and electrical systems. They also check out the foundation, roof, and so on. They can even tell you whether termites are living in the house. Property inspections typically range from a few hundred dollars up to $1,000+ for larger homes.</li>\r\n \t<li><strong>Loan costs:</strong> The costs of getting a mortgage include items such as the <em>points</em> (upfront interest that can run 1 to 2 percent of the loan amount), application and credit report fees, and appraisal fees.</li>\r\n \t<li><strong>Title insurance:</strong> When you buy a home, you and your lender need to protect yourselves against the chance — albeit small — that the property seller doesn’t actually legally own the home you’re buying. That’s where title insurance comes in — it protects you financially from unscrupulous sellers. Title insurance costs vary by area; 0.5 percent of the purchase price of the property is about average.</li>\r\n \t<li><strong>Moving costs:</strong> You can transport all of your furniture, clothing, and other personal belongings yourself, but your time is worth something, and your moving skills may be limited. Besides, do you want to end up in a hospital emergency room after being pinned at the bottom of a staircase by a runaway couch? Moving costs vary wildly, but you can count on spending hundreds to thousands of dollars. (You can get a ballpark idea of moving costs from a number of online calculators.)</li>\r\n \t<li><strong>Real estate agents’ commissions:</strong> A commission of 5 to 7 percent of the purchase price of most homes is paid to the real estate salespeople and the companies they work for. Higher priced homes generally qualify for lower commission rates.</li>\r\n</ul>\r\n<p class=\"article-tips remember\">On top of all these transaction costs of buying and then selling a home, you’ll also face maintenance expenses — for example, fixing leaky pipes and painting. To cover all the transaction and maintenance costs of home ownership, the value of your home needs to appreciate about 15 percent over the years that you own it for you to be as well off financially as if you had continued renting. Fifteen percent! If you need or want to move elsewhere in a few years, counting on that kind of appreciation in those few years is risky. If you happen to buy just before a sharp rise in housing prices, you may get this much appreciation in a short time. But you can’t count on this upswing — you’re more likely to lose money on such a short-term deal.</p>\r\nSome people invest in real estate even when they don’t expect to live in the home for long, and they may consider turning their home into a rental if they move within a few years. Doing so can work well financially in the long haul, but don’t underestimate the responsibilities that come with rental property.","blurb":"","authors":[{"authorId":8975,"name":"Eric Tyson","slug":"eric-tyson","description":" <p><b>Eric Tyson</B> is the best-selling author of <i>Personal Finance For Dummies, Investing For Dummies,</i> and co-author of <i>Real Estate Investing For Dummies </i>and <i>Taxes For Dummies.</i> Tyson is a nationally recognized personal finance counselor, writer, and lecturer.</p> ","hasArticle":false,"_links":{"self":"https://dummies-api.dummies.com/v2/authors/8975"}}],"primaryCategoryTaxonomy":{"categoryId":34299,"title":"Real Estate","slug":"real-estate","_links":{"self":"https://dummies-api.dummies.com/v2/categories/34299"}},"secondaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"tertiaryCategoryTaxonomy":{"categoryId":0,"title":null,"slug":null,"_links":null},"trendingArticles":null,"inThisArticle":[{"label":"The pros and cons of ownership","target":"#tab1"},{"label":"Recouping transaction costs","target":"#tab2"}],"relatedArticles":{"fromBook":[],"fromCategory":[{"articleId":296220,"title":"Real Estate Investing All-in-One For Dummies Cheat Sheet","slug":"real-estate-investing-all-in-one-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","investing","real-estate"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/296220"}},{"articleId":291208,"title":"Foreclosure Investing For Dummies Cheat Sheet","slug":"foreclosure-investing-for-dummies-cheat-sheet","categoryList":["business-careers-money","personal-finance","investing","real-estate"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/291208"}},{"articleId":274965,"title":"Simple, Profitable Real Estate Investments","slug":"simple-profitable-real-estate-investments","categoryList":["business-careers-money","personal-finance","investing","real-estate"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/274965"}},{"articleId":266690,"title":"Public and Private Real Estate Investment Trusts","slug":"public-and-private-real-estate-investment-trusts","categoryList":["business-careers-money","personal-finance","investing","real-estate"],"_links":{"self":"https://dummies-api.dummies.com/v2/articles/266690"}},{"articleId":266683,"title":"How to Qualify Property Inspectors for Real Estate 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General Investing The Difference Between Passive and Active Investors

Article / Updated 06-06-2023

Investing might not seem controversial, but it shouldn’t surprise you that anytime you’re talking about money, people have some strong opinions about the right way to do things. The first way investors categorize themselves is by whether they are passive or active. Because these two approaches are so different, the following information helps you think about what they are and which camp you see yourself in. How to know if you’re a passive investor Passive investors don’t try to beat the stock market. They merely try to keep up with it by owning all the stocks in an index. An index is a basket of stocks that mirrors the market. Passive investors are happy matching the market’s performance. You know you’re a passive investor if you like the following ideas: Not picking individual stocks: These investors buy large baskets of stocks that mirror the performance of popular stock indexes like the Dow Jones Industrial Average or the Standard & Poor’s 500 index so they don’t worry about whether a small upstart company they invested in will release its new product on time and whether it will be well received. Owning mutual and exchange-traded funds: Because passive investors aren’t looking for the next Microsoft, Google, or Apple, they buy mutual and exchange-traded funds that buy hundreds of stocks. (We cover mutual and exchange-traded funds in more detail in Book 5.) Reducing taxes: Passive investors tend to buy investments and forget about them until many years later when they need the money. This can be lucrative because by holding onto diversified investments for a long time and not selling them, passive investors can postpone when they have to pay capital gains taxes. Not stressing about stocks’ daily, monthly, or even annual movements: Passive investors tend to buy index or mutual funds and forget about them. They don’t need to sit in front of financial TV shows, surf countless financial websites, read magazines, or worry about where stocks are moving. They’re invested for the long term, and everything else is just noise to them. Sites for passive investors to start with One of the toughest things about being a passive investor is sitting still during a bull market when everyone else seems to be making more than you. Yes, you might be able to turn off the TV, but inevitably you’ll bump into someone who brags about his or her giant gains and laughs at you for being satisfied with 10 percent market returns. When that happens, it’s even more important to stick with your philosophy. Following the crowd at this moment undermines the value of your strategy. That’s why even passive investors are well served going to websites where other passive investors congregate: Bogleheads is an electronic water cooler for fans of Vanguard index funds and passive investors to meet, encourage, and advise each other. They call themselves Bogleheads in honor of the founder of Vanguard, John Bogle. The Arithmetic of Active Management is a reprint of an article by an early proponent of passive investing, William Sharpe, who explains why active investing can never win. Vanguard’s website contains many helpful stories about the power of index investing and offers them for free, even if you don’t have an account. How to know whether you’re an active investor Active investors almost feel sorry for passive investors. Why would anyone be satisfied just matching the stock market and not even try to do better? Active investors feel that if you’re smart enough and willing to spend time doing homework, you can exceed 10 percent annual returns. Active investors also find investing to be thrilling, almost like a hobby. Some active investors try to find undervalued stocks and hold them until they’re discovered by other investors. You’re an active investor if you Think long-term averages of stocks are meaningless: Active investors believe they can spot winning companies that no one knows about yet, buy their shares at just the right time, and sell them for a profit. Are willing to spend large amounts of time searching for stocks: These are the investors who sit in front of financial TV shows, analyze stocks that look undervalued, and do all sorts of prospecting trying to find gems. Believe you can hire mutual fund managers who can beat the market: Some active investors think that certain talented mutual fund managers are out there and that if they just give their money to those managers, they’ll win. Suspect certain types of stocks aren’t priced correctly and that many investors make bad decisions: Active investors believe they can outsmart the masses and routinely capitalize on the mistakes of the great unwashed. Understand the risks: Most active traders underperform index funds, some without even realizing it. Before deciding to be an active trader, be sure to test out your skills with online simulations, or make sure that you’re measuring your performance correctly. If you’re losing money picking stocks, stop doing it. Be sure to know how dangerous online investing can be when you’re trying to be an active investor by reading a warning from the Securities and Exchange Commission. Sites for the active investor to start with Ever hear of someone trying to learn a foreign language by moving to the country and picking it up through “immersion”? The idea is that by just being around the language, and through the necessity of buying food or finding the restroom, the person eventually becomes proficient. If you’re interested in active investing, you can do the same thing by hitting websites that are common hangouts for active investors. By lurking on these sites, you can pick up how these types of investors find stocks that interest them and trade on them. These sites can show you the great pains active investors go through in their attempt to beat the market. A few to start looking at include the following: TheStreet.com collects trading ideas and tips from writers mainly looking for quick-moving stocks and other investments. TradingMarkets explores the details of complicated trading philosophies. The site highlights stocks that have moved up or down by a large amount, which is usually something that catches the attention of traders. Seeking Alpha provides news and commentary designed for investors of all skill levels who are trying to beat the market.

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Real Estate How To Learn about International Real Estate

Article / Updated 06-06-2023

Knowledge is power, as the saying goes. But knowledge also is a tool — a tool for building wealth and personal freedom. A bit like a spanner or a wrench, only slightly more glamorous. In most professions, continual education is key to staying on top of your game. The people who progress well and succeed are the ones who are continually evolving. Real estate is no different, and if you want to become (and remain) a successful real estate investor, you need to invest time in your education and improvement. Even as your real estate portfolio becomes more established, never be fooled into thinking you know it all. You’ll be missing out on so many important opportunities to grow and learn. I love learning from those who know more than I do, whether that comes from networking, reading books, or wherever. Even if I only get one useful nugget from a book — a tidbit that changes my mind-set or improves the way I do something — it’s well worth my time. Tap into a wide variety of educational sources Well, real estate is a very accessible industry with little in the way of formal qualifications needed to succeed, so you’ll have to think outside the formal education box when looking at ways to continually learn and grow. Thankfully, these days it’s easier than ever to access information quickly and easily, often for free or extremely cheap. Your mission is to make like a sponge and soak up all that information. This may include Reading as many books as you can get your hands on about your chosen real estate strategy: If you struggle to find time to read, try listening to audiobooks in the car or while you’re at the gym. If you commute to work every day for 30 minutes each way that’s a potential hour of audiobook training time every day, which equates to 240 hours a year! It soon adds up… . Becoming a general business, entrepreneurship and self-help book junkie, like me: I love reading both the practical how-to-succeed-in-business types of books and the more mind-set/self-help kinds, and even autobiographies by business leaders and entrepreneurs. I find it particularly inspiring to read about how people became successful and their personal formula for success. You’ll be surprised how many similar traits successful people have — and you can learn these traits and techniques, so keep reading! Staying alert to potential new real estate strategies that are a good fit with your portfolio, skills, and passion. Keeping up to date on the latest technology developments, from social media platforms to productivity apps and software for managing your real estate investments: You don’t need to be a tech genius to thrive in real estate, but you don’t want to miss out on opportunities to connect with people more easily and streamline your processes. Harnessing the wealth of information available for free online by joining property forums, delving through relevant thread archives on forums, signing up for relevant industry newsletters, and subscribing to blogs. Attending education seminars held by property investment and development companies: These seminars often free to attend because the goal of the seminar is usually to sell you a product or investment. So, although I wholeheartedly encourage you to tap into these free sources of education, never buy anything on the day. Always go away and do your homework after the seminar because there are plenty of paid courses not worth the paper they’re printed on. Signing up for online real estate and business courses, such as those available through Udemy and Coursera. Attending big annual property shows and exhibitions: These shows provide fantastic educational and networking opportunities and are a great way to immerse yourself in the market and to learn what others are doing. Being open to new mind-set-related, self-help techniques and approaches (for example, positive affirmations, visualization, the law of attraction, and meditation). Taking the time to build mind-set-related, self-help techniques into your daily routine: As in any industry, there are operators out there looking to make a quick buck from inexperienced real estate investors who are keen to learn. So, don’t automatically believe everything you’re told by someone in a seminar where the end goal is to sell you something. Soak up their information; then assess that information against other sources as well. If multiple different sources are telling you that Morocco is a great place to invest, that’s very different from one guy pushing Moroccan investments at a seminar. Take time for education before you put your real estate investment money on the line Although continual education is an important part of success, take the time to immerse yourself in real estate and learn as much as you can before you embark on your first investment. Learning as you go is great, but mistakes in your early days can be costly. Immerse yourself in property education for at least six months before you put your money on the line with an investment. Why not set yourself some education targets to hit before you start seriously scouting for investment opportunities? For example, you can set yourself a target of reading one inspirational book a month, attending six property shows this year, and participating in property forums once or twice a week.

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Real Estate How to Vet Property Inspectors for Real Estate Investments

Article / Updated 06-06-2023

Many real estate investors pick inspectors as an afterthought or simply take the recommendation of their real estate agent. But inspect the property inspectors before you hire one. As with other service professionals, interview a few inspectors before making your selection. You may find that they don’t all share the same experience, qualifications, and ethical standards. For example, don’t hire an inspector who hesitates or refuses to allow you to be present during the inspection or won’t review the findings with you upon completion of the inspection. The inspection is actually a unique opportunity for most property owners and, because you’re paying, we strongly recommend that you join the inspector while he’s assessing your proposed purchase. What you learn can be invaluable and may pay dividends throughout your entire ownership. When an unscrupulous contractor later tries to tell you that you need to completely replumb your property, you can recall that your property inspection revealed only isolated problems that can be resolved inexpensively. (Of course, inspectors, especially ones who aren’t good, can make mistakes, so you should also dig into discrepancies raised by different real estate–related people. In other words, get a second opinion.) About half of the states now have a license or certification requirement, whereas a few only have trade practice guidelines. This regulation is all relatively new because in 2000 virtually no governmental licensing or supervision of inspectors existed. Regardless of whether your state has strict licensing or certification requirements, every real estate investor needs to look out for her own interests and look for telltale signs of potential problems. Red flags include inspectors who are affiliated with a contractor, offer a special discount if you call who they recommend, or credit their inspection fee toward work. Only consider full-time, professional inspectors. Hire an inspector who performs at least 100 comprehensive inspections per year and carries errors and omissions insurance. Such coverage isn’t cheap and is another key indicator that the person is working full-time in the field and is participating in ongoing continuing education. Many inspectors are licensed general contractors, but not all home inspectors have designations or credentials specifically relating to inspecting real estate. One of the best certifying trade associations for professional property inspectors is the American Society of Home Inspectors (ASHI), which was founded in 1976. In addition to home inspections, many ASHI members are qualified and experienced enough to assist you with your due diligence physical or structural exterior and interior inspection of multifamily residential properties and all types of commercial properties. You can find certified inspectors and more info about the inspection process including tips and checklists at the ASHI website. Some individuals or companies adopt names that at first glance may indicate adherence to certain professional practices. For example, a fictitious but potentially misleading name is “Professional Property Inspection Association.” Do some research to find the best state or regional association and one whose qualified members adopt a code of ethics. For example, in California, the California Real Estate Inspection Association is the group that offers education and designations for real estate inspectors. Review a copy of inspectors’ résumés to see what certifications and licenses they hold. A general contractor’s license and certification as a property inspector are important, but also find out whether they’ve had any specialized training and whether they hold any specific sublicenses in areas such as roofing, electrical, or plumbing. These can be particularly important if your proposed property has evidence of potential problems in any of these areas. For example, if a property has a history of roofing or moisture intrusion problems, an inspector who’s a general contractor and roofer is an extra plus. The inspection report must be written. To avoid surprises, request a sample of one of the recent inspection reports that has been prepared for a comparable property. This simple request may eliminate several potential inspectors but is essential so that you can see whether an inspector is qualified and how detailed a report he will prepare for you. Check out the following figures for a sample interior inspection checklist. Source: Robert S. Griswold Sample interior unit inspection checklist (page 2 of 2). The advent of digital photography is a boon to property inspectors and makes their sometimes mundane and difficult-to-understand reports come to life. Select a technologically savvy inspector and require her to electronically send you her report, including digital photos documenting all the conditions noted. Recently, some inspectors have begun using advanced, non-invasive technology via an infrared or thermal imaging camera to produce images of heat radiation and identify energy efficiency concerns and electrical issues, as well as moisture intrusion scans inside walls or around plumbing fixtures. With the report in the electronic realm, it’s a simple process to email this information as needed. Although the cost of the inspection should be set and determined in advance, the price should be a secondary concern because inspection fees often pay for themselves. Just like many other professional services, there is a direct correlation between the pricing of your inspection and the amount of time the inspector takes to conduct the inspection and then prepare the report. If the inspector only spends a couple of hours at your new 20-unit apartment building, the report will surely be insufficient and your money not well spent. Finally, require the finalists to provide the names and phone numbers of at least ten people who used the company’s services within the past six months. Randomly call and make sure that these clients were satisfied and that the inspector acted professionally and ethically.

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Precious Metals Different Styles of Precious Metals Investing

Article / Updated 04-25-2023

Before you start investing or trading in precious metals, you need to understand the concepts of saving, investing, trading, and speculating; otherwise, the financial pitfalls could be very great. The differences aren't just in where your money is but also why and in what manner. Right now, millions of people live with no savings and lots of debt, which means that they are speculating with their budgets; retirees are day-trading their portfolios; and financial advisors are telling people to move their money from savings accounts to stocks without looking at the appropriateness of what they're doing. Make sure you understand the following terms — knowing the difference is crucial to you in the world of precious metals: Saving: The classical definition of saving is "income that has not been spent," but the modern-day definition is money set aside in a savings account for a "rainy day" or emergency. Ideally, you should have at least three months' worth of gross living expenses sitting blandly in a savings account or money market fund. Although precious metals in the right venue are appropriate for most people, including savers, you need to have cash savings in addition to your precious metals investments. A good example of an appropriate savings venue in precious metals is buying physical gold and/or silver bullion coins as a long-term holding. Investing: Investing refers to the act of buying an asset that is meant to be held long-term (in years). The asset will always run into ups and downs, but as long as it's trending upward (a bull market), you'll be okay. Investing in precious metals may not be for everyone, but it is an appropriate consideration for many investment portfolios. The common stock of large or mid-size mining companies is a good example of an appropriate vehicle for investors. Trading: Trading is truly short-term in nature and is meant for those with steady nerves and a quick trigger finger. There are many "trading systems" out there, and this activity requires extensive knowledge of market behavior along with discipline and a definitive plan. The money employed should be considered risk capital and not money intended for an emergency fund, rent, or retirement. The venue could be mining stocks, but more likely it would be futures and/or options because they are faster-moving markets. Speculating: This can be likened to financial gambling. Speculating means making an educated guess about the direction of a particular asset's price move. Speculators look for big price moves to generate a large profit as quickly as possible, but also understand that it can be very risky and volatile. A speculator's appetite for greater potential profit coupled with increased risk is similar to the trader, but the time frame is different. Speculating can be either short-term or long-term. Your venue of choice could be stocks, but more likely, the stocks would typically be of smaller mining companies with greater price potential. Speculating is also done in futures and options.

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Stocks Strategies for Investing in Cannabis Stocks

Article / Updated 04-25-2023

Momentum investors (speculators) lean toward technical analysis instead of fundamental analysis when choosing which stocks to buy, when to buy, and when to sell. Investors who rely on technical analysis spend most of their time looking at charts to spot patterns in an attempt to predict the future movement of a stock’s price. Upward momentum With momentum investing, you basically want to buy stocks that show sustainable upward momentum and sell them before the price starts to trend downward. The key word here is sustainable, which means you’re looking for a pattern that you have reason to believe will continue for the foreseeable future. One way to identify a stock with sustainable upward momentum is to look at its 50-day and 100-day simple moving averages in relation to one another. A simple moving average (SMA) shows the change in a stock’s average price over a certain number of days. For example, to calculate the five-day SMA of a stock for a given day, you total the stock’s closing prices over the past five days and divide by five. To calculate the 50-day moving average, you total the stock’s closing prices over the past 50 days and divide by 50. To create an SMA chart, you calculate the SMA for the desired period (for example, for each of the past 50 days) and plot those points on a chart, as shown. You end up with a line or curve that smooths out the daily fluctuations in the share price (which reduces the “noise”) to make the stock’s overall momentum clearer and easier to visualize and understand. The good news is that you don’t have to calculate simple moving averages and chart them. Nearly every online broker features moving average charts as part of its service. I explained how to calculate the SMA and create a chart just so you would have a clearer understanding of how this investment strategy works. As a momentum investor, you look for times when the short-term upward trend is strong enough to trigger a positive shift in the long-term trend. The most common way to spot such a shift is to chart a stock’s 50-day and 100-day moving averages and look for points where the two lines cross. When the 50-day SMA line moves from below to above the 100-day SMA line (see the following figure), this is a sign that the short-term trend may be strong enough to trigger an upward shift in the long-term momentum — a buy signal. However, if you look at enough of these moving averages charts, you start to notice that this technique doesn’t always work. You’ll notice plenty of instances where the 50-day SMA line moves from below to above the 100-day SMA line that corresponds with a sell-off. Likewise, you’ll notice plenty of instances where the 50-day SMA line dives down below the 100-day SMA line corresponds to an upward shift in share price. In other words, don’t blindly follow this technique. Momentum investors may examine the SMA over longer periods or use other types of charts to gauge a stock’s momentum and identify buy and sell opportunities, but this basic method enables you to wrap your head around the concept and try it if you so desire. Be careful buying into an apparent rally, because short sellers can quickly inflate a stock’s price when they exit their positions in anticipation that the stock price will soon tank. Downward momentum After buying a cannabis stock with upward momentum, your next decision is when to sell it. At this point, monitoring the stock’s SMA is even more important, because at any time in the future, the trend can flip from upward to downward. You want to sell your stock as close to the stock’s peak as possible, and as you feel comfortable doing. As is commonly said among investors, “Pigs get fat, and hogs get slaughtered.” Don’t be too greedy when deciding the right time to sell. If you’re unsure whether a stock has peaked, consider cashing out your principle (the initial amount you invested) and riding to the top with your gains (the remaining shares). As you become more familiar with cannabis stocks, you may want to consider taking bigger risks. Deciding when and how much to sell depends on your personal risk tolerance and how much you can afford to and want to gamble. Now, instead of looking for points where the 50-day SMA moves from below to above the line for the 100-day SMA, you want to watch for when that 50-day line crosses down from above to below the 100-day line (see Figure 13-3). How far that 50-day line dives down before you pull the trigger is up to you, but if you want to remain true to this strategy, the sooner you sell, the better.

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ETFs ETFs For Canadians For Dummies Cheat Sheet

Cheat Sheet / Updated 04-13-2023

An exchange-traded fund (ETF) is something of a cross between an index mutual fund and a stock. It’s like a mutual fund but has some key differences you’ll want to be sure you understand. Here, you discover how to get some ETFs into your portfolio, how to choose smart ETFs, and how ETFs differ from mutual funds.

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General Investing Fundamental Analysis For Dummies Cheat Sheet

Cheat Sheet / Updated 04-12-2023

Make the most of fundamental analysis by getting familiar with financial statements and investment terms as well as knowing the best places to find fundamental data.

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Stocks Stock Investing For Canadians For Dummies Cheat Sheet

Cheat Sheet / Updated 04-12-2023

Stock investing can be exciting, but it shouldn’t be a rollercoaster ride for Canadian investors. If you know how to read company reports and what financial measures to review, you’re more likely to pick a winning stock. Staying up to date on market conditions ensures you’ll know when it’s best to buy or sell.

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Real Estate Simple, Profitable Real Estate Investments

Article / Updated 03-22-2023

Investing in rental real estate that you’re responsible for can be a lot of work. Think about it this way: With rental properties, you have all the headaches of maintaining a property, including finding and dealing with tenants, without the benefits of living in and enjoying the property. Unless you’re extraordinarily interested in and motivated to own investment real estate, start with and perhaps limit yourself to a couple of the much simpler yet still profitable methods discussed here. Find a place to call home During your adult life, you need to put a roof over your head. You may be able to sponge off your folks or some other relative or friend for a number of years to cut costs and save money. If you’re content with this arrangement, you can minimize your housing costs and save more for a down payment and possibly toward other goals. Go for it, if your friend or relative will! But what if neither you nor your loved ones are up for the challenge of cohabitating? For the long term, because you need a place to live, why not own real estate instead of renting it? Real estate is the only investment that you can live in or rent to produce income. You can’t live in a stock, bond, or mutual fund! Unless you expect to move within the next few years or live in an area where owning costs much more than renting, buying a place probably makes good long-term financial sense. In the long term, owning usually costs less than renting, and it allows you to build equity in an asset. Think carefully before converting your home into a rental If you move into another home, turning your current home into a rental property may make sense. After all, it saves you the time and cost of finding a separate rental property. Unfortunately, many people hold on to their current home for the wrong reasons when they buy another. Homeowners often make this mistake when they must sell their homes in a depressed market (such as the one that existed in many areas in the late 2000s). Nobody likes to sell their home for less than they paid for it, so some owners hold on to their homes until prices recover. If you plan to move and want to keep your current home as a long-term investment property, you can. But turning your home into a short-term rental is usually a bad move for the following reasons: You may not want the responsibilities of a landlord, yet you force yourself into the landlord business when you convert your home into a rental. If the home eventually does rebound in value, you owe tax on the profit if your property is a rental when you sell it and you don’t buy another rental property. You can purchase another rental property through a 1031 exchange to defer paying taxes on your profit. Real estate investment trusts Real estate investment trusts (REITs) are entities that generally invest in different types of property, such as shopping centers, apartments, and other rental buildings. For a fee, REIT managers identify and negotiate the purchase of properties that they believe are good investments, and then they manage these properties, including all tenant relations. Thus, REITs are a good way to invest in real estate if you don’t want the hassles and headaches that come with directly owning and managing rental property. Surprisingly, most books and blogs that focus on real estate investing neglect REITs. Why? I’ve come to the conclusion that they overlook these entities for the following reasons: If you invest in real estate through REITs, you don’t need to read a long, complicated book on real estate investment or keep coming back to a blog. Therefore, books often focus on more complicated direct real estate investments (where you buy and own property yourself). Real estate brokers write many of these books. Not surprisingly, the real estate investment strategies touted in these books include and advocate the use of such brokers. You can buy REITs without real estate brokers. Blogs and websites aren’t much better as they are often run by folks selling something else like a high-priced seminar or other direct investment “opportunity.” A certain snobbishness prevails among people who consider themselves to be “serious” real estate investors. These folks thumb their noses at the benefit of REITs in an investment portfolio. One real estate writer/investor went so far as to say that REITs aren’t “real” real estate investments. Please. No, you can’t drive your friends by a REIT to show it off. But those who put their egos aside when making real estate investments are happy that they considered REITs, and have enjoyed annualized gains similar to stocks in general over the decades. You can research and purchase shares in individual REITs, which trade as securities on the major stock exchanges. An even better approach is to buy a mutual fund or exchange-traded fund that invests in a diversified mixture of REITs. In addition to providing you with a diversified, low-hassle real estate investment, REITs offer an additional advantage that traditional rental real estate doesn’t: You can easily invest in REITs through a retirement account (for example, an IRA). As with traditional real estate investments, you can even buy REITs, mutual fund REITs, and exchange-traded fund REITs with borrowed money. You can buy with 50 percent down, called buying on margin, when you purchase such investments through a non-retirement brokerage account.

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Real Estate How Home Ownership Can Help You Achieve Financial Goals

Article / Updated 03-22-2023

Even though your home consumes a lot of dough (mortgage payments, property taxes, insurance, maintenance, and so on) while you own it, it can help you accomplish important financial goals: Retiring: By the time you hit your 50s and 60s, the size of your monthly mortgage payment, relative to your income and assets, should start to look small or nonexistent. Lowered housing costs can help you afford to retire or cut back from full-time work. Some people choose to sell their homes and buy less-costly ones or to rent out the homes and live on some or all of the cash in retirement. Other homeowners enhance their retirement income by taking out a reverse mortgage to tap the equity that they’ve built up in their properties. Pursuing your small-business dreams: Running your own business can be a source of great satisfaction. Financial barriers, however, prevent many people from pulling the plug on a regular job and taking the entrepreneurial plunge. You may be able to borrow against the equity that you’ve built up in your home to get the cash you need to start your own business. Depending on what type of business you have in mind, you may even be able to run your enterprise from your home. Financing college/higher education: It may seem like only yesterday that your kids were born, but soon enough they’ll be ready for an expensive four-year undertaking: college. Of course, there are alternatives. Borrowing against the equity in your home is a viable way to help pay for your kids’ higher-education costs. Perhaps you won’t use your home’s equity for retirement, a small business, educational expenses, or other important financial goals. But even if you decide to pass your home on to your children, a charity, or a long-lost relative, it’s still a valuable asset and a worthwhile investment. The decision of if and when to buy a home can be complex. Money matters, but so do personal and emotional issues. Buying a home is a big deal — you’re settling down. Can you really see yourself coming home to this same place day after day, year after year? Of course, you can always move, but doing so, especially within just a few years of purchasing the home, can be costly and cumbersome, and now you’ve got a financial obligation to deal with. The pros and cons of ownership Some people — particularly enthusiastic salespeople in the real estate business — believe everybody should own a home. You may hear them say things like “Buy a home for the tax breaks” or “Renting is like throwing your money away.” The bulk of home ownership costs — namely, mortgage interest and property taxes — are tax-deductible, subject to limitations. However, these tax breaks are already largely factored into the higher cost of owning a home. So, don’t buy a home just because of the tax breaks. If such tax breaks didn’t exist, housing prices would be lower because the effective cost of owning would be so much higher. I wouldn’t be put off by tax reform discussions that mention reducing or even eliminating home-buying tax breaks — the odds of such changes passing are slim to none. Renting isn’t necessarily equal to “throwing your money away.” In fact, renting can have a number of benefits, such as the following: In some communities, with a given type of property, renting is less costly than buying. Happy and successful renters I’ve seen include people who pay low rent, perhaps because they’ve made housing sacrifices. If you can sock away 10 percent or more of your earnings while renting, you’re probably well on your way to accomplishing your future financial goals. You can save money and hopefully invest in other financial assets. Stocks, bonds, and mutual and exchange-traded funds are quite accessible and useful in retirement. Some long-term homeowners, by contrast, have a substantial portion of their wealth tied up in their homes. (Remember: Accessibility is a double-edged sword because it may tempt you as a cash-rich renter to blow the money in the short term.) Renting has potential emotional and psychological rewards. The main reward is the not-so-inconsequential fact that you have more flexibility to pack up and move on. You may have a lease to fulfill, but you may be able to renegotiate it if you need to move on. As a homeowner, you have a major monthly payment to take care of. To some people, this responsibility feels like a financial ball and chain. After all, you have no guarantee that you can sell your home in a timely fashion or at the price you desire if you want to move. Although renting has its benefits, renting has at least one big drawback: exposure to inflation. As the cost of living increases, your landlord can keep increasing your rent (unless you live in a rent-controlled unit). If you’re a homeowner, however, the big monthly expense of the mortgage payment doesn’t increase, assuming that you buy your home with a fixed-rate mortgage. (Your property taxes, homeowners insurance, and maintenance expenses are exposed to inflation, but these expenses are usually much smaller in comparison to your monthly mortgage payment or rent.) Here’s a quick example to show you how inflation can work against you as a long-term renter. Suppose you’re comparing the costs of owning a home that costs $200,000 to renting a similar property for $1,000 a month. (If you’re in a high-cost urban area and these numbers seem low, please bear with me and focus on the general insights, which you can apply to higher-cost areas.) Buying at $200,000 sounds a lot more expensive than renting for $1,000, doesn’t it? But this isn’t an apples-to-apples comparison. You must compare the monthly cost of owning to the monthly cost of renting. You must also factor the tax benefits of home ownership in to your comparison so you compare the after-tax monthly cost of owning versus renting (mortgage interest on up to $750,000 of mortgage debt and property taxes up to $10,000 worth per year when combined with other state and local taxes are tax-deductible). The figure does just that over 30 years. As you can see in Figure 10-1, although owning costs more in the early years, it should be less expensive in the long run. Renting is costlier in the long term because all your rental expenses increase with inflation. Note: I haven’t factored in the potential change in the value of your home over time. Over long periods of time, home prices tend to appreciate, which makes owning even more attractive. The example in Figure 10-1 assumes that you make a 20 percent down payment and take out a 4 percent fixed-rate mortgage to purchase the property. It also assumes that the rate of inflation of your homeowners’ insurance, property taxes, maintenance, and rent is 3 percent per year. I’ve assumed that the person is in a moderate federal income tax bracket of 24 percent and about half their mortgage interest and property taxes are effectively reducing their tax burden. In the absence of having enough such deductions to be able to itemize deductions, federal income tax filers now qualify for larger so-called standard deductions. If inflation is lower, renting doesn’t necessarily become cheaper in the long term. In the absence of inflation, your rent should escalate less, but your home ownership expenses, which are subject to inflation (property taxes, maintenance, and insurance), should increase less, too. And with low inflation, you can probably refinance your mortgage at a lower interest rate, which reduces your monthly mortgage payments. With low or no inflation, owning can still cost less, but the savings versus renting usually aren’t as dramatic as when inflation is greater. Recouping transaction costs Financially speaking, I recommend that you wait to buy a home until you can see yourself staying put for a minimum of three years. Ideally, I’d like you to think that you have a good shot of staying in the home for five or more years. Why? Buying and selling a home cost big bucks, and you generally need at least five years of low appreciation to recoup your transaction costs. Some of the expenses you face when buying and selling a home include the following: Inspection fees: You shouldn’t buy a property without thoroughly checking it out, so you’ll incur inspection expenses. Good inspectors can help you identify problems with the plumbing, heating, and electrical systems. They also check out the foundation, roof, and so on. They can even tell you whether termites are living in the house. Property inspections typically range from a few hundred dollars up to $1,000+ for larger homes. Loan costs: The costs of getting a mortgage include items such as the points (upfront interest that can run 1 to 2 percent of the loan amount), application and credit report fees, and appraisal fees. Title insurance: When you buy a home, you and your lender need to protect yourselves against the chance — albeit small — that the property seller doesn’t actually legally own the home you’re buying. That’s where title insurance comes in — it protects you financially from unscrupulous sellers. Title insurance costs vary by area; 0.5 percent of the purchase price of the property is about average. Moving costs: You can transport all of your furniture, clothing, and other personal belongings yourself, but your time is worth something, and your moving skills may be limited. Besides, do you want to end up in a hospital emergency room after being pinned at the bottom of a staircase by a runaway couch? Moving costs vary wildly, but you can count on spending hundreds to thousands of dollars. (You can get a ballpark idea of moving costs from a number of online calculators.) Real estate agents’ commissions: A commission of 5 to 7 percent of the purchase price of most homes is paid to the real estate salespeople and the companies they work for. Higher priced homes generally qualify for lower commission rates. On top of all these transaction costs of buying and then selling a home, you’ll also face maintenance expenses — for example, fixing leaky pipes and painting. To cover all the transaction and maintenance costs of home ownership, the value of your home needs to appreciate about 15 percent over the years that you own it for you to be as well off financially as if you had continued renting. Fifteen percent! If you need or want to move elsewhere in a few years, counting on that kind of appreciation in those few years is risky. If you happen to buy just before a sharp rise in housing prices, you may get this much appreciation in a short time. But you can’t count on this upswing — you’re more likely to lose money on such a short-term deal. Some people invest in real estate even when they don’t expect to live in the home for long, and they may consider turning their home into a rental if they move within a few years. Doing so can work well financially in the long haul, but don’t underestimate the responsibilities that come with rental property.

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