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This year, most people who buy stock for the first time will do so online. This differs from the past, when you had to physically meet with a broker to open a stock account. While talking with the broker, he or she would ask a lot of questions about your investment goals and how long you planned to invest.

Opening an account was a bit daunting, and the process probably kept some people from doing it. But now you can open an account online and transfer money into it with just a few clicks. It is easy to do, and the paperwork is sent to your home for signing. Since getting an account is almost too easy, you might wonder if some people really shouldn’t participate in the stock market.

Initially, learning to buy stocks can be intimidating, but it is quite simple after you know the basics. The terminology may scare a new investor, and if you do not understand it, you may not progress beyond the first step. But since opening an account and buying stocks online eliminates the need to work with a broker in person, you don’t have to be embarrassed by a lack of knowledge.

Online information will give you all the knowledge needed to begin investing. You can still go to a stockbroker and ask for further guidance if you desire to become more knowledgeable about trading and the market.

The ease of pushing a button to buy stocks online makes it almost seem like betting. The stock market is designed to be for serious investing in America’s future, but today buying stocks may feel more like gambling. The case could be made that online transactions have made stock trading too easy, and that day trading has damaged the lives of many people.

Would you like to find out how to open a stock account? If you would you can take a look at my site The Stock Market For Dummies.

In part one of this series, I let you know some of the pros and cons of mutual funds. I wrote that there are many expenses that come with investing in a mutual fund, including the high price of management fees and brokerage fees that come with frequent trading. But, the fund manager is bound by a responsibility to find the best deals on commission for you that she or he can. The expertise of a fund manager can be quite helpful for beginners when they start to invest, too.

Also, a number of mutual funds offer more than one class of shares. The way it works is like this: every class invests in the same pool of securities and the investment objectives and policies are the same. But, every class has different shareholder services and distribution arrangements for different fees and expenses. So, if you pay more money for a higher class of share, you can expect different services, and better performance out of the mutual fund. This multi-class structure gives investors the capacity to pick their own fee that fits their investment goals best.

While all of these aspects of mutual funds are pros, critics return to the high cost of mutual funds as a big con. They are also quick to point out that the efficiency of mutual funds lack when compared to a simple index fund. An index fund will invest in companies that are part of major stock or bond indexes and therefore tries to profit from simply riding the market, while funds that are run by a manager attempt to outperform a relevant index through advanced stock picking techniques.

The assets of an index fund are configured to closely match the performance of a particular published index that exhibits positive trends. Due to the fact that there will be little changes associated with a stock index, an index fund manager makes fewer trades than an active fund manager. Because of this, the management fee will be much less, and because there are fewer trades, there will be lower trading expenses. In fact, mutual funds have fees that are usually four times as much as those charged by index funds.

Also, evidence proves that mutual funds typically don’t, in fact beat the market, and actually under-perform other portfolios with similar characteristics. One study illustrated that almost 1500 United States mutual funds underperformed the market in about half of the years between 1962 and 1992. What’s more, analysis shows that funds that did well in the past aren’t able to beat the market again in the future. And maybe what is worst is that even if your manager proves to be a dud, and your mutual fund doesn’t do well, you will be stuck with a premium in fees – and often a large tax bill. Ultimately, it is a decision you should make after long thought and weighing all of the pros and cons, and not one that you should take lightly if your money is important to you.

Mallory Megan works for Rapid Recovery Solution and writes articles on medical collection agencies.

If you were paying attention in your economics class, you might have heard the phrase “stocks and bonds” thrown around a few times. Stocks and bonds are both securities (a security is a negotiable “instrument” that represents financial value), and thus both stocks and bonds can be used to finance a company and company activities. However, there are major differences between stocks and bonds.

A bond can loosely be defined as a contract to repay borrowed money along with interest at set dates. An authorized issuer will owe holders a debt, and most of the time if you are issuing a bond you will have to pay interest and the principal at a later date. This later date is called maturity. So, you can see that a bond is much like a loan, the issuer is the borrower, the holder is the lender (the creditor) and the coupon is the interest. Bonds are repaid at fixed intervals over a period of time.

Stocks and bonds differ because stockholders share a fraction of ownership in the company, while bondholders are creditors to the company. Another way stocks and bonds are different is that bonds generally have a set time span in which the bond will mature, whereas stocks have the capacity to be outstanding indefinitely.

Bonds have be issued by credit institutions, companies, and public authorities. The most common way to issue bonds is through a process called underwriting. This is when one or more banks buys an entire issue of bonds from an issuer and re-sells them to investors. Professionals known as bookrunners arrange this deal, speaking directly with investors and advising the bond issuer about the price and timing of the bond issue.

All bonds have a number of common features. A bond will have what is called a nominal (principal or face) amount, which is the amount of money on which the issuer pays interest. Some bonds can be redeemed for a different amount than what they were issued for and might be linked to performance of certain assets like a stock index, foreign exchange or a fund. This can often result in an investor getting less or more than her original investment when the bond matures. To be continued in part two

Mallory Megan works for Rapid Recovery Solution and writes articles on commercial collection agencies.

In part one of my primer course on stocks, I wrote that businesses divide stocks into shares, and that each share represents a fraction of ownership. I told you that shares may come with various ownership rules, privileges, or share values. Also, I let you know about the two forms of stock: preferred stock and common stock. Now we’ll talk about shareholders.

A shareholder is a person or company that legally owns one or more shares of stock in a joint stock company. Shareholders get special privileges that depend on the class of the stock. Privileges include: the right to vote on matters like elections to the board of directors, the right to share in distributions of the company’s income, the right to buy new shares that are issued by the company, and the right to a company’s assets when a company liquidates. Directors and officers of a company are bound by fiduciary duties to act in the best interest of the shareholders.

The owners of a business might sell more shares to build further capital for investing in new projects for the business, or to reduce their holding so they have more capital freed for their own private use. When you purchase a share you are literally sharing in the ownership of the company, a portion of the decision making power, and potentially, a portion of the profits.

Because there could potentially be thousands of shareholders in a large publicly traded corporation, shareholders will use their shares as votes in the election of members of the board of directors of the company.

Usually, each share equals one vote. Corporations might issue different classes of shares though, which might have different voting rights. Because shares are proportional to votes, owning most of the shares permits other shareholders to be out voted, which is how original owners of a large business will usually still have control of the company. To Be Continued In Part Three.

Mallory Megan works for Rapid Recovery Solution and writes articles about credit collection agencies.

Stocks and bonds. Doubtlessly, you’ve heard of them, and if you have been reading my articles, you know what they are. If you haven’t, here is a quick update: stocks represent a fraction of ownership in a company, and a bond represents money that a company “borrowed” and has to pay back on set dates. You may have heard that bonds are “safer” to invest in than stocks, but is this true? How are bonds traded, and what are the differences between a stock market and a bond market? Hopefully, this article can put these questions to rest.

Unlike the stock market, bonds markets don’t generally have a centralized trading system. Instead, bonds will be traded in decentralized, dealer based over the counter markets. When an investor purchases or sells a bond, the counter party to the trade is usually a bank acting as a dealer. Another difference between bond markets and stock markets is that at times investors don’t pay broker’s fees to dealers with whom they buy or sell bonds. Instead, the dealers get their money by collecting the spread, which is the difference between the price at which the dealer buys a bond from one investor and the price at which he sells the same bond to another investor.

In terms of volatility, bonds are generally somewhat safer than stocks, particularly short and medium dated bonds, however the value of stocks can definitely vary. Bonds are liquid – it is pretty easy to sell a bond investment, and the safety of a fixed interest payment twice a year is attractive. Bondholders also enjoy certain legal protections: in the United States if a company goes bankrupt, its bondholders will be paid before stockholders because they are creditors.

But, bonds also come with their risks. Fixed rate bonds are subject to interest rate risk, which means that their market prices will shrink in value when the interest rates rise. Bonds can also be subject to other risk factors such as call and prepayment risk, reinvestment risk, event risk, liquidity risk, credit risk, inflation risk, yield curve risk, volatility risk and sovereign risk. Price changes in a bond can also affect mutual funds that hold these bonds immediately. If the value of the bonds in a trading portfolio has plummeted over the day, the value of the portfolio will also have fallen.

Finally, even though the money will go to them first before shareholders, in the case of bankruptcy there is a hierarchy of creditors that must be paid that bondholders are not on top of, so there is no guarantee of how much money will go to repay the bondholders. Bondholders have been known to lose some or all of their money when this happens.

Mallory Megan works for Rapid Recovery Solution and writes articles on national collection agencies.

A home loan is sometimes referred to as a mortgage. A home loan is used to purchase a home or property. It is paid in installments over a set period of time.

Essentially home loans are offered in four major types. The most popular, especially among home owners is a fixed rate home loan. A fixed rate loan, like it sounds, retains the same interest over the term of the loan. Fixed rate loans usually last between 15-30 years, are low risk, protected under inflation, and easier to budget.

Adjustable rate home loans, unlike fixed rate home loans, adjust the interest rate over an initial period (between a few months and few years). Adjustable interest rates begin high during the initial period and slowly reduce in rate.

Balloon home loans are based on a 30 years amortization schedule, but the entire home loan balance is due at the end of the loan?s term, which is between five or seven years. If you cannot pay the entire home loan balance at the end of the term, then you can elect to reset the home loan at the current interest rate.

A newer type of home loan is called a reverse mortgage. This appeals to older homeowners, especially those interested in supplementing their retirement savings. In a reverse mortgage, the home owner receives money instead of making a monthly payment. The reverse mortgage does not need to be repaid until the home is sold, the owner dies or the owner no longer uses the home as their primary residence. You must be 62 years old and living in the home as a primary residence in order to qualify for a reverse mortgage.

A down payment is required when getting a home loan. Depending on the type of home loan, the required down payment is usually between three percent and 20 percent of the home?s total cost. The buyer?s credit history, income and the home?s cost can also influence the amount of down payment required. Anyone who puts down less than 20 percent is required to carry private mortgage insurance (PMI) on their home loan. This protects the bank if the home owner defaults on the home loan.

The buyer will also have to pay closing costs on their home loan. The closing cost is between 3-7% of the total value plus taxes, financing, and other settlement costs. Negotiating with the lender may reduce the closing costs or you can request that the seller covers the closing costs.

Tom Martens is the content coordinator for South Arica?s leading Homeloans portal which amongst others offers Bond origination services for all major banks.

Buying a home is one of the biggest investments a person will ever make. That?s why you must take the time to shop for a home loan, do your research and make sure you find a home loan that suits your needs. You?ll want to use a qualified lender as well.

Buyers want flexibility and Nedbank can provide it. Nedbank is known for their flexible loan offers and personal customer service.

Nedbank home loans can be used to buy either an existing home or vacant land. Build the house of your dreams or move into one. Nedbank will finance between 70-100% of a vacant lot as well as cover 100% of the home?s value. A lot of this coverage falls under your credit history and the value of the property.

Nedbank offers both fixed and variable interest rate home loans, as well as Nedbank Accelerated Payments, which enable the buyer to pay off their home loan faster than what is agreed upon in the home loan contract. Talk about flexibility!

In order to qualify for a Nedbank home loan, you must be a South African resident with a good credit record. Also, minimum monthly income requirements exist. Before you ever think about apply for a home loan, make sure you check your credit report.

If high credit balances are lowering your score, pay down your balances before you apply. The higher your credit score, the better home loan terms will be offered to you. You also want to make sure you have two or three months? worth of mortgage payments in the bank. These are called reserves.

Buying a home means paperwork, too. You will need proof of identity, income verification, bank statements and the offer to purchase agreement. Make sure you have all the necessary documentation gathered before you apply for a home loan in order to speed up the process and not delay. A delay could cause you to lose out on your home purchase.

Once you get a home loan, you will have to make monthly installment payments on the loan. The monthly payment consists of capital, interest, home insurance premiums, an administrative fee and possibly a life insurance premium.

When you are ready to purchase a home, make sure you see a qualified lender first, as they can review your situation, answer any questions, and develop a home loan proposal to meet your specific needs.

Tom Martens is the content coordinator for South Arica?s leading Homeloans portal which amongst others offers Bond origination services for all major banks.