Getting started in stock investing
Readers have spoken. The launch of the year-long, once-a-month Moneywise pretend portfolio project has generated interest and reader feedback.
We thank everyone who has taken time from their busy schedules to send commentary. The Moneywise mission has always been to provide useful, easy-to-understand information to help everyone become more financially successful.
Due to the volume of letters and time constraints, Moneywise apologises for not answering each and every query, promptly. When not possible for me to reply to each one personally, letter queries are answered in the Moneywise forum. We emphasise again that any individual-related personal data is always generalised to keep reader identity confidential.
Today, there are three queries for discussion.
Reader A wrote: “I enjoyed the last Moneywise article, very interesting. I did not understand a lot of the investing terms used, but would like more information on what they mean and where to learn more.”
There are numerous ways to learn about investing, products, and industry jargon (and here I apologise for using too much of that in last week’s article). The Bermuda Stock Exchange programme, listed in detail in Reader B’s query, is one source.
An incredibly current comprehensive global website is:
• Investopedia: Investing Essentials and much more, including cryptocurrency and other complex items, as well as featuring a stock market simulator. https://tinyurl.com/uvzejwu
• Also check out Investopedia Academy. Some free and some paid courses. https://academy.investopedia.com/
Not everyone wants to spend their time electronically hooked. Books, no matter what the younger generation espouses, are still in vogue, and two of my favourites are listed below. I own both of them.
Unfortunately, you may not be able to find them in local bookstores, but they can be ordered online.
However, being a thrift-shop devotee, I always try to purchase books second-hand because so often reference books are library editions that have barely seen a human touch.
Standards and Poor’s Guide to Money and Investing by Virginia B. Morris, $4.19 (before shipping to Bermuda) from thriftbooks.com and $1.55 from Amazon
This succinct book features clearly written definitions, vital facts, and straightforward language by transforming the complicated world of investing into understandable terms and concepts. It is perfect for anyone intimidated by financial jargon. It teaches you how to decipher the financial pages (NYSE and Nasdaq exchanges). Photographs, maps, flowcharts, tables, and figures effectively convey the meanings of key concepts. It is comprehensive and user-friendly using fact boxes and anecdotes that provide real-world examples.
Peter Lynch: Learn to Earn, a Beginner’s Guide to the Basics of Investing and Business, first published 1995 and still relevant today.
The book explains the basic principles of investing such that a high school goer or a person from the non-commerce background can easily understand.
You can get the book free, all 231 pages are downloadable in pdf format from Learn Market at https://tinyurl.com/ump5yz9
Reader B wrote: “I would like to invest in Bermuda companies and need your help to understand how to go about it.”
The Bermuda Stock Exchange, a highly sophisticated, globally recognised stock exchange, is an enthusiastic supporter of investing locally. This is the first place to go for local company information, incentives and enthusiasm about the local economy. Exploring their website, we see the following on their menu bar:
• A list of all domestic publicly traded main board, and small cap companies. https://www.bsx.com/comp_domestic_company.php
Each company’s financial particulars are detailed in great depth merely by clicking on the name, then drilling down to its sub-menu information.
You then have access to each company’s financial statements, both quarterly and annually, trading history, dividend participation, share pricing and market capitalisation, eg the first local company on the list, Argus Group Holdings Ltd, has a current market cap of $62 million plus.
• Other significant lists of investment products, both local and international firm registry.
The process on how to purchase local shares that is conducted by registered brokers, or trading members. A list of the five Bermuda financial institutions that offer dealing in local shares, namely Barrington Investments Ltd; Butterfield Securities (Bermuda) Ltd; Clarien BSX Services Ltd; LOM Financial (Bermuda) Limited; and HSBC Bank Bermuda Ltd.
• Own Your Share of Bermuda an Investor Education Guide is a unique summary guide in electronic flipbook format that includes:
— Introduction to Investing: Getting it Right
— Investment Products Summary
— Basic Investment Principles that encompass pages 8-12
— Page 13. How do you start, The first step in “owning your share of Bermuda” reviews your account opening and meeting your brokerage representative processes.
— Page 15. What can you buy? includes choices of the 13 publicly held companies’ shares of Bermuda that represent a number of different sectors: banks, consumer, insurance, transportation, media, utilities, real estate.
— a number of bond issues, and
— a selection of mutual funds
— Page 16. How Does it Work? takes you through the steps and transaction activity entailed in the share trading process.
— Page 17. Delineates what happens to your securities once you own them. Shares of a local company’s stock are generally no longer held in paper format, but on the electronic storage platform called the Bermuda Securities Depository.
Conservative investors may still wish to receive paper stock certificates. That service can be arranged, but safe storage is highly recommended. Don’t make the mistake of an elderly former client (now deceased) who put his certificates in a paper bag, then burnt them in the wood stove by mistake. Fortunately, his stocks’ ownership was listed on an US electronic exchange, and while it took tedious amounts of time along with burdens of proof, he was able to have the certificates reissued.
Reader C wrote: “Getting closer to retirement and would like to start an investment programme. What do you suggest?”
Regretfully, space does not suffice. Moneywise is constrained by the 1,000 words per article. So stay tuned to next week for the Retirement Investment Checklist and Planner.
• Martha Harris Myron CPA CFP JSM: Masters of Law — international tax and financial services. Dual citizen: Bermudian/US. Pondstraddler Life, financial perspectives for Bermuda islanders and their globally mobile connections on the Great Atlantic Pond. Finance columnist to The Royal Gazette, Bermuda. All proceeds earned from this column go to The Reading Clinic. Contact: firstname.lastname@example.org
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