Step 1 online stock exchange Ask yourself which industries you would like to invest in (such as energy or cosmetics). To learn more about them, set up for each. surveillance software Step 2 purchase shares online Go to and find the forward price-to-earnings (P/E) ratio for each . This number is calculated by dividing the stock’s price by the predicted earnings per share for the fiscal year. (For example, if a stock is selling for $96 a share and its earnings per share are expected to be $8, then the forward P/E would be 12.) Typically, you want to invest in a company with a P/E of around 15. The higher the number, the more costly it is in relation to its earnings. But if most of the company’s competitors are trading at the same level, then it’s OK to buy the stock, because some sectors, like technology, tend to have higher P/Es overall. Step 3 You’ve probably narrowed down your list. Now check out each company’s annual report (often available on its website), which discloses the firm’s financial well-being. Find out (A) whether the net income increases each year and (B) whether the pays a dividend—a payment made by the to a shareholder. “It’s a bonus if they do, since it’s money that you can reinvest or accept in the form of a check,” online investing Step 4 Now you’re ready to purchase shares. You can often buy directly from the , but often there’s a drawback: Sometimes your transaction will not be processed immediately, so the price could increase before the sale is finalized. The better option is to make instantaneous purchases online through an investing firm, such as , which charges just $7 a trade. 47851
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