Top 10 Online Investing Hacks Tipsby Bonnie Biafore, author of Online Investing Hacks
The self-serve movement is alive, well, and overtaking our financial well-being. Company-funded pension plans are as scarce as hen's teeth, while employers encourage employees to contribute their own money to 401K retirement plans and make their own decisions about how to invest for retirement. Just when the responsibility shifts, the choices in the personal finance and investing arenas seem to explode. Accounts that defer taxes are great, but the options and fine print can be overwhelming. Fortunately, competition has driven financial institutions to reduce costs while increasing market share, which means more web-based services. These initiatives provide educational articles, training courses, financial calculators, and other valuable financial tools for existing and potential customers alike.
The dark cloud behind that silver lining is the magnitude of available information. With financial institutions wrestling to become the must-have financial bookmark, what you want is probably out there, but finding it is another matter. Online assistance is usually targeted to the masses, so you might end up understanding the concepts without having any idea how to put them to work. Having struggled with all of these issues, I was ready to write Online Investing Hacks. I wanted to take control of my financial life, and that meant finding the best financial web sites and learning how to search for the tools I wanted. In some cases, it meant building a tool to match my requirements and financial circumstances. From the annals of Online Investing Hacks, here are some of the most important things you can do to improve your financial situation and the tools that simplify these tasks.
1. Ditch High-Interest Debt First
Paying off debt isn't as exciting as investing in stocks, but more often than not the returns beat the market. With credit card interest rates sometimes running 20 percent or more, don't even think about investing until you've paid off your credit card balances. Investments that guarantee a 20 percent return don't exist, but eliminating credit card debt is like earning the interest rate that your credit card charges.
Whether you make the minimum credit card payment from laziness or because it's all you can afford, the following techniques reduce your debt with a minimal amount of pain:
For light debt loads, get back on track by hiding your credit card in a drawer for a while. Paying cash or writing checks usually brings your spending back to reality. To remove the temptation of credit card debt, replace your credit card with a debit card, which you must pay off each month.
As long as you have some emergency funds to fall back on, don't contribute to savings until your high-interest debt is paid off. In addition, consider using additional savings to pay down high-interest-rate debt. The few dollars you lose in savings interest saves you a bundle of credit card interest.
If you can't afford to pay off your credit card balances, start by paying off the debts with the highest interest rate first. For example, pay as much as you can afford each month on the card charging 20 percent interest, while paying the minimum monthly payment on your 8 percent credit card. When the balance on the 20 percent card is paid down, switch the monthly payment you were making to the 8 percent card. When that card is completely paid up, apply the monthly payment to your 4 percent home equity loan. (After your debts are paid, you can switch the monthly payment to savings or investing.)
As a last resort, stop contributing to your 401(k). Reducing the taxes you pay on your income, receiving employer-matching, and earning an investment return might be better than saving on credit card interest. By the way, don't start investing in other accounts until you max out the company matching in your 401(k). Company matching is like receiving a 100 percent return on your money. You don't think you can afford to withhold that much of your paycheck? You can't afford not to.
If you're in serious trouble with debt, don't try investing to dig your way out. Instead, contact Debt Counselors of America, a not-for-profit organization that works with creditors to reduce your monthly payments, late fees, and interest. You make one monthly payment to DCA and they handle payments to your creditors for a small fee.
2. Save a Bundle with a Great Mortgage
A mortgage with a great interest rate and low fees can save you the equivalent of several years' salary. Why work thousands of additional hours, when a few hours picking the right mortgage nets you hundreds of dollars each month for your investing program? HSH Associates publishes "The HSH Mortgage Survey," which includes everything you need to know about mortgages offered around the country, updated weekly in most cases. In addition, the HSH web site includes articles and pamphlets that explain what you need to know to pick the right loan or mortgage, and calculators that turn your newfound knowledge into hard numbers. For $20 plus $3 shipping and handling, you can obtain the current mortgage survey, as well as the 56-page pamphlet "How to Shop For Your Mortgage." Add any of the other HSH educational booklets for $2 each.
3. Find Stocks that Meet Your Needs
With over 10,000 publicly held companies available as investments, you need some help whittling the field down to a few companies for in-depth study. Some companies don't grow enough. Some don't grow at all. Others grow robustly, but cost too much to deliver an attractive return on your investment. Others are growing and priced right, but might be too risky for your taste. Weeding out these also-rans typically narrows the field considerably. If you're looking for companies to balance your portfolio diversification, you can filter the field even more. Stock-screening tools filter the universe of publicly held companies to only those that meet your criteria. By using the more sophisticated online screening tools, you can not only filter the list, but compare key financial measures to find the strongest competitors.
Don't try to screen all the way to only one stock! By keeping your criteria more flexible, you catch companies that don't quite fit your criteria but are worth watching, such as quality growth companies that are currently overpriced. Besides, stock screens find companies based primarily on historical performance. You still have to do your homework to figure out which ones are positioned to continue that performance into the future.
MSN Money Deluxe Screener and Reuters Investor Power Screener both offer lots of bells and whistles for screening and comparing stocks and both come at a great price -- free. Each tool provide hundreds of financial measures and ratios for building screens. You can define criteria by selecting fields, operators, and values from pull-down menus or by typing values in boxes. MSN Money's Deluxe Screener makes it easy to screen for a specific value or compare a company's performance to the industry average. Reuters Power Screener enables you to define criteria with multiple tests or define your own custom variables. You can save the screens you build to run again. Better yet, you can export screen results to an Excel spreadsheet or comma-delimited file, or export the ticker symbols for the resulting companies to MSN's Portfolio Manager. By specifying the financial measures that appear in the results table, you can evaluate all aspects of the companies that pass your tests. To access the Reuters Power Screener, click Ideas & Screening and then PowerScreener in the navigation bar in the left margin.
4. Download Data from the Web
Much of the data you need to analyze investments is on the Web for little or no cost, but transferring that data into a spreadsheet where you can work with it is another matter. With Excel's web queries (available in Excel 2000 and later, and Excel v.X for Macintosh), you can capture data stored in web page tables to feed your financial formulas. The only information a web query needs is the address (URL) of the web page and the tables on that page that contain the data that you want.
To add a web query to a worksheet in an Excel workbook, open the Excel file and select the tab for the worksheet you want. To create a new web query in Excel XP, choose Data -> Import External Data -> New Web Query. The New Web Query dialog box opens, displaying the home page you use in Internet Explorer. The toolbar in the New Web Query dialog box includes an Address drop-down list, which is automatically populated with your URL History list from Internet Explorer, as well as other frequently used browser commands, such as Back, Forward, and Refresh.
You can type a URL or navigate to a web page in the New Web Query dialog box. In Excel XP and 2003, arrows point to each table on the page. After you select the tables to query, Excel extracts the labels and values from those tables, and adds them to cells in a worksheet. Although the spreadsheet cells don't look like they have super powers, they are associated with your web query. You can refresh the data from the associated web page by right-clicking any cell in the web query area and choosing Refresh Data from the shortcut menu.
Because web queries correspond to specific web pages, a financial web query returns the data for the same company, mutual fund, or other investment you're evaluating. Wouldn't it be cool if you could make a query download data for a new investment when you type its ticker symbol into a worksheet cell? Well, you can, but it requires a few steps.
To customize a web query, first save it as a file by right-clicking any cell in the web query area and choosing Edit Query from the shortcut menu. Click the Save As icon on the toolbar and save the query file.
Next, you must add the ticker symbol as a parameter to the saved web query file. Navigate to the saved web query file in Windows Explorer and use Notepad to open it. Most URLs for web pages with investment data include the ticker symbol for the investment. For example, the Yahoo! Finance quote page for Lowe's home improvement stores is finance.yahoo.com/q?s=low.
To make the web query download the data for the ticker symbol you specify, replace the ticker symbol in the URL with
["symbol", "Enter Symbol"]so that it looks like this:
http://finance.yahoo.com/q?s=["symbol", "Enter ticker symbol"]
Save the web query file.
Finally, you must link the web query to the spreadsheet cell in which you type the ticker symbol. Choose Data -> Import External Data -> Import Data and use your saved query file as your data source. In the Import Data dialog box, specify where you want your web query results to go. You must click Parameters, select the Get the Value from the Following Cell option, and specify the worksheet cell that contains the ticker symbol.