With Thanksgiving Day out of the way, we can now focus on that other big event in October.
Yes, it's Investor Education Month once again. In other words, the annual push by financial regulators and industry organizations to display some concern about the welfare of investors.
The Personal Finance column would like to say thanks to these groups for their efforts, and then let them get to their regular business. Investor education is too important a job to be left for a perfunctory annual exercise that comes and goes unnoticed by most people.
With that in mind, let's consider some good investing-education websites that you can bookmark and refer to over and over again.
To start, we'll cover those times when you run across some financial jargon or a concept you don't understand.
Your go-to website in this case is Investopedia, which, as the name suggests, is an online financial encyclopedia.
Maybe you'd like to know what the phrase "credit crunch" actually means. It's being used a lot these days as a punchy, all-encompassing description of what's happening in financial markets, and there isn't always space in daily news coverage to fully define it.
Here's Investopedia on credit crunch: "An economic condition where investment capital is difficult to obtain. Banks and investors become wary of lending funds to corporations, thereby driving up the price of debt products for borrowers." If you trip over "investment capital," Investopedia allows you to click on the phrase and jump to a definition.
Investopedia is constantly being updated, so it has lots of material on the U.S. subprime mortgage meltdown, which caused the credit crunch and helped contribute to recent stock market volatility.
It's also a good resource for learning about investing basics, such as, say, asset allocation. In addition to offering a clear definition of the term (it refers to the mixing of stocks, bonds and cash in a portfolio), Investopedia provides 13 articles on the topic, with contributors described in little biographies that include their credentials.
If Investopedia doesn't get the job done, try InvestorWords.com. It's not as comprehensive a site, but it does deliver the goods in plain English.
Another reference on investing basics is a website called investorED.ca, run by an independent offshoot of the Ontario Securities Commission called the Investor Education Fund.
This site plays it smart by allowing users to either take the big-picture view (sections called Investing Basics and Building a Financial Plan) or get material on specific kinds of investments, such as mutual funds, stocks, bonds and income trusts.
If you really want to educate yourself about mutual funds, be sure to use the mutual fund fee impact calculator on investorED.ca. The first step in becoming an educated fund investor is to understand that the cost of owning a fund matters, even if some flat-Earth types in the financial industry say otherwise. The fund fee impact calculator shows you why and how fees are important.
Educated investors always question the background and independence of any source of financial information they consult.
In the case of the Investor Education Fund, operational costs are paid from financial penalties assessed against financial firms by the OSC.
The fund itself is run by a high-quality board of directors that includes chairman Paul Bates, dean of the DeGroote School of Business at McMaster University; Julia Dublin, a former OSC staff member who is now a securities lawyer; and Claude Lamoureux, the soon-to-retire head of the Ontario Teachers' Pension Plan.
Once you've acquired some investing basics, you're ready to benefit from the smarts of other investors who use online discussion forums to debate topics ranging from high-interest savings accounts to early retirement. Start with the discussion boards on the Canadian Business magazine website, where there are a variety of well-used threads under the title Investing for Beginners.
A spot for more experienced investors is the Financial Webring Forum, where an active participant with the online moniker Bylo Selhi maintains his own website focusing on mutual fund investing. This site is full of links to articles about finance and educational material aimed at the cost-conscious do-it-yourselfer.
One other website worth visiting for plain-English investing basics is About.com, where experts in all areas share their knowledge. There's an area titled Business and Finance containing an investing for beginners section that covers topics such as choosing a broker and building a portfolio. About.com is a U.S. site, so a little of the information may not apply here in Canada.
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Investing school
In honour of Investor Education Month, here is a list of websites you can visit to learn more about financial topics:
investopedia.com
investorwords.com
investored.ca
canadianbusiness.com
financialwebring.org
bylo.org
beginnersinvest.about.com
