Janice Williams doesn’t have a problem with making sacrifices today to reach tomorrow’s financial goals. “I’m good at delaying immediate gratification for future payoff,” the self-confessed chronic saver says of her money management philosophy.
In recent years, Williams has embraced direct investing to meet her objectives. The 35-year-old program director for the New York-based Bailey House Inc., a supportive housing provider, has grown more confident in picking stocks for two good reasons. First, she’s created a solid safety net through her aggressive savings program. Williams has a rainy day account in which she tries to keep the recommended six months salary cushion and, in preparation for her golden years, she maxes out on her annual contributions to her company’s 403(b) plan. She also invests in her IRA account regularly and in a Fidelity Destiny II (FDETX) mutual fund.
The second reason: she only purchases equities she has thoroughly researched. Williams developed this ethic more than a year ago when she thought it would be fun to choose stocks as market exuberance began to fizzle. “It’s a good time [to buy] now,” she says of the recently battered market. “It’s like a bargain basement.”
Williams and her husband, Brian Martin, have built their stock portfolio by using the online broker ShareBuilder, investing $250 per month. Their holdings, which include shares from Intel (Nasdaq: INTC), AOL Time Warner (NYSE: AOL), General Electric (NYSE: GE), and Taro Pharmaceuticals (Nasdaq: Taro), are currently worth about $2,000.
In order to spot investment-worthy candidates, Williams reads the business sections of newspapers and watches financial news programs. But her greatest tool can be found on the Web: the Securities and Exchange Commission’s (SEC) online corporate filing database EDGAR (Electronic Data Gathering, Analysis, and Retrieval system; www.sec.gov/edgar .shtml). By engaging in such research, Williams has adopted DOFE principle No. 2: to be a proactive and informed investor.
It’s important for individuals to have timely, accurate information before making an investment decision. EDGAR is Williams’ research tool of choice because it’s a free, accessible way to get the inside scoop on companies 24 hours after they’ve filed with the SEC.
EDGAR doesn’t make stock recommendations. Instead, it furnishes you with all the financial details of a given company; critical information to help you gauge the company’s current health, revenue outlook, and profit potential. What makes EDGAR more valuable than the plethora of other financial Websites? Corporations and mutual funds registered with the SEC are required to file a number of forms that hold information that may or may not be found in a company’s annual report or on its Website.
The database is fairly easy to navigate, but you do need to know the type of information and form you are looking for. You can perform two kinds of searches on EDGAR. If you conduct a general-purpose search, you can review specific forms filed with the SEC using the company name, or perform an archival search using a keyword or phrase to help you locate a company. Through a special-purpose search, you can search for