In Short When a currency becomes less valuable relative to another currency. Explanation The value of all currencies (US Dollar, Euro, Pound, etc.) are defined relative to each other. For example: right now one US dollar is worth about .762 … Continue reading
Risk Vs. Return Before that question can be answered, it is important to understand the relationship between risk and return. In the financial/investing world there is a direct relationship between the two. For example: a treasury bond is very low … Continue reading
Definition When you buy a security there is time between when you buy the security and when you pay for that security. The date you buy is the buy date. The date you pay the money is the settlement date. … Continue reading
In Short An ETF (Exchange Traded Fund) is a basket of securities that attempts to duplicate the performance of a multiple of an index. See here for the definition of a stock index. There are also commodity indexes. Their Benefit … Continue reading
Defining Standard Deviation Standard deviation refers to the fluctuation in the value of your portfolio. The ups and downs of a portfolio can be thought of as a roller coaster. How scary is the roller coaster? A roller coaster that is … Continue reading
In Short Probably. I would generally not suggest taking out a loan to create a portfolio (although I did exactly that once). The Investment Returns Cannot Be Counted Upon to be Higher Than the Loan Interest It would make sense … Continue reading
In Short As a portfolio gets larger, the growth occurs on an expanding base, which means the amount of growth you experience each year is increasing. Compounding means you are earning money on your past earnings. For Example Say you … Continue reading
Introduction If you look at a security, there is a lot of noise. Every day the security goes up and down, sometimes by a few cents and sometimes by many dollars. If you average out all those prices, you get … Continue reading
Overview All companies on the stock market are required to provide information on their company to the public. They are required to provide financial statements (income statement, balance sheet, statement of cash flows). See previous post for information on those … Continue reading
Determine An Inventory Of Your Situation Think of it like a balance sheet in accounting if you are familiar with the set up. List all your assets at fair market value. Then list all your debts, amounts AND interest rates. Finally list … Continue reading