What is Economics?
Economics is the study of the interaction between people within a market context. For example: Person A sells chairs, how do they maximize their profit?
What is the Market?
A market in the context of economics refers to all buyers and sellers for all goods and services. Think of the world as a shopping mall. There are tons of products being sold and tons of people that are buying things.
Marginal Cost/Benefit
Marginal cost/benefit within the context of economics refers to the effect of each additional unit of measure. For example: If you have a job and earn 10 dollars per hour. The marginal benefit of each hour of your time is 10 dollars.
Opportunity Cost
Within Economics, the opportunity cost of a choice is the value of the best alternative choice that you declined. For example: you can choose to work at job A or job A. If you choose job A, the opportunity cost is job B.
Supply and Demand
The most important rule of economics. The more people want to buy something, the more expensive it is to buy. The rarer the item is, the more people want it. For example: item A is very rare (there is only 1 in the world), so the seller makes it very expensive. Item A is then mass produced so each unit isn’t as valuable so the seller lowers the price.
Specialization of Labor
A crucial way of maximizing economic efficiency. If people focus on what they are good at and trade for/purchase everything else they need, they are better off than they would be if they tried to do everything themselves. For example: The best accountant in the world should focus on accounting and buy furniture if they need it. If they try to make their own furniture then everyone is made worse off.
Federal Reserve
Affects the amount of currency in the economy via various methods. That affects the cost of borrowing and the incentive to save money. The lower the interest rate the cheaper it is to borrow money and the less incentive there is to save money. For example: the Federal Reserve purchases treasury bills from member banks which increases the amount of currency that each member bank has. The greater supply of currency, drops the demand, so the interest rate is lowered.
Inflation
A reduction in the purchasing power of a unit of currency. For example: 1 dollar today purchases a whole lot less stuff than 1 dollar 50 years ago.
Fee Structure
| Rate | Assets Under Management |
| 1.44% | Below $125,000 |
| 1.00% | Between $125,000 and $750,000 |
| .85% | Between $750,000 and $1,250,000 |
| .80% | Between $1,250,000 and $1,750,000 |
| .75% | Between $1,750,000 and $2,500,000 |
| .70% | Between $2,500,000 and $3,250,000 |
| .65% | Between $3,250,000 and $4,250,000 |
| .60% | Above $4,250,000 |
A single rate is applied to the entire account. So a person with a $750,000.01 account pays less than a person with a $750,000 account. I will waive personal tax return fees for accounts over $1 million. For accounts that are above $5,250,000, we’ll need to discuss a custom rate.
As I’m writing these to help my readers, I would be very appreciative of any input in regards to what I should write next. If you want me to write about a particular topic, please contact me. If you would like to submit a post to my blog, please contact me.
If anything that I mentioned above interests you, please consider downloading my free e-book. The book contains my thoughts on investment management and some information that I think everyone should know. You can also download it below.
E-Book Download
Questions for the comments
Did my explanation make sense? Do you agree or disagree with what I said?
