In this newsletter, we are going to discuss debt. Now that interest rates are going up, the topic becomes very relevant. Understanding and managing your debt is a critical part of the financial planning process. Debt is how much you … Continue reading
What is risk? Risk as defined in financial planning is simply the likelihood that something unexpected happens, which meaningfully impacts the price of a security. That unexpected event could be positive or negative. A company being heavily damaged by a … Continue reading
In Short In addition to objective measures of risks as I mentioned earlier, there is also an emotional side to risk, which is how much fluctuation a person can mentally handle within their portfolio. My Sensitivity Analysis Whenever I meet … Continue reading
In Short Real estate is an asset class with its own unique curve. It has advantages and disadvantages when compared to stocks. It should be a part of every portfolio. What is Real Estate? Real Estate is land and the … 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
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
Definition Opportunity Cost is the value of the best alternative choice that you decide to forego. Example 1 You are trying to decide whether or not to wake up early tomorrow to go for a run or to sleep in. … Continue reading
In Short Risk is the possibility that at a particular moment in time, you won’t have enough money to pay for whatever you need to pay for. Fluctuation is Noise The market fluctuates up and down like a roller coaster. … Continue reading
I wanted to let everyone know that I just uploaded a free e-book. To download a copy of “A Simple Overview of Financial Planning. Book 1: Market Overview”, please click this link or go to the menu on the top … Continue reading