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Financial
Calculators
Recommended
Reading
Think
& Grow
Rich
by Napoleon
Hill –
What a
great book.
Surprisingly,
it’s
not just
about accumulating
money,
it’s
about building
a successful
life with
many intangible
and tangible
benefits.
But it
will definitely
help you
get rich
in dollars
and assets.
The
Millionaire
Next Door
by Thomas
J. Stanley,
Ph.D. and
William
D. Danko,
Ph.D.
The
Millionaire
Mind
by Thomas
J. Stanley,
Ph.D. Millionaires
don’t
spend money
the way
certain
celebrities
and movies
and television
portray
it. Anyone
can become
a “millionaire
next door”
by following
time tested
sensible
“rules.”
Stocks
for the
Long Run
by Jeremy
J. Siegel,
Ph.D.
Abbreviated
Glossary
of Investment
Terms
ASSETS
- Resources
owned by
a company,
fund, or
individual;
i.e. cash,
investments,
money due,
materials,
inventories,
etc.
BEAR
MARKET
- A market
in which
prices
are falling,
or expected
to do so.
BOND
- A debt
security
issued
by corporations,
governments,
or their
agencies,
in return
for cash
from lenders
and investors.
A bond
holder
is a creditor,
not a shareholder.
BULL
MARKET
- A market
in which
prices
are rising,
or expected
to do so.
COMMODITY
- A tradable
item that
can generally
be further
processed
and sold;
i.e. metals,
wheat,
coal, etc.
COMPOUND
INTEREST
- Interest
that is
calculated
on both
the principal
and interest
previously
earned.
DIVERSIFICATION - One of the most effective ways to reduce risk is to diversify your
portfolio. No one type of security, asset class or investment manager provides the best performance over all time periods. So a range of investments should reduce the risk of each of the investments.
DIVIDEND
- The amount
of a corporation’s
after-tax
earnings
that it
pays to
its shareholders.
DOW
JONES INDUSTRIAL
- U.S.
stock market
prices
frequently
quoted
in the
news.
FINANCIAL
ANALYST
- A person
trained
to advise
on the
risk and
return
characteristics
of investments
and in
the management
of investment
portfolios.
INVESTMENT
- An asset
acquired
for the
purpose
of producing
income
and/or
capital
gains.
LIQUIDITY
- The ability
of an investment
to be easily
converted
into cash
with little-
to no loss
of capital
and a minimum
of delay.
MARKET
- A public
place where
buyers
and sellers
conduct
transactions,
either
directly
or via
intermediaries.
NATIONAL
ASSOCIATION
OF SECURITIES
DEALERS
AUTOMATED
QUOTATIONS
(NASDAQ)
- The New
York-based
U.S. stock
exchange
that specializes
in technology
companies.
OPTION
- An agreement
that conveys
the right,
but not
the obligation,
to the
holder
to buy
or sell
a particular
security
at a stipulated
price within
a stated
period
of time.
PORTFOLIO
- An investor’s
collection
of investment
holdings,
usually
with reference
to its
composition.
PROSPECTUS
- A legal
document,
required
by the
Securities
Act of
1933, setting
forth the
complete
history
and current
status
of a security
or fund;
it must
be made
available
whenever
an offer
to sell
is made
to the
public.
RETURN
- The amount
of money
received
annually
from an
investment,
usually
expressed
as a percentage.
RISK
- The measurable
likelihood
of loss
or less-than-expected
returns. A way of reducing risk is to diversify
investments.
Risk cannot be eliminated but, it can be managed. Assessing risk and potential investment returns should be in the context of your goals and your timeline.
Types of Risk
-
Investment market risk - the possibility that all investments in a market sector, will be influenced by an event.
- Investment specific risk - the possibility that a particular investment may under
perform compared to competitors.
- Market timing risk - the possibility that the investment may be sold at a time when the sale price is at a low-point or purchased when the sale price is at a high-point.
- Inflation risk - the possibility that your investment return is below the inflation rate, which reduces the spending power of your money.
- Credit risk - the potential failure of a debtor to make payments on amounts they have borrowed.
- Interest rate risk - the possibility that your investment will be adversely impacted by a fall or rise in interest rates.
- Legislative risk - the possibility that a change in legislation will impact the appropriateness of certain investments.
- Liquidity risk - the ease with which you can sell or liquidate your investments. Some investments impose exit fees or have limitations on withdrawals. Other investments may be difficult to sell due to a lack of buyers.
SECURITIES
AND EXCHANGE
COMMISSION
(SEC) -
The U.S.
regulatory
authority
for the
securities
industry.
SECURITY
- The paper
right to
a tradable
asset.
SIMPLE
INTEREST
- Interest
that is
paid on
the initial
investment
alone.
STOCK
- An instrument
that signifies
an ownership
position
(equity)
in a corporation.
TREND
- The current
general
direction
of movement
security
or commodity
prices.
VOLATILITY
- The extent
of fluctuation
in share
price,
interest
rates,
etc. The
higher
the volatility,
the less
certain
an investor
is of return;
therefore,
volatility
is one
measure
of risk.
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