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Financial Literacy

Financial Literacy

Home Financial Literacy Investing 101

Investing 101

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Why On Earth Should You Care?

You should care because, if you handle your career and finances in the right way, your money will start working for you rather than the other way around.Just for gits and shiggles, let’s say you...

A Walk Through the Investing Park

Good news/ bad news: Your crazy Uncle Larry just died. Sad, but you weren’t that close anyway, so… oh well. We all gotta go some time. Uncle Larry lived in a dilapidated shack and drove what he...

Student Finance

OK, before you get all hot and bothered to buy the next hot internet stock and make a fortune (dumb idea to roll the dice that way but that’s a separate story)… please oh please click around ou...

College Finance: Investing in Education

Why you need to think about this starting at age 10 (not just for Tiger Moms, Hawk Moms or really Somerset Maugham either).Worrying about college at age 10? Are you nuts? No. Not any more. Not tod...

What is a Stock?

Stocks represent a slice of pie – ownership in a company. Today, you can buy one share of Google for about $500. Google has 330 million shares outstanding, meaning that there are 330 million slic...

Why You Should Care About Stocks

Stocks are the most common creator of wealth in the United States and - more or less - around the world. You want to have wealth, don’t you? It’s going to be tough to become the world’s first...

Stocks as Ownership

Okay, so let’s go back to that 1/330,000,000th of Google you bought. We know you just snagged yourself a tiny slice of the pie, but… what does that mean, exactly? What did you just buy?In any i...

Rights of Stocks

Stockholders are the owners of the company. They don’t have to turn the lights out and lock up at closing, but you know what we mean. Since there are usually too many shareholders to have anythin...

Common v. Preferred Shares

When thinking of common shares, think of “commoners.” Bricklayers, plumbers and other people who actually get their hands dirty and perform manual labor for a living. These people live at the b...

Who Invests in Stocks?

Who buys stocks? Anyone can, although not nearly enough do. However, every type of person from every walk of life is free to jump in and try their hand. The real question is who buys stock well. Th...

Tools of Analysis

People who invest in stocks look at a number of measures of a company’s performance. Some look at charts to see how stocks are training. Some use sophisticated algorithms to predict market cycles...

If You Want to Invest in the Stock Market

Historically the stock market was closed to anyone other than the relatively wealthy. In 1970, a $2000 stock purchase carried $150 commission. In order for an individual to buy a diversified basket...

What is a Mutual Fund?

A mutual fund is a collection of stocks and / or bonds which are professionally managed for the benefit of investors in them. Mutual funds exist because individual investors generally don’t have...

Paying for Mutual Funds: The Myth of "No Load"

Not surprisingly, nothing other than love is free. You pay one way or the other. Overly simply and to illustrate on point, a typical “no load” fund will charge 0% commission upon purchase. They...

Different Types of Mutual Funds

Mutual funds come in every shape and color you can imagine – in fact, there are more mutual funds than stocks! For flavor, you can buy growth, value, blend, mid-cap blend, small growth, foreign s...

Judging Performance of a Mutual Fund

Let us introduce you to the Concept of “Alpha”. Greek letters make mundane things just seem.. classier, don’t they? Common parlance for describing good stock picking on Wall Street is “Alph...

Buying a Mutual Fund

Mutual funds are priced each 24 hour cycle with what is called Net Asset Value or NAV. Basically, a fancy and highly trusted bean-counter inside the mutual fund company adds up the closing bids for...

The Rise of Mutual Funds: Fidelity

In new emerging marketplaces, there are always those who “see the world” more clearly than others. When oil first became the driver of drivers of cars, a few visionary entrepreneurs knew enough...

Mutual Funds v. Index Funds

The biggest issue facing mutual funds is not the competition of other mutual funds – it is index funds. Sadly, most mutual funds don’t hit even the bogey of the index fund return – AND they c...

What is an Index Fund?

An index fund is just a big fat basket of stocks or bonds geared to reflect a market “strategy” (i.e. whatever logic that consumers will buy). If you believed in sin doing well over time, you m...

Why Buy Index Funds?

Myth: People don’t get rich in index funds but they don’t usually go brokeTruth: They do get rich and they do go broke. As with everything, it depends on how long you hold and when you have t...

The Rise of Index Funds: Vanguard

Vanguard was the pioneering uber index fund. And it made its name as an index fund – not an exchange traded fund. John Bogle, their curmudgeonly CEO/ founder was the first to popularly (very unpo...

Index Funds v. ETF's

One key elemental thing worth understanding is the difference between index funds and exchange traded funds. Index funds are NAV beasts – that is, each day, an uber-beancounter adds up the stocks...

Types of Index Funds

There are loads of index funds. To give a sense of the varieties and flavors, we took a look at Vanguard’s listing. A sampling:California Tax-ExemptHigh-Yield CorporateLong-Term TreasuryDividend...

Purchasing an Index Fund

It is pretty easy to buy an index fund. Just set up a Schwab, etrade, Scottrade or aFidelity account, wire in $2k and click.

Judging Performance of an Index Fund

“Everything’s relative”. Sorta. In general, the “How well am I doing?” conversation starts (and sometimes ends) with how well the market is doing. If you were up 10% in 2008, you were a h...

When Should You Sell an Index Fund?

Pretty much never. If you don’t have “market edge” and the market goes up about 8% a year, just let things cook as long as you can. Steak can’t be “too” tender. But when you do sell, th...

What is a Bond?

No longer the hippest spy in the world (taken over by Matt Damon or Dragon), the dictionary definition takes bonds from its Latin roots is just “an agreement.” “ A bond is a man’s word.”...

Why You Should Care About Bonds

You would likely have been raised in a barn and gotten your transportation to your soccer games in a horse and covered wagon if bonds or debt didn’t exist. Almost nobody buys a home without debt....

Major Types of Bonds

Just like ice cream, bonds come in flavorsSenior Debt typically is the safest and most secure type of bonds in a corporate balance sheet. If the company ever ran into bankruptcy problems, the first...

How the Government Participates

The government participates in the bond market by selling money. The Fed acting on a variety of data inputs sets the pricing of money which then is sold to banks. Investors wanting to play lender t...

The Pieces of a Bond

Principal - the original amount that you borrow that you eventually have to pay offWhen people quote the size of their mortgage, the number they are quoting is usually the principal and it is your...

Why Buy a Bond?

Bonds are purchased by individuals and institutions who seek a set relatively steady payment and relatively steady rate of return. Retired people for example want to know they have money to pay nex...

Inflation and Bonds

Inflation is the friend of the bond issuer and the enemy of the bond holder. Consider an example. JBI (Jelly Bean Inc.) issues $10 MM of bonds in 2012 at an 8% coupon. We then have rolling inflatio...

Duration

Duration refers to the length of time from which a loan is made to when it is paid off. Loans which have a very long expiration (Disney has issued 100 year bonds) will reflect prices that are much...

How Bonds Trade

TBD***How to Buy a Bond***Commissions***Mechanics***How to Read a Bond Table

What You Need to Know

To buy a bond, you need to take into account its price, duration, and yield. But the biggest thing you need to know is how much other debt the company/person has, where you fall in seniority, and w...

What are Commodities?

Commodities, technically are things you find anywhere, can buy and sell easily and have low margins (but often high volumes) for the people who broker them. Commodities are things like copper and o...

Currency

Currencies exist because… we can’t all just get along. The US has its own currency. So does Australia. So does Israel. And Russia. France, Germany, Spain, … used to have their own currencies...

What are Hedge Funds?

A hedge fund is a collection of stocks and bonds just like any mutual fund – except that hedge funds are… hedged. Shocking. What does hedged mean? That’s where all the magic is. In theory, he...

Emerging Markets

What is an emerging market anyway? It isn’t the new grocery store on the corner. Emerging markets generally refer to places where investors not only endure company risk (that the company won’t...

Bringing Everything Together: Asset Allocation

The idea of a rabbit putting his eggs in a bunch of baskets plays in the investing world as well. You will probably not be right all of the time. Asset allocation usually refers to the value of div...

The Standard & Poor's 500

The Standard and Poor's 500 or S&P 500 exists to reflect a broad and general sense of how mostly-American business is doing. Here is a list of what comprises the 9 sectors which make up today...

The Richest Americans and How They Got There

The richest man in America is old. His name is Warren Buffett and he is the Tiger Woods (when Tiger was great) of investing. Here are his investment returns under Berkshire Hathaway which he runs a...

Silicon Valley

Another way to make money is to invent something new or do it in a way no one else has done it before. This happen all over the world but it happens very quickly and frequently in Silicon Valley, C...

How the Rich Stay Rich

From the time that this country IPO'd around 1776, there was essentially no estate or wealth transfer tax. Great fortunes – at the time, mostly based in real estate assets – were illiquid. That...

Starting a Company/Entrepreneurship

Want to be a hero? Start a company that creates jobs and taxable profits for this country and for others around the world. This country was built on you – great entrepreneurs were the great power...

Entrepreneurs You See

So, entrepreneurs in the “normal” world are found in every local niche that exists. The most common entrepreneur you likely know is your local dry cleaner. Most likely, that store is owned by a...

Challenges Facing Entrepreneurs

The key element linking all entrepreneurs is an appetite for risk. That risk comes in the form of an entrepreneur losing both his money (and other people’s money) and time (opportunity cost of do...

Today's Entrepreneurs

Just for kicks, we thought we’d illustrate some entrepreneurial businesses in hopes of enlightening you to either start one or learn how to back up an 8 wheeler for the men in brown. Restaurant O...

Financial Journalism: Why You Can’t Believe All You Read

Almost every day you can pick up the Wall Street Journal and read a salacious headline like, “GE loses $2.32 a share!” But then you look up the stock price and it’s up 4%. How can that be? Jo...

Great Growth Stories

Coca Cola, ticker: KO, Market Capitalization, Board of Directors: Warren Buffett, Barry Diller….Retirement planning - only as interesting for a teen/college student1. Why you need to think ab...

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