bonus chapter c Flashcards
what are the 6 steps to managing personal assets
- take inventory of your financial assets by making a balance sheet with the accounting equation
- keep track of all your expenses
3.prepare budget - pay off debts
- start savings plan
- if you have to borrow, do it for only assets that can increase in value or generate income
how can I accumulate funds
- find a job
2.live frugally - invest your savings to generate even more capital
how does the gov help you buy real estate
they allow you to deduct interest payments on the mortgage which lets you buy more home for the money
where is the best place to keep savings
in stocks
what is a good way to handle credit cards
pay the balance in full during the period when no interest is charged
what are the criteria for selecting investments
risk, yield, duration, liquidity and tax consequences
how do investors make purchases in securities markets
through stockbrokers or online investing
what is diversification
several types of investments with different degrees of risk
whats a market order
tells a broker to buy or sell a security immediately at the best price available
whats a limit order
tells the broker to buy or sell if the stock reaches a specific price
whats the difference between bond selling at a discount vs at premium
premium means priced above face value
discount sells below face value
whats a mutual fund
an organization that buys stocks and bonds and then sells shares in those securities to the public, enabling individuals to invest in many more companies than they could otherwise afford
what are ETFs
like mutual funds, ETFs are collections of stocks that are traded on securities exchanges, but are traded more like indiviual stock
what role does insurance play in protecting capital
insurance protects you from loss
what insurances do you need
health insurance, car insurance, liability insurance, and homeowners/renters insurance
