Investment and Taxation Flashcards
INVESTMENT AND TAXATION
Golden Rules of Investment:
1. Invest ________.
2. Invest ________.
3. Invest _____________________________.
- Invest early
- Invest regularly
- Invest for the long term and not short term.
INVESTMENT AND TAXATION
Money you earn is partly spent and the rest saved for meeting future expenses.
Investment
NOW: Money spent
FUTURE: Payoff/ return
Investment
Needs of investment
1.
2.
3.
- Earn return on your idle resources
- Generate a specified sum of money for a specific goal in life.
- Make a provision for an uncertain future.
____________ – not needed for other needs/expenses.
Idle money
Rate at which the cost of living increases.
Inflation
_________ – added cost after production.
Inflation rate
Mark-up
Consider inflation in __________.
investing
Inflation considers the performance of _____________.
other countries
_____________ is simply what it costs to buy the goods and services you need to live.
Cost of living
__________ causes money to lose value.
Inflation
Explain and state why knowing inflation is important in investment.
If there was a 6% inflation rate for the next 20 years, a Rs. 100 purchase today would cost Rs. 321 in 20 years.
Forecast
Inflation rate & mark-up. Inflation is ____________ from mark-up.
different
Explain why this happens.
Luxury goods do not have that much mark-up.
Food and other needs’ mark-up is usually 100% depending on how much it is needed.
Share your thoughts on having an entrepreneurial mindset.
Business
Everyone wants to be an employee (comfort-zone) – no risk
Think about opening up a business connected to your field/ interest.
_________ above inflation rate to ensure that investment does not decrease in value.
Return
Explain the connection of the return, inflation rate, and investment
If the annual inflation rate is 6%, then the investment will need to earn more than 6% to ensure it increases in value.
If the after-tax return on your investment is less than the inflation rate, then your assets have actually decreased in value.
Return > ____________ – no decrease in value and investment.
Business – ROI (___________________).
Inflation rate; Return of Investment
Education is an investment. The return is what?
(high) investment (_____) payoff (_____) return
Return – salary after graduation when working.;
high; high
Explain the difference between the three:
Mutual funds
Stocks
Bonds
Mutual funds → risk-neutral
Stocks – part-owner
Bonds – owner liable to you
What should we keep in mind when investing in cryptocurrency or any other investments?
Always monitor
Unknown determinants
Always doubt if the return is super big.
100%>
In a short period of time.