Lesson 4 Flashcards
The creation of wealth due to the commencement of employment or the establishment of a business and the continuous accumulation of assets may be considered the _________ of the cycle
initial stages
May be considered as a period of consolidating assets and personal wealth.
It is assumed that those in this phase already have the necessary assets required of a typical household and have settled most their children’s education
Middle Stages
The spending and gifting phases may happen concurrently.
It is called the spending phase since their pensions should cover their daily living needs.
Later Stages
A good starting point in analyzing the ability of the company you are investing with to meet its obligations to investors
Financial Statements
Used to determine if the sources of funds will be able to meet the required living expenditures and if there is an excess for savings and investment
Budget
The basis on computing the return promised by an investment scheme
Time value of money
Collected by the government from the income of individuals
Income tax
Ability to meet near-term obligations
Liquidity
Do not put all your eggs in one basket.
Gifting or wealth distribution
An individual’s assets less liabilities
Net worth
Preservation of assets accumulated to prepare for eventual retirement
Consolidation or wealth preservation
Cover for daily living needs during retirement
Pension
The life stage that focuses on how individuals provide support to family members, friends, or any charitable institution
Gifting or wealth distribution
