Who wants to buy a House
The most common length of a conventional mortgage.
What is 30 years.
Mortgage terms can vary but the most common mortgage terms are 30 and 15 years.
Employer sponsored account that lets you contribute pre-tax dollars.
What is a 401K?
401Ks are retirement accounts administered through an employer. An employee can contribute up to $18K annually to a 401K and an additional $6K after 50 years old. 401ks have limited investment options and built in fees.
Investment vehicle that provides partial ownership of a company.
What is a Stock or Equity?
A stock is a security that represents ownership of a fraction of a corporation. Stocks are bought and sold on stock exchanges. Stocks are the lowest priority of repayment in a bankruptcy situation. In return for the additional risk, stocks provide a higher return
Recommended size of an emergency fund
What is 3-6 months of expenses.
To provide financial security in the case of an emergency, most advisors recommend saving 3-6 months of living expenses.
What stock increased 1,099% this year?
What is Gamestop.
Name three of the documents your lender will require you to provide for the mortgage.
Income Verification: 2 years W2 forms, last 30 daysPay stubs, 2 years income tax returns, Alimony/Child support
Assets/Liabilities: 3 months of account statements, documentation for large deposits
Other: list of assets, purchase contract, id, last two years employment info.
Self Directed account that lets you contribute pre tax dollars.
What is an Individual Retirement Account (IRA)?
Similar to a 401k, an IRA allows you to contribute pretax dollars. The difference is that it is not connected to your employer and you get more investment options. The annual limit on IRA contributions is $5,500
Collection of the 500 most valuable publicly traded companies in the united states weighted by their market capitalization
What is the S&P 500 Index.
Indexes are collections of stocks that are grouped according to some metric. There are many different types indices but the S&P 500 is the most well known. Many other indices track the performance of assets that are not stock such as bonds or real estate.
Recommended max rent/mortgage payment
What is 30%
What stock increased 1,830% this year
What is AMC.
Payment added if borrower doesn't put down 20% as a down payment.
What is Private Mortgage Insurance (PMI).
PMI is a type of mortgage insurance you might be required to pay if you do not put down at least 20% as a down payment. PMI is tax deductible
Account which you can contribute after tax dollars that grow tax free
What is a Roth IRA.
A ROTH IRA lets owners contribute after tax dollars which they can then pull out without tax. This type of account is best for someone that expects to be in a higher tax bracket at retirement.
Investment which pays a fixed interest rate and returns your investment at a future point in time.
What is a bond.
Bonds are investment vehicles that pay a stated interest rate normally semi annually. Most bonds are considered senior meaning they are the first to be repaid in case of a default. Bond holders do not own any of the issuer's equity. Bond prices move inversely to interest rates.
Recommended max car payment
What is 10%
10,000 unique collectible characters with proof of ownership on the Ethereum Blockchain
What are Crypto Punks NFTs?
Cheapest Crypto Punk is currently trading at $437k
Loan product that acts like a credit card against the equity in your home.
What is a Home Equity Line of Credit (HELOC)?
HELOCs offer the home owner the ability to open up a line of credit similar to a credit card. The interest rate is normally a floating interest rate and the home owner can draw or paydown the loan at their discretion.
Savings account for college education
What is a 529 plan.
529 plans are administered by states and allow a parent/relative to contribute after tax dollars which can then be used for qualified education expenses. 529 plans can count towards assets for financial aid decisions.
Company that pools money from many investors and invests the money in securities.
What are mutual funds?
Mutual funds are a way to invest in many different assets in one vehicle. MFs can be passively or actively managed. MFs charge a fee for the portfolio management of the fund.
Recommended monthly savings
What is 20%
Manipulative scheme that attempts to boost the price of a stock or security through fake recommendations
What is a Pump and Dump.
This mortgage product was abused during the 2008 financial crisis.
What is an Adjustable Rate Mortgage (ARMs).
ARMs are mortgage products that have a set time frame of fixed rate payments after which the mortgage interest rate adjusts to a higher floating rate. Common ARMs are 3/1 5/1 or 7/1.
Penalty for redeeming money from a 401k/IRA early.
What is 10%.
401K/IRA account owners cannot redeem any money until 59 1/2 without incurring a 10% penalty. In addition to the 10% penalty, the account owner will need to pay income tax on the withdrawal.
Financial instruments that give the buyer the right but not obligation to buy or sell an asset at a specific price on or before a specific date.
What are options.
The two most common options are call and put options. A call option allows the buyer to buy a stock a specific price on or before a specific date. A put option allows the buyer to sell the stock under the same circumstances. Options are very risky and are often described as adding leverage to a trade.
Percentage of budget for Needs / Wants / Savings
What is the 50/30/20 rule
50% to needs - bills you cannot live without paying
30% to wants - things you buy that you could live without i.e. eating out, electronics, subscriptions
20% to savings - includes emergency fund, retirement savings, 529, etc.
This is what caused Gamestop's stock price to increase.
What is short squeeze.
I'll explain