Chapter 1
Values===
Beliefs you consider important
define assets and liability's
Assets= any item of value that you own
Liability= debts you own
Savings =
Safe storage of funds for future use
Define tenant and landlord
tenant= a person who pays for the right to live in a residence owned by someone else
Landlord: The person who owns the property you rent
Types of stock investments (know 4 of 8)
Blue Chip Stocks
Income Stocks
Growth Stocks
Cyclical Stocks
opportunity cost
what you give up when you make one chioce instead of another
Insolvency
= occurs when liability's are greater than assets
Federal deposit insurance corporation(must know all three)
1. established in 1933 as a result of bank failure
2.Created to restore faith in the US banking system
3. Insures deposits in federally charted banks up to $250,000 per account
Advantages of Renting (only need to know 1 of 3)
Mobility: If you need to move for any reason, you can as long as you give proper notice.
Bull Market:
Occurs when investors are optimistic about the economy and buy stocks. As a result, the values of stocks increase.
Liquidity
the ability to easily convert your financial rescourses to cash
define income and expenses
Income = money you receive
Expenses = Money you spend
Credit==
An arrangement to receive cash, goods or services now and pay for them in the future.
Disadvantages of Renting (only need to know 1 of 3)
Few Financial Benefits: No tax deductions, no increase in property value because you don’t own the property.
Bear Market:
Occurs when investors are pessimistic about the economy and sell stocks. As a result, the values of stocks decrease
How long are each one of the timing of goals
one or less
1-5 years
5 or more years
Net cash flow
Income - expenses
Advantages in credit
Allows you to enjoy goods and services now when funds are low
Security Deposit:
: Money that the tenant pays the landlord in order to protect against any financial loss the tenant might cause.
TYPES OF TAXES (need to know 2 of 4)
Taxes on Purchases (Sales Tax)
Taxes on Property (Property Tax)
guidelines for setting goals
be realistic
specific
must have a clear time frame
must guide your actions
Deficit
= occurs when expenses are greater than income
Disadvantages in credit
Credit cost money (interest)
Advantages of Owning (know 1 of 3)
and
Disadvantages of Owning (know 1 of 3)
Stability: Sense of permanence
and
Limited Mobility: Can’t move quickly
Insurance:
Coverage:
Premium:
Risk
Is protection against possible financial loss.
The protection provided by the terms of an insurance policy.
Fee that a policyholder pays the insurance company in exchange for the company taking on the policyholder’s risk.
A chance of loss or injury.