Budgeting Basics
What does the "50" mean in the 50/30/20 rule?
50-How much we can spend on needs
What does “living below your means” mean?
spending less money than the amount you earn
What does the rule of 72 estimate?
Estimates our time to double our money based on return on investment/ interest rate
Bull vs Bear market. Which one describes a market that is optimistic and rising?
Bull
What does a Market Cap measure?
Measures the total value of a company. Shares outstanding x share price.
Give one example of a fixed expense and one variable expense
Fixed-Rent, Car Payment
Variable-Utilities, Gas
What is the purpose of an emergency fund? How many months of income do we need to have saved up?
To protect yourself if something happens, like losing a job, large expense, 3-6 months
If you double your money in 4 years, what was your rate of return?
72/4=18%
What does IPO stand for? What happens when this occurs?
Initial Public Offering. A private company becomes publicly owned
What does a beta of 2.0 mean?
It moves with the market but at a higher and more volatile rate. S&P 500 index moves 3%, that company may move 6%.
What does “Pay Yourself First” mean?
Immediately saving a portion of our income before paying bills
What are two benefits of having a side hustle?
Skill development, extra income, etc
Rather than investing in individual companies, what can we invest in that still maximizes growth but minimizes risk?
ETF (exchange-traded funds). Many eggs in one basket
NYSE vs Nasdaq. Which is older?
NYSE
What is the term that describes why a stock price rises or falls?
Supply and Demand
What is the 3x Annual income rule used for?
Determining the price of a house that you can afford by multiplying your yearly income by 3
When should someone focus on paying off debt rather than investing their money?
When the debt is high-interest debt
Beyond Meat, GameStop, and AMC are all examples of what?
Meme stock. No financial reasoning for the price increases these companies had.
NYSE vs Nasdaq. What are two differences between the two exchanges?
NYSE has fewer companies listed but a higher market cap.
NYSE has a hybrid model. Nasdaq is all online trading.
What are three external factors that can affect the supply and demand of a company's stock?
Government, central banks, economy, news, sentiment, products, management, earnings, and inflation
Why might someone adjust their 50/30/20 percentages?
No car payment, don't spend 50% on wants, can save more than 20%, etc
How does inflation affect your savings and investments?
It decreases the value of your money, account, portfolio
If I have 100 shares of Apple Stock valued at $10,000, and it undergoes a 10:1 stock split. I would now have how many shares of stock, and what is the total value of my stocks?
100x10:1= 1,000 shares. $10,000
Name the three major US indexes.
S&P 500, Nasdaq, Dow Jones Industrial Average
Name one key investing strategy from yesterday and describe what it does.
Double and Trim, Trailing Stop Rule, 10% Rule, Dollar Cost Averaging, and Break Even Analysis