Chapter 6
The promotion of a product or service by identifying it with distinct characteristics, usually associated with public perception, quality, or effectiveness.
The ability to walk away from a purchase while negotiating.
Walk-away power
The benefit of diversification in your investments.
Reduced risk
The purpose of insurance.
To transfer risk
A brief account of ones professional or work experience and qualifications.
Resume
1) Buying motives
2) If you can't pay cash, don't buy it.
3) Opportunity Cost
Components of getting the best deal on a purchase.
1) Shopping around
2) Negotiating
3) Having patience
According to Dave, the best investment option; represents the most diversification and least risk with highest return.
Mutual Funds
The amount you pay monthly, quarterly, semiannually, or annually to purchase different types of insurance.
Premium
The difference between net pay and gross pay.
Net pay is payment after deductions, gross pay is before.
Feeling regret or concern after making a large purchase.
Buyer's remorse
Why cash is a great bargaining tool.
1) Cash is emotional
2) Cash is visual
3) Cash has immediacy
Non-wage compensation provided to employees in addition to their normal wages or salaries.
Employee benefit packages
Describe how a person becomes self-insured.
2) Fully funded retirement and emergency fund
3) Saving and investing
Steps to take when applying for a job.
1) Send resume and cover letter
2) Present yourself well
3) Follow up with employer
Safe assumptions to make regarding companies and their marketing practices.
1) Use all angles to aggressively compete for your money.
2) Spend millions to do extensive research on advertising.
3) Know the competition is fierce for consumer dollars.
The process of quantifying costs and benefits of a decision.
Cost-benefit analysis
Rules when buying and selling investments.
1) Understand basic investment strategies and identify ones that will help you reach goals.
2) Learning the different types of investments
3) Set goals and consider time frames.
Unnecessary types (2) of insurance and reasons for being unnecessary.
1) Any duplicate health insurance
2) Mortgage Insurance
3) Credit Card insurance
4) Alien abduction insurance
5) Pet insurance
Taxes paid by anyone who owns property.
Property tax
The purpose of advertising.
1) To tease the consumer
2) To inform the consumer
3) To persuade the consumer
Three negotiation tactics.
1) Walk-away power
2) Cash
3) Tell the truth
4) Shut up
5) That's not good enough
6) Good guy, bad guy
7) "If I"
Money invested either tax deferred or tax free within a retirement plan.
Tax-favored dollars
Amount you must pay before you begin receiving any benefits from your insurance company.
Deductible
The three basic types of income.
1) Earned income
2) Portfolio income
3) Passive income
Explain the concept of opportunity cost when considering making a significant purchase.
Money spent here cannot be spent there.
Describe the cost benefit of buying slightly outdated products.
Little difference in quality and performance in slightly outdated products. Significant price reduction.
Explain the concept of liquidity.
Liquidity represents how quickly you can access your investment dollars.
Explain how people manage financial risk through transfer.
By paying a small, affordable premium, you are transferring financial risk of major crises to the insurance company and protecting your wealth.
The three basic, broad types of taxes.
1) Taxes on income
2) Taxes on wealth
3) Taxes on consumption.