Tag: Personal finance
The balance sheet is the document where assets, liabilities, and equity of a particular company or a person are recorded. It’s a crucial financial statement wildly used in accounting, investing, analytics, and other areas. In this article we’ll explain what a balance sheet is, cover its essential components, and answer the most common questions.
Assets, liabilities, and equity are three core accounting concepts. It’s impossible to evaluate a company properly without a thorough knowledge of them. The word “equity” has many meanings but, in this article, we focus on equity in the general accounting sense, although we briefly cover other kinds of equity too.
Assets, liabilities and equity are three basic building blocks that form the balance sheet equation and any investor should have a deep understanding of what they mean. In this article, we’ll explain what liabilities are and we’ll also provide a real example using a balance sheet of a public company.
Alpha (α) and beta (β) are two crucial coefficients that are used for measurement of success of a particular portfolio. Beta represents the volatility of a particular asset (or the whole portfolio) versus the volatility of the benchmark. In this article, we’ll explain what beta is and give a few simple examples to demonstrate how it can be used.
More than 20 years ago, in 1997, Robert Kiyosaki and Sharon Lechter released their book “Rich Dad Poor Dad” which became an immediate success. This book is about personal finance, entrepreneurship, business, investing and economics and it has become some kind of a bible for a lot of people.
Alpha (α) coefficient in investing is used for measurement of the success of a particular portfolio. Along with beta, the alpha coefficient helps portfolio managers to determine how certain picked assets performed against the market average. In this article, we’ll explain how to use alpha and why is it important for investors.
It’s usually justified to be skeptical about financial forecasting, yet most portfolio managers have certain expectations regarding the future rate of return on the investments they make. How does one figure out an expected return of a financial portfolio? In this article, we’ll explain a method that is commonly used to calculate the expected return.
It’s believed that investing is something that only the rich and old people should be interested in but an early start can bring many financial benefits. We’ll explain why you should start investing early and what benefits it can bring when you get older.
When you open your first bank account an adviser would often propose you to get checking (otherwise known as current) and savings accounts. The first one, without any interest for your day-to-day transactions and the second one with a very small interest.
When it comes to measuring dividend return of a particular stock, it’s important to understand what dividend yield is. It’s a rather simple concept but it may confuse some people because they’re expecting to see an absolute number, instead, they usually see some weird “yield” thing in the form of a fraction.
Time horizon measures an expected holding length of your investments and this term is often mentioned in relation to an investment strategy, meaning that a particular strategy (approach) can prefer a certain holding length. Some strategies, such as “buy and hold”, have a long time horizon, contrary to the day trading strategies which have an extremely short time horizon and, of course, there are many strategies in between.
A lot of people have a misconception about the amount of capital required to start investing and they think that only the rich people can be investors and traders. Actually you can create a new real investment portfolio with a relatively small sum of money.
Investing seems like an inherently risky affair for many people but it’s not true at all, you can actually choose what level of risk you’re comfortable with. Why would you choose a higher risk? There can be only one good reason: it should give you a higher return on investment.
Diversification has been an extremely popular term in finance and investing for many years. Almost any article, video or a book about personal finance or investing mentions diversification at some point. Why the idea of allocating your capital in various assets is that popular?
In general, a portfolio is just an organized collection of data created to serve a certain purpose. This beautiful word appeared in the English language in the 18th century and it was an adaptation of a much older Italian word ‘portafoglio’ (porto folio, port folio) which means ‘to carry’ something.
There is nothing wrong with managing your financial portfolio on your own (non-discretionary portfolio), although, in some cases, it may be preferable to find a qualified professional and let him manage your money. Those professionals are called portfolio managers. A portfolio manager is someone who fully controls a portfolio and makes all of the necessary investment decisions on behalf of the portfolio’s owner.