The rule of 72 is a handy formula to determine approximately how long an investment will take to double, using a fixed annual rate of interest. It is used for compound interest and is helpful for simple mental approximations. How It Works All you need to know is the rate of interest. You divide 72 […]
Many financial enthusiasts have most likely heard of the film The Big Short, adapted from the book by Michael Lewis with the same title. The story follows one of the greatest trades in Wall Street history where a hedge fund manager, Michael Burry, from California predicted the financial crisis of 2008 and made his investors […]
“In investing, what is comfortable is rarely profitable.” Robert Arnott Bonds are an important component of many investors’ portfolios. In the past, they offered a stable return compared to other investments such as stocks, which are more volatile. There are many types of bonds, but most of them typically fall into one of two categories: investment […]
Earnings: the thing all investors obsess about. Every company reports earnings and investors pay close attention to them. Investors look at metrics like EPS, EBITDA, P/E, and many more to judge the company and its stock. The company’s earnings are a very important factor, but understanding it can seem extremely overwhelming. In reality, earnings and […]
You may have heard of credit scores before in various places during your daily life. These scores are part of a much larger rating system that has immense influence over our economy and investors’ attitudes. The Basics A credit rating is an assessment of how suitable a borrower is to receive financial credit or money. […]
The economy is far too vast and complex to fully understand, and thus economists have made models to simplify the many moving components: one of the most important is the circular flow model. The Model The circular flow model is most simply a way to show the flow of resources and money. It is composed […]
Even though many people use banks every day, they do not understand the big picture of how banks work. Many people see banks as a place to save money, get loans, or open checking and savings accounts. However, they fail to realize how banks are also businesses, and the goal of most businesses is to […]
You gotta spend money to make money. Or rather, it takes money to make money. This is true because when capital is invested, it generates interest proportional to the investment. Therefore, the larger the investment, the larger the return. This is great if you have tons of money because it means you can make tons […]
If you are following the 2020 presidential election news, you’ve probably heard of Elizabeth Warren and her stance on student debt. Considered a front-runner in the Democratic presidential primaries, Warren has openly voiced her opinions on corruption and transparency in politics and business. Recently, though, Warren’s stance on student debt has become more and more […]
While looking at various stocks, you may have noticed something called a dividend. Perhaps you saw a percentage that denoted the “Dividend Yield,” or you saw the “Ex-Dividend Date” and the “Payment Date.” As an investor, these are important concepts to understand, especially when choosing to buy a stock. Does it offer a dividend? What […]