Podcast #128: We chat with Kent C Dodds about why he loves React and discuss what life was like in the dark days before Git. Listen now.

Questions tagged [financial-literacy]

for questions related to understanding basic concepts in finance or certain terms in a particular context

Filter by
Sorted by
Tagged with
18
votes
3answers
38k views

If I were to buy something a day before my due date for my credit card bill, would I be charged interest?

First of all, I am a resident of Canada. I am new to credit cards, so I hope my question makes sense. I've had my card for a few months ago and I've always paid the balance in full by the time the ...
67
votes
3answers
14k views

How did this day trader lose so much?

I recently read this article about a day trader that lost $100,000: A trader started a GoFundMe page to pay back $100,000 to E-Trade after a disastrous short Please explain this, because I can not ...
187
votes
19answers
26k views

How smart is it to really be 100% debt free?

For the last 2 years, I have been trying hard to be debt free without affecting my personal cash flow. I am by no means a rich person, but I have a decent salary. I still have debt, specifically ...
27
votes
7answers
3k views

Where to start with personal finance?

I am married with kids and starting to look hard at savings for retirement, buying a house and sending my kid to college (still a LONG way away). However, I am completely new to the world of finance ...
218
votes
21answers
73k views

Why isn't everybody rich?

This question came up after reading this question (stock market long term risks), in which it is re-iterated (as it has been many times on this site), that investing in the stock market, especially an ...
150
votes
10answers
32k views

Do I make money in the stock market from other people losing money?

Basically I am new to stock trading and neglect to see the differences between trading stocks and betting on sports. Basically I am "betting" on which company will do well, and this can change due to "...
119
votes
13answers
18k views

Why does gold have value?

I'm curious about why is there so much financial interest and news coverage about gold. It's hard to do things like buy food or pay the rent with gold, but I can do this with cash. Gold doesn't yield ...
35
votes
5answers
19k views

How can a credit card company make any money off me? I have a no-fee card and pay my balance on time

How does a credit card company make any money off of me using their card if there are no fees associated with the card (I don't pay any extra) and I pay off my balance on time every month (so I don't ...
11
votes
9answers
42k views

Why are American-style options worth more than European-style options?

Why are American-style options worth more than European-style options? I realize I can exercise American-style options anytime before the expire, but I can only exercise European-style options ...
27
votes
3answers
3k views

What does “Yield Curve” mean?

In the financial news we often read about the Yield Curve. What exactly is it?
14
votes
4answers
2k views

Why would I want a diversified portfolio, versus throwing my investments into an index fund?

Index funds are well-known to give the best long-term investment. However, most financial planners recommend having a diversified portfolio, including components such as bonds and foreign markets. I ...
3
votes
1answer
4k views

ADR vs Ordinary shares

Why should someone prefer an ADR if he can get the ordinary share from the same stock exchange? Yes, ADRs often have multiple ORD bundled but they also cost more (fees for the company who manages ...
8
votes
1answer
163 views

Do ETF owners buy and liquidate units from the market when gap between market value and value of underlying shares is large?

Due to various reasons, an ETF, even an index ETF might trade at a value lower that the value of its underlying securities. In such a situation, can the company managing the ETF actually buy from the ...
4
votes
2answers
342 views

What is a mutual fund?

From Investopedia I understand that a mutual fund is a pool of funds used to invest in various assets. I am struggling to understand what it is. I wouldn't be able to spot a mutual fund based on this ...
124
votes
23answers
22k views

Why buy insurance?

I don't understand why people buy insurances when they know that odds are is not their favor. Is it not better bet to stay uninsured, and save money? I am not talking about house insurance. About ...
93
votes
9answers
23k views

When someone's ability to pay is suspect, why would it make sense to give them more expensive credit?

Answers to the recent question "Why don't bond makers just get loans?" Seem to take it as a given that lending someone money at a 12% interest makes sense when there is already doubt about their ...
27
votes
9answers
3k views

Which practice to keep finances after getting married: joint, or separate?

My wife and I have been keeping our finances separate for a long time. Some of my friends just put everything in a big pot. We each have our own pot, but then we have a common pot where we put all ...
13
votes
4answers
1k views

How to learn about doing technical analysis? Any suggested programs or tools that teach it?

I've been going through the OIC Education Courses recommended by @jaydles in another question about learning options. I'm about halfway through, I've learned a lot about how the stock market works ...
52
votes
6answers
21k views

How can a company use money from stock investors when they are constantly being bought and sold?

I am interested in the mechanisms which a company can use the money that investors give them when they buy a public stock since they are being bought and sold constantly. How can a company spend other ...
19
votes
6answers
6k views

Can you explain “time value of money” and “compound interest” and provide examples of each?

Can you explain the time value of money concept, including present value and future value? How does compound interest work? Why is compound interest a powerful concept when it comes to borrowing, ...
32
votes
7answers
18k views

Bought stock at higher price than current price

I wanted to buy stock ABCD at a price of 880. The current price was 900. When I bought, I set 980 instead of 880 and it was fully executed. I don't understand how it is possible to buy stock at a ...
26
votes
4answers
12k views

What is the meaning of “short selling” or “going short” a stock?

Can someone please explain the meaning of 'shorting' a stock with an example?
17
votes
2answers
1k views

Can someone explain the different kinds of annuities?

So in my retirement and personal investing I have some stocks (very little), a Roth IRA, a Roth 401K and a Traditional 401K (later two are from work and I split things right now). At my age and ...
11
votes
3answers
611 views

At what age should I begin discussing money - saving, spending, investing - with my child / children?

In addition, when should I open a savings account at our bank for my kids; and give them accountability over it?
11
votes
3answers
5k views

What does market cap (or market capitalization) mean?

When I look at my Google finance page, and I look at a company, lets say Citigroup for example, and I see that the market cap is 83.45 billion, what does that mean? Does that mean Stock Price X ...
0
votes
2answers
1k views

Why hold calls until expiration?

I am reading a book on options basics. I am in a chapter on selling covered calls. The author says that buyers of calls almost always hold the calls until expiration. Why is this? Here's how I ...
37
votes
9answers
48k views

If stock price drops by the amount of dividend paid, what is the use of a dividend

I have heard that some people buy stocks based on how much dividend they pay, because dividend is considered 'income'. But if I buy a stock for 100$ and it pays a $1 dividend, the stock would also ...
22
votes
9answers
4k views

What is the difference between “good debt” vs. “bad debt”?

This other question about home renovations makes reference to the concept of "good debt." Could somebody explain the concepts of good debt vs. bad debt, providing examples of each? Are there cases ...
5
votes
4answers
8k views

If I buy a share from myself at a higher price, will that drive the price up so I can sell all my shares the higher price?

Suppose I buy 100 shares of Apple at $200 and I want to increase the share price. If I sell 1 share at $210, and at the same time log in to buy the share at $210, will the share price increase to $210 ...
4
votes
1answer
456 views

Why do passive ETFs require so much trading (and incur costs)?

As far as I've understood, the idea of passive ETFs is to track an index. Typically, the index is a value-weighted stock market index, such as the S&P500. Now, if I'm not mistaken, tracking a ...
4
votes
1answer
611 views

What happens to my stock when a company I invested in gets bought by another company?

If a company is bought by another company, does my stock rollover to the new company when it is combined with the new parent company?
11
votes
2answers
1k views

How can I tell what is “real” Motley Fool advice? [duplicate]

I clicked on a link and was taken to a video, which troubled me a bit and is a bit different from what I expect of the Motley Fool, of which people have presented as offering advice like "Live below ...
6
votes
1answer
6k views

What does negative Total Equity means in McDonald's balance sheet?

I was wondering, what does negative Total Equity means in McDonald's balance sheet? Please refer to https://finance.google.com/finance?q=NYSE%3AMCD&fstype=ii&ei=3ZDCWaDdFcyauATPnb6wBg For "...
4
votes
2answers
609 views

Why are cash advance limits lower than my credit limit?

All my credit cards allow for cash advances. But for some reason the limit for cash advances are always way lower than my actual credit limit, why is this? If a bank trusts me with credit to purchase ...
4
votes
3answers
601 views

Credit card grace period for pay, wait 1 day, charge?

Does a credit card grace period apply in this situation: March 1: I charge $1000 to my card. March 8: My billing cycle ends (ie, this my card's closing date). My due date is March 28th. March 9: ...
58
votes
9answers
17k views

Why are 30-year mortgages seen as unwise, if you can pay off the loan in a shorter period of time anyway?

I'm slowly working towards buying my first home (yay!), and have been playing around with the numbers. As far as I can tell, there's literally zero advantage for getting a 10 or 15-year mortgage since ...
24
votes
3answers
10k views

What is a trust? What are the different types of trusts?

What is a trust? What are the different types of trusts? Are some better than others? What are the different roles involved in a trust?
22
votes
9answers
2k views

What are the best strategies to give pocket money or an allowance to children?

What are the best strategies to give pocket money or allowance to a child especially if you would like to teach them something through this, e.g. saving?
12
votes
3answers
405 views

Solid reading/literature for investment/retirement/income taxes? [closed]

I'm striving for financial literacy and education. I've been really frustrated with most of the literature that's out there surrounding retirement, income taxes, and investment. Most of it seems ...
31
votes
11answers
7k views

Will a credit card issuer cancel an account if it never incurs interest?

I have a few credit cards that are currently carrying some larger "promotional" balances. These are purchases that I decided to put on a 6, 12, or 18 month 0% APR financing offer vs. taking any points ...
12
votes
3answers
2k views

Should I care about expense ratios?

I've never been an investor before, but I recently came into some money. In my understanding, expense ratios for mutual funds and ETFs are typically incorporated into the yield or ticker price. If ...
9
votes
6answers
1k views

Ongoing things to do and read to improve knowledge of finance? [closed]

In this forum, there are a lot of people whose primary job is programming. And yet they are very knowledgeable on a lot of financial topics. Can you please share what you do/read on a regular basis ...
3
votes
4answers
636 views

Building financial independence

In my very late 20s I am working hard to become financially independent. I have a good job paying between 74-80k a year. I can live (pay rent, food, entertainment) for $1k a month. So after taxes I ...
20
votes
5answers
16k views

Why don't SPY, SPX, and the e-mini s&p 500 track perfectly with each other?

These tickers (SPY, SPX, /ES) are all based off the S&P 500 yet the relative lows and highs diverge. Can someone provide a basic explanation what causes this to happen? I feel like it may stem ...
16
votes
2answers
7k views

What is “financial literacy” and how does one become “financially literate”?

How does one become "Financially Literate"? Also, on a side question; what does "Financially Literate" even mean?
7
votes
2answers
1k views

How does a monthly inflation rate work?

I'm struggling to understand the following inflation numbers for South Africa given here: http://www.tradingeconomics.com/south-africa/inflation-cpi Year Month Inflation 2015 Jun 4.7 2015 Jul ...
26
votes
4answers
49k views

When a stock price rises, does the company get more money?

When a stock price rises, does the company get more money?
21
votes
2answers
165k views

What's the difference between a certified check, a cashier's check, a money order, and a bank draft?

The question comes from reading this answer. I've heard these terms used somewhat interchangeably, but I have no idea what the differences are. What's the difference between a certified check, a ...
6
votes
5answers
4k views

Why do stocks go up? Is it due to companies performing well, or what else? [duplicate]

I searched for this question but I didn't get any convincing answer. What everyone says is that if a company does well (I assume this means the company has good returns on its projects) then people ...
4
votes
3answers
2k views

What's the correct formula to calculate my monthly wage (deducting UK Income Tax and National Insurance)?

For a given salary, how do I work out what would be paid into my bank each month? The Income Tax part is explained for the main part in this question, but I can't make sense of the National Insurance ...