Questions tagged [financial-literacy]
for questions related to understanding basic concepts in finance or certain terms in a particular context
640
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What is the correct Formula for calculating fund growth with fees
I am considering two different options for a roth IRA. A managed fund that has a higher historical growth rate but 1% fee and a self directed vanguard account, which would have a lower growth rate but ...
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For mutual funds, does average annual return mean compounded annually or continually or daily?
Vanguard's Portfolio Allocations page (1926-2019) shows 9.21% Average annual return for 70% Equity and 30% Fixed income.
Does this mean 9.21% compounded annually?
GOAL...
If at age full retirement age ...
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1
answer
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Equity cannot be redeemed at the option of the holder
I was going through Tier 1 Capital on Investopedia. I came across this note a couple of times in the article.
Equity capital is inclusive of instruments that cannot be redeemed at the option of the ...
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5
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What exactly is a professionally managed company? Why the promotor holding of professionally managed company is always 0%?
As you might have guessed by now, yes! I am new to the world of finance.
I have been going through a playlist on YouTube about investing in the stock market. And in one of the videos, I came across ...
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IRR -> Reinvestment Assumption Or Myth (And What It Actually Means)
I've been trying to wrap my head around a downside of using IRR - the reinvestment assumption. I don't really understand the concept on how IRR assumes that we reinvest at the IRR, if IRR is for ...
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What is a trust? (Canada)
I'm having a very difficult time researching what exactly a trust is. Is a for-profit company with some additional agreements? Is it a not for profit?
If it's neither of the two, and is simply a ...
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Is it wrong to say that a company only has a single stock?
I'm a newbie to investing and I was doing some research regarding the difference between stocks and shares. According to Investopedia stock simply refers to partial ownership of a company, whereas a ...
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Standard method for calculating YoY and YTD performance of an index or stock
I'm trying to understand how year-over-year and YTD performance values are calculated. I thought it was obvious and straightforward, but I can't replicate the values my bank shows for even a simple ...
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2
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Resources vs. Assets
I read an excerpt on Quora from the book, "Rich Dad, Poor Dad":
If you want to be rich you must know the difference between an asset and a liability and you must buy assets. This may sound ...
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Why buy insurance?
I don't understand why people buy insurance when they know the odds are not in their favor. Is staying uninsured and saving money not a better bet? I am not talking about house insurance. About things ...
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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
...
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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 ...
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Does the debt snowball outperform avalanche if you put the freed cash flow towards debt?
There are two main algorithms for paying off debt;
The snowball, where you put your extra money towards the smallest debt to knock them off the board faster
The avalanche, where you put the extra ...
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1
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How can I analyze my whole financial health?
I've tried Mint, but don't love it and all the ads.
I have all these csv spreadsheets of transactions from banks and credit cards. I can look at each one or create tabs and look at each tab and sort, ...
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Calculating future value on an initial deposit and then, incrementing this initial deposit as a recurring deposit yearly
I have a scenario where $10000 was initially invested into a savings account, at 6% pa compounded yearly. An amount of $1000 is then added annually to this savings amount after the first year, and we ...
CommunityBot
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How to read CDs: price vs yield vs bid vs ask?
I'm trying to understand CDs by comparing the two:
NAME
CLOSING PRICE
CLOSING YIELD
CURRENT BID YIELD
CURRENT BID PRICE
CURRENT ASK YIELD
CURRENT ASK PRICE
Mountain Commerce Bank
99.68
5.694%
99....
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1
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How to deal with insurance after car accident
My car met with an accident early January. The doors were slammed and the person who hit our car admitted his fault and confirmed his insurance will take care of expense. This is what happened (...
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4
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How to decide whether to pay an USD amount from my AUD account or from my EUR account?
Soon I have a payment of, say, 100 USD to make and I have an AUD account which holds enough currency and an EUR account which holds enough currency.
I wonder which account to choose?
Just looking at ...
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1
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Is it possible to calculate share price previous to stock split based on adjusted close price?
The price of NSE:HDFCBANK was around Rs. 2K+ before it split on 19-Sep-2019. I am using AlphaVantage to get stock price for NSE:HDFCBANK. It does not show the stock price before stock split as Rs. 2K+....
CommunityBot
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How can one compare the yield of a municipal money fund with the yield of a municipal bond?
Let's consider the following municipal money fund and the following municipal bond:
The Schwab Municipal Money Fund (Investor Shares) (SWTXX) discloses a 7-day yield (with waivers) as of 02/28/2023 ...
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What really is a recurring deposit?
What I do not understand is what is really meant by the term "recurring"? Also why is the minimum time limit between recurring and fixed deposit so different (min :6 months and min :7days) ...
2
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1
answer
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Do I pay bid-ask spread if I trade on the NYSE?
From what I understand from this market-maker versus specialist discussion on Investopedia, the job of the specialist is to bring buyers and sellers together as opposed to a market-maker who buys from ...
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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, ...
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Risk to Reward Ratio Calculation
I'm learning how to do a Risk/Reward ratio and want to make sure I am calculating this correctly.
Let's start with a .92 per share of 500 shares purchase = $460.
I expect the stock to increase by ....
3
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2
answers
129
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Currency forward rates
I'm looking at EUR/USD forward rates here: http://www.investing.com/currencies/eur-usd-forward-rates
Can someone explain, in very simple terms, what do the bid/ask prices mean? And what is the ...
- 2,451
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8
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Why do people still write checks as payments in stores?
Why do we still see (edit: in the US) some people (especially the elderly) still pay with checks in stores, even when the amount isn't too large for a debit card?
Here are the disadvantages I can ...
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1
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How to calculate the APR on an investment?
I'm trying to boil this scenario down to an equation:
A token is worth $1.50. There is a total of 100 tokens invested. Last week, this investment earned $2 in interest.
Given this, how would I ...
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2
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169
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Market Cap, NAV and finite resources
Gave a read through this question and I believe I understand the following:
NAV is the sum of a companies assets; represents the value if the company was liquidated
Market Cap is (shares outstanding ...
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6
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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 ...
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Why is beta linear?
Alpha and beta are commonly used to metaphorically describe decorrelated vs. correlated return, implicitly following a linear regression of returns relative to some benchmark. But isn't the choice of ...
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2
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How do I buy a life insurance policy as a collateral? [closed]
I’m almost done paying my home, my wife wants to sell it and buy a bigger house using the money from the sale? Someone told me to borrow against the house instead of selling it, and then purchase a ...
- 42.9k
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5
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Best way to invest money as a 22 year old?
I currently have a small sum of money of less than $1000, but will be reaching greater than $1000 over the summer due to a summer waiter job. I have been reading about the stock market, but so far I ...
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2
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How do stock analysts estimate the earnings for a publicly traded company? What about costs?
I assume that if one was a careful study of a company, you could determine revenue by surveying consumers and determining how much inventory is being sold, but I don't see how an analyst could gain ...
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3
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Why and why would/wouldn't a company split their stock?
When Apple was in the high $600 or so range, it split 7-for-1 and made it more affordable to purchase more shares for less, even though the value was technically the same. I see companies like Google ...
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Why is Year-Over-Year (YOY) important? [closed]
I have a question regarding Year-Over-Year (YOY) as I am really confused right now. Why is YOY important?
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3
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How much accounting knowledge is needed to read financial statements of publicly traded companies?
You have to understand accounting and you have to understand the nuances of accounting. It's the language of business and it's an imperfect language, but unless you are willing to put in the effort to ...
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Effective Maturity Calculation for prepaying securities?
Trying to find the best way to calculate effective maturity for prepaying securities (non-fixed income). My current understanding is that the link below is the best definition for effective maturity.
...
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2
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Is the Operating Income or Loss equivalent to Total Revenues for wealthier companies?
I have noticed on yahoo finance that some companies like this one don't have total revenues in their financial table but rather an Operating Income or Loss and a Net Income. Is it the same ? Can I use ...
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2
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Bank financing vs. Owner Financing (Dan Pena QLA, Company Acquisitions)
I have a question about small detail in QLA program from Dan Pena about company acquisitions and business loan lending in general. My question is related to the 03:45 (minute:second) moment of the ...
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2
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Is it becoming normal for young people to spend most of their income on rides and meals out? [closed]
Is it becoming normal for part-time and hourly employed people in their 20s (not college students) to spend most of their income on rides and meals out? If someone works 8 hours, spends 2 of those ...
CommunityBot
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4
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Financially stable. Now What? [closed]
I'm 43
0 Debt
Home Mortgage: PAID OFF
Several Cars: PAID OFF
Loans on renal property: PAID OFF
Credit Cards: PAID OFF
Personal Loans: PAID OFF
6mo+ Emergency Fund
Credit report clean and rising
I've ...
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2
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2
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How to produce daily loan amortisation schedule
I've seen some examples of how to calculate an amortisation schedule either monthly or yearly. My bank charges interest on a daily basis so I'd like to create a spreadsheet detailing my current ...
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1
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Corporate Finance Vs Corporate Finance? (w/ context differences)
I've heard corporate finance in 2 very different contexts, one referring to IBD, S&T, PE, VC and hedge funds, the other referring to a more financial accounting oriented role (at the same level w/ ...
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4
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What is meant by daily high/low and monthly high/low when it comes to stocks?
I have started reading financial information. I see mention of stocks reaching "daily highs", "monthly highs" and so on.
What is the exact of these descriptions? What is a daily ...
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1
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How to calculate Average CAGRs?
I have sales by 30 different products over years (2015-2022). I need to compute Compound Annual Growth Rate, however some of the product groups have high CAGR and some of them have quite low CAGR. So ...
- 130k
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2
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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 ...
CommunityBot
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what is more to Market Capitalization formula?
I wonder what is more to Market Capitalization formula ?
I am mostly an ETF investor, but follow some stocks with few # of shares and when I look at SPCE about 4-5 years ago its market capitalization ...
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Why is a stock dividend considered a dividend? What makes it different from a stock split?
I've been reading Principles of Corporate Finance by Brealey, Myers and Allen, but unfortunately they did not cover stock dividends. From what I understand, by paying a dividend, a company can ...
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7
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Financial astrology: How do the movements of celestial objects affect the stock market?
I noticed that there are many published research papers about financial astrology. There's also a book published by Wiley: A Trader's Guide to Financial Astrology: Forecasting Market Cycles Using ...
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Compound Interest Formula With Monthly Investment Increase
I'm looking to solve this problem:
If I were to start investing now, With a 4% annual return compounded monthly what is the function for my return if my monthly input is initially $2000 then for ...
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