Questions tagged [financial-literacy]
for questions related to understanding basic concepts in finance or certain terms in a particular context
99
questions
18
votes
3
answers
45k
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 ...
- 189
68
votes
3
answers
16k
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 ...
- 709
255
votes
22
answers
85k
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 ...
- 3,655
200
votes
21
answers
31k
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
...
- 5,825
168
votes
11
answers
39k
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 ...
- 1,993
132
votes
13
answers
29k
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 ...
- 1,438
27
votes
7
answers
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 ...
- 373
18
votes
10
answers
62k
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 ...
user1731
56
votes
4
answers
123k
views
When a stock price rises, does the company get more money?
When a stock price rises, does the company get more money?
user454
49
votes
9
answers
62k
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 ...
- 15.9k
43
votes
14
answers
11k
views
Hypothetically, should I pay off the smaller + higher interest rate loan first, or the larger + higher absolute interest cost?
I have this hypothetical situation on my mind and I am not sure which is the best solution.
Given:
Loan 1: $340,000 at an interest rate of 1.69% per year
Loan 2: $40,000 at an interest rate of 3.6% ...
- 441
37
votes
5
answers
22k
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 ...
user2667
29
votes
2
answers
3k
views
What does "Yield Curve" mean?
In the financial news we often read about the Yield Curve. What exactly is it?
5
votes
2
answers
443
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 ...
- 219
130
votes
23
answers
24k
views
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 ...
- 1,489
21
votes
6
answers
19k
views
Is rent considered a debt?
I am taking a financial assessment. It asks me:
What is your total monthly debt payment (e.g. student loans, vehicles, credit cards, personal loans, etc.)?
Then the next questions are about ...
- 529
15
votes
4
answers
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 ...
- 1,279
8
votes
1
answer
206
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 ...
- 221
6
votes
3
answers
3k
views
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 ...
- 213
94
votes
9
answers
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 ...
- 1,556
57
votes
6
answers
43k
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 ...
- 781
32
votes
7
answers
23k
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 ...
- 469
28
votes
10
answers
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 ...
- 5,825
27
votes
4
answers
15k
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?
- 2,205
22
votes
9
answers
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 ...
user178
17
votes
2
answers
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 ...
- 1,014
17
votes
7
answers
7k
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, ...
user178
14
votes
1
answer
24k
views
How do wire transfers get settled?
Say I open accounts at Bank A and Bank B. I deposit $20 in Bank A. I then initiate a wire transfer to my account in Bank B. I drive over to Bank B and withdraw $20.
Bank A now has $20 extra physical ...
- 243
13
votes
4
answers
2k
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 ...
- 833
12
votes
2
answers
2k
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 ...
- 405
11
votes
3
answers
689
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?
- 8,683
11
votes
3
answers
6k
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 ...
- 2,205
9
votes
5
answers
9k
views
Why is the bid-ask spread considered a cost?
I know the obvious costs of trading stocks, like commissions, fees and taxes. But I also hear people saying the bid ask spread is part of the transaction cost. Why is this the case? One of the ...
- 342
9
votes
5
answers
6k
views
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 ...
- 193
7
votes
1
answer
21k
views
What does negative Total Equity mean in McDonald's balance sheet?
What does negative Total Equity mean in McDonald's balance sheet?
Please refer to https://finance.google.com/finance?q=NYSE%3AMCD&fstype=ii&ei=3ZDCWaDdFcyauATPnb6wBg
For "Total Equity" row, ...
- 1,091
6
votes
2
answers
1k
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 ...
- 10.2k
5
votes
4
answers
9k
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 ...
- 77
5
votes
3
answers
743
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: ...
user1731
5
votes
1
answer
586
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 ...
- 105
4
votes
1
answer
915
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?
- 41
4
votes
4
answers
2k
views
Does short selling create additional share in the market?
Let's say that I short-sell 1 share that A lent to me and B immediately bought from me.
Doesn't this create additional share in the market because A will see it as "lent out" in his bank account and ...
- 655
3
votes
2
answers
2k
views
Does FDIC insurance at one bank cover each account?
I was reading that FDIC insurance covers accounts up to $250,000. Does this mean each account you have at a bank is insured up to $250,000 or is $250,000 the maximum for all accounts at a bank?
Also,...
- 1,717
1
vote
2
answers
5k
views
What is the meaning of realization in finance?
The definition of "realization" is well defined by multiple sources in accounting terms while we google it.
But, can someone explain in terms of real life example that suits the meaning of ...
- 267
0
votes
2
answers
5k
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 ...
119
votes
14
answers
31k
views
As a 16 year old, how can I keep my money safe from my mother?
I am 16 and still in HS and work 20+ hours a week. I live with my mother (my Dad left us when I was a kid and I don't see him anymore). My mother is an alcoholic and has trouble keeping a job. I don't ...
- 861
60
votes
9
answers
18k
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 ...
user44315
31
votes
11
answers
8k
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 ...
- 413
25
votes
5
answers
37k
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 ...
- 361
25
votes
3
answers
8k
views
Can someone just forcefully take over a public company for its market price?
I am working for a Fortune 500 company. A recent drop in our stock price caused, let's say, some startle.
Following that, one of our executives said in a global Q&A session in response to one ...
- 361
25
votes
3
answers
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?
- 8,683