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
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?
14
votes
2answers
4k views

Stock Split seems not to have changed the Share Price. Why?

I was recently looking at the financial charts of TCS(Tata Consultancy Services) and noticed that the TCS offered 1:1 bonus on 31st May, 2018. I noticed that the price of the share stock did not ...
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 ...
14
votes
2answers
977 views

Is there any reason to not request a CC limit increase?

I have had the same card for quite some years now, approaching 10. I have requested a few limit increases for the sake of convenience because buying a computer or international airfare tends to be the ...
14
votes
6answers
11k views

Will the stock market continue to grow forever?

I am relatively new to investing. I understand that the stock market, in some sense, reflects what happens in the real economy. For example, if the U.S. economy grows, the stock market in the long ...
13
votes
3answers
3k views

What is the difference between a stock and a bond?

I am just learning about finances (only 14 years old) and have heard about Stocks and Bonds and I would like to know the difference between these two things and wonder why would I invest in one or the ...
13
votes
7answers
2k views

Understanding the phrase “afford to lose” better

The phrase, "Only invest what you can afford to lose", when put in quotes, generates 167,000 Google hits and seems to me like one of the hoariest maxims in investing. But what does it mean? ...
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 ...
12
votes
3answers
17k views

If you own 1% of a company's stock, are you entitled to 1% of its assets?

Say you own 1% of company ABC's shares. If all of a sudden there is no more demand in the stock market for company ABC's stocks, and its share price dropped down to $0, can you claim 1% of company ABC'...
12
votes
3answers
4k views

Available credit more than credit line

I have a credit card with a credit line of $400. I have the whole $400 available to spend right now. I received a refund of $400 from a company. That makes my total available balance go up to $800. ...
12
votes
2answers
7k views

What's the difference between wire transfer and ACH?

My sponsors have two ways to transfer money. I wonder what's the difference?
12
votes
3answers
416 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 ...
12
votes
1answer
2k views

What is the difference between an amortized loan and a non-amortized loan?

As an example, my parents told me that their current car loan is amortized. Does that make any practical difference to how they pay off their loan, as opposed to if their loan had not been amortized?
12
votes
3answers
290 views

What exactly is the interest rate that the Fed is going to adjust?

Lately, the financial press talks non-stop about the Fed doing this and that to the interest rate. What exactly is this interest rate that the financial press is talking about? Why is this Fed ...
11
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 ...
11
votes
10answers
52k 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 ...
11
votes
1answer
1k views

Why didn't the balance go down on the student loan after a big check?

I owed about 45k on student loans. I wrote a check for around 10k to get the balance down. What I expected to happen was, for the balance to go down more than 10k, because that 10k would no longer ...
11
votes
3answers
5k views

What is the difference between fund and portfolio?

I am new to the finance world, and I keep hearing fund and portfolio. What is the meaning of these words and how are they related? Can someone please explain with examples? Is there any difference ...
11
votes
3answers
9k views

Is there a term that better describes a compound annual growth rate (CAGR) when it is negative?

When calculating rates of return for an investment or portfolio over time, whether to report or compare performance, one frequently calculates the Compound Annual Growth Rate (CAGR). I've got a ...
11
votes
3answers
635 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
2answers
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 ...
11
votes
1answer
1k views

Why can unissued capital stock exist?

Unissued capital stock allows a company to issue shares at any given time, diluting the ownership of current shareholders. This does not seem logical nor fair. At any given time, shouldn't 100% of the ...
11
votes
2answers
362 views

Why companies appear in several stock exchanges?

Let's say I want to buy stocks of Sinopec which is a Chinese company. I would expect to buy it from HKS and in local currency. With the Degiro broker which is Dutch, I see "Sinopec Shangai Petrochem-H ...
11
votes
4answers
6k views

Why do people rarely execute options?

Options have recently sparked my curiosity as you can short a stock with a put option and only risk your premium (as opposed to shorting in a margin account) but I still have a few questions. Why do ...
11
votes
1answer
22k views

How do wire transfers get settled?

Say I open accounts on Bank A and Bank B. I deposit $20 in Back 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 and Bank ...
11
votes
3answers
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 ...
11
votes
1answer
2k views

Presenting negative numbers using parentheses: where does this practice come from? [closed]

The standard accounting way is always to show negative numbers in parentheses. Where does this practice come from? For example, this cash flow statement use parentheses indicate negative values:
11
votes
2answers
517 views

Has anyone created a documentary about folks who fail to save enough for retirement?

In this question, the OP suspects that she simply needs to select the right annuity to solve her money problems. And in her defense, many financial institution commercials try to convince soon-to-be ...
11
votes
1answer
755 views

How does a synthetic ETF work?

A comment on my recent ETF-related question mentioned swap/synthetic ETFs. Most of what I can find on the web glosses over the mechanics. Can someone walk through what is happening behind the scenes? ...
10
votes
6answers
742 views

Is it a good idea to teach children that work is linearly related to income?

It seems to me that, if you want to teach children at an early age about the benefits of careful personal finance, and other fun concepts (like an intuitive understanding of compound interest), paying ...
10
votes
4answers
4k views

Credit card minimum monthly payment

I am opening a new credit card and am not sure exactly what this clause means: Your Minimum Payment Each Month. Each billing cycle, you must pay at least the Minimum Payment Due shown on ...
10
votes
4answers
9k views

Do you have to be mega-rich to invest in companies pre-IPO?

Say there's a company which is known with certainty to be doing very well, but is privately held and is expected to go public within a few years. When such companies do investment rounds, are the only ...
10
votes
3answers
13k views

What is the point of the stock market? What is it for, and why might someone want to trade or invest?

Sometimes you have to explain this to young people or people unfamiliar with the stock market. Why would a company want to be a stock company? Why would a person want to trade stocks? How does a ...
10
votes
2answers
6k views

Why do futures traders write months in a strange way?

I was reading up a bit on futures and found that futures clearing merchants write months in a very unexpected way: Month Month Code January F February G March H April J May ...
10
votes
6answers
2k views

Does reading financial statements (quarterly or annual reports) really help investing?

Will learning how to read financial statements really give investors a significant edge? From your experience, is it worth the time to pick up this tool? Edit: Thanks for all the feed back guys. I ...
10
votes
1answer
9k views

Which type of stock order would I use to sell a stock that hits a price or drops below it?

I have a few stocks and my normal way of selling them is to watch yahoo and if they hit a certain price I decide if I should sell. I want to be a bit more automatic and I see these orders are ...
9
votes
4answers
2k views

What is market capitalization? [duplicate]

I constantly hear the terms "small cap" and "large cap" while watching the financial channels on TV. What is meant by small/large market cap? How do they relate to a stock valuation?
9
votes
6answers
985 views

What are good games to play to teach young children about saving money?

I've heard that giving allowance is one approach to develop an understanding of money management. What other ways are available to teach kids about the benefits of savings?
9
votes
3answers
1k views

Why is gold not a good investment? [closed]

The following comment has 18 up votes: Gold is really not a good investment. – Almo (source) What's the deal with it? Is investing in gold bars equally bad as investing in gold jewellery?
9
votes
4answers
6k views

What does net selling or buying of a stock mean?

What does it mean when some one says that today there was a lot of net selling or buying in a stock. What does it mean because for every selling there is also a buying going on then how can you ...
9
votes
3answers
9k views

Foreclosure process: What happens when a bank forecloses on a home?

I know it is a long complicated process, but what is the high level overview of what a bank does when it forecloses on a house? Beyond credit getting hurt, what else? Where does the bank get it's ...
8
votes
11answers
6k views

Ways you can end up paying extra on a credit card even if you pay the full amount back in due time

If you are a financially responsible person, you know how a credit card works, you pay back the loans in full before the due date, you don't take out money form the ATM or otherwise do something that ...
8
votes
6answers
2k 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 ...
8
votes
4answers
2k views

What exactly is a “derivative”?

I haven't been able to find exactly what a derivative means. It seems to be some sort of cross of insurance, stock, and lay-a-way. When I try to look it up, all I find is all the problems not ...
8
votes
4answers
5k 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 ...
8
votes
1answer
180 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 ...
8
votes
5answers
576 views

Are personal finance / money management classes taught in high school, anywhere?

It sure seems like something that would be a valuable life skill, akin to Home Ec (or even more important!)... Where I'm from (Peel Region in Ontario Canada), it isn't part of the curriculum.
8
votes
3answers
3k views

What is the true value, i.e. advantages or benefits, of building up equity in your home?

I am a relatively new home owner, having purchased my first home in October 2009. It was a $315,000 home, purchased with a 5% no-cost loan with I believe 12% down payment. I think the total financed ...
8
votes
2answers
817 views

what are the pros and cons of structured deposits?

This morning, I came across the term, structured deposits. As I am still learning about finance, I am quite curious on different types of deposits. In layman's terms, What is a Structured Deposit? ...
8
votes
4answers
12k views

When inflation is mentioned over a period of more than one year, is it typically reported as a compound annual growth rate?

When we say "inflation has remained steady at 2% for the past 5 years", is that typically taken to mean 2% compounded annually for each of those years, or something else?

1
2
3 4 5
12