New answers tagged

2

Debt is money owed to another for goods or services (or money) rendered. For example, if you took $5 worth of product from a store (other legal consequences aside), you would be in debt to that store for $5 of product taken. Rent is typically paid in advance for use of the premise for the upcoming month, or other unit of time specified in your lease ...


3

This question of the financial assessment test is asking for your monthly repayment rate for any annuity loans you have. An annuity loan is when you receive either a sum of money or goods/services worth a certain amount of money and then pay that money back over time through a monthly installment plan. The questionaire is asking you for the monthly ...


63

Rent is not a debt because you have not borrowed any money from the landlord. Your current month's rent is a (very) short term liability, as are other payments for services rendered (like utility bills and maid service). Future rent obligated by a lease agreement can also be considered a liability, or you can consider the cost of breaking the lease to be a ...


20

The answer is a certain 'no'. There was a question along the lines of "How can one always be debt-free, given that we get monthly bills?" In that case, we make the distinction between an accumulated debt and regular bills. I'd prefer not to argue word definitions, per se, or semantics. For purposes of such exercises, your highlighted quote helps make the ...


0

Probably not the reason for the .84%. Reason is more likely that all index funds (including SPY) have fees/expenses. So they have to be deducted from the return, thus producing a slight under-performance as compared to the index (in this case, the S&P 500). If dividends are included on one and not the other, the difference would be much greater as the ...


2

(I know this answer is correct for the UK, I am 99% sure it is also correct for the USA, in other parts of the world YMMV). In my naive understanding of how credit cards work I would expect my actual bank account to be charged the how much I spent in the billing period. Normally, by default your bank account is not automatically charged anything. It is ...


3

What the authors are trying to discuss is how to think about a company which has retained earnings, in terms of the 'cost of financing'. Because you want this to non-corporate finance people, first some definitions: (1) Retained earnings: these are accrued profits from previous years, that haven't yet been paid out as dividends. ie: if Ford had net income ...


1

You're not missing anything obvious, but I would reduce the amount that you need to live somewhat. Your fictitious income is 60k (15% of 60k is 9k). You're contributing $9k to a 401k. You're calculating the money you need based on that 60k income to be 60k as if you were continuing the contributions after retirement. You should either include those 9k in ...


5

You've stopped the drawdown projection after 15 years, but you could easily live longer than that, and in just a few more years you'd run out of money. Your initial withdrawal rate of >7% is very high. You haven't considered the need to grow your withdrawals with inflation. As a result of the above, most people cannot rely purely on "conservative portfolios" ...


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