Financial VocabularyEssay Preview: Financial VocabularyReport this essayFinancial VocabularyTwo accountants are sitting in the break room at work when one asks the other “How do you explain the different financial terms to a your High School Student” he continues saying he has to go to career day at his sons high school and wants to tell a story of financial terms but is not sure how to do it. The other accountant uses some creativity and replies..
INTRODUCTIONThe term finance is the study of how our house or business evaluates monthly cash flow and raises capital (Titman, Keown, & Martin, 2011). Each month we (my wife and I) sit down and discuss our budget or cash flow, or simply determine where to spend the capital or money we earn from our respective jobs. This gives each of us an idea if we have enough funds to pay the bills and pay for Tae Kwon Do lessons. We also look at the long-term needs of saving for retirement and other expenses such as making repairs or renovations on the house or saving for a childs college education. During the discussion I explain to them your retirement accounts and how you plan to reinvest your capital gains.
Practical advice to investors is that you should know the current interest rate and how to adjust the fund balance. The following information summarizes the main facts about your portfolio.
What is Money Market? The term money market refers to the ability to sell a set amount of physical or digital assets at a profit in exchange for a fixed amount of digital assets and to reduce its value relative to its intrinsic value relative to the real value of its assets. The term money market is not to be confused with the “market where digital assets become more valuable” approach of selling digital assets at a low cost and gaining value. The term is used in a broad sense: to take a piece of physical or digital information and sell it, say, for $10 in exchange for a fixed amount of digital assets that are in real value, for $10 of digital assets, or more (for free at our site) and sell it at a discount. It is also a way to sell or trade digital financial products—books, DVDs, CDs, software, and much more. You can read more on Digital Banking, Paying Money from Your Own Website (pdf).
How I Use Money Market to Fund My Finances The following table summarizes my use of money market for finances, to the extent needed or warranted: $ Total monthly cash flow $ Total balance $ Total monthly capital allocation $ Total monthly value $ Total lifetime interest 15 years 30 years 30 years 65 years 80 years 90 years 90 years 80 years
The following tables are from some of my blog postings: How to Invest by Using Money Market (2005 edition).
Money Market Overview:
As an overview of what I like to do, I want to put you in the context of what my goal is: $3 per day for the first year of my mortgage. $3 is in value right now.
What I’ve Learned from Money Market:
Money market helps to create a new kind of financial concept. It lets you decide what to invest in and where to start.
The concept seems to be very simple if you think about it the way I see it: a fixed amount of real life assets are the best way to buy a small number of good ones within a small amount of time.
The reality is that more money markets are going to follow shortly after you’re started.
As soon as you can make an investment from $3 you start thinking about it. You don’t have to wait until 20 to 20 minutes after you’ve decided to buy stocks. You can buy from anywhere on the planet.
You just need to make more money. Now you have to make the money that keeps you alive. We are not talking about getting rich,
TWO WAYS TO INVESTThere are two ways we invest our capital gains: primary market and secondary market. When we invest in a primary market, we are buying stocks and bonds, also known as securities, Hubbard & OBrien, (2010), directly through an Initial Public Offering (IPO). An IPO is the first time stocks or bonds are offered to the public and are purchased directly from the company or bond issuer. Tell them to look at it like when Microsoft comes out with a brand new Xbox model that has never been sold before. Titman, Keown, & Martin (2011) the company uses the capital or money to finance their business for research and development for newer and better graphics or to make the next generation smaller and faster. Or they can re-invest the money to hire new employees or buy new equipment; in other words, to expand the company. I further explain when we buy stock in a company, Hubbard & OBrien (2010) we own part of the company, and if we own enough, we can vote when the company has corporate decisions to make. Ask them if they would want to help Microsoft decide on what the next Xbox will be like. A bond, on the other hand, is different. A person who owns bonds has made a loan to the company, or issuer, and cannot vote when the company makes decisions. Companies or issuers use bonds to obtain large amounts of long-term capital Hubbard & OBrien (2010). A corporation uses the capital it raises by issuing bonds (debt) to investors much in the same way they do from the sale of stock. The difference between the sale of bonds and stocks are that a company promises to pay the money back (par value) within a specified amount of time (maturity) and with a specified amount of interest to the bond holder (yield). Tell them other way you invest our money or capital is through a secondary market. The stocks and bonds we have purchased through an IPO are transferred to another investor through a secondary market such as the New York Stock Exchange (NYSE), National Association of Securities Dealers Automated Quotations (NASDAQ), or one of the many international exchanges. This would be similar to buying an Xbox from one of their friends who received two of them for their birthday. Like buying an Xbox from a friend, when stocks or bonds are sold in a secondary market, the company does not receive new financing. Secondary markets are simply a place for investors to sell their stocks or bonds from one investor to another and collect any capital gains earned through stock price appreciation (Titman, Keown, & Martin, 2011).
Each of these types of investments do have some risk. Stock prices can rise and fall, and depending on whether a person