These fundamental concepts will provide a foundation for understanding investments, markets, and investment strategies. Supply and Demand The value of an item depends not on what you paid for it, but on what someone else would be willing to pay for it today. What someone is willing to pay is related to supply and demand. For example, if there is a fixed supply of something, and the demand for it increases, then the price will increase. If demand for something remains constant, and there is an increase in supply, the price will decrease. Yield, Total Return, and Compounding For any asset, yield is the income earned (interest or dividends) divided by the price of the asset, such as a bond or a share of stock. Price and yield move in opposite directions. If a $100 bond earns 5 percent interest, it earns $5 on a $100 asset, or $5 divided…
Read the Wall Street Journal
A woman in my community received an MBA from the same school that I attended. She graduated with distinction thirty years before me, one of only six women in her class. (My business school class was 25% women.) She has had a successful career and has made a point of advising younger women to read the front page of the Wall Street Journal every day. It is important to keep up with national and world events, but also to be informed about the most important business and financial news of the day.
Financial Jargon – You Asked…
Question: What does “sell in May and go away” mean? Answer: The stock market has not performed well sometimes during the summer months. Some have suggested that you should sell all of your stocks in May and buy them back after Labor Day. This is not a good idea, however. You should not try to time the stock market. Plus, you could generate capital gains.
Educate Yourself About Investing
Educate Yourself About Investing is one of the four pillars in managing your financial life. The others are Get Organized, Analyze Your Finances, and Save and Invest. The following is a collection of posts that include important guidelines to follow. Please keep checking back as this list is constantly growing!