They say money doesn t grow on trees, but one way to to make the most of what you earn is by paying attention to interest.
As far as financial concepts go, interest is one of the most important to understand. Essentially, it s the payment you receive when you lend (or deposit) money, as well as the money you pay when you borrow it.
Interest also comes in two forms: simple and compound. Simple interest is calculated based on an investment or loan s principal balance, which is the initial amount you put down or borrowed. And compound interest combines previously accumulated interest to the initial amount, sometimes referred to as interest earned on interest.
Investors use market value to analyze investment opportunities.
Market value is used interchangeably with market capitalization, but it is a more complex measurement based on a range of factors.
Evaluating where a business stands in relation to its competitors and industry is a key step in deciding whether a stock is worth your investment.
Market value, or the value of a security in the eyes of the market, is one of the many metrics investors use to evaluate a company s worth.
Most often used in tandem with book value, market value gives individuals a look at the bigger picture. If you re looking for leg up to spot the right investing opportunities, understanding all the factors that comprise an asset s market value is a must.
The 80/20 rule, also known as the Pareto Principle, is a theory that finds that, for any given situation, 80% of the effects come from 20% of the causes. It can be applied to many facets of life, but most typically used in business economics.
Bonds and bond funds allow individuals to diversify their portfolios while mitigating investment risk.
Unlike stocks, bonds typically offer lower returns and don t come along with ownership rights or the chance to win big.
Although stocks tend to garner most of the excitement behind everyday investing, bonds are another major asset class that offer a valuable way to diversify your portfolio.
Bonds are fixed-income securities that represent the ownership of debt and act as loans between a company or government and an investor. They re safer and less volatile than stocks, offering predictable, but often lower returns.
How do bonds work?
Zero
Single, head of household, or married filing separately and you did not live with your spouse at any time during the year $125,000 $125,000 but $140,000
Reduced amount
Zero
If your income is too high to contribute to a Roth, going through the backdoor can be your way in, since the IRS does not limit who can convert a traditional IRA to a Roth IRA.
These accounts can be opened at banks and brokerages that offer IRAs. If your retirement plan is part of a 401(k) offered by an employer, the associated financial services company can also help you navigate the logistics.