An investment vehicle is basically any structure or place where you put your money to try to make more money. Some examples of investment vehicles are stocks, bonds, and mutual funds.
Archive for the ‘Other Grow’ Category
An Investment Vehicle is…
Friday, June 3rd, 2011One More Thing, Before You Go…
Wednesday, May 25th, 2011
(photo credit: bredgur)
It’s not often that the Wall Street Journal writes for readers under 40, but they just published a really good article with financial advice for the pre-college population. Now, we’re not trying to get all parenty on you, but as pseudo-grownups we can assure you that a little planning goes a long way.* (And it really doesn’t take that much time out of your schedule.) Here are some of the points writer Zac Bissonnette makes:
- > Debt becomes part of your life once you take it on. If you’re planning to use student loans to pay for school, remember that paying back those loans after graduation means part of every paycheck will belong to the bank.
- > Speaking of paying for college, do you really need to pay for an ivy league degree? Success doesn’t depend on which school you go to – it depends on the effort you put in.
- > Don’t get sucked in by materialism. The vast majority of people are not rich but still perfectly happy. But there are a lot of forces around you conspiring to make you feel poor and deprived. Tell them to go away.
(TILE Fun Fact: A small amount of debt can actually help you, by rounding out your credit history and boosting your credit score. But ONLY if you use it responsibly – that means pay it off, and never miss a due date.)
The most important question you need to ask yourself is this: What is this college degree really going to cost me, in terms of my dreams? Maybe you’d like to travel the world after graduation, or take an entry-level job in the nonprofit sector, or buy your first house before you’re thirty. Massive debt can really screw up your plans, so plan accordingly.
* For example, if you chose to invest $1,000 at age 18 and earned a paltry 3% return, you could have $3,500 waiting for you when you’re 60. (And by the time you’re 60, 60 will be the new 30.) All that with absolutely no effort. Well, you do have to take an hour to invest that $1,000 when you’re 18. See what we mean about planning?
Play with your own numbers to see what a little investment today can earn you: Compound Interest Calculator
OPEC is…
Tuesday, May 24th, 2011OPEC stands for “Organization of the Petroleum Exporting Counties.” It is a cartel made up of 12 countries: Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela.
These countries produce much of the oil that the rest of the world buys, so they’ve banded together to ensure that everyone receives a fair price for their oil. The oil ministers of the member countries meet regularly in Vienna to discuss oil prices and production.
Price Per Share is…
Thursday, May 19th, 2011A Reverse Stock Split is…
Thursday, May 19th, 2011A reverse stock split is when a company adjusts the number of shares they have available to artificially increase the price per share. Technically, the shareholders don’t lose or gain any money when this happens, but the company buys itself some time to rebound from an economic drop.
The easiest way to explain reverse stock splits is with an example. Let’s say you own 100 shares of Apple stock, each worth $10. (For the record, AAPL is nowhere near that cheap in real life.) Unfortunately, Apple is suddenly hit hard by the recession – nobody’s buying iThings anymore – and the price of their stock falls to $0.50.
Apple knows that if their stock price remains under $1 for 30 days, it may be delisted from the NYSE. So in order to increase the price per share, Apple asks for a 10 to 1 reverse stock split. Suddenly, instead of having 100 shares worth $0.50 each, you have 10 shares worth $5 each.
In order to get from $0.50 to $5, you have to multiply $0.50 by 10. Imagine smooshing 10 of your $0.50 shares into one big ball of shares. Instead of 10, you now have one. And that one is worth $5.
You haven’t lost a penny. But Apple has just saved itself from being delisted.
An Intangible Asset is…
Thursday, May 19th, 2011An intangible asset is an asset that a company owns even though it isn’t a physical thing – you can’t see it, touch it or measure how much of it you have, but it does have value. For example, an idea (also known as intellectual property) is an intangible asset because no matter how good an idea it is, it’s just a thought until you do something to turn it into a physical reality.
Rut-Roh: Credit Rating Agency Just Not That Into U.S. Debt Right Now
Wednesday, April 20th, 2011
(photo credit: striatic)
Well, that pesky federal deficit has finally caught up with us. Standard & Poor’s, a credit rating agency that basically judges how risky (or safe) it is to invest in a country, has officially said that the United States’s economic shenanigans may end up costing it its pristine AAA credit rating. (That’s three A’s, so you know it’s extra awesome.) The main reason? Washington’s seeming inability to agree on a plan to reduce the deficit.
S&P didn’t actually downgrade America’s credit rating, but it did change its “outlook” from “stable” to “negative.” This is basically a shot across the bow, or a warning from your mother that if you keep hanging out with those corner boys all you’ll get is a reputation.
This is kind of a big deal. If the U.S. is downgraded (and according to S&P is could be within three years), we’ll be out-credited by France. And foreign investors might be less interested in buying Treasury bonds, which would cut off an important source of income for the government. Which might result in more cuts to services like health care, education, and, you know, repairing roads.
Let’s see where we are in two years. In the meantime, how do you think you would do in S&P’s eyes?
Can you weather the credit storm?
The NYSE Is Worth Less (and More) Than You Think…
Thursday, February 24th, 2011
(credit: jarapet)
How a marriage of two stock exchanges illustrates the modern revolution in stock trading.
- The New York Stock Exchange – famed hall of capitalist drama – has just been acquired by a German company called Deutsche Boerse. The result will be a giant international company with stock exchanges in Lisbon, Paris, Amsterdam, Brussels, New York and Frankfurt.
- The way people trade stocks has totally transformed as technology has changed. Most trades these days are executed by computers with almost no human involvement. Since computers are smaller and cheaper than human traders, it’s possible for more small exchanges to exist, and that means more competition for giants like the NYSE.
- The NYSE still operates a real trading floor with real people, making it ancient by today’s standards. Fewer companies are bothering to even get listed on the NYSE. This merger is an attempt by the exchange to stay competitive in an increasingly crowded industry.
- Still, the trading floor, the opening bell, and that building on Wall Street are worth something. In fact, according to the latest valuation, they’re worth about $10 billion.
Facts & Figures
- The NYSE has been on Wall Street since 1792, when 24 merchants traded stocks under a buttonwood tree (you know, back when there were trees on Wall St.)
- The new company formed by the merger will be 60% owned by Deutsche Boerse
- High-frequency trading (a.k.a. computer trading) accounts for about 70% of all daily trades
Best Quote
“The exchange business is really a computer business these days.” – Charles Jones, Professor at Columbia Business School, former visiting economist at the NYSE
What do you think?
Did you know that stock exchanges like the NYSE are themselves publicly-traded, for-profit companies?
How much does a name brand influence your decision to buy (or invest)?
Get to it!
Thinking about investing in stocks? Take our Risk Assessment Quiz to see how much equity you can handle.
When You Think “Activism,” Is Corporate Strategy The First Thing That Comes To Mind?
Tuesday, January 25th, 2011“On Monday J.C. Penney said it would add Mr. Roth and hedge fund manager William Ackman to its board, news that sent its stock up 7%. The pair, who have a track record of buying big stakes in companies and then pressing them to make strategic changes, surprised markets and Mr. Ullman Oct. 8 by saying they had amassed a 27% holding in the retailer.”
What do you think?
When you think of activism, is corporate strategy the first thing that comes to mind? Would you be willing to invest in a company that has taken a step toward major changes in the way it operates?
A diverse investment portfolio. With butter and sprinkles.
Thursday, December 23rd, 2010
from Let It Dough! by Christoph Niemann (NYTimes)
You can invest in lots of different things – stocks, bonds, mutual funds, currencies, cows. (For real! They’re called commodities and they’re really weird.) And you can invest in this stuff in the U.S. or in almost any country in the world.
But here’s the trick: you want to have a diverse mix of all these things, so you don’t lose all your money if, say, the U.S. economy crashes or all the cows go on strike.
Diversification is a way to reduce that risk by creating a portfolio with a wide mixture of different investments. In basic terms, it means “don’t put all your eggs in one basket.”
Mmm. Sprinkles.