Synergy, besides being one of those infamous “corporate buzzwords,” is the combination of at least two things (for example companies or organizations) to produce a financial benefit that’s greater than the sum of its parts.
For example, by purchasing one company, another company might be able to generate more revenue than both companies would have been able to generate if they kept operating separately. (Think Graham Crackers Inc. and Melty Marshmallows LLC being acquired by Hershey’s.)
OPEC 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.
A Plutonomy is an economy that is driven and controlled by an extremely wealthy minority. The word was coined in 2005 by an analyst at Citigroup. According to the laws of Plutonomics, the rich – because they spend a lot of money – make up such a large proportion of national spending that they mess with national spending statistics.
For example, if you asked everyone in the country how much they spend on designer clothes each year, and averaged that number, you would get an inaccurate picture of how well America is dressing. Why? Because one person spending $10,000 a year on couture while 9 other people spend $0 still makes it look like everyone is dropping $1,000 on their “collection” every year.
An annuity is a kind of tax-deferred retirement plan, but it’s usually operated through an insurance company. You pay the insurance company a certain amount of money, and in return that company promises to pay you back with interest over a period of time. An annuity is a simple way to save money for retirement without paying taxes on it right away.
You can pay into your annuity all at once (“lump sum”) or in a series of payments. Depending on your contract, an annuity might start paying you back right away or start at a later date – such as when you plan to retire.
Frank Murtha from MarketPsych returns with some insight about how that annoying habit from high school follows most people into their grown-up financial lives. If you’ve been jumping off bridges after your friends up until now, maybe this will convince you to stop:
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Supply and demand is an economic model that determines prices in a competitive market. Generally speaking, supply refers to how much is available for sale, and demand refers to how much consumers want it. The selling price represents where supply and demand meet.
Earnings are the amount of money that a company makes over a certain period of time, usually after taxes. So if you have a painting business for the summer, your earnings for the summer would be the amount of money that you’re left with after paying your employees, buying all the materials, and paying taxes on your profit.
A management fee is the compensation that investment fund managers get in exchange for constantly trying to make a fund profitable. The money for management fees comes from investors, who pay into the management fee pot every time they invest in a fund.
The amount of the fee is determined in different ways. Sometimes it is a fixed rate and sometimes it is a percentage based on the manager’s investing success. Sometimes it’s both!
A windfall profit is a big profit that you don’t expect. If you own a store and make a steady amount of profit every month, you probably expect that the next month you’ll keep making the same amount.
But if one month you bring in twice as much money as you normally do, then the unusually large profit is called a windfall profit. Windfall profits are unexpected and sometimes you don’t even know why they happened!