A direct investment is the purchase or sale of a company’s stock through that company alone, without the intervention of a broker. This is done via a Direct Stock Purchase (DSP) or Dividend Reinvestment Plan (DRIP), where dividend income automatically goes to buying more stock. Basically, you deal with the company directly and eliminate the middleman.
Archive for the ‘Level 1’ Category
A Direct Investment is…
Wednesday, August 5th, 2009A Market is…
Wednesday, August 5th, 2009A market is anywhere people come together to buy and sell things. At a farmers market, farmers and consumers come together to buy and sell produce, but markets can be exchanges for anything. Generally when we hear newspeople talk about “the market,” they are talking about the stock market – which refers to not only the physical trading floor of the NYSE but also online or electronic markets where people come together to buy and sell stocks.
A Tax Refund is…
Wednesday, August 5th, 2009A tax refund is money you get back from the government if you’ve paid more in taxes than you actually owed.
Value Added Tax is…
Wednesday, August 5th, 2009Value added tax is a tax levied on commodities after they go through production to reflect the increase in value. For example, a cake is made out of many ingredients, but the finished product sells for more than the sum of its parts, so the company selling the cake pays value added tax on this price increase. However, since sellers usually just hike up their prices to compensate for value added tax, it’s the consumers who really pay it in the end.
An Excise Tax is…
Wednesday, August 5th, 2009An excise tax is a tax on commodities made and sold within the same country (as opposed to the import tax on goods from other countries). For example: environmental taxes, and fuel taxes
The Gross National Product (GNP) is…
Monday, August 3rd, 2009The gross national product (GNP) measures the value of the total output of goods and services produced by a nation’s citizens, whether they live within the country or elsewhere. GNP was the main measurement of U.S. production and growth until it was replaced by GDP in 1991.
Breaking Even is…
Monday, August 3rd, 2009Breaking even is the point where your total revenue equals your total cost – you haven’t made any money yet, but you also haven’t lost any. For example, when you buy a financial instrument there are the costs to purchase the item plus transaction costs – like paying your broker. The investment doesn’t “break even” until the value increases enough to cover ALL costs.
Return is…
Monday, August 3rd, 2009Return is the change in value of an investment over a period of time. For example, if a group of stocks in which you invested were worth $50,000 three months ago and they’re worth $75,000 now, you have a return of $25,000, or 50%, over that three-month period.