In my last post I discussed dividends which are one method which company management can use to return value to shareholders. The other main method is what is known as stock buybacks. The official term is share repurchases, but I’ll use buybacks as that is the term most commonly used. I’ll first define stock buybacks, […]
Dividends – Why they aren’t “free money”
In this article, I introduce the concept of dividends. Dividends are often stated as a major source of investment return. In this post I’ll address: How dividends are commonly portrayed Define dividends Show an example of the reality of dividends Address how dividends can be deceiving How dividends are often portrayed (“Free Money”) Dividends are […]
Rate of Return – The difference between $2k and $1.4 million
Rate of return of is one of the three most important factors that determine how much money you make investing. The other two are your expenses and your risk of loss, which are both closely related to rate of return. In our previous post, we discussed compound interest and how earning interest on your interest is […]
Compound Interest
Almost everyone has heard of interest. If you have a bank account, the bank probably pays you interest. (Even if it is a 0.000001% interest rate) If you have any debt, then you are likely paying interest on that debt. However, do you understand the effects of compound interest? Compound interest is the effect of […]
Do I need an emergency fund before investing?
One of the most common questions asked for those beginning to invest is: Do I need an emergency fund before investing? The Answer: It depends. In most cases, having an emergency fund before you begin investing is the ideal situation. This is the mantra waived by nearly all personal finance writers. Often, they overlook complex […]
