What is budgeting and why is it important?

A budget is a financial plan for a period of time or an estimate of income and expenditures for a period of time. A personal budget is broken down into needs, wants, and savings & debt. Budgeting is crucial for managing monthly and unpredictable expenses, and gives you greater control over your finances.

This article explains everything about budgets in full-scale.

https://www.investopedia.com/terms/b/budget.asp

What are Stocks and how to invest in them?

Stocks represent fractional ownership of a company in proportion to the total number of shares. If you buy one share of Apple for $437, you own 1 share out of 4.405 billion shares of the company. If Apple as a company performs well, your $437 will increase, and if they perform badly, your $437 will decrease.

What are Bonds and how to invest in them?

A bond is a loan made by an investor to a borrower for a certain amount of time. A bond is a sort of IOU and the borrowers pay the lender a yearly interest rate on top of eventually paying back the initial loan. The two most common types of bonds are municipal and corporate bonds.

What is an IRA and how to invest in one?

An IRA is an individual retirement account that provides tax advantages for retirement savings. There are 3 main types of IRAs: Traditional, Roth, and Rollover IRAs.

What are Dividends and how to receive them?

A dividend is a distribution of a portion of a company’s profits to its shareholders. The extra profit that is not put back into the company is paid out to stock owners of the company in the form of a dividend. You receive dividends quarterly by holding onto a stock for a full quarter. For example, if you bought Walmart stock a year ago and didn’t sell it, you would have received dividends on 4 different dates throughout the year specified by the company. Walmart pays a dividend of $2.16/share per year. Companies give dividends to entice shareholders to continue holding onto their investments in those companies and to entice new investors to buy their stock.

What to look for when Choosing Stocks and where can I go for Investment Advice?

It can be challenging to pick out stocks as a new trader which is why most new investors have financial advisors manage their money instead. These are 7 characteristics to take into account when looking at potential company investments.

Starting off in investing is very difficult and it is even harder if you do not have a mentor or somebody you know that can give you early advice.

How and why should I Diversify my Investment Portfolio, and when is the Best Time to Invest?

Diversifying your investment portfolio is very important because it protects you from a market crash and helps you capture gains across numerous different industries. For example, if you had both healthcare, technology, fin-tech, retail, financial, industrial, real estate, and utility companies in your portfolio you would have been completely protected against the coronavirus market dip. But, if you were just invested in industrial, real estate, and financial companies, the pandemic dip would have sent your portfolio down the gutter.

Some investors believe that there are better times to be investing than others. For example, you could either buy on a dip and hope that the stock price will recover, or buy on an increase hoping that the stock price will continue to rise

What is Day Trading and Swing Trading Stocks?

Day trading is when you buy and sell a stock or stock option on the same day. If you bought Kodak for $22 and sold it for $48 on the same day, that would be a day trade. Swing trading is when you buy a stock or stock option and hold it for 2-3 weeks and then sell it. If you bought a call option betting that Apple would reach $500 by the end of August and sold it 3 weeks later, that would be a swing trade. These two investing strategies are extremely volatile and take a lot of market knowledge for you to become profitable doing them.

What are Stock Options and how to invest in them?

Simple stock options are bets on whether a stock is going to go up or down within a certain time period. A call option of $500 on Apple with an expiration date of 1/15/2021 is a bet that you are placing that Apple’s stock price will reach $500 by 1/15/21. The closer Apple’s price gets to $500 the greater return you receive. A put option is betting that a stock is going to go down.

What are bonds and how to invest in them?

A bond is a loan made by an investor to a borrower for a certain amount of time. A bond is a sort of IOU and the borrowers pay the lender a yearly interest rate on top of eventually paying back the initial loan. The two most common types of bonds are municipal and corporate bonds.

What is a mortgage and how does it work?

A mortgage is a loan that you can use to buy or refinance a home. Mortgages are a way to buy a home without having all the cash upfront. They are used when you can’t afford to pay the full cost of a home out of pocket or when you would rather have the extra cash free to make other investments.

This article from Rocket Mortgage explains mortgages in full-scale.

https://www.rocketmortgage.com/learn/what-is-a-mortgage

What are Earnings & EPS (Earnings Per Share)?

An earnings report is a report given by a company four times a year discussing how they performed financially in the previous quarter and giving guidance and plans for the future quarters to come. EPS is a measure of profitability and takes net income and divides it by the number of shares owned. The formula for EPS is Quarterly Net Income / Shares Owned. The other main metric looked at in earnings reports is quarterly revenue. These two metrics are both compared to analysts estimates beforehand. When a company beats earnings, they report a higher than expected EPS and if they missed earnings, they report a lower than expected EPS.

What is GDP?

GDP stands for Gross Domestic Product and is the monetary value of all finished goods and services made within a country during a specific period. GDP is a great indicator of how the economy of a certain country is doing during a time frame and has been used a ton in trying to predict the U.S. and other countries’ recovery time frames from the pandemic. Better than expected GDP data will end up pumping the market because it shows that the U.S. economy is in a better state than previously expected.

What does the Federal Reserve (Fed) do and who is Powell?

The federal reserve is the central banking system of the U.S. and was formed by Congress in 1913 to provide the U.S. with a safer, more flexible, and more stable monetary and fiscal policy system. Monetary policy is the management of interest rates and money supply in circulation while fiscal policy handles the taxing and spending actions of the government. Powell is the 16th chair of the federal reserve and is in complete charge of the federal reserve. Powell specifically will go down in history because of his amazing work in protecting the U.S. from a greater economic catastrophe. The U.S. would be in a way worse state economically if it wasn’t for Powell and some of the tough decisions that he made. The following article explains what the Federal Reserve is and their purpose.

What does the U.S. Treasury do and who is Mnuchin?

The U.S. Treasury operates and maintains systems that are critical to our financial infrastructure, such as the production of coin and currency, unemployment payments, revenue collection, borrowing of funds for the federal government, and more. The Treasury’s goal is to maintain a strong economy and create economic and job opportunities by improving conditions that enable strong economic growth and stability. Steve Mnuchin is the 77th secretary of the treasury as part of the cabinet of Donald Trump. Mnuchin is in charge of the U.S. treasury and handles government borrowing, financial sanctions against other countries, the tax code, and more.

What are the S&P 500, Dow Jones, and Nasdaq and their key differences?

These are the 3 main stock indices that consist of numerous companies and show the general direction of the overall U.S. market. The S&P 500 represents the broadest measure of the economy. The Dow Jones is the oldest index and represents 30 large-cap stocks across different sectors. The Nasdaq is the youngest index and consists of the largest non-financial companies and has a huge weight on technology companies.

What are Jobless Claims?

Jobless claims are claims for unemployment benefits filed by unemployed individuals. Every Thursday, there is a jobless claims report that shows us how many people filed for unemployment benefits last week. This is very important to the market because it gives a weekly update on how the unemployment rate is increasing or decreasing in the U.S.

Attached is an article that breaks down jobless claims in full-scale and its impact on the economy. https://www.investopedia.com/terms/j/jobless-claims.asp

What is Consumer Spending?

Consumer spending is the total money spent on final goods and services by individuals and households for personal use and enjoyment in an economy. Measures of consumer spending come from purchases of durable goods, nondurable goods, and services. Consumer spending is very important to track as it has a huge impact on GDP and can provide an outlook on the short-term future of the economy.

Attached is a link that breaks down consumer spending in full-scale and its impact on the economy. https://www.investopedia.com/terms/c/consumer-spending.asp

What is the Consumer Confidence Index?

The consumer confidence index is an economic indicator that measures how much consumers are saving vs spending and how this relates to how confident they are financially. The consumer confidence index is a great indicator to look at during a recession or market crash to see how it is affecting consumers and if and when the crash will turn around.

Attached is a link that breaks down the consumer confidence index in full-scale and its impact on the economy. https://conference-board.org/data/consumerconfidence.cfm