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18 Basic Terminologies in Investments

September 16, 2009

Managing money is easy as long as we can spend lesser than we earn. The problem starts when we start to borrow; we borrow from banks to buy a house and a car which are the essential things we need to ease our live nowadays. Big problem arise when we just do not buy a reliable car that can bring us from point A to point B. We buy a luxury car that has brand which cost is 100% or more than the cost of the original car. You name it BMW, Merc, Porche. Don’t get me wrong. You can buy it if you have the money, by all means, buy.

If we can afford a bungalow, by all means, buy. It will provide us with more space and privacy to us and our family. Do not buy it if deep in your heart, you buy it for the sake of being seen as a wealthier person than those around you.

CREDIT CARD
Credit cards are another culprit in our lives. If we are not money savvy, having more than two cards will get you in a big pool of debt. Credit card should only be used as an advance payment in order for us not to bring too much cash at any point of time. It has to be repaid once the statement of Account comes before the last date of payment. Anything exceeding that will be charged penalties eg. late payment penalties, interest on amount being loaned etc. Conventional banks count the interest on principal plus interest payable which result in a higher amount to be paid by end of the next month. Use your credit cards wisely and do not buy anything you do not need.

MANAGING YOUR FINANCES
Most wealthy people I know as good in managing their finances. They live simple lives, they are networking with good industrious people like them, sharing ideas and business opportunities, and most importantly they are very positive about everything.Sometimes they are even willing to share with us. The problem with us is that we are not willing to be taught and we are being negative about some things. Always pushing off new ideas and not willing to explore things. Opportunities do not come knocking twice, people say.

ROBERT KIYOSAKI
I was listening to Robert Kiyosaki in YouTube and he was asked whether he wants to share his secrets of being wealthy with other people. He said that he will not give to those who do not want advise/information/lessons. He will only give his secrets to those who want it, searching for it, looking for it. I agree with him totally. People will not appreciate it if we give things FREE.

THE 18 BASIC TERMINOLOGIES
The terminologies that we need to understand to invest and manage our finances:

1. profit and loss
2. balance sheet
3. net worth
4. cash flow
5. NAV
6. Rule 72
7. Dollar Cost Averaging
8. Buy low sell high
9. Buy high sell higher
10. Return of investment
11. Rate of Return
12. Annualized Rate of Return
13. Financial Freedom
14. passive income
15. passive residual income
16. EPS
17. PE Ratio
18. DE Ratio
17. market price
18. Reserve price

We may not have to master all terminologies before we can start investing. Start small and equip yourself with knowledge along the way. I shall be discussing the terminologies in my future articles.

by  Dina Talib

Written by paydayla · Filed Under Investment 

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