Before investing, first, understand these financial terms


Understanding Financial Terms - NewsCarter

Why does money management scare so many people? Because they lack knowledge of money management, there are a lot of financial terms that people don't understand, which makes people feel that finance is far, far away from people. Texts usually explain the meaning of each term one by one in order for people to understand it. Break-even ratio. I guess you didn't understand the word before you explained it. The break-even ratio refers to the amount of capital that an investor can receive when the investment product is about to mature. For example, if you buy a product with a 70% break-even ratio, you will lose 30% of your principal in the worst-case scenario. So, what you need to note is that when choosing a financial product, it's important to consider the break-even ratio of the product.

If you want to find some suitable investment vehicles, then it is necessary to have some financial knowledge, you need to learn more about different types of financial content. National debt: a bond issued by a country on the basis of its credit. It has the advantages of high safety, no risk, and higher returns than bank deposits. However, its advantages feed its disadvantages: there are so many people buying Treasury bonds that there is a shortage of them, so you must be eager to buy them

Financial Literacy for Students: Important Points - Acquisition  International

Money funds: They are also a low-risk product with higher returns and higher safety than bank deposits. Corporate bonds: They offer a higher yield than bank deposits and government bonds, and they are not as risky. They offer more flexibility, but the disadvantage is that they are subject to price fluctuations and are not suitable for short-term investments. Bank financing: It is a bank financing product with fixed income, so it has high security and higher returns than bank deposits and national bonds. But the flexibility is low, you can't sell the product before the maturity, suitable for fixed term investment, the starting point is high, generally 50,000, 200,000, 400,000 are OK. Gold: Gold is a very valuable tool for preserving value and increasing value. It is used by people all over the world. It has very high liquidity, although there are periods of depreciation and some risks, so it is necessary to choose a suitable time to invest. Insurance: is a kind of financial planning tool, with the role of risk prevention, if the investment term is longer, there is poor flexibility.

Rule 4321: All four numbers are meaningful. 4 means that 40% of household income is spent on housing and investments, 3 means that 30% of income is spent on living expenses, 2 and 1 mean that 20% and 10% of household income are spent on emergency bank savings and insurance, respectively. This is a classic way of distributing income. The Rule of compounding: The point of this rule is that you don't get any interest back, interest makes money, and the time it takes to double the principal is 72 divided by the annual rate of return. For example, if you deposit $100,000 in the bank at an annual interest rate of 2%, the interest would roll over every year and over 36 years, that $100,000 would become $200,000. Rule of 80: This rule defines the maximum amount of investment risk you can tolerate. A reasonable percentage of total assets for risky investments is 80 minus age plus a percent. But this is not fixed, actual venture capital requires you to make some adjustments according to your own situation.

10 Financial Terms Every Investor Should Know