Building Wealth Econ

IRA monthly

$6,500 max

Average salary in U.S 2021?

$70,000

The 50/30/20 Budgeting Rule

50% - The Essentials / 30% - The "Fun Bucket" / 20% Your Financial Goals

Bonds

A bond is a loan made by an investor to a borrower (typically corporate or governmental). Bonds are used by companies, municipalities, states, and goernments to finance projects and operations.

Mutual funds

Actively managed. Operated by professional money managers, who allocate the fund's assets and attempt to produce capital gains (ROI) or income for the fund's investors.

Index Fund

An index fund is a type of fund with a portfolio constructed to match or track the components of the whole stock market or portions of it

Bond Disadvantages

Bonds pay out lower returns than stocks Companies can default on your bonds Bond yields can fall

What does wealth look like?

Cash in the bank Real estate Full or partial ownership of a business Shares of stock in company you work for Bonds Pension Plan Crypto Currency

Demand Pull Inflation (ticketmaster)

Everybody has money and wants to buy the same stuff. Price of that stuff goes up

Common Growth Pattern of a Company who wants to "go public"

First person to invest in a business - Entrepreneur/Founder Friends & Family Small Business Loan/Kickstarter Or an Angel Investor - $10,000s - $1,000,000s Venture Capital - $100,000s - $10,000,000s Going Public - $1,000,000s - $10s billions

Why Build Wealth?

Leave an undesirable job You can't really hide if you hate this job Choose a lower paying career at some point in your life Move to a city without a job and have time to find one Borrow money easier Stop working when you choose Financial independence = more choices in life

Why Go Public?

Money Publicity Prestige Founders and other early investors can get rich

Bond Advantages

Receive income through the interest payments Hold the bond to maturity and get all your principal back You can profit if you resell the bond at a higher price

ROI goes up

Risk increases

Exchanged Traded Fund

Shares traded on securities markets that represent the legal right of ownership over part of a basket of individual stock certificates or other securities. Unlike mutual funds, ETF's can be purchased or sold on a stock exchange the same way that a regular stock can.

Cost Push Inflation

The costs to make a product goes up, the cost of the final product goes up too

Certificate of Deposit

a product offered by banks and credit unions that provides an interest rate premium (return on investment, yield) in exchange for the customer agreeing to leave a lump-sum deposit untouched for a predetermined period of time.

Assets

anything having value and available to meet debts, commitments, or legacies

Gross vs. Net

gross is before taxes taken out & net is after

Pension paying jobs

replaced w/ retirement

Investment Portfolios

usually investing in the stock market