Investors hear plenty about asset allocation—what percentage of their investments should be in stocks, bonds, real estate or other asset classes. But asset location—the type of account in which you hold an asset—can be even more important when it comes to taxes: Sin...
Because of thetime value of money—the concept that any given sum is worth more now than it will be in the future because it can be invested in the meantime—the first $1,000 payment is worth more than the second, and so on.
However one manages finances, financial planning starts with understanding spending needs and priorities. In this chapter I give a very simple way to estimate spending needs—essential for knowing how much of savings to hold in stable assets (like bonds
Therefore, you are required to purchase property insurance amounting to $1.2 million or more. But since you find that amount too big, and would want to save some money, you only purchase insurance worth $900,000. An earthquake happens, and the replacement cost is found to be $500,000. B...
For example, suppose you buy a stock for $100 and expect its value to increase by 10% over the next year, anticipating it will be worth $110 at year-end. Your expected return is $10, or 10% of your initial investment. Most assets are often more complex than this. The capital asset...