Basic investment concepts, portfolio theory, asset allocation, stocks, bonds, mutual funds, and ETFs.
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Foundation terms you need to know first (65 terms)
A lump sum investment in real estate involves committing a single, large amount of capital upfront to acquire a property or fund a project, rather than making smaller, periodic contributions. It's a direct approach often used for full property purchases or significant down payments.
Real assets are physical, tangible investments such as real estate, commodities, and infrastructure, valued for their intrinsic properties and often used as an inflation hedge and portfolio diversifier.
Liabilities are financial obligations or debts that an individual or business owes to others, representing money that must be paid back in the future.
The percentage of your disposable income that you save rather than spend, a key metric for personal finance and crucial for building capital for real estate investments.
The fundamental resources—land, labor, capital, and entrepreneurship—used to produce goods and services, including real estate, and are crucial for understanding economic activity and investment potential.
Complex strategies and professional concepts (4 terms)
A Personal Financial Stress Test is a systematic evaluation of an individual's or household's financial resilience against adverse economic scenarios, crucial for real estate investors to safeguard their portfolios.
Indexed Universal Life (IUL) is a type of permanent life insurance that offers a death benefit and a cash value component, where the cash value growth is linked to the performance of a market index, such as the S&P 500, typically with a floor and a cap on returns.
The Securities and Exchange Commission (SEC) is an independent agency of the U.S. federal government responsible for protecting investors, maintaining fair and orderly functioning of securities markets, and facilitating capital formation. It regulates publicly traded securities, including those related to real estate.
Modern Portfolio Theory (MPT) is an investment framework that aims to maximize portfolio expected return for a given level of market risk, or equivalently, minimize risk for a given level of expected return, through diversification.
A 401(k) plan is an employer-sponsored retirement savings account that allows employees to contribute a portion of their salary on a tax-advantaged basis, often with employer matching contributions, to invest for their future.
A 401(k) withdrawal is the act of taking funds from a 401(k) retirement account, often incurring ordinary income taxes and a 10% early withdrawal penalty if done before age 59½ without qualifying for an exception.
Actionable steps are small, specific, and measurable tasks that break down a larger real estate investment goal into manageable parts, making it easier to plan and execute your strategy.
Adjustable life insurance is a type of permanent life insurance that offers policyholders the flexibility to modify their death benefit, premium payments, and cash value accumulation to adapt to changing financial needs and life circumstances.
An Adjustable-Rate Mortgage (ARM) is a home loan where the interest rate can change periodically based on an index, leading to fluctuating monthly payments after an initial fixed-rate period.
After-tax contributions are funds added to a retirement account, such as a 401(k) or IRA, that have already been taxed, offering a pathway for tax-free growth and withdrawals in retirement.
An alternative investment is a financial asset that does not fall into conventional investment categories like stocks, bonds, or cash. For real estate investors, these often include assets like real estate itself, private equity, or commodities.
Annuity is a financial contract from an insurance company providing a fixed or variable income stream over time, often used for retirement planning or structured settlements.
An annuity due is a series of equal payments or receipts made at the beginning of each period, such as rent payments or insurance premiums, which impacts its present and future value.
Asset allocation is an investment strategy that distributes capital across different asset classes, property types, and investment vehicles to manage risk and optimize returns according to an investor's financial goals and risk tolerance.
An asset class is a group of investments that share similar characteristics and behave similarly in the market. In real estate, it categorizes properties like residential, commercial, or industrial, each with distinct risk and return profiles.
Automated savings is a financial strategy that involves regularly transferring a set amount of money from one account to another without manual intervention, helping investors consistently build capital for real estate goals.
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