Basic investment concepts, portfolio theory, asset allocation, stocks, bonds, mutual funds, and ETFs.
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Foundation terms you need to know first (49 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.
An Investment Club is a group of individuals who combine their funds and expertise to collectively invest in assets, often real estate, sharing both the risks and rewards.
Complex strategies and professional concepts (2 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.
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.
Private Mortgage Insurance (PMI) is a type of insurance required by lenders for conventional loans when a borrower makes a down payment of less than 20%, protecting the lender in case of default.
The Quick Ratio, also known as the Acid-Test Ratio, measures a company's ability to meet its short-term obligations with its most liquid assets, excluding inventory. It provides a more stringent view of liquidity than the Current Ratio.
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.
Real estate refers to land and any permanent physical structures or improvements attached to it, encompassing everything from residential homes to commercial buildings and undeveloped land. It is a tangible asset that can be bought, sold, or leased for various purposes, including living, business operations, and investment.
Retirement income refers to the money an individual receives to cover living expenses after they have stopped working full-time, ensuring financial security in their later years.
A retirement portfolio is a collection of investments specifically designed to generate income and growth to support an individual financially during their retirement years.
Risk tolerance is an individual's psychological willingness and financial ability to take on risk in pursuit of investment returns, dictating comfortable levels of market fluctuation and potential loss.
A financial strategy involving moving pre-tax retirement funds from a traditional IRA or 401(k) into a Roth IRA. This conversion incurs taxes on the converted amount in the year of conversion, but allows for tax-free withdrawals in retirement, provided certain conditions are met.
Roth IRA tax-free withdrawals allow eligible individuals to access their contributions and earnings completely free of federal income tax in retirement, provided specific age and holding period requirements are met. This makes them a powerful tool for tax-efficient wealth accumulation, especially for real estate investors.
A deposit account held at a bank or financial institution that provides a secure place to store money while earning a small amount of interest, typically used for short-term savings goals or emergency funds.
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.
A sole proprietorship is the simplest business structure where an individual owns and runs an unincorporated business, making no legal distinction between the owner and the business itself.
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