An asset class consisting of equity securities and debt, which is invested in an operating company that is not publicly traded on a stock exchange. A private equity investment is typically made by a firm that specializes in private equity, venture capitalist or an angel investor. Each investor category has different goals, preferences and investment strategies; however, all provide working capital to nurture expansion, new product development, or restructuring of the company’s operations, management, or ownership.
Category: Money & Wealth Page 7 of 14
The value of money with a given amount of interest earned or inflation accrued over a specific amount of time. This is the central concept in finance theory, which suggests that a certain amount of money today, has a different value, or buying power than the same amount of money in the future. This principle is twofold; there is an opportunity to earn interest on the money and because inflation will cause prices to go up, thus changing the “value” of the money.
There are four primary reasons money has time value:
- Risk and Uncertainty: The future is always uncertain and therefore risky. Outflows of cash are in our control as payments have to be made by us. On the other hand, there is no certainty of future cash inflows, therefore the preference is for receiving cash now.
- Inflation: In inflationary economies, money that is received today has more purchasing power than money to be received at a future date. In other words, a dollar today represents a greater real purchasing power than a dollar a year’s time.
- Consumption: Most people prefer consumption today over future consumption.
- Investment Opportunity: An investor can profitably employ money received today in order to receive a higher value tomorrow.
The state or condition of having limited actual or perceived discretionary time. This may include being money-rich, time-poor, or money-poor, time-poor. The time-is-money attitude values money over other less “productive” or aesthetic aspects of life. A society that values work, efficiency, business, money, and materialism can develop high levels of material wealth at the expense of happiness, creativity, philosophy, spirituality and relationships. Overscheduled and overworked is a classic symptom of low-quality time as well as a person’s inability to take vacations, enjoy leisure time, waste time, or relax. You could say they are wound up like a clock!
A derogatory analogy between slavery and wage labor, which is used to highlight similarities between owning and renting a person. Typically refers to a situation where a person’s livelihood depends on wages or a salary and when they are totally dependent on that income for survival, basic necessities, and live paycheck to paycheck. The term wage slavery has been used to criticize the exploitation of labor and social stratification with workers paid comparatively low wages for soulless, heartless work, unequal bargaining, lack of self-management, fulfilling job choices, and leisure time.
The ability of an individual, family or group to improve their economic status, usually measured in income. Financial (also known as Economic Mobility) often leads to social mobility. Lack of Financial Literacy leads to downward mobility and declining social status.
The language of money, investing and business is the language of accounting, which is the systematic and comprehensive recording of financial transactions pertaining to a person, partnership or business. It includes the process of summarizing, analyzing and reporting these transactions to the persons managing the finances, as well as government and tax agencies. Accounting is one of the key functions of business and depending on the size and volume of transactions, it may be handled by a bookkeeper, accountant or teams of bookkeepers and accountants.
An investment strategy that involves buying a stock that appears underpriced by some form of fundamental analysis. The stock may be trading at a discount to the book value or tangible book value, have high dividend yields, have low price-to-earning multiples or have low price-to-book ratios. High-profile proponents of value investing, including Berkshire Hathaway chairman Warren Buffett, who for more than 25 years, has taken the value investing concept even further with a focus on “finding an outstanding company at a sensible price” rather than generic companies at a bargain price.
Analysis of the qualitative and quantitative information that contributes to the economic well-being and the subsequent financial valuation of a potential investment. Investors analyze these fundamentals to develop an estimate of whether the underlying asset is a worthwhile investment. For businesses, information such as revenue, earnings, assets, liabilities, and growth are considered some of the fundamentals.
These are activities that produce the maximum result for the minimum risk, time, and effort. Typically these activities are those that cannot be outsourced to another lower cost person to complete the activity. On the other hand, Low-Value Activities are those that could be outsourced to a lower-cost or minimum wage person. High-Value Activities include income generating, capital raising, recruitment, planning, visioning, leveraging, relationship building, communicating, etc.