Renaissance for LEADERS

Peak Performance Resources for Leaders by Leaders

Tag: Invest

Dollar Cost Averaging

The process of buying a fixed dollar amount of a particular investment on a regular schedule, regardless of the share price. More shares are purchased when prices are low, and fewer shares when prices are high. The cost per share over time eventually averages out. This reduces the risk of investing a large amount in a single investment at the wrong time.

Financial Literacy

The knowledge of what money is, how it works, financial terminology, all aspects of financial life, and the competence to perform financial management including; decision making, planning, saving, spending, budgeting, cash flow management, lifestyle choices, investing and retirement planning.

Investment

1. The outlay of money, for example, by depositing it in a bank or buying stock in a company, with the object of making a profit. 2. An amount of money invested in something for the purpose of making a profit. 3. Something such as a company, endeavor, or object that money is invested in with the goal of making a profit. 4. A contribution of something such as time, energy, or effort to an activity, project, or undertaking, in the expectation of a benefit. 5. A purchase, especially something that somebody should be able to use for a relatively long time (informal.) 6. The outlay of money that a company’s existing buildings, equipment, and materials are equivalent to.

Leverage

1. The process of applying a small force that multiplies into a large effect. 2. The action of a lever. 2. The mechanical advantage or power gained by using a lever. 3. Power or ability to act effectively or to influence people. 4. The use of a small initial investment to gain a relatively high return. Using a small amount of your own money to make an investment of much larger value, thus gaining significant financial power. For example, if you borrow 80% of the cost of a property, you are using the leverage to buy a much more expensive asset than you could have afforded by paying cash. If you sell the property for more than you paid for it, the profit is yours. The reverse is also true if you sell at a loss, the amount you borrowed is still due and the loss is yours. Buying stock on margin is a type of leverage, as is buying a futures or options contracts. Leveraging can be risky if the underlying asset doesn’t perform to your expectations.

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