Financial Terms That We Always Ignored

Image via Wikipedia

I can say that it is not bad to familiarize them. They are just common words but with special meanings such as:

Income Tax – a tax levied on incomes, especially an annual government tax on personal incomes.

Wealth – the condition where your financial resources can support your lifestyle throughout your lifetime even if you do not work to generate income.

Unique Genius – the activity you truly enjoy, loved and excel.

Stockbroker – an individual who acts as an agent for the trade of securities for buyers and sellers.

Statement of Assets and Liabilities – a listing of all your assets and liabilities to get your network.

Personal Income and Expenses Statement – a listing of all your income and expenses to get your net income.

Passive Income – investment income you earn from your assets or investments even when you do not work.

Passive Entrepreneur – one who makes his money work to make more money.

Liabilities – all the amounts owed by an institution, a company, a corporation or an individual to others.

Investment Portfolio – holdings in the form of financial assets such as stocks, bonds, other securities, real estate and etc.

Interest – money received from your lending investments when you lend someone your principal money or capital. Interest is the payment for the use of your money.

Inflation – the economic condition of sustained price increases. 

Retirement Stage – this is when you no longer make any active income because your passive income, or income from your savings and investments, is more than enough to support your living expenses given your chosen lifestyle.

Fine-Tuning Stage – when your savings and investments are already providing a good portion of your income. At this stage your concern is the distribution of your financial assets in such a way as to address your needs when you reach retirement.

Build-up Stage – this is when you now have some income from your savings and investments, which contribute at least about 20% of your total income.

Start-up Stage – this is when your only source of income is your salary, the fees you charge or the  earnings provided by your active work spending time and talent.

Credit Card – an automatic card – you can get the goods you bought without paying it yet but if becomes a loan when the credit becomes due and you do not pay for it.

Compound Interest – interest paid on both the original sum of money borrowed or invested and on the interest added to it.

Collateral – security to support a loan. Something of financial value such as cash, stocks, real estate, etc. used to secure a loan.

Capital Gains or Earnings – money received from your ownership investments.

Asset Allocation – the distribution of one’s assets among various types of investment classes.

Assets – all the things of value owned by an institution, a company, a corporation or an individual.

Active Income – income that comes directly as a result of your own hard work, your skill, talent and time. This is to be spent only for your needs, not for your wants.

Active Entrepreneurs – those who earn income through employment, the practice of profession or through their own business.

About the Author visit: Dream big and don’t stop without giving it a chance to come true.