Net Worth: Definition, Examples, and Calculation
The top google search after a celebrity’s name is often net worth because people are curious about how wealthy famous people are. This is particularly true of billionaires like Warren Buffett. It is not something to obsess over but knowing your own current net worth and what you’d like it to be in the future helps you […]
Time Value of Money (TVM): Formula, Definition, and Use
The Time Value of Money (TVM) states that a £1 today is worth more than a £1 at a future date, due to its earning potential in the interim period. This idea underlies a lot about how interest rates are set, which themselves play a big part in stock market valuations. QUOTE You may delay, […]
Cash Flow: Definition, Types, Examples, Ratios, and Metrics
It is commonly believed that profit is the most important element of a strong business. However, experienced investors and entrepreneurs will often state that it is better to look at cash flow (CF), first and foremost. QUOTE Making more money will not solve your problems if cash flow management is your problem. – Robert Kiyosaki […]
Defining a stock price and market cap
The stock price of a public company and its related market capitalisation are two of the most essential and fundamental terms in equity investment. QUOTE All intelligent investing is value investing. Acquiring more than you are paying for. You must value the business in order to value the stock – Charlie Munger Big ideas What […]
Price-to-Earnings (P/E) Ratio: Definition, formula, and examples
Every potential investment is characterised by numbers, ranging from the simple to the arcane. Which do you look at first? A company’s price-to-earnings ratio. It tries to tell you how much the stock costs versus how much profit it earns per share. QUOTE “People may bet on hourly wiggles of the market, but it’s the […]
ETF Investing: Definition, Examples, and How to Invest in ETFs
The exchange-traded fund (ETF) is one of the most popular investment options due to its cost, flexibility, diversification, and transparency. QUOTE No invention has been more disruptive to the asset-management industry in the last quarter century than the exchange-traded fund. – Crystal Kim The ETF has been described as a disruptive technology that could potentially […]
How to invest in stocks: UK edition
If you live in the UK, then it makes sense to look beyond Wall Street to stocks listed in London, especially those on the FTSE 100 – BUT good investing practices are global! Here we have aimed to make a special UK edition of how to invest in stocks. QUOTE The individual investor should act consistently as […]
S&P 500 Index Investing Overview: Definition, Calculation, and Examples
The S&P 500 is probably the most famous broad-market index in the world. And for good reason. Investors use it to judge the health of the US stock market and directly invest in it using index funds and ETFs. But what is the S&P 500 exactly? How is it used and why should you, as […]
FTSE 100 Index: Definition, top companies, performance and dividend yield for the Footsie
The FTSE 100 tracks the top 100 companies in the UK and is the most popular index for British investors. After underperforming US stock indices in recent years, it is experiencing all-time highs in 2024. QUOTE “The make-up of the FTSE 100 has changed dramatically in the past three decades. It is part of a […]
Volatility trading guide: Causes, key influencing factors and indicators & volatility trading instruments
Do you see volatility as a threat or an opportunity? This guide will show you how to interpret volatility, and practical strategies to protect yourself and take advantage of the opportunities it brings. QUOTE “In the world of investing, volatility is like the weather: unpredictable but with patterns worth understanding.” – Nassim Nicholas Taleb, Author […]