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6 Aug 2019

- Describe what the phrase "use other people's money" means to you. Why is it beneficial to finance a venture with other people's money; why not just use your own cash? Why would someone else let you use their money?

- A line of credit can either be committed or uncommitted. Explain the difference. When would you want the line to be committed? When would an uncommitted line be preferred?

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Sixta Kovacek
Sixta KovacekLv2
8 Aug 2019

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Have you ever walked into a Wal-Mart or other big box store and been greeted by an older person who probably should have retired a decade ago? We all have at some time or another, and most of us think that when we're that age, we want to be taking vacations and spoiling our grand kids, not handing people shopping carts! Heck, none of us really -want to have to work during retirement. It's okay if you choose to work during retirement so that you have a reason to get up in the morning, but it should be your choice to do so.

Want to get rich? Use the power of compound interest working in your favor. A little bit of money invested well over a long period of time can equate to a lot of money! It's really a simple concept, but so many people fail to make use of the amazing power of compound interest. You can be very wealthy at retirement if you just put a relatively small amount of money away for retirement in a solid investment for a long period of time.

If you're under the age of 30, you can retire with a million dollars by age 65 by putting away a lot less money than you think! You'll need to put it in a solid investment account maybe a 401K- You just have to do the research and find a account at your work.. If you're really young, say age 20, you would only need to deposit very little into a good 401k to be a millionaire upon retirement.



You'll have to go find a savings calculator to figure out how much a month you need to put away to be a millionaire at retirement, but chances are it's a lot less money than you might think. Go to ANY OTHER FINANCIAL CALCULATOR. Please note two important things! 1) You must start as young as possible and 2) the return on your investment (percentage gain each year) makes an incredible difference in how you do. Someone who just puts money in CD's may average a 2% return and it would take much more money. If you get a professional broker or educate yourself, you should be able to get the traditional 7-8% return on your investments that someone using professional can usually get . This is why I always tell people to get the best advice they can through a professional broker as young as they can!

Your discussion is to tell me how much you should start investing now each month to have a cool million by retirement.


Make use of the power of compound interest in your financial life rather than letting the bank use compound interest against you through credit cards, mortgages and automobile loans. Compound interest is an amazing tool if you put away a percentage of your income away for retirement. When retirement occurs, you could do just about anything that you ever wanted--- just let it work for you and not somebody else.

Imagine a close friend asks you if they should attempt to manage their own portfolio or hire someone to help them. Share the pros and cons of both as well as at least one resource (book, article, video, etc.) not yet shared by one of your classmates that can help them decide.

Pros- Managing your own investment portfolio can come with a lot of personal satisfaction. If you are a sophisticated investor you can enjoy the advantages of not having to deal with third party fees such as brokers, financial advisors or any other financial service organizations. Some of these fees can range anywhere from 0.15% to 0.7% annually, it may not sound like it is much but if you are investing on a large scale with big volume this is a lot of money to just give away. According to an article I read alleged that, “Morningstar admitted that low cost was a bigger indicator of superior performance than their own mutual fund star rating” (Carter, 2014). This is definitely an eye opener, to show that a good chunk of what your portfolio earned went to fees and commission. So if you have the ability to take your investment in your own hands and manage it yourself, I would advise to go for it.

Cons- There is a lot to know when it comes to dealing with the complexity in the financial arena. It’s like someone telling you to operate a heart surgery procedure on yourself. Yikes!! I hope not, especially if you didn’t go through the proper schooling and training. However does that means it is impossible, of course not it can be done (managing your portfolio that is). The financial world has a different lingo, culture, knowledge of terms. You can easily loose if you are not prepare or willing to dedicate yourself to learn the basic and then more.

I would recommend someone who is new to investing and the financial world in general to read Mind over Money: Overcoming the money Disorders the Threaten Our Financial Health by Drs. Brad and Ted Klontz. This book can server as a beginner’s insider to learning and understanding basic of over coming bad money behavior.

Carter, E. (2014)Should You Pay Someone To Manage Your 401k? Retrieved fromhttp://www.forbes.com/sites/financialfinesse/2014/05/16/should-you-pay-someone-to-manage-your-401k/#7d92ba2f65921990d4546592

COMMENT

1. What is a sale and lease back and why would a corporation do this?

2. Why might a lease be easier to finance (or do) than a straight borrowing for the purchase of an asset? Explain two reasons

3. When should the cancellation provision be negotiated (before or after the lease is signed)? Pick one

4. What type of lease shows up on the balance sheet of a corporation?

5. At what cost of money (or rate) do you bring the residual value back to present?

6. At what cost of money (or rate) do you bring the after-tax cost of the lease payments back to present?

7. Would gaining market power be a value or management related reason for merging? Pick one.

8. Would reducing volatility in sales and income (without a commensurate decrease in the cost of capital) be a value or management related reason of a merger.

9. What must be present for there to be a difference between the minimum exchange ratio and the maximum exchange ratio?

10. You own a company and it is being purchased by another company. You do not believe the synergistic benefits from the merger will materialize in the future. When you are negotiating the sale of your company, should you push for a stock-for-stock exchange or a cash-for-stock exchange in selling your company (disregard any tax consequences)?

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