Flawed and Unreliable The debt to disposable income (DTI) ratio represents the ratio of one’s total debt amount to his after tax income. But the debt to income flaw is not often discussed. “Debt” is a balance sheet item (net worth,) but “income” deals with budgeting (income statement.) Debt is simply a static number, while income requires the element of time… Read More »
How do you handle change? Some people put it in parking meters. But everybody copes with it differently. Change can appear in many ways but it is always inevitable. You have memories and life experiences today that you didn’t have 20 years ago. Your appearance has probably changed quite a bit too. Even the matter of which you are made… Read More »
In the world of finance, the word “arbitrage” refers to buying something in one market, and simultaneously selling it in another, profiting from a temporary price difference. According to Investopedia, this form of profit is considered practically risk free for the investor/trader. 😀 Well I have recently found such an arbitrage opportunity in the gold bullion market. Introducing… Read More »
Rich people value financial security while the middle class focuses on job security. There use to be a time when these two terms meant the same. When I was going through school my parents wanted me to have a good education, so I could go on to get a high paying job someday. But that was the old way of… Read More »
What is a stress test? A stress test determines if you have the ability to deal with a financial crisis if things go pear-shaped. It makes the impact of unlikely, but plausible events measurable and transparent. This lets you predict potential problems your finances may face in the future so you can address them early and sleep at… Read More »
There’s a saying that younger people should invest more in equities (stocks) and older people should buy more bonds. Some like to use the “100 minus your age” rule to determine asset allocation. Start with the number 100 and subtract your age. The resulting figure is the percentage you should allocate to equities, and the rest should be invested in bonds. For example… Read More »