Life Events – Getting Ahead – Napkin Finance

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Risk Tolerance

Appetite for Destruction

Risk tolerance describes how much risk you can (or should) be taking on with your investments. Investing...

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Credit Report

Good Marks

Your credit report is a detailed history of your past use of credit. It’s a bit like...

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How to Save More Money

Keep the Change

Like many good habits, saving more money is easier said than done. Once you’ve gotten into a...

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Active vs. Index Investing

Pick Sides

Active and index investing are two different ways of choosing individual investments. With active investing, investors try...

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Growth vs. Value Investing

Moves Like Buffett

Growth and value investing are two different approaches to investing in stocks. Growth investors aim to invest...

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P/E Ratio

At Any Price

The price-to-earnings ratio (or P/E ratio) is a way to evaluate whether a company’s stock is cheap,...

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Technical Analysis

Off the Charts

Technical analysis means using stock price charts to try to predict future stock price movements. It involves...

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Sticking to a Budget

In It to Win It

Budgeting can be a lot like dieting. You start out with big hopes for dramatic changes in...

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Paying Off Student Loans

Take a Load Off

It might seem like there’s only one way to pay down your student loans (namely: slowly, painfully,...

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Game Theory

Roll the Dice

Game theory is an economic model for predicting people’s decisions in tricky situations.

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ESG Investing

Do the Right Thing

ESG investing means investing in companies that do good (or at least don’t actively do harm). With...

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Business Plan

Best-Laid Plans

A business plan is a document that outlines your vision for your business. It describes your big-picture...

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Venture Capital

Nothing Ventured, Nothing Gained

Venture capital (or “VC” for short) is a type of financing for startup companies. Venture capitalists invest...

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Market Capitalization

Size it Up

Market capitalization (or just “market cap”) is a measure of a company’s total value. If you ever...

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SBA Loans

Helping Hand

SBA-guaranteed loans (or just “SBA loans”) are business loans backed by the U.S. Small Business Administration (SBA)....

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Volatility

Rocky Road

Volatility describes how much an investment bounces around in price. More volatile investments zigzag in price more...

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Valuing a Company

What’s it Worth?

A company’s value is the dollar figure that it might sell for if a person or another...

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Incorporating

Limited Liability

A corporation is one type of formal business structure that entrepreneurs can choose to use when starting...

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Futures

Looking Ahead

A futures contract is an agreement to buy a specific investment at an agreed-upon price on an...

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Forex

Hard Currency

The foreign exchange, or forex, markets are where investors go to buy and sell currencies. Unlike the...

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Asset Classes

Building Blocks

An asset class is a group of similar kinds of investments. It’s a generalization, not a detailed...

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Financial Advisors

Get Some Help

Financial advisors are experts who can provide financial advice and help you manage your money. Some people...

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Financial Planning

Ducks in a Row

Financial planning describes the process of mastering your money. It means figuring out where you actually are...

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Asset Allocation

Divide and Conquer

“Asset allocation” is a way of describing what you own in percentage terms. If you’ve got $1,000...

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What Is an ICO?

The Wild West of Finance

An ICO, or Initial Coin Offering, is a way for startups to raise money by inventing and...

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Tax Deductions

Cut Rate

Tax deductions, such as for donations to charity or interest on student loans, are amounts that you...

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Diversification

Spread Your Bets

Diversification is the practice of dividing your money among lots of different types of investments. It’s the...

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Cryptocurrency

Tales of the Crypto

Cryptocurrency is digital money that can be sent electronically anywhere in the world.

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Rebalancing

Move Your Assets

Know how self-help gurus are always talking about “finding the balance” in your personal life? That same...

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Bitcoin

Not So Silky Road

Bitcoin is the world’s first type of digital money, or cryptocurrency. Unlike traditional paper money, Bitcoin only...

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Bull or Bear Market

Into the Wild

Wall Street may be a bit of a rodeo, but there are no literal bulls or bears....

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Compound Interest

Make Bank

  The most powerful force in the universe is compound interest. — Albert Einstein

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GDP

Grossly Underrated

Gross domestic product, or GDP, measures the size of an economy. In essence, it puts a dollar...

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Break-Even Point

Point Break

A company is at its break-even point when its revenue equals its expenses. It is neither making...

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IRR

Crunch the Numbers

The internal rate of return, or IRR, is a measure of an investment’s or a project’s profitability....

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Private Equity

Members Only

Private equity is money invested directly into a private company. Private equity funds pool money from many...

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Crowdfunding

Pound the Pavement

Crowdfunding is a way to raise money from many people, thanks to the power of the Internet....

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Tax Loss Harvesting

Cut Your Losses

Tax loss harvesting is a trading strategy investors can use to try to reduce their taxes. It’s...

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Capital Gains Tax

The Taxman Cometh

If something you own goes up in value and you sell it, then you’ve made a profit....

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Carried Interest

In the Interest Of

Carried interest is a share of a private equity or hedge fund’s profits that is paid to...

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Blockchain

Chain Gang

Blockchain is the recordkeeping technology that serves as the foundation for Bitcoin and some other types of...

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The S&P

Make the Market

The Standard & Poor’s 500 Index—also known as the S&P 500, or just the S&P—is an index...

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Business Insurance

Cover Your Bases

A business insurance policy is a contract between an insurance company and a business. In exchange for...

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Options

Coming Attractions

An option is the right, but not obligation, to buy or sell an investment at a specific...

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EPS

Bang for the Buck

Earnings per share (EPS) is a financial metric that helps investors evaluate a company’s profitability. It’s calculated...

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Index Funds

Copy That

An index fund is a professionally managed collection of stocks, bonds, or other investments that tries to...

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Fixed vs. Variable Costs

At All Costs

Fixed and variable costs are types of expenses that businesses pay in order to operate.

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Convertible Note

Take Note

A convertible note is a type of short-term loan for a business. However, instead of being repaid...

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Liquidity

Cashing Out

Liquidity refers to how easily you can sell an investment or asset at a fair price.

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ROI

Many Happy Returns

Return on investment, or ROI, is a ratio for measuring the profitability of an investment. It puts...

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IPO

Opening Bell

An IPO, or initial public offering, is when a company’s shares start trading on a stock exchange...

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Mutual Funds

Join Forces

A mutual fund is a professionally managed fund that pools lots of investors’ money in order to...

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Risk vs. Reward

Double Down

All investments come with risk. With financial investments, risk is usually tied to reward. That means investments...

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Rule of 72

Crunch the Numbers

The rule of 72 is an easy, back-of-the-napkin way to figure out how long it will take...

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Philanthropy

Greater Good

Philanthropy is giving back. It’s paying forward the resources you have—whether your money, or physical goods, or...

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Hedge Funds

Hedge Your Bets

Hedge funds are investment funds that pool many investors’ money and then hire one or more professional...

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EBITDA

How You Slice It

EBITDA (pronounced “ee-bit-tah”) stands for “earnings before interest, taxes, depreciation, and amortization.” It’s one measure of a...

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Profit Margin

Margin of Error

A company’s profit margin measures the portion of its total sales that it gets to keep as...

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The Stock Market

Greed Is Good

The stock market is the collection of physical and electronic markets where buyers and sellers come together...

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Financing a Start-up

Sink or Swim

If you’re trying to get a start-up off the ground, chances are you’ll need some cash to...

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REITs

Take Stock

A real estate investment trust, or REIT, is a company that owns, manages, or finances real estate....

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Short Selling

The Big Short

Short selling is a way to bet that a stock will fall in price. Normally, an investor...

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Investing

Piece of the Pie

Investing is putting your money to work in the hopes of earning a return. You probably already...

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Opportunity Cost

Fork in the Road

Opportunity cost is the return or benefit you miss out on by choosing one option over the...

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ETFs

Jack-of-All-Trades

Exchange-traded funds (ETFs) are investment vehicles similar to mutual funds. Like mutual funds, ETFs are professionally managed...

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How to Start a Start-up

Go Big or Go Home

Although plenty of start-ups fail, the ones that succeed can do so wildly. Beyond a financial payoff,...

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Stocks

Buy Buy Buy

Stocks are pieces of ownership in companies. If you bought one stock of, say, Amazon, and Amazon...

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Independent Contractor

Free Agent

An independent contractor is someone who is self-employed and works for clients as a nonemployee. Independent contractors...

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Securities

Market Maker

“Securities” is the term used to describe stocks, bonds, mutual funds, and other types of financial investments....

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Real Estate

Location, Location, Location

Buying real estate—whether on your own or by pooling your resources with other investors—is one possible way...

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