Featured Napkin
Equity
Own It
Equity is ownership. You can have equity—or an ownership stake—in any asset, meaning anything of value.
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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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Cash Alternatives
Cash In
Cash alternatives are investment types that you can consider as alternatives to simply holding money in your...
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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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Quantitative Easing
Easy Money
Quantitative easing is when the Fed (or another country’s central bank) buys up large amounts of bonds....
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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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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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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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Target-Date Funds
Bullseye on Retirement
A target-date fund is an investment fund that’s based on your expected retirement date. These mutual funds...
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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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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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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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NFTs
(Not So) Real World
An NFT, or non-fungible token, is a code that says you own a unique digital item.
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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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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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Banks
Bank on It
Banks are institutions that take deposits, cash checks, and make loans. They are essentially home bases for...
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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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Apple
The Big Apple
Apple was the first business in history to be valued at $1 trillion—the largest value ever recorded...
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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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Interest
Pay Up
Interest is the cost of borrowing money. For a borrower, interest is the price of taking on...
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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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Financial Statements
State of Affairs
Financial statements are reports a company puts together to measure how it’s doing. Companies create their financial...
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Robo-Advisor
Autopilot
A robo-advisor is an investment management company that uses a computer program instead of a live human...
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Yield
Make Coin
Yield is the earnings generated by an investment over a specific period of time, expressed as a...
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Municipal Bonds
One for the Road
A municipal bond, or muni bond, is a type of bond issued by a state or local...
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Profit and Loss (P&L)
The Bottom Line
A profit and loss statement, or income statement, shows the money a company earned and what it...
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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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APR
Another Day, Another Dollar
An annual percentage rate (APR) represents the annual cost of borrowing money, including fees. Because the APR...
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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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Bankruptcy
Lose Your Shirt
Bankruptcy is the legal process for consumers or businesses to get help with their debt. Bankruptcy starts...
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Dividends
Show Me the Money
A dividend is a portion of a company’s profits that is paid to its shareholders in the...
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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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Interest Rate
At Any Rate
Interest is what a lender charges you to borrow money. It is usually expressed as a percentage...
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Balance Sheet
Cook the Books
A balance sheet is a snapshot of financial health, showing what a company or person owns and...
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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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Bonds
Bonds, James Bonds
Bonds are essentially IOUs. When you buy a bond, you become a lender to whatever entity issued...
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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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Commodities
Back to Basics
Commodities are raw materials. They are the inputs, or ingredients, that are used to make most of...
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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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Investing in Gold
Worth its Weight
Gold is a precious metal that’s used in everything from jewelry and artwork to industrial goods and...
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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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CDs
On Principal
Certificates of Deposit, or CDs, are low-risk investments that pay interest. You can think of them as...
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Annuities
Nest Egg
An annuity is a series of regular payments made over a set period of time. Annuities can...
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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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The Fed
Making a Federal Case
The Fed is the central bank of the U.S. Its overarching role is to make sure that...
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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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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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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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Blue Chips
Steady Eddy
A blue chip is a company that is financially sound and well established. These companies usually sell...
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Depreciation
Wear and Tear
Depreciation is a physical asset’s loss of value over time. Just as your once new car is...
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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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