Let's Talk Money

Definition
A call is a type of options contract that gives the owner the right to buy a stock at a certain fixed price within a specified timeframe.

Why It's Important
As I discussed in last week's word, Options, they are a good way to hedge against a downturn in the market if used correctly.  Let's take an example:

Let's say a stock trades at $100 per share, and I think it's going to go up pretty soon. I  could potentially buy 100 shares of stock, paying $10,000 OR I could buy a call option that would give you the right to pay $110 per share for stock any time in the next two months.  My buy-in for the option is typically $1-$2 per share.  So, I would pay $200 for that right at the high end.  This is a sunk cost (I'm not getting it back regardless of what happens).

If I'm right and the stock goes up to $130 per share by the time the option expires, then I can exercise my option and purchase the stock at $110, therefore, making a profit of $20 per share...

In this episode, Tiffany sits down with Calvin Williams, Jr. owner of Freeman Capital. They discuss everything from post-slavery wealth in their families to real estate and changing the narrative for future generations. 

About Our Guest
Calvin F. Williams, Jr. is the first black owner of an automated wealth management platform for retail customers. As the CEO and founder of FreemanCapital.co, he aims to empower millennials and the middle class with the tools to become wealthy.

Williams’ years of financial service experience along with lessons inspired by his great-grandparents ignited the inception of FreemanCapital.co. They knew they couldn’t get ahead from saving alone, their money had to work harder for them, so they used their savings and purchased properties in Washington, DC. Before it was acceptable by people of color in the 1950s Freeman Capital is for all hardworking people looking for a better future.

Freeman Capital has completed Google for Start-Ups,...

Definition
An option is a contract that gives the buyer the right, not the obligation, to buy or sell an asset at a certain price in the future.

Why It's Important
Options play an important part in some portfolios as a way to hedge (arbitrage) against loss.  Although you can purchase options on bonds, stocks, and futures, stocks are typically the go-to.  So, how does it work?  Let's use a simplified example.

Let's say I think Apple is going to go up.  I pay a fee (or premium) to purchase a call (buy) option for the current price.  This means as Apple climbs in value I can exercise my call option to get the stock for a lower price.  But, let's say the stock goes down, I can opt to not exercise my option and just let it expire.  If that's the case, I only lose the premium that I paid for it.  

On the other side of the table, if I were the person selling the contract, I would lose money as the price went up and gain money if the buyer decided not to...

Have you heard of geographic arbitrage?  Me either until I spoke with Kim!  She and her husband are debt-free and living life on their own terms.  She came on to explain how she and her husband paid off over $200k in debt to be debt-free by 30!  I was inspired!  Be sure to have a pen and paper handy because she drops so many gems.

About our Guest
Kim is a financial independence and early retirement blogger at The Frugal Engineers. She used geo arbitrage to achieve financial freedom in Wyoming and spend more time with her kid. She and her husband now enjoy the semi-retired lifestyle as freelance engineers and plan to retire from engineering in 2020.

Links
Visit Kim's website: https://thefrugalengineers.com

Want to catch Money Talk with Tiff live?  There are three events coming up in the Greensboro, NC area!  Please visit https://www.moneytalkwitht.com/events.html for more information. 

Connect with Tiffany on Social Media
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Definition 
Adjusted Gross Income or AGI is gross income minus adjustments to income for tax purposes

Why It's Important
AGI is the portion of your income that you are taxed on.  I think the best way to explain this term is to provide an example.  

Let's say your salary is $50,000 a year.  Because you are awesome, you contribute 5% of your salary to a 401k.  To keep it simple, we will leave the salary deductions there (in real life, you will probably also deduct medical, dental, and vision benefits as well).  5% of $50,000 = $2,500 so instead of being taxed on your full (gross) salary of $50,000, you would only be taxed on $47,500 of it.  $47,500 is your Adjusted Gross Income.  

This is why participating in company-sponsored benefits plans (like medical, 401k, HSAs, etc.) are so important.  It effectively lowers your tax bill.  It is important to note that in order for your gross income to get adjusted, the benefit has to come out PRE-TAX...

There are so many ways scammers can get your information.  Listen as Tiffany breaks down ways she protects herself against fraud especially during the holiday season.  

Links
Visit Tiff's website: https://www.moneytalkwitht.com

Connect with Tiffany on Social Media
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Twitter: @moneytalkwitht
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LinkedIn: Tiffany Grant
YouTube: Money Talk With Tiff Channel
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Definition 
A broker-dealer is any person or firm engaged in the business of buying and selling securities for the accounts of others or its own account. 

Why It's Important
You may be thinking that is an expansive definition. Well, it is and for a good reason! A brokerage acts as a broker when it buys and sells for its customers and as a dealer when it buys and sells for itself. Broker-dealers can range from small, independent, boutique firms to subsidiaries of big banks and investment companies. There are over 3,700 broker-dealers in the US to choose from! 

The big three (as of October 2018) are:

1. Fidelity Investments ($6.85 trillion under management)
2. Charles Schwab ($1.85 trillion under management)
3. Wells Fargo ($1.6 trillion under management)

One role of a broker-dealer is to underwrite (distribute) new securities for issuers. Broker-dealers are powerful entities and essential for the flow of the market! A lot of financial advisors work under a broker-dealer, which is...

Oh, investing!  This is Tiffany's absolute favorite topic to talk about.  Angela Matthews sits down with her to discuss how she got started and some strategies she uses to make smarter investment decisions.  Definitely have a pen and paper ready because they dropped so many gems!

About our Guest
Angela E. Matthews is a thought leader and expert in the Personal Finance space, particularly investing. She is the founder of the Happy Investor Method, which has a mission to impact millions by helping them create millions. With the goal of achieving financial freedom for everyone through investing in the stock market, Angela has single-handedly created a movement. For people who strive to be happier with their money and their achievements, Angela is your go-to.

Follow her on Facebook: https://www.facebook.com/TheAngelaEMatthews/

Follow her on Instagram: https://instagram.com/Happyinvestormethod

Follow her on Twitter: https://twitter.com/angelaematthews

Links...

What is your current age? Is it between 22 to 37 years? You are a millennial for sure. Yes, friend, I am a millennial too. Do you know an interesting fact about us? We are currently the biggest generation in the world. Unfortunately, we had faced a demon called the Great Recession in the early phase of our career. That is why we have coined a term called FIRE. Let's check out how we can make our 'Financial Independence, Retire Early' movement successful.

How the millennials see the world:
Millennials look at the world differently from the previous generations. Working parents have brought them up. Their parents worked hard to earn a living. Still, they have faced difficulties with saving for retirement. That is why a millennial thinks differently from past generations about post-retirement savings and investment.

What are the financial troubles they are facing currently:
All was not good for Americans at the beginning of the 21st century. We had encountered two significant mishaps...

Definition 
The FIRE movement is a school of thought where you aim to become debt-free (financially independent) and retire as early as possible, typically before age 35. 

Why It's Important
The FIRE movement is a trendy movement in the financial blog and influencer circles because who doesn't want to become debt-free and not HAVE to work?! I capitalized HAVE because the movement is not saying to sit around and wait to die. It just makes it so you don't have to rely on worrying about money and can do more fulfilling work. The motivation behind the movement came from Americans being able to live longer than before, the inaccessibility of pensions from jobs, and the shorter job tenure. 

Last year, I read "Your Money or Your Life" by Vicki Robin, one of the pioneers of the modern FIRE movement. She makes the argument that every moment in your life is worth money, and jobs are more expensive than what meets the eye. She urges people to track every expense even down to the...