Let's Talk Money

Definition

A mortgage is a legal agreement by a bank or other financial institution and a debtor.  The financial institution lends money with interest and takes ownership of the property if the debtor defaults.  This is a type of secured debt.

Why It's Important

Most people that purchase homes, have to get a mortgage to afford it.  In my opinion, mortgages are a form of "good debt" although cash is always king!  There are different types of mortgages a borrower can get.  For instance, a borrower can get a 30-year conventional loan with a variable interest rate or a 30-year FHA loan with a fixed interest rate.  There are many combinations these loans can come in and your best defense is to learn as much as you can before using one to purchase a home.  Some of these terms will be covered in the upcoming Wednesday Words of the Week.

Personally, I have a 30-year FHA loan with a fixed Interest rate of 4.25%.  I would like to refinance at...

Black females are working successfully around the globe in the financial field, despite racism challenges. Women-owned businesses are low in the market, and black women commonly face a lack of venture capital funding and access to loans. American Express reported that the ratio of women of color from 2018-19 is increased in women-owned businesses. During a similar period, black women entrepreneurs experienced a high growth rate in the financial industry than any other group. Many black women experts in the business are breaking barriers by serving as a role model for women from every walk. Also, they are the motivation for others to meet their financial goals.   

There has been enough to talk about the significance of diversity and inclusion in the workplace when it comes to the financial field. In 2016, black American families had 10 cents to the dollar of a white counterpart, on average. On the contrary, women earned 32 cents on the dollar as compared to men....

This episode is not just for women!  Join Tiffany as she sits down with Justine Chan as they talk about home buying and real estate investing strategies.

About Our Guest

Justine is the founder and CEO of Live With Plum, the home buying guide for the modern woman.

The site was inspired by her personal experience buying in NYC and seeing how little resources there were for female home buyers even though they buy at twice the rate of men.

Prior to starting Live With Plum, Justine was a startup operator and management consultant.

Follow her on Twitter: https://www.twitter.com/livewithplum

Join her group on Facebook: https://www.facebook.com/groups/livewithplumgroup

Follow her on Instagram: https://www.instagram.com/livewithplum

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Definition
A Keogh plan (also called HR10 plans) is a tax-deferred retirement plan for self-employed individuals or unincorporated businesses.

Why It's Important
It's important to note that contributions to these plans are tax-deductible up to a certain amount.  There are two types of Keogh plans.  One type is a qualified defined-contribution plan.  This type of plan is typically in the form of a profit-sharing plan.  The beauty is that a business doesn't have to generate profits to participate in this type of plan.  As of 2019, a business can put 100% of their income or up to $56,000 of funds into this plan.  Profit-sharing plans are only contributed to by the employer (yourself if you are self employed) not the employee.  It's a good way to squirrel away money when your company is doing well.

The other type of Keogh plan is a qualified defined-benefit plan.  These types of plans are similar to pensions in that you get paid out annually after...

Definition
The head and shoulders pattern in technical stock analysis is used to predict what the support level (lowest price it will potentially go before traders make it rise again) of a stock is.

Why It's Important
You probably saw this and wondered why I would be talking about a shampoo.  LOL!  This is one of many charting patterns that technical analysts use to make stock price predictions.  I will warn that this is an advanced investing topic so if it does not make sense, do not worry!  

As you can see from the chart below, the trend looks like a head and two shoulders.  The "neckline" is a support level.  The stock price hit that level then bounced up.  Then, it hit it one more time and bounced up before breaking through the support and trending downwards.  

This same charting pattern can also happen in the opposite way as shown below.  In this scenario, the neckline shows the price ceiling instead of the support.  It is the same...

Definition
A fiduciary is a person or organization that acts on behalf of another person or persons to manage assets.

Why It's Important
The term fiduciary has been thrown around a lot lately but do you really know what it is? A fiduciaries' responsibilities and duties are both ethical and legal. Once the advisor or organization says that they are a fiduciary, they have to act in your best interest. This means that they are not supposed to do things just to pad their pockets (make money).

What does an advisor not acting like a fiduciary look like? They may try to sell you products you don’t need to make a commission. They may initiate trades unnecessarily just to get commission (also called churning). It is important to stay educated and ask questions.

Definition
In economic terms, expansion is an increase in the level of economic activity.  It is a period of economic growth as measured by a rise in real GDP (Gross Domestic Product).

Why It's Important
An expansion means that the economy is doing good.  This typically coincides with the stock market.  Think about it.  If the economy is doing good, that means companies are generally doing good which means they are profitable.  It directly effects the stock market.  This is only one phase of the economic cycle.  

Are we currently in an expansion?  You can tell by figuring out if: 

• Real GDP has grown for two or more consecutive quarters, moving from a trough to a peak
• There is a rise in employment
• There is a rise in consumer confidence
• There is a rise in equity markets 

Expansion is also sometimes called a recovery and the economic cycle is sometimes called the business cycle.  Don't let the different terms...

Definition
A put is a type of option contract that gives the owner the right to sell a stock at a certain fixed price within a specified timeframe.

Why It's Important
Puts are the opposite of the word we discussed last week, Call Options.  Take a look at the example in that post to get a good idea of how options work.  I won't belabor the point here.  But, I do want you to understand that a put option becomes more valuable as the price of the underlying stock depreciates relative to the strike price.  

Put options are a short position that lets you take advantage of price drops in the market.  Calls are more commonly used but Puts can be another way to hedge.

There are pros and cons to trading options.  As always, do your research!

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,...