A realized loss is the loss that is recognized when assets are sold for a price lower than the original purchase price.
Why It's Important
Losses suck! Ok, that wasn't politically correct but they really do. No one wants to lose money in the stock market but sometimes you do. It is all part of the risk that you are taking when you invest money. When you buy something (let's say a stock for ease of explanation), you are setting up your cost basis or book value. If I bought 1 share at $2.00, $2.00 is my cost basis. In a month, that share is now worth only $1.00. At that point, without doing anything with it, I have an unrealized loss of -50%. I decide I don't want that stock in my portfolio anymore so I sell it. Now, I have a REALIZED LOSS of $1.00.
Believe it or not, this is not all bad news! Yes, I am sad that I lost a dollar BUT now I can write off that loss on my taxes to offset any gains in other investments. This, my friends, is called tax loss harvesting but that's another vocabulary word for another week.
A number given to an individual to indicate creditworthiness to a lender.
Why It's Important
I am sure every one reading this knows what a credit score is. If not, check out my blog posts below. So, I am not going to bore you with details but I am going to provide some facts you may not have known!
There are hundreds of different credit scores lenders use to evaluate your creditworthiness. No, there is not just one or three but hundreds! It is almost safe to say that each lender will probably use a different score that's why sites like Credit Karma and Credit Sesame can only give you an estimate. Don't be surprised if it doesn't match what the lender pulled on you.
You can request a copy of what the lender used! If you would like to see how your creditworthiness was evaluated, the lender has to provide a copy of what they used by law. So, if you are curious just ask for it!
Most jobs now look at your credit score! As a matter of fact, every 1 in 4 Americans has had to submit to a financial check before they were employed. I know I have had to deny employment due to what was showing in my career as HR.
The most popular credit scores are FICO (Fair Isaac Corporation) and VantageScore.
The five most important factors that affect a FICO score are 1) payment history (35%), 2) how much you owe (30%), 3) how long you’ve had credit (15%), 4) your last application for credit (10%), and 5) the types of credit you use (10%).