Financial Thought of the Day November 21, 2014: Is the Money You Spend A Waste?

Remember to always do a cost benefit analysis. If you buy a product you won’t use then you threw money to the wind.

Financial Thought of the Day November 20, 2014: Putting a Stock on the Shelf

When buying shares of a company. Pretend that you are going to buy an ornate vase to be stuck on a mantle and forgotten about for decades. When the decades pass, you can open the vase and find gold on the inside.

Buying shares in a good publicly traded business that sits behind a wide moat and keeping it for a decade or more can do wonders for your wealth because you are not paying money in taxes and brokerage commissions.

Financial Thought of the Day November 19, 2014: Unrealized Stock Market Gains

One of the advantages of stock market gains is that they are untaxable until sold. Remember that when you consider selling a stock because of a bombastic macro-economic headline that won’t amount to anything in the long run.

Financial Thought of the Day November 18, 2014: Planning for the Unexpected

Remember it always pays to save. You may plan for things but other unexpected events like medical emergencies, natural disasters, and permanent changes in your industry can disrupt your financial life.

Thought of the Day November 17, 2014: What Being a Long-Term Investor Means

Being a long-term investor means thinking of companies behind a stock as a business. It also means picking good businesses with wide moats and that have staying power. Moreover, you can take advantage of long-term capital gains tax free and without incurring brokerage fees.

Financial Thought of the Day November 14, 2014: Return On Equity

Return on Equity is the amount of net income generated by a company’s capital base according to Investopedia. The figure is calculated by the following formula:

Net Income/Shareholder’s Equity

Financial Thought of the Day November 13, 2014: Healthcare Expenses—Another Reason to Save

While you can prevent healthcare expenses by eating right and exercising daily, sometimes you just simply can’t control healthcare expenditures. Some diseases and conditions just happen. This represents another reason to save so that any unexpected expenditure can be covered.

Financial Thought of the Day November 12, 2014: Long-Term Debt

Long-term debt is obligations incurred by a business or entity that comes due at a point exceeding one year. This type of debt can incur interest expense.

Financial Thought of the Day November 11, 2014: Operating Profit

Operating profit is the amount of profit a company makes from its operations. It doesn’t account for items such as investment income, interest expense, and income tax expense.

Financial Thought of the Day November 10, 2014: Making Money May Not Always be Easy

It’s always good to save when times are good and money is easy to make. There may come a time when making money won’t be that easy and you will need a savings cushion to fall back on.

Financial Thought of the Day November 7, 2014: Day Trading/Dog Track—What’s the Difference?

When you trade your stocks on a day in and day out basis you subject yourself to the daily whims of the stock market which could go in any direction based on an infinite number of factors. By contrast, buying a share of an excellent business and holding it for the long-term will make you wealthy. If you want to day trade you would be just as well off as to go the dog track.

Financial Thought of the Day November 6, 2014: Times Interest Earned

Times interest earned is a very important and often overlooked measure. It is defined by the following formula--operating income/interest expense. It describes a company’s ability to cover interest expense incurred by long-term debt. I have said in many of my articles that the rule of safety lies at five times or more. Companies who can’t meet interest obligations may go into bankruptcy.

Financial Thought of The Day November 5, 2014: Again-Always Save Something

Remember..always save something even if it is a few bucks a pay period. You never know when you may need it.

Financial Thought of the Day November 3, 2014: Profit Margin

Profit margin is defined by the following formula: (Net Income/Revenue) x 100. It is essentially the percentage of net income relative to revenue.