One of the ideas that has become quite pervasive within the minds of investors is the notion of a “good stock” or a “good property” to own. A This notion stems from a general desire on the part of most people to own things of quality. A In our personal life, this frequently manifests itself as a desire to own a comfortable home, and a reliable automobile. A Quality gives us a feeling of safety and security. A Thus, it seems completely natural to want our investments to be the stock of a high …

The financial planning profession has a long history of demonstrating the power of compounded growth to clients who are looking to invest for the future.  Typically, a chart will be shown that shows the difference between investing $100 per month at 1%, 5%, 8%, and 10% rates of return for 20, 30, and 40 years.  As expected, the results are typically astounding.  The extended impact of compounding for a longer period of time at a higher rate of return creates a tremendous difference in the amount of compounded returns after …

Anybody who has taken accounting classes in school is familiar with the terms asset and liability.  Typically, assets are things you own that have value, and liabilities are obligations that you owe to pay for your assets.  This definition is very consistent with how accountants view the world, but Robert Kiyosaki has advanced a different way of viewing assets and liabilities that may be very enlightening.
Kiyosaki advocates classifying ‘assets’ as things that generate cash flow and ‘liabilities’ as things that cause a cash outflow.  This perspective throws a large monkey …

One of the most important factors influencing our financial lives today is the notion of volatility.  At it’s basis, volatility is the rate at which the value of an investment or stream of cash flows will vary over time.  People who owned real estate in California, Las Vegas, Florida, or the Northeast over the last few years are very well associated with the notion of volatility, since the values of their properties shot up like a rocket and then crashed back down to earth like a rock.
The principal is critically …

Most people are very familiar with the traditional investing axiom of ‘buying low’ and ‘selling high’ that is rooted in experience with the stock market.  Because of this, many equity market investors choose to hold their capital on the sidelines waiting for prices to hit a cyclical bottom before buying-in.  We understand this sentiment in regards to stock market investments, due to the increasing volatility of market values in recent years.  The orthodoxy of ‘buy and hold’ worked very well for stocks through the 1990’s, but has subjected investors to …

One of the oldest and most important notions in Finance is the statement that “Cash is King”. The purpose of this cliche is to focus examination for a business deal, product decision, or prospective investment on cash flow. This is especially important when the accounting profit & loss is different from the cash flows.
Consider the difficulty of running a business where all of the value comes from a future sale of the business to somebody else? What happens if large losses must be absorbed until the future …

Earlier this year, news was made when the current cash flow for social security went negative for 2010.  This has prompted many politicians to make the statement that Social Security is not in danger because of its “Trust Fund” balance that has been built over the years when it ran a surplus.  These statements represent either ignorance in regards to the flow of government funds or deceit on the part of the politicians.  (Possibly Both)
The important consideration when talking about the Social Security “Trust Fund” is to understand the cash …

When many young people endeavor to purchase their first automobile, they face a wide variety of choices.  One of the choices available is to lease or buy.  If buying, you can purchase the automobile with cash or finance it.  It is highly important to make the right decisions when purchasing a car, since the wrong move can turn that shiny new street cruiser into an automotive prison that locks up your financial resources for years on end.
Most people who are deciding how to purchase a car on paper will reply …