Key Takeaways Cost of Capital: Foundational Context ↓ Understanding Components ↓ Cost of Equity (Ke) Cost of Debt (Kd) WACC ↓ Ke Details: • Return required by investors • Reflects ownership risk • Estimated using CAPM • Input in capital budgeting Kd Details: • Interest on debt • Tax shield adjustments • Lower risk than…
Key Takeaways Yield to Maturity (YTM) If current yield is like checking your car’s current speed, Yield to Maturity is more like your GPS estimating your entire journey time. YTM represents the total annualized rate of return you can expect if you purchase the bond at today’s market price and hold it until its maturity…
Key Takeaways 🔥 Contribute at least enough to get your full employer match—don’t leave free money behind🔥 Choose low-cost index funds to grow your savings 20%+ over time🔥 Use Target Date Funds or follow “120 minus your age” for asset mix🔥 Stick to 4% or less in yearly withdrawals to protect your portfolio🔥 Diversify income…
Key Takeaways 🔥 Use 4% as a starting withdrawal rate, then adjust to your needs🔥 Expect 3–4% inflation—$50K today could double in 20 years🔥 Balance stocks (9–11%) and bonds (4–6%) for steady withdrawals🔥 Plan for retirement 5–7 years beyond life expectancy to be safe🔥 Flex your withdrawal plan during market shocks—stay adaptable Sustainable Withdrawal Rate…
Key Takeaways Typical Asset Ownership Costs Routine Maintenance 0.54% Property Taxes 0.91% Home Maintenance Guidelines 1% High-End Maintenance Budget 4% Annual Property Maintenance Did you know your house requires an annual “health budget” just like your body does? Owning property involves ongoing costs for maintenance and repairs, separate from mortgage payments. Budgeting for these expenses…
Key Takeaways Periodic Contribution Amount (PMT) This is the consistent amount you commit to saving or investing at the beginning of each period. It’s your financial discipline made tangible. Whether you’re setting aside $500 on the first of every month or $10,000 at the start of each year, the defining characteristic is consistency. The annuity…
Key Takeaways 🔥 Shop the full 6–25% loan range—ads reflect only top-tier rates🔥 Longer auto loans lower payments but raise total interest sharply🔥 Seek savings rates 3–5× the national average to grow passively🔥 Use liquid savings for <3 yrs; plan strategically for 3–7 yrs🔥 Credit score matters—subprime rates can be 2× higher than prime Common…
Key Takeaways 🔥 ROIC > WACC = value creation; ROIC < WACC = value destruction🔥 Use benchmarks as guides, but adjust for your unique risk profile🔥 Base calculations on market values, not outdated book values🔥 Tailor hurdle rates to each project’s specific risk🔥 Leverage the tax shield—debt is cheaper because interest is tax-deductible Weighted Average…
Key Takeaways 🔥 Annualize yields to fairly compare different T-Bill maturities🔥 Buy T-Bills on TreasuryDirect to skip all transaction fees🔥 Weigh T-Bills vs. commercial paper based on risk and liquidity🔥 Longer maturities usually pay more to offset limited access🔥 Use proper formulas to convert discount rates into true yields Foundational Background and Key Performance Indicators…
Key Takeaways 🔥 Compare bond value vs. market price to spot undervalued buys🔥 Longer-maturity bonds are more volatile with rate changes🔥 High coupon rates mean premium prices if above market yields🔥 Bond prices drop when rates rise—anticipate market shifts🔥 Use tax-equivalent yields to fairly compare municipal bonds Introduction to Bond Present Value Ever wonder what…