Rich Dad Definitions

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Rich Dad Definitions
2015-08-12 09:08:27

Investing Vocabulary
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  1. Appreciation -
    is an increase in the value of an asset over time.  The increase can occur for a number of reasons including increased demand or weakening supply, or as a result of changes in inflation or interest rates.  The term appreciation can be used to refer to an increase in any type of asset such as a stock, bond, currency, or real estate.  Appreciation is the opposite of depreciation.
  2. Asset -
    is something that puts money in your pocket, whether you work or not.
  3. Canary in the mine -
    a proverbial warning of bad things to come.  Because the canary has the ability to detect small concentrations of gas, miners would explore new coal seams with a caged canary.  As long as the bird sang, the air supply was safe.  A dead canary signaled an immediate evacuation.
  4. Capital -
    is financial resources or assets... the word comes from the word cattle, an early form of 'capital'.
  5. Capitalist -
    is someone who prints his or her own money and an entrepreneur who provides jobs.
  6. Capital gains -
    in basic terms, is buying low and hoping to sell high.  Investing for capital gains is also 'gambling'... speculation that the price of something will go up in value.
  7. Cash flow -
    is money flowing into your pocket from an asset.
  8. CBO -
    is the Congressional Budget Office of the United States.
  9. CEO -
    is a Chief Executive Officer.
  10. Commodities -
    were the first type of money - tangibles such as gold, silver, oil, gas, salt, and livestock - and still used today.
  11. Currency -
    is a generally accepted form of money, including coins and paper notes, which is issued by a government and circulated within an economy.  It's used as a medium of exchange for goods and services and is the basis for trade and exchange.
  12. Bad Debt -
    is incurring debt to buy doodads (liabilities) and debt that you yourself, not other people, have to pay back.
  13. Good Debt -
    is also known as 'leverage', using other people's money to buy assets.  Other people, such as tenants, pay the money back for you.
  14. Debt-to-GDP ratio -
    is a country's national debt - the amount of cash flowing out - as a percentage of the country's Gross National Product, or the amount of cash flowing in.  The lower the percentage, the healthier the country.