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Financial Independence
Financial independence is a state where an individual or household has accumulated sufficient financial resources to cover its living expenses without having to depend on active employment or work to earn money in order to maintain its current lifestyle. These financial resources can be in the form of investment or personal use assets, passive income, income generated from side jobs, inheritance, pension and retirement income sources, and varied other sources. The concept of financial independence goes beyond just having enough money or wealth. Achieving financial independence gives freedom to make the best use of time to pursue life's goals and dreams, or help the citizens of the community to lead a life with purpose. It is a state where one has come to terms with the fact of having accumulated enough, has been freed from the shackles of debt and the tendency to make poor financial decisions, and has transformed their relationship with money to make healthy financial choices. ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Passive Income
Passive income is a type of unearned income that is acquired with little to no labor to earn or maintain. It is often combined with another source of income, such as regular employment or a side job. Passive income, as an acquired income, is typically taxable. Examples of passive income include rental income and business activities in which the earner does not materially participate. Some jurisdictions' taxing authorities, such as the Internal Revenue Service in the United States, distinguish passive income from other forms of income, such as income from regular or contractual employment, and may tax it differently. It can take a long period of work and accumulation before passive income can be acquired. Passive income can be a way of creating financial independence and early retirement, because the beneficiary will receive an income regardless of whether they are materially active in the activity creating the revenue. Passive income can come in the form of a lump sum ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Endowment Effect
In psychology and behavioral economics, the endowment effect, also known as divestiture aversion, is the finding that people are more likely to retain an object they own than acquire that same object when they do not own it. The endowment theory can be defined as "an application of prospect theory positing that loss aversion associated with ownership explains observed exchange asymmetries." This is typically illustrated in two ways. In a valuation paradigm, people's maximum willingness to pay (WTP) to acquire an object is typically lower than the least amount they are willing to accept (WTA) to give up that same object when they own it—even when there is no cause for attachment, or even if the item was only obtained minutes ago. In an exchange paradigm, people given a good are reluctant to trade it for another good of similar value. For example, participants first given a pen of equal expected value to that of a coffee mug were generally unwilling to trade, whilst participants f ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Royalty Payment
A royalty payment is a payment made by one party to another that owns a particular asset, for the right to ongoing use of that asset. Royalties are typically agreed upon as a percentage of gross or net revenues derived from the use of an asset or a fixed price per unit sold of an item of such, but there are also other modes and metrics of compensation.Guidelines for Evaluation of Transfer of Technology Agreements, United Nations, New York, 1979 A royalty interest is the right to collect a stream of future royalty payments. A license agreement defines the terms under which a resource or property are licensed by one party ( party means the periphery behind it) to another, either without restriction or subject to a limitation on term, business or geographic territory, type of product, etc. License agreements can be regulated, particularly where a government is the resource owner, or they can be private contracts that follow a general structure. However, certain types of franchise ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Dividend
A dividend is a distribution of profits by a corporation to its shareholders, after which the stock exchange decreases the price of the stock by the dividend to remove volatility. The market has no control over the stock price on open on the ex-dividend date, though more often than not it may open higher. When a corporation earns a profit or surplus, it is able to pay a portion of the profit as a dividend to shareholders. Any amount not distributed is taken to be re-invested in the business (called retained earnings). The current year profit as well as the retained earnings of previous years are available for distribution; a corporation is usually prohibited from paying a dividend out of its capital. Distribution to shareholders may be in cash (usually by bank transfer) or, if the corporation has a dividend reinvestment plan, the amount can be paid by the issue of further shares or by share repurchase. In some cases, the distribution may be of assets. The dividend received by ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Interest
In finance and economics, interest is payment from a debtor or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, the amount borrowed), at a particular rate. It is distinct from a fee which the borrower may pay to the lender or some third party. It is also distinct from dividend which is paid by a company to its shareholders (owners) from its profit (economics), profit or Reserve (accounting), reserve, but not at a particular rate decided beforehand, rather on a pro rata basis as a share in the reward gained by risk taking entrepreneurs when the revenue earned exceeds the total costs. For example, a customer would usually pay interest to debt, borrow from a bank, so they pay the bank an amount which is more than the amount they borrowed; or a customer may earn interest on their savings, and so they may withdraw more than they originally deposited. In the case of savings, the customer is the lender, and the ban ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Salary
A salary is a form of periodic payment from an employer to an employee, which may be specified in an employment contract. It is contrasted with piece wages, where each job, hour or other unit is paid separately, rather than on a periodic basis. Salary can also be considered as the cost of hiring and keeping human resources for corporate operations, and is hence referred to as personnel expense or salary expense. In accounting, salaries are recorded in payroll accounts. A salary is a fixed amount of money or compensation paid to an employee by an employer in return for work performed. Salary is commonly paid in fixed intervals, for example, monthly payments of one-twelfth of the annual salary. Salaries are typically determined by comparing market pay-rates for people performing similar work in similar industries in the same region. Salary is also determined by leveling the pay rates and salary ranges established by an individual employer. Salary is also affected by the number of ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Wage
A wage is payment made by an employer to an employee for work (human activity), work done in a specific period of time. Some examples of wage payments include wiktionary:compensatory, compensatory payments such as ''minimum wage'', ''prevailing wage'', and ''yearly bonuses,'' and wiktionary:remunerative, remunerative payments such as ''prizes'' and ''tip payouts.'' Wages are part of the expenses that are involved in running a business. It is an obligation to the employee regardless of the profitability of the company. Payment by wage contrasts with salary, salaried work, in which the employer pays an arranged amount at steady intervals (such as a week or month) regardless of hours worked, with Commission (remuneration), commission which conditions pay on individual performance, and with compensation based on the performance of the company as a whole. Waged employees may also receive tips or gratuity paid directly by clients and employee benefits which are non-monetary forms of ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Passive Income
Passive income is a type of unearned income that is acquired with little to no labor to earn or maintain. It is often combined with another source of income, such as regular employment or a side job. Passive income, as an acquired income, is typically taxable. Examples of passive income include rental income and business activities in which the earner does not materially participate. Some jurisdictions' taxing authorities, such as the Internal Revenue Service in the United States, distinguish passive income from other forms of income, such as income from regular or contractual employment, and may tax it differently. It can take a long period of work and accumulation before passive income can be acquired. Passive income can be a way of creating financial independence and early retirement, because the beneficiary will receive an income regardless of whether they are materially active in the activity creating the revenue. Passive income can come in the form of a lump sum ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Income
Income is the consumption and saving opportunity gained by an entity within a specified timeframe, which is generally expressed in monetary terms. Income is difficult to define conceptually and the definition may be different across fields. For example, a person's income in an economic sense may be different from their income as defined by law. An extremely important definition of income is Haig–Simons income, which defines income as ''Consumption + Change in net worth'' and is widely used in economics. For households and individuals in the United States, income is defined by tax law as a sum that includes any wage, salary, profit, interest payment, rent, or other form of earnings received in a calendar year.Case, K. & Fair, R. (2007). ''Principles of Economics''. Upper Saddle River, NJ: Pearson Education. p. 54. Discretionary income is often defined as gross income minus taxes and other deductions (such as mandatory pension contributions), and is widely used as a ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Diversification (finance)
In finance, diversification is the process of allocating capital in a way that reduces the exposure to any one particular asset or risk. A common path towards diversification is to reduce financial risk, risk or volatility (finance), volatility by investment, investing in a variety of assets. If asset prices do not change in perfect synchrony, a diversified Portfolio (finance), portfolio will have less variance than the weighted mean, weighted average variance of its constituent assets, and often less volatility than the least volatile of its constituents. Diversification is one of two general techniques for reducing investment risk. The other is hedge (finance), hedging. Examples The simplest example of diversification is provided by the proverb "Don't put all your eggs in one basket". Dropping the basket will break all the eggs. Placing each egg in a different basket is more diversified. There is more risk of losing one egg, but less risk of losing all of them. On the other h ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Investment
Investment is traditionally defined as the "commitment of resources into something expected to gain value over time". If an investment involves money, then it can be defined as a "commitment of money to receive more money later". From a broader viewpoint, an investment can be defined as "to tailor the pattern of expenditure and receipt of resources to optimise the desirable patterns of these flows". When expenditures and receipts are defined in terms of money, then the net monetary receipt in a time period is termed cash flow, while money received in a series of several time periods is termed cash flow stream. In finance, the purpose of investing is to generate a Return (finance), return on the invested asset. The return may consist of a capital gain (profit) or loss, realised if the investment is sold, unrealised capital appreciation (or depreciation) if yet unsold. It may also consist of periodic income such as dividends, interest, or rental income. The return may also inclu ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Budget
A budget is a calculation plan, usually but not always financial plan, financial, for a defined accounting period, period, often one year or a month. A budget may include anticipated sales volumes and revenues, resource quantities including time, costs and expenses, environmental impacts such as greenhouse gas emissions, other impacts, assets, Liability (financial accounting), liabilities and cash flows. Companies, governments, families, and other organizations use budgets to express strategic planning, strategic plans of activities in measurable terms. Preparing a budget allows Company, companies, Public authority, authorities, private entities or Family, families to establish priorities and evaluate the achievement of their objectives. To achieve these goals it may be necessary to incur a Deficit spending, deficit (expenses exceed income) or, on the contrary, it may be possible to save, in which case the budget will present a Surplus (economics), surplus (income exceed expense ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
