Investing Basics Stocks – Categories, Capital Structure and Theory Behind Outperformance

This is a continuation of the last post discussing basic financial principles as it applies to individual stocks. Read Part 1 first if you haven’t already There are many ways to describe a stock/business, but the 3 major categories are: the market cap size, the sector and geographic location. Market Capitalization Market cap size refers to the overall quoted value of the stock. Market Cap = the stock’s trading price X the total number of outstanding shares of the company.

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Investing Basics – What is A Stock and What Happens to Profits?

My last post talked about deciding upon a 100% stock allocation as I was starting out on our investment journey. I failed to mention that before making this bold decision, I spent an enormous amount of time reading about stocks, profits and their valuation principles. It seems a bit daunting to try and learn investment concepts when you are starting from square one. I decided it was probably best to learn it in a similar fashion to medicine, which meant

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Basic Asset Allocation and Risk Tolerance (cont’d) – My Road To Financial Independence Series

This  post  completes the discussion of risk tolerance and is the 3rd post in a multi-post series walking through all the key financial decisions that led to financial independence in our 30’s. Make sure you read them in order as each post builds on the last.  Don’t Fight Your Emotional Self – Find Coping Mechanisms Based upon my tolerance for volatility in poker and my strong belief in Stocks for the Long Run, I was ready to start our investment portfolio

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Basic Asset Allocation and Risk Tolerance – My Road To Financial Independence Series

This is the 2nd post in a multi-post series walking through all the key financial decisions that led to financial independence in our 30’s along with a few mistakes along the way! Make sure you read them in order as each post builds on the last. As discussed in the first post, I spent a substantial part of my 2nd year medical residency working out my fundamental investment belief system before investing a single dollar. I poured over financially blog

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Understanding Stock Market Risk – My Road to Financial Independence Series

  Life has been a bit of a whirlwind recently. As I mentioned previously, our family had our 3rd child in November which coincidentally was the time of my last post! I failed to mention we also moved into a new house and then had plenty of family and friends visiting as well. We knew this was going to be our last child, so I have really tried to take as much quality time with our little boy as possible

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Investing Basics Bonds Part 1

I’m a big believer in understanding the basic concepts of what you are invested in. Each asset class has its own unique characteristics, risk profiles and short and long term performance. Understanding why these investments act the way the do will help you have faith in the process of investing within them. The next few investing basics posts will cover the main types of investment categories that most professional investors will come across. What is a Bond? The first basic

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Investing Basics – The Power of Compound Interest

  The prior post about inflation discussed why savings alone can’t allow you to enjoy a comfortable retirement. The next set of posts will dive into different asset classes, but the first real question to ask is “How does investing combat inflation?” For those paying attention in the last post, it will likely come down to the power of compound interest. I mentioned that investing with a long time frame is essential and everything else will fall into place. If

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Investing Basics – Why Do We Need To Invest?

As self-employed professionals, we all know that we have to save for retirement. The above question may seem a bit basic given this fact. Yet I’ve also told you that the first absolute principle of financial planning is simply spending less than you earn and the bigger the difference the better. As a professional, you already have the opportunity to save much larger sums of cash for retirement than the average person. Why do you then need to take that

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