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Stock or equity is an investment that represents part ownership of a corporation and entitles the owner to a proportion of the corporation’s profits and assets, equal to how much stock they own. Units of stock are called shares.

Unlike stocks, bonds don’t give you ownership rights. They represent a loan from the investor to the issuer of the bond.

Bonds are investment securities (fixed income securities) where an investor lends money to a corporation or government for a period, in exchange for regular interest payments. Bonds are used mainly by companies, municipalities, states, and sovereign governments to finance major projects, operations, or acquisition. Bond details include the face value, maturity date, coupon dates fixed or variable, and issue price end. The owners of bonds are debt-holders or creditors of the issuer.

An excellent first step to establishing financial wellness is to know what you are worth. A person’s net worth is simply the value that is left after subtracting liabilities  (.ie.student loans, credit card debt, mortgage) from assets (i.e., cash, investments). In short , net worth is the difference between what you own and what you owe. What this does is to gauge a person’s financial health and it provides a snapshot of your current financial position. 

What does this means? A positive and or increasing net worth indicates good financial health, while decreasing or negative net worth is cause for concern, as it might indicate a decrease in assets relative to your liabilities.  By knowing where you stand financially, you will be more conscious of your spending habits and more likely to achieve your short-term and long-term financial goals.

…Start by figuring out what your debts are or liabilities, then make a list of all of your debts (excluding your mortgage) and put them in order of the method or methods that you decide to use to become debt-free. The only caveat here is your mortgage. If you have a mortgage, you have some time to pay it off.

The two most popular methods to pay off your debt will either be the debt avalanche or the debt snowball. The avalanche method suggests paying as much as possible toward the debt with the highest interest rate to the lowest, regardless of the balance. This is done while making at least the minimum payments on all other debts.

The snowball, meanwhile, suggests taking the smallest debt balance first and then work your way up aggressively- regardless of the interest rate. You are required to make the minimum payment amount on all other debts.

This topic always evokes a lot of emotion, especially, from those that believe the home they live in should be considered an asset. However, there is a school of thought, popularized by Robert Kiyosaki (author of Rich Dad Poor Dad), that says a home, particularly one carrying a mortgage, is a liability. The focus of this concept is on cashflow.

According to Robert Kiyosaki definition: an asset puts money in your pocket, while a liability takes money out. 

Most persons have been led to believe that their primary residence is an asset, which is why so many thought they should buy a huge home. The bigger the home; the bigger the asset. Unfortunately, if the house is not producing a cashflow, it is not an asset but rather a liability. 

Instead of generating income or cashflow, it takes money out of your pocket in the form of a mortgage, utility payments, taxes, maintenance, and more. So the question is, where are you going to get that extra income from to pay for theses expenses? Do you continue to work, or will you get that money from other income generating areas, like investment properties, cash, stocks or profit from a business?

This is not to say you shouldn’t buy a house, but don’t buy it as an asset or think of it as an investment. Rather buy it because you want to live in it, it’s a life style choice to be enjoyed, but not as an investment to a secure retirement.

Could it appreciate in value? Yes. Appreciation is wonderful, but until you have realized the capital gains at sale the property it is still an expense.