• How Much To Save?

    When it comes to weight control, we all know that the trick is to eat less and move more. When it comes to financial health, the healthy person spends less and saves more.

    This infographic describes the why and how to save more money.

    Please find this infographic at https://www.missionfed.com.

    How much should I be saving?

  • Crowdfunding in a Volatile Market

    According to a recent article in Entrepreneur magazine (Clifford, 24 Aug 2015):

    Crowdfunding has been celebrated as the grand democratization of finance -- a mechanism for anyone with a business idea to raise money from their peers, outside the bureaucracy and nepotism of more traditional fundraising paths. But while this “of the people, for the people, by the people” approach to raising money may see itself as divorced from anything happening on Wall Street, that’s hardly the case.

    This CNBC video shows that crowdfunding isn't just for small startups and creatives anymore. Today, larger businesses are turning to crowdfunding to raise capital.

    For discussion:

    How does crowdfunding work?

    According to the article cited above, what is the likely impact of volatile markets on crowdfunded markets?

  • Saving for Retirement with a Self-Directed IRA

    Your parents told you to save for a rainy day, and with a self-directed Individual Retirement Account (IRA), you can do it. This infographic describes IRS rules related to self-directed IRAs that every investor should know.

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    Find more great infographics on NerdGraph Infographics

  • No Good, Very Bad Day for Stocks

    Starbucks, Amazon, and even Facebook are down more than 10% from their recent record highs. And to blame is China, the Fed, and the low, low price of oil.

    For discussion:

    In your own words, why are China, the Fed, and the price of oil driving the U.S. stock market lower into a "correction?"

  • Avoid Bad Financial Habits

    Avoiding bad spending habits is the secret to getting out and staying out of debt. This infographic by Daniel Wesley offers some wise advise on bad spending habits and how to avoid them:

  • The Chicago Board of Trade: From Beginning to End

    In 1848, the Chicago Board of Trade (CBOT) was created by merchants for merchants. It was destined to become the largest futures exchange in the world.

    Then on July 6, 2015, the CBOT closed its futures pits for the last time--without fanfare or ceremony. The end of a trading era.

    Pit trading didn't actually end on July 6. It was headed for a sure death in 2007 when the CME and CBOT and the new exchange began migrating trading from the floor to electronic platform.

    From a 2007 article (Schmerken):

    Less than six months after completing the historic merger between Chicago Mercantile Exchange Holdings and its former rival CBOT Holdings in July, the new CME Group is about to move all of its asset classes onto a single electronic trading platform. While the CBOT is best known for futures and options on agricultural products, and Treasury notes and T-bills, the CME dominates futures and options on futures on currencies, Eurodollars and stock indexes.

    Over the course of two weekends in January, CME will migrate the electronically traded CBOT products to the CME Globex electronic trading platform, whose capacity has been expanded to accommodate the increase in volume, according to Kevin Kometer, deputy CIO at CME Group. And in a sign that the future of open-outcry trading could be waning, CME will consolidate the two trading floors into one by moving all of the floor-traded products over to the CBOT's 60,000-square-foot trading floor on Jackson Blvd. during the second quarter of 2008.

    For discussion:

    What is a futures exchange? How can one trade on the exchange?

  • U.S. and China and the World


    This week, China experienced suddenly devalued its currency, sparking fear in financial markets. 

    From the NY Times (Eavis, 13 Aug 2015):

    This week, China jumped into the fray. In a surprise decision on Tuesday, the country’s authorities began sharply devaluing its currency, the renminbi. While the plunge paused on Friday, the renminbi was still down 4.4 percent against the dollar this week, a huge drop for China.

    The abrupt move opens a new phase in what some analysts see as a long-raging global currency war, a development that could leave the United States exposed and undermine efforts to pull the world economy out of the doldrums.

    The impact may be more far-reaching than we suspect.

    From the Economist (15 Aug 2015):

    But this week, China jumped into the fray. In a surprise decision on Tuesday, the country’s authorities began sharply devaluing its currency, the renminbi. While the plunge paused on Friday, the renminbi was still down 4.4 percent against the dollar this week, a huge drop for China.

    The abrupt move opens a new phase in what some analysts see as a long-raging global currency war, a development that could leave the United States exposed and undermine efforts to pull the world economy out of the doldrums.

    For discussion:

    Why does a depreciating Chinese currency threaten the U.S. and other economies? How might other countries react to an intentional currency devaluation by one trading partner?

  • The Buying and Selling of Risk

    Prices rise and fall with supply and demand. And when that happens, businesses can get hurt.

    At CMEGroup, buyers and sellers meet to lock in prices or try to make money by speculating on future prices. Using futures, buyers can lock in prices for tomorrow. Or, if buyers aren't sure they wlll want that item, buyers can buy the option to buy later--i.e. they can buy a "call option" to be exercised in the future.

    For discussion:

    How does "hedging" compare with "speculating?"

    What types of market participants deal in options and futures contracts?

    What is liquidity and what does it have to do with options and futures contract trading?

  • Women and Investing

    Experts agree that men and women behave differently when it comes to risk, investments, and personal finance decisions in general. From a 2012 article by Brad Barber:

    Studies on investor behavior indicate that men are more tolerant of risk than women. For example, studies indicate men allocate a greater proportion of their investment portfolio to stocks rather than bonds. What-is-more, the stocks men choose tend to be riskier (more volatile with greater market risk). All of this suggests that men are more comfortable taking on higher risk. We do not yet understand whether these differences in risk appetite between the genders can be traced to nature or nurture. Are women innately more cautious than men or do environmental factors govern these differences. This question remains an area of ongoing research, and, though the jury is still out, I suspect both nature and nurture are important factors.

    In terms of investment, higher risk means higher returns. However, it also means there is a higher risk of negative outcomes, so it’s not a free lunch. Men’s willingness to take more risks also means a higher risk of shortfalls.

    (read the full article here)

     

    This infographic shows the "Rising of the She-conomy and considers the implication on the economy of more women breadwinners.

    source: infographic by Daniel Wesley on CreditLoan.com

    For discussion:

    In your opinion, what are some explanations for the differences in investing behavior between men and women?

  • Finance Careers

    In this video, finance is described as the "heart of the business." Without finance, businesses could not make or receive payment--the "life blood," so to speak. If you're considering a career in finance, this video may introduce you to the types of careers available and the skills required in finance.

     

    For discussion:

    Can you picture yourself in this career? What appeals the most or the least to you based on this video?

  • Your Best Investment: Your 401k

    The best investment a young worker can make is to invest the maximum in your 401k. With time on your side, the benefits of compounding are tremendous. The downside? It's tough to hide some of your paycheck each month, especially when you're just starting out and you don't have a lot of excess cash lying around.

    For discussion:

    Using a reasonable assumption of a starting salary and the amount you can invest in a 401k, calculate the amount of money you'll have at retirement if you invest the same monthly amount in your 401k from now until retirement. What if you wait to start in 20 years?

  • What Happened to Productivity?


    Experts agree that productivity is the secret to a successful global economy. As innovations are transferred from one company to another, everyone benefits from the increased efficiency and improvements in quality of life.

    But productivity seems to be stalling, and that has raised warning signs. From the Financial Times (Giles, 14 Jan 2014):

    Productivity growth is the most important ingredient for raising prosperity in rich and poor countries alike. If overall productivity growth disappears in the years ahead, it will dash hopes that rich countries can improve their population’s living standards and that emerging economies can catch up with the advanced world.

    ...The failure of overall efficiency – known to economists as total factor productivity – to grow in 2013 results from slower economic growth in emerging economies alongside continued rapid increases in capital used and labour inputs. Labour productivity growth also slowed for the third consecutive year.

    The decline in total factor productivity continues a trend of recent years in which the remarkable rise in the efficiency of emerging markets has slowed and in advanced economies it has declined.

    In an era where technology is expanding by leaps and bounds, it seems counterintuitive that productivity would decline. And yet, it may very well be the technology transfer, or rather lack of technology transfer, that is to blame.

    From a recent Bloomberg article (Smith, 31 July 2015):

    If technology has become more excludable -- if ideas and technologies are not spreading from company to company the way they used to -- then we're in trouble. The OECD report suggests that this is happening, but it doesn't give us a clear answer as to why. In fact, no one really knows. 

    One possibility is that technology "spillovers" between companies -- the term for when methods and practices jump from one company to another -- are slowing as globalization runs its course. Companies that interact with each other via supply chains will naturally tend to exchange ideas, as each company in the chain sees what the others are doing. The burst of globalization in the 1990s and early 2000s might have allowed a huge transfer of knowledge along these supply chains; that burst might be coming to an end as the integration of East Asia into the global economy is completed. 

    For discussion:

    What are some other reasons that may explain the slowing growth of productivity?

    How might the trend in productivity affect your future?