Did not truly appreciate the fact until I read this book, but … companies and governments run exactly the same.
Not with the same purpose … contrary to what Mr. Potatohaid says/thinks, can’t run a country like a business.
No, rather government (or gub’mint, to be consistent) and private enterprise need money to function … and all of it is just capital.*
*Taxes are the bane of existence & the lifeblood of gub’mint – power to tax = power to destroy – but taxes don’t cover all the costs of controlling human behaviors/inclinations … that is pricey / digress
“Capital” just means money (no mystery why it’s the “U.S. Capitol” / trine to trick us!) with gub’mint and PE selling “products” to do one of two things:
1) generate income, or
2) grow in value
Now, these “products” come in (basically) two forms – stocks or bonds, both called “certificates”
By way of example/explanation … a business “manufactures” a stock certificate, sets its value (see e.g., an IPO or “Initial Public Offering”), then sells the certificates to a “securities broker” (which is just fancy for a salesman of stocks & bonds) and after all the certificates are sold from the IPO, the stock certificate/stock is traded (bought & sold) on the stock (or securities) exchange … the “market.”
Here’s a handy-dandy chart for reference:
| Stock Growth/Equity = Ownership Unlimited growth potential BUT Could lose everything Value = depends Payment (dividends)? = depends | Private Bond Characterized as “income” or “debt” Status = lender/creditor, no ownership Return of initial investment only Value = set at time of purchase Interest rate = set at time of purchase Payment = set at time of purchase Maturity date = date initial investment returned |
| Reserves Ideal? = 12 months’ expenses Reality? = Get off the paycheck to parking lot carousel and start saving … $25/mo to start | Gub’mint Bonds – bonds issued to finance Two types: General Obligation (GO) Revenue GO = schools, highways, public works projects (i.e., non-revenue generating / makes no money) Revenue = toll roads, stadiums, airports, etc. (i.e., revenue generating / makes some money) |
The book wisdom suggests wiping out debt before investing, but why not do everything all at once right now?
The book wisdom also says invest early and consistently, don’t follow trends and most financial advice giving recommendations are about a year behind.
Hmmm. Sounds like a Ponzi scheme to me … how to get rich in America.
Welcome to investing.