Financial Terminology – Kirayaka International
Kirayaka International looks at some of the financial terms that are used regularly and explains them for the novice.
Financial jargon can add to the confusion that many novice investors feel when they first start to take control of their finances. Kirayaka International looks to explain some of the more commonly used terms.
Asset – simply put this is something that has value. Assets are anything from property, cash, investments or anything that can be converted into cash, and hopefully with a profit.
Liability – is an obligation to pay or as we more commonly call it, debt. Credit cards, car loans and your mortgage fall into this category. If your asset depreciates (drops) in value, such as a car, then that can be considered a liability also.
Asset allocation – Kirayaka International believes this to be one of the most important principles in investing. It is how spread out your net worth is amongst the different asset classes, such as cash savings, bonds, stocks, property etc. Having the right spread protects you from risk and will help you to achieve your financial goals.
Net worth – this is the total amount of your assets minus the total amount of your liabilities, and what is left behind is how much you are worth, in financial terms at least.
Inflation – you may have noticed that a pint of milk costs more now than it did when you were a child. This is down to inflation and it is an erosion of your relative wealth over time and is important to understand this to successfully plan for your future.
If you are interested in taking greater control of your finances and wish to learn more, then contact a financial advisor at Kirayaka International.
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