Tutor profile: Brooks D.
Subject: Personal Finance
One of my friends just passed away and it made me realize that if that happened to me I don't know how my family would survive. I also realized I need to begin saving for retirement. I don't even know where to start. Can you help?
The first thing that you should do is create a budget. Once you have a budget we can determine how much income you can set aside to saving for retirement and implementing some life insurance to protect your family. For life insurance I would suggest some low cost term insurance which will protect your family for a certain period of time. The best way to start saving for retirement is to take advantage of an employers 401k plan if available, and contribute at least what the company match is. If that is not available then start putting money away in either an IRA or a Roth IRA. Both of these have different tax advantages. While investing go with a low cost broker and make sure your investments are diversified. Don't put all your money in one basket. As you get closer to retirement you will want to move into more conservative investments. Remember the more you can put away now, the more time your money has to grow.
How can I find the right price of a stock or bond?
There are multiple ways to value a stock. The most common way is to use the Capital Asset Pricing Model (CAPM). In order to use this model you need to figure out a few things. First you need to figure out the beta of he stock you are researching. This can be found online on various research sites or you can calculate it using a regression model by comparing the returns of the stock over time versus the overall market overtime. You next need to find what the current risk free rate is. This is typically what the current interest rate is on the US 10 year treasury. The last and most difficult number to determine is to figure out what the market risk premium is. This is the rate of return that an investor requires to get above the current risk free rate in order to take on additional risk. historically this number has been between 6-10%. Based on how you think the market will perform, will have a big impact on the ending value of the stock you are valuing. Finding the proper value of a bond is much easier. You need to take the present value of all the future payments that will be received based on current interest rates. This includes future coupon payments as well as the principle that will be repaid at the time of maturity.
What are the best ways to increase profit margin?
A lot goes into profit margin. It all starts with sales revenue and the costs that go into making those sales possible. By reducing costs of the goods or services sold you can increase your margins. You can also implement tax strategies and more closely monitor inventory levels to raise profit levels.
needs and Brooks will reply soon.