Portfolio Literacy is dedicated to transparency and promoting free financial literacy for everyone. Here are Portfolio Literacy’s latest blog posts. If you are looking for specific topics, the categories are at the bottom of this page.
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What Is Systematic Risk for Investors?
When investing, you may often hear the terms “market risk” or “systematic risk.” These refer to the potential for an investor to experience losses due to factors impacting the entire market rather than just a specific company or sector. Understanding systematic risk is crucial because it can’t be avoided through diversification alone. Systematic risk, also…
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What is Idiosyncratic Risk and Why is it Important?
Understanding the different types of risk is crucial for anyone investing in the stock market. One type of risk that often confounds new investors is idiosyncratic risk. Idiosyncratic risk refers to the risk specific to a single company or industry, which can be diversified away, different from the overall market risk. For example, a sudden…
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What is Liquidity Risk and Why is it Important?
Liquidity risk is a crucial concept in finance that affects both individuals and businesses. Liquidity risk is the danger of being unable to meet short-term financial obligations, where assets can’t be quickly sold or converted into cash without a loss. This risk becomes evident during market downturns, sudden changes in market conditions, or when there is…
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Portfolio Update: July 1st, 2024
I want to share my portfolio to provide a learning experience for others based on my failures and successes, to be transparent about my personal financial interests, and to gain feedback from others. The plan is to make these portfolio updates on a somewhat regular basis. I will include snapshots of my portfolio from Google…
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How to Reach 10K Net Worth in 5 Steps?
Achieving a net worth of $10,000 is the first milestone on the path to financial stability. It represents a combination of disciplined saving, smart investing, and effective money management practices. As your net worth is the sum of your assets minus your liabilities, some may easily achieve this 10K net worth by having 10,000 in…
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Financial Literacy Essentials You Should Know
Many Americans believe they have strong financial knowledge, yet evidence shows a different story. The Financial Industry Regulatory Authority (FINRA) has found that a large portion of adults struggle with basic financial concepts. You should be able to pass the FINRA financial literacy quiz to ensure you have the essential financial skills needed for everyday…
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How Does Bond Laddering Work?
Investing wisely in fixed income can be challenging, especially in fluctuating markets. Bond laddering offers a strategic way to manage your investments by staggering the maturity dates of multiple bonds. This helps you achieve regular income and risk management by holding bonds until they mature. Imagine having a series of bonds that mature at different…
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How to Grow Your Emergency Fund to 18-24 Months for Retirement?
As you approach retirement, ensuring financial security becomes crucial. One way to achieve this is by reassessing the size of your emergency fund from 3-6 months of expenses to 18-24 months. This larger cushion can help you manage unexpected costs without dipping into your retirement accounts prematurely. Retirement can bring about various uncertainties, including fluctuations…
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What is an Expense Ratio?
When you invest in mutual funds or exchange-traded funds (ETFs), you’re often focused on the potential returns. However, a crucial factor that can significantly affect your earnings over time is the expense ratio associated with these investments. Essentially, the expense ratio is a measure of what it costs an investment company to operate a mutual…
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How to Build an Emergency Fund with Irregular Income
Building an emergency fund is a fundamental step towards financial security, especially for those with irregular income. Without a consistent paycheck, traditional budgeting advice often falls short, leaving you vulnerable to the ebbs and flows of freelance work, commission-based roles, or seasonal employment. But even with an unpredictable income stream, establishing a financial safety net…