Financial literacy is the ability to understand and effectively use various financial skills, including personal financial management, budgeting, and investing.
When you are financially literate, you have the essential foundation for a smart relationship with money. This can help start a lifelong journey of learning about the financial aspects of your life. The earlier you start to become financially literate, the better off you’ll be because education is the key to a successful financial future.
Key Takeaways
- The term “financial literacy” refers to understanding a variety of important financial skills and concepts.
- Financially literate people are generally less vulnerable to financial fraud.
- A strong foundation of financial literacy can help support various life goals, such as saving for education or retirement, using debt responsibly, and running a business.
- Key aspects of financial literacy include knowing how to create a budget, plan for retirement, manage debt, and track personal spending.
- Financial literacy can be obtained through reading books, listening to podcasts, subscribing to financial content, or talking to a financial professional.
How Do Dividends Work?
Dividends are the percentage of a company’s earnings that is paid to its shareholders as their share of the profits. Dividends are generally paid quarterly, with the amount decided by the board of directors based on the company’s most recent earnings.
Dividends may be paid in cash or additional shares. When a company announces a dividend, it also will announce the payment date on which the dividend will be paid into the shareholders’ accounts.
The dividend yield of a stock is the dividend amount paid per share and is expressed as a percentage of the company’s share price, such as 2.5%.1
Not all companies pay dividends to the owners of common shares. (Owners of preferred shares are guaranteed a set dividend payment.)
Key Takeaways
- A dividend is a distribution of a company’s earnings to eligible shareholders.
- Dividend payments and amounts are determined by the company’s board of directors.
- Many companies do not pay dividends and instead retain their earnings to be invested back into the company.
What is Dow Jones Industrial Average?
The DJIA initially launched with just 12 companies based mostly in the industrial sectors. However, it later grew to include 30 firms. The original companies operated in railroads, cotton, gas, sugar, tobacco, and oil. Industrial companies’ performance is often seen as synonymous with that of the overall economy, making the DJIA a key measure of broader economic health.2 Although the economy’s health is now tied to many other sectors, the DJIA is still seen as a vital indicator of the U.S. economy’s well-being.
What Is the Nasdaq?
Nasdaq is a global electronic marketplace for buying and selling securities. Its name was originally an acronym for the National Association of Securities Dealers Automated Quotations. Nasdaq started as a subsidiary of the National Association of Securities Dealers (NASD), now known as the Financial Industry Regulatory Authority (FINRA).
Nasdaq was launched after the Securities and Exchange Commission (SEC) urged NASD to automate the market for securities not listed on an exchange. The result was the first electronic trading system. Nasdaq opened for business in 1971.1
Key Takeaways
- Nasdaq is an online global marketplace for buying and trading securities—the world’s first electronic exchange.
- It operates 29 markets, one clearinghouse, and five central securities depositories in the United States and Europe.
- Most of the world’s technology giants are listed on the Nasdaq.
THE INHERITANCE MYSTERY NOVEL
What one thing did you learn about the Stock Market that you did not know before?
