Earning money can be through buying and selling real properties.

TRUE
Buying clothes for sale is spending. FALSE
Selling used clothes is earning. FALSE
Savings is a result of income minus spending. TRUE
As student, you consider yourself as investment of your parents. TRUE
Using spending tracker app is way of managing money. TRUE
Setting an emergency fund in the bank is considered investing. FALSE
Cutting cost in business is considered saving. FALSE
Investing is the process of placing our money in a bank through savings account. FALSE
Savings is buying a car for rentals. FALSE

Basic principles of financial management

 Organize your finances

 Spend less than you earn
 Put your money to work
 Limit debt to income-producing assets
 Continuously educate yourself
 Understand risk
 Diversification is not just for investments
 Maximize yoür employment benefits
 Pay attention to taxes

Money management philosophies in managing personal finance Plan for the unexpected

 The Basic Protection is Knowledge

 Nothing Happens without a Plan
 The Time Value of Money
 Taxes Affect Personal Finance Decisions
 Stuff Happens, or the Importance of Liquidity
 Waste Not, Want Not - Smart Spending Matters/Live below your means
 Insure your needs
 Risk and Return Go Hand in Hand
 Mind Games and Your Money

Stocks (Equity)

Disadvantage: It is the riskiest of all assets (can lose as much as 50% of their money in one day).

Bank Deposits (Fixed Income)

Advantage: It is shorter, if any, holding period vs. bonds.

Mutual Funds

Disadvantage: Pay management fees.

Real Estate

Advantage: It can be a source of recurring rental income.

Insurance

Disadvantage: On some of traditional plans, no sickness/death until a certain age may mean not getting any
benefits at all.

1. A loan from an investor to a borrower such as a company or government. The borrower uses money to fund
its operations, and the investor receives interest on the investment. bond
2. It is a type of debt-based investment, where you loan money to a government in return for an agreed rate of
interest. government bond
3. Debt issued by a company in order for it to raise capital. corporate bond
4. It is a pooled collection of assets that invests in stocks, bonds, and other securities. mutual fund
5. It is a form of security that indicates the holder has proportionate ownership in the issuing corporation and
is sold predominantly on stock exchanges. stock
6. What area of personal finance is Life insurance? Protection
7. These sources of income all generate cash that an individual can use to either spend, save, or invest EXCEPT
Taxes
8. This refers to a source of cash inflow that an individual receives and then uses to support themselves and
their family. Income
9. It includes all types of expenses an individual incurs related to buying goods and services or anything that is
consumable (i.e., not an investment). Spending
10. It refers to excess cash that is retained for future investing or spending. Saving
11. It relates to the purchase of assets that are expected to generate a rate of return, with the hope that over
time the individual will receive back more money than they originally invested. Investing
12. It refers to a wide range of products that can be used to guard against an unforeseen and adverse event.
Personal protection
13. The expenses listed below all reduce the amount of cash an individual has available for saving and investing
EXCEPT Stocks
14. This relates to the purchase of assets that are expected to generate a rate of return, with the hope that over
time the individual will receive back more money than they originally invested Investing
15. This are funds put into your bank account by a cash or check deposit or an electronic transfer. bank deposit
16. Insurance is a contract, represented by a policy, in which a policyholder receives financial protection or
reimbursemnent against losses from an insurance company. Insurance
17. An individual that puts money into an entity such as a business for a financial return. investor
18. It is related to the nature of the company's products and operating strategy. Companies with stable sources
of sales and earnings have relatively low business risk. Business risk
19. It is associated with political and economic uncertainty of a particular business environment. You can only
entice investors to invest in countries with political stability if a higher rate of return is expected. Country
risk
20. It refers to a source of cash inflow that an individual receives and then uses to support themselves and their
family. It is the starting point for our financial planning process. Income
21. Refers to a tangible asset or resource with fundamental value. hard asset
22. It is the ownership of properties such as land, houses, buildings, and other things above and below the land
for generating income, instead of buying just for residence or occupancy purposes. real estate investment
23. It refers to the risk created by the choice of capital structure the financing mix of the issuing company. A
company usually funds its operation through debt and equity financing Financial risk
24. It is the uncertainty that an investment can be converted to cash at a known price. The existence of
exchange facilities eases in liquidating an investment. Liquidity risk
25. It exists if the investment is denominated in another currency different from that of the local currency of the
investor. Exchange rate risk