General Information

Classes

Classes	Description
Bonds	Loans (fixed income from interest)
Equities	A piece of a business
Real estate	Physical space (rental income), REITs (e.g. VGSIX)
Commodities	Raw materials, hard (drilling, mining, etc.), soft (plants, animals)

Terminology

Term	Description
Net income	Total income after expenses (cost revenue + taxes)
Earnings	Same as net income, but for a single share
Dividend	The money that goes to the owner (pay themselves)
Board of Directors	Shareholders, i.e., owners

Documents

Document	Description
Income statement	Where Net Income/Earnings can be found
Balance sheet	What would happen if the business liquidated right now (Total assets - Total liabilities = Equity, Book Value is a share's equity)
Cash flow statement	Lesson 2?

Risk is defined as Market Price - Equity: the closer the equity is to the market price, the safer the investment (Figure 1).

Figure 1: The information needed to assess a business (image taken from here).

VANGUARD LifeStrategy 100% -> a collection of index funds.