The purpose of this case study is to illustrate the steps involved in analyzing a residential investment opportunity. It may not cover all aspects of the investment analysis but it is very comprehensive. Where applicable, there are links to more explanation of the topics throughout this post. The objective is to show how one, systematically and objectively, can quantify the…
Continue Reading →I’ve discussed the first component of wealth building, Time Value of Money, in another post. In this post I am discussing the second component Leverage, the pros and the cons. First some definitions and I’ll have examples. Leverage is the use of borrowed funds to finance an investment. A Positive leverage is when an unleveraged investment has higher returns than…
Continue Reading →The two principals in wealth building that an investor must understand are the Time Value of Money and Leverage. This post describes TVM and a few things about financial calculators. But first 5 definitions: Compounding(i) & Discounting(i), Present Value(PV), Future Value (FV), Payment (PMT), Holding Period (n). (A)Let’s say you invest $1000 today (PV) at 10% annually for 5 years…
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