Money talks

What's your net worth? 10 financial terms everybody should understand

Some people believe that, unless you work in the world of finance, there is no need to understand financial terms and concepts. Well, nothing could be further from the truth. Finance is a core part of society, and financial literacy is important for everyone. At the same time, some of these terms are thrown around without fully understanding their meaning. What is a principal? Is compound interest different from normal interest? What is a person’s net worth? Here are 10 financial concepts that everyone should know.

Whether you are investing a sum of money or taking a loan, there is an initial sum of money involved. The principal is the initial amount of money that you invest or borrow. It does not include any interest, fees, or future earnings, and it’s used as a base to calculate the interest that will be added to a loan and the returns from an investment.

We commonly understand interest as the cost we pay for borrowing money, often calculated as a percentage of the principal amount. That is ‘simple interest’, but what about ‘compound interest’? Any accumulated interest from previous periods generates its own interest as well, so compound interest is the sum of the interest on the principal amount and the accumulated interest.

We often hear the media discuss the net worth of celebrities, politicians, and other public figures, but can the worth of a person be calculated? When it comes to finance, it can, and it follows a very simple formula: the value of all your assets minus any money you owe. This simple but effective calculation is a good way to check how healthy your finances are at any point in time.

Paying a loan is never as simple as adding interest to the initial amount. In most cases, there are different fees involved, which means that you might owe more than you think. The Annual Percentage Rate or APR will give you the true cost of a loan —initial amount, interest, and any additional fees— represented as a percentage. With the APR, you can also compare loans to see which one offers better options.

If you own shares in a company, you will receive dividends, a portion of the profit made by the company. How do dividends work? Paid regularly, often quarterly, its value is decided by the company’s board of directors, who will determine an amount to be paid per share. The more shares you have, the more dividends you will receive.

When taking out a loan, we are assuming that we will pay it over a period of time. This is called amortization. While the amortization of a loan gives us the possibility of paying a large sum back in regular smaller installments, it also involves interest (both simple and compound) and fees added to the principal amount.

An asset is an item of value, and this includes cash, but also other valuable things such as objects, properties, bonds, shares, etc. Liquidity refers to how quickly an asset can be turned into cash without affecting its value, which in turn tells us how quickly we could access funds to cover any payment or debt.

If you ever looked into buying a home, you might have heard the term ‘escrow’. An escrow is a legal arrangement where a third, neutral party temporarily controls the funds of a transaction, releasing them once the contract’s terms have been fulfilled. This helps prevent fraud, reduce financial risks, guarantee fairness, and ensure that neither party takes advantage of the other.

If you are a financial delinquent, you might be in trouble, but not in the way you imagine. When taking on a loan, you assume a responsibility to pay it back. If you fail to do so, or fall behind in your payments, you become a ‘delinquent’. While delinquency is temporary, it will hurt your credit score and can eventually turn into default, which allows the lender to take action against you.

We often use the word liability to describe a disadvantage or something that could cause difficulties. In its financial sense, liabilities refer to a responsibility or obligation we assume, such as paying back a loan. In this sense, liabilities —money we owe— are opposite to assets —money we possess.

Incredible speeches that changed the history of the world

History has been made through iconic speeches that changed the world: From ‘I Have a Dream ’, ‘Are Women Persons?’ to ‘The Only Thing We Have to Fear Is Fear Itself ’, tectonic shifts have occurred after these words were spoken. All written and delivered by masters of ideas and expression, discover the ultimate 10 manifestos that modified how people felt, thought, and acted.

On the 28th of August 1963, at the Lincoln Memorial in Washington, D.C., Dr Martin Luther King delivered his famous speech I Have a Dream, which was one of the most defining moments in history. This incredible speech was the climax of the March on Washington for Jobs and Freedom, which drew over 250,000 supporters to the city. Through his words, King galvanized the American Civil Rights movement, calling for racial equality and an end to legalized discrimination.

Through the reiteration of the title phrase, he managed to express hope powerfully, stating his wishes for the nation as a whole, in a relatable and inspiring way for all: "I have a dream that my four little children will one day live in a nation where they will not be judged by the color of their skin but by the content of their character".

This iconic speech was delivered by Winston Churchill on June 4th, 1940, in the House of Commons, while he was Prime Minister of the United Kingdom. It was the second of a three-speech series given by Churchill around the time of the Battle of France, where tough things had to be said, without losing all hope.

The objective of this delivery was quite complex: to warn the British public of a possible invasion attempt by the Nazi regime, without casting doubt about their eventual victory: "...we shall prove ourselves once again able to defend our island home, to ride out the storm of war, and to outlive the menace of tyranny, if necessary for years, if necessary alone".

During John F. Kennedy's Inaugural Address on January 20th, 1961, he had a climactic moment which has been remembered throughout history: "Ask not what your country can do for you—ask what you can do for your country."

His goal was for it to be a call to civic action, urging ordinary citizens to prioritize public service, community sacrifice, and the greater good over individual self-interest.

It was on April 20th, 1964, when the future leader of South Africa, Nelson Mandela, the eldest son of a Xhosa-speaking Tembu chief, had a difficult time ahead of him: He faced the death penalty for alleged sabotage and treason against the white-minority-ruled state and its segregationist policies during what was known as the Apartheid regime.

Mandela, also known as Madiba, used the trial in Pretoria to outline the ideals of the African National Congress (ANC). His closing statement, which became a defining document for the global struggle for human rights, shocked the courtroom: "I have cherished the ideal of a democratic and free society in which all persons will live together in harmony and with equal opportunities. It is an ideal for which I hope to live for and to see realised. But, my Lord, if it needs be, it is an ideal for which I am prepared to die."

On the 23rd of September of 2019, during the United Nations Climate Action Summit in New York, Greta Thunberg delivered a speech titled: "How Dare You?" Just like Malala Yousafzai, she was 16 years old at the time, but she confronted world leaders on their inaction on climate change in a way that had rarely been seen before.

She demanded urgent measures to be taken to save the planet, urged them to stop ignoring scientific warnings, and accused those present of stealing her generation's future with empty promises: "We are at the beginning of a mass extinction, and all you can talk about is money and fairy tales of eternal economic growth. How dare you!"

During his First Inaugural Address on March 4th, 1933, Franklin D. Roosevelt delivered this pivotal speech while facing the depths of the Great Depression. His intention was to assure the American public that, instead of the economic crisis itself, despair, inaction, and hopelessness were their biggest enemies.

The full historic passage reads: "So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance."

On her 16th birthday, on July 12th, 2013, Malala Yousafzai, the Nobel Peace Prize laureate, delivered her historic speech at the United Nations Assembly in New York to urge leaders around the globe to provide free and compulsory education for every child.

Incredibly, this took place just nine months after Malala survived an assassination attempt on her life by the Taliban for advocating for girls' education. In her address, she declared that the extremists were "afraid of books and pens" and that the power of education frightened them.

Following her arrest for illegally voting in the 1872 presidential election, Susan B. Anthony posed a powerful question in her groundbreaking speech of 1873: "Is it a crime for a United States citizen to vote?", where she passionately argued that the United States Constitution guaranteed women’s rights. Anthony famously stated, "The only question left to be settled now is: Are women persons? And I hardly believe any of our opponents will have the hardihood to say they are not."

Since women are persons, she argued they are inherently citizens, pointing out that the Preamble of the Constitution begins with "We, the people," and does not say "white male citizens," or "male citizens," concluding that any state law denying women the right to vote was unconstitutional, null, and void.

In the Farewell Address given by J. Robert Oppenheimer to the Association of Los Alamos Scientists on November 2, 1945, he argued that scientific progress cannot be divorced from humanity, and that moral responsibility must guide the pursuit of knowledge.

"But there is another thing: we are not only scientists; we are men, too. We cannot forget our dependence on our fellow men. I mean not only our material dependence, without which no science would be possible, and without which we could not work; I mean also our deep moral dependence, in that the value of science must lie in the world of men, that all our roots lie there."

The British suffragette Emmeline Pankhurst delivered her famous speech "Freedom or Death" on November 13, 1913, in Hartford, Connecticut, a speech that was a defining moment in the women's suffrage movement.

In the opening, she famously declared: "I am here as a soldier who has temporarily left the field of battle to explain—it seems strange that I should have to explain it—what civil war is like when women wage it."