Money Tutorials at thisMatter.com: Fundamental Tutorials on Personal Finance, Investments, and Economics

by William C. Spaulding

More than 850 in-depth, continually updated tutorials on personal finance, investments, and economics — supplemented with full-color illustrations and charts, color-coded examples, and formatted for quick comprehension.

At first, people said that money is the root of all evil. Later, people decided to be more specific, and said that it is the love of money that is the root of all evil. But wait a minute! If money didn't exist, then the love for money wouldn't exist, so I guess money is the root of all evil, after all! — wcs

Navigation

Find more specific information quickly by using the search engine at the top-left of every page (or near the bottom when viewing on a mobile, tablet, or other small-screen device). This page links to the table of contents to individual subjects with many more topics than are listed here.

To ease navigation, my website provides these keyboard shortcuts:

I originally added the outline feature to facilitate article editing, but it is also a good way to navigate the document, especially a long one. You can click any element in the outline to go to that element in the document. The outline will close when any part of the outline is clicked. With the full site menu, you can quickly see all the articles on my site by clicking the various headings and subheadings. Clicking on a link will take you immediately to that article.

Consumer Finance

The lack of money is the root of all evil — Mark Twain

Credit and Debt

Bankruptcy

Insurance

Real Estate

Taxes

Wills, Estates, and Trusts

Investments

If you can count your money, you don't have a billion dollars. — J. Paul Getty
I can confirm this! I counted my money, and it wasn't a billion dollars! — wcs

Investment Fundamentals

Banking

Bonds

Derivatives

Investment Funds

Stocks

Options

Futures

Forex

Technical Analysis

Economics

Economics

Money can't buy happiness, but it can buy you the kind of misery you prefer. — Unknown Author

Miscellaneous

Pedagogical Features and Sample Content of thismatter.com

My name is William C. Spaulding. I write all the articles and do most of the illustrations for this site. The only illustrations I have not done are graphs and photos downloaded from government websites. I present this section to illustrate the major features of this site, including types of content and other features, such as navigational aids. It also gives you a good sample of my content and my writing. But do remember that these excerpts do not have the context here that they would in their original pages.

The purpose of this site is to teach the fundamental concepts of economics, personal finance, and investments. These topics were chosen because they are highly interrelated, so the concepts learned in economics, for instance, can be applied to personal finance and investments. Indeed, economics makes it much easier to learn why things are how they are and how they behave over time. Learning these subjects also improves your life.

To facilitate learning these concepts, I use many pedagogical features that will enhance learning, listed below this section. There are over 850 articles on this site, grouped under the appropriate categories, which, on a desktop, you can see in the sidebar on the left or, on a smaller screen, such as a phone, at the bottom of any article. Clicking on these links will display the list of topics in that category. I have included many of the pedagogical features on this page. Although some are long, they provide a good preview of what my site offers.

Graphs and Illustrations

As they say, a picture is worth a thousand words, so where images make concepts clearer, I use them. Most of the images also have extensive captions to clarify and expand the information conveyed by the image. Here are 2 examples:

From the Deadweight Loss of Taxation:

To see why this deadweight loss occurs, look at the supply and demand curves in the graph below. When a market transaction is taxed, the buyer pays a higher price, and the seller receives a lower price. This lowers demand, which shifts the buyer's equilibrium from the market price (Pm) to a higher price (Pb) at lower quantities; likewise, because the seller receives a lower price (Ps) for his product, less of it is supplied, which moves the seller's equilibrium down the supply curve, to a lower price and quantity. The amount the government receives equals the tax, which equals the buyer's price minus the seller's price, times the quantity of the transaction, whether for goods or services.

Tax Revenue = Tax × Quantity

The area of the light purple rectangle in the graph = the tax revenue collected by the government. The area of the dark purple triangle = the economic welfare lost to taxation.

  • Pb = Price buyers pay. Demand is reduced because buyers must pay a higher price because of the tax.
  • Pm = Market price without taxes.
  • Ps = Price sellers receive.
  • Qe = The quantity supplied without the tax.
  • Qt = The reduced quantity supplied because of the tax.

From Duration and Convexity, with Illustrations and Formulas

Note that the price-yield curve is convex and that the modified duration is the slope of the tangent line to a particular market yield, and that the discrepancy between the price-yield curve and the modified duration increases with greater changes in the interest rate. It can easily be seen that modified duration changes as the yield changes because it is obvious that the slope of the line changes with different yields. The gap between the modified duration and the convex price-yield curve is the convexity adjustment, which — as can be easily seen — is greater on the upside than on the downside.

SVG Images

Many of the images use a format called scalable vector graphics, or SVG, which are defined mathematically, so they are usually much smaller than raster graphics such as PNG, GIF, or JPEG images. Since they are constructed mathematically, they can be adjusted to any size without losing any resolution, from phones to high-resolution monitors. Moreover, they look a lot better than the rasterized equivalent. The 2 images above are both SVG images. However, SVG is only suitable for simple graphics and illustrations, such as diagrams. More complex images, such as photographs, use the JPEG format.

Color-Coded Examples

For more complex examples, I use color coding to show the interrelationship of different parts, making it easier to follow and faster to comprehend.

From Child Tax Credit:

Example: Calculating the Child Tax Credit for Incomes Above the Phaseout Amount

Ava is a single parent with 2 dependent children who qualify for the child tax credit, and she earned $215,020 for the tax year. Because her income is $15,020 more than the phaseout amount of $200,000 for a head of household, she must reduce the $4,000 child tax credit that she would otherwise be entitled to by:

Here's another example from Bond Pricing and Accrued Interest, Illustrated with Examples, where color coding facilitates following the example and also illustrates how to use certain tools, such as Microsoft Excel, in doing some of the examples:

Examples — Using Microsoft Excel for Calculating Bond Prices and Discounts

These listed variables — where they apply — will be used for each of the example calculations that follow, for a 10-year bond originally issued on 1/1/2024 with a par value of $1,000:

Price of a bond with a yield to maturity of 8%:

Bond Price

The discount price of a zero coupon bond with a $1,000 par value yielding 8%:

Price Discount

The interest rate of a discounted zero coupon bond paying $1,000 at maturity, but that is now selling for $219.90:

Interest Rate of Bond Discount

PRICEMAT calculates the prices of securities that only pay interest at maturity:

What is the price of a negotiable, 90-day CD originally issued for $100,000 on 3/1/2024 with a nominal yield of 8%, a yield to maturity of 6% and a settlement date of 4/1/2024? Using the Microsoft Excel Date function, with format DATE(year,month,day), to calculate the maturity date by adding 90 days to the issue date and choosing the banker's year of 360 days by omitting its value from the formula, yields this result:

Other Special Types of Content

I use real-world examples to illustrate how the concepts are applied to the real world, to increase understanding, such as this example from Will Execution: The Common Law Elements of the Wills Act Formalities

Real Word Examples: Testamentary Intent Clauses of Famous Wills

I also include alerts about special situations that readers should be particularly aware of, such as this one about credit ratings on bonds from credit rating agencies, from the Complete Introduction to Bonds:

Investor Alert! Note that credit ratings are not foolproof. Enron had an investment-grade rating right up until it declared bankruptcy, and WorldCom up to 3 months before filing for bankruptcy! It's also a good idea to check all the credit-rating agencies for a particular issuer, because different agencies have different criteria, and different strengths and weaknesses in rating bond issuers.

Many articles also have Notes and History to point out certain facts or to illustrate how things were or came to be, such as these 2 examples from Credit Scores:

Sometimes, payments are not made because they are disputed. If your dispute is unresolved, you have a right to add a statement in your credit report, limited to 100 words, explaining why you refuse to pay. Note, however, that your statement will not protect your credit score since explanations cannot be quantified, so the credit-scoring algorithm cannot consider your statement. It will, however, account for a missed payment.

Fannie Mae Is Using Trended Credit Data to Underwrite Consumers

In mid-2016, Fannie Mae started using trended credit data from all 3 credit reporting agencies — Equifax, Experian, and TransUnion — for all mortgage applications. The trended credit data focuses on credit data from the past 30 months showing not only if payments were made on time, but whether the borrowers carried balances from month-to-month, paid off the balances in full, or at least paid more than the minimum. Studies by TransUnion have shown that consumers who carry balances or only pay the minimum balance are a greater risk than those who pay in full. TransUnion estimates that trended credit data will put more consumers, from 12% to more than 21%, in the so-called Super Prime risk tier, who are offered the best credit terms.

Source: A Focus on Credit History for Mortgage Approvals - The New York Times

Or this one from United States Treasury Securities: Bills, Notes, Bonds, Treasury-Inflation Protected Securities (TIPS), and STRIPS:

Quick Facts on the National Debt

The US debt is financed mostly by selling US Treasury securities. The United States has carried debt since the American Revolution. Only during the presidency of Andrew Jackson has the United States been truly debt-free. As of 2024, the US debt exceeds $35 trillion, but $7 trillion of that debt is what the government owes to other government agencies, such as the Social Security trust fund.

Source: National Debt

While this site focuses on how things work, it also has many tips for using the information in real life, such as these tips from Credit Scores:

Additional Tips and Resources for Improving Your Credit Score

I also provide some humor, such as:

I'm living so far beyond my income that we may almost be said to be living apart. — e.e. cummings

And I include news items:

March 9, 2015 update: The credit bureaus use automated dispute resolution processes to correct errors reported by consumers, so mistakes in their credit reports frequently go uncorrected. In their settlement with the New York Attorney General's office, with changes being phased in over the next 3 years, the 3 credit bureaus will provide specially trained employees to resolve disputes. Additionally, the credit bureaus will establish a 6-month waiting period before listing medical debt, and any such debt reported but subsequently paid by insurance will be removed.  - TransUnion, Equifax and Experian Agree to Overhaul Credit Reporting Practices - NYTimes.com

Believe it or not, I also have opinions, such as this one from Payment Systems:

Bitcoins and Cryptocurrencies Will Never Be Major Currencies

Another form of payment receiving media attention recently is Bitcoins or other cryptocurrencies. Some of the main advantages advanced for Bitcoin are that:

However, some of these advantages touted for Bitcoin result because it is an entirely electronic form of money. If the United States dollar or the euro was made entirely electronic, then those currencies could be subdivided indefinitely to allow for micro-payments. Most fiat currencies have a lower limit for value because they are represented by coins and paper currency, which cost money to produce. Indeed, the US penny and nickel cost more to produce than their fiat value. On the other hand, the value of electronic money can be reduced, virtually without limit, to form smaller payments.

When money becomes entirely electronic and the government institutes reforms to exploit electronic payments — which I believe is inevitable — then all the advantages of electronic payment, such as enabling micro-payments and lowering transaction costs, will be realized for that currency.

That the supply of Bitcoin is limited is actually a major disadvantage since the value of Bitcoin varies widely over short periods because supply cannot be increased or decreased to meet changing demand. So, Bitcoin and other cryptocurrencies, or for that matter, any other means of payment, such as gold, where the supply cannot be controlled, cannot satisfy the primary functions of money as a unit of exchange, unit of account, and store of value.

Using cryptocurrencies as a unit of exchange is very risky. Imagine if Walmart or Amazon accepted Bitcoin for payment. What would happen to these companies — or any other company — if the value of Bitcoin suddenly dropped to half its value or more, as it has already done? In December 2017, the price of 1 Bitcoin reached almost $20,000. Shortly afterward, near the start of 2018, the price of Bitcoin was less than $9,000 (USD)! The pay rate for employees would have to change every week and prices paid to suppliers would have to change with every payment. This would be a managerial nightmare!

It cannot serve as a unit of account because its varying value, even within a short time, makes its exchange value for goods and services unpredictable; price comparisons would be impossible because these cryptocurrencies vary in value by the minute, so any prices you would see may be stale, reflecting the value that Bitcoin had at an earlier time. Likewise, it cannot serve as a store of value since it can lose value very quickly, as has already occurred several times with Bitcoin and many times with gold. Additionally, using methods common in business and investments, such as calculating the present value or future value of projects or investments or even calculating financial risk, becomes impossible. Calculating present or future value is only meaningful if the currency's value is stable. Even though most currencies decrease in value because of inflation, inflation is usually low and predictable, so it is easier to account for inflation.

Hence, Bitcoin or any other type of money where the supply cannot be controlled will never serve as a major currency or co-currency. Instead, Bitcoin will remain as it is, a novelty currency that can be used either as a medium of exchange for those businesses or individuals willing to assume the risk of a widely fluctuating currency or to profit from speculation, where profits are contingent on the greater fool theory. Because the intrinsic value of Bitcoin and other cryptocurrencies is 0, that is the price that I believe it will eventually fall to, though it may take many years.

(Another factor propping up the prices of cryptocurrencies far beyond their intrinsic value is micro-demand. Because cryptocurrencies can be subdivided into ever smaller amounts, I believe many people are getting these small amounts to experiment with these novel currencies. When the demand for these micro-amounts is totaled over the entire global population, the result is significant demand. Eventually, people will realize that cryptocurrencies offer no added value over traditional forms of electronic payments, nor are they spendable at most places, so, it is still my prediction that all cryptocurrencies will drop to their intrinsic value of 0, though it may take years. Blockchain, of course, has great promise, but this is used only to record transactions. Although Bitcoin and other cryptocurrencies depend on blockchain, blockchain does not depend on the cryptocurrencies.)

A few of my articles also have summaries, although most of my articles are already concise. From Money Growth, Money Velocity, and Inflation:

Money Growth, Money Velocity, and Inflation

I also provide resources and links to additional information, such as:

Most pages do not have all these features since many articles do not benefit from them, but they are used when they improve the article. (And, of course, when I think of it!)

Responsive Website

This website is designed to respond to different screen sizes so that the articles remain readable from phones to oversized high-resolution monitors. Many of the articles contain equations, which I write using tables rather than images because tables are designed to be responsive for different screen sizes. Using SVG images also improves responsiveness to screen sizes and orientation.

My website has style sheet sections for printing and viewing on mobile devices. If a page is printed, it will not include any advertising, navigational links, or any other content not useful on the printed page. On screens wider than 1,400 pixels, there is a fixed sidebar with a search box at the top, followed by navigational links to major sections of the site. On smaller screens, the pages have no sidebar so that all the screen space can be devoted to the article. In this case, the search box is located below the footer near the bottom of each page.

Update Policy

I continually update my articles with new information or to improve readability or comprehension. Some information may be dated, but I continue to use it because it provides the same pedagogical value. Because many of my examples take much work, I will not update the examples themselves while they reflect current understanding and procedure. For instance, in my article on Butterfly and Condor Option Spreads, I use real bid/ask prices for specific stocks, such as Microsoft and Facebook, to illustrate how these option strategies work. This takes time, but there is no advantage to using more recent prices since the principle of option spreads remains the same. But it does allow me to construct many graphs and show actual results of using different options strategies based on real bid/ask prices for a specific period. Here is an example of a long-put butterfly for Facebook, using prices from 2014:

Example: Long Put Butterfly
Stock Price $73.06
Long Put Butterfly
October, 2014 Puts Strike Price
1 Long K1 70 -$3.10
2 Short K2 72.5 $8.30
1 Long K3 75 -$5.60
Debit $0.40
Maximum Loss $0.40
Maximum Profit $2.10
Line chart showing the potential profit/loss of a long put butterfly option spread at expiration for underlying stock prices ranging from $69.50 to $76.

The price of Facebook, now META, stock is much higher. I could update the above example and the many other examples in the article with higher prices, but it would make no difference in illustrating how option spreads work. On the other hand, continually updating these tables and graphs would take much work but would not add pedagogical value.

A valuable resource for me is my readers. I have been writing articles for this website for 18 years, as of May 2024, so I often receive emails about mistakes in my articles or other problems with the article or website. This allows me to make corrections and improvements continually. It always helps to have a diversity of opinions. When I write, I often edit different parts of the document, editing here and there, striving for perfection. But in doing so, I often become blind even to obvious mistakes, so it helps to have fresh eyes reading the articles. You can find my email address in the sidebar or, at the bottom, in the footer section of every page, or right here: Contact Me!

So, if you see any mistakes, or if you have suggestions, please email me.

A Note to the Grammarian Police

Originally, grammar was the study of how a language was constructed, how the individual words are put together to form meaning. Then, in time, some people dubbed themselves to be the grammarian police — grammandos! — and have asserted that writing must follow the grammar rules rigorously, and, nowadays, we even have grammar software to ensure that our writing is so constructed. I disagree with maintaining a rigid grammatical structure.

The main purpose of language is to communicate. If there is a better way to communicate, it should be done, even if it breaks the grammar rules. Case in point: writing numbers as actual numbers rather than as words because numbers can be read faster when they are written as numbers rather than as words, including the numbers 1 through 10. (The only problem with 1 is that it looks like I, depending on the font family of the letters, and my voice recognition software seems to prefer "one" over 1.) However, I only use the number 1 when referring to the number, not when it is being used to refer to a person or thing, such as "any one of you". I also know that grammandos are not gonna like "gonna" nor the fact that I put the period after the apostrophe. (Okay, I only used "gonna" here to make the grammandos cringe a little.) I also often write first as 1st and second as 2nd, and so on. I don't always write ordinal numbers this way since I must consider how people will search for certain topics. So in those cases where the ordinal number may be part of popular search terms, I will continue to write it out as a word.

Because nouns can also be used as adjectives, I have also chosen, in many cases, where there is no possibility of misinterpretation, to use the noun as an adjective rather than using possessive forms of the noun. So, I write stockholders equity rather than stockholders' equity. This looks cleaner. I also put punctuation marks after quotation marks instead of before the end quotation mark. I think it looks better, and I sometimes do not want the punctuation marks to be within the quotation marks, such as quoting search terms. For instance, to get basic information about companies from general search engines, I may write to just search for the term stock + the ticker symbol, such as “stock MSFT”. This also makes it easier to select the search terms without selecting the punctuation mark, and the punctuation mark itself also stands out.

I think language can be improved in many ways to speed comprehension. For instance, using mathematical symbols for some words, such as = for equals. I don't always do this on my site because I am not sure how people would react. But I believe that people would comprehend written documents faster if they were so written. It might be worthwhile to have some scientists measure the differences in comprehension speed between a document that used all words and a document that used other common symbols, especially mathematical symbols.

In fact, a committee should be formed to seek ways to improve language in much the same way as the W3.org works to improve HTML and CSS.

I would like to make 1 suggestion right now. In English, no word refers to either male or female in the 3rd person singular. Hence, writers are reduced to saying he or she, his or her, or him or her, or they are forced to alternate between the references to avoid being labeled sexist. Sometimes this is useful when using 2 people in examples since this removes any ambiguity in pronoun referents, but usually it results in superfluous language. Therefore, I propose this: e to refer to the 3rd person singular for either sex and er to refer to the objective case, as her does for the pronoun she, and ers for the possessive case. Maybe this new 3rd person singular should be capitalized as the pronoun I is, to distinguish it from the natural logarithm base e, although, usually, context should clarify the meaning. In any case, this is just a suggestion. I will also probably use singular they more, if the meaning is clear.

English also needs a 2nd person plural pronoun that differs from the singular pronoun. Though context could often be used to distinguish between them, too many times, the referent is ambiguous. A natural suggestion would be "yous."

I have also decided to cut back on my use of the words generally and usually, and other, often superfluous, words. Although I use these terms a lot because most statements have exceptions, not modifying the statements with generally or usually doesn’t mean that the statement is categorical. But removing these terms often makes the reading better, I think. I will only use these words when necessary. I have only decided to do this on November 23, 2019, so most of my articles still use these terms liberally.

This is not to say that this site has no unintended grammatical errors that impede comprehension. Although I run the documents through a grammar checker for a 2nd opinion, even if I don't always follow that opinion, I am sure that errors slip through anyway. Nonetheless, if you want to comment on this, please email me. I would be interested in your opinion. Maybe I should set up a Facebook page for this topic, but, alas, I do not have the time.

Since there are over 800 articles on this site written since 2005, my thoughts on grammar and my propensities have changed through the years, yielding some inconsistencies in the rules that I have used, something that grammandos the world over are definitely not gonna like, but since what is acceptable and not acceptable in grammar has changed throughout the years as evinced by the changing results of Usage Panel surveys and by literature itself, my main objectives are clarity and conciseness. You can at least be consoled that there is no Beowulf here.

My Books

How to Invest in Bonds for Maximum Profit shows how you can invest in bonds to maximize your profits, especially when interest rates are high, as they are now.

Imagine if you could pick only stocks that would rise the most. Well, as far as I know, there is no sure way to do that with stocks, but there is a way to do that with bonds. This book will show you how, and it will show real examples of how this works and how much you can potentially profit, and how bonds, at times, can even be better than stocks. This book will also show the best way to combine investments in bonds with investments in stocks.

The Pauper's Money Book shows how anyone can manage their money to greatly increase their standard of living.

  • Save, Invest, and Earn More Money
  • Increase Your Credit Score
  • Learn to Negotiate Successfully
  • Manage Time Effectively
  • Invest for Maximum Results with a Minimum of Risk
  • Minimize Taxes, Earn Tax-Free Income
  • Earn More from a Career or from Running a Business

Trickle-Up Economics describes the best tax policy for any economy, based on simple economic principles that anyone can understand. I think this book is particularly pertinent for the upcoming 2020 elections since it not only describes the best tax policy, but it also explains why the current tax policy is both inadequate for generating sufficient revenue for the government, and how it increases inequality. This book also shows the problems with the several tax proposals being presented by the Democratic candidates. So, if you want to argue intelligently about tax policy at your next party or family gathering, this is the book to get. :-)

An introductory textbook on Economics, lavishly illustrated with full-color illustrations and diagrams, and concisely written for fastest comprehension. This book is composed of all articles on economics on this website. The advantage of the book over using the website is that there are no advertisements, and you can copy the book to all your devices. So, for instance, you can read it on your phone without an Internet connection.

Privacy Policy

This website does not use any cookies, but I do use Google Analytics and Google AdSense. Google does use cookies. On my privacy page, Privacy Policy, I provide full information about how you can manage the information collected by Google and any other third-party provider used on the site. Some information is also provided in the footer at the bottom of every page.

Navigation

To facilitate navigation, my website provides these keyboard shortcuts:

I originally added the outline feature to facilitate article editing, but it is also a good way to navigate within the document, especially a long document. You can click any element in the outline to go to that element in the document. The outline will close when any part of the outline is clicked. With the full site menu, you can quickly see all the articles on my site by clicking the various headings and subheadings. Clicking on a link will take you immediately to that article.

My Credentials

I am a financial writer who has been writing about financial topics since 2005. I have a degree in philosophy and business from Millersville University, located in Lancaster County, Pennsylvania, but most of my knowledge comes from constantly reading, writing, thinking, and doing examples. I continually read textbooks, magazine articles, and other news sources about economics, personal finance, and investments. Unlike most other sites, I continually edit my articles to provide more updated and clearer information, especially when my readers alert me to mistakes or ambiguities. I also provide worked-out examples for many of the articles. Writing is the best education because it forces you to think deeply about the topic, to research it thoroughly, and to ensure that it coheres with other principles and facts. I sometimes disagree with the consensus, and I will point out why I believe it is so, allowing you to decide if my argument has merit. I also get feedback from readers like yourself, pointing out mistakes I correct immediately — a major benefit of reading from a website rather than a book, even an ebook.

I also provide many references to my topics, including individual facts, such as points of law, where you can review that information instantly by clicking on the link, which will open a new window. For instance, in my tax articles, I provide direct links to all the referenced IRS forms, as well as many individual provisions of the tax code and to the many instructions and other publications by the IRS.

Of course, another source of my knowledge, is from personal experience, though it is, by necessity, much more limited than the many topics that I cover. Nonetheless, writing about many topics gives me a greater perspective and better insight into each topic since they are interrelated.