A sound understanding of certain mathematical functions can offer a great deal of help to just about anyone who wants to take control of their finances and prevent losses. Even playing by the numbers will give you some leverage, not everything will be sunshine and rainbows. You better cast out the idea that probabilities can predict the future. If you however, adopt the idea to act only on the most beneficial occasions as a rule of thumb, at the very least you’ll be on the right track. Without further ado, allow me to introduce the essential formulas that will work for the good of your finances.
Calculate Your Expenses
To begin with, you should focus on the money you’re flushing down the drain. Instead of looking for fresh income, first you need to fine tune your spendings. Find, what you’re spending money on across three months and from there you’ll be able to see about whether it’s possible to cut down your financial outlay. Making a balance sheet boils down to doing simple math, most notably totting up numbers. I want to open parenthesis and clarify that, the most common financial mistake people make is not paying off debts. You’ve got to get out of your debt first. You can’t save money if paying interest to somebody else.
Net Income / Shareholder Equity = ROE
Indisputably the know-how of biggest importance to investors is the formula giving the return on equity. There lies the roadblock to making good investments. Aiming for a ROE (Return on Equity) higher than 15% will guarantee you healthy profit margins. As Kevin O’Leary would suggest “Don’t settle for low-return rate deals”. He even goes on to say that less than 10% doesn’t even get him out of the bed in the morning. So, here’s a lesson to learn – if you plan on participating in your investment, buy as much equity as you feel comfortable with.
Computing the Chance of Winning in a Casino Game
Casinos knows how to evaluate the probability for an event to happen when there’s only a limited number of outcomes. The house knows its game, that’s a given, but you, on the other hand, can too give it a good run for its money. The math is pretty simple – 1 divided by the number of possible outcomes times 100 will give you the percentage likelihood an event to occur. This is the bread and butter of counting cards in blackjack for instance. This game also relies heavily on skill, so don’t neglect your gut feeling.
Scientists are still working on putting into words and numbers the space-time continuum. Until a final conclusion is reached and a formula is built, we will be constrained to making mere speculations about the future. Probability theory is our best shot yet and still a viable option for people of all ages and social identity.