What is IRS Publication 544 on Sales and Other Dispositions of Assets?
IRS Link to Publication — Found Here This guide is a reference for the tax implications of sales, transfers, barters, exchanges, forfeits, repossession, condemnation and abandonment of property. Where gains or losses are manifested, the guide helps to differentiate between capital gains and ordinary gains, as well as how to figure and report the gains or losses. Often when people sell or dispose of property in various manners there is a question of what the tax implications are, how much of the transaction is taxable, and whether any amount of it can be applied toward tax deductions. This guide, Publication 544, will outline all of the necessary filing forms and reporting practices for almost any kind of sale or disposition of property. Continue reading...
What is Weighted Average?
A weighted average is a calculation considers the relative importance or relevance of a piece of data. Weighted averages multiply numbers in the average by a predetermined factor, like time, that enhances the relevance given to the number. One example of a weighted average is the Exponential Moving Average (EMA), an alternative to the Simple Moving Average (SMA) line which gives greater weight to the more recent data. SMAs are effective in their simplicity, but their efficacy is most closely tied to how they are used. Continue reading...
What is the Federal Supplemental Education Opportunity Grant?
The Federal Government will give college students who have filled out a FAFSA and are found to be in dire financial need a grant of up to $4,000 a year. The grant does not have to be repaid. The Federal Supplemental Education Opportunity Grant provides funding for educational expenses to students with expected family contributions (EFCs). The maximum annual amount that can be received in a SEOG is $4,000 per student. Continue reading...
What is a foreign fund?
A foreign fund is a mutual fund that invests solely in companies abroad and does not invest in corporations owned in the US. Owning foreign companies can be a very good diversification strategy and is considered a core holding in the portfolio of most investors. Foreign exposure means that if the US economy hits a rough patch, you may have a hedge in the foreign fund if the companies or markets in other parts of the world are not entirely correlated. Continue reading...
What is Dividend Yield?
A dividend yield is a ratio that represents how much a company pays in annual dividends relative to its share price. A dividend yield is represented as a percentage, and is easily calculated. Simply divide the annual dividends paid per year (dollar value) by the per share price of the stock. Here’s the equation in simple terms: Annual Dividends Per Share / Price Per Share = Dividend Yield A company with a higher dividend yield means they pay out more of their profits to shareholders, but it also means that company may be allocated less of their free capital towards investment, research, and other growth areas. Continue reading...
What should I compare the performance of my portfolio with?
Benchmark indices are used to gauge the performance of an investment portfolio. In order to evaluate the performance of your portfolio for any given period of time, find the corresponding index for each investment in your portfolio. For example, for US Equities, use the S&P 500 For your Small Cap portion, use the Russell 2000 Index, etc. You can also compute weighted index blends that correspond to your index allocation (e.g., 40% MSCI / 60% S&P). If your manager or the portion of your portfolio significantly (by more than a couple percent) underperforms the corresponding index, be sure to carefully monitor this manager or portion of your portfolio. Continue reading...
Where do I find a good CPA?
A good CPA can be a valuable ally. You should find one who works with clients similar to you and who is easy to talk to. Taxes and accounting are a part of nearly every financial instrument and consideration that people will be confronted with in their life. It can be very beneficial to work with a CPA who can advise you properly on the issues that affect you. It can also be detrimental to place too much trust in a CPA who isn’t really an expert in the areas he claims to be. Continue reading...
What is a Treasury Note?
Treasury notes are government-issued coupon bonds with maturities between 1 and 10 years. A large secondary market exists for Treasury Notes, and they can be acquired at issue in a competitive bid or a noncompetitive bid auction. They are extremely popular for their marketability and six-month interest payment schedule. They do have interest rate risk, since treasuries issued with higher interest rates will make the ones already issued with lower rates less valuable. Continue reading...
How often do I check the performance of my portfolio?
You don’t want to overdo it, but it’s important to stay on top of things. Generally speaking, if your portfolio is run by professional investment managers, you should check the performance quarterly; otherwise, you may not give them enough room to do their jobs. If you run your own portfolio, it is entirely up to you how often you check the performance, but be aware that the closer and more short-term your focus gets, the higher the chance you have of losing sight of the bigger picture. Continue reading...