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What are the Expenses Associated with Buying and Owning Mutual Funds?

Several forms of fees and expenses may be charged to those who own, buy, or even sell mutual funds. With mutual funds, there two types of charges that might be paid by the investor: expenses and fees. Different types of share classes may have different types structures to their fees and expenses. Expenses are the operating costs of the fund company, essentially, and these show up in all mutual funds, usually labeled as expense ratios. The returns reported by the fund will be after expenses. Continue reading...

What are Load Mutual Funds?

“Load” mutual funds are those which have a fee structure that includes a front-end or back-end sales charge. All funds have expenses, but not all funds have loads. Loads are sales charges that are part of the fee structure of a mutual fund. Each mutual fund will typically offer a few types of shares classes to its investors, and the main difference between the share classes are their fee structures. There are front-end loads, which come out of your initial investment and can be up to 5%. Continue reading...

What is “contango?”

Contango is when the price of a futures contract is higher than the current spot price of a commodity, and the expected future spot price. Some contango falls within the normal range, but too much is generally unfavorable. Contango means that the price of a futures contract has become inflated beyond the expected price range of a commodity. Backwardation is the word for the opposite of contango, in which futures contracts are being sold for less than the current spot price and below the probable future spot price. Some backwardation and contango is part of life and considered normal, but contango markets can have a particularly negative impact on some ETFs. Continue reading...

What are Net Sales?

Net sales are the amount of sales that will actually be counted towards a company’s bottom line, meaning they account for goods returned or damaged goods. If a good is fully delivered to a customer and any return policy is expired, the good can be booked as a net sale for the company. Therefore, net sales gives a more accurate picture of the actual sales generated by the company, or the money that it expects to receive. Continue reading...

How Does a 401(k) Compare With Other Retirement Plans?

There are several types of retirement plans that employers can provide, but 401(k)s are one of the most popular. Other employer-sponsored retirement plans include SIMPLEs, SEPs, and various kinds of defined benefit plans. SIMPLE IRAs are sometimes called SIMPLE 401(k)s, because they operate under the same laws as Safe Harbor 401(k)s. They both are primarily employee-funded, and have rigid standards for employer contributions. Continue reading...

What is Return on Sales?

Also called net operating margin, return on sales can indicate how well a company makes use of its sales revenue. By dividing Operating Profit by Net Sales, we can arrive at the Return on Sales. Essentially what we’ve done is broken down profits on a per sales basis. We can see what percentage of sales ends up as profit, or, on the other side of the coin, how much profit is generated per unit of sales. This can be useful for a comparison of companies of different sizes, because it excludes their assets, capital structures, taxes, and interest. Continue reading...

What is Income?

Income is a stream, series, or lump sum of cash or cash equivalents that is paid to an individual or entity based on work performed, goods sold, ownership rights, or by being a creditor to whom interest is paid. It is received when a net result is positive, and is sometimes referred to as the “bottom line.” Income can be viewed from a itemized, current perspective or as a balance sheet item for an entire accounting period, such as a year. It also might be discussed as a gross (pre-tax) or net (post-tax) amount. Continue reading...

What is a Bill of Sale?

A Bill of Sale is essentially a trumped-up receipt, unless you are in England. A Bill of Sale is a document affirming that the rights of ownership of an asset have been transferred from one party to another, in exchange for “full consideration,” which is another word for compensation or payment. A receipt from a retail transaction can be considered a Bill of Sale, but a full-fledged bill of sale should accompany large transactions like car sales and so on. The British definition of Bill of Sale, however, is somewhat different. Continue reading...

What are the 457 Plan Contribution Limits?

Contribution limits depend on if you are making contributions as a government employee, a non-profit employee, or a highly compensated employee. Government employees can defer up to $18,000, plus a $6,000 catch-up contribution for those over 50, in 2016. These plans use the same elective deferral limits as 401(k)s. A non-governmental, non-profit employee can only contribute the $18,000, and is not allowed to make the $6,000 catch-up. Both of these types of employees are allowed to use the alternate catch-up provision of 457s, however. Continue reading...

What Are the Contribution Limits For My Thrift Savings Plan?

Contribution limits for the TSP are the same as regular 401(k)s. Employees and employers using the TSP will have the same contribution limits as 401(k) plans. An employee can defer up to $18,000 a year in 2016, plus a $6,000 catch-up deferral if the employee is over 50 years old. The employer can contribute up to a maximum total balance of $53,000 (or $59,000 if the employee is over 59 ½), including employee deferrals. There is a standard 1% employer flat contribution, and some Federal employees will also receive a match. Continue reading...

What is adaptive selling?

Adaptive selling is a sales and marketing principal where the product or services offered are framed or actually modified based on the preferences or demographics of the audience or client. Adaptive selling requires the ability to customize a shopper’s experience as they interface with the real or virtual storefront. The sales system leaves room to learn about the customer and to adopt the language and products offered based on changing interpretations of the customer. This may require a well-trained sales representative or a well-designed computer algorithm, as has been implemented on some e-commerce sites. Continue reading...

What is an Account Executive?

An account executive is an individual who has executive responsibility of the maintenance of client account. In certain businesses, some client accounts have a high degree of importance and priority with regards to sales and operations, perhaps because they generate significant revenue for the company. Examples of such businesses might be advertising, office products, and investment services. The title of account executive is especially fitting if there is a staff which supports the lead account executive in maintenance of the client relationship and account service, but a staff is not required to hold this title. In other businesses this position might be called an account manager. Continue reading...

What is a "Breakpoint"?

A breakpoint generally refers to a level of investment at which the fee structure changes. For mutual funds, it can mean a level that triggers a reduced sales load. An investor can either hit the breakpoint at the time of original investment or in some cases can sign a letter of intent to reach a certain investment level and qualify for the reduced fee that way. There may be multiple breakpoints for an investment, with the fee falling at each one. Continue reading...

What is a Variable Annuity?

Variable annuities generally provide investors with downside protection for a fee (the insurance guarantee), while also providing market exposure that may give the investor upside potential. A variable annuity is characterized by offering market exposure, and the risk and upside potential that comes with it, in the form of “separate accounts” which are institutional-level mirrors of retail mutual funds. Typically a variable annuity will not deplete the amount of your initial investment with sales charges, and may even credit your annuity with an initial bonus amount of several percent. Continue reading...

What is a Fixed Annuity?

Fixed annuities, generally speaking, are annuity products that give the purchaser of the annuity the guarantee of fixed income payments for life. Annuities must come with the option to be paid out in equal payments either over a certain number of years or the lifetime(s) of the annuitant(s). This is the case for variable and fixed annuities, and these payments will be fixed and guaranteed. Where they differ is how they are invested before any annuitization takes place. Continue reading...

What Are the Contribution Limits for My SIMPLE IRA?

SIMPLEs allow higher employee deferrals than most retirement accounts. Employees are only able to make salary reduction contributions. As of 2016, they are able to defer up to $12,500 a year, but if an employee is over 50, they may defer an additional $3,000 as a “catch-up” contribution. However, an employee may choose not to contribute anything to their SIMPLE IRA. Employers, on the other hand, are required to make either a dollar-for-dollar matching contribution of 3%, or a non-elective contribution of 2% of the employee’s pay. The 3% match can be reduced to 1% in two out of five years if employees are notified before they make contributions. Continue reading...

Why Should I Have a 401(k)?

There are many potential benefits to using a 401(k) for retirement savings. You can break down the primary benefits of a 401(k) to 3 things: 1) Tax-Deferred Growth: This is probably the most advantageous aspect of a 401(k). Not only is the money contributed to the account pre-tax, which lowers your current taxable income, but the money also grows without being taxed within the account. The effect produced by the tax-deferred growth is much more powerful than most imagine. Continue reading...

What is Asset Turnover?

Asset Turnover is a metric that investors and companies can use to determine how efficiently a business uses its assets to create revenue. Asset Turnover is a ratio of the value of a company’s sales or revenues relative to the value of its assets. It can be calculated simply by dividing sales or revenue by total assets. The higher an asset turnover ratio for a company, the better that company is performing - since it implies that the company is generating a high level of sales and revenue per unit of assets. Continue reading...

What’s So Special about an IRA?

When compared to other methods of investing, there are benefits to using an IRA. An IRA provides tax deferred growth of your assets, and the result of such growth, over the years, can be quite remarkable in comparison with a regular savings account. Using an advanced calculator online – or asking an advisor or a CPA to run some calculations for you – can be an eye-opening experience. For most investors, mutual funds will be their best option for cost-efficient diversification. Holding mutual funds outside of an IRA or 401(k) means that the investor will have some taxes, whether long term gains or short term gains, passed on to him or her from the mutual fund company every year that the fund experiences gains. Continue reading...

What is IRS Publication 535, Business Expenses?

IRS Link to Publication — Found Here Businesses can refer to Pub. 535 to get a better grasp on what expenses can help lower their corporate tax bill. Many of the costs required to do business can be deducted or depreciated. The guide addresses employee compensation, inventory, research and development, and much more. Many of the expenses that could fall into the category of “overhead” can be deducted by a business. Continue reading...