ETFs vs Mutual Funds -- What's the Difference?
The better choice might be different for each investor. There is no clear-cut answer to this question, since it will depend on an investor’s unique situation and what’s being offered. If you intend to trade actively, ETFs might be a better choice since they have prices that update minute-to-minute during the day and their trades settle more quickly. If you are just buying and holding an index (see ‘index investing’), an ETF will give you the cost effective means for doing so. You may be able to buy into an ETF with lower initial requirements than a mutual fund, since you can buy one share instead of possibly having to meet a $1,000 minimum initial investment requirement for a mutual fund. Continue reading...
What is a 457 Plan?
A 457 is a deferred compensation arrangement that is available to some government employers and non-profit organizations. A 457 Plan, offered to state and local public workers and employees of a few nonprofit organizations, functions similarly to a 401(k) or 403(b): the contributions are automatically deducted from your paycheck before taxes and transferred into your account, where they grow tax-deferred until retirement. Continue reading...
How Much Will Long-Term Care Insurance Cost?
The cost of long-term care insurance varies depending on the policy and the age of the insured. Generally speaking, however, the insured can expect to pay between a hundred to several hundred dollars a month. Typically the total cost adds up to at least a few thousand dollars per year. Furthermore, you will be required to continue paying the premium through your retirement (until you begin using the insurance), and if you fail to pay the annual fee, you might lose some or all of your coverage (regardless of how much you have paid up to that point). Continue reading...
What is the Suitability Standard?
The suitability standard states that a broker-dealer is obliged to, in the very least, make investment recommendations that are suitable for their clients. The SEC defines a broker as someone who acts as an agent for someone else, and a dealer as someone who acts as a principal for their own account. The suitability standard only details that the broker-dealer has to reasonably believe that any recommendations made are suitable for clients (in terms of the client’s financial needs, objectives and unique circumstances) instead of having to place his/her interests below that of the client. An example would be a broker recommending a proprietary bond fund for a client looking for a fixed income solution. Continue reading...
What is Gambling Income?
IRS Link to W2-G Form — Found Here IRS Link to Form 1040 — Found Here Winnings from gambling activity must be reported as income, and they will be subject to different kinds of taxes depending on how they were won and the amount. If you win over a certain amount through a lottery, raffle, horse track, keno game, slot machine, poker tournament, or other form of gambling, it will all be taxed at a 25% rate and will have to file form W2-G. Lesser winnings will still need to be reported as income. If an individual wins over $600, less the amount of the wager, and it is over 300 times the amount of the bet, they must file a W2-G on their taxes. Continue reading...
What is currency arbitrage?
Currency arbitrage is when the value of a triangle of currency pairs does not cross-correlate, and a bank or large institution is able to exploit the temporary discrepancy for a profit before the market equalizes again. Arbitrage is when an investor (usually an institutional investor) can pick up something in one market that has a higher value in another market, perhaps due to lower liquidity or information flow in the secondary market, and can move goods or securities across these markets and make a profit. Continue reading...
What is a Good Financial Advisor?
A good financial advisor should care as much about your investments as you do, and be personable and knowledgeable enough to make the relationship worth your time, money, and trust. Choosing a Financial Advisor is a bit like choosing a caretaker for your child: you would want someone who gives you a sense of security, who has professional references or the recommendation of a trusted friend, years of experience, is reliable and honest, can foster growth, and ideally, will care about your child almost as much as you do. Continue reading...
What is adaptive price zone?
Adaptive Price Zone is a volatility-based trading indicator. Similar to traditional Bollinger Bands, Adaptive Price Zone is a recent development by Lee Leibfarth that overlays two indicator bands around a moving average line. It is more adaptive than many previous band indicators, using several short-term exponential moving averages which are double-smoothed and closely hug changes in volatility and price data. Exponential moving averages give more weight to recent data, which helps the lines hug current data. Continue reading...
What is the Russell 2000 Index?
The Russell 2000 index is comprised of the 2,000 smallest companies in the U.S. If you’re looking for a small cap domestic benchmark, this is a good one. Companies included in this index are reevaluated annually to make sure they can still be considered small cap companies. Since the Russell 1000 index represents 90% of the market, the Russell 2000 index represents about 10% of the market (if you are wondering whether or not there is a Russell 3000 index, the answer is yes — it is a combination of the Russell 1000 and Russell 2000 indices). Continue reading...
What is Credit Debt?
Credit debt or credit card debt is a type of consumer debt that is incurred through a short-term revolving loan facility. The most common of course is a credit card company issuing a card to a client to make purchases, with the client being responsible for minimum payments plus whatever interest rate applicable. Removing credit card debt from one’s balance sheet is often an effective way of improving your financial life. Continue reading...