When Can I Access the Money in my IRA?
You have the ability to make withdrawals from an IRA leading up to retirement, but you may be penalized. You are able to withdraw money from your Traditional IRA at any time (after all, this is your money), but it can be a costly decision. If you decide to take out money before age 59½, you will most likely pay a 10% penalty in addition to regular income taxes on the amount that you withdraw. As the name Individual Retirement Account implies, the money is meant to be taken out during retirement. There are a few circumstances in which the IRS will allow you to make early withdrawals without assessing the 10% penalty. These exemptions are mostly for hardships, but first time homebuyers can get up to $10,000 out penalty-free, and college tuition costs for family members can usually be withdrawn penalty-free. Continue reading...
How Can I Establish a Keogh Plan?
A Keogh plan will primarily need a plan document and a way to invest. A Keogh plan can be established by any self-employed individual of a sole proprietorship, partnership, and Limited Liability Company (LLC). A plan document must be put together by the sponsor, or the standard plan document from a prototype plan at a broker-dealer or trustee institution can be used. It is not necessary to submit the document to the IRS, but if you have any employees, it is required that you use this document and any other printed information necessary to fully explain and disclose their rights in regards to the plan. Continue reading...
How Much Money Does the Government Have Invested in Social Security?
As of 2016, there is about $2.8 trillion in the Social Security Trust Funds, if you include what is owed to it by the Treasury for the bonds purchased with the surplus funds every year. The funds in the Trust are partitioned from the rest of the government budget, but the surplus year to year is invested in Treasury Bonds which effectively gives the government temporary use of the funds in exchange for a market-value interest rate. Continue reading...
What is a Revocable Trust?
A Revocable Trust is also known as a Living Trust, and it is an estate planning vehicle that allows you to determine how your assets are dispersed to heirs or other entities. While you are alive, you can modify the trust without restriction. When setting up a Revocable Trust, you generally name a Trustee (the person that will care for the assets in the trust and oversee distribution) and define the terms and conditions of the Trust. It is also possible to name yourself the Trustee in a Revocable Trust while you’re alive, but you should also name a contingent Trustee in the event of your death. Continue reading...
What is an Electronic Communication Network (ECN)?
An ECN is an alternative platform to an index for making trades. An Electronic Communication Network is a type of alternative trading system that allows for trading listed stocks and other exchange-traded products. Trading on an ECN is typically limited to institutions and broker-dealers, and trades are facilitated when the price on a buy order intersects with a price on a sell order. ECN’s must register with the SEC, and you must be a subscriber to trade on one. Continue reading...
What does asset allocation mean?
At the highest level, Asset Allocation refers to an investor’s decision of what percentage to allocate to stocks, versus bonds, versus cash (and cash equivalents), versus any other asset class (commodities, alternatives, real estate, etc…). It is believed that the asset allocation decision is responsible for the majority of an investor’s returns. In other words, there is a direct correlation between an investor’s long-term return and how long - and to what percent - they owned stocks over their lifetime. Continue reading...
What are Accounting Policies?
Accounting policies are the internal controls of a company which stipulate the methods by which the books will be kept. Accounting policies are the agreed-upon accounting methods, conventions, and practices of an accounting cycle. A business must establish guidelines and training to ensure that accounts are kept in ways that satisfy their needs for documentation, security, liquidity, management, and the observation of applicable laws. Continue reading...
BB+/Ba1 — credit rating
BB+ — S&P / Fitch Ba1 — Moody’s This rating is the highest non-investment grade category that the ratings agencies will give to a bond. When rating bond issues based on their risk of default, investment grade bonds will range from AAA/Aaa to BBB-/Baa3, in the parlance of Fitch, Moody’s and S&P. Below this level, starting with the BB+/Ba1 rating, are High Yield Bonds, also known as Junk Bonds. If an investor chooses wisely, high yield bonds can be some of the best investments in his or her portfolio. The further down the ratings scale a bond appears, the higher the yield; but there is also a higher risk of default. The higher yield paid out on higher-risk bonds is known as the “risk premium,” which is a concept present throughout the investment world. Continue reading...
What is market research?
Market research is the process of evaluating a possible opportunity for entering into a market with a new product or company, or for evaluating the effectiveness of a product or company in a market that they are already invested in. Market research can also be important for decisions regarding mergers and acquisitions. It may involve surveys and market study groups. Sometimes a company will conduct its own market research, but often third-party companies are hired for the task. These companies may specialize in sampling and surveying methods for consumer groups, and/or statistical analysis of a business model or product’s chance of success in a given market. Companies may look to such analysts if they are considering a merger or acquisition, or of launching a new product. Continue reading...
What are Large Cap Mutual Funds?
Large Cap mutual funds primarily invest in companies with the highest market capitalizations. Large capitalization mutual funds, also called “large cap funds,” invest primarily in large companies with market capitalization of over $10 billion. Some examples include Microsoft, General Electric, Google, and other well-known companies. Some large cap mutual funds invest in all of the companies in an index (therefore closely following the performance of that index), and some pick and choose which large companies to select in an attempt to outperform the index. For more information about indices, see “What is Index Investing?” Continue reading...