What are Value Mutual Funds?
Value mutual funds are those that invest in companies with strong fundamentals and steady earnings histories. A Value Mutual Fund’s portfolio will typically consist of stocks that are considered to be undervalued and expected to pay out dividends. The stocks held in such funds usually have P/E ratios in-line with or lower than the S&P 500 index, and such companies are usually older and well-established. Continue reading...
What are the Forms of Ownership of a Corporation in the United States?
There are many different forms of ownership of a company in the United States. This subtopic describes some of them. Corporations can be privately held or publicly traded. There are also C-Corporations (C-corps), which are the typically large companies controlled by a board of directors, and S-Corporations (S-Corps), which are smaller and have some of the characteristics of LLCs. LLC is an abbreviation for Limited Liability Company, which is a pass-through entity for partnerships or sole proprietors which shields the private assets of the owners from the liabilities of the business. LLCs are almost entirely regulated by state law, and while they can issue stock, it depends on the state. Continue reading...
Can I Take a Periodic Distribution From My Cash-Balance Plan?
Periodic distributions are one of the main ways that former employees enjoy the benefits of a Cash Balance plan. Yes, you can take periodic distributions from your cash-balance plan. As opposed to the other option (lump-sum distribution), opting for the periodic distribution can help you sleep better at night, knowing that you have a fixed stream of income for the rest of your life. This Life Annuity option is mandated by law to be an option to participants of a cash balance plan. Continue reading...
What is an ADV form?
A form ADV can be requested to find out all about the fees and professional backgrounds of a financial advisory firm. Firms who engage in the solicitation of securities or give investment advice must file form ADV with the SEC and keep it updated, usually on an annual basis. It is similar to the form U4 that individual securities-licensed professionals must submit and keep updated in the event of changes of address, tax liens, industry disciplinary actions, and so forth, but the ADV is filed on behalf of a firm instead of an individual. FINRA and the NASAA keep up with the filings as well. Continue reading...
What is Capital Accumulation?
Capital Accumulation is the act of acquiring more assets which will generate more profits or other benefits to the company or economy. Capital accumulation is sometimes discussed in relation to rumors that a company is preparing to acquire another company. This could be the case for one or two reasons. One would be that the company has actually been buying up shares in the target company for some time. Continue reading...
What is a Reverse Mortgage?
A reverse mortgage is basically an annuity paid for with home equity. In a reverse mortgage, instead of paying to for your home, you’re getting paid for your home. It is considered a loan, but it does not have to be repaid, except by the proceeds from selling the home. Older Americans who need the income and aren’t concerned about their heirs getting their house might apply for a reverse mortgage. It is also known as a Home Equity Conversion Mortgage (HECM). Continue reading...
What Does Having a Long Position Mean?
A long position in a security means owning shares and having a positive investment balance in a stock, bond, commodity, etc. This is done by simply buying and owning the investment. An investor with a long position in a stock will benefit financially when the price of the stock rises. What is a Short Position? What is Short Selling? Continue reading...
What is active money management?
Active management is when an investor or money manager attempts to outperform an index or benchmark, using tactical strategies. Many economists and financial professionals believe that the markets are efficient. This means that all available financial information has already been built into the prices of securities, and that you cannot outperform the market by making specific selections of stocks, timing the market, reallocating your assets regularly, following the advice of market pundits, or finding the best portfolio managers. Continue reading...
What is market saturation?
Market Saturation is the point at which there are few consumers that are still interested in buying a product because those who were ever likely to already have done so. Saturation can be said to exist for all similar products in a market. This may call for different strategies which could keep a company going. One is that products can be made to wear out after a certain amount of time and need replacement. Another is that the business can shift its focus to subscription or service-based income. Continue reading...
What is a protective put?
A protective put is an option contract that hedges against losses in a long stock position, by allowing the investor to sell the underlying security at a specific price. Sometime investors will seek to limit possible losses in a stock that they hold by purchasing a put option at a price below the current market price. This allows the investor to sell their stock at a set price if it takes a dive for any reason. Let’s assume that you have 100 shares of company ABC, which is trading at $100/share. Continue reading...