Similar to other cryptocurrencies, litecoin can be purchased through major cryptocurrency exchanges and wallet apps. Many reputable exchanges exist for buying and trading cryptocurrencies, and several of these will allow you to purchase litecoin with credit cards, wire transfers, and bank deposits. There may be issues with buying enough litecoins to suit your fancy if you aren’t willing to verify your identity, or if the exchange simply won’t allow you to exchange for a large balance of litecoin in single transactions. One option that may open more doors is to purchase bitcoin first, and then exchange those for litecoin. Many people search for good ways to buy litecoin or Bitcoin with Paypal, but it is probably more trouble than it’s worth. Paypal has a somewhat over-active reversible charge system, which favors some buyers or sellers over others by default and can be used by bad actors to reverse the payment owed to someone transacting business in cryptocurrencies. Continue reading...
Currency Substitution can be an official or ad hoc occurrence in a country whose commerce is partially, or fully, conducted using the currency of another country. Some currencies which are pegged to another currency at a fixed rate (especially at whole integers) are domestically exchanged in the same manner that the local currency is. Many countries have completely adopted the currency of another country, and do not have a central bank of their own. Continue reading...
Dollar cost averaging (DCA) is a method of hedging against the risk of investing a lump sum at high market prices. With DCA, the investor deploys money at set intervals, hoping to get the best average price per share. If you use the same amount of money to buy shares at set intervals, you will acquire more shares when the market is down, and fewer shares when the market is up, so theoretically you would have acquired more of the advantageously-priced shares overall and will be in a better position in the long run. Continue reading...
Currency symbols are characters written or typed in a specific arrangement alongside the numerical values of a currency amount, to denote the kind of currency in which the amount of money is held. An example would be the dollar sign ($), which is placed at the beginning of the numbers which describe the amount of currency in question, despite the fact that in most languages the word “dollars” follows the numbers when spoken. Many currencies have their own symbol but not necessarily all do. Continue reading...
The main difference is that Roth contributions go in after tax and are not taxed on withdrawal. People sometimes don’t realize that Roth 401(k)s only exist as extensions of Traditional 401(k) plans. Some plans have been designed to also permit after-tax contributions, which become that employee’s Roth 401(k) account. This Roth side account has all of the same investment options as the rest of the plan on the traditional side. In fact, an employee can contribute to both the traditional 401(k) and Roth 401(k) with each payroll cycle. Continue reading...
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...
A good investment performance calculator will give you the ability to input various cash flow scenarios and compute weighted returns, among other options. A really useful investment performance calculator will allow you to input various cash flow scenarios and to see weighted returns based on these. Dollar-and-time-weighted performance, dividend cash flows, deposits and withdrawals, as well as fees paid for various transactions, will all be incorporated in a good calculator. Continue reading...
Dividend rollover plan is another, rarely used way to refer to a Dividend Reinvestment Plan (DRIP). Unfortunately just reinvesting dividends in a systematic way will not get you out of any tax implication associated with the dividends attributed to your account. An automatic dividend reinvestment plan (DRIP) is an option in some investment accounts and financial products. Any dividends paid out will be reinvested in the same mutual fund, ETF, or stock at the earliest possible opportunity. Continue reading...
IRS Link to Form — Found Here Form 8891 was previously used by individuals with retirement plans held in Canada when they were living in America, each time they took distributions. The process proved to be cumbersome for many good-natured Canadians, and caused the IRS a lot of trouble as well. This form has been retired in favor of an acknowledgement on the IRS Form 1040. Form 8891 is no longer used, which came as a relief to many Canadian-Americans who had retirement plans from work they did in Canada. Certain filing requirements still exist, such as a new form replacing the FBAR, for foreign bank accounts, now called the FinCEN Form 114. Continue reading...
Market capitalization is a measure of a company’s size, in terms of the value of its total outstanding shares. Most readers have probably heard of large-cap, mid-cap, and small-cap stocks. These classifications are based on the market capitalization of a company, which is defined as the number of a company's outstanding shares multiplied by the price of one share. For example, if company ABC issued 1,000 shares and it is trading at $10/share, then the market capitalization of company ABC is 1,000 x 10 = $10,000. The largest company by market capitalization as of the time of this writing is Apple Inc. Its market capitalization exceeds $750 billion. Continue reading...
Market indexes attempt to give an overall picture of the behavior of the market by tracking the performance of a representative sample of stocks. Different indexes have different focuses. The Russell 3000 samples more of the smaller companies than the S&P 500. Index mutual funds and ETFs track specific indexes but, as you’ll notice in their disclosures, it is impossible to invest directly in an index; they only follow the index by investing in as many of the companies as possible and minimizing lag as much as they can. Indexes give numerical values for the progressive fluctuations in the price action for specific sets of stocks. Continue reading...
Lending companies or other companies with Receivables may characterize certain unpaid accounts as Bad Debt and write off the losses. Bad debt is debt that is on the books and is in default, meaning payment has not been made on it in a long while. Creditors, banks, and companies may periodically get bad debt off of their accounting books by moving it out of Receivables. Most companies have attempted to calculate their exposure to default risk and bad debt, and have allocated amounts into accounts such as Allowance for Doubtful Accounts (ADA). It can be passed off to debt collection agencies, but most of the debt will never be recouped. Continue reading...
The MSCI ACWI is the “All Country World Index” - providing the broadest measure for global stocks. The MSCI ACWI tracks performance of stocks from all over the world - literally. It includes all markets and gives the broadest picture for how world stocks are performing. Developed markets account for some 75% of total global output, so the MSCI ACWI includes many countries that are not necessarily palatable contributors to world growth. Continue reading...
Companies with significant operations or sales abroad will be affected by changes in foreign currency exchange rates. If the dollar strengthens relative to a foreign currency, the price paid for the goods in the country will not be worth as much domestically when the company converts their profits back to dollars. Some foreign currencies fluctuate much more than the US dollar does, but even the dollar can behave unpredictably. This can have a tremendous effect on the bottom line of companies engaged in significant amounts of business abroad. Continue reading...
Mortgages take a while to process, but a broker or bank can lock in a rate for themselves or their clients. Locking-in rates costs money somewhere along the line, and the longer the rate is locked in, the more it costs. 60 days is generally the longest time frame you will see a rate locked in, due to the cost associated with that risk. Mortgage rates can be locked in for a period of time long enough to underwrite the loan. This might be for a period as short as 20 days or as long as 60 days. Continue reading...
Foreign Exchange Risk is the possibility that exchange rates will move against you when you have pending payment on transactions in another currency or other investment positions in foreign currencies or foreign assets which will be affected by Forex fluctuations. Foreign Exchange Risk can also be called Forex risk, and it is the potential loss to an investor or institution when doing business in a foreign currency if the exchange rate swings unfavorably. Companies and countries take various measures to hedge against exchange rate risk, including holding reserves of other currencies and buying derivative contracts on various currency pairs. Continue reading...
The main idea behind index investing is that markets are efficient, and, especially with the low fees of indexed funds, it can be a winning strategy. Index investing is a simple strategy of choosing the indices which reflect your investment beliefs and offer diversification, buying mutual funds or ETFs that track these indices, and holding them for a long period of time. The last 10 years have seen the propagation of index funds for any specific market, industry, country, commodity, etc. Continue reading...
Index futures are futures contracts written on an index in which a large position can be held with a relatively small margin requirement. Index futures can be used for hedging or speculation. A "good faith" initial margin deposit (also called a performance bond) of a fraction of the contract size is all that is required to hold a substantial position, with a notional value worth significantly more than the amount invested. Continue reading...
Most index funds are known for using a completely passive strategy to track an index, but some take a more active approach. Some mutual funds track an index by passively using algorithms to buy the shares necessary to build a portfolio which closely replicates an index. Such a fund will have low turnover, will only rebalance slightly based on the market cap or other criteria set forth in the prospectus, and will basically ride out all of the ups and downs of the index in a blind faith for the efficient market hypothesis. Continue reading...
The Ease of Movement (EMV) indicator measures the degree to which prices can be moved by a lower volume of trading. It was developed by Richard Arms, inventor of the Arms Index, which also attempts to quantify the relationship between price movements and volume. High positive values indicate a present tendency for prices to increase on low volume, and larger negative values indicate that prices are slipping lower but with relatively low trade volume. Continue reading...