What is the “Period Income” Option on Annuities?
The Period Income option or Guaranteed Period option on Annuities means that the entire balance, plus some interest, will be paid out to you in equal amounts over the course of a set number of years. This option may fulfill a specific need for income in a certain time of life. It used to be slightly more attractive to investors when interest rates were higher, but, today, the low interest rate environment does not give insurers enough time to generate interest for these sorts of payouts. Continue reading...
What if I Cannot Get Individual Coverage?
Under current law (the Affordable Care Act), everyone is eligible to receive health insurance coverage. However, not everyone may be able to afford health insurance. There are subsidies provided by the federal government for those who cannot afford it, but cost may still be an issue for many. How Much Will Individual Health Coverage Cost? Can I Purchase Individual Health Insurance? What Health Insurance Do I Need if I Don't Have a Job? Continue reading...
What is IRS Publication 54, Tax Guide for US Citizens and Resident Aliens Abroad?
IRS Link to Publication — Found Here Publication 54 is a guide for those earning income in a foreign country. There are several tax deductions which might be available and several forms and filing practices that one will need to be familiar with when taking employment elsewhere. US Citizens and long term resident green card holders will need to let the IRS know how much they are making even if they are employed in a foreign country. Continue reading...
What is the Falling Pennant (Bearish) Pattern?
The Falling Pennant (or Bearish Pennant) pattern looks like a pennant turned upside down (the mast points up). It forms when falling prices experience a consolidation period, and the price moves within a narrow range defined by the converging lines through points (2, 4) and (3, 5). After the consolidation, the previous trend resumes. This type of formation happens when anticipation of downtrend is high, and when the price of a security consolidates during a declining trend. It may indicate growing investor concern of an impending downtrend. Continue reading...
What is a Cash Conversion Cycle?
A business with a fast ‘cash conversion cycle’ can efficiently use funds and resources to fulfill the different needs of the business and to generate more business. In the simplest terms, the ‘cash conversion cycle’ is an accounting and efficiency model which measures how fast a retailer can disburse cash to suppliers and then receive cash from customers. To be more descriptive, the business would use cash from Receivables, to get Inventory (and cover Payables), sell that Inventory, and Receive cash again. Continue reading...
What does it mean to Accept Risk?
The notion of who bears risk for various sorts of failures, circumstances, or losses is a prevalent one in the financial world, and many institutions make all of their money accepting risks. To accept a risk is to bear the burden of loss or replacement if an event occurs that causes an asset to lose value or disappear. There is a bright side to this, however. There is a real and theoretical “risk premium” due to those who accept a risk. Continue reading...
What is a Home Equity Line of Credit (HELOC)?
Much like a Reverse Mortgage or Second Mortgage, a HELOC gives homeowners the ability to convert their home equity into cash. A HELOC is a line of credit secured by the equity in your home. Homeowners can choose when to use the funds, and there are repayments due according to a schedule in the contract. It functions as a revolving line of credit, similar to a credit card with large limits. Some people find themselves interested in a HELOC if they have a large balloon payment due on a loan, perhaps even their home mortgage loan. They are also sometimes used as a debt consolidation tool to pay off credit cards and other outstanding debts (but, for this, fixed-rate home equity loans are more popular). Continue reading...
What is a Bankruptcy Trustee?
A bankruptcy trustee is appointed to oversee the liquidation of a debtor’s estate. A bankruptcy trustee has an obligation to do all he or she can to maximize the amount that a bankrupt entity’s estate can pay to the debtor’s unsecured creditors. The trustee must also challenge the claims of a creditor where appropriate. The estate is constituted of all of the bankrupt entity’s nonexempt assets. The trustee will oversee the “341” meeting, in the case of Chapter 7 bankruptcy. Continue reading...
What is a foreign currency swap?
These are generally referred to as currency swaps or cross-currency swaps , since “foreign” is a little redundant (currencies are from different countries anyway). Central banks and large institutions sometimes swap principal amounts and loan interest in their domestic currency in exchange for a foreign currency, to provide liquidity and a hedge. Currency swaps are where banking institutions, particularly central banks, exchange a loan in one currency for a loan in another currency. Continue reading...
What is the commodity channel index (CCI)?
The Commodity Channel Index is an oscillator introduced in 1980 in Commodities magazine, but it can be used for indexes, ETFs, stocks, and so on. It basically displays the relative daily difference above or below a simple moving average. It can be used to identify overbought and oversold conditions and to confirm trends. The CCI averages out the prices of a commodity (or security) for a day, calling it the Typical Price, and compares it to the simple moving average for a time period (usually 20 days). Continue reading...