How do I Choose an ETF?
There is guessing, there are screening programs, and there are advisors. As you can imagine, looking at the list of over 900 ETFs can give you a big headache. Fortunately, there are screening programs that can help you sort through the mess by giving you many criteria by which to search. You can narrow down the choices to a point where the research about each ETF will become manageable. In the process you will have to determine what is important to you, and what need you’re trying to fill in your portfolio. It can certainly help to bring that information to a financial professional that can help you choose the right ETFs for your situation. 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 Net Worth?
Net worth is the total value of a person or entity’s assets, minus all of their outstanding liabilities. Net worth is most often used in personal finance, with the simple calculation of Net Worth = Assets - Liabilities. In the business context, net worth is also known as book value or shareholder’s equity, and those with rising book value mean they are generating more revenue and obtaining property more quickly than they’re accumulating debt. A rising market value does not necessarily correlate to a rising net worth, as the market may bid up a company’s market capitalization absent profit growth. Continue reading...
What is Long-Term Debt?
Long-term debt refers to the duration of a liability/amount owed, and to qualify it must be due at least 12 months out. The period is in reference to 12+ months from the date of the balance sheet. A company will typically take on long-term debt in the form of a mortgage for property owned, or as capital for growth raised through bond sales or other debentures. Continue reading...
What is an Accounting Convention?
An accounting convention is an established an agreed-upon method of documenting specific items on a company’s books. The most widely-used accounting conventions are part of the Generally Accepted Accounting Principals (GAAP), which is the only accounting methodology accepted for quarterly 10-Q filings with the SEC in the United States, and has also become the basis for regulatory accounting practices in other countries. Continue reading...
A/A2 — credit rating
A — S&P / Fitch A2 — Moody’s Such ratings are given to bond issues and insurance companies, primarily, and this particular one is in the Upper Medium band of the Investment Grade ratings. Investment grade bonds are considered to have a very low possibility of default. The ratings go up to AAA/Aaa and all the way down to DDD/D, with Investment Grade bonds being in the range of AAA/Aaa to BBB-/Baa3. Continue reading...
What is Cash Flow-to-Debt Ratio?
Comparing operating cash flow to the size of a company’s debt obligations can give investors and analysts an idea of how capable a company is of paying of its debts. This ratio compares the size of a company’s cash flow from operations to the size of its debt, in an effort to get an idea of how capable a company is of paying off its debt obligations, and how long it would take if all cash flow were diverted to debt service. Continue reading...
What are Bank Deposits?
Deposits are cash, checks, and electronic transfers that banking customers put into their personal or corporate bank accounts. Deposits will increase the balance, or pay off a debt, within a bank account. Deposits may not show up on an account balance until they have cleared from the institution or account from which the check is written or the electronic transfer was requested. The types of accounts that can receive bank deposits include but are not limited to checking, savings, and money market accounts. Bank Certificates of Deposit (CDs) can be purchased with an initial deposit that satisfied minimum amount. Deposits are considered liabilities on the balance sheet of the bank, since they are obligated to pay that money out when a customer requests it. Continue reading...
What is foreign aid?
Wealthy countries and non-government organizations frequently donate or lend resources to help the population of a country in dire economic need. This can come in the form of educational assistance, funds, materials, construction, food, medicine, and so on. On a macroeconomic scale, foreign aid constitutes one of the major forms of asset transfer between different parts of the world. Governments, charitable organizations, and NGOs donate or lend resources to countries that cannot supply their own needs effectively. Aid can be given altruistically, that is, just for the sake of doing good deeds, or it can be used as a tool for influence or personal gain, which is common. Continue reading...
What Happens to the Price of a Bond After I Buy It?
Bonds can be traded on exchanges before their maturity date, but the price might fluctuate based on the current interest rate environment. As the buyer of, say, a $1,000 bond, you should be aware that as long as the company does not go bankrupt, you will receive $1,000 back at the date of maturity. During the life of the bond, however, the price at which you can sell that bond might oscillate depending on the interest rate environment and the perceived financial health of the company. Continue reading...