EDU Articles
Popular articles
Where do I Get Started in Saving for Retirement?
Your employer is usually the best place to start, but you can also open your own retirement account (an IRA or Roth IRA, for instance) at your bank or a major custodian (like Charles Schwab or Fidelity). In some cases, there are income limits for contributing to a retirement account, which a financial advisor can discuss with you. A smart idea is to set up an automatic contribution to your retirement account, such as 10% of your monthly income. That way you’re automatically saving, and saving regularly. Continue reading...
What Should My First Savings Vehicle Be?
Start basic, and just open a savings account at a bank or create a brokerage account at a major custodian (Charles Schwab, Fidelity, for example). As a rule of thumb, you should have six months’ worth of living expenses in this account. Another good rule of thumb is to avoid touching this money at all costs, and never invest this money in risky assets like stocks. It’s better to keep the money as liquid as possible, so even buying Certificates of Deposit (CDs) may not be the best idea. The purpose of this money is not to make you rich – this is your safety net. Continue reading...
Can I Take a Periodic Distribution from my Pension Plan?
Regular pension payments are periodic distributions. Yes. This will be the default option on pension arrangements, unless companies are trying to settle with pensioners for lump-sum amounts that will lessen the plan’s long term liability. The options for periodic distributions will always be for periods less than or up to a year in length. Periodic distributions can help you sleep better at night, knowing that you have a fixed stream of income for the rest of your life. It may not be enough to sustain your lifestyle completely, but it will give you a sense of financial security and prohibit overspending in a way that the lump-sum distribution does not. Continue reading...
What is Accounts Receivable Financing?
Financing companies can step in and take over the accounts receivables of a company who no longer wants to wait to be paid on their receivables. Financing companies, who are sometimes called Factoring Companies or Factors, will pay about 75% of the amount due to companies who want to offload or outsource their Receivables. The factoring company will then take over the task of collections, and will transfer most of the money received back to the original company, after their fees have been deducted from the proceeds. Continue reading...
How do I Calculate my Expenses?
Keeping track of your expenses is one of the most important (and basic) steps to leading a responsible financial life. It might be tempting to “eyeball” your expenses and somehow get by without a plan, but in almost all cases, such carelessness will spell financial disaster. Budgeting your money for specific categories of expenses and carefully documenting the actual spending is critical. You should add up amounts spent on monthly mortgage and car payments, rent, groceries, clothing, entertainment, utilities, transportation, and other miscellaneous expenses, and try to get as close to possible to a monthly budget. Continue reading...
How Much Money Should I Set Aside for Emergencies?
Research suggests that more than half of adult Americans do not have sufficient savings needed for emergency purposes. Here’s a startling but true piece of information: most surveys conducted in the past few years indicate that more than half of adult Americans do not have any kind of emergency fund at all, and even fewer have enough to cover three months of living expenses in the event of an unexpected event, like job loss or health emergency. Continue reading...
How Do I Calculate my Net Worth?
Calculating your net worth is a simple and worthwhile endeavor, and should be done once a year to measure your progress. Generally speaking, your net worth is the sum of all of your assets, minus the sum of your liabilities. For example, to calculate your net worth, you would need to add up the dollar values of all of your assets – usually consisting of your house, your cars, savings accounts, retirement accounts, CDs, cash, etc…, and your most valuable possessions (you don’t need to include your desk lamp into the calculations). Continue reading...
Crafting Financial Wisdom: The Unconventional Path of a Personal Finance Expert
Uncover the educational journey of a renowned Personal Finance Expert! Discover how they broke the mold with a diverse academic background, relentless self-improvement, industry-specific education, and valuable certifications. Their unique path to expertise will inspire you to achieve your financial goals. #PersonalFinanceExpert #FinancialJourney Continue reading...
What is a Pension?
Pensions are income streams guaranteed to employees upon their retirement. A Pension is a type of Defined Benefit Plan in which your employer promises to pay you a certain amount every month for the rest of your life. Employers who are part of the pension plans are sometimes called pensioners. An employer retains the funds in a trust, usually, and everyone’s pension assets are pooled together in what’s called a Pension Fund. Continue reading...
When Should I Start Saving Money?
The answer is simple and needs only common sense to understand: you should begin saving as soon as you can! However, because of most people’s spending habits and the day-to-day realities of life, it is often difficult to follow that advice. Let’s compare how your savings would accumulate, depending on the age at which you begin to save. Your total savings will be much greater by the time you want to retire – say when you’re 65 – if you invest $5000/year at age 25 for just 10 years, than if you continuously invested $10,000/year at age 35, or $15,000/year at age 45. Continue reading...
What is commodity paper?
Commodity paper is the contract for a loan which is secured by collateral in the form of a commodity held in a warehouse or in transit. This is basically a form of warehouse financing, where the inventory in storage is verified and the changing level of inventory insures a larger or smaller line of credit from the lender. In this arrangement, however, there is one agreed-upon loan and collateral amount. Continue reading...
What Does Debt Financing Mean?
Debt financing occurs when a company borrows money or secures financing through loans, with the obligation to repay the money (typically with interest). Generally, a corporation will engage in debt financing by selling bonds in the marketplace or to private investors, or with promissory notes or commercial paper. Generally the terms of the bond or the loan will have the company commit as collateral assets of the business, such as real estate, cash on hand, or fixed assets. Continue reading...
What Websites and Apps Can Help Me With Personal Budgeting?
There is a thriving industry committed to helping people plan and maintain a personal budget through online tools and apps. Perhaps the most-used personal budgeting tool as of this writing is Mint, which allows a user to link their bank accounts into the budgeting software, and then sends the information right into a tax filing after the new year. A list such as this is almost definitely going to be outdated by the time you read it; your favorite search engine or app store may turn up more relevant results than this. Continue reading...
What is an Account Balance?
An account balance is the amount either credited to or owed on a ledger assigned to a particular entity or line-item. The balance of an account is the net debit or credit assigned to it after all transactions have been documented for a current period. Transactions might be deposits, withdrawals, interest credited, fees, or other activity. The account in question could be a personal savings or checking account, or a ledger account at a business or institution, or another form of account, such as the macroeconomic concept of current national account. Accounts are said to be “in the red” when there is a net debit (negative) amount, and “in the black” when there is a net positive balance (net credit). Continue reading...
What is Cash-Flow Financing?
Cash flow financing is an alternative method of securing a loan, in which cash flows are the collateral, not assets. In cash flow financing, also known as cash flow loans, a lending institution will base their decisions regarding the size of the loan and the loan repayment schedule on future expected cash flows of the company. The cash flows serve as collateral instead of assets, as in an asset-backed loan. Continue reading...
What are Financials Stocks?
Financial stocks are those that make up the financial sector, which encompasses banks, lenders, wire houses, and other companies that facilitate the flow of capital and debt. Real estate companies can also fall under this category. Financials tend to do well when yield curves are steep and the regulatory environment favors banks. When credit markets aren’t under strain financials tend to perform well. Continue reading...
What is Earnings Season?
Earnings season describes not one, but four times in a year, when corporations release their quarterly earnings reports. Investors look forward to this time because they are able to get an update about how the year is going, compared to projections. After each fiscal quarter ends, there are a few weeks in which companies file their quarterly reports with the SEC and announce their current earnings and sales numbers. Each of these periods is known as earnings season. Continue reading...
What does 'Poison Pill' Mean?
A ‘poison pill’ is a maneuver by a company to make itself less attractive to a hostile takeover. It can be used in an effort to avoid the takeover altogether, or at least to make the takeover more painful for the bidder. One type of poison pill is a “flip-in,” which allows shareholders to buy shares of the company being targeted at a discount, which makes the takeover more expensive and more difficult. Continue reading...
What is an Accounting Period?
An accounting period is a specific time frame from which documents and records have been used by accountants to arrive at reported balances and statements. An accounting period can be a fiscal year, quarter, or month, or any other time frame for which reporting is being done. At any given time, there may be different accounting periods running. Books are kept and reports are made for different tiers of accounting periods. Continue reading...
How old should my portfolio manager Be?
While we do not doubt that a young advisor can be intelligent and helpful, there is really no substitution for experience and tenure. Generally speaking, it’s a good idea to choose a manager who has experienced various market cycles. Younger advisors who have never helped their clients through a recession may not be as humble, prudent, or knowledgeable as ones who have. If you can find an advisor with over 10 years of experience, we would recommend that over an advisor with only 3, all other things being equal. There are advisors and wealth managers with only a few years under their belts but who have learned a lot in a short time. Continue reading...