What are the Withdrawal Rules From My Self-Employed 401(k)?
Individual 401(k)s will have the same withdrawal rules as regular 401(k)s. The withdrawal rules for a Self-Employed 401(k) are identical to the rules for a traditional 401(k). If you want to avoid a 10% early withdrawal penalty, you’ll need to keep the money in your account until you reach age 59½, but if you separate from service after 55 you may be able to make withdrawals penalty-free. If you really need the money early, certain exceptions for disability, medical expenses, 72(t) annuitized distributions, and plan loans can allow you to sidestep the penalty. Withdrawals for any other reason, including hardships, are still subject to the penalty. Continue reading...
What Happens If I Withdraw Money From my Cash-Balance Plan After I Retire?
You may not be able to make non-recurring withdrawals of various amounts from a Cash Balance plan. After you retire, you’ll typically have two options: a fixed monthly payment for the rest of your life, or a lump-sum payment. Cash balance plans generally do not allow random, non-recurring withdrawals because the individual account was always a hypothetical account. The administrative work of fetching various sums for everyone and keeping up with the total pool of plan assets is not the administrator’s prerogative with these plans. Continue reading...
Will My Spouse and Children Receive Social Security Benefits if I Die?
Spouses and children can and do receive social security benefits upon the death of a person who paid into the system. A spouse who is older than 60 will always be able to receive either a majority of the benefit that was (or would have been) paid to you, using their own age against the full benefit amount that was part of your benefit equation. Children, including dependent grandchildren, can receive a payment equal to 75% of your full benefit amount until they are about 18. Continue reading...
What are Household Expenses?
Household expenses are sometimes also called a family budget. In some cases this can be limited to items purchased such as food and clothing, and services paid for such as utility bills, which only have to do with the livability of the home and the health of the family. This can be extended to included all out of pocket expenses for a family, from health insurance to school tuition. Household expenses are things that people feel that they must pay for to maintain their standard of living, for themselves and their family. You may not have to pay for natural gas to get heat and hot water, but you most likely do, and this is a household expense. The same goes for food and other necessities. Continue reading...
B-/B3 — credit rating
B- — S&P / Fitch B3 — Moody’s In the world of junk bonds, a B3/B- rating is about as low of a rating as most investors will venture to explore. Bonds are rated by independent ratings institutions known as the Big Three: Moody’s, Fitch, and S&P. Two companies, S&P and Fitch, use the same symbols, and the B- in this example belongs to them. Moody’s has its own system, and the B3 in this example is theirs. Continue reading...
What is a Foreign Portfolio Investment (FPI)?
When foreigners purchase shares of domestic companies that represent less than 10% of the voting shares in the companies, and the investments are not those of company expansion or market penetration, but rather to add diversification to the foreigners’ investment portfolios, it is known as Foreign Portfolio Investment (FPI). FPI is the passive investing that foreigners do in a domestic market. It is separate from investments that companies might make into joint ventures or purchase facilities or acquire controlling interest in a domestic company — all of those are active investing and are usually called Foreign Direct Investment (FDI). FPI can be done by individuals or institutional investors. Institutional investors might run a mutual fund or pension fund in another country. Continue reading...
What is Total Enterprise Value?
Enterprise value is an amount that would have to be paid for a company to acquire all of its equity and debt. It is notable that cash and cash equivalents are left out of this equation since that amount is netted out of a cash purchase. The basic formula for enterprise value is market capitalization + debt obligations and any minority interests or preferred shares. This regularly appears in the numerator position in the EV/EBITDA ratio. Often investors can just look at the market capitalization of a company to get an estimation of the size of the company. Continue reading...
What Does Mark to Market (MTM) Mean?
Mark to Market (MTM) is an accounting method meant to price an asset by its most recent market price. An example would be mutual funds, whose “NAV” price is a mark to market price of how much the mutual fund closed for at the end of a trading session. The mark to market accounting method has some pros and cons. On the pro side, if an asset is very liquid, then MTM will provide an accurate reflection of its current value. Continue reading...
What is an 'expiration date' in reference to option trading?
An ‘expiration date’ refers to the time when an option contract must either be acted upon by the owner (buying or selling the security in question) or left to expire. With derivatives such as options and futures, there will be an expiry, or expiration date in the contract, after which they expire worthlessly. Most options contracts will expire in 3, 6 or 9 months from when they are generated, and they all share the same expiration day of the month on their contracts in the United States, which is the 3rd Friday of the month at 4 PM. Continue reading...
What is the commodity selection index?
The Commodity Selection Index (CSI) is a momentum indicator based on the Directional Movement Indicator and the Average True Range. It helps commodities traders find momentum in commodities futures that seem to be the best candidates to make the trader money in the short term, based on volatility and also the cost of holding the position. This momentum indicator uses multiple other indicators for price, volume, and volatility to find short term trends. It may identify situations where a price movement is likely to persist. This is certainly not a guarantee, and even if a trend is strong there are often retracements and unexpected reversals. Continue reading...