What is a put time spread?
A put time spread is an options strategy that has the investor implementing a short put and a long put at the same strike price, but with different expirations. Time spreads can also be called calendar spreads or horizontal spreads. A put time spread will use two put contracts on the same underlying security but with different expiration dates. One of the puts will be sold short, and one will be held long (this is the nature of spreads). Continue reading...
What is a Traditional IRA?
A Traditional IRA holds money tax-deferred until retirement. An Individual Retirement Account (IRA) is an account which allows tax-deferred growth of assets. As its name implies, an IRA has to be opened in the name of the individual. A person can contribute to one, up to the annual limit, and deduct the entire amount from his or her taxes unless they are prevented from taking deductions due to participation in a workplace retirement plan and having income that exceeds certain limits. Continue reading...
Where Should I Open an IRA?
IRAs can be held at many kinds of institutions, even those that you only see online. It is completely your choice! IRAs can be opened at almost any large bank or brokerage firm, giving you plenty of options. Many online services make it possible to open an IRA from your phone or computer. Be sure to compare them because there are some distinctions, such as fee structures and the investments available within the account. Some institutions will only offer their proprietary funds, while others will let you access almost any investment on the market that is allowable inside of an IRA. Continue reading...
What Are the Contribution Deadlines for My SIMPLE IRA?
Contributions for employees must be made within 30 days after a pay-period, while employers may match any time before their tax filing deadline. Salary reduction contributions to a SIMPLE IRA must be made no later than 30 days after receiving the paycheck in the calendar year that reflects their deferral. Employer contributions can be made each pay period, but they must be made by the same due date as their tax-filing deadline. This can be the extended deadline. Continue reading...
What are the Vesting Rules for My Keogh Plan?
Vesting rules depend on the type of Keogh contributions being made. The IRS imposes certain rules on Keogh Plans, which includes vesting restrictions. Different employers might have totally different vesting schedules, as long as they satisfy the IRS rules. It depends on the type of contribution being made, such as matching or profit-sharing or money-purchase contributions, whether the plan is a QACA, and so on. Many contributions are immediately vested, while some are gradually vested over a few years, and some are on a cliff-vesting schedule. Continue reading...
What is the Symmetrical Triangle Top (Bearish) Pattern?
The Symmetrical Triangle Top pattern forms when the price of a security fails to retest a high or low and ultimately forms two narrowing trend lines. The price is expected to move up or down past the triangle depending on which line is broken first. This pattern is commonly associated with directionless markets since the contraction (narrowing) of the market range signals that neither bulls nor bears are in control. However, there is a distinct possibility that market participants will either pour in or sell out, and the price can move up or down with big volumes (leading up to the breakout). The price movement inside the triangle should fill the shape with some uniformity, without leaving large blank areas. Continue reading...
What is a Global Depository Receipt (GDR)?
A Global Depository Receipt is a security which represents ownership in shares of a foreign corporation. Investment banks in the United States and elsewhere purchase shares in foreign corporations and sell the equity in the form of a Global Depository Receipt, also called an International Depository Receipt, and formerly known as an American Depository Receipt. They allow foreign companies to find investors in other countries, and vice versa, and the Americans and other foreigners can pay for the GDRs in American currency. They are typically sold in lots such that 1 GDR equals 10 shares of the underlying foreign company, but other ratios can be used. Continue reading...
What is an Accelerative Endowment?
Cash-value life policies can be structured for certain endowment ages, and dividends from the company can accelerate the endowment age. Traditional life insurance policies, especially older ones always had an “endowment age,” which meant that if the insured reached that age, their death benefit would be paid out in one lump sum, to be used however the insured wanted. The endowment age used to be about 95 or 100 years old, but in the last few years most companies have moved the age of endowment back to about age 120, since people are living longer and longer, and it looked like they were going to be paying out too many contracts at endowment age instead of at time of death in the future. Continue reading...
What is active trading?
Active trading is the pursuit of returns in excess of market benchmarks. Investors are advised to have a diverse portfolio, to hedge against the risk of seeing future financial plans devastated due to significant losses in one holding. When attempting to diversify, investors will hear from the increasingly popular camp which believes that the best strategy is to use only passive index funds, which follow indexes using computer algorithms and have low expense ratios. Continue reading...
What is the random walk hypothesis?
The Random Walk Hypothesis states that in an efficient market, prices will correlate around the intrinsic value of securities, but there will always be a randomization and unpredictability to it. The Random Walk Hypothesis suggests that technical analysis and the efforts of chartists cannot beat the market over time, because the market will move randomly and unpredictably, and past results cannot predict future returns. Continue reading...