What are REITs?
REITs are pooled investments similar to mutual funds, but, like mutual funds, they can take many shapes. They invest in different kinds of real estate and real estate-oriented assets, depending on the REIT, and sell ownership shares to investors. REIT is an acronym for Real Estate Investment Trust. REITs are similar to mutual funds, except that they only invest in real estate properties and related companies and assets such as mortgages. REITs will define the scope of their investments and strategies in their prospectus, which may read something like “We invest only in commercial Real Estate” or “Only in residential houses in Las Vegas” while other REITs are very general. Continue reading...
If I Want to Establish a SEP IRA, Do I Have to Establish One for All Owners of My Business?
If a business owner is a silent partner, and not an employee, they do not need to be included in the SEP IRA. You have to offer SEP IRAs to all of your employees. If the business owners are not employees of the business, you do not need to offer a SEP IRA to them. If you intend to include one partner but not another, you should take care to ensure that whatever criteria you used to define who is eligible in your plan document will hold up to scrutiny. Continue reading...
What is a Charitable Remainder Unitrust (CRUT)?
A Charitable Remainder Unitrust (CRUT) is an irrevocable trust created for the purpose of donating a fixed percentage of a trust to a charitable organization each year. The fixed percentage must be at least 5% per year but no more than 50%, under current law. At a specified time (usually at the death of the person that established the trust), the remaining assets are distributed to charity. A Charitable Remainder Unitrust is a mechanism that allows you to create tax-advantaged income in your lifetime with the ultimate end of donating a large portion of the principle to charity. Continue reading...
What is IRS Publication 505, Tax Withholding and Estimated Tax?
IRS Link to Publication — Found Here This IRS guide gives taxpayers and businesses an idea of how to calculate the appropriate amount of withholding to do and how to continually estimate tax rate on an ongoing basis for an entire year. It is about 60 pages long and touches on many issues related to tax withholding. Tax withholding applies to payroll needs, self-employed reporting, as well as some retirement planning applications, among other things. Continue reading...
How Does Ethereum Work?
Ethereum uses a blockchain that looks very similar to Bitcoin’s until you get into the details. Ethereum is a platform on which transactions can be made using Ether or other tokens which have been made using the protocol, and smart contracts and decentralized applications (Ðapps) can be executed using the distributed computing power of what’s called the Ethereum Virtual Machine. When viewed from different angles, Ethereum is an open-source coding environment, a market upon which to distribute new blockchain-based applications, and a distributed computing machine that processes functions of the blockchain applications across a broad network. Distributed computing itself is not that new, but distributed computing on a blockchain is. Continue reading...
How to use the Advance/Decline Ratio in trading
The Advance/Decline Ratio (AD Ratio) is a market breadth indicator, calculated by placing the number of advancing stocks over the number of declining stocks for a day or time period in order to view the direction of the market. It is one way of viewing the daily breadth, or difference in the number of advancing issues and declining issues. The Advance/Decline Ratio uses the same numbers as the Advance/Decline Line but presents them as a ratio instead. The AD Ratio is sometimes more useful than an AD Line, including in instances where comparing AD for different indexes which have different metrics; the ratio is the standardization with which comparisons can be made. Continue reading...
What is the Debt to Capital Ratio?
The debt-to-capital ratio is a measure of a company’s leverage that looks at total debt compared to total capital (shareholder equity + debt). This measure of leverage is not a globally accepted accounting practice, therefore it is important for analysts to learn exactly what is being included by the company as their debt and equity in calculating the ratio. Generally speaking, a higher debt to capital ratio indicates that the company is financing more of its operations and needs through the debt markets versus with equity. Comparing debt-to-capital ratios amongst companies within the same sector or industry can be a useful exercise. Continue reading...
What is a Credit Crunch?
A credit crunch is when access to liquidity dries up dramatically in rapid fashion, or becomes less accessible due to a spike in borrowing rates. Central banks will often step-in to try and curb the lack of liquidity by offering the markets access to cash at lower than market rates, in the event of a crisis. Perhaps the most famous credit crunch in history occurred in late 2007 and early 2008, when bank balance sheets became highly leveraged overnight due to mark-to-market accounting rules that were applied to the mortgage backed security portfolios on their balance sheets. Continue reading...
What is Adjusted EBITDA?
Basically synonymous with Normalized EBITDA, Adjusted EBITDA is a non-GAAP method of making earnings valuations a little more standardized between companies. Adjusted Earnings is a valuation that has many moving parts in the form of the interest, taxes, depreciation and amortization that might be included there, in addition to the non-GAAP nature of the methods. EBITDA removes all of those moving parts and looks at the Earnings before any of the other arithmetic interferes, hence the name Earnings Before Interest, Taxes, Depreciation, and Amortization. Continue reading...
How Do I Invest Money in My Pension?
Employees are not able to control investments in a Pension Fund, but you can control a few variables. You cannot direct investments in your pension. Since a pension is a type of Defined Benefit Plan provided by your employer, the company worries about the investments, and you will receive a fixed monthly payment that is calculated based on your age, salary, and number of years worked for the company. Continue reading...