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What are Balanced Funds?

Balanced funds offer a well-diversified investment that includes relatively equal exposure to stocks and bonds. Balanced funds combine stocks, bonds, and money market instruments to give investors some upside potential along with a goal of capital preservation. While they are considered to be safer, they also have more modest returns in most market environments, because of course lower risk investments have lower potential returns. Continue reading...

What Kinds of ETFs Exist?

There are many ETFs on the market and more popping up all the time. Currently, there are over 900 ETFs available on the market, covering basically every market sector, industry, commodity, asset class, country, style of investing on the stock market. The amount of money invested in ETFs has increased exponentially over the last decade and is likely to continue in that direction. Many more ETFs are introduced to the market every year, many with different and creative strategies that have never been available in a single investment product before. These might use Forex, rate swaps, CMOs, futures, options, short-selling, and other advanced or institutional trading strategies, to create a new kind of position in a sector, industry, or geography to which the investor wants to gain exposure. Continue reading...

What is the minimum investment in a typical venture capital fund?

What is the minimum investment in a typical venture capital fund?

Minimum investments in venture capital funds tend to be vast sums of money. They tend to be for $1 million or more but can be as low as $250,000. As with hedge funds, the minimum investment is very steep and suitable only for accredited investors and qualified buyers. A typical minimum investment in a VC fund varies between $1 to $5 million, but it can be over $25 million. Most of the investments in venture capital funds are made in terms of commitments: you commit a certain amount of money, and when a venture capital fund finds an appropriate investment, it makes a “call” on you to deposit the money with them, perhaps in increments over a period of several years. Continue reading...

What is Second-To-Die Life Insurance?

What is Second-To-Die Life Insurance?

Second-to-die policies are also known as survivorship policies, and are primarily used by married couples to provide a guaranteed legacy to their children after they have both passed away. These come in handy for estate planning, when an estate tax bill might be looming for the heirs. To be clear, this insurance covers the lives of two individuals and provides a death benefit to a listed beneficiary only after the last surviving insured individual dies. Continue reading...

What is the Suitability Standard?

The suitability standard states that a broker-dealer is obliged to, in the very least, make investment recommendations that are suitable for their clients. The SEC defines a broker as someone who acts as an agent for someone else, and a dealer as someone who acts as a principal for their own account. The suitability standard only details that the broker-dealer has to reasonably believe that any recommendations made are suitable for clients (in terms of the client’s financial needs, objectives and unique circumstances) instead of having to place his/her interests below that of the client. An example would be a broker recommending a proprietary bond fund for a client looking for a fixed income solution. Continue reading...

What is an Expense Ratio?

Generally associated with mutual funds and exchange traded funds, the expense ratio represents the total annual management fee. The expense ratio is the annual management fee charged to shareholders by ETFs and mutual funds. The annual fee typically comprises the annual management fee, 12b-1 fees (which are associated with research costs), operating costs, and all other administrative type fees that go into the product. The expense ratio encompasses all of these fees as one percentage. Continue reading...

What is foreign debt?

What is foreign debt?

Foreign Debt is also called International Debt or External debt. It is the amount of debt that is owed by one country to other countries or entities outside of the borrowing country’s borders. A country may find it easy to raise capital for operations and projects by issuing lots of bonds and taking on lots of debt obligations. If this proves to be unsustainable, or if the sheer amount of debt has investors worried, it can have significant detrimental effects and send an economy spiraling out of control. Continue reading...

What is a Life Settlement?

A life settlement, also known as a viatical settlement, is a lump sum payment that purchases a person’s life insurance contract from them and makes the life settlement company the new beneficiary. These have become more regulated in last 20 years due to the questionable moral dilemma that this presents. They tend to only work for permanent life insurance products like whole life and universal life, since the viatical company will know that it will get a return on its investment. Life insurance companies have some of the most impressive returns, in a risk-adjusted perspective, on the money in their general account. Continue reading...

What is Publication 17 for Individual Federal Income Taxes?

IRS Link to Publication — Found Here The Publication 17 is a very large and detailed guide to help individuals correctly file their federal income tax returns. Form 1040, 1040-A, and 1040-EZ are the return forms used by individuals for federal income tax, but most people won’t know which one to use without either consulting a tax professional or reading this handy 290-some-odd page document. There are many ins-and-outs when it comes to filing federal income tax returns, and Publication 17 is robust enough to clear up many of the questions that might be asked by non-professional filers and CPAs alike. Issues such as filing status, charitable contributions, and a list of instructions for deductions individuals can take, are all listed, among other things. Continue reading...

What is the Falling Wedge (Bearish) Pattern?

What is the Falling Wedge (Bearish) Pattern?

The Falling Wedge pattern forms when prices appear to spiral downward, with lower lows (1, 3, 5) and lower highs (2, 4) creating two down­-sloping trend lines that intersect to form a triangle. Unlike Descending Triangle patterns, however, both lines need to have a distinct downward slope, with the top line having a steeper decline. 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).​​ Continue reading...