What do ETFs Invest In?
ETFs invest in a wide array of securities, and which ones depends on the goal, strategy, or index that the ETF is built around. ETFs hold baskets of individual securities, of which investors can purchase an undivided interest in the form of ETF shares. ETFs can be a good option if you want quick diversification, and there is an increasingly diverse selection of ETFs on the market. Many investment companies have issued new ETFs in the last 10 years. One of the biggest issuers is Barclays - one of the largest investment banks in the world — through their ETF brand iShares. Continue reading...
What are the Withdrawal Rules for My Money Purchase or Profit Sharing Plan?
The standard withdrawal rules for 401(k) accounts apply to these plans. Once you are age 59½, you may begin to make penalty-free withdrawals and only pay income taxes on the amount you withdraw. If you decide to take out money before age 59½, you will have to pay a 10% penalty fee in addition to income taxes on the amount of your withdrawal. Of course, there are exceptions that would allow you to avoid this early withdrawal fee. Continue reading...
Should I Buy a Medigap Policy?
There are pros and cons to buying so-called Medigap coverage, and it can depend on how much medical care and services you anticipate needing. They cover all or nearly all of the out-of-pocket costs left over by Part A and Part B, but they don’t offer Part D coverage. Obviously, buying a Medigap policy will mean additional costs. If you have the means and you’re looking to extend your medical insurance to areas not covered by Medicare Part A and B (original Medicare), it might be a good option. Continue reading...
What is a BitLicense?
A BitLicense is an informal name for the New York state license required of cryptocurrency businesses to operate within the state. While a lot of cryptocurrency transactions can and do happen “off the grid,” many companies working in cryptocurrency choose to register for licenses to do business and to comply with relevant state and federal regulations and reporting requirements. Different states have different requirements for the businesses that operate within them. In New York state, the applicable license has come to be called the BitLicense. Continue reading...
What is the Inverted Cup-and-Handle (Bearish) Pattern?
The Inverted Cup-and-Handle (sometimes called Inverted Cup-and-Holder) pattern forms when prices rise then decline to create an upside-down “U”like shape (1, 2, 3, also known as the Cup), followed by a shorter relatively straight price increase that bounces from the right lip (from 3 to 4, creating the Handle). The rising handle forms as a result of mounting buying pressure created when the pair retests a low at the right lip of the cup. Once the buyers give up, sellers take over and the pair has the potential to decline rapidly. Continue reading...
What is a Balloon Loan?
A Balloon Loan has lower debt payments than a fully amortized loan up until a lump sum payment at the end of a term. Balloon loans have relatively low monthly payments due over their term and then a large lump sum payment for the remaining balance at the end. This can be advantageous if someone or a business knows they will be paid in a certain way that fits well with this schedule. Other people and businesses may be planning to use a more flexible approach where the lump sum due at the end is rolled into a new financing schedule (such as a two-step mortgage), and this is usually done if there is a reset provision in the contract. Continue reading...
What is a market index?
Market indexes attempt to give an overall picture of the behavior of the market by tracking the performance of a representative sample of stocks. Different indexes have different focuses. The Russell 3000 samples more of the smaller companies than the S&P 500. Index mutual funds and ETFs track specific indexes but, as you’ll notice in their disclosures, it is impossible to invest directly in an index; they only follow the index by investing in as many of the companies as possible and minimizing lag as much as they can. Indexes give numerical values for the progressive fluctuations in the price action for specific sets of stocks. Continue reading...
Should I pay for financial planning services?
Any professional that you work with for financial planning is going to be compensated for the work they do, but there are different ways they earn their pay. Whether it’s worth it to you is another question. If you have enough knowledge and time on your hands, and your investment portfolio is not very complicated, you may be able to manage it on your own. This can save you some money on financial advisor fees. Continue reading...
Day trading with RSI
The Relative Strength Index (RSI) is a momentum oscillator developed by Welles Wilder. In the RSI, the average gains and average losses over a specific time period (such as 14 days) are divided to calculate the Relative Strength, then normalized into the Relative Strength Index (RSI), which is range bound between 0 and 100. The RSI typically fluctuates between values of 70 and 30, with higher numbers indicating more momentum. According to this indicator, a security with an RSI over 70 (out of 100) can be considered overbought, while a security with an RSI under 30 (out of 100) can be considered oversold. Continue reading...
Will my target mutual funds miss their targets?
Surprisingly, target funds seem to be doing their jobs well enough, despite their ‘one-size-fits-all’ style. There are many target date mutual funds that have appeared in the past 5-10 years, which are supposed to simplify your investment decisions. These target funds are nothing more than carefully selected asset allocations, based on historical models and a client’s time horizon. For example, Target Retirement 2018 will probably consist of 70% Fixed Income Funds, and 30% of Equity Funds, and Target Retirement 2028 will probably consist of 50% Fixed Income Funds and 50% Equity Funds, etc. Continue reading...