What are the Expenses Associated with Buying and Owning Mutual Funds?
Several forms of fees and expenses may be charged to those who own, buy, or even sell mutual funds. With mutual funds, there two types of charges that might be paid by the investor: expenses and fees. Different types of share classes may have different types structures to their fees and expenses. Expenses are the operating costs of the fund company, essentially, and these show up in all mutual funds, usually labeled as expense ratios. The returns reported by the fund will be after expenses. Continue reading...
Should I use options in my portfolio?
Options can be a valuable tool in portfolio management, but investors should be well-versed in how options work, and the risks involved, before actively engaging in options trading. Options can provide you a hedge, or provide the potential for unlimited gains or losses. They can also give you a relatively conservative income stream. Proper use of options can be highly profitable, but requires some level of expertise and a watchful eye. Continue reading...
Who Can Contribute to a Roth IRA?
Most people will be able to contribute to a Roth, but once your income hits certain limits, you may need to find another way. Many people use Roth IRAs to make after-tax retirement contributions that will not be taxable upon withdrawal. If you have earned income under certain income limits, you can fund a Roth for yourself and even for a non-working spouse. Roth IRAs cannot be opened by everyone: the income limits are based on your modified adjusted gross income (MAGI) and marital status. 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 are Lifetime Reserve Days?
Lifetime Reserve Days are part of the structure of Medicare Part A benefits. Medicare will cover up to 90 days in a hospital or skilled nursing facility per event, and each event is called a benefit period. After the benefit period has been used up, the client will then dip into a pool of lifetime reserve days if the insured requires additional inpatient care. There are only 60 additional days in the Reserve pool, and a person cannot reuse them. Continue reading...
What is the Falling Pennant (Bearish) Pattern?
The Falling Pennant (or Bearish Pennant) pattern looks like a pennant turned upside down (the mast points up). It forms when falling prices experience a consolidation period, and the price moves within a narrow range defined by the converging lines through points (2, 4) and (3, 5). After the consolidation, the previous trend resumes. This type of formation happens when anticipation of downtrend is high, and when the price of a security consolidates during a declining trend. It may indicate growing investor concern of an impending downtrend. Continue reading...
What is Assessed Value?
Assessed value is used to determine the property taxes due on real estate. Assessed value is normally lower than the appraised value of a residential property, because it is not looking as much at the value of the home, but rather the value of the property, for property tax assessment. While the assessed value does have to do with the market value of real estate, most calculations only use average home prices the area, found in local real estate listings, as part of the valuation. The “ask” prices are going to be higher than the prices at which they’ll sell. Continue reading...
What is a Dividend ETF?
Dividend ETFs invest primarily in preferred stock and stocks that pay regular dividends. Strategically, they tend to be either Dividend Appreciation or High Yield. Dividend ETFs are equity dividend funds that seek income from preferred stocks, common stocks. As of 2016 there are over 130 Dividend ETFs, and that’s up from about 29 in 2011 and 45 in 2012. This has become a popular strategy, obviously, and they all seek to distinguish themselves from the pack. Continue reading...
How should my strategy change with age?
The more time you have to invest, the more room you have to make mistakes, wait-out downturns, and to experience the power of compounding interest. As you get older and need to draw income from investments, things change. The answer is relatively simple: you can afford to be very aggressive when you’re young, and gradually become more and more conservative with your investments as you grow older. Generally speaking, stocks are considered risky investments, while bonds are considered less risky, so a person’s portfolio mix from age 40 to age 80 might go from 80 stocks/ 20 bonds to 50/50 or even 20 stock/ 80 bonds depending on his or her preferences and the market conditions. Continue reading...
How large are market fluctuations?
Fluctuations are represented in terms of volatility, and different types of investments experience different levels of volatility. The answer here depends on which market you’re talking about. Generally speaking, the capital markets in fixed instruments, such as government bonds, are the least volatile. Market fluctuations of the price of commodities, small-cap stocks, and emerging markets are the largest, and can be as high as 30-40% per year. Continue reading...