What Should I Do With a Lump-Sum Distribution From My Cash-Balance Plan?
Lump Sum distributions can allow you to invest according to your preferences, but could also be used frivolously and spent down in a short time. The first thing to keep in mind is that it’s very easy to spend a lump sum right away without thinking about the consequences. While the monthly payment option protects your money from overspending, many people feel that they would derive a greater value from having access to more of their money. Continue reading...
What is the CAC 40 Index?
The CAC 40 is an index tracking performance of stocks in France. The CAC 40 is an index that tracks the 40 largest capitalization stocks of the 100 listed on the Euronext Paris stock exchange. It provides a good barometer for the performance and standing of the French economy. What is the DAX? What is the EURO STOXX 50? Continue reading...
What is a Home, Legally-Speaking?
The laws concerning a legal residence or primary residence may come into play for purposes of insurance, state taxes, and business matters. Some people have secondary residences, some people choose to remain legal residents of one state while they inhabit another. It can be quite complicated and various statutes may apply, depending on the situation. It can matter for a mortgage loan, for local voting, for healthcare and for business: what is a home? Continue reading...
What is Form 1099-R?
IRS Link to Form — Found Here Sources of retirement plan income, such as pensions, annuities, and IRAs, will be associated with a 1099-R filing. The form is filed by the company making the distribution. The taxpayer uses the information on it for when filing income taxes. The IRS receives Form 1099-R from the companies making distributions from retirement plans. They have categorized all annuity contracts as retirement plans by default, so those are included, as are pensions, profit sharing plans, other forms of employer-sponsored retirement plans, cash-value life insurance distributions, and individual retirement accounts (IRAs). The company making the distribution sends the 1099-R to the IRS and the account owner. Continue reading...
Can I Get Exposure to Virtual Currency Through ETFs, Mutual funds, or Stocks?
While there aren’t that many ways to use institutional-level, regulated vehicles to get exposure to bitcoin and other cryptocurrencies, there are some, and the market will likely expand. Money managers are finding ways to offer managed investments that offer exposure to cryptocurrencies, despite the hurdles presented by regulators and skepticism from large financial companies. On the over-the-counter market OTCQX, you can buy shares of the Bitcoin Investment Trust from Grayscale (Nasdaq: GBTC). This fund has seen massive gains recently but does come with a 2% fee. The Chicago Mercantile Exchange (CME) has stated that it would like to start trading cryptocurrency futures, but it may be a little time before this becomes a reality, due to significant red tape and guidance needed regarding cryptocurrencies. Continue reading...
What are the FinCEN Guidelines Surrounding Cryptocurrency?
FinCEN is an agency of the Treasury Department responsible for preventing financial crimes, and they have taken a few steps toward creative effective regulations for cryptocurrency transactions. FinCEN is the Financial Crimes Enforcement Network, an office of the Treasury Department, primarily concerned with money laundering and other forms of financial fraud domestically and internationally. It is because of FinCEN’s far=reaching authority that major cryptocurrency exchanges who do business with US citizens will generally require identity and bank account verification, and will impose limits on transaction amounts. In 2013, FinCEN issued guidance that anyone engaged in the transmission or exchange of cryptocurrencies may fall under their jurisdiction to regulate Money Service Businesses (MSBs), meaning you may potentially have to register as a Money Transmitter on the Federal and state level if you frequently engage in cryptocurrency transactions. Continue reading...
AAA/Aaa — credit rating
AAA — S&P / Fitch Aaa — Moody’s AAA/Aaa rated bond issues have an almost nonexistent chance of defaulting, according to the major ratings institutions that issue the ratings. AAA/Aaa is the highest rating a bond issue or company can get. In the aftermath of the 2008 financial crisis and recession, many companies, and the US Government itself, were downgraded from AAA to AA+. Only two companies in the US still retain the AAA rating: Johnson & Johnson and Microsoft. Continue reading...
What does delta mean?
Delta is a ratio which measures the degree of correlation between changes in price for the underlying security and changes in the price of the option. Put another way, Delta indicates the amount of price change in a derivative by comparing changes between asset and derivative prices. Delta is a multiple that applies to options positions; it, along with Gamma, Theta, and Vega, helps options investors calculate risk and potential return for an investment. Delta can quickly tell an options investor how much the price of their option will change per share relative to the price change in the underlying security. Delta is represented by a number between 1 and -1, with a negative Delta value sometimes written in accounting notation, like: (1). Continue reading...
What is a Credit Spread?
Credit Spread is an indication of the default risk perceived in corporate bonds at the current time. The credit spread is the difference between the yield on the safest bonds and the riskiest bonds. How much does it cost corporations to issue bonds, in terms of the yield expected by investors in the current market? Typically, a higher spread indicates a more unstable economy. Buyers of large quantities of bonds tend to insure their purchases, and the cost of the insurance is usually reflected in so-called CDS's (Credit Default Swaps). The more expensive the CDS's are, the more risky it is to purchase the bond. Continue reading...
What is a naked put?
A naked put is when a put option contract writer or short-seller does not have the resources (shares of the security) on hand to cover the position if the option is exercised. Put options are contracts between two people who have been put together with the help of an options exchange or clearinghouse.One of them will be the “writer” who sells the put on a certain underlying stock with a certain strike price and expiration date. Continue reading...