What Should I Know About Roth IRAs?
Roth IRAs are a very popular and useful accumulation vehicle, and there are some things you should be aware of. Along with Traditional IRAs, Roth IRAs are very important retirement tools and should be taken into careful consideration while deciding upon the account that is right for you. The first thing you’ll want to know is whether you can contribute, based on income limitations, so check the current IRS website to find out. Continue reading...
How do I Calculate my Expenses?
Keeping track of your expenses is one of the most important (and basic) steps to leading a responsible financial life. It might be tempting to “eyeball” your expenses and somehow get by without a plan, but in almost all cases, such carelessness will spell financial disaster. Budgeting your money for specific categories of expenses and carefully documenting the actual spending is critical. You should add up amounts spent on monthly mortgage and car payments, rent, groceries, clothing, entertainment, utilities, transportation, and other miscellaneous expenses, and try to get as close to possible to a monthly budget. Continue reading...
What is Mortgage Modification?
Mortgage modifications are arrangements agreed to by the lender that are outside of the contractual mortgage agreement, in instances where the borrower experiences unique circumstances or hardship. An example of a mortgage modification is a loan forbearance, which is when a lender agrees to let the borrower temporarily stop payments for an agreed-upon span of time, before resuming payments with an added repayment stipulation for the time spent not paying. Continue reading...
What is the Symmetrical Triangle Bottom (Bullish) Pattern?
The Symmetrical Triangle Bottom pattern forms when the price of a pair fails to retest a high or a low and ultimately forms two narrowing trend lines. As the support and resistance levels consolidate, it forms a triangle (15). Symmetrical Triangles are characterized by the upper line sloping downward and lower line sloping upward. The price movement inside the triangle should fill the shape with some uniformity, without leaving large blank areas. Continue reading...
What is Exponential Moving Average?
Moving averages are important components of many technical indicators. The Exponential Moving Average (EMA) uses the closing prices of all the previous trading days for a given interval to calculate an average price from that for the period, but is weighted to give the most recent days more influence over the final number. The weighted averages are plotted in a line that helps traders follow trends. Continue reading...
What are Current Yields?
The current yield on a bond takes into account its annual interest payment but also the price at which it can be sold. The yield on a bond held to maturity is fairly straightforward. However, if the bond you are holding is trading at a price higher or lower than where you purchased it, the current yield would be different than the yield to maturity. For example, if you purchased a 5% bond at a price of $100, but the current market price was $90, your current yield would be significantly lower than 5%. To calculate, simply divide annual cash inflows by market price. Continue reading...
What is Accrued Revenue?
Revenue that has not yet been received for goods or services already rendered may be documented as Accrued Revenue. Accrual accounting allows a business to put the payments due to it for good and services already rendered into the Assets column of its books. If no invoice or payment plan is established, it sits in the Accrued Revenue line; if so, the item goes into Accounts Receivable. Accrual accounting is different than cash accounting in this regard: cash accounting will only make an entry on the books when cash or goods are exchanged. Accrual accounting is actually mandatory for publicly traded companies with revenues over $5 million who are based in the US, per SEC regulations. Continue reading...
When was the Latest Housing Bubble?
The latest housing bubble burst in 2005, a few years prior to the stock market meltdown. Housing prices peaked in 2005, and over-leveraged homeowners started to feel the pinch of falling property values leading into the 2008 financial crisis. In the 2005 - 2012 period, housing prices fell some 30-80% in various parts of the U.S. Problems emerged when the loans outstanding on homes exceeded the home's value, and when job losses eventually resulted in mass defaults. Continue reading...
What should I look for in a good Mortgage Calculator?
Mortgage payment arrangements can be engineered in a number of ways, and a good mortgage calculator will give you enough flexibility to input the terms of your own. Ideally a mortgage calculator will be flexible enough to let you input the following: an adjustable rate, a rate cap, optional mortgage “acceleration” payments, balloon payments and resets, impound account calculations which take into account the property taxes and insurance you pay, as well as calculations which take any origination fees into account. Continue reading...
What does 'call option' mean?
If you own a Call Option, you have the right (not the obligation) to purchase a security at an agreed-upon price from the seller of the option. Buying a call option means you are bullish on the security. For example, an investor may buy an August 2017 call on stock XYZ for $50/share (strike price). This means that the owner of this call option has the ability to buy XYZ on the expiration date (August) for $50/share. Continue reading...