What is the “Life with Period Certain” Option?
In a “life with period certain” annuity payout option, the insurance company will pay the annuitant a set income for as long as the annuitant lives. If the annuitant dies before the “period certain” expires, the company will continue to pay the income to the beneficiaries until the period certain expires. If the period certain is 20 years, it would be called a “Life with 20 Years Certain” payout option. Continue reading...
When Can I Access the Money in my IRA?
You have the ability to make withdrawals from an IRA leading up to retirement, but you may be penalized. You are able to withdraw money from your Traditional IRA at any time (after all, this is your money), but it can be a costly decision. If you decide to take out money before age 59½, you will most likely pay a 10% penalty in addition to regular income taxes on the amount that you withdraw. As the name Individual Retirement Account implies, the money is meant to be taken out during retirement. There are a few circumstances in which the IRS will allow you to make early withdrawals without assessing the 10% penalty. These exemptions are mostly for hardships, but first time homebuyers can get up to $10,000 out penalty-free, and college tuition costs for family members can usually be withdrawn penalty-free. Continue reading...
What will Long-Term Care Insurance Cover?
Long-term care insurance is designed to pay benefits for the elderly in need of daily medical services, such as an at-home nurse, room and board in an assisted living facility, adult daycare, respite care, hospice care, and/or medical supplies needed for daily living. Depending on the insurance company offering the services and the policy selected, the menu of benefits will vary. The more benefits offered the higher the premium for the policy. Continue reading...
What Does Medicaid Cover?
Medicaid will cover many things, but it is reserved for those without enough assets to get such care on their own or to pay for other coverage. Some examples of covered services include checkups and childbirth for low income pregnant women, and nursing home care for low-income elderly people with long term care needs. Medicaid covers a very wide range of medical costs, including hospital expenses, visits to the doctor, nursing home expenses, and so on. Continue reading...
What is Home Equity?
Home equity is a notional amount that a person owns at any given time, which is computed as the market value of a home minus any remaining principal repayments on a loan. Home equity is an asset on a person’s balance sheet, and can be used as as leverage for additional loans or lines of credit. A person’s home equity is the amount in their home which is “paid off.” It can be computed by taking the fair market value of a home and subtracting the amount of principal, if any, that still needs to be repaid on a mortgage loan. Continue reading...
Will Ripple Make a Superior Payment System?
Ripple is already making waves in the banking world and may be poised to become the #1 option for cross-border settlements between banks worldwide. Ripple is described as giving cross-border payments a protocol as universal as Http does for the web. The current default system for communicating cross-border payments, SWIFT, has been around since the 1970s, but transactions can take nearly a week to settle. This is because SWIFT only provides secure messaging services for the requests from different institutions, but each transaction still requires several intermediaries who each might take a day to negotiate or complete their part in the deal. Ripple offers a revolutionary way to complete transactions in a matter of seconds, by directly linking banks around the world and cutting out the middlemen wherever possible. Continue reading...
What is a Cash Flow Statement?
A statement of cash flows is an accounting report which describes the changes in cash flows, which is distinct from net income. Cash Flow Statements are an important part of corporate accounting. While net income reports include non-cash items such as depreciation, as well as accounts receivable and accounts payable, cash flow statements will isolate the cash transactions in and out of the company. This helps get an idea of whether the company can pay its bills in a timely manner and so forth. Continue reading...
What is a Leveraged Buyout?
A leveraged buyout occurs when members of management use outside borrowed capital to buy a controlling share in the company. Often times, the assets of the company being acquired are used as collateral for the borrowed capital. The purpose of leveraged buyouts is to acquire another company without having to commit a lot of working capital up front. In a typical leveraged buyout, you may see a ratio of 90% debt financing to 10% equity used to acquire the company. Continue reading...
What is an ADV form?
A form ADV can be requested to find out all about the fees and professional backgrounds of a financial advisory firm. Firms who engage in the solicitation of securities or give investment advice must file form ADV with the SEC and keep it updated, usually on an annual basis. It is similar to the form U4 that individual securities-licensed professionals must submit and keep updated in the event of changes of address, tax liens, industry disciplinary actions, and so forth, but the ADV is filed on behalf of a firm instead of an individual. FINRA and the NASAA keep up with the filings as well. Continue reading...
What is a Good Financial Advisor?
A good financial advisor should care as much about your investments as you do, and be personable and knowledgeable enough to make the relationship worth your time, money, and trust. Choosing a Financial Advisor is a bit like choosing a caretaker for your child: you would want someone who gives you a sense of security, who has professional references or the recommendation of a trusted friend, years of experience, is reliable and honest, can foster growth, and ideally, will care about your child almost as much as you do. Continue reading...