Should I buy other currencies?

Should I buy other currencies?

The U.S. dollar is the world’s reserve currency, so generally speaking, if you are not planning to travel to foreign countries or do not have the need for foreign currencies in your business, you might as well stay with U.S. dollars. If you are using foreign currencies in your investment portfolio, you must be prepared for volatility and continue to educate yourself on the Forex market as well as international trade. The famous example of George Soros, who almost destroyed the Bank of England, and made a couple of billion dollars along the way, might not necessarily be applicable to you. Continue reading...

What is a SEP IRA?

A SEP is like a profit-sharing plan that uses some Traditional IRA rules. A SEP IRA is a benefit for employees that uses employer contributions to fund retirement investment accounts for each employee. Contributions are made on a pre-tax basis, the account grows tax-deferred, and the withdrawals are taxed as income. The employer contributions are immediately vested to the employees, who can exercise discretion with investment choices and allocations, among the investment options available in the plan. Continue reading...

What is IRS Publication 1244, Employee’s Daily Record of Tips and Report to Employer?

IRS Link to Publication — Found Here This publication contains both Form 4070A – Employee’s Daily Record of Tips, and Form 4070 – Employee’s report of Tips to Employer. It also gives detailed instructions for how to report tips, which generally includes any cash or credit card tips over $20 in a month. Publication 531 gives additional details about reporting tip income. Employees who earn tips over $20 a month must report them on Form 4070. At the end of the year, all tips, even those not reported due to being under $20, are to be reported on the individual’s 1040 for income tax. Continue reading...

What is an Abandonment Clause?

An Abandonment Clause primarily refers to maritime insurance contracts in which a lost vessel can be replaced without the expectation of recovery or salvage, or the terms by which a construction contract or lease agreement can be dissolved. This is not to be confused with an Abandonment Option contract between a financial advisor and his or her client. It can also refer to a frequently used clause in construction law, in which the contractors define an abandoned project and give their counter-parties the right to move on and find another contractor to finish the job. Continue reading...

What is Receivables Turnover Ratio?

Receivables Turnover Ratio gives a snapshot of how well a company does by extending credit. The ratio is computed by putting the number of credit sales over the total amount of outstanding receivables. If a company is not able to efficiently collect on credit that it has extended to its customers or debtors, it will have a low Receivables Turnover Ratio. The top number is the amount of new receivable accounts opened during a period, and the lower number is the total number of outstanding receivable accounts. A much larger bottom number suggests that they are not able to efficiently collect on and close their receivables. Continue reading...

What is the Federal Trade Commission (FTC)?

The Federal Trade Commission (FTC) was originally created to encourage market competition and to protect consumers by breaking up monopolies and monitoring mergers and acquisition activity. It has now branched out into more areas in the pursuit of consumer protection and fair markets. The FTC is now comprised of three bureaus: Consumer Protection, Competition, and Economics. They protect consumers from fraudulent business activity and monopolistic business practices. Continue reading...

What is Foreign Investment Funds (FIF) tax?

What is Foreign Investment Funds (FIF) tax?

New Zealand and Australia, in particular, have instituted a tax regime for offshore investments that fall into the definition of Foreign Investment Funds (FIFs). FIFs will generally be mutual fund companies that are based overseas, but can also include cash value life insurance underwritten by a foreign company and some stock portfolios from overseas stock exchanges. The US has the PFIC tax, which is a passive foreign investment corporation tax. The PFIC category generally applies to mutual funds or pooled investment companies from foreign countries. Continue reading...

Who is the Most Widely Known Villain of Wall Street?

Throughout the history of the U.S. Stock Market, there have been countless crooks, swindlers, and villains. Money can drive people to cheat, and there have been no shortage of cheaters over the years. Undoubtedly, the biggest hoax in the history of the market is credited to Bernard Madoff, who made off (no pun intended) with over $10 billion of his investors’ money through a massive Ponzi scheme. However, there have been countless other criminal activities, such as the Enron scandal of the early 2000’s. Continue reading...

Is there such a thing as the “pre-holiday effect?”

Is there such a thing as the “pre-holiday effect?”

Pre-Holiday price fluctuations have been observed in many instances, but there a difference of opinion as to whether the markets are higher or lower just before holiday. Pre-Holiday Seasonality is the idea that prices will rise or fall before a holiday weekend in which the market will be closed for a day. When researching this phenomenon you may find colloquial wisdom stating that prices always rise before a holiday, but in actuality most of the evidence points the opposite direction: prices are most likely to close lower the day or two before a holiday weekend, and may remain low the day after the holiday, but this provides a possible opportunity to ride the upswing. Continue reading...

How to use the Chaikin Oscillator in trading

How to use the Chaikin Oscillator in trading

The Chaikin Oscillator is a volume indicator that can help traders discern if price movements are verified by changes in trading volume. When there are discrepancies, it can mean that prices are exhibiting overbought or oversold conditions. Before the Chaikin Oscillator, On-Balance Volume was the most popular indicator for the job. On-Balance Volume (OBV) is a popular leading indicator introduced in the 1960s by Joe Granville. OBV is a line built using differences between daily trading volume – in Granville’s estimation, the major driver of market behavior – adding the difference on days that the market or stock moves up and subtracting the difference on days when the market or stock moves down. It looks for instances of rising volume that should correlate with price movement, but price movement has not occurred; additionally, OBV can be used to confirm lag. Continue reading...