What kind of venture capital funds exist?
Different venture capital firms focus on different types of funding. Some are more attuned to late-stage funding for proven companies who still have not gone public, while others prefer to help startups with bright futures. There are large venture capital firms, which might invest in any start-up company, as long as they think that the company has potential. There are also more narrow VC firms specializing only in one or a small number of industries, such as clean energy, or semiconductors. Continue reading...
What happens if I don’t diversify my portfolio sufficiently?
Not diversifying a portfolio sufficiently can mean putting your assets at greater risk of loss. At the same time, less diversification means more risk but also the possibility of a better return. An investor that put all of their assets into Apple Inc. (APPL) five years ago would certainly be much better off than an investor that owned a broadly diversified portfolio over the same time frame. But over time, a less diversified approach can hurt an investor’s chance of achieving the long-term desired result they want for retirement. Continue reading...
Who Can Participate in an HSA?
In order to be eligible for an HSA, you must be enrolled in a high deductible health plan (HDHP) that is HSA-eligible. You must also not be enrolled in Medicare and you cannot be claimed as a dependent on someone else’s health plan. Your health insurance must also be part of a high deductible plan with substantial out-of-pocket costs. How Does a Health Savings Account Work? Where Should I Put my Healthcare Savings? What is Medicare and Medicaid? Continue reading...
What is Form 8282: Donee Information Return?
IRS Link to Form — Found Here Non-cash contributions to a charity which are valued at over $5,000 must be reported on a Form 8282 by the organization receiving the donation. The organization does not have to include publicly traded securities on this form, or items used in the course of the organization’s mission, such as medical supplies. Non-profit organizations must report non-cash contributions that they receive from donors if the value of the item is over $5,000. These items will also need to be reported by the donor or form 8283, Section B. Continue reading...
What is a market-with-protection order?
A market-with-protection order starts out as a regular market order to buy or sell at the market price. This kind of order will cancel the remainder of the order if the price moves before the entire order is filled, and it is immediately re-entered as a limit order with a price just above or below the market price. A market-with-protection order allows investors to hedge against the change that prices will move unexpectedly before their entire order is filled at the desired price. So an investor would submit an order to be executed at the current market price, and then, if the price moved, the order would automatically cancel the rest of the order and resubmit it as a limit order. Continue reading...
What are Energy Sector Stocks?
The Energy Sector contains companies that are in the business of discovering, processing, or selling (or all 3) natural resources like oil, natural gas, coal, solar and wind. Oil companies dominate the sector and are the largest players. Energy stocks are also cyclical, meaning that they tend to perform better when demand for energy is high (economic expansions). Companies in the Energy sector are also very sensitive to changes in the price of the underlying natural resource, like oil. For example, as the price of oil rapidly declined in 2015, falling by 50+%, the earnings for virtually every energy company collapsed. Continue reading...
What is alpha in investing?
Alpha is a risk ratio which measures gains or losses relative to a benchmark, indicating whether an investor is being compensated with a return greater than the volatility risk being taken. Alpha’s counterpart, the Beta figure, measures how closely an investment follows movements in the market as a whole or, when examining mutual funds, how similarly the funds move to their relevant indexes. Alpha is expressed as integers, which can be translated into percentage points above or below a benchmark for a time period. Investors are interested in higher Alpha figures: the larger the positive Alpha, the more the fund in question has outperformed its benchmark. An Alpha of 2 indicates a performance 2% greater than its benchmark; inversely, a -2 Alpha would denote 2% underperformance. Continue reading...
Should I Listen to Commentators on Financial News Programs?
It’s easy to become drawn in by the financial media, but it’s important not to let them do your thinking for you. Commentators on the most reputable financial channels will always be sharp-looking, smooth-talking, and quoting a barrage of statistics that makes it seem like you didn’t know anything before you tuned in. Is this an indication of being camera-friendly? Without a doubt. Is it an indication of sound financial advice? Absolutely not. Continue reading...
How many financial advisors do I need?
It’s good to have the opinion of advisors who are knowledgeable in various areas of your planning and portfolio, but for most portfolios this can be reasonably accomplished with one advisor. It’s a good idea to have one Financial Advisor who oversees all of your assets, and if the individual parts of your portfolio are of significant size, you might consider having a specialist in those fields to oversee them. Continue reading...
What is standard deviation?
Standard Deviation is a measurement of how far from the average (mean) the majority of a data set lies. Standard Deviation is a measure of variability, and it is on a different scale for each data set being measured; there is no “standard” standard deviation. It is possible to normalize it for comparison to other data sets using measurements like r-squared and the sharpe ratio. The number arrived at when computing standard deviation is going to reveal the distance, in terms of one of the quantifiable variables being observed, from the average, in either a positive or negative direction, within which 68% of the data set falls. Continue reading...