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time homebuyers can get up to $10,000 out penalty-free, and college tuition costs for family members can usually be withdrawn penalty-free.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 does Bid Mean?
When you make a ‘buy offer’ on a stock or other security in the financial markets, you are making a Bid. A Bid offer in terms of financial markets is the price offered by an investor or trader for a security. A market maker will try to reconcile Bid offers (the highest prices that buyers are willing to pay) with Ask offers (the lowest price that a seller is willing to accept). Match the Bid and the Ask offers, and you’ve got a trade. Continue reading...
What is Dividend Recapitalization?
Leveraged Recapitalizations involve issuing new corporate bonds to finance a share buyback or large dividend, essentially rebalancing the capital structure of the business. Dividend recapitalizations will cause the share price to reduce, largely because the company’s debt-to-equity ratio has changed. This can be used to make the company look unattractive to potential acquirers. Recapitalizations are restructuring of a company’s capital. Dividend recapitalizations are sometimes called dividend recaps. Continue reading...
What is the Ascending Triangle (Bearish) Pattern?
The Ascending Triangle pattern has a horizontal top line (1, 3, 5) representing a resistance level, and an upward-sloping bottom line (2, 4). The Breakout can either be up or down, and the direction of the Breakout will determine whether the Target Price is higher or lower. This pattern is commonly associated with directionless markets, since the contraction (narrowing) of the market range signals that neither bulls nor bears are in control. When the price of a security consolidates around highs it might indicate that a significant downtrend is ahead. Continue reading...
How Does Blockchain Technology Work?
Blockchains are intended to maintain integrity in the system without anyone needing to monitor or control it. By instituting a system of checks and balances that functions on its own accord through rules programmed into the protocol, and which also makes decisions and keeps records based on consensus throughout a peer-to-peer network, a blockchain oversees its own activities without requiring any trust in a central authority or the other parties involved. Continue reading...
What is the Broadening Top (Bearish) Pattern?
The Broadening Top pattern forms when a pair price makes higher highs (1, 3, 5) and lower lows (2, 4) following two widening trend lines. The price is expected to move up or down past the pattern depending on which line is broken first. What distinguishes a Broadening Top from a Broadening Bottom is that the price of the pair is rising prior to entering the pattern formation. This type of formation happens when volatility is high or increasing, and when a pair’s price is moving with high volatility but little or no direction. It indicates growing investor nervousness and indecisiveness. Continue reading...
Can I Take a Periodic Distribution from my Pension Plan?
Regular pension payments are periodic distributions. Yes. This will be the default option on pension arrangements, unless companies are trying to settle with pensioners for lump-sum amounts that will lessen the plan’s long term liability. The options for periodic distributions will always be for periods less than or up to a year in length. Periodic distributions can help you sleep better at night, knowing that you have a fixed stream of income for the rest of your life. It may not be enough to sustain your lifestyle completely, but it will give you a sense of financial security and prohibit overspending in a way that the lump-sum distribution does not. Continue reading...
What is the Dividend Discount Model?
The Dividend Discount Model (DDM) is a method for valuing a stock, that looks at expected future dividend payouts and adjusts to present value. If the calculated value is less than the current trading price, the security is thought to be undervalued. The DDM is helpful as a tool but should not solely be used in valuation calculations. Perhaps its biggest flaw is that future dividends have to be projected and assumed, which is a far-from-certain practice. Continue reading...
What is a Stop Order?
A stop order is like putting a lure out on a pond but having a robot there to cut the line or reel in the lure if the conditions are not met, such as a fish too small to bother with, to stick with the metaphor, so that the fisher-person (investor) can take a nap or attend to the many other lines he may have in the water. A stop order names a price which serves as a trigger point, and once the security price has crossed this trigger point, a market order is entered to buy or sell at the next available price. It might be called a buy-stop or sell-stop depending on which action it pertains to. Continue reading...
What are the basics of options?
Options are contracts used by investors to take a speculative position – or a hedge – based on expected future price movements of the underlying securities. Many investors are scared when they heard the word "option" and perceive it as a risky, speculative investment. Options certainly can be risky, but they don’t have to be. In fact, certain options strategies are far more conservative than many available investments in the marketplace. Continue reading...