Does IRS Rule 72(t) Provide a Way to Take Early 401(k) Withdrawals Without Penalty?
Rule 72(t) allows the owner of a 401(k) or IRA account to take “substantially equal periodic payments” from an account without owing the 10% early withdrawal penalty. Taking money out of a401(k) or IRA before age 59½ will generally cause someone to owe a 10% early withdrawal penalty. One of the ways this penalty can be avoided, however, is if the participant uses 72(t) distributions. IRS rule 72(t) is the section of the code that describes early withdrawal penalties, but it also allows “substantially equal periodic payments” to be taken from a 401(k) or IRA without owing the 10% penalty. Continue reading...
What is Investment Income?
Also referred to as passive income, investment income is money paid to an investor from the dividends, premiums sold, or sale of assets in their portfolio. Some investors treat it like a part-time job, such that there is nothing passive about it. In retirement, investors often receive income from bonds, preferred stock, and dividend-paying common shares. Income can be pulled from several kinds of investments, including real estate, and it is likely to be taxed at ordinary income tax rates. Continue reading...
What is the Falling Wedge (Bearish) Pattern?
The Falling Wedge pattern forms when prices appear to spiral downward, with lower lows (1, 3, 5) and lower highs (2, 4) creating two down-sloping trend lines that intersect to form a triangle. Unlike Descending Triangle patterns, however, both lines need to have a distinct downward slope, with the top line having a steeper decline. 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. However, there is a distinct possibility that market participants will either pour in or sell out, and the price can move up or down with big volumes (leading up to the breakout). Continue reading...
Who is an Account Manager?
Account managers are the point of contact and liaison between a business and its clients. An account manager is assigned to specific accounts to maintain the customer relationship, provide service, and to ensure that the customer remains client. It is easier and more cost-effective to preserve a long-term relationship with a client and to get their repeat business than to find new clients. This is especially true when the client is a business entity and their business constitutes a significant portion of overall Revenue. Continue reading...
What is Return on Assets?
Return on Assets, or ROA, is an efficiency ratio which quantifies how much profit a company can generate with the assets it has. Return on Assets is a ratio of the net income of a company divided by the amount of assets it has on the books. It can also be synonymous with Return on Investment (ROI), at least at a corporate level. Theoretically this gives analysts an idea of how much profit a company could generate by buying more equipment or other assets, or how efficiently they use the assets in which they have invested. Comparing companies in a specific industry to their peers with ratios such as this one can be illuminating. Continue reading...
What is the SEC?
The Securities and Exchange Commission (SEC) is a governmental regulatory agency established by Congress which polices the practices of the securities industry. Since 1934, the SEC's mission has been to protect investors and the market from malfeasance. FINRA (the 2007 successor to the NASD which was formed in 1939) is a self-regulatory organization in the industry which seeks to keep member firms more than compliant with SEC regulations. Continue reading...
What is the difference between Common Stock and Preferred Stock?
A preferred stock is higher up the equity chain than a common stock - preferred stockholders receive dividends first and will be paid out first in the event of liquidation. The primary difference between a preferred stock and a common stock is that preferred stockholders have a greater claim to assets of the company. This can come in two forms: preferred shareholders being paid dividends first, and also having a higher claim to being paid out in the event a company goes bankrupt or liquidate assets. Continue reading...
What is the commodity selection index?
The Commodity Selection Index (CSI) is a momentum indicator based on the Directional Movement Indicator and the Average True Range. It helps commodities traders find momentum in commodities futures that seem to be the best candidates to make the trader money in the short term, based on volatility and also the cost of holding the position. This momentum indicator uses multiple other indicators for price, volume, and volatility to find short term trends. It may identify situations where a price movement is likely to persist. This is certainly not a guarantee, and even if a trend is strong there are often retracements and unexpected reversals. Continue reading...
What is the NASDAQ?
The NASDAQ (National Association of Securities Dealers Automated Quotations) is an electronic marketplace for trading stocks, and is also used to track major Technology stocks. The NASDAQ Composite is an index of over 3,000 publicly traded companies on the NASDAQ stock market, which includes the world's biggest and most relevant technology companies - Apple, Google, Amazon, Intel, Oracle, and so on. Continue reading...
What is Liability?
As a general statement, a liability refers to some form of currency (money or service) that is owed from one party to another, typically in the form of debt or a balance outstanding. On a balance sheet, a company’s liabilities would include its loans, accounts payable, outstanding debt. Short-term liabilities are generally those owed within a year, whereas long-term liabilities might stretch beyond that. Continue reading...