What is a Sole Proprietorship?
Sole proprietorships are businesses owned by a single person. The owner assumes all legal and financial responsibility for the company. Most sole proprietors will file an LLC with their state, to shield their personal assets from business risks to the extent that they can, as well as to be recognized by the state as a business for other purposes. LLC stands for limited liability company, and it serves as a pass-through entity for the owner. Continue reading...
What is IRS Publication 521 on Moving Expenses?
IRS Link to Publication — Found Here Publication 521 details the methods and requirements for tax deductions related to moving expenses, where the move is necessary to start a new job or maintain a job that requires relocation. The IRS requires that the situation passes tests regarding the distance of the residence to the new job and the time spent at the new job. If an individual moves in order to take a new employment opportunity, he or she may re Moving expenses include travel expenses as well as storage, transportation, and labor costs connected with moving furniture and whatnot. Continue reading...
Should I Trust an Article Such as “Five Awesome Value Stocks?”
Articles that list “great value” buys should be food for thought, but may not put food on your table. Value stocks are those with low Price to Earnings ratios. To say that a particular Value Stock has an “Awesome” value is to say that it has been significantly undervalued by the market. While sometimes the market is ignorant of the growth potential and strong fundamentals of a particular company, the author of such an article would have you believe there is a great big crystal ball in his office. Continue reading...
What is a credit rating?
A credit rating is given to a company or debt issue after a disinterested third party evaluates the strength of the business or cash flow and rates its ability to pay all of its liabilities. Third-party institutions such as Standard & Poor’s (S&P), Moody’s, and Fitch will conduct research in order to give investors an idea of how likely a business, bond issue, or insurance company can pay all of its obligations. Continue reading...
What is a Convertible Bond?
A convertible bond, also known as convertible debt, is debt that can be converted to equity (in the form of common stock) at the discretion of the bondholder. There are typically windows that an investor can choose to convert the bond to equity, which an investor may choose to do if they have confidence the company will continue to perform well. Because a convertible bond has the option to convert to stock, it typically offers a lower interest rate since the conversion capability itself has value. Continue reading...
What is Hyperinflation?
Hyperinflation is when a rate of inflation grows exponentially, and a currency is rapidly devalued. Hyperinflation occurs in the midst of dire economic circumstances. This is usually partially due to the piling on of downward price pressure in which newly printed currency rapidly floods the market as the government attempts to cover debt obligations. Sometimes this stems from situations where the government is having trouble receiving adequate taxes from the population. Continue reading...
What are Fibonacci Extensions?
In Fibonacci line analysis, chartists attempt to predict how far a trend will go in a single direction, despite some minor pullbacks that do not break the overall, stronger trend (behavior known as retracements). Trends can be upward or downward and still experience this phenomenon. Fibonacci extensions are estimations of the next high after an initial push and retracement, using Fibonacci sequences as guidelines. Some investors believe that, like many naturally occurring systems in nature, mark... Continue reading...
Can I Decide How My Money is Invested in My Defined Benefit Plan?
Employees have no control over the assets in their Defined Benefit plan. The short and simple answer is: No. The payments you will receive in retirement are calculated according to a pre-determined formula. Your employer is responsible for managing the investments, while you simply receive the agreed-upon payments when they are due to you - assuming all goes as planned. Most pension funds, as they are sometimes called, are invested in very conservative instruments such as long term government bonds and fixed accounts offered by some insurance companies and banking institutions. Continue reading...
Is there such a thing as the “January effect?”
The January Effect is a hypothesis which states that stocks will see their biggest monthly gains in January. The January Effect states that the stock market usually increases during the first few days in January, or that the largest monthly gains of the year will be realized in January, therefore January will set the pace. There are many explanations for this effect, such as tax-loss selling in December, fresh starts after the New Year, and many others. Continue reading...
What is a Junior Security?
Junior Securities come last in the pecking order if a company gets liquidated; common stock shares are the most prevalent example. Junior securities are securities such as common stock which would be the last in order to receive any payout if the company were to go bankrupt. Examples of securities which are senior are Preferred Stock and Bonds; senior securities receive service first in the event of company insolvency. Continue reading...