What is a Lump-Sum Distribution from a 401(k)?
Lump sum distributions are when the entire balance of an account is paid out at once. After you retire, you can elect to receive your money in a lump sum. Of course, you will end up paying income taxes on the entire distributed amount that year. There is also what’s called the mandatory 20% withholding, which requires custodians to withhold 20% from retirement plan distributions if they are not part of a trustee-to-trustee transfer (such as funding an IRA). Continue reading...
What will Long-Term Care Insurance Cover?
Long-term care insurance is designed to pay benefits for the elderly in need of daily medical services, such as an at-home nurse, room and board in an assisted living facility, adult daycare, respite care, hospice care, and/or medical supplies needed for daily living. Depending on the insurance company offering the services and the policy selected, the menu of benefits will vary. The more benefits offered the higher the premium for the policy. Continue reading...
What Should My First Savings Vehicle Be?
Start basic, and just open a savings account at a bank or create a brokerage account at a major custodian (Charles Schwab, Fidelity, for example). As a rule of thumb, you should have six months’ worth of living expenses in this account. Another good rule of thumb is to avoid touching this money at all costs, and never invest this money in risky assets like stocks. It’s better to keep the money as liquid as possible, so even buying Certificates of Deposit (CDs) may not be the best idea. The purpose of this money is not to make you rich – this is your safety net. Continue reading...
What is a Blue-Chip Stock?
A blue-chip stock generally refers to a publicly traded company that is very well-established and is in the top tier of market capitalization, usually in the tens of billions. There is no formal definition for what makes a company a blue-chip stock, but the general category includes some of the biggest and most household names available to trade. Companies like Johnson & Johnson, Walmart, Visa, Dow Chemical, and so on, that have been around for decades and have market capitalizations in the tens of billions. (click on the link for each company to see their current stock price) Continue reading...
Bitcoin’s Source Code, Part 2: What Does It Mean That Bitcoin Is Open-Source?
Open-source software code can be viewed and changed by anyone, but it actually works in the favor of Bitcoin and other cryptocurrencies. Bitcoin’s source code was uploaded by Satoshi Nakamoto to a code-sharing site called Sourceforge, which enabled anyone to download, use, and modify the code as they saw fit. In fact, he encouraged the community to do so. The fascinating thing about the design of Bitcoin and many other open-source software is that they will work, and will continue to exist, without anyone owning the rights to the code. In most people’s concept of ownership and responsibility, the owner is responsible for maintaining something, for protecting it from attacks, manipulation, vandalism, fraud, etc, and is also responsible for making sure that it is safe for other people to use. Continue reading...
How to use the Accumulation/Distribution in trading
The Accumulation/Distribution Indicator (originally called the Cumulative Money Flow Line) tracks cash flow into or out of a security and correlates the cash flow changes to changes in the security price. By following the trading volume into or out of a security, it establishes the degree of correlation between this trading volume and the price of the security. Accumulation/distribution is designed to reveal divergences in price trends (specifically between stock price and trading volume). These divergences indicate the degree to which a security may be overbought or oversold at a given time. Continue reading...
What is Bad Debt?
Lending companies or other companies with Receivables may characterize certain unpaid accounts as Bad Debt and write off the losses. Bad debt is debt that is on the books and is in default, meaning payment has not been made on it in a long while. Creditors, banks, and companies may periodically get bad debt off of their accounting books by moving it out of Receivables. Most companies have attempted to calculate their exposure to default risk and bad debt, and have allocated amounts into accounts such as Allowance for Doubtful Accounts (ADA). It can be passed off to debt collection agencies, but most of the debt will never be recouped. Continue reading...
What is Federal Debt?
Federal debt is the money owed by the government. The primary source of this debt is Treasury Bonds (Notes), which constitute debt obligations. About 25% of the current national debt is owed internally between different government agencies, mostly to the Social Security Trust Funds. The Federal Debt is also, and perhaps more commonly, referred to as the National Debt. Currently the debt is approximately $19 Trillion. Continue reading...
What is Chapter 10?
Chapter 10 is a bankruptcy filing available to smaller corporations where they agree to have their management replaced to oversee a restructuring, and they also agree to have their debts repaid within three years. If a company does not have more than $2.5 million in debt, they may be able to file Chapter 10 bankruptcy. The company and its attorney will put together a plan for reorganization and explain how the plan will ensure that the company meet its obligations in the future. 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...