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What are Bank Fees?
Bank fees are penalties or maintenance requirements that may apply to checking, savings, or money market accounts. Banks may charge fees for specific types of transactions, if a check bounces, or just a monthly checking account fee. There are many other types of fees and reasons for them. They may be penalties, such as an overdraft fee, or they may be customary for the kind of transaction or account being used. Continue reading...
What Does Maintenance Margin Mean?
A maintenance margin is the minimum amount of equity an investor must keep in a brokerage account to cover margin balances. Under the regulatory guidance of NYSE and FINRA, an investor has to have in equity at least 25% of the total market value of the securities in the margin account. Depending on which brokerage firm the account is held, the maintenance margin requirements could be higher. According the the Federal Reserve’s regulation titles “Regulation T,” when a trader buys on margin they must maintain key levels of equity throughout the life of the trade. Continue reading...
What is a foreign transaction fee?
Credit card companies and banks generally charge an additional percentage for all purchases made with a card in a foreign country. If you’re traveling abroad, you may want to find another way to pay. Most credit card companies and bank debit cards will charge an additional percentage on transactions made abroad, to help them pay the cost of clearing the transaction with international institutions. This is sometimes called a currency conversion fee. Continue reading...
What is Account Activity?
Account activity is any credit or debit activity in a checking or savings account, or investments, withdrawals, dividends or fees in an investment account. Account activity is the transactional history that will appear in ledger statements from a checking, savings, money market, investment, or other kind of financial account. This usually refers to transactions that were originated by the account owner, such as buying and selling securities or withdrawing and depositing in bank accounts, but could also include activity such as dividends, interest, fees, and other sorts of automated activity generated by the custodial institution. Continue reading...
What is 'buying on margin' and margin trading?
A margin trade is one where the trader uses other securities or cash as collateral, for a transaction in which he or she has not purchased the security outright. The broker acts as a lender. If your broker approves you for a margin account, you have the ability to purchase new securities “on margin” by using your current holdings as collateral, or by depositing 50% (or more depending on the broker) of the market price of the security into the margin account. Continue reading...
What are the Expenses Associated with the Purchase of ETFs?
There may be fees and commissions involved in the purchase of ETFs, and ongoing expenses that reduce earnings over time. Purchasing an ETF will probably involve paying some fees or commissions to the service or broker through which you acquired the shares, but these days those commissions are fairly minimal. These fees will be the same or less than you might pay for using their services to acquire positions in other securities. ETFs are a relatively cheap way to gain an exposure to a particular sector of the market or to take a position that might otherwise be difficult and expensive to research, calculate, and engineer. Continue reading...
What is an Expense Ratio?
Generally associated with mutual funds and exchange traded funds, the expense ratio represents the total annual management fee. The expense ratio is the annual management fee charged to shareholders by ETFs and mutual funds. The annual fee typically comprises the annual management fee, 12b-1 fees (which are associated with research costs), operating costs, and all other administrative type fees that go into the product. The expense ratio encompasses all of these fees as one percentage. Continue reading...
Should I pay for financial planning services?
Any professional that you work with for financial planning is going to be compensated for the work they do, but there are different ways they earn their pay. Whether it’s worth it to you is another question. If you have enough knowledge and time on your hands, and your investment portfolio is not very complicated, you may be able to manage it on your own. This can save you some money on financial advisor fees. Continue reading...
What are No-Load Mutual Funds?
Mutual funds that do not charge a front-end or back-end sales load are known as no-load funds. What are Load Mutual Funds? While no-load mutual funds do not require the investor to pay sales charges (i.e., commissions) when buying or selling that fund, it’s important to remember that nothing is free, especially in the world of financial services. The portfolio manager of the fund and his team of analysts still have their salaries, bonuses, retirement benefits, and so on, and fees are needed to pay for it. Continue reading...
Where Do I Find a Financial Advisor?
A financial advisor can be found through an online search, at events, or through the recommendation of friends. Believe it or not, while there are thousands of resources and databases, the best way to find a Financial Advisor is to ask your friends. You will need to determine a few basic criteria when looking for a Financial Advisor, such as geographical location, his or her age bracket, years of experience, frequency and medium of communication, and the amount of fees you are willing to pay. While there are thousands of resources and databases, sometimes the easiest way to find a Financial Advisor is to ask your friends. Continue reading...
What is a Lifeline Account?
Lifeline accounts are offered by some banks, and are required in some states to be offered by all banks — they give low-income individuals an opportunity to bank without paying fees or observing a minimum balance. This is done in an effort to promote social mobility by giving everyone access to banking services. You are likely to be able to find a bank that offers free checking accounts anyway, but some states have mandated that banks allow for so-called “lifeline accounts,” which have fewer features than other checking accounts but which may be the only banking option available for low-income banking customers. Continue reading...
Is there a Benefit to Self-Managing?
An investor may be able to save money in management fees self-managing, but there are also limitations and risks. Perhaps the biggest risk is the role that emotion can play in investing. Even the most skilled professionals are tempted by emotions in the market - big declines like the financial crisis can make one second-guess whether the market has hope of recovering, and big gains can create confidence that leads to less prudent risk-taking. Continue reading...
How do Advisors Charge and How Much Should I Pay?
It depends. There are three commonly used fee structures: fee-only, fee-based, and commission-based, Advisors can be compensated in three ways: It’s impossible to say exactly how much you will end up paying for an advisor – it really depends on the type of advisor you decide to hire, the amount of trading or planning you will be using them for, and the size of your portfolio. In some transactions with commission-based planners, you may not see any out-of-pocket cost; their commissions are built into the products in such a way that it may not appear that there is any direct cost for their services. Continue reading...
What are My Keogh Plan Investment Options?
Keoghs can hold a wide range of investments, and it will mostly depend on your plan trustee. Keogh plans have the ability to include many investment options, from stocks to bonds, certificates of deposit to cash value life insurance, and so on. Keep in mind that Keogh Plan investments are usually determined by the financial institution at which your Keogh Plan is established. When opening a Keogh Plan, be sure to check what investment options the financial institution offers, and how much in fees and commissions they would charge for these investments. Standard ERISA rules apply, so all employees must be offered the same options. Continue reading...
Who is the best custodian for my investments?
Custodians are the institutions which hold your securities for you and provide some related services. Some will have various arrangements and relationships with exchanges and broker-dealers, and some may do everything in-house; such things have bearing on what your investment options are, how much equity you must have for margin, what kind of fees you pay for various services, and so on. Different custodians tend to structure their fees and services to a particular type of clientele or a particular account size. You may outgrow the custodian you have, or you may discover that there is a better, more affordable option for an account like yours. Continue reading...
What are Load Mutual Funds?
“Load” mutual funds are those which have a fee structure that includes a front-end or back-end sales charge. All funds have expenses, but not all funds have loads. Loads are sales charges that are part of the fee structure of a mutual fund. Each mutual fund will typically offer a few types of shares classes to its investors, and the main difference between the share classes are their fee structures. There are front-end loads, which come out of your initial investment and can be up to 5%. Continue reading...
What is a "Breakpoint"?
A breakpoint generally refers to a level of investment at which the fee structure changes. For mutual funds, it can mean a level that triggers a reduced sales load. An investor can either hit the breakpoint at the time of original investment or in some cases can sign a letter of intent to reach a certain investment level and qualify for the reduced fee that way. There may be multiple breakpoints for an investment, with the fee falling at each one. Continue reading...
Can I Leave My 401(k) With My Former Employer?
Generally a plan will allow you to leave your assets in there indefinitely, but this is probably not ideal for you. Most custodians will be happy to hold onto your account dollars as long as you’re willing to leave them there. They don’t have to spend any time servicing your account since you can’t make contributions and probably aren’t even able to reallocate your assets, and they will continue to make money on your account with the built-in fees. You may be charged inactive account fees or small account fees as well. Continue reading...
How Does Ethereum Mining Work?
Ethereum mining is the process of solving blocks of encrypted blockchain data using a proof-of-work algorithm and occasionally being rewarded with Ether. Blockchain data is validated and added to the distributed ledger by computers on the network performing the task of “mining,” which is continually attempting to solve puzzles, basically, which each unlock a block of encrypted data containing information about transactions, and, on the Ethereum platform, information about distributed application functions and smart contracts. Once a block is unlocked, the data within is shared with the network and added to the distributed ledger. Continue reading...
How do I Buy an ETF?
ETFs are widely available through brokers and online trading services. ETFs can be purchased in the same way that you might purchase stocks. ETFs are priced continuously during the day, and reflect the underlying basket of stocks comprising this ETF. The fees and commissions investors pay for purchasing ETFs are exactly the same as those for stocks. The market for ETFs is highly liquid, with substantial trading volume every day. As such, ETFs are readily available and easy to acquire, but it is important to remember that they are not quite as simple as individual stocks. Continue reading...