What are My SIMPLE IRA Investment Options?
SIMPLE IRAs will have various kinds of investment options, depending on the trustee company that holds the plan assets. SIMPLE IRA investments are determined by the financial institution at which your SIMPLE IRA is established. When opening a SIMPLE IRA, be sure to check what investment options the financial institution offers as well as the fee structure. Standard ERISA rules apply, meaning that all employees must be offered the same thing. SIMPLE IRAs can only be held at trustee companies whose business model is on the IRS’s list of approved SIMPLE Trustees. Continue reading...
What is the Russell 2000 Index?
The Russell 2000 index is comprised of the 2,000 smallest companies in the U.S. If you’re looking for a small cap domestic benchmark, this is a good one. Companies included in this index are reevaluated annually to make sure they can still be considered small cap companies. Since the Russell 1000 index represents 90% of the market, the Russell 2000 index represents about 10% of the market (if you are wondering whether or not there is a Russell 3000 index, the answer is yes — it is a combination of the Russell 1000 and Russell 2000 indices). Continue reading...
What is Income Property?
An income property is also called an investment property, which is a piece of developed commercial or residential real estate that is used by a third party tenant who makes rental or lease payments for the use of it. Income property can be a good source of income for an individual or business. It can include single- or multi-family residential or commercial properties. Sometimes people co-own income properties together, and receive a proportionate share of the proceeds according to the amount of the start-up capital they paid in. Continue reading...
What is an Income Trust?
Income trusts are a type of company that has been structured to pass through all earnings to shareholders. A trust is a legal entity, that seeks to use assets in the best interest of beneficiaries. Some pooled investments are categorized as trusts, and they pass all income (and the tax implications) on to investors. Examples include a real estate investment trust (REIT), a royalty trust, a utility trust, or a business investment trust (also known as a master limited partnership, or MLP). Mutual funds can also fall into this category, but they are not necessarily designed just for income. Continue reading...
What is a Living Trust?
A living trust describes a trust designed to transfer assets to beneficiaries upon the death of the owner/grantor, which is established during the life of the grantor. They can take several forms, but most common ones are categorized as either revocable or irrevocable. Living trusts have a similar effect to a Last Will and Testament, both being legal documents that stipulate how the decedent would like property to be divided amongst beneficiaries upon the death of the owner or grantor of the trust. Continue reading...
What is a Mortgagee?
When a mortgage loan is made to a consumer, the bank or loan institution is the mortgagee, while the consumer is the mortgagor. Mortgages are long term loans secured by the real property of the individual borrowing the money, and they are generally used for homes, called home mortgages. The lending institution, which might be a bank or a mortgage company, is the mortgagee, lending money to the homebuyer, who is the mortgagor. Continue reading...
What is Accelerated Amortization?
Accelerated amortization is the recalculation of an amortization schedule, such as mortgage payments, after the borrower pays off some of the debt ahead of schedule. Amortization describes the accounting practice of giving a one-time expense a retirement schedule or payment plan by which it is to be either deducted for tax purposes, repaid, or paid out. Accelerated amortizations allow for more payments or deductions in the early years rather than later years. Continue reading...
What is a commodity index?
Commodity indexes are also called commodity price indexes, and they are informational services which reflect the price action in a designated commodity or basket of commodities. Indexes are often tracked by mutual funds or ETFs, and these can be confused with the actual index. Indexes are computed and published by market research firms. They can serve as benchmarks against which the performance of a specific asset or an investment portfolio can be compared, or they can serve as the model that index funds seek to emulate. Continue reading...
What is Chapter 9?
Chapter 9 is a form of bankruptcy filing that is reserved for municipalities which have defaulted on their debt obligations. This could include a school district or other entities which have a municipal affiliation and the ability to generate revenue from local taxes. They cannot be made to liquidate anything. In fact, it forces the lender to accept a refinancing of the debt obligation. Because municipalities fall under state jurisdiction, the federal government, which governs bankruptcy court, does not have the ability to force liquidation of a municipal entity’s assets. Instead, this provision of bankruptcy law governs refinancing arrangements to facilitate the repayment of debts owed. 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...