What are REITs?
REITs are pooled investments similar to mutual funds, but, like mutual funds, they can take many shapes. They invest in different kinds of real estate and real estate-oriented assets, depending on the REIT, and sell ownership shares to investors. REIT is an acronym for Real Estate Investment Trust. REITs are similar to mutual funds, except that they only invest in real estate properties and related companies and assets such as mortgages. REITs will define the scope of their investments and strategies in their prospectus, which may read something like “We invest only in commercial Real Estate” or “Only in residential houses in Las Vegas” while other REITs are very general. Continue reading...
When are My IRA Withdrawals Penalty Free?
The surest way to make tax-free withdrawals is to wait until you are older than 59½, but there are a few other ways. If you are 59½ or older, you can make penalty-free withdrawals. Of course, you will need to pay income taxes on the amount you withdraw from your Traditional IRA. There is a 10% penalty assessed by the IRS on early withdrawals (withdrawals made before age 59½) and these are generally not a good idea. Continue reading...
Will Having a 529 Plan for My Child Impact His/Her Eligibility For Financial Aid in the Future?
It will be factored in when considering financial aid eligibility. Unfortunately, having a 529 Plan may affect your child’s eligibility for financial aid in the future. If a parent owns the account, in 2016 the financial aid office will take 5.64% of the account’s value (and all other non-retirement investment accounts) into consideration when determining how much financial aid a student can receive. Continue reading...
How Do I Allocate My Assets in Retirement?
How you allocate your assets in retirement depends on your goals and objectives for the assets, and the amount of growth you need to reach them. Your asset allocation also depends on your age and risk tolerance, all of which need to be factored-in each year when allocating your portfolio. The very first step in deciding an asset allocation is to determine your total level of liquid assets, what your desired level of growth and/or income is over long stretches of time, and your tolerance for risk/volatility. Most investors need more growth over time than they think, and often times it results in investors under-allocating to stocks or other risk assets. Continue reading...
What factors affect currency exchange rates?
Currency exchange rates will fluctuate with various macroeconomic factors such as inflation, interest rates, trade balance, and so on, as well as political climate. Currency exchange rates are influenced by a number of factors, with some experts listing 5, some experts listing as many as 10. The main variables that will affect exchange rates are inflation rates, interest rates, the trade balance / current account, speculation in Forex markets, and government policies and interventions. Continue reading...
What is Form 2106-EZ: Unreimbursed Employee Business Expenses?
IRS Link to Form — Found Here Some necessary expenses paid in the course of performing the duties of a job will go unreimbursed by an employer but are eligible for tax deduction. These can be filed by the employee on a 2106 or a 2106-EZ. The 2106-EZ is, of course, the simpler of the two, and allows for standard mileage deductions and most of the common types of related deductions. Unreimbursed business expenses are expenses that can be considered necessary to performing a job, such as paying for business-related insurance or professional organization dues, that aren’t paid for by an employer. These can be used to file for tax deductions on a 2106 or 2106-EZ. Continue reading...
What is the Inverted Cup-and-Handle (Bearish) Pattern?
The Inverted Cup-and-Handle (sometimes called Inverted Cup-and-Holder) pattern forms when prices rise then decline to create an upside-down “U”like shape (1, 2, 3, also known as the Cup), followed by a shorter relatively straight price increase that bounces from the right lip (from 3 to 4, creating the Handle). The rising handle forms as a result of mounting buying pressure created when the pair retests a low at the right lip of the cup. Once the buyers give up, sellers take over and the pair has the potential to decline rapidly. Continue reading...
What are forward contracts?
Forward contracts are agreements to exchange specific assets on a specific date, at a price determined at the outset. Forward contracts are similar to futures contracts, but they are over-the-counter private contracts drafted for specific purposes, quantities, and dates that satisfy the specific needs of the counter-parties. These contracts are mostly entered into by institutional investors seeking a hedge against risks such as interest rates and exchange rates. Continue reading...
What is the difference between active and passive money management?
The debate on whether active or passive management is better for investors has polarized many advisors and theorists for years. There are two schools of thought when it comes to long-term investing. One basically states that you should determine a proper allocation of asset classes for yourself, buy index funds to reflect each particular asset class, and possibly rebalance the portfolio periodically. This basically means “set it and forget it,” and the investor must be willing to ignore fluctuations in the markets and maintain a faith in an Efficient Market. Continue reading...
What are Bond Ratings?
The possibility of a company or municipal government defaulting on their bond obligations, usually by going bankrupt, is a real one. For this reason, all bonds are rated according to the financial stability of the issuer. A look at the history of corporate and municipal debt will illuminate the fact that the possibility of the issuer being unable to pay its obligations to bondholders is a very real one. There is an established system of bond ratings that gives a rough estimate of the bond's reliability. Continue reading...