What is a Thrift Savings Plan?
A Thrift Savings Plan (TSP) is a 401(k)-style plan for Federal employees. A Thrift Savings Plan functions the same way a 401(k) does – you can elect to contribute a portion of your salary, known as an employee deferral or employee contribution, and the money will be allowed to grow in the account tax-deferred. The TSP is only available to Federal Employees and United States military personnel. There is a flat contribution of 1% from the employer, and, depending on the type of Federal job, employees may be eligible for a matching contribution from the employer. Continue reading...
What happens if I don’t diversify my portfolio sufficiently?
Not diversifying a portfolio sufficiently can mean putting your assets at greater risk of loss. At the same time, less diversification means more risk but also the possibility of a better return. An investor that put all of their assets into Apple Inc. (APPL) five years ago would certainly be much better off than an investor that owned a broadly diversified portfolio over the same time frame. But over time, a less diversified approach can hurt an investor’s chance of achieving the long-term desired result they want for retirement. Continue reading...
What is COBRA?
The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal law that mandates employers to keep you covered under your current employer-provided health plan for up to 18 months after you leave. Of course, COBRA doesn’t apply to all employers, so you have to check in your specific case (there generally has to be over 20 employees). In some cases, you might have to pay the entire premium for the insurance, plus some sort of administrative fee (and this can be more expensive than purchasing an individual plan). Continue reading...
What is Form 1099-R?
IRS Link to Form — Found Here Sources of retirement plan income, such as pensions, annuities, and IRAs, will be associated with a 1099-R filing. The form is filed by the company making the distribution. The taxpayer uses the information on it for when filing income taxes. The IRS receives Form 1099-R from the companies making distributions from retirement plans. They have categorized all annuity contracts as retirement plans by default, so those are included, as are pensions, profit sharing plans, other forms of employer-sponsored retirement plans, cash-value life insurance distributions, and individual retirement accounts (IRAs). The company making the distribution sends the 1099-R to the IRS and the account owner. Continue reading...
What is the Form 6251: Alternative Minimum Tax, Individuals?
IRS Link to Form — Found Here The Form 6251 is used to calculate the alternative minimum tax (AMT) for individuals who may have high income but relatively low taxes due after deductions. The individual first computes his or her adjusted gross income, which does not allow for some deductions that may have been taken for the tax filing. If the AMT is higher than the taxes already paid, the individual will have to pay the difference. Continue reading...
What is a Quick Ratio?
The quick ratio (also known as an “acid test”) is a financial ratio used to measure how well equipped a company is to meet its short-term liquidity needs. It basically measures how much cash (or assets easily and quickly converted to cash) a company has available to meet its short-term liquidity obligations. Since inventories are assets but are not necessarily liquid, they are excluded from the calculation. Continue reading...
A/A2 — credit rating
A — S&P / Fitch A2 — Moody’s Such ratings are given to bond issues and insurance companies, primarily, and this particular one is in the Upper Medium band of the Investment Grade ratings. Investment grade bonds are considered to have a very low possibility of default. The ratings go up to AAA/Aaa and all the way down to DDD/D, with Investment Grade bonds being in the range of AAA/Aaa to BBB-/Baa3. Continue reading...
What is Cash Collateral?
Cash collateral is liquid cash and cash equivalents designated as collateral for loans and debts of various sorts. One frequently used example of cash collateral is cash used in short selling of securities in a brokerage account. While securities equal to significantly more than the required cash margin can be substituted for cash, the most cost-effective and least risky way to maintain margin requirements is with cash and cash equivalents. Continue reading...
What are Fibonacci Retracements?
Fibonacci Retracements are places where a Fibonacci lines and arcs. If a retracement has a length that proportionally fits within certain parameters in comparison to the uptrend that preceded it, some traders attempt to predict the size of the uptrend that will come afterwards using Fibonacci numbers. The most popular retracement percentages to use are 23.6%, 38.2%, 50%, 61.8%, and 100%. Fibonacci numbers are part of the Fibonacci sequence, where the two previous numbers are added together to calculate the next number in the sequence. The ratio of two Fibonacci numbers is the Golden Ratio, or 1.61803398875, which has been used since ancient times as the perfect proportion in architecture and other design. The Golden Ratio is also known as Phi (pronounced “fee”). Because Fibonacci numbers are found throughout the natural world, they have been integrated into some traders’ strategies for market analysis. Continue reading...
What can I do to make my portfolio grow faster?
If your portfolio isn’t growing enough for your liking, you might need to take on more risk or change your active management company. The answer is surprisingly simple: find good managers, fill your portfolio with more risky assets, and rebalance it regularly. The last point has more of a long-term focus, since harvesting and redistributing the gains of successful investments may stunt the growth, but it could also prevent you from losing as much when the winners experience a corrective downturn. Continue reading...