When Do I Have to Start Taking Money Out of My IRA?
The IRS requires IRA owners to take distributions starting at age 70 ½. By April 1st of the year following the year you turn 70 ½, the IRS needs to see a distribution from your IRA that satisfies the Required Minimum Distribution rule. The RMD is calculated using a table published by the IRS, and each age is assigned a different “factor.” The factor is a number, and you divide the balance of your IRA or 401(k) by that number to reveal the amount that will satisfy your RMD obligation. The factor decreases incrementally as the ages increase. Continue reading...
What are the Contribution Limits For My Coverdell ESA?
Coverdell ESAs have low contribution limits, and an income limit that may keep you from contributing at all. Currently, in order to contribute to an ESA at all, you and your spouse must make less than $220,000 per year (combined). The annual contribution limit to an ESA is $2,000, and the contributions made to an ESA are not tax-deductible. These limits have not been adjusted for inflation in years, and these plans are quickly becoming obsolete. Continue reading...
What is the “efficient frontier”?
The “Efficient Frontier” is a modern portfolio theory tool, which demonstrates to investors the best possible returns they can expect from their portfolios, relative to the amount of risk they’re willing to accept. For investors that find themselves below the “Efficient Frontier,” it means their strategy is not providing enough return for the level of risk assumed. The opposite is true as well. What the theory means to communicate is that investors would be wise to include some higher growth, higher risk securities in their portfolios, but combine them in a strategic way so as to gain risk/reward value that comes with diversification. Continue reading...
How Do You Make a Paper Bitcoin Wallet?
Because bitcoin wallets and balances are little more than a few lines of code, it is often desired to move the wallet offline into paper form. Generally speaking, it is not a difficult process. The way bitcoin transactions work, funds are sent to a specific address that signifies the wallet of the payee. People can possess multiple wallet addresses, which can be quickly generated at no cost, and this is often preferential for security and privacy reasons. Services such as bitaddress.org allow users to generate new wallet addresses and then help users encrypt and print paper versions of the necessary information to keep their bitcoin balances offline for cold storage in physical form. Extensive tutorials on how to do this exist online in forums and videos. Some people like this option because it removes any chance of their wallet being hacked. Continue reading...
How to use Momentum Indicators in trading
A momentum indicator allows for a quick comparison of a security’s current price relative to its past prices using a flexible time period, allowing traders to decide the parameters. The formula to calculate momentum is M = V – Vx (where V is the current price and Vx is the closing price from x number of days ago). A current price in excess of past price is a positive momentum indicator; a lower current price represents negative momentum. Continue reading...
What is Due Diligence?
Due diligence is the responsibility of the investor and broker to research all pertinent information about the individual's, investments, and companies involved prior to doing business. Due diligence is a responsibility and also a legal defense. If a fiduciary person or company is accused of negligent or criminal behavior, it may be a good defense to show a document trail of research about the people, companies, and investments involved in a transaction. Continue reading...
What is the Federal Open Market Committee?
The Federal Open Market Committee (FOMC) is the monetary policy-making body of the Federal Reserve System. The FOMC makes the decision on “raising” or “lowering” interest rates, which refers to moves in the federal funds rate. The FOMC consists of 12 members, which is comprised of the seven members of the Board of Governors and 5 of the 12 Reserve Bank presidents. The president of the Federal Reserve Bank of New York always has a seat on the FOMC, while the other presidents rotate for one year terms. This policy-making body meets eight times a year to decide monetary policy, which consists of setting the benchmark interest rate and make decisions regarding the supply of money. All dependent on economic conditions. 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 are Consumer Discretionary Stocks?
Consumer Discretionary companies are those that sell ‘non-essential’ items, such as clothing retailers, media and entertainment, luxury goods, auto makers, and so on. Consumer discretionary companies tend to sell goods with elastic demand, meaning that demand goes up as economic conditions are good and falls when conditions are slowing or recessionary. Consumer discretionary companies are also categorically referred to as ‘cyclicals.’ Consumer discretionary stocks can also include companies in the service industry, like hotels and restaurants. Continue reading...
Should I Listen to Commentators on Financial News Programs?
It’s easy to become drawn in by the financial media, but it’s important not to let them do your thinking for you. Commentators on the most reputable financial channels will always be sharp-looking, smooth-talking, and quoting a barrage of statistics that makes it seem like you didn’t know anything before you tuned in. Is this an indication of being camera-friendly? Without a doubt. Is it an indication of sound financial advice? Absolutely not. Continue reading...