How is a 403(b) Different From a 401(k)?
403(b)s are essentially the same as 401(k)s but there are a few notable differences. A 403(b) is extremely similar to a 401(k); the main difference is the type of employer than can offer each. 403(b)s are offered by public educational institutions, non-profit hospitals, non-profit organizations, religious groups and some government organizations. Due to the negotiating powers of many of those institutions, and their non-profit status, the administrative fees are smaller and they are not subject to some of the administrative oversight imposed on 401(k)s. Most 403(b)s are not subject to ERISA, which means they don’t have to satisfy as many auditing and reporting requirements. Continue reading...
If I Want to Establish a Self-Employed 401(k), Do I Have to Establish One for All Owners of My Business?
This may be something you have to ask a CPA or tax attorney, but generally the answer will be yes. Some institutions will not allow you to open a self-employed 401(k) if you have more than one owner in the business, but by statutory definition these plans can be set up for partnerships. If you are part of a partnership and this is where your self-employed income is made, you will be getting on thin ice if you attempt to form an LLC for yourself as a conduit for the money, just so you can have a self-employed 401(k), because, while that is not recommended, it will be about your best chance of setting up a Solo K that does not include your partners. Continue reading...
What is Ethereum?
Ethereum is an open-source, public, blockchain-based distributed computing platform. Ethereum provides a cryptocurrency known as ether. Ethereum is a decentralized platform that runs what are known as “smart contracts.” Smart contracts are applications that run on custom built blockchain, which functions on its own accord through rules programmed into the protocol, and which also makes decisions and keeps records based on consensus throughout a peer-to-peer network. A blockchain oversees its own activities without requiring any trust in a central authority or the other parties involved. Continue reading...
What does “Buy to Close” Mean?
When an investor takes a short position on an option contract by selling (“writing”) a call or put option, he or she is opening a position, which creates more open interest in an underlying security which will be handled by the brokerage house, and this is called “selling to open.” If the price changes in the underlying security in an unfavorable way, the investor will seek to get out of the short position he holds on the options contract before the option’s expiration date. To do so, the investor must buy back the option (or, really, cancel out the position by buying the same kind of contract that he or she previously sold short). Continue reading...
What does FDIC Insured mean?
The Federal Deposit Insurance Corporation (FDIC) is a government entity created by the Glass-Steagall Act of 1933, and its purpose is to protect savers from losing their deposits in banking institutions if the bank becomes insolvent. FDIC insurance only covers certain types of assets, up to certain limits for each person, and only at member banks. FDIC insurance will “make whole” any deposit amount up to $250,000 per person if the banking institution that held the funds declares insolvency. Most banks are members of the FDIC program, which was established by the Federal government in the 1930s. Continue reading...
What is the VIX?
VIX is the ticker of the volatility index of the S&P 500. The Chicago Board Options Exchange (CBOE) Volatility Index projects the volatility of the S&P 500 going forward by creating a composite of the volatility priced-in (implied) on various S&P 500 options. Since it is created using the prices of options, it serves as a gauge of market sentiment, and is often called the "fear gauge" since it will spike when the market plunges. Continue reading...
What is a Certificate of Deposit?
A Certificate of Deposit, commonly referred to as a CD, is a financial product that essentially pays risk-free interest (though typically at very low rates). CDs are typically offered by banks and credit unions, and usually span in duration from one month to 5 or 10 years. They are FDIC guaranteed up to $250,000, so customers may generally consider them risk-free. But because there is very little risk to purchasing a CD, they also typically pay very low annual interest rates. Continue reading...
Who is the Most Widely Known Villain of Wall Street?
Throughout the history of the U.S. Stock Market, there have been countless crooks, swindlers, and villains. Money can drive people to cheat, and there have been no shortage of cheaters over the years. Undoubtedly, the biggest hoax in the history of the market is credited to Bernard Madoff, who made off (no pun intended) with over $10 billion of his investors’ money through a massive Ponzi scheme. However, there have been countless other criminal activities, such as the Enron scandal of the early 2000’s. Continue reading...
Is there such a thing as a “presidential election cycle” impact on stocks?
Some analysts have popularized the notion that the 4-year presidential election cycle holds secrets to bear and bull markets. Found in publications such as the Stock Traders Almanac, The Presidential Election Cycle is the theory that different phases of the presidential term are correlated to broad market conditions. As will many such theories, it may not hold up under a lot of scrutiny, but there are some correlations to be found. Continue reading...
Learn to Use Model Portfolios for Long-Term Investing
With Investing/ Model Portfolios, you can view the performance of passive portfolios. You can receive timely alerts with each re-allocation. Re-allocations are infrequent. Here are the steps: Step 1. Review Model Portfolios' past performance for free. Step 2. Select any Model Portfolio you might be interested in based on their performance. Step 3. Subscribe and follow one or more Model Portfolio. Continue reading...