Should I invest in private placements?
Different opportunities to invest in private placements may present themselves to wealthy individuals over time. Unless the opportunity comes from someone that you know and trust, and you have the ability to research the opportunity, it is probably something you should avoid. Private Placements are sometimes complex deals that cost people a lot of money. You should definitely have your guard up if one is pitched to you. In general, the company or partnership seeking the private placement will not have to register with the SEC or report their books accurately on a public record. Continue reading...
How Much Will Health Insurance Cost in Retirement?
It is difficult to forecast how much health care will cost in retirement, but J.P. Morgan research indicates that it’s a few thousand dollars a year. According to their research, the median amount spent each year on health care by 65 year old’s is $4,660. For those age 85 and older, the average amount spent each year is $18,030. At age 65, you can get covered by Medicare, but there are separate costs there, as well as in the optional Medigap policy. Continue reading...
What is Ripple?
Ripple is a protocol for cryptocurrency transactions primarily focused on offering solutions to the financial sector for implementing blockchain technology. Banks and other financial institutions have been experimenting with ways to implement blockchain technology for years. Many of these have gravitated toward Ethereum, with its platform distributed applications and smart contracts, but the San Francisco-based startup Ripple has been gaining traction in this space recently. Continue reading...
What are ICOs?
ICO is an acronym for Initial Coin Offering, and it is the primary way that new companies can use blockchains to raise capital. Many entrepreneurs have gotten their start in the last decade through crowdfunding sites such as Kickstarter, where anyone can contribute funds to help an idea get off the ground. Obviously, such funding methods were bound to reach new heights when peer-to-peer blockchains came onto the scene. Blockchains allow transfers of value anywhere in the world without regulatory... Continue reading...
What are Accounts Payable?
On a balance sheet, Accounts Payable is a section under ‘Liabilities’ that details the obligations the company has to pay off short-term debts. Goods and services rendered to a company by suppliers, banks, utilities, and so forth will need to be paid for in the short term, and these bills are accounted for in the Accounts Payable. In a Company's Balance Sheet, the Payables will appear in the Current Liabilities section, and these tend to have cycles of 30-90 days in which they should be paid. Continue reading...
What is Abandonment Value?
The Abandonment Value is the salvage value left if a capital project is stopped short at an unknown time. Authors Robichek and Van Horne (1967) offered a very concise argument for the importance of including an Abandonment Value in the calculations leading to a company decision to undertake a long-term capital project. The calculation is useful for risk assessment, and tries to find the value at which project assets could be liquidated if the project could not be continued for some reason. Continue reading...
What is an Accounting Convention?
An accounting convention is an established an agreed-upon method of documenting specific items on a company’s books. The most widely-used accounting conventions are part of the Generally Accepted Accounting Principals (GAAP), which is the only accounting methodology accepted for quarterly 10-Q filings with the SEC in the United States, and has also become the basis for regulatory accounting practices in other countries. Continue reading...
What is Accrued Revenue?
Revenue that has not yet been received for goods or services already rendered may be documented as Accrued Revenue. Accrual accounting allows a business to put the payments due to it for good and services already rendered into the Assets column of its books. If no invoice or payment plan is established, it sits in the Accrued Revenue line; if so, the item goes into Accounts Receivable. Accrual accounting is different than cash accounting in this regard: cash accounting will only make an entry on the books when cash or goods are exchanged. Accrual accounting is actually mandatory for publicly traded companies with revenues over $5 million who are based in the US, per SEC regulations. Continue reading...
What are Marketable Securities?
Marketable securities is a term referring to assets / securities that can be converted to cash easily, at least within a year. Examples of marketable securities are stocks, bonds, or CDs you might buy at the bank. What makes an asset a marketable security is its ability to be redeemed for cash quickly at a known market price. What is a Broker-Dealer? What is an Illiquid Security? Continue reading...
What is a Callable Bond?
A callable bond, also known as a “redeemable bond,” is one where the issuer has the ability to pay off the debt prior to its maturity date, with certain conditions. Which the issuer has the right to redeem prior to its maturity date, under certain conditions. The primary reason that an issuer would choose to “call” a bond is that interest rates have declined since the bond was issued. By calling the bond, the issuer generally has to opportunity to refinance that debt at a lower rate. Once called, the issuer will notify the creditor and pay off the debt, typically with a slight premium added to close the deal. Continue reading...