What should I know about IPOs?
IPOs are initial public offerings of a private company ready to turn public and trade on an exchange, with the scrutiny of shareholders. IPOs are priced by the investment bank selling them, instead of the supply and demand of the market. Many have heard the term "IPO" (Initial Public Offering), which is the issuance of the first publicly-available shares of a company. It actually represents the only capital a company will ever raise with its stocks, unless they issue more at another time or if they have issued convertible bonds or warrants. After the IPO, any money made on those shares of stock will be by the buyers and sellers in the market, which is known as the Secondary Market-- the Primary Market is where stocks are issued and purchased directly from the company. Continue reading...
How Do I Invest Money in My 403(b)?
Investing in a 403(b) is done by making contributions via payroll deductions and selecting investment options from among the available choices with your custodian. Payroll deductions on a pretax basis are routed into your 403(b) account with your consent. This can be done by telling the payroll department what percentage of your compensation you would like to send there, or by telling the plan custodian company, who tells your payroll department. Continue reading...
What are the Withdrawal Rules for My SIMPLE IRA?
SIMPLE IRAs have the same withdrawal rules as Traditional IRAs, with one notable exception. SIMPLE IRA contributions and earnings may be withdrawn at any time, but there are certain penalties that apply. If you are under the age of 59½, you must pay a 10% penalty fee in addition to income taxes on your withdrawal. If the early withdrawal occurs within two years of receiving your first employer contribution, the 10% penalty is increased to 25%. Continue reading...
How is a 457 Plan Different From a 401(k)?
A 457 is only slightly different than a 401(k), but the differences can be important. Although the two plans are similar in practice, there are some very important differences. Former employees can withdraw from their accounts penalty-free after they have separated from service, even if they are under 59 ½. 457 plans must also be offered to independent contractors, which 401(k)s do not. 457 plans are offered to state and local public workers and employees of certain nonprofits.Top-hat 457 plans can also be offered to highly compensated employees without being offered to other employees, at both non-profit and for-profit businesses. Continue reading...
What is Second-To-Die Life Insurance?
Second-to-die policies are also known as survivorship policies, and are primarily used by married couples to provide a guaranteed legacy to their children after they have both passed away. These come in handy for estate planning, when an estate tax bill might be looming for the heirs. To be clear, this insurance covers the lives of two individuals and provides a death benefit to a listed beneficiary only after the last surviving insured individual dies. Continue reading...
What is Asset Turnover?
Asset Turnover is a metric that investors and companies can use to determine how efficiently a business uses its assets to create revenue. Asset Turnover is a ratio of the value of a company’s sales or revenues relative to the value of its assets. It can be calculated simply by dividing sales or revenue by total assets. The higher an asset turnover ratio for a company, the better that company is performing - since it implies that the company is generating a high level of sales and revenue per unit of assets. Continue reading...
What is an Earnings Call?
An earnings call is when a company opens up a teleconference line or webcast that the public can join to hear the company management talk about how the company performed recently, their plans for the future, and the market forces that exist in the current environment. Most publicly traded companies today have adopted this practice. Earnings calls may take place once a year or during earnings seasons after the quarterly earnings have been announced in a press release. Companies often have one executive whose job is to interface with the shareholders in such settings, but various executives are often given a chance to present some thoughts. Continue reading...
What is Weighted Average?
A weighted average is a calculation considers the relative importance or relevance of a piece of data. Weighted averages multiply numbers in the average by a predetermined factor, like time, that enhances the relevance given to the number. One example of a weighted average is the Exponential Moving Average (EMA), an alternative to the Simple Moving Average (SMA) line which gives greater weight to the more recent data. SMAs are effective in their simplicity, but their efficacy is most closely tied to how they are used. Continue reading...
Do I Need a more Specialized Financial Advisor?
Some advisors have practices that focus on specific types of investments or niche markets. If your investment portfolio seems to be lacking a particular area and you are not confident that your current advisor or you yourself can take on the challenge of incorporating the changes you desire, then you may want to speak with a more specialized advisor in that particular area. Similarly, some advisors focus on specific types of clients, such as medical professionals, and if such a category suites you then you may find that your needs are best met by someone who deals with people like you most often. There are some designations and certifications that advisors can earn beyond the standard ones, which may cause them to be sought out on certain topics or investments. Continue reading...
What Kinds of Overlays are Used in Chart Patterns?
Overlays are technical supplements which help to interpret the data of a normal price chart. Often a chart program will allow the user to pick a few different overlays at a time, to help him or her get a better idea of what is going on with the price. Some common overlays include moving average lines, Bollinger Bands, Ichimoku clouds, and channel lines. An overlay or series of overlays will appear as additional lines, shading, or other graphics on a price chart. An overlay helps a trader or analyst interpret the price data in the context of other data, by putting the other data right on top of it. Continue reading...