How do I Choose an ETF?
There is guessing, there are screening programs, and there are advisors. As you can imagine, looking at the list of over 900 ETFs can give you a big headache. Fortunately, there are screening programs that can help you sort through the mess by giving you many criteria by which to search. You can narrow down the choices to a point where the research about each ETF will become manageable. In the process you will have to determine what is important to you, and what need you’re trying to fill in your portfolio. It can certainly help to bring that information to a financial professional that can help you choose the right ETFs for your situation. Continue reading...
Which is Better for Me – a Roth or Regular 401(k)?
Some 401(k)s give participants the ability to make after-tax contributions, which raises the question of which fits better into a person’s retirement plan. One advantage to Roth 401(k)s is that they do not have income limits which may have barred certain high earners from contributing to a Roth IRA in the past. Down the road in retirement, it may be advantageous for someone with significant savings to be able to take some withdrawals that do not increase his or her income tax bracket. Continue reading...
Can I Take a Periodic Distribution From My Cash-Balance Plan?
Periodic distributions are one of the main ways that former employees enjoy the benefits of a Cash Balance plan. Yes, you can take periodic distributions from your cash-balance plan. As opposed to the other option (lump-sum distribution), opting for the periodic distribution can help you sleep better at night, knowing that you have a fixed stream of income for the rest of your life. This Life Annuity option is mandated by law to be an option to participants of a cash balance plan. Continue reading...
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...
How Much Money Should I Set Aside for Emergencies?
Research suggests that more than half of adult Americans do not have sufficient savings needed for emergency purposes. Here’s a startling but true piece of information: most surveys conducted in the past few years indicate that more than half of adult Americans do not have any kind of emergency fund at all, and even fewer have enough to cover three months of living expenses in the event of an unexpected event, like job loss or health emergency. Continue reading...
What is Income?
Income is a stream, series, or lump sum of cash or cash equivalents that is paid to an individual or entity based on work performed, goods sold, ownership rights, or by being a creditor to whom interest is paid. It is received when a net result is positive, and is sometimes referred to as the “bottom line.” Income can be viewed from a itemized, current perspective or as a balance sheet item for an entire accounting period, such as a year. It also might be discussed as a gross (pre-tax) or net (post-tax) amount. Continue reading...
What is the Three Falling Peaks (Bearish) Pattern?
The Three Falling Peaks pattern forms when three minor Highs (1, 3, 5) arrange along a downward-sloping trend line. This pattern often emerges at the end of a rising trend, when a pair slowly rolls over. It potentially indicates sellers moving in to replace buyers, which pushes the price lower. If the price breaks out from the bottom pattern boundary, day traders and swing traders should trade with the DOWN trend. Consider selling the pair short or buying a put option at the downward breakout price level. To identify an exit, compute the target price by subtracting the pattern’s height (maximum price minus minimum price within the pattern) from the breakout level the lowest low. When trading, wait for the confirmation move, which is when the price moves below the breakout level. Continue reading...
What is the Series 63?
In order to solicit orders for any type of security, a broker or representative must pass the Series 63 examination, in addition to the Series 6 or Series 7. These tests are administered by FINRA, the financial services industry self-regulatory organization (SRO), and serve as licensing requirements for financial services representatives and management in the field. The 6 and 7 deal with product and industry knowledge and theory, while the 63 covers state-specific laws and rules, along with an understanding of ethical and fiduciary responsibility. The Series 63 takes only 75 minutes, with 65 multiple choice questions. Continue reading...
Should I Trust an Article Such as “What Are the Best Mutual Funds?”
Probably not, but it might get you thinking in the right direction. The short answer is “no.” The title of such an article should be enough to deter your from it. If such information were widely available, everyone would instantly act on it and nobody would be able to profit. In fact, if such lists are analyzed, almost none of the funds will appear on the next year’s list. That’s too bad, since mutual funds are not meant to be as liquid as stocks and ETFs, but are designed to be held for 3 years or more. Continue reading...
What is beta in investing?
Beta is a volatility indicator that denotes how closely an investment follows movements in the market as a whole; when examining mutual funds, it indicates how similarly the funds move to their relevant indexes. It is often referenced with its counterpart, Alpha; a risk ratio which measures gains or losses relative to a benchmark, indicating whether an investor is being compensated with a return greater than the volatility risk being taken. Continue reading...