What are Load Mutual Funds?
“Load” mutual funds are those which have a fee structure that includes a front-end or back-end sales charge. All funds have expenses, but not all funds have loads. Loads are sales charges that are part of the fee structure of a mutual fund. Each mutual fund will typically offer a few types of shares classes to its investors, and the main difference between the share classes are their fee structures. There are front-end loads, which come out of your initial investment and can be up to 5%. Continue reading...
What is the minimum investment in a typical venture capital fund?
Minimum investments in venture capital funds tend to be vast sums of money. They tend to be for $1 million or more but can be as low as $250,000. As with hedge funds, the minimum investment is very steep and suitable only for accredited investors and qualified buyers. A typical minimum investment in a VC fund varies between $1 to $5 million, but it can be over $25 million. Most of the investments in venture capital funds are made in terms of commitments: you commit a certain amount of money, and when a venture capital fund finds an appropriate investment, it makes a “call” on you to deposit the money with them, perhaps in increments over a period of several years. Continue reading...
How Much Does it Cost to Prepare a Will?
A simple will can be created for free if a person uses an online template from a trusted source and/or creates the document themselves. Having an attorney create a will may cost a few hundred dollars, depending on the complexity of the estate. If you opt for an online will, the cost will be extremely cheap compared to hiring a professional (possibly a few hundred dollars or even significantly less). Continue reading...
How do I Calculate my Expenses?
Keeping track of your expenses is one of the most important (and basic) steps to leading a responsible financial life. It might be tempting to “eyeball” your expenses and somehow get by without a plan, but in almost all cases, such carelessness will spell financial disaster. Budgeting your money for specific categories of expenses and carefully documenting the actual spending is critical. You should add up amounts spent on monthly mortgage and car payments, rent, groceries, clothing, entertainment, utilities, transportation, and other miscellaneous expenses, and try to get as close to possible to a monthly budget. Continue reading...
What is a Dividend Rate?
The dividend rate is basically just the value of the annual dividend of a company, stated as the monetary value. Not to be confused with the dividend yield, or the dividend growth rate, both of which are percentages. Dividend yield and dividend rate are slightly different from one another. The dividend yield is the size of a dividend in relation to the share price, and is stated as a percentage. The dividend rate is actually the amount of money paid out per share, per year, stated as a dollar amount. Continue reading...
What is Earnings Momentum?
Earnings momentum is an indicator that is computed by not just looking at the earnings performance and estimations of a company, but looking at the positive or negative direction of earnings and the acceleration in that direction. Momentum in securities is much like momentum in physics. Where there is momentum, it is hard to slow things down and charge direction. Instead of looking only at the growth of earnings, which could be the slope of the inclining line, momentum also looks for increases in change to the growth rate, making earnings growth more parabolic or exponential. Continue reading...
What is the Falling Pennant (Bearish) Pattern?
The Falling Pennant (or Bearish Pennant) pattern looks like a pennant turned upside down (the mast points up). It forms when falling prices experience a consolidation period, and the price moves within a narrow range defined by the converging lines through points (2, 4) and (3, 5). After the consolidation, the previous trend resumes. This type of formation happens when anticipation of downtrend is high, and when the price of a security consolidates during a declining trend. It may indicate growing investor concern of an impending downtrend. Continue reading...
What is Operating Leverage?
Operating leverage is a measure of how critical each sale of a company is to overall cash flow. If a company has high operating leverage, it means that it relies on fewer sales with very high gross margins, versus a company with low operating leverage that experiences higher levels of sales with lower gross margins. As an example, a convenient store has less operating leverage than a business that sells yachts. Continue reading...
What is Adjusted EBITDA?
Basically synonymous with Normalized EBITDA, Adjusted EBITDA is a non-GAAP method of making earnings valuations a little more standardized between companies. Adjusted Earnings is a valuation that has many moving parts in the form of the interest, taxes, depreciation and amortization that might be included there, in addition to the non-GAAP nature of the methods. EBITDA removes all of those moving parts and looks at the Earnings before any of the other arithmetic interferes, hence the name Earnings Before Interest, Taxes, Depreciation, and Amortization. Continue reading...
How do Market “Bubbles” Burst?
Bubbles, while both intriguing and puzzling occurrences, have always been a part of market and economic cycles. In short, a bubble forms when investors start bidding up the price of an asset well beyond its intrinsic value, based on speculation and euphoria surrounding potential gains. Eventually demand will dry up when valuations are too high, as investors start shunning the risk premium associated with investing. Investors will then race to be the first out of the position, and it ultimately brings all the sellers to the table at once. The bubble then pops. Continue reading...