How Can You Buy a Stock?
There are many services online and custodians that that can facilitate stock trades. Anybody can buy shares of a publicly traded company, but it must be done through a brokerage firm or a custodian. Brokers and brokerage firms act as middle men between the buyer and the seller. Some brokerage houses such as E-Trade, Ameritrade, or Charles Schwab offer low-cost services online to anyone with a checking account, and offer no personal advice. Other brokerage firms focus on the human element, offering investment advice and making additional money through long-term client relationships and the commissions and fees that result from portfolio management. Continue reading...
What are the Contribution Deadlines for My Self-Employed 401(k)?
Contribution deadlines vary depending on whether it is a salary deferral or contribution based on profits generated. The contributions to a Self-Employed 401(k)s consist of two parts, and the deadlines for these parts are different. The contribution which you as an employee make on your own behalf, which is considered a salary deferral, is 15 days after the close of your fiscal tax year. If you have a regular fiscal year, which ends on December 31, the contribution deadline is January 15th. These contributions include both regular salary deferrals and catch-up contributions. Continue reading...
What Are the Contribution Limits For My Thrift Savings Plan?
Contribution limits for the TSP are the same as regular 401(k)s. Employees and employers using the TSP will have the same contribution limits as 401(k) plans. An employee can defer up to $18,000 a year in 2016, plus a $6,000 catch-up deferral if the employee is over 50 years old. The employer can contribute up to a maximum total balance of $53,000 (or $59,000 if the employee is over 59 ½), including employee deferrals. There is a standard 1% employer flat contribution, and some Federal employees will also receive a match. Continue reading...
What is a Loss?
A loss refers to reduction in the value of an investment, or in business terms, to having expenses outweigh revenues. In a company’s fiscal year, if their operating and total expenses outweigh their revenues, they are operating at a loss. If those companies are not supported by private capital and operate at a loss for too long, it can easily lead to bankruptcy or closure. Newer businesses often run at a net loss for the first few years, while they rush to build labor and capital infrastructure, with costs such as equipment, buildings, technology, employees, and rights. Continue reading...
How does Bitcoin Mining Work?
Anyone with a computer connected to the internet can potentially be a bitcoin miner. Bitcoin’s blockchain technology requires that a large network of computers, running the same client software, be used to randomly succeed at validating blocks of encrypted transactions every 10 minutes or so. That’s where bitcoin mining comes in. Mining is the act of letting one’s computer run what’s known as the “hash function” over and over and over in an attempt to crack the codes on the blocks that need validation. The codes that need cracking are all similar and are only difficult enough to require an average of 10 minutes for a random mining computer to get the right answer. The code and the answers are only significant in that they take time to complete, and that they allow the transactions to be validated and added to the ledger of all bitcoin transactions. Continue reading...
What are the FinCEN Guidelines Surrounding Cryptocurrency?
FinCEN is an agency of the Treasury Department responsible for preventing financial crimes, and they have taken a few steps toward creative effective regulations for cryptocurrency transactions. FinCEN is the Financial Crimes Enforcement Network, an office of the Treasury Department, primarily concerned with money laundering and other forms of financial fraud domestically and internationally. It is because of FinCEN’s far=reaching authority that major cryptocurrency exchanges who do business with US citizens will generally require identity and bank account verification, and will impose limits on transaction amounts. In 2013, FinCEN issued guidance that anyone engaged in the transmission or exchange of cryptocurrencies may fall under their jurisdiction to regulate Money Service Businesses (MSBs), meaning you may potentially have to register as a Money Transmitter on the Federal and state level if you frequently engage in cryptocurrency transactions. Continue reading...
What is 'Pro Forma'?
Pro Forma is a term used frequently in the context of a company’s financial statement, and refers to the manner in which figures are presented. In Latin the term “Pro Forma” means “as a matter of form,” and in the case of a financial statement refers to how figures are presented either in present form or as projections. For publicly traded corporations, statements prepared with the pro forma method are generally made ready ahead of a planned transaction such as an acquisition, merger, or some change in corporate structure based on new investment or capital changes. Continue reading...
What is Account History?
Account history is a term especially useful for investment accounts, where transactions beyond a current month or year’s records are useful for reference. Most people are familiar with the transaction history that is available for the current month, quarter, or year on an individual’s savings, checking, and credit card accounts. These are often called “activity ledgers” or something similar. Account history that reaches further back might be more useful for investment accounts, where the current value of investments, and their cost basis, will depend heavily on account history from potentially years in the past. This sort of query can be made easily with online investment account viewing software from a broker or custodian company. Continue reading...
What is Volatility?
Volatility is a measure of the variance, deviation, or movement of a stock. Volatility is all the extra movement of a stock or other security over and above (and below) a line of averages. Put another way, it is a measure of how many changes in price, and by how much, a security experiences over an amount of time. Computations of Standard Deviation and Variance are measures of the degree of volatility which exists in the movement of a stock. Volatility will also be measured relative to a benchmark index, and the degree to which a security adheres or deviates from the benchmark is called Beta. People will also trade on derivatives of the VIX, which is the volatility index of the S&P 500. Continue reading...
What is a strangle?
A strangle is an options strategy which is profitable if the price of the underlying security swings either up or down because the investor has purchased a call and a put just out of the money on either side of the current price of the underlying. To execute a strangle an investor chooses an underlying security which he or she anticipates will experience some price volatility around a given expiration date for options, but is not sure which way it will go, so a call and a put are both purchased. Continue reading...