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...
How Can I Use the Money From My Coverdell ESA?
Coverdell ESA accounts can be used to cover educational expenses. Similarly to a 529 Plan, the money from a Coverdell ESA can only be used for qualified educational expenses. However, the definitions for “qualified” are broader with this plan, and can be used for educational expenses from Kindergarten through high school, in addition to postsecondary (college) expenses. The downside is that Coverdell’s have a low contribution limit of only $2,000 per year. Continue reading...
What is the Triple Tops (Bearish) Pattern?
The Triple Tops pattern appears when there are three distinct minor Highs (1, 3, 5) at about the same price level. The security is testing the upper resistance level (horizontal line formed by (1, 3, 5), but the price ultimately declines as buyers give up. This type of formation potentially happens when investors can not break the resistance price. There is a distinct possibility that market participants will sell out, and the price can move down with big volumes (leading up to the breakout). Continue reading...
What is the Descending Triangle (Bearish) Pattern?
The Descending Triangle pattern has a horizontal bottom (1, 3, 5) which represents the support level, and a down-sloping top line (2, 4). The breakout can be either up or down and the direction of the breakout determines which corresponding price level is the target. This pattern is commonly associated with directionless markets, since the contraction (narrowing) of the market range signals that neither bulls nor bears are in control. When the price of a pair consolidates in a somewhat volatile fashion, it may indicate growing investor concern that the price is set to break out. Continue reading...
What is Book Value?
Book value is based on an accounting method that only considers certain factors, generally the more tangible or easily quantifiable ones, and excludes the more ethereal factors such as ‘goodwill.’ Book value can apply to an individual asset, a security, or a company, and tends to be pretty straightforward. Whatever value an asset is given on a balance sheet is its book value. For a tangible asset, this is calculated as the cost of the asset minus accumulated depreciation. Continue reading...
What is the Absolute Breadth Index?
The Absolute Breadth Index (ABI) is a market breadth indicator, calculated using the absolute value of the difference between the number of advancing stocks and declining stocks to indicate the size of market movement without considering price direction. Larger ABI numbers will indicate more volatility. When breadth is smaller, it means that the market isn’t experiencing significant movement, or movement in a definitive direction. When advances or declines pull away from the other, it indicates the presence of market-wide trends. 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 the Accounting Cycle?
The Accounting Cycle includes all of the documentation that is collected and all of the controls and systems in place to ensure accurate accounting. The Accounting Cycle begins with the point of sale, with documentation for the transaction (invoice or receipt) and the internal expenses and inventory. There are conventions, controls and systems in place to account for and control the flow of information in a company at each stage of the process to ensure that accounts are as accurate as possible. The Accounting Cycle may refer to the length of time between trial balances, such as monthly, quarterly, or annually. Continue reading...
What is a commodities futures contract?
Commodities Futures are one of the most highly traded securities in the world, and it is partially because nothing has to be delivered by the participants as in a spot-trading market. Futures can be purchased on margin, opening up large positions, long or short, and if a trader finds a place to exit before the settlement date of the contract, the trader will buy/sell to close his or her position, and the exchange will regard the trader’s position as flat, and nonexistent for all intents and purposes. Continue reading...
What are 'non-marginable' securities?
Some securities, such as penny stocks and IPOs, are prohibited from being purchased on margin or for serving as margin for other purchases. Stocks and other securities that are too volatile to serve as margin collateral - or to be purchased on margin - are called Non-marginable Securities. The Federal Reserve Board has defined certain criteria for determining which securities are non-marginable, and brokers often have their own house rules for traders. Continue reading...