When Can I Access Money in My Roth IRA?
Roth IRAs have some interesting provisions that make them a little more liquid than other retirement accounts. Roth IRAs contain after-tax contributions that actually remain accessible to you at any time, without tax or penalty. The stipulations on withdrawals are only concerned with earnings in the account, not the principal amount. In order to withdraw earnings without paying a 10% penalty and income taxes, you must be at least 59½ and five years must have passed since you first began contributing. Continue reading...
What are the Contribution Limits For My Coverdell ESA?
Coverdell ESAs have low contribution limits, and an income limit that may keep you from contributing at all. Currently, in order to contribute to an ESA at all, you and your spouse must make less than $220,000 per year (combined). The annual contribution limit to an ESA is $2,000, and the contributions made to an ESA are not tax-deductible. These limits have not been adjusted for inflation in years, and these plans are quickly becoming obsolete. Continue reading...
Do I Need a Will?
Yes, generally speaking any person that has assets and liabilities needs a will. In the absence of a will, a deceased person’s assets will be distributed by a court, which may not handle the assets as the deceased would have desired. Not having a will also subjects a person’s estate to legal disputes from heirs, creditors, and sometimes non-family members seeking to make a claim. The court costs to settling an estate without a will can be very high and taxing to the deceased’s immediate family and loved ones. Continue reading...
What is Dividend Per Share?
Dividend payments are allocated on a per-share basis. The company issuing them may announce the dividend in terms of the dollar value, but investors and analytical services will translate that into a percentage yield. When calculating the dividend from a company perspective, the total dividend amount that they are comfortable declaring is divided by the number of outstanding shares. The dividend per share is an important number, and the growth of this number is the dividend growth rate. Continue reading...
What is a Living Will?
A Living Will is a document that dictates your wishes in the event you become incapable of making decisions, whether because of illness or injury. The directives in a living will are almost always related to person's desires regarding their medical treatment in those circumstances of incapacitation, in which they are no longer able to express informed consent. What is Probate? Should I Notarize my Will? Continue reading...
What is Private Equity?
In the world of finance, private equity is a relatively new industry whereby private companies finance other businesses through direct investment, often in exchange for equity in the company and in some cases, decision-making capabilities. Private equity companies generally use capital of the principals or of high net worth investors to strategically invest in growing companies that need growth capital or seed capital to expand operations. Continue reading...
What Does Debt Financing Mean?
Debt financing occurs when a company borrows money or secures financing through loans, with the obligation to repay the money (typically with interest). Generally, a corporation will engage in debt financing by selling bonds in the marketplace or to private investors, or with promissory notes or commercial paper. Generally the terms of the bond or the loan will have the company commit as collateral assets of the business, such as real estate, cash on hand, or fixed assets. Continue reading...
What is Demand?
Demand is a measure of consumer’s desire to purchase goods and services. High demand for a product typically puts upward pressure on price, and vice versa. Demand is a key metric in reading price trends and a company’s ability to set price point. Weaker demand on a global macro level implies that countries are investing less, developing less, and therefore focused less on growth. Sustained downtrends in demand will generally lead to recessionary conditions. Often times, central banks will try to step-in and stoke demand by lowering the cost of money (interest rates). Continue reading...
Should I Rely on Analyst Upgrades or Downgrades of the Positions in my Investment Portfolio?
Upgrades and downgrades can be useful but they may not be the most current form of trading information. The problem with upgrades or downgrades is that they rely on the events which already happened; in most cases, the information is already built into the price of the stock. Very often, after a company reports bad results, analysts will downgrade that company — how smart they are! Of course, we all wish that they would do it before the results had been reported. Still, if a majority of analysts downgrade the stock, it might be prudent to seriously consider selling it. Continue reading...
What is a Credit Spread?
Credit Spread is an indication of the default risk perceived in corporate bonds at the current time. The credit spread is the difference between the yield on the safest bonds and the riskiest bonds. How much does it cost corporations to issue bonds, in terms of the yield expected by investors in the current market? Typically, a higher spread indicates a more unstable economy. Buyers of large quantities of bonds tend to insure their purchases, and the cost of the insurance is usually reflected in so-called CDS's (Credit Default Swaps). The more expensive the CDS's are, the more risky it is to purchase the bond. Continue reading...