In today’s world, having sufficient insurance coverage is a key component of being financially secure. While there are many different types of insurance on the market today, there are a few basic kinds of coverage that every adult should have. Here are some examples of the kinds of insurance policies you should acquire and maintain if at all possible.
An Initial Public Offering (IPO) prospectus is the report prepared by a corporation when it is seeking to raise capital from investors by selling company shares of stock to the public. The IPO prospectus details the reasons for the IPO, how the company plans to use the capital raised, and the risk factors involved in the business. Careful evaluation of the IPO prospectus can help a potential investor steer clear of a company that is seeking money to bail itself out of a difficult financial situation or allow some shareholders to sell their ownership in the company.
The process of transferring the total amount owing on a credit card to another revolving debt instrument are known as balance transfers. This process allows cardholders to take advantage of a competitor’s offering of a lower interest rate. Balance transfers are available from all credit card issuers and are a commonly used method of moving multiple credit card balances onto one credit card.
When credit card debt is moved to a longer term debt instrument, such as a line of credit or personal loan, it is called a debt consolidation. Multiple credit cards and other debts are combined into one debt, usually with a lower interest rate and a fixed monthly payment and term.
Many people purchase cars with bank or dealership financing, and may put little to no down payment on it. This can quickly result in what is called an upside down car loan. When a loan goes upside down it means that the person owes more money than the car is worth. Attempts to sell the car would leave residual amounts owed that the person with the loan would have to pay.
The upside down car loan is actually a fairly common thing in auto financing. Estimates differ, but reports on American car loans suggest that about 30-40% of loans for new cars are presently upside down. There are a number of reasons why this occurs.
It is an inescapable fact of life that most of us will someday be evaluated by our credit history. This tasteless, odorless documentation of our spending and repayment habits, held in secrecy by three reporting agencies, can literally make or break us financially. Starting with the first store-issued charge card or student loan application, a credit history keeps an unblinking eye on an individual’s timely payments, slow payments or non-payments. Failure to fulfill a credit obligation, no matter what the financial or personal circumstances, can lead to a very negative credit rating. This information remains active for many years, which means a closed store account from six years ago can adversely affect a car loan application submitted yesterday.
Once you realize that your debit card is missing, regardless if it is stolen or just lost, the first step should be to cancel the card by calling the bank that issued it. The liability for a stolen debit card can differ greatly from a traditional credit card. It depends on the length of time between when the card was stolen and when you reported it as such. To effectively handle debit card fraud, American consumers need to understand the difference between debit and credit, know their rights under the law, report the theft and take action to prevent the situation from occurring again.
If you are considering donating a car to charity, there are a few aspects of the process you should be familiar with. As a tax deduction, donating a car may or may not make good financial sense. However, if you are truly interested in being charitable, then the tax deduction merely comes as an added bonus. Before donating a car, make sure you are dealing with a reputable donation service or qualified charity.
Numerous charities, from the National Kidney Foundation to the Vietnam Veterans, accept vehicle donations. The use of vehicles donated to charities varies from auction proceeds to gifts to the needy to actual use by the charity itself. The majority of charities sell donated vehicles at auctions and use the proceeds to fund their programs.
Buying stocks is a means of investing in companies in which you want to own equity. These ownership positions are issued in instruments called stocks. People purchase stocks through stockbrokers, agents, the company itself or they can be traded individually.
It is important to consider not only the company you want to invest in, but also the environment of the stock market at the time. For example, if the market were in a long-term downturn, or recession, you would want to investigate companies that produce necessities of life. Certain household items, or consumer goods, are more dependable options during this time. They will always be needed, regardless of the economic environment.
Buying timeshares is incredibly easy in some respects and more challenging to do properly in others. In many instances people are buying the right to use a property for a specific time each year, and the market is literally flooded with timeshare sales. This should say something to people when they are considering buying timeshares. While many people love this way of prearranging a place to stay during vacations, others are anxious to get rid of any timeshares they purchased, and that suggests a high degree of dissatisfaction with purchase (in addition to things like financial need) that needs to be taken into account. It’s recommended that people think long and hard before they make a purchase of a timeshare.
Western accounting refers to the accounting methods and practices used in the western-most countries of the world as opposed to those located farther to the east. Generally, western accounting is rules-based. This is demonstrated by the two dominant sets of western accounting standards, U.S. Generally Acceptable Accounting Principals (GAAP) and International Fair Reporting Standards (IFRS). The codes have many similarities, but also many differences. There has been a worldwide push toward uniting these codes into one standardized set of accounting rules which can be used by all, including the businesses in eastern countries. This will make for financial statements that can be understood by financial advisers worldwide.
Voodoo economics is a derogatory term used to describe the economic process known as supply-side economics. The term was used by then-presidential candidate George Herbert Walker Bush, in his fight against Ronald Reagan for the Republican nomination in 1980. Voodoo economics is a complicated system that uses tax cuts as incentives to saving and increasing labor.
Supply-side economics focus on increasing the supply of goods and services. According to some economists, by increasing supply, you will increase demand. This may seem contradictory, but it is often true that a market flooded with products will induce lower prices for the consumers, as companies compete for business. Voodoo economics largely revolved around the lowering of taxes to encourage a higher rate of supply.
Timing the market is a strategy to buy and sell investments at a preferred price. This includes stocks, bonds, commodities, mutual funds, index funds and real estate. Every financial market experiences fluctuations in their trading range based on news factors such as financial reports, news reports that directly impact the company or product, stock and bond payouts, supply and demand, and the economic health of the industry and nation.
By studying these indicators and the cycles of your particular vehicle of investment, you can predict the market direction. This will enable higher returns as you buy and sell at premium prices. The goal in timing the market is to buy as the price bottoms out and begins to gain momentum and to sell just before the price peaks. Several market strategies are available to help predict where your investment instrument is in the cycle.
When government agencies calculate economic figures such as the Gross National Product (GNP), they rely on information gathered from legitimate income reports generated by companies, non-profit organizations and individual taxpayers. What these agencies cannot use in their economic forecasts, however, are the estimated billions of dollars in cash circulating through what is known as the “underground economy.” The underground economy includes income generated through illegal means, such as prostitution or gambling, as well as legitimate but cash-based activities such as online auctions or bartering services.
The Taylor rule is an economic concept that suggests how the United States Federal Reserve or any central bank should set short-term interest rates. Proposed by a Stanford University economist, the rule is meant as a guideline for balancing complicated nationwide economic factors. Many experts suggest that the general adherence of the US Federal Reserve to the Taylor rule has kept inflation under control throughout the United States.
In August 1997, United States President Bill Clinton signed a tax-reform bill meant to balance the US budget and make massive changes to the economic policy of the federal government. It was passed by a large majority of the United States Congress, receiving a 90% majority in the House of Representatives and a 92% majority in the Senate. The Taxpayer Relief Act of 1997
Social choice theory is a series of methods used to create a perfectly average individual to see how the average person would react in a situation. The basic premise of social choice theory is that a person will do whatever she can to improve her situation and avoid circumstances that will lessen her situation. To determine how an individual will react, the group studied is broken down into prime motivations. The average motivations among everyone in the group are collected and attached to a single aggregate individual. This hypothetical individual is the basis of the testing.
The single audit is an audit performed on all aspects of an organization that receives more than $500,000 US Dollars (USD) of federal funds from the United States government in a single year. Such institutions eligible to be audited include states and cities, universities, and non-profit organizations. By conducting such an audit, the U.S. government can keep track of how its funds are being managed and make sure they’re not being wasted or misused in any way. This audit came about when the U.S. Congress passed the Single Audit Act in 1984.
The National Foundation for Credit Counseling (NFCC) is an American institution that aimed to provide licensing, accreditation and assistance to debt or credit counselors. It was funded primarily by lending (credit card) agencies. In the wake of much higher credit spending in the 1970s and 1980s (which continues today) the NFCC helped point people in the direction of debt counselors. These counselors worked for nonprofit agencies, and would help borrowers consolidate their debts, especially if they owed to multiple credit cards, lowering or suspending further interest, and helping borrowers make a single payment each month, which would be disbursed among their creditors.
The National Credit Union Administration is an independent agency of the United States government that is responsible for chartering and overseeing the activity of the nation’s several thousand federally-chartered credit unions. Established in 1934 as part of New Deal legislation, the agency was first known as the Bureau of Federal Credit Unions and was part of the Farm Credit Administration. Its mandate was made necessary by the growing popularity of credit unions across the United States, which itself was primarily due to the reluctance of most banks at the time to offer banking services to consumers at reasonable costs.
The Market Technicians Association is a non-profit association of stock market analysts based in the U.S. Originally a local New York City organization, the association now has over 3,400 members in over 70 different countries. The Market Technicians Association’s primarily objective is to educate both the public and its members in the theory of technical analysis as well as its application and practice. This organization also offers a professional certification known as Chartered Market Technician to qualified technical analysts.
The marginal rate of substitution is the rate at which it is necessary to forgo consumption of one product in order to secure an additional unit of a different product and still receive the same level of satisfaction overall. From this perspective, this type of rate can be viewed as a compromise or a trade-off that makes it possible for the consume to still meet needs or wants in an acceptable manner, even if the exact means of obtaining that satisfaction has changed. Companies as well as individuals make use of this particular economic strategy on a daily basis as they seek to maximize the return on the amount of income they have available to spend.
John Maynard Keynes, whose Keynesian economics significantly influenced federal fiscal policies during the Great Depression in the United States, first presented the liquidity preference theory in 1935. The liquidity preference theory asserts that investors strongly prefer to maintain their funds in liquid form, such as cash or checking accounts, rather than less liquid accounts or assets, such as stocks, bonds, and commodities. In order to promote long-term investments, banks offer interest to investors to compensate for their loss of liquidity. Investors expect interest rates for longer-term investments to exceed those for short-term investments, and these expectations drive the interest rate yield of investments.
The Investment Company Institute (ICI) is the association of players in the investment industry in the United States. It was organized with the mission of promoting high ethical standards among investment companies in order to gain public trust and confidence, thus, helping to encourage investing. It also seeks to give members of the public a good grasp of fund management and the ways they can invest their money in financial products or investment funds that can yield interests or dividends for their money. The Investment Company Institute, likewise, aims to promote the interests of directors, stockholders and investment counselors of investment houses as well as the investment funds themselves.
The iBoxx® is a denomination of particular bond market indices used by professionals in finance. These indices are used as benchmarks in the cash bond market because they mainly consist of investment-grade issues. Some of the reasons for their use include performance evaluation, asset allocation and fixed income research. The iBoxx® indices are designed to befit diverse investment profiles and strategies. They are chiefly comprised of the major global sovereign and corporate issued bonds, denominated in the issuer’s local currency, such as US Dollars (USD), Euro and Sterling.
The Financial Services Roundtable is an organization designed to represent the financial services industry. It is made up of 100 members taken from the largest United States companies in the industry. The group’s work is mainly related to promoting the industry, discussing policies and lobbying against increased regulation.
The group’s history dates back to 1912 with the formation of the Association of Reserve City Bankers. A counterpart group titled the Association of Registered Bank Holding Companies began in 1958. These two associations merged in 1993 to form the Bankers Roundtable. This was expanded between 1999 and 2000 to cover other financial sectors, such as insurance and investment.
The Federal National Mortgage Association, colloquially known as Fannie Mae® or the FNMA, is a congressionally-chartered, government-backed mortgage lending company in the United States. The main goal of the Federal National Mortgage Association is to ensure that U.S. homebuyers can have access to affordable mortgage rates. The association does not itself issue mortgages, but purchases and underwrites existing mortgages from banks, which frees up money for the banks to continue lending. The association was created in 1938 during the Great Depression as a wholly government-owned entity. Its leadership and ownership structure has undergone several changes since then: it was once wholly independent, but as of 2010 was held in government conservatorship.
The Elliott Wave Theory, or Elliott Wave Principle, is a type of technical analysis used to predict trends in the stock markets. It accomplishes this by the monitoring of unique characteristics in the wave patterns of prices and crowd psychology. It is somewhat based on the Dow Theory, which states that the market is trending upward if one of its averages is higher than a previous important high, and thus the market trend flows in waves of highs and lows.
The economic cycle, or business cycle, refers to the repetitive but irregular up-and-down fluctuation of the aggregate economy between periods of growth, or expansion, and periods of contraction, or recession. Four different phases of activity spread out over a period of years — the trough, the expansion or recovery, the peak, and the recession or contraction — make up a business cycle. Merely flat points on the cycle, the peak and trough represent the maximum and minimum points of economic vigor, while recession and expansion are the moving periods of the economic cycle that reflect the trends in the financial climate, measuring the direction of the economy. The National Bureau of Economic Research gauges the overall health of the economy and determines whether the United States is in expansion, recession, or transition between the two by analyzing a variety of factors such as personal income levels, employment rates, sales volumes, and industrial production.
Credit unions and banks are more similar than they are different. Both are financial institutions which offer a variety of services to their depositors, ranging from savings accounts to home loans. However, the underlying philosophy behind banks and credit unions is different, with the key distinction being that banks are run for the purpose of generating profits, while credit unions are generally run as non-profit, community-based institutions.
The practice of banking is ancient; for almost as long as people have had money, bankers have been present to deal with it. Credit unions date to the 1900s, when they were initially established as workers cooperatives. In the 20th century, several industries began creating their own credit unions, allowing members of specific industries or employees of particular businesses to enjoy credit union membership, and credit unions were also opened more generally to the public.
In 1946, the United States passed the Employment Act, which among other things, set up a special presidential advisory committee called the Council of Economic Advisors (CEA). This Council would consist of three members, one of whom who would chair the Council, and each advisor would be decided on by presidential appointment, which then had to be confirmed by the US Senate. In overview, the main goals of the Council of Economic Advisors were to evaluate the economy, and government programs and how they affected the economy. From this analysis, they reported to the president, and advised on and helped to develop economic policy based on their findings.
Commodities are actual physical goods such as grain, gas, metals, cattle, and food products. The commodity market consists of exchanges where commodities are bought and sold using standardized contracts. There are currently 48 large commodity exchanges world-wide selling approximately 100 different commodities. Eurex, an electronic exchange in Europe, is the world’s largest commodity market.
The existence of commodity contracts and exchanges appears to date back to the ancient civilization of Sumer. The primary products traded at that time were grain and livestock. There are now five basic categories of goods sold on the commodity market; grains, such as corn, wheat and soybeans; energy products, including crude oil, heating oil, gasoline and natural gas; metals, such as gold, silver and copper; softs, a category that includes food and manufacturing products such as cotton and coffee; and livestock.
The Commodity Futures Modernization Act was passed by Congress and signed into law by President Bill Clinton in December 2000. It was an attempt to solve a dispute between the Securities Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC) that arose in the early 1980s. At that time, Congress had enacted legislation to expand the scope of what was defined as a commodity. This resulted in some overlap between the regulatory scope of the SEC and the CFTC.
Originally, commodities were typically agricultural products and raw materials. Things like pork bellies, corn, wheat, and oil are common commodities. Markets developed for these products, and standard contracts were developed, and then bought and sold.
The child and dependent care credit is an amount deducted from your total taxes owed to the US Internal Revenue Service (IRS). Qualifying for the credit depends in part on whether your child or dependent is considered a “qualifying” person, how much money you make, and exactly what money you had to pay in order to care for the qualifying person. Many people use the child and dependent care credit to offset payments to daycare facilities, to nannies, housekeepers, or people who provide personal care for a disabled dependent. But it doesn’t represent a dollar for dollar cost of your actual expense. Amounts will differ from year to year because tax codes and tax laws change frequently.
Founded in 1944 and owned by the Canadian government, the Business Development Bank of Canada is a banking institution focused on promoting entrepreneurship among the country’s small- and mid-sized businesses. It does this by providing financing, venture capital, business development consulting, educational materials, and online tools to start-up businesses that have approximately 50 to 250 employees. The Business Development Bank of Canada is often willing to lend to start-up companies by tailoring loan terms to new company business models when their performance and financing needs fall outside the guidelines acceptable to traditional commercial lenders. The bank does not provide retail banking services to everyday consumers.
Many companies and individuals use debt as a way to buy things they do not have the money for at the time of purchase. Although there are cases where debt can be a tool, more often than not the costs outweigh the benefits of borrowing money. Although most financial experts will agree that too much debt is not healthy for your financial future, there is disagreement about the best way to consolidate your debt. One option is simple consolidation through a loan or credit counseling company, while another option is through paying off your debt in a systematic way.
The Internal Revenue Service (IRS) requires all 401(k) plans to be tested annually. The testing fulfills several key purposes. One test is the ADP/ACP test, which stands for actual deferral percentage/actual contribution percentage. The purpose of the test is to determine whether all participants are benefiting equitably from the plan. Other tests are designed to ensure that participants are not exceeding the contributions limits allowed by the IRS.
There are several required tests for every plan. Due to the complexity of the tests, they are usually completed by an outside company rather than the company sponsoring the plan. Similar to tax filing deadlines, each test has an annual filing deadline. The filing deadline for the ADP/ACP test is 15 March. Failure to meet the filing deadline can cause a plan to incur stiff penalties, including disqualification of the plan.
Tax sheltering is the practice of making investments and purchases for the purpose of benefiting from preferential tax treatment. There are three different types of tax shelter in the United States: those on which no tax is ever due, or tax-exempt; those on which tax liability is postponed or deferred, usually until the money is withdrawn by the taxpayer; and those which reduce the taxpayer’s tax liability without regard to income at all, or tax credit.
Tax competition is the practice of lowering tax rates, and sometimes regulatory costs, below those of other jurisdictions. There are various reasons a jurisdiction may engage in tax competition, the most common being to attract businesses and people to the area, and to dissuade exports of goods and/or the out-migration of people. The alternative to tax competition is tax harmonization, which can be described as the movement of tax rates and regulatory costs to a single level, so that there is no tax advantage to moving from one jurisdiction to another.
Style analysis is the strategy of evaluating and identifying the investment style that an investor or money manager usually employs when making decisions about the acquisition or sale of various investment options. Conducting an analysis of this type from time to time can help determine if the currently employed strategy or style is actually aiding the investor in achieving his or her financial goals, or if there is a need to make some changes in how investments are handled.
There are many different kinds of investment styles, including combinations of one or more basic styles. Some are designed for quick return, while others are suited to achieving long-term goals. Classifying some of these basic styles makes the process of style analysis much easier, since each of these styles possess characteristics that set them apart from the rest.
Sallie Mae®, properly known as the SLM Corporation®, is a corporation concerned with the servicing of student loans. The largest provider of student loan services in the United States, Sallie Mae® claims to have lent money to over 31 million students since its inception in 1972. A controversial organization from the beginning, Sallie Mae® has faced frequent criticisms for its role as both a lender and a collector.
In 1972, the United States created Sallie Mae® as a government-sponsored enterprise. These business endeavors were meant to fuel credit and lending in targeted segments of the country; in this case, the targeted group was students. The Congressional charter for the organization was ended in 2004, making Sallie Mae® a wholly private enterprise. In 2010, following new student loan legislation that returned federal loan lending practices to the province of the federal government, the SLM Corporation® became a private lender.
Sales per square foot is a unit used to measure the profitability of retail stores. This number is determined by calculating the total sales in question, over a given period of time, and dividing it by the square feet of the area being analyzed. It is generally used mostly by retailers and property managers.
Sales per square foot may be calculated for one individual shop, a chain of stores, or for an entire shopping mall. When calculated for one individual store, it shows how much money the store is receiving. Sales dollars may be totaled for one month or one year.
Risk theory attempts to explain the decisions people make when they are faced with uncertainty about the future. Typically, a situation in which risk theory may be applied involves a number of possible states of the world, a number of possible decisions and an outcome for each combination of state and decision. The theory predicts a decision according to the distribution of outcomes it will produce. The theory is important for people who make decisions whose success hinges on the way the risks in the world turn out. For example, people involved with insurance companies, whose success depends on predicting the frequency and magnitude of claims, use risk theory to help determine their optimum exposure to risks.
The cash advance form is not a new document. In fact, businesses have granted cash advances to employees for a number of decades. More recently, a type of cash advance form has developed when consumers wish to arrange a payday loan with some type of lending service. Here are some examples of what sort of information would be included on this type of document in each of these settings.
Regulation Q, a part of the US Code of Federal Regulations (CFR), was promulgated in 1933 and essentially phased out in a six-year process ending in March 1986. Regulation Q’s most visible component was to prohibit American banks from paying interest on checking accounts, but it also contained various provisions by which the Federal Reserve could set interest rate ceilings for various types of banks to influence the extension of credit.
The United States was suffering through the Great Depression in the early 1930s, and the Congress wanted to influence country banks emdash; savings and loans (S&Ls) and similar thrift institutions &emdash; to extend credit to local farmers and merchants. However, the practice of many banks was to deposit their funds in commercial banks and earn interest on those deposits. These deposits were demand deposits; they could be withdrawn at any time, upon demand. Modern checking accounts are demand accounts.
Public financing is a system that allows political candidates access to public funds for their election campaign. The system is meant to make the majority of the candidate’s funding come from the country, rather than from special interest groups such as Political Action Committees (PACs). Public financing is either considered a full or partial financing system for political races.
Prospect theory is an economic theory of behavior that attempts to explain people’s decisions when they are faced with situations that involve risk. According to the theory, people evaluate potential gains and losses as changes from their current state rather than as independent situations in the future, and they try to avoid losses more than they try to seek winnings. People perceive the likelihood of an event inaccurately, especially when the probability is close to zero or one. Prospect theory explains seemingly irrational decisions in situations like gambling and insurance purchases.
Price discrimination is the practice of one retailer, wholesaler, or manufacturer charging different prices for the same items to different customer. This is a widespread practice that does not necessarily imply negative discrimination. Early forms of price discrimination certainly existed in Jim Crow law states, where a black consumer might very likely pay more for the same quantity and items than a white consumer would. In general, this type of price discrimination is very rare today.
Personal finance is the process of effectively managing assets in the possession of an individual or a family. The approach dictates that attention is given to the generation of income for the household, allotting specific amounts of that income to cover all expenses associated with the household, and take action to create reserves of cash and other assets for ongoing financial security. A wide variety of resources can be called upon to aid in the process of personal finance.
Basic to the task of personal finance is having a firm grasp on the flow of income into the household. The income is usually in the form of wages or salary from a job, although other forms on income may apply. Interest earned from investments, alimony or child support payments and other forms of compensation all qualify as income.
Overwithholding refers to the practice of taking more taxes from a paycheck, usually as done by an employer or payroll clerk, than are required to pay the amount of taxes you will owe at the end of the year. If the employer has practiced overwithholding, you’ll usually note this when you file your taxes at the end of the year because you’ll receive money back. Usually, when taxes are overwithheld, it’s not purposeful on the part of the employer, and your receiving a refund at the end of the year is related to the fact that you didn’t claim enough deductions on your W-4 forms. Sometimes, when a salary is very small, or if circumstances leave you without employment for part of the year, any taxes you paid, regardless of how many deductions you took when you were working, will be returned to you.
Obsolescence is a word which is used to describe a product, service, or concept which is functional, but no longer useful because of changes which have occurred in the market. Technology may have outstripped the product, for example, or changes in training, social norms, and accepted practices may have rendered a service useless. Obsolescence is a continual issue with everything from medical training to cars.