Archives July 2021

The 457 Plan is a type of tax-advantaged retirement plan with deferred compensation. The plan is non-qualified – it doesn’t meet the guidelines of the Employee Retirement Income Security Act (ERISA). 457 plans are offered by state and local government employers, as well as certain non-profit employers. A 457 plan is provided by the government and local state organizations (and some non-profit organizations), allowing employees to contribute portions of their salary into a tax-advantaged, non-qualified retirement vehicle.

What Is a 457 Plan?

A 457 plan is commonly associated with state and local government, while many private-sector employers offer a similar type of plan. It is a deferral, defined contribution, Roth or Traditional IRA-type plan. 457 contributions are not deductible as income (for federal income tax purposes), but are fully or partially deductible for state and local income taxes and in certain cases, for self-employment taxes. The 457 plan is different from a 403(b) (a non-qualified defined contribution plan), in that the 457 is not eligible for “catch up” contribution amounts or for matching contribution to an employer’s contribution.

How a 457 Plan Works

The employer may contribute up to $52,000 per employee (10% of employee’s compensation up to a maximum of $208,000 in 2019) or as many as 20% of employee’s compensation. As the employee draws out portions of the contribution over his or her life, he or she gets to keep this tax-free. Any balance leftover at the end of the year is returned to the employee. The 457 plan is for employees of state and local government organizations. You can contribute up to 25% of your salary to the plan, or $127,200 (for 2018), or up to $132,500 (for 2019) if you are age 50 or older. The plan has a $3,400 annual maximum in employer match funds. However, the federal government match is $1,000 and your employer match is $2,400 for 2018, so your employer and federal government match are equal to $4,400. You don’t have to take any distributions until age 59 ½.

Advantages of a 457 Plan

According to a study conducted by Fidelity, a 457 plan can provide a tax benefit of up to $40,000 annually for middle-income participants. Qualified participants can defer taxes up to an additional $16,000 annually through their first five years. After that, they can defer up to $30,000 annually. unqualified participants can contribute up to $54,000 annually tax-deferred (or $17,000 annual) if they meet certain requirements.

A 457 plan offers an employer a 50% match on qualified plan contributions. Even though the 457 plan isn’t a qualified retirement plan (such as a 401k), an employer may contribute up to $52,000 (for 2018) into the 457 plan on behalf of each employee on a tax-deductible basis. If the employer makes matching contributions, this is a 50% tax deduction on the employee’s contribution, and an additional 50% tax deduction for the employer, resulting in an immediate tax savings of the employee’s contribution. Employer and employee contributions are protected 457 plans are a tax-deferred savings plan, and contributions are not subject to income tax, Medicare tax, FICA tax, or Social Security taxes.

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Limitations of a 457 Plan

There are a few significant limitations to the 457 plan. There are no investment restrictions on the plans – so, once money has been contributed to a 457 plan, there’s no need to diversify. Unlike 401(k) plans, 457 plans are non-qualified. So, if an employee takes a loan from the plan, it must be repaid in order to receive the refundable portion of the contribution back. There are some exceptions to the rules – such as the case of government employees. If an employee is an employee of a government entity, there’s a one-time exemption that makes it easier for employees to invest a small amount of their salary without losing the benefit of the tax-advantaged funds.

Types of 457 plan

There are four types of 457 plans: Regular – a current 457 plan with a percentage of salary matching contribution, and employer match. Mandatory – a current 457 plan with a percentage of salary matching contribution, and employer match. Permitted – a current 457 plan with a percentage of salary matching contribution, and employer match. Unrestricted – a current 457 plan with a percentage of salary matching contribution, and employer match. 457 plans work because employees can contribute pre-tax dollars – either through direct deposit or by paying themselves. While the contribution and/or the employer’s matching contribution is not taxed, the balance of the account is after-tax, and in most cases after-tax dollars.

How Withdrawals in 457 Plan Work

A 457 plan allows you to take advantage of both the tax-deferred aspects of a 401(k), as well as the tax-free aspects of a 403(b). An investor can withdraw the funds, tax-free (within limits, depending on your specific plan), as a lump sum, in smaller amounts, or in combination. The lump sum, however, is taxable as ordinary income (unless the amount withdrawn is below the applicable withholding taxes). At age 62, the 457 workers are generally allowed to begin taking withdrawals from the plan. Any vesting requirements or time payments must be met, however.

Rollover and Transfer Options

The custodian of a 457 plan allows participants to roll over balances over to a new participant, or roll over to a personal IRA. The custodian will automatically roll over the balance, with or without a change in beneficiary information. The rollover amount is determined by the value of the balance at the start of the rollover. For example, if a participant has a $100,000 balance, the rollover amount will be equal to the balance at the time of the rollover, multiplied by a one-time income tax savings for the participant. Rollovers are accomplished by the custodian and financial institutions.

Special Consideration for 403(b) Plan Holders

Although there are pros and cons to the 403(b) plan structure, the key difference is that the 403(b) plan type has the characteristics of a defined benefit plan (traditional plan), not a defined contribution plan (401k plan). Some 403(b) plans offer features and benefits not available to other plans (i.e., a fee-for-service option). Contributions made to a 403(b) plan must be made with pre-tax dollars, and the plan has no upfront employer contribution.

There are two other important points to note in regards to 403(b) plans: The 403(b) plan you are in will automatically roll over your 401(k) to your 457 plan after 10 years, or sooner if you request it. You can rollover your 403(b) after 15 years of service unless you request it in the contract. There are three major differences between the 403(b) and 457 plans. The biggest difference is the way contributions to the 403(b) are tax-deductible. Employers will make an offer letter, which gives employees the opportunity to participate in a 403(b) plan. The 401(k) option is the default option for new employees, and once employees join the 401(k) program they can continue to contribute in the 403(b) plan until age 59 ½.

The benefits of a 457 plan

The 457 Plan has tax benefits on both the employee and the employer side. The employee has to contribute to a separate account on the individual side, called the “discretionary” account. The amount that the employee contributes to the plan is counted as income and taxed as regular income. But on the other hand, the employee’s wages are protected from the excesses of the income tax, and the contribution does not count as income on the employee’s return. The employee then receives a withdrawal from the plan for a period equal to the number of years worked. For example, the employee works 20 years in the plan. The employee receives a 10% return on the money.

Conclusion

Until President Trump signs the tax plan into law, 457 plans will continue to exist as federal law. For now, employers who want to incorporate the plan into their benefits packages for their eligible employees should do so now and consider offering it to additional employees as well.

“If you have any feedback about what is a 457 retirement plan that you have tried out or any questions about the ones that I have recommended, please leave your comments below!”

NB: The purpose of this website is to provide a general understanding of personal finance, basic financial concepts, and information. It’s not intended to advise on tax, insurance, investment, or any product and service. Since each of us has our own unique situation, you should have all the appropriate information to understand and make the right decision to fit with your needs and your financial goals. I hope that you will succeed in building your financial future.

In this post, we will help you make ends meet. Cable deals look great until the bill arrives, and their customers are shocked with all their extra fees. Some people looked inside cables’ hidden costs and detected cable TV surcharges had increased considerably since 2010. According to a 2020 report from DecisionData.org, the average household cable package in the U.S. costs $217.42 a month —that is nearly $2,600 a year. According to the findings of this report, a cable TV bill is relatively expensive compared with other utilities for smaller households.

The cable companies that offer such services, such as Spectrum, Mediacom, Xfinity, claim that these costs are necessary; because of the rising cost of cable programming and the cost of local broadcast stations. For years, cable companies rebroadcast local channels without paying anything! However, Congress changed that in 1992. Now the cable companies have to pay local channels to broadcast their programs.

10 ways to lower your Cable Bill

Here, there are several tips and trick you can do to lower your cable bill and save more money:

1. Buy a digital antenna for approximately 30 dollars. Once you set it up, you will get dozens of free over-the-air channels.
2. Usually, cable companies offer specials to be more competitive in the market. Find promotional deals from cable companies and other providers. Call with specific offers you have found from competitors, and say you are thinking of leaving; finally, ask for the retention department whose job is to keep their customers from canceling. “Cable companies know that it is much more costly for them to get a new customer than to retain an existing customer,” says financial advisor Charles H. Thomas III, founder of Intrepid Eagle Finance. Most likely, you will get a price cut. Therefore, you can use it as a bartering tool to bring it down to the price you want or switch cable providers.
3. Compare different rates by different providers in your area. If you think there are better available options for you, then switch away from your current service. As long as you will not face a sizable cancellation fee for switching away from your current service, you could end up with a cheaper alternative.
4. You can directly call your current cable company provider and ask them about the options to reduce your bill. Sometimes people unknowingly and due to the lack of information or knowledge pay for more bandwidth or premium cable programs than they need. “This could include less costly packages that have fewer channels or other options,” Thomas says. Getting out the channels you rarely watch or switching to a less deluxe package can greatly reduce your monthly cable bill. A September 2016 report by Nielsen revealed that, on average, American adults watch only about 20 channels, though they get around 205. You can talk with a sales representative at your current cable company provider about the ways to reduce your cable bill. Remember that if you follow TV series such as “Games of Throne” or “The Crown” you can remove the channel when the season wraps. Therefore, speak with your cable provider agent to find how you can cut your cable bill costs. The agent is there to help you find cable and internet options that fit your needs and your budget. Therefore, when in doubt, ask! Feel free to ask the agent, “Is that the best you can do?” or “Are there any other incentives or promotions?” “Do you know what other offers might be available?”
5. Get rid of unnecessary cable boxes. Premium channels are not the only extras you can manage. Additional cable boxes often cost $3 to $12 per month. Maybe the equipment in your bedroom is not necessary after all.

6. Cut the cable cord altogether! Stream TV and movies online and live. You can buy Roku, Boxes, Google TV, or Apple TV box for about 100$. These let you stream the internet. On the other hand, you can buy a smart TV (In this case, you do not have to buy a separate box). You can also watch from your computer, laptop, or smartphone and use services such as Netflix or Hulu. Subscriptions for Netflix start at $8.99 per month, while Hulu’s base plan is just $5.99 per month. Millions of people have switched from cable companies in favor of streaming services to save their money.

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“The quality of internet streaming these days is excellent, and there are a variety of content providers that offer bundles for a fraction of the price of cable,” says financial expert Cyrus Vanover, founder of The Frugal Budgeter. Nevertheless, you still have to pay your internet bills. Vanover recommends combining streaming platforms with services like Tubi TV to get all the content you are used to for a fraction of the price. However, you have to know that some programs do not exist in online streaming.

7. Try SlingTV or DirecTV. Packages start at $25 per month with SlingTV and $40 per month with DirecTV. Both offer access to live and on-demand TV without all the extra fees of cable.

8. Buy a single package. Try to get your internet, phone and cable services from one company. Instead of having multiple services from different providers, try to bundle your services. In this way, you will lower your spending.

9. If you have always paid your cable bills on or before their due date, you can use it as a bargaining tool when trying to persuade your current cable company to lower your costs.

10. Pay attention to each fee on your cable bill. Some expenses are unavoidable, but you can avoid others, such as those for HD technology. Please call your cable provider’s customer service line for more help in this regard.

Conclusion

Nowadays that cable bills are increasing daily without warning, or a clear reason, there are some ways to lower your cable bills. If you feel I have missed out on anything to mention in this list, please share it with us.

“If you have any feedback about ways to reduce your cable bill by a half that you have tried out or any questions about the ones that I have recommended, please leave your comments below!”

NB: The purpose of this website is to provide a general understanding of personal finance, basic financial concepts, and information. It’s not intended to advise on tax, insurance, investment, or any product and service. Since each of us has our own unique situation, you should have all the appropriate information to understand and make the right decision to fit with your needs and your financial goals. I hope that you will succeed in building your financial future.

If you die without a Will, the law says that you have died “intestate,” which means that you left no instructions as to how your property is to be divided and distributed. In these circumstances, this article will show you how your property will be distributed to your surviving relatives or your wife and children. Even if you want your property divided according to provincial law, you should still have a Will because it will reduce delays and expenses involved in wrapping up your affairs.

What is a Will?

A Will often called a “Living Trust,” is a legal document that dictates how your property is to be divided after your death. Some people choose to make a Will for their own benefit while others may use their Will to transfer property to their spouse, children, or a charity. It is also a common practice to name someone to act on your behalf as an “Administrator of the Estate.” This person is responsible for the proper execution of your Will. It is important to specify in the Will who will be appointed as the Administrator because this person will be the only person authorized to distribute your property according to provincial law and estate laws in the province or territory in which you lived.

Why do people make Wills?

People sometimes make Wills for the following reasons: They want to be sure that they and their family members are legally protected from possible lawsuits from other family members (or even themselves) that could arise from any potential estate disagreements. They might have young children who are minors, or they may have a spouse or child who is incapacitated, mentally disabled, or who is ill and might die within a short period of time. They might have parents or other adult relatives who are facing financial problems, or they might be senior citizens. They might have some reason or other that might have to be considered by the courts regarding their property.

Problems that arise when someone dies without a Will

If someone dies without a Will, the law doesn’t have much say about how the property should be divided. While there are provincial laws that spell out the types of property that should be distributed according to provincial law, the law doesn’t really spell out how it should be done. It does say that the only factor in deciding how the property should be distributed is whether the deceased person intended it to be distributed according to provincial law or on the understanding of a personal representative. So here are some of the questions that might arise if someone dies without a Will: Does the property have to be divided in the order in which the deceased owned it? The answer to this question depends on the date of death.

What Exactly Happens If I Die Without A Will?

Here are some key points that you need to know about how your property will be distributed if you die without a Will: Unless you have a surviving spouse or dependent children, your property will be divided equally among your four remaining living children and your surviving spouse or dependent children. Your surviving spouse or dependent children can’t have any other children before your death, but they can have other spouses, boyfriends, or girlfriends after you die. This is a result of the “step-up” provision, which allows surviving spouses to keep certain property that they had earlier inherited from you. You can inherit a piece of property outright, and it will be distributed equally among your heirs, without a Will.

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What Exactly Happens If I Die Without A Will?

Here are some key points that you need to know about how your property will be distributed if you die without a Will: Unless you have a surviving spouse or dependent children, your property will be divided equally among your four remaining living children and your surviving spouse or dependent children. Your surviving spouse or dependent children can’t have any other children before your death, but they can have other spouses, boyfriends, or girlfriends after you die. This is a result of the “step-up” provision, which allows surviving spouses to keep certain property that they had earlier inherited from you. You can inherit a piece of property outright, and it will be distributed equally among your heirs, without a Will.

Who Will Be In Charge Of My Estate?

The law allows each province or territory to choose to handle the distribution of your property. Generally, your province or territory will make a recommendation of who will be responsible for your estate if you die without a Will. If you live in a province that is not listed, you should still make a Will. Who Is On My Estate? Each province has a division of wills that is responsible for managing the probate of your estate. In Ontario, the government’s General Division of Wills handles these matters. By registering with the General Division, you appoint them to take care of your estate upon your death. These persons then form the General Division’s executor and administrator. These persons are in charge of organizing your estate and your distribution of your estate.

Who Will Take Care Of My Children?

For many of us, including parents, children are the most significant, cherished family members. It would be shocking if one of these loving children lost everything. In order to address this possibility, you must have a Will. If you don’t have a Will, your property will be divided according to the following provisions: If your spouse dies first, then his/her estate, which includes your children, will be taken care of first, even if you have separate wills. If you have separate wills and your spouse died first, then his/her children will be taken care of first. If you have no children, then the property will go to a designated charity. If you have a minor child, then the child will be left to your spouse, and the minor child will be taken care of first.

Who Will Get My Estate?

There are several ways your family can receive your property. The surviving spouse will inherit the entire estate, including your real estate, personal effects, and remaining money. Your spouse will have the benefit of your remaining income tax-free until you are buried or cremated. You can tell the decedent to set up a living trust so that the spouse will be named as the beneficiary in your Will. Even if you have children who are no surviving children, they can be named as beneficiaries under a living trust because children are considered legal persons for the purposes of intestate succession. Even if you don’t have any children who are now living, you still may want to have your estate divided equally among your children after you die.

What happens if you die intestate?

In the case of intestate deaths, a judge determines how the estate is distributed. Typically, a family court judge will appoint an executor, a person who is appointed to look after the will of a person who died without a Will. An executor is usually a family member or a close friend who will carry out the terms of the will. An executor is often paid to do his or her job, which is usually quite complicated because executors are tasked with doing tasks that most of us would rather not do. The executor will investigate the contents of your estate. They will look into bank accounts, investments, and real estate, as well as a credit union and insurance accounts. An executor can pay your bills and settle your estate without having to go to court.

How to make a Last Will and Testament

If you have not made a Will, you will have to create one in the circumstances described below. Making a Will takes time, and making one in the wrong way can cost you more than it should. The more time you spend on writing it, the better off you are. You can write it in a few hours or even a few days if you work hard, but do not make the mistake of taking a few weeks or months to do it, as that will add more delays to the process. If you do not have a Will, your property will be distributed according to the law of intestacy. This is the law that requires that your property be divided equally among your heirs.

Conclusion

Get a Will done or change your Will to reflect the current law on your property. Not only should you have a Will, but it is very important that you read through the information that this article gives you and be prepared for the eventuality that you might die without one. No one wants to die in a legal limbo; it may be one of the greatest fears of all.

“If you have any feedback about what happens if you die without a will that you have tried out or any questions about the ones that I have recommended, please leave your comments below!”

NB: The purpose of this website is to provide a general understanding of personal finance, basic financial concepts, and information. It’s not intended to advise on tax, insurance, investment, or any product and service. Since each of us has our own unique situation, you should have all the appropriate information to understand and make the right decision to fit with your needs and your financial goals. I hope that you will succeed in building your financial future.

Swing training sits somewhere between day trading and trend trading. A swing trader holds the stock for a short to medium-term period of time. A swing trader, as the name suggests, looks for the ‘swings’ patterns in the price of the things they want to buy in the market.

Swing Trading Vs. Day Trading

Swing trading is a short-term trade. It usually lasts longer than a day but less than a month. That is why I previously mentioned, that swing trading is placed between day trading and buy-and-hold investment. A day trader holds the stock from few hours to a day but never for longer than one day while trend traders hold the stock from few weeks to months. Swing trading is between these two extremes.

Swing traders use technical analysis to find out tradable opportunities. For a time being, they study the price of the stock they want to buy daily and then they limit the time to 5 hours and study the timeframe in order to find better trade entry levels.

Another difference between day traders and swing traders is that the first group spends all day analyzing the price chart but swing traders only need to check out the swings of the price at the end of the day or for a 4/5 hours period of time.

That is why swing trading is suitable for those who are new in the market and they do not want to become a full-time trader. They can keep their own job and trade part-time.

How Does Swing Trading Work?

Swing traders focus on the individual swings of the market. The price in the market comes in waves. It might go up which is called upswings or it might come back down which is called downswings. Swing traders focus on the individual swings, the upswings, and downswings.

Swing traders almost always trade in the direction of the overall trend. So in an uptrend, they trade on upswings and in a downtrend, in a downswing. Beginner swings traders usually trade on uptrend which means that they trade on upswings. Because the price always can and might go up but it won’t come lower than a specific amount.

Swings traders work to get small wins that become a significant amount after a period of time. If they gain 4% profit per month it will be a great deal by the end of the year.

This post contains affiliate links. Please please read my Disclaimer for more information

Strategies for Swing Trading

Bull Flag on Daily Chart

This pattern is one of the most accessible and conservative patterns. A bull flag pattern happens when we have a strong uptrend in the stock. It is called a bull flag because when you look at the chart it looks like a flag on a pole and also for the reason that it is upward, it is called a bull flag. Most of the days, there are hundreds of bull flags to choose from. Choose the one with high volume upswings and lower volume of downswings.

When the trend moves higher eventually a pullback happens because the market needs a break. Then you should look for a bull flag. This bull flag is consist of a smaller range of up and downs. Tighter these rangers, higher the breakout. The bear flag is similar to the bull flag, the only difference is that in the case of the bear flag we have a downward trend.

The Mean-Reversion Strategy

When the market goes upward it will eventually come back down, this is the mean-reversion strategy in a nutshell. The market makes over-exaggerated moves on both sides. It will go up and then it will reverse it and goes down. These swings help us predict the next move of the market.

The Breakout Strategy

Breakout happens when the price goes higher than ever. Previously when the priced this point we had a reverse because this is a mean-reversion strategy, when the price goes it eventually comes down. But this time, it passes the reverse point and goes higher. It indicates that we have a huge demand or a buying potential, that is why the price might go even higher.

T-Line Strategy

T-line strategy is actually the same with EMA (8 Day Exponential Moving Average). Anywhere in the chart, you can set a moving average line (MA). You can make a line from one day to 500 days.

For the T-line strategy, you actually draw a line for 8 days. This is like the footprint of the price over previous days.

When the price reaches above the T-line then the price will continue to rise. When it is below the T-line it will go downward.

The Advantages and Disadvantages of Swing Trading

Advantages

It is not time-consuming

As previously mentioned, if you want to be a swing trader you do not need to quit your job and check out the market prices all day long. So if you are just entering this trading business, swing trading might be the best choice.

It does not tie down your capital for a long period of time

It will keep not tie down your capital for a bad stock for a long time, unlike long-term trading. Your capital will be tie-down from less than a day to a few days. That is not much.

Disadvantages

It is hard to figure out the timing

Even if you are an experienced swing trader, you might not be able to see the pattern and lose some opportunities.

There are overnight and weekend price changes

As the swing traders stay open for the night, they might experience price gaps. The only way to reduce these gaps is to trade smaller trade sizes without leverage.

Conclusion

Now that you know all about swing trading and how it works, you are able to decide whether this type of trading is suitable for you or not.

Remember that every type of trading has its own advantages and disadvantages, you cannot find a trade that is absolutely perfect. Swing trading is one of the best for beginner traders. So if you want to start trading, this one is a good first step.

“If you have any feedback about what is swing trading that you have tried out or any questions about the ones that I have recommended, please leave your comments below!”

NB: The purpose of this website is to provide a general understanding of personal finance, basic financial concepts, and information. It’s not intended to advise on tax, insurance, investment, or any product and service. Since each of us has our own unique situation, you should have all the appropriate information to understand and make the right decision to fit with your needs and your financial goals. I hope that you will succeed in building your financial future.

A brokerage account is a taxable account for individuals so that they are able to sell or buy different types of investment securities. Investors use a brokerage account to buy and sell stocks, bonds, and mutual funds. You can use this brokerage account to transfer money because this account provides you with the ability to have access to the stock market and other types of investments.

A brokerage account is also referred to as taxable accounts. Because the money you earn using this account is considered a capital gain, therefore this account is taxed.

How does a brokerage account work?

Actually, it is so easy to open up a brokerage account. It is similar to the process of opening a bank account. If you are interested in having a brokerage account you should file an application from a brokerage firm. Then you need to submit your basic personal information; your first and last, your address, and the like. Then you have until your information is approved. After that, you will be able to charge your account by transferring money from your bank account. Then you are good to go.  You can use the transferred money to buy (and later on, sell) different types of investment. Remember that the money you earn from this account is considered capital earn therefore it is taxable.

The number of brokerage accounts that you have is not limited. You can have as many accounts as you want in the same institution, or if you prefer you can have several accounts in several institutions. The choice is yours to make.

Brokerage Accounts vs. Retirement Accounts

As previously mentioned, brokerage accounts do not offer tax advantages. So you need to pay your tax, which is why they are called taxable accounts. And because of the fact you are paying the tax of your income, there are few rules for these taxable accounts. You can pull out your money whenever you want no matter what the reason is. You can invest as much as you want. There is no limit in the amount of money that you are investing.

If you are investing money in order to have a saving for your retirement, then you probably would prefer retirement accounts like Roth or IRA to the taxable accounts. You can earn more money using retirement accounts but note that you cannot pull out your money before a certain age.

The basic knowledge you need in order to open up a brokerage account

To open up a brokerage account you need to pay attention to few elements in order to have a better experience:

Choose a brokerage account provider that suits you

Now that you have decided that you want a brokerage account, you need to choose a provider. There are two famous providers: online brokerage account and managed brokerage accounts.

If you prefer to manage your investments on your own, then you probably prefer online brokers. You can use their website to buy and sell different types of investments.

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If you rather want someone else to manage your investments then you would like the second option. Managed brokerage accounts come with an advisor. You can get help from a Robo-advisor which is a cheaper alternative for human investment advisors. These companies use computer algorithms to manage your account for you.

Know different types of brokerage accounts

Brokerage accounts are easier to master than retirement accounts because they have fewer special rules. Still, brokerage accounts have different types that you better be familiar with, before opening up your brokerage account.

Discount Brokerage

A discount broker is the most common type of brokerage accounts. It is mostly for the new users and it is most probably an online-only brokerage. You manage your own trading and as a result, you pay less amount of fee.

Full-Service Account

This type of account provides you with a dedicated broker who knows your financial status. You can call them or even book a meeting with them in order to discuss your portfolio. Obviously, as a result of this detailed and personalized service, you ought to pay higher fees.

Cash Brokerage Account

This type of brokerage account will not let you use the money you do not have. In other words, it won’t lend you money. If you want to buy a stock which is costs $5 then you should transfer at least 5$ to your account in order to buy that stock.

Margin Accounts

A margin account unlike a cash account will permit you to borrow money in order to make a trade. These loans are usually for more advanced trades. Margin accounts can be full-service or discount.

Conclusion

Just like anything else, trading also needs background knowledge. You just will not go to sleep one night and the next day, wake up reach. You need to gather information in order to have a better experience and more enjoyable trading.

In the case of brokerage accounts, you first need to decide whether you need a retirement account or a taxable account. If you want a long-term investment then you should go with a retirement account. If you decided on the brokerage account, you need to decide whether you want to manage your trades on your own or you prefer to have an advisor.

The last step is to decide on the type of brokerage account that you want to get. When you are done deciding about all of the named matters then you can open up your account using the provided guideline.

Do not forget that learning about trading does not end with opening up a brokerage account, it is the exact opposite. The learning process will just start from there. You need to think, learn and decide before every step you take to have a tremendous experience in trading and investment.

“If you have any feedback about what is a brokerage account wok and about the ones that I have recommended, please leave your comments below!”

NB: The purpose of this website is to provide a general understanding of personal finance, basic financial concepts, and information. It’s not intended to advise on tax, insurance, investment, or any product and service. Since each of us has our own unique situation, you should have all the appropriate information to understand and make the right decision to fit with your needs and your financial goals. I hope that you will succeed in building your financial future.

What is Cryptocurrency?

You have probably heard a lot about cryptocurrencies such as Bitcoin, Ethereum, Bitcoin, Peercoin, Ripple, Cardano, Polkadot, Bitcoin Cash, Stellar (XLM), etc. More than 6,700 different cryptocurrencies are traded publicly, according to CoinMarketCap.com, a market research website. But, what exactly is cryptocurrency? How does it work?

A cryptocurrency is a digital or virtual asset based on blockchain technology. Cryptocurrencies are virtual or digital money that takes the form of tokens or coins. They are not generally issued by a central authority, like governments or banks; therefore, this defining feature of cryptocurrencies allows them to exist outside their influence and control. The name Cryptocurrency derives from the encryption techniques used to secure the network. “Crypto” refers to the various encryption algorithms and cryptographic techniques that safeguard these entries, such as elliptical curve encryption, public-private key pairs, and hashing functions.

Any investor can purchase cryptocurrency through crypto exchanges like Coinbase, Cash app, and more. Investors can make money by mining Bitcoin or selling their Bitcoin at a profit. The total value of all cryptocurrencies on April 13, 2021, was more than $2.2 trillion, according to CoinMarketCap, and the total value of all bitcoins, the most popular digital currency, was at about $1.2 trillion.

How Does It Work?

To buy cryptocurrencies, you will need a “wallet,” an online app that can hold your currency. Generally, you create an account on an exchange, and then you can transfer real money to buy cryptocurrencies such as Bitcoin or Ethereal.

If you are buying cryptocurrencies, actually you are buying the idea behind the coin, which is supported by blockchain technology. At its simplest, a Blockchain is a shared database (ledger) that everyone can access to verify transactions. It is extremely secure because the transactions are encrypted with 256-bit cryptographic keys. So all the information is kept in the decentralized ledger (the blockchain).

The ledger is public, but everything on the ledger is encrypted. This is how the system is able to be secure, but also public. Everything is encrypted using an algorithm that is, as of now, unhackable. Cryptocurrencies are inherently very safe but the vulnerability of cryptocurrencies lies not with the underlying technology but rather with people and institutions. Hackers trick the user into divulging access to the exchange, typically your email address and a password (via phishing) or the private key in your wallet. The most common way is to hack into your email account and then request a password reset to the exchange. To counter this risk, enabling multi-factor authentication has been recommended.

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The Pros of Cryptocurrencies

1. They have been admired for their transparency, anonymity, inflation resistance, probability, and divisibility. The advocates highly value their benefits of privacy, like protection for whistleblowers or activists in repressive countries. Some cryptocurrencies are more private than others. For example, Bitcoin has less privacy. While other cryptocurrencies such as Dash, Monero, or ZCash are far more difficult to trace.
2. They make it easier to transfer funds directly between two parties, without any need for a third party, like a bank or credit card company. In other words, a cryptocurrency is a medium of exchange that is digital, encrypted, and decentralized.
3. They are not under the influence of a central authority such as governments or banks. There is no central authority that manages and maintains the value of a cryptocurrency. Instead, these tasks are distributed among a cryptocurrency’s users via the internet.
4. Some cryptocurrency advocates love the technology behind it (called the blockchain) because it is a decentralized processing and recording system and can be more secure than traditional payment systems.
5. Some investors like it because their value is going up increasingly. They see cryptocurrencies such as bitcoin as the currency of the future. Some people even refer to it as a bar of digital gold.
6. Unlike the stock market, you can participate in the cryptocurrency market 24 hours a day, 7 days a week.

The Cons of Cryptocurrencies

1. Their use for illegal activities, such as money laundering and tax evasion.
2.  Exchange rate volatility. The rate at which a cryptocurrency can be exchanged for another currency can fluctuate widely. Bitcoin has experienced some rapid ups and downs in value, climbing as high as $19,000 per Bitcoin in Dec. 2017 before dropping to around $7,000 in 2021. It should be noted that a currency needs stability; however, it seems that cryptocurrencies don’t have such stability for now.
3. Vulnerabilities of the infrastructure underlying them.
4. It is very costly to produce a Bitcoin, which requires an increasingly large amount of energy. It’s estimated that 0.21% of all of the world’s electricity goes to powering Bitcoin farms. That’s roughly the same amount of power Switzerland uses in a year. It’s estimated most Bitcoin miners end up using 60% to 80% of what they earn from mining to cover electricity costs.
5. They are not immune to the threat of hacking. Several online exchanges have been the subject of hacking and theft.
6. Cryptocurrencies are designed to be free from government manipulation and control. However, as they become more popular, this key aspect of the industry has largely been threatened.

Conclusion

If you like the idea of day trading, buying cryptocurrencies, like Bitcoin, and then selling them when their value moves higher is a good option. But remember that cryptocurrencies are very speculative and volatile buy. To put it in other words, it is a very risky or aggressive investing strategy and you should have a good knowledge and market savvy about it to fully understand how it works.

As this network grows, it becomes more complicated, and more processing power is required. But aside from these concerns, you should also know that just having cryptocurrency exposes you to the risk of theft, as hackers try to penetrate the computer networks that maintain your assets. You have to optimize your equipment and technology to outcompete. If you are interested and determined to take part in this market, you should learn many things and choose the right platforms to make the best investments.

“If you have any feedback about what is cryptocurrency that you have tried out or any questions about the ones that I have recommended, please leave your comments below!”

NB: The purpose of this website is to provide a general understanding of personal finance, basic financial concepts, and information. It’s not intended to advise on tax, insurance, investment, or any product and service. Since each of us has our own unique situation, you should have all the appropriate information to understand and make the right decision to fit with your needs and your financial goals. I hope that you will succeed in building your financial future.

A Municipal Bond explained:

A municipal bond, also known as a muni bond (or muni), is a government bond issued by a local government or its agencies. The issuers of such bonds are governmental entities (or a group of governments) at or below the state level, including state governments, local governments, redevelopment agencies, municipalities, special-purpose districts, school districts, and suchlike that have one of these powers at hand: 1. The power of taxation 2. The power of eminent domain 3. The police power. The governmental entities issue muni bonds to finance their capital expenditures and projects, covering the construction and renovation of highways, bridges, schools, parks, roads, hospitals, neighborhoods, and other infrastructure.

In fact, they are loans that investors make to these public organizations. To put it in other words, if you buy municipal bonds, you are lending your money to the bond issuer in return for a promise of getting regular interest payments, also taking back your original investment (or the principal). A municipal bond’s maturity date (the time in which the bond issuer returns your original investment) may be years in the future (i.e., even more than a decade) or in one to three years.

There are 2 general types of municipal bonds: 1. General obligation bonds 2. Revenue Bonds

1. General Obligation Bonds are backed by the government’s taxing power. These bonds have the full faith and credit of the issuer, which has the power to tax residents to pay investors. These bonds are generally riskier and offer a higher yield.
2. Revenue bonds are backed by revenues from a specific project or source like lease fees or toll roads. The bonds’ yields depend on the amount of revenue collected from these sources.

How Does it work?

Municipal Bonds pay interest to their investors, usually twice a year. The bond issuers repay the principal on the bond’s maturity date. You can purchase municipal bonds directly from a registered municipal bond seller or indirectly through a municipal bond fund.

The municipal bond rates are determined at origination by these three factors:

1. They follow the equivalent Treasury bond rate. By the way, the bonds issued by the U.S. Treasury are considered to be among the safest in the world. Since munis have a bit more risk, they will pay slightly higher rates than federal bonds.

2. Municipal bond rates depend on the bond issuer’s credit rating as well. The highest is AAA. Since they are also the safest, they pay the lowest rates. Lower-rated bonds pay a higher rate to compensate investors for the greater risk of default.

3. It depends on the length of the bond, whether it is long-term or short-term. Long-term bonds (for example, 10 to 30 years) will pay more than short-term (i.e., less than ten years) bonds.

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The Pros of Municipal Bonds

1. Municipal bonds are more risk-averse and more focused on preserving than increasing wealth. The bonds provide a conservative investment in which your capital grows slowly and steadily.
2. Muni bonds are exempt from federal taxes and most state and local taxes. The interest rate can also be tax-free for the residents of that state.

*Note that municipal investments are not always tax-exempt investments. There are cases in which the income generated by a municipal bond may be taxable. For example, a municipality may issue a bond that does not qualify for federal tax exemption. So conducting a preliminary investigation about their provisions is a must for investors.

3. They are free to trade at any time once investors purchase them.

4. The U.S. municipal bond market is unique for its size, liquidity, legal and tax structure, and bankruptcy protection by the U.S. Constitution.

The Risks of Munis:

keep in mind that like any investment, municipal bonds entail risk;

1. Because of their relatively low risk, they pay low-interest rates than other investment strategies.

2. When interest rates decline, the bond issuer may repay a bond before its maturity date, which is called Bond call (or call risk). Many municipal bonds are callable; therefore, if you intend to hold a muni to maturity, before having that, make sure that you know well the bond’s call provisions.

  3. Credit risk (or default). The bond issuer may encounter financial problems in paying interest rates or returning the principal in full. Investors need to know that sometimes governments lack the ability or willingness to return their debts. Credit ratings try to evaluate the credit risk of a bond compared with other bonds; nevertheless, a high rating does not give a 100% guarantee that the bond will have no chance of defaulting.

  4. Inflation risk. Inflation will be a risk for bond investors who receive a fixed rate of interest. Fixed income falls behind with rising inflation.

  5. Liquidity risk. It refers to the risk that the bond investors won’t find an active market for their municipal bonds. Therefore, the market for the bond may not be liquid, and quoted prices for the same bond may differ.

  6. Interest rate risk. Market interest rates have inverse relationships with the value of a bond. Interest rate risk is the potential that a change in overall interest rates will reduce the value of a bond or other fixed-rate investments.

Conclusion

Muni bonds are an attractive option for investors in high tax brackets; because they offer various benefits, risks, and tax treatments. Additionally, they are very suitable investment strategies for risk-averse individuals who prefer preserving their wealth to increasing it.

Although municipal bonds are less risky than other investment strategies, remember that they are not supported by the federal government and can sometimes default. Because of the different types of municipal bonds available and the fierce competition among dealers to gain a piece of the business, you should enter into muni investing carefully and cautiously.

It is better to consult with your financial manager to find out –based upon your financial goals and needs- whether it is appropriate for you to purchase municipal bonds or not. For more information, please visit The Municipal Securities Rulemaking Board’s Electronic Municipal Market Access
website.

“If you have any feedback about what is a municipal bond that you have tried out or any questions about the ones that I have recommended, please leave your comments below!”

NB: The purpose of this website is to provide a general understanding of personal finance, basic financial concepts, and information. It’s not intended to advise on tax, insurance, investment, or any product and service. Since each of us has our own unique situation, you should have all the appropriate information to understand and make the right decision to fit with your needs and your financial goals. I hope that you will succeed in building your financial future.

Do you want to know what exactly wealth management is in simple terms? How does it benefit you? How does it work? So, if you have these questions in mind, keep up reading this post.

Wealth Management

Wealth management is a holistic approach to wealth creation and sustaining wealth. If you have a wealth management plan and approach in your life, you will reach your financial goals and dreams in life much more easily; you will have better control over your money in the present and future life; you will have more financial independence and security, even in your retirement period.

Wealth management includes four components: 1. Financial life planning; 2. Building capital; 3. Managing capital; 4. Succession planning. 

1. Financial Life planning: some of the wealth management services in this area include:

1.  Life planning gives you more control over life and its expenses.
2. Making sure you have the rainy day fund, lifetime savings, college savings planning, retirement planning, etc.
3. Life planning provides a roadmap to achieve the things you want. It will help you to reassure that you will reach your goals and aspirations.
4. Life planning in wealth management focuses on planning your wealth to meet your life plan.

2. Building capital will cover a number of needs such as:

1.  Investing intelligently, effectively, and timely.
2. Maximizing your capital in the few years of employment and introducing investment vehicles and plans such as target-date funds (TDFs), 401(k), Roth 401(k), Roth IRAs, etc.
3. using tax shelters
4. Providing research-based financial advice to help you decide what to invest in. To help clients get the most from their investment plans, wealth management pros will draw on their market-leading research.
5. Recommend the type of investment journey that suits you well according to your personality, risk tolerance, needs, goals, etc.
6. Managing your portfolio on your behalf, freeing your time for other activities and pursuits in life. Moreover, there will be constant reporting and ongoing communication between financial advisors and their clients.

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3. Managing capital

1. Creating a balance between your income, capital preservation, and capital growth objectives.
2. The management of risk by using diversification strategy or insurance. Investment should be diversified across all assets –i.e., cash, stocks, bonds, equities, and so on.

Why Is Wealth Management Important?

In the lifetime, we may encounter different financial questions and dilemmas. Do I have enough money to retire? Which investing strategy is the best one for me?  How can I maximize my capital? What is the best way to minimize my taxes? And immeasurably more other questions.

If you make a wrong decision based upon false information and advice, it will cost you –and your family members- dearly. Moreover, financial management is very daunting for some people; thus, you should hire a financial advisor or wealth manager.

What do the Wealth Management Professionals do?

Generally, wealth managers take the following actions:

• They talk to their affluent clients to gather specific information and then analyze their unique financial situation. They take the time and effort to understand your household expenses and cash flow, to help you manage your wealth effectively and appropriately. They ask about your tax situation, medical expenses, family expenses, your expectations, and even more personal questions to customize your life and wealth plan. In other words, without building personal relationships with their clients, wealth management professionals will not have an outstanding performance.
• These professionals try to understand their client’s financial needs and goals that matter most to them. They help their clients transition from their current financial situation to where they wish to be.
• Having had good knowledge and expertise in the financial area, they offer advice and recommendations; create a financial plan; help their clients overcome difficult monetary decisions and dilemmas.
• They are very experienced in dealing with large sums of money and managing multiple assets over different accounts.
• They will help you invest your money in securities and investment strategies that will enhance and protect your wealth.
• They improve your portfolio performance by using tools and strategies that enhance your passive income and allocate your assets wisely.
• They are in contact with you to make sure that you stay on track.
• They offer individualized and unique financial services for their clients. To do this in the best possible way, they build long-term relationships with their clients. Wealth management professionals should be at your disposal throughout your life.

Conclusion

On the whole, the question “what is wealth management?” Can be captured by asking yourself what does it mean to live a good life and leave a good legacy? It is all about your financial needs and goals and deals with your life and wealth plan. It may sound easy at first, but the reality is that the financial world is complex and fast-changing, with a wide range of choices available for you.  Therefore, you had better seek a wealth management professional.

Finding the right and trustworthy wealth manager will require some research. In addition, you had better look at the wealth manager’s immediate past performance. You can choose to go to wealth management firms, such as Pillar Wealth Management, JARDEN, and ST. James’s Place.

You should feel comfortable with the advisor you choose; the wealth management advisors should also consider your standards and specific requirements. If you do not see eye to eye with them, this long-term process will be stressful and frustrating and probably will be doomed to failure. Additionally, receiving the best insight and advice from the right and competent wealth management advisor will motivate you to take steps to achieve your life goals and aspirations. The right wealth management advisor will ensure a better future for you and your family.

“If you have any feedback about what is wealth management that you have tried out or any questions about the ones that I have recommended, please leave your comments below!”

NB: The purpose of this website is to provide a general understanding of personal finance, basic financial concepts, and information. It’s not intended to advise on tax, insurance, investment, or any product and service. Since each of us has our own unique situation, you should have all the appropriate information to understand and make the right decision to fit with your needs and your financial goals. I hope that you will succeed in building your financial future.