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The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, the transition between jobs, death, divorce, and other life events. Qualified individuals may be required to pay the entire premium for coverage up to 102% of the cost to the plan.

COBRA generally requires that group health plans sponsored by employers with 20 or more employees in the prior year offer employees and their families the opportunity for a temporary extension of health coverage (called continuation coverage) in certain instances where coverage under the plan would otherwise end. COBRA outlines how employees and family members may elect continuation coverage. It also requires employers and plans to provide notice.

What is a cobra health plan?

It is not a regular insurance plan, but instead a plan provided by a health insurance carrier and administered by an insurance carrier, as a last resort for a member who is no longer eligible for group health benefits. The Cobra coverage allows you to choose continuation coverage for the period of one month. “Continuation coverage” means coverage for a period of time determined by the carrier and will be based on the renewal period of a regular health insurance plan. It is not covered for a period of time that remains continuous beyond that of a regular health insurance plan.

How does the cobra health plan work?

With a cobra plan, there are no employer contributions. A cobra plan is available to everyone at no charge. To be eligible, you must be employed by a participating plan and eligible for health care benefits. The coverage under the cobra plan is provided at the lowest available plan level within the applicable COBRA coverage and access points. If you prefer a plan with additional benefits, you can opt for that option on a per-payor basis.

How to Qualify for COBRA?

Any employer or insurer in the U.S. may participate in the COBRA program if they are covered by the Consolidated Omnibus Budget Reconciliation Act (COBRA) and the U.S. Health Insurance Portability and Accountability Act (HIPAA) regulations. Employees and/or family members who have less than 12 months of coverage will be required to qualify under COBRA. Healthcare.gov also provides guidelines for those who are eligible for COBRA, including a list of provisions for COBRA continuation coverage. COBRA works if your employer or plan allows you to choose a plan to continue coverage. However, you may be required to pay an unsecured portion of your premium for coverage and deductibles.

Who is eligible for the cobra health plan?

Individuals without a group health plan that offers the continuation of group health benefits are eligible to enroll in the COBRA continuation health plan if they do not qualify for group health benefits under COBRA. Employees and their families who are eligible for COBRA coverage under current law and eligible for continuation of COBRA benefits will be automatically enrolled into COBRA coverage. Workers and their families who are ineligible for COBRA benefits, or who did not previously enroll for COBRA benefits, may elect to enroll in the program. Participation in COBRA coverage is available to a broad range of employees and family members including those who were previously on an employer’s group health plan that is no longer in existence or whose employer has closed or withdrawn coverage (death, voluntary departure, etc.).

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Paying for COBRA

Depending on the duration of the employment, there are a number of COBRA options. Continuation-paid plan: This is the most common option for employees to pay for their insurance for a fixed period of time after leaving their employer. Most COBRA plans provide for a continuation-paid plan, in which the employee’s share of premiums for continuation-paid coverage remains with the individual employer (or group health plan administrator).

Pros of cobra health plan

COBRA coverage can be extremely affordable, sometimes less than one-half the cost of a private health insurance plan. COBRA will provide most or all of the same coverage and services that the family received from the health plan in the past. The option of COBRA health plan provides coverage and access to medical care for over 70 different health care providers that are pre-approved by the insurance company for health care. If an employee lost their health benefits from their group health plan, COBRA allows them to keep their private insurance coverage for a limited time. This allows for continuity of care. Cons of COBRA health plan The cost of the insurance will be more expensive than if the employee had remained on the insurance policy.

Cons of cobra health plan

Currently, cobra plans do not offer the most coverage, in my opinion. So, a lot of people are not going to be happy with the amount of coverage that they have. It is just not a good alternative to group coverage that is offered. Also, there is a shortage of companies that offer the plan. Most health care plans offered by companies are on the Obamacare exchange. In other words, insurance is not guaranteed, but you can have affordable health care coverage. If you are going to have health insurance, then it should be a very good option that is provided.

Is COBRA coverage expensive?

Costs depend on a number of factors, including whether your health plan is an HMO or an HMO or other preferred provider organization (PPO). Most group health plans today are either PPOs or an HMO. COBRA coverage is always more expensive than your current health plan but also has a special component in that, even though you are required to pay all premiums and a deductible, you are eligible for a $2,000 (or $2,500, for retirees) premium credit, that lowers the overall cost of your coverage. An additional cost-saver is that you are not liable for the first $500 in healthcare expenses for each employee or family member covered under your COBRA health coverage and $3,250 in health insurance expenses for yourself as a retiree.

Is COBRA insurance right for you?

Not every job requires a group health benefit plan. Some jobs have health insurance offered as an individual benefit. If you don’t have employer-based insurance or your group health plan has recently changed or will change soon, it is worth exploring COBRA insurance. At the same time, don’t forget about other insurance products that may be available to you or that you may qualify for. Insurers are changing their health benefits every year. Medicare, Medicaid, and other insurance plans may also be available to you as part of a group or individual plan. If you need a comprehensive health insurance policy with comprehensive coverage, check with a broker who specializes in helping clients navigate the insurance process and find the best product for their needs.

Conclusion

Traditionally, COBRA was a program administered by your group health plan, but the program has been slowly being phased out. According to some sources, as of 2013, the Program has been “rolled into the IRS rather than by the health plan itself.” In other words, this program is no longer administered by your group health plan. While the COBRA Program’s benefits may be lost during the transition from a group health plan to an individual health plan, you will find that there is still a way to keep your coverage. You should carefully investigate this option before you dismiss it. With the right knowledge, you can keep your COBRA benefits.

“If you have any feedback about what is a cobra health 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.

An option is a contract that allows (but doesn’t require) an investor to buy or sell an underlying instrument like a security, ETF, or even index at a predetermined price over a certain period of time. Buying and selling options are done on the options market, which trades contracts based on securities. Buying an option that allows you to buy shares at a later time is called a “call option,” whereas buying an option that allows you to sell shares at a later time is called a “put option.” However, options are not the same thing as stocks because they do not represent ownership in a company. And, although futures use contracts just like options do, options are considered lower risk due to the fact that you can withdraw (or walk away from) an options contract at any point. The price of the option (its premium) is thus a percentage of the underlying asset or security.

What is options trading?

Options are traded on the options market, a computer-based trading platform. It is akin to a stock market, except that you are trading contracts rather than shares. The most popular contracts traded on the options market are put and call options. The purpose of trading options is to protect a trader against the risk of owning security at a particular price. If you own a call or put option, your trade expires at a certain time. For a call option, this would mean the option goes ex-dividend. You then lose the right to buy the underlying stock or ETF at that price for a given period of time (the “ex-date”).

The Different Types of Options

There are basically four types of options available on the U.S. stock exchange. Two of the – calls and puts – are bought and sold just like regular stocks, but they differ in how they’re constructed. The first one is called the “single” option. It is a naked call option that allows the owner to buy the underlying security at a predetermined price at any time up to the expiry date or expiration date. The only difference between a call option and a put option is that the owner of the option gets the right to buy the security at the expiration date. The second type is called the “divided” option. It is a stripped naked put option that requires the investor to buy and then simultaneously sells 100 shares at a fixed price per share at any time up to the expiry date.

What is a call option in stocks?

A call option gives you the right to buy shares at a certain price over a certain period of time. For example, if you are looking to buy shares of a company and you get a call option, you will receive a $30 strike price. As long as the company keeps the shares above $30, you will be able to sell the option anytime you want to. A call option is a contract that gives you the right to purchase shares of a company at a certain price (usually between $1.00 and $5.00 a share), at a certain date in the future. In the same way, you buy a stock that gives you the right to buy a company’s stock at a predetermined price, you can also sell a call option to someone else who will buy it at that predetermined price. In other words, you buy an option and ask someone to purchase it from you.

What is a put option in stocks?

With a put option, you can take a bet that a stock will decline in value over a certain period of time. A put option entitles you to purchase a stock for a given price at a later time. If the share price is above that price, then the investor receives the money back. But if the share price drops below the put price, then the investor loses the entire amount they invested and the stock is not delivered.

How does options trading work?

Options trading involves multiple scenarios. As an example, you may want to use options in your account when an ETF you own goes on a deep, multi-day decline. In this situation, you may want to sell calls on your position and receive a “cash-out” for selling the shares you would have otherwise owned. The strategy can help you keep the premium you receive on stock for an extra week or two if the underlying ETF keeps falling in value. Another scenario might involve selling an out-of-the-money call option on a stock that you don’t own at a large premium to the share price. Your premium can be used to buy shares in the company, if they go on a crash of any kind, at a discounted price.

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Why should you consider options trading?

Because you can create an excellent risk-adjusted return, and, more importantly, have more control over the price at which you’re going to get out of your position. Options are great if you want to take a bet on the price of a stock going down while being able to buy the stock at a cheaper price than it would be trading for at the open.

What are the options trading terms?

Options trading terms vary by contract but are usually explained in simple terms below: Selling: When an investor buys an option to sell the underlying security (like a call option). This will only be done if the underlying security is above the strike price (the price you agree to pay for the underlying security) and you’re willing to sell at that price in the future. This means you can only sell your option if you want to. When an investor buys an option to sell the underlying security (like a call option). This will only be done if the underlying security is above the strike price (the price you agree to pay for the underlying security) and you’re willing to sell at that price in the future. This means you can only sell your option if you want to.

How Options Pricing Is Determined

Options are priced in two steps: The first step is determining the price range that options are offered for trading, typically ranging between $0.01 and $0.50 per option. The second step is determining the number of contracts that will be sold based on the historical data on demand. The formula for determining the price range is as follows: (Price of the underlying stock when the contract is purchased) + (Length of the option contract) The length of time that the contract will remain open can be calculated by multiplying the time that the contract was open times the strike price, which is the price at which the contract will be settled.

Advantages and Risks of Trading Options

If you’re willing to accept the risks involved, you can make money trading options. However, most people don’t know how to do this. The reason is that options trading is not just a matter of picking the right option contract. The risks are real and can ruin your trading experience, and it can also harm your overall portfolio if you are not careful. For example, a call option is not risk-free because it gives the buyer the right to buy the underlying security at a certain price by a certain time. But if the price moves above or below the strike price, the buyer could make or lose a lot of money. So, the options are not risk-free. Another risk is the underlying stock’s volatility. If the stock price moves beyond a certain threshold, the buyer could lose a lot of money.

Conclusion

Options have traditionally been viewed as too risky for investors and too risky for small investors, but they are certainly gaining traction among investors. The popular trend of volatility in stocks has taken many by surprise as they speculate on price swings and this has brought more trading activity to the options market. Ultimately, investors should decide for themselves whether options are right for them.

“If you have any feedback about what is options 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.

If it feels like your dollar doesn’t go quite as far as it used to, you aren’t imagining it. The reason is inflation, which describes the gradual rise in prices and slow decline in purchasing power of your dollars over time. The impact of inflation may seem small in the short term, but over the course of years and decades, inflation can drastically erode the purchasing power of your savings. Here’s how to understand inflation and the steps you can take to protect the value of your money.

How Does Inflation Work?

According to the U.S. Department of the Treasury, inflation is the increase in the price of consumer goods and services over time. The rise in price is measured by the Consumer Price Index (CPI), which is published by the Bureau of Labor Statistics. CPI measures the prices of a basket of goods and services, such as health care, shelter, food, and transportation. An average of CPI readings from January 1967 to December 2017 shows prices rising 2.4 percent annually. To put it another way, a $100 dollar bill would be worth around $135 in 2017 dollars, while in 1967, the bill’s purchasing power was more than $60. The CPI rose slightly in the first half of 2017, as shown in the chart below.

How does it affect you?

When prices are rising rapidly, the real purchasing power of your money starts to decrease. Inflation is typically measured by comparing the same product or service bought at different times, in the same currency. Over time, prices change as costs for things like food, fuel, and housing increase, along with prices of manufactured goods like clothes, computers, and automobiles. These prices often don’t even need to be passed on to consumers, as companies pass on cost increases to retailers and manufacturers. But eventually, prices rise enough to start to erode the purchasing power of your savings. And that’s why it’s called inflation. There are different types of inflation, and the factors that drive them differ.

The impact of inflation on your money

Inflation is generally measured by taking the year-over-year percentage change in the prices of a representative set of U.S. consumer goods and comparing that figure to the previous year’s level. For example, if a can of Campbell’s soup is selling for $1.39, the Bureau of Labor Statistics (BLS) would measure the change over the past 12 months as a percentage change of 1.9 percent. That figure represents the actual change in price for that item; if that number is 0.3 percent higher this year than last year, then prices have risen by 2.9 percent.

How to track inflation using a graph

Like many people, you probably never heard the term inflation until recently. That’s because the phrase isn’t included in the common English lexicon. But inflation affects most people, whether you realize it or not. Imagine you save your money each week in a traditional bank account. Say inflation rates vary over the course of the year and year after year, which makes your money purchase less and less. Here are the inflation rates you’ll find when you go to the online banking service Web bank. You have two choices: Prevent inflation from taking hold by keeping a strict budget and having consistent savings plan to provide the money you need each month. Reduce inflation by taking advantage of earning interest on money held in a traditional bank account or investment accounts.

Over time, many goods and services become more expensive, in part because production costs go up as volume grows. The prices of these goods and services also rise as they get more competitive, so if you are on a shopping trip and are comparing prices, you may find the same item at different stores that sell for the same price. But don’t be surprised if you see different prices — sometimes called inflationary “shifting” — for the same item. The Consumer Price Index (CPI), a measure of the prices of a basket of goods and services that’s used to adjust the Social Security Administration’s cost-of-living adjustment, is the best tool to track consumer prices over time.

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What Is Hyperinflation?

What happens when inflation gets out of control? The most extreme form of hyperinflation occurs when the rate of inflation drastically outpaces the overall rate of growth in the economy, leaving the buying power of money dramatically diminished. Consider Argentina, in recent decades. While Argentina experienced consistent annual inflation in the tens of thousands, it’s worth noting that in 2002, the Argentinian peso lost 97% of its purchasing power in a single year. The devaluation was so bad that the only way to buy essentials was to barter or accept large, inflated discounts from stores and other retailers. At its worst, hyperinflation can leave even those who are relatively well off out in the cold.

What Is Stagflation?

Stagflation, in this case, means higher prices and lower consumer demand, and the combination of factors contributes to slowing economic growth. “If you put that in layman’s terms, you could say consumers are struggling, they’re getting higher prices for goods, they’re not spending as much on goods and services,” says Tony Nash, research director at the International Council of Shopping Centers. The problem is especially acute in the United States, where many goods are manufactured overseas and shipped across the country for distribution and delivery, which raises prices. The reason for higher prices on imported goods is “deflation,” meaning that their producers have devalued their currency to reduce their prices relative to the dollar.

What Causes Inflation?

The problem is that no one really knows exactly why inflation occurs. There are many factors that impact the economy, and cause changes in consumer prices. An increase in supply due to increased productivity could cause inflation. A rise in oil and gas prices could also cause inflation. Consumer products also have an impact on inflation. For example, the price of gasoline tends to rise over time as fuel prices fluctuate. The other most common causes of inflation are a change in the supply and demand for currency. At times, inflation is caused by higher wages for workers, which leads to greater inflation of the money supply.

Demand-Pull Inflation

Inflation is caused by the “demand” side of the equation. The economy often expands because people need and want more goods and services, such as cars, houses, and even food. But then, those extra cars, houses, and food end up costing more to make and deliver. Inflation is known as demand-pull inflation because the way it is created is by people demanding a greater quantity of a certain good or service than the sellers can meet with existing products and services in the marketplace. The result? Your dollar buys a smaller amount of the same thing over time, which ends up depressing the purchasing power of your money. Put simply, inflation is when there is more demand than there is supply for a good or service in the economy.

Cost-Push Inflation

Cost-push inflation occurs when prices rise because of a shortage of supply. Such inflation typically results in higher costs for businesses to serve the public. For example, if a loaf of bread is $2 and there is no wheat to harvest and mill it, or if a brewer is being undercut by an imported product, cost-push inflation can result in an increase in the cost of bread. This price increase likely results in price increases for consumers, who are then asked to pay the higher prices. Of course, consumers are not the only ones affected by cost-push inflation. Inflation can also hurt businesses. Higher costs of inputs mean less profit, which means the businesses may stop buying new equipment, hire fewer people, and raise their prices. At the same time, consumers’ cost of living increases.

Conclusion

Determining your portfolio’s allocation to equities and bonds might seem easy, but it isn’t so simple. There are lots of factors to take into account, and it isn’t all that important that you get it exactly right. If you follow a consistent, long-term investment plan, however, you can put your money to work in ways that will maximize its growth potential. The $16,122 Social Security bonus most retirees completely overlook. If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example, one easy trick could pay you as much as $16,122 more… each year!

“If you have any feedback about what is inflation and how does it affect you 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 certificate of deposit (CD) is a product offered by banks and credit unions that provides an interest rate premium in exchange for the customer agreeing to leave a lump-sum deposit untouched for a predetermined period of time. Almost all consumer financial institutions offer them, although it’s up to each bank which CD terms it wants to offer, how much higher the rate will be compared to the bank’s savings and money market products, and what penalties it applies for early withdrawal.

Shopping around is crucial to finding the best CD rates because different financial institutions offer a surprisingly wide range. Your brick-and-mortar bank might pay a pittance on even long-term CDs, for example, while an online bank or local credit union might pay three to five times the national average. Meanwhile, some of the best rates come from special promotions, occasionally with unusual durations such as 13 or 21 months, rather than the more common terms based on three, six, or 18 months or full-year increments.

How to choose a Certificate of Deposit

Certificates of Deposit (CDs) are a great tool for all consumers who want to earn some extra money on money that’s sitting around their bank accounts. That being said, there are a few considerations to keep in mind when choosing a CD. The lowest risk CDs are the shortest-term CDs, which typically offer only a few months of interest. The medium-term CDs offer anywhere from six months to three years, the longest-term CDs offer anywhere from five years to a few decades, and the highest-yield CDs are the longest-duration, providing the highest interest rate. How to open a CD Most CD products require a minimum deposit of either $1,000 or $2,000, with the remainder to be paid in the form of monthly interest checks.

How Certificates of Deposit Work

Certificates of Deposit usually offer interest rates as high as 3.5% but have a fixed rate until you decide to withdraw your cash. This term “until you decide to withdraw” generally applies to 2½ months or less, but many financial institutions extend that period to 3 or 4 months. Once you decide to take your money out, though, the rates quickly fall to near-zero and may require a deposit of $50,000 or more to earn a rate of even 1%. Although CDs are normally a lot safer than savings accounts, they’re still very risky investments. That’s why they’re typically treated with a degree of caution by the prospective depositor.

Certificate of Deposit Interest rate

The CD interest rate will be set by the bank when you open an account and will remain the same or increase from that point on. The difference between what a CD paid and the best available rate on a savings account today is called the CD premium. The CD premium is the difference between the CD’s fixed rate and what the best available savings or money market product has to offer. The CD premium can be paid as a bonus when you open an account, or the rate may increase when you renew the CD at the end of the term. When your CD gets paid as a bonus, you are getting the difference between the CD’s stated interest rate and the CD premium.

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Certificate of Deposit Term

The minimum term for CDs is set at several years and can vary a great deal based on the type of product and the bank or credit union issuing it. It’s standard for certificates of deposit to have terms of one to five years. However, CD terms of one to two years, or shorter, are also common and are often offered at higher rates. Certificate of Deposits (CD) is considered to be fairly safe with a few obvious exceptions. Many borrowers don’t pay attention to the term of their CD or in fact, may be required to make a minimum monthly interest payment in the form of minimum monthly required fees.

Certificate of Deposit Principal

These are the initial deposits you make to get the CD, but they will be converted to interest payments during the duration of the certificate, which is typically set at between 2 and 5 years. The interest rate on a certificate of deposit is determined by the bank. For example, a 3-year CD will pay interest between 0.20% and 0.80%, with 1-year CDs paying between 0.30% and 0.80%, 2-year CDs paying between 0.60% and 1.40%, 3-year CDs paying between 1.50% and 2.00%, and 5-year CDs paying between 2.00% and 2.80%. You can see an even wider range of CD interest rates for even more specialized products such as certificates of deposit tied to specific maturities or “guaranteed” money market accounts.

Why do banks offer Certificates of Deposit?

Typically, a certificate of deposit has a higher interest rate than a savings account. For example, if a savings account has a 1.01 percent interest rate, a certificate of deposit would likely have a higher rate and could provide an additional 2 percent to 4 percent of interest rate over time. CDs also have certain advantages over savings accounts, such as the ability to take out a portion of your deposit at any time and without having to pay a penalty. CD withdrawals are typically not subject to a penalty, but the interest rate of the product could be significantly lower if you withdraw the money before the term is completed. Certificates of deposit can be long-term, meaning your money will remain invested in a bank’s CD, and there are also short-term certificates of deposit.

Advantages of Certificate of Deposit

A CD offers three distinct advantages to the holder of the certificate: Secured The account is secured with your cash and so the interest on your CD will not be taxed. (If you leave the money in your CD for less than one year, then it’s considered a checking account.) You will not be liable for any fraud or loss on your cash deposit, and this protection is covered under the FDIC’s deposit insurance. The yield on a CD also is guaranteed by the government. The account is secured with your cash and so the interest on your CD will not be taxed. (If you leave the money in your CD for less than one year, then it’s considered a checking account.) You will not be liable for any fraud or loss on your cash deposit, and this protection is covered under the FDIC’s deposit insurance. You will get a real interest rate on your money. You can withdraw money before the end of the term, usually several years. As a general rule, certificates of deposit tend to pay higher interest rates than a savings account or money market fund.

Disadvantages of Certificate of Deposit

Dealing with a financial institution There’s no point dealing with an institution that doesn’t have convenient branch hours. This will require you to take time off work to visit the bank. On the flip side, there’s no point dealing with an institution that offers interest rates that are either too high or too low or that doesn’t allow for easy, on-demand withdrawal. Also, interest rates for CDs vary depending on where they are issued, so CDs can’t be set up to work with online accounts. Interest rates for CDs vary depending on where they are issued, so CDs can’t be set up to work with online accounts. Also, interest rates for CDs vary depending on where they are issued, so CDs can’t be set up to work with online accounts.

Conclusion

Banks often offer higher rates on CDs, but unlike with a savings account, they do so in exchange for some restrictions on the rate you can withdraw on demand. Keep in mind that these higher interest rates on CDs are often found in specialized accounts offered by banks. For example, some banks will offer CDs with shorter durations and/or higher rates than their traditional savings account offerings. So, regardless of the product, you’re looking for, start by focusing on checking and savings accounts, not CDs. And if you find a specific bank that offers a CD offer that you like, contact the bank to get a better understanding of the terms and conditions.

“If you have any feedback about what is a certificate of deposit 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.

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.

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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.