Endowment funds are usually permanent because the principal balance, or “corpus,” stays invested forever. The organization can only spend the investment income generated by the fund—and that income must be used according to donors’ wishes. For example, the San Diego Foundation is a community-focused and run organization that distributes the funds’ investment earnings to “impactful organizations for social impact” on its donors’ behalf. It manages 1,330 individual endowment funds, totaling more than $682 million....

While the Securities and Exchange Commission (SEC) does not regulate investment clubs specifically, some club activity can fall within the purview of the SEC, which lays out a basic structure and rules for clubs. For instance, if the club invests in securities, it must register with the SEC under the Investment Company Act of 1940. Alternate definition: Self-directed investment clubs let members research and select investments together, but each member invests their own money individually....

Learn more about how cost of carry works and the different types. Definition and Examples of Cost of Carry “Cost of carry” refers to the expenses that come with storing a physical commodity or holding an investment position. They may include what the investor pays for transportation costs, insurance, and interest on margin accounts, among others. Alternate name: Carrying charges Physical commodities are common examples of investment opportunities with several costs of carry....

In the 1950s and early 1960s, Nobel Prize winners and University of Chicago economists Gary Becker and Theodore Schultz were among those primarily responsible for the development of the theory of human capital. Becker realized the investment in workers was no different than investing in capital equipment, which is another factor of production. Both are assets that yield income and other outputs. Becker differentiated between general and specific human capital....

For example, imagine storms blow through your area all the time. Over the last few months, maybe you have found wet spots in your ceiling after intense storms. You don’t repair it or report it to your insurance company, and eventually, you start getting streams of water running into your house. You finally report it, but the insurance company decides that you were negligent because you didn’t report and repair the leak the first time, and you allowed it to cause further damage to your home....

Let’s take a closer look at joint and several liability and how and when it may come into play. Definition and Examples of Joint and Several Liability Joint and several liability is a legal situation in which two or more parties share responsibility jointly and individually. Joint and several liability allows a plaintiff to sue all responsible parties jointly, or individually, making it possible for a plaintiff to collect a full judgment from all defendants or just one....

MERS saves time and money because the process of selling and transferring ownership of a mortgage loan, sometimes called the “chain of title,” can be cumbersome. There is an official document called an “assignment” that must be filed with the county recorder in the U.S. to transfer ownership when a mortgage loan is sold. MERS created a new system that allowed the process to happen digitally while still being official and legal....

Take a look at different mortgage loan purposes, how they work, and what it means for you. Definition and Examples of Mortgage Loan Purpose The mortgage loan purpose is the reason you are applying for a mortgage. Mortgage loan purposes can vary depending on your situation. For example, you may be looking to buy a property, or looking to refinance when interest rates have dropped. Your lender wants to know why you’re getting a mortgage....

With pent-up demand, people do not usually buy only their normal goods and services, but also spend money on purchases they have forgone for months due to the recession. Typically, durable goods tend to be delayed the most during a recession because they are costlier to purchase. As pent-up demand comes to the market during an economic recovery, businesses will try to ramp up supply to meet the need. For example, during a recession, you may only spend money on groceries, gas, and other necessities you need in order to live and work....

Phantom stocks are becoming increasingly prevalent as part of a total compensation package. They’re not restricted to tech companies. Some companies tie the award to performance goals. Alternate name: Shadow stock How Phantom Stock Works The number of phantom shares given to an employee or manager often depends on that person’s perceived value to the company. The more an employee is valued, the greater the number of shares they’re likely to receive....

Find out what Section 7702 defines as life insurance, how to determine whether a policy qualifies under its rules, and what it all means for you. Section 7702 Definition Qualified permanent life insurance policies receive valuable tax advantages, including tax-deferred cash value accumulation, tax-free loans and withdrawals, and tax-free death benefits. Section 7702 is the part of the IRC that defines what qualifies as a life insurance policy or contract for tax purposes using two tests: the cash value accumulation test (CVAT) and the guideline premium and corridor test (GPT)....

In this letter, titled “On the Imposition of Direct Taxes Upon the Colonies Without Their Consent,” Franklin wrote: “…[E]xcluding the people of the colonies from all share in the choice of the grand council will give extreme dissatisfaction, as well as the taxing them by act of Parliament, where they have no representative. …It is supposed an undoubted right of Englishmen not to be taxed but by their own consent, given through their representatives....

Definition of The CBOE Volatility Index (VIX) The VIX is an index created by Cboe Global Markets in 1993 that tracks how volatile the United States stock market is and is expected to be over the immediate future. It is widely used across the world as a measure of stock market volatility, with higher levels in the VIX indicating more volatility. Like other indexes, which track the performance of a basket of stocks or other securities, the VIX measures volatility by tracking a basket of securities....

But if you’re looking for an app that will help you save money, Digit might be for you, especially when you consider 50% of Americans have less than $600 in their savings accounts. Digit uses a special algorithm to analyze your spending habits, bills, and cash flow before moving money from your checking account to a Digit savings account. Learn how this personal finance app works, what it costs, what personal information it stores, and if it really helps you save money in the long run....

How you calculate your payments depends on the type of loan. Here are three types of loans you’ll run into the most, each of which is calculated differently: Interest-only loans: You don’t pay down any principal in the early years—only interest.Amortizing loans: You’re paying toward both principal and interest over a set period. For instance, a five-year auto loan might begin with 75% of your monthly payments focused on paying off interest, and 25% paying toward the principal amount....

For example, if your income goes up by $500 a month, you might decide to put part of that money toward eating out at a restaurant twice a month instead of once a month. Since your income directly rose, and there was an effect on the demand for restaurant meals, this is an example of the income effect. By contrast, if your favorite restaurant cuts the price of your favorite meal in half, you can suddenly afford to buy it twice as often....

Unsystematic risk can also be further divided into two individual subcategories: business risk and financial risk. Business Risk Business risk is the uncertainty that arises due to the nature of the business activity that the company you are investing in is engaged in. For example, very speculative businesses or those that are in a new industry face a higher degree of uncertainty than businesses in more stable industries. Disruptions in the firm’s operations, challenges from competitors, legal trouble, and a damaged reputation are all examples of ways that a company may face business risks....

In this article, we will distinguish between the most common types of yield and what they mean for the average investor. Yield works in concert with, and sometimes matters more to investors than, their initial investment amount. Your goals, needs, and risk aversion dictate the dance you’ll do between principal, or what you originally invest, and the income it earns. With that balance in mind, how should you view yield in relation to your investments?...

In economics, there exists a risk of the yield curve changing shape and inverting, an indicator that the economy may be entering a recession, which will alter investments. Yield curve risk in investing is the threat that interest rates on bonds of a similar quality will change. Bonds of similar quality but with different expiration dates (known as maturities) are plotted over time, along with their respective interest rates, on a curve....

What Is a Long-Term Loan? Technically speaking, long-term loans aren’t a specific type of personal loan product. Rather, the phrase refers to loans with longer repayment periods, generally over 60 months. Longer terms aren’t common with personal loans, so finding one may take some digging.Long-term personal loans are those with repayment terms of more than 60 months. Other types of long-term loans include 15- and 30-year mortgages and auto loans with terms over 60 months....