Annuity contracts Individual retirement accounts (IRAs), 401(k)s, or other retirement accounts Life insurance policies Pension benefits How a Beneficiary Works When you open a financial account that will exist after your death, you will usually be asked to designate a beneficiary. This designation is included as part of the paperwork for that account. A beneficiary designation usually supersedes (or overpowers) the instructions in a will, so the will only applies to assets that do not have a named beneficiary....

Definition and Examples of the Bottom Line The bottom line refers to a company’s net income, which appears at the end of the income statement. If total expenses exceed revenue for the reporting period, the bottom line will show a net loss. If revenue is greater than total expenses, the bottom line will show positive net income. Understanding a company’s bottom line is vital if you’re analyzing financial performance. However, it isn’t the only metric you should consider as an investor....

However, others have more complicated situations that involve multiple homes and splitting time between different regions. For these individuals, a domicile is the one place they have chosen as their primary residence for tax and legal purposes. You can not have more than one domicile. Differentiating between a home and a domicile can be somewhat subjective, but objective actions can indicate your intention. Your domicile is: The state to which you pay state income taxes The state and county where your will would be probated and your estate would be administered The state to which your estate would pay any estate and inheritance taxes The state whose laws govern the enforcement of judicial orders...

For instance, let’s say a borrower wants to purchase a home for $250,000 and takes out a mortgage from a local bank. The home that the borrower purchases is used as collateral for the loan. Before the bank approves the mortgage, it checks the borrower’s credit score and performs its due diligence. It finds the borrower has no history of default, so the bank approves the mortgage. But a year after purchasing the home, the borrower loses their job and defaults on their mortgage....

Mock interviews are an ideal way to practice for real job interviews because you are in a situation that mirrors an actual interview with a company. When you review your interview with the interviewer, you’ll be able to modify your responses and interview behavior, if necessary. Here’s what you need to know about mock interviews, how they can help you prepare for job interviews, and how to find someone to practice interviewing with....

Definition and Examples of Mortgage Servicing Fees Mortgages are complicated. Along with repayment terms, interest rates, due dates, and varying mortgage types, there’s a lot of information involved in administering your loan. A mortgage lender is the financial institution that originally lent you money. It may continue to act as your loan servicer, but can also choose to have your mortgage serviced by another company, thus giving that company mortgage servicing rights (MSR)....

Laurence Dutton / Getty Images With the surge in online trading among retail investors, interest in penny stocks has grown. But while they may be “cheap,” these securities have significant pitfalls of which to be aware, including the allure of enormous upside potential. Definition and Examples of Penny Stocks Penny stocks are stocks that typically trade for less than $5 per share. If the company has a market capitalization of less than $300 million, it is typically considered a penny stock....

Fundamental factors used to evaluate the value of a security include economic data and financial information about the company. The use of financial ratios such as price to earnings is a key component of fundamental analysis. Technical analysis relies on patterns in stock price movements to gauge future price movements. Technical indicators may suggest to an analyst that a price will rise or fall to a certain level. How Price Targets Work Analysts review securities to determine their value and make recommendations to buy, sell, or hold them....

Example of TIPS The best way to understand how TIPS work is by example. TIPS pay interest semi-annually, but for the purposes of simplicity, the following looks at how the value of the bond changes in each calendar year. Suppose the Treasury issues an inflation-protected security with a $1,000 face value and a 3% coupon. In the first year, the investor receives $30 in two semi-annual payments. That year, the CPI increases by 4%....

Since mortgages are often hundreds of thousands of dollars, this clause protects lenders when borrowers miss payments or break other stipulations. It can also help lenders avoid the costly process of foreclosure. How an Acceleration Clause Works Acceleration clauses vary from lender to lender. In most cases, however, they may be initiated if you miss too many payments, file for bankruptcy, cancel your home insurance, don’t pay your property taxes, or fail to keep your home in livable condition....

Definition and Examples of an Act of God When natural disasters not caused by humans strike, catastrophic events can ensue. These types of destructive forces are known as “acts of God.” Common phenomena classified as acts of God are: Flood Tornado Lightning Hailstorm Earthquake Fire (if caused by lightning or another natural force) Volcanic eruption Tsunami In business contracts, acts of God (“force majeure”) are often used to describe unstoppable events (war, riots, natural disasters) beyond any party’s control that make normal business operations difficult or impossible....

Let’s look at an example. Say you wish to start investing, but are not sure how to start, so you decide to sign up for a robo-advisor. Robo-advisors are software products that can help you manage and automate your investments. When you sign up to use one, you will answer a series of questions about your financial background, current situation, and goals, as well as fill in financial details to secure automated deposits....

An equity glide path refers to key shifts in the asset allocation of stocks, or equities, in your account over time. You use your age at any given time to decide how to spread and manage the assets you will need to tap into when you retire. For example, a target-date retirement fund changes its asset allocation based on how close you are to the date you plan to retire....

If you are never in an accident, it is possible that you will never have to file an insurance claim. But it’s likely that you will be in at least one accident in your lifetime. Let’s say you are in an accident. Another driver hit you from behind at a red light. Both cars are damaged; you have whiplash as a result. The repair shop quotes $3,000 to fix your rear bumper and replace the rear windshield....

In other words, if you wanted to close the doors of the business, how much money would be left after you sold off all the assets and settled all the outstanding obligations? That’s the company’s book value. For instance, suppose a firm has a total of $2 million in assets and $1 million in outstanding liabilities. Its book value would be $1 million. Alternate terms: Net worth, shareholders’ equity...

Cash on hand comes in various forms, from actual cash to funds in a business checking account. Businesses also consider assets that can quickly be liquidated or sold as part of their cash on hand; this is especially useful when businesses don’t have much cash to rely on. As an example, cash on hand would be the equivalent of a business’s cash, cash equivalents, and other short-term investments that can be quickly liquified in the event funds are needed....

Examples of cheap money include: A car loan at 1.9% interestA credit card offering a 0% introductory APR for 18 monthsA 30-year fixed mortgage at 2.935% How Cheap Money Works Cheap money often becomes available when the Federal Reserve lowers interest rates, which it typically does to stimulate the economy. Lower interest rates encourage consumers to seek loans to buy big-ticket items, such as cars and homes. It also prompts businesses to borrow money to expand factories, buy heavy equipment and hire staff—all of which have a positive impact on economic growth....

Community property is the law in nine states: ArizonaCaliforniaIdahoLouisianaNevadaNew MexicoTexasWashingtonWisconsin In these states and territories, assets that enter the lives of a couple after they are married are considered community property. These assets include income, furniture, vehicles, or anything purchased during the marriage. Example of Community Property In a community property state, if you purchase a house during the marriage and put only one partner’s name on the deed, the other partner is still the legal co-owner....

Below, we’ll discuss what financial inclusion is, how it works, and the different types of financial inclusion. What Is Financial Inclusion? Financial inclusion is a movement to ensure that individuals and businesses have access to affordable and effective financial services. Services range from basic transaction accounts like checking accounts and include additional services like credit and insurance. PayPal CEO Dan Schulman describes three essential aspects of modern financial inclusion:...

Financial performance metrics are quantifiable, meaning you can measure. But just as your doctor can’t tell you how healthy you are just by taking your temperature or blood pressure, there’s no single way you can measure financial performance. For example, a firm may be rapidly increasing its revenues, but that doesn’t mean its financial performance is strong. To assess its financial performance, you’d also need to look at its expenses, its liabilities, and how much free cash it has available....