As of tax year 2022, the ability to contribute to a Roth IRA begins phasing out at modified adjusted gross incomes (MAGI) of $204,000 for married couples who file joint returns, or $129,000 for single taxpayers. The limit for single taxpayers also applies to head-of-household filers and to married taxpayers who file separate returns, as long as they haven’t lived with their spouses at any point during the tax year....
Price Stability In theory, bond proxies have stronger price stability than other stocks. If the stock market falls broadly, bond proxies may experience less of a price decline—similar to how bonds perform during these same events. Income The other aspect of bonds that bond proxies seek to replicate is the promise of a fixed income. Bond proxies have hefty dividends that are meant to rival the interest or coupon payments from bonds....
Alternate names: confirmation statement, trade confirmation statement When you place trades through a brokerage account, you will receive a report known as a brokerage trade confirmation. This is a detailed record of the trade completed. While trade confirmations can vary, they often includes: The name of the investment traded, along with the ticker symbol. The total shares bought or sold. The cost or selling price per share. The commission paid to the brokerage firm....
If you’re thinking about buying car insurance and aren’t sure whether you need endorsements, read on. We’ll explain how endorsements work and which ones you may have to choose from, depending on your needs, location, and insurer. What Is a Car Insurance Endorsement? A car insurance endorsement is a clause added to your car insurance policy that makes a change to the coverage. An insurance endorsement can serve several purposes, such as:...
Definition of Conditional Binding Receipts A conditional binding receipt is a common type of receipt issued after the first payment of a new life insurance policy. It creates a conditional contract between the applicant and the insurance company. During the conditional period, the life insurance company processes the application and the applicant completes any required medical examinations or paperwork. This receipt binds the insurance company to pay death benefits for any applicant who passes away before the full approval is issued, on the condition that they would have met the insurance company’s guidelines for eligibility and passed any required medical examination....
One of the top reasons why investors and traders use dark pools is to obtain better pricing by remaining private. Within a lit exchange, an institutional investor—such as a large pension fund—might try to sell thousands or millions of shares. This could quickly cause the price to drop before the transaction finalizes, as others could see that someone is trying to get rid of a lot of stock. Within a dark pool, however, the pension fund could try to sell all the shares they want to get rid of all at once (before the price can move against them)....
Definition and Examples of a Covenant In the case of a loan, covenant requirements are conditions the borrower must regularly meet throughout the term to demonstrate their creditworthiness to the lender. Lenders frequently use certain financial tests that serve as indicators of the borrower’s repayment ability. Failure to meet these tests violates the covenant and constitutes loan default. For example, let’s say a business owner secures a commercial loan from a lender....
Factors That Impact Salary Of course, determining the salary you should be receiving is easier said than done. There are many components that can affect the amount of pay you receive, including your level of education or type of degree, your professional experience, your skill set, your references, and how you perform in an interview. External factors may impact your salary as well. How to Get Salary Information Salary data is a great starting point to get a sense of what constitutes fair pay for your role, experience level, and location....
When you invest in a bond, you may worry about losing your principal and fixed interest payments if the issuer defaults. One solution is to invest in a guaranteed bond. If you’re wondering whether guaranteed bonds are right for your investment portfolio, you’ve come to the right place. We’ll cover the basics of guaranteed bonds, how they work, and some pros and cons to be aware of. Definition and Examples of a Guaranteed Bond A guaranteed bond is a bond that offers investors protection from default risk because it is backed by a third party....
Is a minority depository institution suitable for your deposits, savings, borrowing, and business needs? Find out more about these financial institutions, how they work, and if one might be a good fit for you. Definition and Example of Minority Depository Institutions There are many types of minority depository institutions, depending on the entity overseeing the bank. The Federal Deposit Insurance Corp. (FDIC) directly supervises two-thirds of all FDIC-insured MDIs, and uses these definitions for them:...
The Basics of Revocable Living Trusts A revocable living trust is a legal contract between the trustmaker and trustee that can be changed at any time and requires the trustee to oversee the management of property transferred into the trust by the trustmaker for the benefit of the beneficiaries of the trust. While the trustmaker is still alive, they act as their own trustee. After they have died, a new trustee—called the successor trustee—takes over....
Basic supply and demand mechanics drive a sell-off. If demand for a stock is higher than the supply, the price will increase. If the demand is lower than the supply, the price will drop. When demand falls sharply, a sell-off may occur. Sometimes, a sell-off is specific to a certain asset, like stock or cryptocurrency. But other times, a sell-off occurs across a sector or the overall stock market....
Definition and Examples of Settlement Banks A settlement bank enables a merchant to allow you to pay with credit and debit cards and receive the funds in its merchant account. The settlement bank plays an important part in helping brick-and-mortar and online retailers do business and provide convenient payment options for you. This type of bank also can help with other services, such as handling customer chargebacks. After a merchant partners with a settlement bank, it can accept card payments through compatible card networks....
It’s important to know what different closing costs and real estate fees are, as they can add up to a significant amount. Here’s what you should know about tax service fees. Definition and Example of a Tax Service Fee A tax service fee is one of many closing costs you’ll pay when you finalize the purchase of a home. Tax service fees are ways for lenders to ensure there are no issues with local government entities or property taxes during the months after a sale....
Students in work-study jobs generally work flexible hours that don’t conflict with their class schedules. There are limits to how many hours students can work each week so they’ll have time for studying and school activities. The types of schools that participate in the federal student aid program include four-year colleges and universities, two-year colleges (community and junior colleges), and career schools (technical and vocational schools). However, not all school participate in federal student aid programs....
What Abstract of Title Means When purchasing real estate, you do not want to be buying a property with liens or other problems you don’t know about. If you’re going to buy a home with liens on it, you need to know what those liens are and how much they’ll cost to remove. You also want to avoid survey problems. You don’t want any claims on the property hiding out there....
Acronym: ESPAlternate name: Employer-sponsored savings plan, salary-deferral plan Some common examples of ESPs include: 401(k)s403(b)s457(b)sThrift Savings Plans (TSPs)Health savings accounts (HSAs)Flexible spending accounts (FSAs)Profit-sharing plansDefined benefit plans How Does an Employee Savings Plan Work? Employers offer ESPs as part of their benefits package to incentivize employees to save for long-term goals such as retirement and health care expenses. Your employer typically deducts your ESP contributions from your paycheck each period; you don’t have to set aside this money yourself....
When an ICO takes place, a large group of investors can buy the coin. Unlike a regular stock market account, however, coins in an ICO are generally created and distributed using a blockchain, the technology behind cryptocurrencies and other modern asset tracking solutions. Cryptocurrency website Coindesk maintains an updated list of current and upcoming ICOs. Before you buy, however, it’s important to understand how they work and the risks involved....
Interest rate ceilings aim to protect consumers and prohibit abusive lending practices. The concept of interest rate ceilings stems from ancient usury laws, which were made to protect consumers from extremely high interest rates. Except for regulations for federal credit unions, there are no federal interest rate cap laws. Instead, each state has its own set of usury laws that set the legal maximum interest rate a lender can charge....
In theory, the system may sound simple, but in practice, it’s much more complicated and can have both positive and negative effects. Here’s how capitalism works and the advantages and disadvantages of this economic system. What Is Capitalism? Capitalistic ownership means owners control the factors of production and derive their income from their ownership. That gives them the ability to operate their companies efficiently. It also provides them with the incentive to maximize profit....
