CMAs combine both short-term investing and day-to-day banking. They allow you to access your money, pay bills, manage your savings, and earn interest. These accounts are typically separate from a brokerage firm’s investment accounts, but the accounts can be linked together. Acronym: CMA How Does a Cash Management Account Work? Your money earns money through automatic low-risk investing when you put it in a cash management account while allowing you to access it for your daily spending....

Definition and Example of Central Bank Digital Currency (CBDC) A central bank digital currency (CBDC) is the digital form of government-backed money. In the United States, for example, a CBDC would be the digital form of the dollar. A CBDC uses blockchain technology to maintain an electronic distributed ledger, just like Bitcoin and other cryptocurrencies. Although CBDCs are conceptually equivalent to fiat currency, no CBDCs are currently in use at full scale....

Marko Geber / Getty Images Let’s examine what CIFs are, how they work, and who can invest in them. Definition of a Collective Investment Fund A collective investment fund, or CIF, is a type of trust administered by a trust company or bank that combines assets from more than one eligible client. The collected assets must be: Retirement funds Pensions Stock bonuses Profit sharing Other types of tax-qualified retirement plans (exempt from federal income tax)...

Learn more about how condotels work, the benefits and drawbacks, and if it’s something worth considering. Definition and Examples of Condotel A condotel is a hybrid between a condominium and a hotel that lets owners enjoy the unit (and the property’s on-site amenities) themselves as well as generate income by offering it as a short-term rental property. Alternate name: Condo-hotel units Condotel owners purchase the property just as they would with other types of real estate, and they pay maintenance fees to the hotel management company for the upkeep of shared areas....

You’ll start the process of loan consolidation by securing your new loan—ideally at a lower interest rate than you’re currently paying on your debt. You’ll use the money you’ve borrowed from your new lender to repay some or all of your existing creditors. This process can simplify your life since you’ll have one payment to make instead of many. And, depending on the terms of your new loan, consolidation can often reduce your interest rate and total repayment costs too....

Definition and Example of a Credit Shelter Trust The Credit Shelter Trust is a tax structure wealthy individuals can utilize to minimize the estate tax their heirs will need to pay to the IRS. The Credit Shelter Trust, also known as an AB Trust or Bypass Trust, leverages the unlimited marital deduction and the tax trust structure to minimize taxation on the deceased’s assets. Alternate names: AB Trust, Bypass TrustAcronym: CST...

Alternate name: Proprietary institution These privately owned (or publicly traded) schools are often large, national chains that offer a wide range of two- or four-year degree programs, either wholly on campus or partially or fully online. These include bachelor’s, masters, and doctorate degrees in diverse fields ranging from healthcare to fine arts, as well as professional certificate programs ranging from communication to theology. Nontraditional students who are interested in earning a degree or obtaining professional certification sometimes consider for-profit colleges....

Definition and Examples of a Fund of Funds A common example of an investment vehicle that employs the fund-of-funds strategy is a target-date fund (TDF). Target-date funds are a common component of employer-sponsored retirement plans, but they also can be purchased directly from a broker. Through a target-date fund, you identify a time frame that matches yours—say 20 years—and the fund assembles a portfolio of other equity and fixed-income funds that match how aggressively you should be investing....

Alternate name: Futures Futures contracts give businesses some level of certainty about what the price of an asset will be in the future, which allows for better planning. For example, a farmer planting wheat can have an idea of how much the crop will sell for when it’s time to harvest. Investors and speculators, meanwhile, benefit from futures contracts, because they profit from anticipated price changes in these assets. How Does a Futures Contract Work?...

How To Get a Loan Modification Start with a phone call or online inquiry to the lender. Be honest and explain why it’s hard for you to make your mortgage payments right now. Then, let your lender know about your proposed adjustment to the mortgage. Lenders often require a loss mitigation application and details about your finances to weigh your request. Some will require that you miss a mortgage payment, often by up to 60 days....

Learn more about mortgage pools, how they work, and what mortgage pooling means for you. Definition and Examples of Mortgage Pools Mortgage pools are common. Lenders need to have liquidity to continue offering loans; if all their credit is tied up in existing loans, they can’t create more loans. To resolve this problem, lenders often bundle several mortgages with similar attributes to sell them. Different entities will buy these groups, whether it’s the federal government agency Ginnie Mae, government-sponsored enterprises Fannie Mae or Freddie Mac, or a private firm....

While national banks are required to join the Fed, others can join if they wish to as long as they meet the eligibility requirements. Nonmember banks only follow state laws, which might have less regulation and red tape compared to member banks that follow federal-level mandates. This could be an incentive for banks to not become part of the Fed—however, with less regulation comes less protection. While nonmember banks may not have as much oversight, they do have to follow some Fed regulations, like how they handle wire transfers and clearing checks....

For example, with a traditional mortgage loan, your loan is amortized over the repayment period, usually 15 or 30 years. You’ll pay fixed installments over the life of the loan, including principal and interest until you reach a zero balance at the end of your loan term. With nontraditional mortgages, however, you may get more flexibility with your repayment. For instance, you may only have to pay interest for a set period, deferring any principal payments until the interest-only period ends....

Panel interviews reduce the risk of making a bad hire. The panel’s goal is to make the best hiring decision possible given the information available about the position and the finalists. Since each panel member brings a different set of experiences, thoughts, beliefs, and biases to the interview process, the members’ strengths tend to compensate for each others’ weaknesses. In the most effective panels, members work well with one another while being unafraid to respectfully challenge each other’s judgments and assertions about the potential hire....

For example, an investor who purchases shares of stock on a Monday must have sufficient funds in their account to cover the cost of those shares (plus any brokerage fees) by Wednesday. The settlement date for stocks specifically is two days after a trade is executed. How a Settlement Date Works It has always been important to settle trades in financial markets as quickly as possible. Unsettled trades pose risks, particularly if market prices drop steeply and trading volume soars....

Alternate names: Short ratio, days to coverAcronyms: SIR, SR To understand why this number is important, you need to know how shorting a stock works. When investors short a stock, they’re essentially borrowing shares from their broker and immediately reselling them in hopes that the price will drop. Investors with short positions can profit if the stock’s price falls because they can buy back the shares for a lower price and return them to their broker....

Governmental agencies at the federal, state, and local levels, as well as non-profits, may offer subsidized loans, but federal agencies most commonly extend subsidized loans. When they do, they tend to be reserved for low-income borrowers, meaning that borrowers often have to demonstrate financial need to obtain them. One common example of subsidized loans is a federal student loan through the Department of Education. How Does a Subsidized Loan Work?...

For example, in the United States, tax laws originate as bills in Congress. When passed by both the House of Representatives and the Senate, these bills go to the president for approval and signature to become laws. Like many bodies of law, tax codes are often organized into different sections. For example, the Internal Revenue Code is divided into the following 11 subtitles: Subtitle A: Income TaxesSubtitle B: Estate and Gift TaxesSubtitle C: Employment TaxesSubtitle D: Miscellaneous Excise TaxesSubtitle E: Alcohol, Tobacco, and Certain Other Excise TaxesSubtitle F: Procedure and AdministrationSubtitle G: The Joint Committee on TaxationSubtitle H: Financing of Presidential Election CampaignsSubtitle I: Trust Fund CodeSubtitle J: Coal Industry Health BenefitsSubtitle K: Group Health Plan Requirements...

We’ll discuss what a vendor is and how it works, provide examples, and cover the different types of vendors. Definition and Example of a Vendor Vendors are an important part of the supply chain. A company or an individual who sells a good or a service is a vendor. Vendors may sell to other businesses, or they may be retailers who sell straight to consumers. Alternate name: supplier An example of a vendor is a company that provides inventory for boutique clothing stores....

MoMo Productions / Getty Images Learn how viatical settlements work, the pros and cons of these strategies, and alternatives to selling your life insurance policy for cash. Definition of a Viatical Settlement A viatical settlement is an arrangement in which you sell a life insurance policy to a settlement company before the insured person dies. The settlement company takes ownership of the policy and eventually receives the death benefit. A viatical settlement is one way to access a significant portion of your policy’s value prior to death....