The IPO process is important to the financial markets because it helps fuel the growth of young companies and adds new stocks to the pool of potential investment opportunities. An initial public offering (IPO) is the first public sale of stock by a private company. Companies tend to schedule IPOs when investors are feeling good about their financial prospects and are more inclined to take on the risk associated with a new venture. Thus, IPOs tend to reflect broader economic and market … [Read more...]
What is the difference between a tax deduction and a tax credit?
Tax deductions and credits are terms often used together when talking about taxes. While you probably know that they can lower your tax liability, you might wonder about the difference between the two. A tax deduction reduces your taxable income, so when you calculate your tax liability, you're doing so against a lower amount. Essentially, your tax obligation is reduced by an amount equal to your deductions multiplied by your marginal tax rate. For example, if you're in the 22% tax bracket … [Read more...]
Quiz: Financial Facts That Might Surprise You
If you have a penchant for financial trivia, put your knowledge to the test by taking this short quiz. Perhaps some of the answers to these questions will surprise you. Questions 1. The first organized stock market in New York was founded on Wall Street under what kind of tree? a. Maple b. Linden c. Buttonwood d. Elm 2. Who invented the 401(k)? a. Congress b. Ted Benna c. The IRS d. Juanita Kreps 3. Which three U.S. bills together account for 81% of the paper … [Read more...]
Investing to Save Time Boosts Happiness Returns
"Time famine" is the feeling of being overwhelmed by the demands of work and life. Also known as time scarcity and time stress, this pressure is a "critical factor" in the rising rates of obesity. Source: "Buying Time Promotes Happiness," PNAS, July 24, 2017 The more money you make, the more valuable you perceive your time to be — and the more time-strapped you may feel, according to University of British Columbia psychology professor Elizabeth Dunn.1 So wouldn't it stand to … [Read more...]
What is gross domestic product, and why is it important to investors?
GDP, or gross domestic product, measures the value of goods and services produced by a nation's economy less the value of goods and services used in production. In essence, GDP is a broad measure of the nation's overall economic activity and serves as a gauge of the country's economic health. Countries with the largest GDP are the United States, China, Japan, Germany, and the United Kingdom. GDP generally provides economic information on a quarterly basis and is calculated for most of the … [Read more...]
What is the employment situation report, and why is it important to investors?
Each month, the Bureau of Labor Statistics publishes the Employment Situation Summary report based on information from the prior month. The data for the report is derived primarily from two sources: a survey of approximately 60,000 households, or about 110,000 individuals (household survey), and an establishment survey of over 651,000 worksites. Results from each survey provide information about the labor sector, including the: Total number of employed and unemployed people … [Read more...]
Marriage and Money: Taking a Team Approach to Retirement
Open communication and teamwork are especially important when it comes to saving and investing for retirement. Now that it's fairly common for families to have two wage earners, many husbands and wives are accumulating assets in separate employer-sponsored retirement accounts. In 2018, the maximum employee contribution to a 401(k) or 403(b) plan is $18,500 ($24,500 for those age 50 and older), and employers often match contributions up to a set percentage of salary. But even when most of a … [Read more...]
The College Landscape After Tax Reform
College students and their parents dodged a major bullet with the Tax Cuts and Jobs Act of 2017. Initial drafts of the bill included the elimination of Coverdell Education Savings Accounts, the Lifetime Learning Credit, and the student loan interest deduction, along with the taxation of tuition waivers, which are used primarily by graduate students and college employees. In the end, none of these provisions made it into the final legislation. But a few other college-related items did. These … [Read more...]
Quiz: Can You Answer These Social Security Benefit Questions?
Most people will receive Social Security benefits at some point in their lifetimes, but how much do you know about this important source of income? Take this quiz to learn more. Questions 1. Can you receive retirement and disability benefits from Social Security at the same time? a. Yes b. No 2. If your ex-spouse receives benefits based on your earnings record, your benefit will be reduced by how much? a. Reduced by 30% b. Reduced by 40% c. Reduced by 50% d. Your benefit will not be … [Read more...]
Dividend Investing: Small Payments Can Boost Returns
Owning shares of stock or stock funds might increase the value of your portfolio in one of two fundamental ways: capital appreciation (i.e., price increases) and dividend payments. Of the two, capital appreciation carries the greatest potential for return, but it also carries the greatest potential for loss. And any gains or losses are only reaped when you sell your shares. By contrast, dividends typically offer more consistent modest returns that are paid while you hold your shares. For this … [Read more...]
