What Is the Capital Gain Tax?
Capital gains are the profits realized from the sale of capital assets such as stocks, bonds, and property. The capital gain tax is triggered only when an asset is sold, not while the asset is held by an investor. However, when a mutual fund sells shares of its holdings during the year, mutual fund investors […]
How Are Annuities Taxed?
One of the most attractive features of an annuity is its tax-deferred status. Generally, you won’t pay any income tax on the interest or earnings until you start taking withdrawals in retirement (age 59½ or later). Qualified and nonqualified annuities are taxed differently. Qualified annuities (such as annuities in an employer-sponsored retirement plan or an […]
What Is the Difference Between a Fixed Annuity and a Variable Annuity?
An annuity is a contract with an insurance company in which you make one or more payments in exchange for a future income stream in retirement. The funds in an annuity accumulate tax deferred, regardless of which type you select. Because you do not have to pay taxes on any growth in your annuity until […]
What Is an Annuity?
An annuity is a contract with an insurance company that is funded by the purchaser and designed to generate an income stream in retirement. It is a flexible financial vehicle that can help protect against the risk of living a long time because it provides an option for a lifetime income. Two advantages of annuities […]
What Is a Stock Index?
In 1884, Charles Henry Dow averaged the closing prices of 11 stocks he considered representative of the strength of the U.S. economy in a paper that preceded The Wall Street Journal. By 1896, The Wall Street Journal was publishing this average on a regular basis, and the most famous indicator of stock market performance was born: the Dow […]
What Do Bond Ratings Mean?
Bond ratings gauge a bond issuer’s financial ability to repay its promised principal and interest payments. Ratings are based on an analysis of the issuer’s financial condition and creditworthiness. In essence, the higher the rating, the more likely it is that a bondholder will receive his or her principal again when the bond matures. Credit […]
What Types of Bonds Are Available?
Bonds are issued by federal, state, and local governments; agencies of the U.S. government; and corporations. There are three basic types of bonds: U.S. Treasury, municipal, and corporate. Treasury Securities Bonds, bills, and notes issued by the U.S. government are generally called “Treasuries” and are the highest-quality securities available. They are issued by the U.S. […]
How Does Inflation Affect Me?
Are you saving for retirement? For your children’s education? For any other long-term goal? If so, you’ll want to know how inflation can impact your savings. Inflation is the increase in the price of products over time. Inflation rates have fluctuated over the years. Sometimes inflation runs high, and other times it is hardly noticeable. […]
What Is a Reverse Mortgage?
Many Americans facing retirement would love to increase their monthly income. Fortunately, there is a way that homeowners can use their homes to help finance their retirement — to turn the value of their property into usable cash without the emotional trauma of having to sell and move. A reverse mortgage turns the value of […]
What Advantages Does a Biweekly Mortgage Offer?
Most homeowners make their regular mortgage payments every month for the duration of the loan term, and never think of doing otherwise. But prepaying your mortgage or making biweekly payments can reduce the amount of interest you’ll pay over time. Under a biweekly mortgage, instead of making the payments once a month, you make half […]