- Accredited Investor Requirements: Rule 501 of Regulation D
Accredited investor 501(d) status is defined under Rule 501 of Regulation D. It outlines the financial criteria that individuals and entities must meet to participate in certain private securities offerings. Generally, individuals qualify with a net worth exceeding $1 million excluding their primary residence or an annual income of at least $200,000 ($300,000 for joint… read more…
- 7 Potential Investment Opportunities for Accredited Investors
Accredited investors can invest in exclusive assets that are not available to the general public. These investments require significant money up front and offer chances for growth and diversification. Investors usually need to work with private investment firms or financial advisors to access these opportunities. Here are seven opportunities for accredited investors. 1. Hedge Funds… read more…
- Residual Value: Meaning, Examples, How to Calculate
Residual value is the estimated value of an asset at the end of its useful life. It’s used to figure out things like the value of a car at the end of a lease or how much equipment is worth after it’s been used. This value also helps with calculating depreciation for taxes. Because rules… read more…
- Section 1256 Contracts: What They Are and How to Report
Section 1256 contracts include certain regulated futures contracts, foreign currency contracts and non-equity options. These contracts receive a unique tax treatment under the IRS code and are subject to mark-to-market accounting, meaning that all open positions are treated as if they were sold at fair market value at the end of the tax year. This… read more…
- Lien Sale: What It Is, Types, Examples
Liens are legal claims on property that are often placed by creditors or government agencies to secure property taxes, contractor fees and other unpaid debts. Common types include tax, judgment, mechanic’s and residential liens. A lien sale settles the debt and can offer a chance to buy real estate and other assets at a lower… read more…
- How a Good ‘Til Cancelled (GTC) Order Works
A good ’til cancelled (GTC) order allows traders to buy or sell a security at a specified price, even if it takes days, weeks or months for the specified price to be reached. Unlike day orders that expire if unfilled by the end of a trading session, a GTC order typically remains active until executed… read more…
- Stop Loss Order: How It Works, Pros and Cons, Examples
A stop loss order is a trading tool that automatically sells a security if its price falls to a set level, helping investors limit losses without constantly monitoring the market. While it can protect against sudden drops, execution prices may vary in fast-moving markets. Different types of stop loss orders provide varying control over trade… read more…
- What Are Mortgage-Backed Securities (MBS)?
Mortgage-backed securities (MBS) are investments made up of bundled residential or commercial mortgages sold to investors. As homeowners make their monthly payments, investors receive returns. These securities help lenders continue issuing new loans, keeping the housing market active. Some MBS are backed by government agencies, while others carry more risk depending on borrower repayment. A… read more…
- What Is a Fee Simple Absolute Ownership in Real Estate?
Fee simple absolute is a type of property ownership that grants the owner full rights to use, sell, lease, or transfer the property without restrictions. It remains in effect indefinitely unless transferred or acquired through legal means such as eminent domain. A financial advisor can help assess how this ownership structure fits into your overall… read more…
- How Does a Fee Simple Defeasible Estate Work in Real Estate?
A fee simple defeasible estate is a type of property ownership in which the owner holds title to the property with specific conditions or limitations. Fee simple defeasible estates are common in real estate transactions where property use is intended for a specific purpose, such as maintaining land for conservation, religious institutions or educational facilities.… read more…
- Purchasing Power: What It Is, Formula, Examples
Purchasing power refers to the amount of goods and services a person or entity can buy with a given amount of money. It fluctuates over time due to inflation, deflation and changes in income, directly affecting consumers, businesses and economies. When inflation rises, purchasing power declines, meaning the same amount of money buys fewer goods.… read more…
- Purchasing Power Parity (PPP): What It Is and How to Calculate
Purchasing power parity (PPP) is an economic concept that compares the relative value of currencies by examining the cost of identical goods and services across different countries. It helps determine whether exchange rates accurately reflect differences in price levels, offering a way to assess a currency’s true buying power. PPP is often used to compare… read more…
- How Does Fiduciary Responsibility Apply to Real Estate?
Fiduciary duty requires real estate agents to act in the best interest of their client. This includes giving honest advice, protecting confidential information and making decisions that benefit the client financially. If an agent fails to do this, they could face legal or financial penalties. A financial advisor can provide additional insight and safeguards to… read more…
- What Is SEC Rule 144A and How Does It Affect Investors?
Created by the U.S. Securities and Exchange Commission (SEC), Rule 144A allows qualified institutional buyers (QIBs) to trade restricted securities without a public offering. This rule improves liquidity and makes it easier for large investors to buy and sell private market securities. While mainly affecting institutions, it can also impact market conditions and investment opportunities… read more…
- The Augusta Rule: How to Rent Out Your Home for Tax-Free Income
The Augusta rule allows homeowners to rent out their primary residence for up to 14 days per year without paying federal taxes on the rental income. Originally created for Augusta, Georgia, residents during the Masters Tournament, this rule now benefits anyone using short-term rentals for extra income. However, it applies only to federal taxes—some states… read more…
- Transfer Pricing: What It Is and How It Affects Investors
Transfer pricing refers to the pricing of goods, services and intellectual property transferred between related entities within a multinational corporation. Companies use transfer pricing to allocate costs and revenues across different jurisdictions, which can impact taxable income and financial reporting. While the practice is legal, tax authorities scrutinize the details of how it is done… read more…
- What Happens in a Short Run and How Can It Affect Investors?
The short run in economics refers to a period when at least one factor of production remains fixed, limiting a business’s ability to fully adjust to changes in demand or costs. For example, a factory may not be able to quickly increase machinery to boost production. While often discussed in relation to individual businesses, short-run… read more…
- Parent’s Guide on How to Invest in Stocks for a Teenager
Teaching your teen about investing in stocks helps build financial literacy and encourages smart money management. Learning these skills early can help them make informed decisions about spending and saving for the future. A financial advisor can provide guidance on beginner-friendly investment options and strategies to help teens develop good financial habits. Why Early Investing… read more…
- Perpetual Bonds: Definition, Yield Calculation, Examples
Perpetual bonds have no maturity date, allowing them to pay interest indefinitely, making them appealing for long-term income. They come in different types, such as government and corporate bonds, each with varying risks and interest rates. To understand potential returns, investors should know how to calculate yield, which is found by dividing the annual interest… read more…
- What Is Short Covering and How Can Investors Use It?
Short covering is a stock trading phenomenon that occurs when traders who have previously sold a stock short buy it back to close their position. This process can drive up the stock’s price, especially if multiple traders rush to cover their positions at the same time. Short covering often happens when unexpected news or price… read more…
- What Is Short Interest Ratio and How Do Investors Use It?
The short interest ratio helps traders and analysts understand market sentiment and potential price moves. It compares the number of shares sold short to the average daily trading volume. A high ratio means more investors are betting against the stock, which may push prices down or lead to a short squeeze if buying demand rises.… read more…
- How a Naked Call Options Strategy Works in Investing
A naked call is an advanced strategy where an investor sells call options without owning the asset. It can be profitable if the stock stays below the strike price but carries unlimited risk when the price rises. Given the complexity of options trading, consulting with a financial advisor can help you develop a strategy based… read more…
- Taxes on REITs vs. Dividend Stocks: What’s the Difference?
Investors seeking passive income often choose between real estate investment trusts (REITs) and dividend stocks, both of which provide regular payouts. However, their tax treatment differs and can impact overall returns. A financial advisor can explain the tax differences between REITs and dividend stocks and help you choose an option for your portfolio. Taxes on… read more…
- How to Calculate Effective Gross Income (EGI) for Real Estate
Effective gross income (EGI) is a key metric for real estate investors looking to evaluate the income potential of a property. It represents the total revenue that a property generates after accounting for vacancy losses and other forms of additional income, such as parking fees or laundry services. By calculating EGI, investors can assess a… read more…
- Accredited Investor vs. Sophisticated Investor
Accredited investors must meet financial criteria set by the SEC, allowing them to invest in private offerings such as hedge funds and private equity. A sophisticated investor, on the other hand, does not need to meet these financial requirements but must demonstrate sufficient knowledge and experience to evaluate investment risks. When comparing the key differences… read more…