Let’s dive into understanding business tradelines. Learn why business tradelines are important and how to establish business tradelines so that you can build your business credit. Definition and Examples of Business Tradelines With a business tradeline, a company can build credit with a specific vendor or supplier by receiving products or services. Then, the company will pay the invoice by the due date. Payment dates are at each vendor’s discretion....
Understanding both the good and bad about checkbooks and how they work may help you gain better control of your checking account and spending habits. Definition and Example of a Checkbook Checkbooks are compact, paper-based financial instruments you receive after opening a checking account with a financial institution. A checkbook typically consists of a pad with paper checks you can use to pay bills and make purchases with the money in your checking account....
Learn more about how conservatorships work and the different types. Definition and Examples of a Conservatorship A conservatorship is a court case in which a judge appoints an individual or party (the conservator) to oversee the welfare of an individual who cannot manage their own affairs (the conservatee). Examples of conservatees include elderly people or people with temporary or permanent mental or physical disabilities. Alternate definition: A conservatorship occurs in a business setting when one party is given authority to oversee a declining company and bring it back to financial health....
Below, we’ll dive into why a company might issue convertible debentures instead of regular stocks or bonds. We’ll also discuss the pros and cons of convertible debentures from an investor’s perspective and provide resources you can use to help inform your decisions. Definition and Examples of Convertible Debentures A debenture is a type of corporate bond that’s unsecured, meaning it’s not backed by collateral. A convertible debenture allows investors to exchange their bonds for another type of security, usually shares of the company’s common stock....
Fixed-rate mortgages can either be conventional loans or loans guaranteed by the Federal Housing Authority (FHA) or the Department of Veterans Affairs. How a Fixed-Rate Mortgage Works Each month’s payment is equal to the interest rate times the principal, plus a small percentage of the principal itself. The process of paying the loan over time is called amortization. Since a bit of the principal is paid off each month, that makes the interest payment on the remaining principal a little less too....
Unlike other investments, most of gold’s value is not based on its contribution to society. People need housing to live in and oil for gas to drive their car, and the value of stocks is based on the profitability of the corporations represented. On the other hand, the biggest use of gold is as a commodity for the production of luxury items. Most of the yearly gold supply is made into jewelry (78%)....
A long squeeze is the opposite of a short squeeze. Investors who take a long position are betting that the asset’s value will rise over time. But investors with a short position seek to profit from a price drop. Essentially, they borrow an asset and sell it in hopes of buying it back at a lower price and profiting off the difference. A short squeeze happens when investors with a short position panic and rush to close out their positions, driving up the price further....
To help you understand the concept, imagine that an asset management company called Sound Investments created a mutual fund management subsidiary and has it sponsor three new mutual funds: The Sound Investments Stock FundThe Sound Investments Bond FundThe Sound Investments Real Estate Fund Each of these mutual funds is unique and has its own investment portfolio. In most mutual fund families, each fund is run by separate portfolio managers, who are obviously focused on different investment strategies....
A parsonage allowance can’t be excluded for self-employment tax purposes. That includes the taxes that go toward Social Security and Medicare, which ministers and religious leaders may also have to pay. Because they can exclude the parsonage allowance from gross income, a minister can save more money on income taxes than if they were to receive that same amount as part of their regular salary. Religious leaders might not always be able to exclude their full housing allowance, or the full amount they pay for housing....
Definition and Examples of a Responsible Party The IRS defines the responsible party as the principal officer of a corporation, a general partner of a partnership, the owner of a disregarded entity (usually a single-member limited liability company (LLC), or a grantor, owner, or trustor of a trust. It’s the person who ultimately owns or who exercises ultimate control over a business or other entity. For business entities, the responsible party is the person who controls, or is entitled to control, the company’s funds or assets....
A company’s end goal is value creation, particularly in the form of profit. By understanding each stage of the value chain, a business can create greater profit by making necessary changes to the process. With so many activities and suppliers involved, the value chain has many facets. Definition and Examples of a Value Chain A value chain documents, in detail, the various steps a business goes through to bring a product or service to the customer....
PeopleImages / Getty Images Definition and Examples of a Wraparound Mortgage A wraparound mortgage is a type of home loan where the buyer’s new mortgage essentially “wraps” around the seller’s original mortgage. It’s a type of secondary financing where the mortgage is provided by the seller rather than a traditional bank or mortgage lender. As the buyer makes mortgage payments to the seller, the seller uses that money to continue paying off their original mortgage loan....
For example, your mother may leave you her house, life insurance proceeds, and bank accounts to you as your inheritance in her will. She may leave her investment accounts and jewelry to your sibling, so that property would be their inheritance. How an Inheritance Works How an inheritance works depends on how assets are designated to be transferred. There are a few ways this can occur, including outside of probate, via a living trust, for example, or through probate....
The base monthly payments of the open-end lease agreement are determined based on the lessor’s projection of the vehicle’s future value. But if that estimation is off, the lessee is responsible for the difference. They may get a refund or owe money, depending on the market value of the car at the time the lease ends. Alternate name: finance lease Businesses may prefer open-end leases for vehicles because these contracts often come with more flexible mileage terms....
Alternate name: expirationless option, non-standard option, exotic option By purchasing a perpetual option contract, you have the luxury of exercising the contract at any point in the future when it makes sense for you to do so. How Does an XPO Work? Standard options contracts are affected by time decay, which means that their values diminish as the contracts approach their expiration dates. Rather than worrying about time degrading the value of an option contract, an investor may decide to purchase a perpetual option contract if they want to remove the expiration risk of a standard option....
Artist websites and online auctions and marketplaces have made it easier to explore collecting as a hobby or investment. If you have a growing collection of treasured items, chances are your homeowners or renters insurance policy doesn’t provide the protection you need. Collectibles insurance provides broader protections and places a higher value on collections—and it may cost less than you expect. Definition and Examples of Collectibles Insurance A standard home insurance policy includes personal property coverage, which covers a wide range of items, including clothing, electronics, and furniture, in case they are destroyed by a covered loss such as a fire....
Credit health insurance is also known as Credit Disability Insurance or Credit Accident and Health Insurance. Who Does Credit Health Insurance Protect? The credit health insurance policy protects the lender from not being paid when the borrower is unexpectedly sick or unable to work due to illness, subject to the terms of the specific policy. Who Is the Beneficiary of Credit Insurance? The beneficiary of credit insurance is the lender....
Instead of panicking about how you’ll make ends meet or cover an unexpected bill, solid financial health gives you the power to: Cover an unexpected bill using your emergency fundLeave an abusive relationship without fear of having no moneyChase opportunities that align with your passions versus what will pay the billsInvest in a housecleaner or meal-prep service to free up more timeQuit a job you don’t like and pull from savings until you can find a new one...
vitapix / Getty Images Income you receive from any sources other than an employer must be reported to the IRS after the end of the tax year, just like the income from your job. The payer reports the payments to the IRS, and the payee must then report the income on their tax return. Taxes typically aren’t withheld from this type of payment, whether it’s from self-employment or investments, so you’ll have to pay the tax on it at tax time....
Alternate names: legacy wealth, family wealth, multigenerational wealth, intergenerational wealth Many people may associate generational wealth with financial wealth such as cash, stocks, bonds, real estate, and family businesses, but generational wealth can include much more than money and valuable possessions. It can also take the form of traditions, heirlooms, an educational legacy, and connections. So, for example, when a grandparent dies, they may have a last will and testament that specifies that their $2 million fortune gets divided evenly and passed down to their five grandchildren....
