Term
|
Definition
selling a stock for a loss and buying the same stock back within 30 days
buying more of a stock that you own at a loss, selling the original shares within 30 days
you may not use that loss for a tax loss |
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Term
| Variable Rate of Interest |
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Definition
| an interest rate that moves up and down based upon the changes of a different interest rate which is not controlled by the lender |
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Term
|
Definition
| interest rate you are charged on unpaid balances in addition to the variable interest rate to determine the total rate of interest on your account |
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Term
| What should you do when your credit card is lost or stolen? |
|
Definition
1. contact the bank immediately
2. close account
3. ask for new card on new account |
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Term
|
Definition
- used like debit card with a million of extra fees to go with it
- not subject to the new credit card act |
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Term
|
Definition
| if the value of the house declines to the point where the amount of the loan(s) is greater than the market value of the house. Even if the house is sold the proceeds will not be enough to repay the loan(s). |
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Term
|
Definition
| legal loan document which pledges a piece of property to a lender as security for repayment of the loan by the borrower. |
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Term
|
Definition
| mortgage that has first claim on the property in the event of a default or the sale of the property |
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Term
|
Definition
| additional loan taken against property which is considered riskier since the 1st mortgage must be paid off first before the 2nd mortgage is repaid. Usually has a higher rate of interest and shorter term (3-5 years) |
|
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Term
|
Definition
| difference between how much the property is worth in the marketplace, less what you owe on the mortgage(s). Value of what you own assuming all debts paid. |
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Term
|
Definition
| using borrowed money to invest, with the hope that it will enable additional profits for the borrower |
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Term
| How does the Government subsidize home ownership through the tax code? |
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Definition
- mortgage interest (not principal) is tax deductible on federal and state up to $1 million loan
- “points” are tax deductible
- origination fees are tax deductible
- property taxes are tax deductible (insurance is not) |
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|
Term
| What is the most important factor in searching for a home? |
|
Definition
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Term
| If you sell a house (primary residence) that you’ve lived in for 2 of the last 5 years what benefits do you get? |
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Definition
- exempt up to $250,000 of profit from any tax on the gain
- $500,00 if married |
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Term
| Are repairs and maintenance on a home tax-deductible? |
|
Definition
| No, only capital expenses like adding a room can be added to your cost-basis to lower potential taxable profits |
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Term
| How does depreciation effect cost-basis? Lowers it or raises it? |
|
Definition
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|
Term
| When selling a house do you want your cost-basis to be as small as possible or as high as possible? Why or why not? |
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Definition
| As high as possible, so that you can deduct it to your profits and you pay less taxes on the profits you make from selling a house. |
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Term
| The more money you pay for a down-payment how is the interest and monthly payment effected? |
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Definition
| The interest rate is lower and the monthly payment is also lower. This is also less risk. |
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Term
| The less money you pay for a down-payment how is the interest and monthly payment effected? |
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Definition
| Interest rate and monthly payment are both higher, but you get more tax deductions. The bad thing is this is more of a risk. |
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Term
| What is Negative Amortization? Is it a good or a bad thing? |
|
Definition
occurs when below market teaser interest rates are used to entice people to buy a house. These low rates are not free. The difference between the low teaser rate and the real rate of interest is added to the amount of the loan.
Never fall for negative amortization, it's bad. |
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Term
| What is the benchmark loan? |
|
Definition
| 30-year fixed interest loan, you will always make the same payment every month regardless of anything. |
|
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Term
| PMI (Private Mortgage Insurance) |
|
Definition
| If your equity or down-payment is less than 20%, the lender may charge a higher rate of interest and require you to buy PMI. The current cost of PMI is about 1.6% of the principal amount per year. You can deduct PMI if your income is $114,000 or less. |
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Term
|
Definition
| charges levied by the lender that are paid at closing and represent prepaid interest. 1 point equals 1% of the loan amount. Each point will buy down the interest rate about .25% lowering the monthly payment. |
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Term
| When are appraisals needed? |
|
Definition
| Some federal agencies will insure or guarantee certain loans when buying a house if you qualify, but they require extra paperwork and appraisals that can cause delays. You pay for the appraisals. |
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Term
| Who pays the commission to the real estate agent when selling a house? Seller or buyer? Is this commission negotiable? |
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Definition
| The seller always pays the commission and nowadays it is common to negotiate the commission lower. |
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|
Term
| Always get professional inspections. True or false? |
|
Definition
|
|
Term
| Is it okay for the buyer and the seller to have the same real estate agent? |
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Definition
| No this is illegal, called dual agencys. They are trying to get the whole commission for themselves. |
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|
Term
| Always have your name on the title or deed of any property you buy or purchase jointly with another person. True or false? |
|
Definition
|
|
Term
|
Definition
a simple mathematical calculation used to estimate how long it will take a certain sum of money to double at a certain interest rate, assuming the interest is compounded annually.
- divide 72 by interest rate -> number of years to double your money
- divide 72 by the # of years you want to invest -> interest rate needed to double money |
|
|
Term
| Long term capital gain (How is it taxed?) |
|
Definition
| For an asset owned over 12 months the profit is subject to a current maximum tax of 15% |
|
|
Term
| short term capital gain (How is it taxed?) |
|
Definition
| For an asset owned for 0-12 months, the profit is added to your income and is taxed at your individual tax rate. |
|
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Term
| What is the current maximum federal income tax rate? |
|
Definition
|
|
Term
| AMT (Alternative Minimum Tax) |
|
Definition
| designed to impose taxes on high income people who were paying little or no income tax by taking advantage of various tax loopholes. You pay the higher of the tax between AMT and regular tax brackets. |
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Term
|
Definition
| The highest price a buyer is willing to pay at that very moment in time |
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Term
|
Definition
| The lowest price a seller is willing to sell at that very moment in time. |
|
|
Term
|
Definition
| the best available price at that moment in time for an immediate execution or filling of that order |
|
|
Term
|
Definition
| the specific price you set at which you are willing to either buy or sell a stock |
|
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Term
|
Definition
| divide the market price of a share by the earnings per share and you will get the price to earning ratio. What the market is currently valuing these shares. |
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|
Term
| Defined Benefit Pension Plan |
|
Definition
| plans in which employer promises an employee a specified lifetime monthly benefit upon retirement which usually depends on the employee’s age at retirement, their salary, and the number of years on the job. |
|
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Term
|
Definition
| employer established plan similar to an individual retirement account (IRA). Gives a special tax break to employees who are saving primarily for retirement. Investments provided by employer and usually can’t take money out before your 59.5 years old. |
|
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Term
|
Definition
| You won all contributions including your own and the employers. |
|
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Term
|
Definition
| You don’t own matching funds until you’ve worked for a period of time, can’t be longer than 3 years. |
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Term
|
Definition
| You get percentage of employers match each year. |
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Term
|
Definition
| Making interest upon interest |
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Term
|
Definition
| When a company offers shares for the first time to the public, often priced mainly for the benefit of the seller rather than the investor. |
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Term
|
Definition
| professionally managed investment instrument that do not require daily or weekly attention. Profits may not be enough to cover research, trading, and administration. |
|
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Term
|
Definition
| professionally managed investment instrument that do not require daily or weekly attention. Profits may not be enough to cover research, trading, and administration. |
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|
Term
| When is the worst time to buy mutual funds? |
|
Definition
| December before the year-end distribution or else they'll require you to pay taxes on it. |
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Term
|
Definition
| when you leave an employer where you were covered by a group plan with 20 or more employees, you can continue in the group plan for up to 18 months, but at an individual rate. Usually double the price. |
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|
Term
| How much is medical insurance for a family of 4 per year? |
|
Definition
|
|
Term
|
Definition
| structured by the IRS as non-profit organizations. Members pay a flat monthly fee for coverage with little or no deductible or co-payment. But if you go to a provider outside the plan you will probably have to pay all or a large part of the bill. (Kaiser Permanente) |
|
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Term
|
Definition
| allows you to choose from a group of providers who have contracts with your insurance company to provide services at a large discount to the posted rate. You pay for the care you receive. |
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Term
|
Definition
| employer only sponsored plan. Money deducted from your paycheck pre-tax for out-of-pocket health care expenses. Select amount you want to contribute at the beginning of the year and the employee deducts a monthly payment from paycheck. Use-it-or-lose-it. |
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|
Term
|
Definition
plans that let you set aside pre-tax dollars to pay out-of-pocket medical expenses tax free, essentially making some medical expenses tax deductible. Tax sheltered account for medical bills.
- money withdrawn is tax-free
- annual out-of-pocket expenses may not exceed $5,950 for an individual, $11,900 for a family |
|
|
Term
| 90% of medical bills are grossly _____________. Fill in the blank. |
|
Definition
|
|
Term
| True or False: Insurance companies cannot cancel a policy just b/c someone gets sick under the new health care reform act |
|
Definition
|
|
Term
| Which year where all legal residents need to be insured or they’ll be fined |
|
Definition
|
|
Term
| What year high-income earners will need to pay additional Medicare taxes on earned and unearned income: |
|
Definition
|
|
Term
| What's the difference between an open-end and a close-end fund? |
|
Definition
Closed-end fund: pooled investment fund that raises money by issuing and selling a set # of shares & then no more (pg 98)
Open-end fund: pooled investment fund open to any investor w/ the money to make a min init purchase (pg 97) |
|
|
Term
| The difference between a traditional IRA and a Roth IRA? |
|
Definition
Traditional IRA
money you put in is tax-deductible
money you take out is taxable as normal income
Roth IRA:
money you put in is not tax deductible
money you take out is tax-free |
|
|
Term
|
Definition
| divide the market price of a share “p” by the earnings per share, EPS and you get the price to earning ratio “P/E” |
|
|
Term
| What is dollar cost averaging? |
|
Definition
| Investing a set amt of $ in the shares of a business on a reg. time sched. regardless of price of shares at the time (pg 122) |
|
|
Term
| What convinces people to buy stocks? |
|
Definition
| Future earnings that convince people to buy stocks |
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|
Term
| What sorts of funds help to diversify just by buying one stock? |
|
Definition
| Mutual funds, Exchange Traded funds, Sector funds: Help to diversify just by buying one stock |
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Term
| Three Major Credit Reporting Agencies (TEE): |
|
Definition
Transunion,
Experian,
Equifax |
|
|
Term
| When can you start collecting Social Security benefits? Medicare? |
|
Definition
Social security, can take early retirement at 62, full retirement benefits at 66
Medicare: start at 65 whether or not you’re collecting social security |
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|
Term
| What is a money market fund? |
|
Definition
| an open-ended mutual fund that invests in short-term debt securities such as US Treasury bills and commercial paper. priced at a dollar |
|
|
Term
| How can you compound growth from stock returns? |
|
Definition
|
|
Term
| Contracts: Is a written or verbal one better? What should you understand before signing? |
|
Definition
Contract is legally enforceable
Written contract is better than a verbal contract
If you sign contract you need to understand everything |
|
|
Term
| What is the difference between qualified and non-qualified dividends? |
|
Definition
| "must have held the stock for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date," |
|
|
Term
| Things to remember when buying a car (a lot) |
|
Definition
More time you spend, less you pay
Can sometimes pay less for bigger car dealers
salesperson does not represent you, they represent the owner of the agency
last 2 days of the month, between Christmas and New Years, end of the model year (Best time to buy a car)
Dealers invoice price is not what you have to pay
Try to sell you insurance and financing on the car, usually higher than what you can get on your own
Some Dealership: tell you that your credit score is worse than it is so they charge you more interest on a loan
more interest means they get more commission |
|
|
Term
| Things to remember when leasing a car (a lot) |
|
Definition
monthly payment is based upon the amount of financing you need to make the lease
not the capatilized cost (what you’re paying for the car)
residual cost that what the lender thinks the car is worth after a while
you pay the difference between these 2 amounts
lease a car you still have to pay sales tax and registration fees
if you go over the number of miles you said: 10 or 20 cents per extra mile
fewer miles they won’t give you any money back
Residual Value: non negotiable
contact CarFax (make sure car has not been totaled or stolen) (don’t pay more than $20)
one month before warranty expires take it in and get it checked out |
|
|
Term
| Can you discriminate in renting out your home? |
|
Definition
| Rent out residential housing: you may not discriminate, can discriminate if you’re taking in a boarder |
|
|
Term
| What should you remember when taking on roommates in leases? |
|
Definition
Roommate
You both sign the lease (all roommates)
rental agreement: enforceable contract (no standard contract)
- don’t listen to verbal promises, get it in writing |
|
|
Term
|
Definition
| signed by all parties of contract |
|
|
Term
|
Definition
| contracts in public properties that do not require the involving party’s consent |
|
|
Term
| Can you be charged if you pay your credit |
|
Definition
| if you pay online ON the due-date they can charge you a fee |
|
|
Term
| How many times are dividends taxed and where? |
|
Definition
| Twice, once at the corporate level and once at the shareholder's level. |
|
|
Term
| Homeowners insurance not only covers the home, but the contents inside the home as well. True or false? |
|
Definition
|
|
Term
| Adjustable Rate Mortgages |
|
Definition
| start with a set interest rate which may rise or fall during the term of the loan. |
|
|
Term
| Is it alright for a landlord to discriminate against someone for renting their property? |
|
Definition
| No, it is against both state and federal laws. |
|
|
Term
| When are you allowed to discriminate against someone who wants to rent your property? |
|
Definition
| The only exception is if you are taking in a border in your private residence. |
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|
Term
| A rental agreement is an enforceable contract. True or false? |
|
Definition
|
|
Term
| Who should sign the roommate lease? |
|
Definition
|
|
Term
| Verbal promises are binding. True or false? |
|
Definition
| False, never listen to verbal promises always get everything in writing. |
|
|
Term
|
Definition
| A deduction to reflect the gradual loss of value of business property as it wears out. It is a non-cash expense. Can be deducted as an expense. |
|
|
Term
| Residential rental properties depreciate over ______ years on a straight line basis. (How man years?) |
|
Definition
|
|
Term
| Commercial and industrial property depreciates on a straight line basis over _____ years. (How many years?) |
|
Definition
|
|
Term
|
Definition
| real estate investments in which you do not materially participate in the “business”, but are more like a silent partner. |
|
|
Term
|
Definition
| the individual actively involved in the business of real estate such as development, management, etc. on a full-time or nearly full-time basis. |
|
|
Term
| Passive and active investors are taxed the same. True or false? |
|
Definition
| False, they are taxed differently. Passive investors are limited in declaring losses. |
|
|
Term
| You can trade a property and defer taxes on capital gains by exchanging or replacing that property with another property. True or false? |
|
Definition
| True, but only adhering to strict IRS rules. |
|
|
Term
| You make most of your money in investing in real estate by selling your property at the right price. True or false? |
|
Definition
| False, you make most of the money by buying at the right price, not by selling it at the right price. |
|
|
Term
| When buying a car, the more time you spend with the agent the more you pay. True or false? |
|
Definition
| False, the more time you spend with the agent the LESS you pay. |
|
|
Term
| The car salesperson represents the owner of the agency, not you. True or false? |
|
Definition
|
|
Term
| You have to pay the dealer's invoice price on a car. True or false. |
|
Definition
|
|
Term
| A CarFax will usually cost you a lot of money to check >$20. True or false? |
|
Definition
| False, you can usually get a CarFax on your own for $20. If a dealer charges you more then you should get it checked on your own. |
|
|
Term
| When you're bringing in a car to be traded you should always ask to let you try to sell the car on your own for ____ days. (How many days?) |
|
Definition
|
|
Term
| When just buying or leasing a car what should you do 1 month before the warranty ends? |
|
Definition
| Bring it in to get it checked, hook it up to a computer, so that you can charge the car company for any damages. |
|
|
Term
| When leasing a car, the residual value of the car is negotiable. True or false? |
|
Definition
| False! This price is not negotiable. |
|
|
Term
| The monthly payment when leasing a car is determined by the difference between what values? |
|
Definition
| The difference between the capitalized cost and the residual value. |
|
|
Term
|
Definition
| the price you and the dealer agree upon for the car to be leased. Negotiable. |
|
|
Term
|
Definition
| pre-determined value and purchase price of the car at the end of the lease |
|
|
Term
| How does retirement work for self-employment companies? How much are they allowed to save in their account? |
|
Definition
| Self-employed employees are allowed to open a traditional or a roth and allowed to save up to 25% or $49,000 whichever is less. |
|
|
Term
| What's the maximum for contributing into a 401K? |
|
Definition
| $16,500 as long as it does not exceed 24% of your combined wages. |
|
|
Term
|
Definition
| brand new type of employer-sponsored pension plan, available to businesses with 500 or less employees. Hybrid of 401(k) and defined benefit pension plan. |
|
|
Term
| What's the maximum contribution to a spousal IRA account? |
|
Definition
| $5,000 if your spouse doesn't have a job. |
|
|
Term
| Uninsured Motorist Insurance |
|
Definition
| covers you and your passengers in case other drivers don’t have insurance or disobey state laws. |
|
|
Term
| Paying your credit card bill on time every month will raise your credit score. True or false? |
|
Definition
|
|
Term
| If you have an earned income of $3,000 is it okay for you to contribute $5,000 into your traditional or Roth IRA? |
|
Definition
|
|
Term
| Workman’s Compensation Insurance |
|
Definition
| insurance is paid entirely by the employer, and provides coverage if an injury or illness is job-related. |
|
|
Term
| What are the 4 things that homeowner's insurance covers? |
|
Definition
- structure of your home
- your personal belongings
- liability protection
- addition living expenses: if you have to live away from home due to damage |
|
|
Term
|
Definition
| interest bearing security obligating the issuer of the bond to pay the bondholder a specified amount of interest for a specified period of time, and then repay the bondholder the face amount of the bond. |
|
|
Term
| Is there ever an instance where bonds can be free of state and federal tax? |
|
Definition
|
|
Term
| When interest rates go up on a bond, what happens to the price of the bonds already in the market? |
|
Definition
| The price of the bonds go down. If interest rates go down then price of bonds go up. |
|
|
Term
| Are Medicare payments tax deductible for you? |
|
Definition
|
|
Term
|
Definition
| strictly “death insurance” with rates varying. If you die it pays, if you don’t die it doesn’t pay. |
|
|
Term
|
Definition
| combines the cost of death or term insurance with a savings component called the “cash value” which is managed and invested by the insurer. The cash value builds up tax free and compounds in your account. |
|
|
Term
|
Definition
| pays an insured person an income when that person is unable to work because of an accident or illness. Does not cover you if you are not employed. |
|
|
Term
| Disability means the same thing to everyone, including insurance companies. True or false? |
|
Definition
| False, The definition of disability is not standardized, but it is super critical when searching for the best terms of coverage and cost. |
|
|
Term
|
Definition
| California has a mandatory state disability plan for non-work related disabilities which is paid entirely by the employee through payroll deduction: the cost is 1.1% of payroll up to $93,000 of annual earned income |
|
|
Term
| Social security is a pay-as-you-go plan, not an endowment. True or false? |
|
Definition
|
|
Term
| High earners will pay a Meidcare Part A tax of ___% more from the current 1.45%. |
|
Definition
| 0.9% more so a total of 2.35% |
|
|
Term
| Under the new Healthcare Act, abortion coverage remains the same under all insurances. True or false? |
|
Definition
| False, abortion is not required to be covered and from now on a person has to pay out-of-pocket themselves on abortion. |
|
|
Term
| Under the new Healthcare Act, Pharmaceutical companies may continue the practice of paying generic drug companies to delay the sale of their less-expensive copies. True or false? |
|
Definition
|
|
Term
| What is the first and most important thing in a successful business? |
|
Definition
|
|
Term
| If your business is unique then your business will be successful. True or false? |
|
Definition
|
|
Term
|
Definition
| defined contribution plans established by non-profit organizations, and are similar to 401(k) plans. Allows matching from non-profit employers. |
|
|
Term
|
Definition
| used by employers to determine the correct amount of tax withholding to deduct from employees' wages |
|
|
Term
| Does a standard homeowner's insurance cover earthquakes and floods? |
|
Definition
| No, these things can be quite expensive actually. |
|
|
Term
| There's a new law eliminating private lenders and Sallie Mae from the student loan business. True or false? |
|
Definition
|
|
