Investing

The rule of 72 formula is an old trick that you can use in order to approximate the amount of years it will take for your money to double if it is invested at a given interest rate. It can...

The Fed rate is the interest rate that banks charge to lend money to each other. The Federal Reserve chairman changes this rate to influence the direction of the U.S. economy.

Yield-to-Maturity (YTM) represents the yield on an investment from now until it matures. This value is different from the stated coupon rate of a bond. The risk-free rate is a comparison point to...

A qualified dividend is a distributed part of a company's earnings given to stockholders which falls under particular tax laws. In this case, the dividends are "qualified" for capital gains taxes....

Bonds are sold by corporations and governments to borrow money. Each bond has a face (or par) value that is the amount the issuer must pay back when the bond matures. Bonds pay a specified amount...

Microsoft Excel can be used to analyze and research stocks by using formulas to determine the future stock price. There are many ways to analyze a stock or company to determine whether it is of...

Companies remain profitable and grow by taking on projects; these projects may involve the addition or upgrading of equipment, a new product/service offering, a new niche market or even just a new...

Corporate and government bonds pay a fixed sum of money each year called the coupon rate. Although the bond issuer must pay the full face value to redeem a bond when it reaches maturity, the price...

CDs (certificates of deposit) are popular with investors because they provide a guaranteed rate of interest for a specified time called the maturity. Also, CDs are very safe since they are insured...

The nominal interest rate is the term for the expressed interest rate for an investment or security, or the interest rate paid on a loan.

Preference shares, also referred to as preferred stock, refer to a class of equity that carries particular claims over those of common stock equity. Corporate financial management has introduced...

The United States Department of the Treasury offers savings bonds as a very secure investment for bond holders. Because chances of the government defaulting on its debt is virtually nonexistent,...

Bonds are issued by corporations and governments to raise money. When you purchase a bond, you are lending the issuer money. In return, the issuer pays you interest in regular intervals and then...

The annualized rate of return is used by analysts and investors to compare the rates of return between investments with different maturity lengths. For example, just by looking at the overall...

Stocks generally provide greater long-term returns than bonds, but with greater volatility along the way. If an investment has greater volatility, then the risk of loss is also greater. Therefore...

Required rate of return is the bare minimum return that an investor needs from an investment to feel comfortable with it. Because of this, the required rate of return is up to the investor's...

The Series I program began in 1998 with the goal of protecting holders from inflation by revising the interest rate every six months and by guaranteeing the bonds would never be worth less than...

Savings bonds are investments offered by the United States Department of the Treasury. These bonds offer investors tax advantages and at least partially guaranteed rates over the life of the...

When you are considering an investment, you want to know what rate of return an investment will give you. Some investments promise a fixed cost and a fixed payment at some point in the future. For...

A fixed annuity is a series of fixed payments in exchange for one lump sum payment at the beginning of the time period. They are designed primarily for retirement accounts and can be purchased...

Annuities are investments designed to help investors save for retirement. Money in an annuity grows tax-deferred for investors holding the money in the account until age 50 1/2 or later. There are...

There are many interest rate calculations that can be applied by investors to determine what returns they have received from their IRA accounts and what they should expect in the future. This...

Like stocks, real estate or any other type of investment, investing in bonds comes with risks. Bonds are issued by government entities and corporations to provide the funding needed for everyday...

Anyone can earn money. It's how you invest and save that money that counts. You can think you are investing wisely, but not keeping track of the current rate of inflation, or not being conscious...

Bonds have three primary issuers: the U.S. government, municipalities and corporations. Bond investing has numerous risks. According to InvestingInBonds.com, the risks include interest rate risk,...

Each business day corporations, businesses and financial institutions move huge sums of money from one currency to another as part of doing business. However, the bulk of the volume on the foreign...

Bonds are debt instruments issued by the U.S. government, government agencies, municipal governments and corporations. These entities use the proceeds of bond sales to fund operations. For...

If you are interested in a federally insured savings vehicle that delivers a higher rate than a regular savings account, consider a money market account. During uncertain stock market times, money...

You have likely heard that stocks and bonds are your keys to financial success. But you may not have any idea what they actually are and why they are so well-regarded. Here is a brief explanation...

A certificate of deposit (CD) is an investment vehicle that is often purchase from a bank. With a CD, the investor typically places a lump sum of money into an account for a specific period of...

An implicit interest rate is a rate which is not explicitly stated. For example, a client may offer to pay in multiple installments instead of up-front, but not have the sophistication, or need,...

Bonds are debt instruments issued by corporations, governments and municipalities. Owning bonds is like lending money to the issuer, and they pay you regular interest and eventually pay back the...

Accrued interest refers to the amount of unpaid interest that has accumulated on an account even though is hasn't been paid out yet. For example, if you have a certificate of deposit that pays...

When you earn dividends from your investments, it is important to know how these earnings will be taxed. The effective yield of the investment will be reduced by the taxes owed, and some dividends...

Banks and credit unions offer CDs (certificates of deposit) to get and keep customers. CDs are insured by the FDIC or the National Credit Union Authority and pay higher rates of interest than...

CD stands for certificate of deposit. These are issued by banks and offer several advantages for investors such as guaranteed returns, increased insurance, payment options, variable term lengths...

Margin is the use of leverage in order to increase the rate of return on an investment. Margin is also debt that accrues at a rate of interest. Margin may affect the kinds of quality in a trader's...

The interest rate futures contract is a highly leveraged financial instrument representing the current trading price of specific, highly traded benchmark securities. Interest rate futures trade in...

Investing in your debt sounds like an oxymoron, but it's actually a wise approach to money management that has been around for centuries. Debt investments may not provide a stream of incoming...

Equity-indexed annuities function in the same way as other annuities, with some special considerations regarding the type of sub-account in which the money is invested. It is a hybrid between a...

Annuities are an investment tool used to guarantee income over a given period of time after an initial investment. These payments can last any number of years and individual payments can be made...

Indexed annuities are a special category of annuities that follow market indexes to determine the rate of return. A derivative of a variable annuity, this investment vehicle has become popular...

Certificates of deposit, commonly referred to as CDs, are fixed-interest time deposits issued by banks and credit unions. When you purchase a CD you agree to leave the money in deposit with the...

An interest rate swap is an exchange between different cash flows. One cash flow stream is fixed and the other variable, but they both revolve around the current cost of money, or the interest...

Dividends are income paid to owners of certain investments. Dividends are not interest. Interest is paid on debt securities or bank deposits. Dividends are listed separately and may be taxed...

The reinvestment rate measures the percentage of a company's net income that is reinvested in the business. The reinvestment rate is of particular concern to financial managers, since investors...

Mortgages on homes can be at either a fixed rate or variable rate. Fixed-rate mortgages are easier to analyze because the rate of interest on the mortgage is fixed at the time the contract is...

The Feds are widely expected to keep rates at record lows (near 0%) through at least the end of the year and next year, which means you should not expect your savings rate to go up any time soon....

Currency exchange is pretty straightforward. Here are some things to know when exchanging currency

The ideal investment is no risk and all gain. However, finding this elusive investment is akin to searching for a pot of gold. Most investment managers settle for achieving gains above the risk...