Spin-Offs
A spin-off occurs when a parent company divests itself of a subsidiary or a division of the company. The subsidiary or division then becomes a separate, independent company.
Employee Stock Purchase Plans (ESPP)
An employee stock purchase plan (ESPP) is a plan that allows a company to compensate a broad group of employees with options to buy the company’s stock at a specified price, usually at a discount. Many large companies use these plans as an employment incentive, giving employees an opportunity to share in the growth potential of the company’s stock. Generally, the employee is not taxed at the time the stock is purchased.
I Bonds
The I Bond is a type of savings bond, issued directly by the U.S. government. I Bonds are available through banks, most financial institutions or directly over the Internet at www.treasurydirect.gov.
Fixed-Income Investment Selection
Fixed-income investments are designed to bridge the gap between after-tax income and your desired after-tax spending.
Cost Basis Consideration
When determining your capital gains and losses, cost basis information is essential.
Mutual Fund Fees and Expenses
Mutual funds incur costs that must be paid from fund assets. These costs are incurred through marketing, advisory fees, accountants’ fees, legal fees, custodial fees, etc. Simple transactions such as buying, selling and exchanging shares can be costly.
Mutual Funds—Different Types
Mutual funds can be classified into several sub-groups: types of funds, open-end vs. closed-end and share classes. An investor who chooses to invest in mutual funds should understand the various differences between funds to ensure that their goals and objectives are inline with those of the fund.
Mutual Fund Basics
Investing in individual common stocks can be an expensive endeavor. Commissions to the broker on every buy and sell can add up over time. Many investors instead choose to invest in mutual funds based on the misconception that mutual funds do not charge commissions. In reality, mutual funds, even funds that are no-load funds, can be costly to buy, sell or simply hold.
Reading a Financial Prospectus
Once an investor makes a decision to purchase shares of a mutual fund, all aspects of the fund must be fully understood. Under the Securities Act of 1933, new issues of a security must be registered with the Securities and Exchange Commission and a prospectus must be provided to all purchasers of the new issue.
Investment Interest and Margin Interest
You can deduct investment interest up to the amount of net investment income received; however, then you have to decide to treat net long-term capital gains as investment income, and forgo the long term capital gains tax rates.