Computerized Investing is a column in the AAII Journal that covers articles about how individual investors can use digital technology to become more effective managers of their assets.
Snapshot of a Stock: The Balance Sheet
Successful investing has no secret formula. Since financial statements are basic tools of fundamental analysis, it is important to be able to read and analyze them.
Let us assume that you are reading the financial pages of your favorite newspaper. You read that even though stock returns have been dismal for the last two years, bond returns have been very good. In fact, you read that over the past two years, many bond funds returned well over 15%. While the returns look pretty darn good relative to stocks, you may wonder: Does that mean I can expect to earn 15% next year if I buy bonds? If the answer is not obvious, read on.
The direction of interest rates is one of the chief determinants of bond prices. A strong market for bonds is one in which interest rates are declining. That causes bond prices to go up. A weak bond market is one in which interest rates are going up. That causes bond prices to decline. Clearly, then, since changes in interest rate levels affect bond prices, they also affect what you earn from investments in bonds.
But that is only the beginning. In order to understand...
Giving to charity is important to many individuals for a variety of reasons. But an added incentive is the tax benefits.
Donor-advised funds are mutual fund-sponsored programs that administer charitable-giving programs on behalf of individual participants, who can direct which charities should receive their contributions. The funds offer one way for you to maximize your charitable deductions, allowing you the opportunity to take a deduction upfront before choosing specific charities, as well as the opportunity to donate appreciated securities rather than cash to sidestep capital gains taxes.
In a donor-advised charitable program, investors make an irrevocable contribution to the donor-advised account and receive an immediate tax deduction. Typically, the money in the account is invested in various mutual funds that are selected by the donor. The money in the account grows tax-free, and is distributed to charities that are requested by the donor, under a donation-granting program determined by the donor.
Most large mutual fund companies have these types of funds. You can also find religious organizations and smaller companies that offer donor-advised funds as well. The typical minimum initial investment ranges among fund companies (typically from $5,000 to $25,000). Minimum additional contributions range from $500 to $5,000.
Contributions to the accounts can be made with cash or with individual stock shares or mutual fund shares. Donating stock and mutual fund shares that have appreciated allows you to sidestep any capital gains taxes, since you can take a deduction for the entire appreciated amount.
Most donor-advised programs will allow you to invest money at any time, while giving you the freedom to distribute the charitable grants as you see fit. This allows you to donate when it is more beneficial to you, even if you are not ready to commit...
