A few popular sectors include: Information technologyIndustrialsEnergyHealth careTransportation or industrialsReal estateMaterialsUtilities Sector ETFs may be referred to as industry ETFs, although this is not common. How Sector ETFs Work Sector ETFs allow you to invest in an entire industry and typically, track major indexes (such as the Standard & Poor’s 500) within a given industry. When you purchase an ETF, you do not own shares in a company. Instead, the fund originator owns the assets, creates a fund to track a particular index, and sells fund shares to investors....

Learn more about subvented leases and how they work. Definition and Example of a Subvented Lease A subvented lease is a lease with incentives such as a lower interest rate. Typically, you’ll need excellent credit to obtain a subvented lease. In some cases, the dealer’s subvention program may increase the car’s residual value so you can get lower monthly payments. For example, let’s say you’re planning to lease a $22,000 car with a residual value of $10,000 after 36 months....

The exact amount withheld from your pay depends on several factors, such as income, deductions, and relevant tax rates. While tax withholdings are intended to match how much you’ll owe when you file your taxes, the amounts may not always align perfectly. With a paycheck, for example, your employer typically asks you to complete a W-4, which is a form that calculates what your withholding will be. This form will let you specify things like your number of dependents, which helps determine how much your employer should withhold....

First, traditional economies center around a family or tribe. They use traditions gained from the elders’ experiences to guide day-to-day life and economic decisions. Second, a traditional economy exists in a hunter-gatherer and nomadic society. These societies cover vast areas to find enough food to support them. They follow the herds of animals that sustain them, migrating with the seasons. These nomadic hunter-gatherers compete with other groups for scarce natural resources....

Understanding the difference between a title with liens on it and an absolute title, as well as how to use a title search to understand whether a title is absolute, is very important. It can help settle property disputes and put to rest confusion about the legal owner of a property. Learn more about what absolute title is, how it works, and what it means for property buyers and sellers....

In contrast, a retail investor is generally a typical individual investor who invests only for their own portfolio. Let’s explore in more detail what institutional investors are and how they differ from individual investors. Definition and Examples of Institutional Investors An institutional investor is an organization like a bank or insurance company that invests large sums of money toward its own financial goals or for portfolios it manages. The forms and characteristics of institutional investors can vary widely....

For example, say a client feels that a broker has mismanaged their investment account. They can file a claim with FINRA, the self-regulatory organization for brokers. Ultimately, an arbitration panel will review the case and make a decision. If the panel rules in the client’s favor, the broker may be required to pay damages to the client. How Arbitration in Investing Works The investment arbitration process is usually faster and more affordable than a full-blown lawsuit, making it an appealing option for many investors....

The bankruptcy code defines a municipality as a “political subdivision or public agency or instrumentality of a State.” A municipality must meet four other requirements to file for Chapter 9: Alternate name: Municipal bankruptcy The city of Detroit, Michigan filed for Chapter 9 bankruptcy in June of 2013. It had been plagued by several issues that had led to the filing, including a weakened tax base, high unemployment, and a lot of debt....

Cost principle is a standard accounting practice for publicly traded companies. Using cost principle follows the Generally Accepted Accounting Procedures (GAAP), which is established by the Financial Accounting Standards Board (FASB). Alternate name: historical cost principle An example of cost principle is a business purchasing a plot of land for $40,000 in 2019 that it planned to use as a parking lot. By 2022, the plot of land is valued at $80,000....

Law of Demand The law of demand governs the relationship between the quantity demanded and the price. This economic principle describes something you already intuitively know. If the price increases, people buy less. The reverse is also true. If the price drops, people buy more. But the price is not the only determining factor. The law of demand is only true if all other determinants don’t change. Determinants of Demand There are five determinants of demand....

Here’s a closer look at how the agency helps people prepare for emergencies and begin the recovery process afterward. Definition of FEMA FEMA is a federal agency that was established by President Carter by executive order in 1979 with the mission to help people “before, during, and after disasters.” The agency accomplishes this through direct assistance, grant funds, risk management, and other programs for businesses, communities, and individuals. Before FEMA, over 100 different federal departments and agencies assisted with fires, earthquakes, and other disasters....

Learn more about IMUs and how they work. What Is IMU? The IMU formula is used to determine the sales price retailers put on an item in a store. For example, if a retailer buys a hammer wholesale for $5, then the IMU is the measurement of how much they mark up that hammer when they sell it to customers. If the retailer set the sales price at $10, then you have a 100% IMU....

As more investors look to add sustainable investments to their portfolios, it’s important to understand exactly what that means. Learn how investing for sustainability impact works, whether it pays off financially, and how you can get started. Definition and Example of Investing for Sustainability Impact Investing for sustainability impact refers to an investment strategy and mindset that seeks dual goals: impact and financial return. These investors seek to achieve financial returns by investing in only businesses focused on the sustainability mission, promoting sustainability goals and positive change....

Personal finance covers a range of topics, including: Income generationBudgetingBankingInsuranceLoans and mortgagesInvestmentsRetirement planningTax and estate planning “Personal finance is simply the approach we take to using money,” said Todd Christensen, AFCPE at Debt Reduction Services and author of “Everyday Money for Everyday People.” According to Christensen, examples of personal finance might include: Planning your monthly spendingBalancing your checkbook or debit accountTransferring money from your checking account to your savings accountSetting up direct deposit for an IRATaking only the cash you plan to use on groceries into the store so you don’t overspend...

Here’s a closer look at what recharacterization is, how to recharacterize a contribution, and when you may need to use this strategy. Definition and Examples of Recharacterization Recharacterization is the process of “fixing” IRA contributions by moving them from one type of IRA to another type of IRA. For example, say you maxed out your Roth IRA this year. Come tax time, you find out you made too much money to qualify for a full contribution....

It’s all about balancing gains with losses. A capital gain occurs when you sell a security like a mutual fund or ETF for more than its purchase price. You would incur a capital loss if you were to sell an asset for a lower price than that at which you bought it. You don’t truly realize the gain or loss on any security as a taxable event until you sell it....

The term “tenor” is often used interchangeably with “maturity,” but there are some distinct differences between the two. Understanding how tenor in lending works can help you better evaluate financial products. Tenor changes depending on where you’re at in the repayment process. For example, when you take out a 30-year mortgage, it is said to have a 30-year tenor. Once you’ve held the loan for 10 years, it has a 20-year tenor....

Learn more about the factors impacting the cost of healthcare in the U.S. and the changes over recent years. Healthcare Costs Based on Age and State Healthcare costs vary based on your age and the state you live in. As you might expect, younger, healthier adults pay the least for healthcare coverage, but even for younger adults, the cost of coverage varies greatly based on location. In 2021, the average cost of a monthly health insurance premium in the U....

Alternative name: Amounts owed The credit utilization ratio essentially answers the question, “How much of your total possible credit card limits are you using?” Creditors use this information to determine how responsible you are with the credit you’ve been given in the past. That helps them decide whether or not to issue you more credit, or what terms that credit will come with. How Do You Calculate the Credit Utilization Ratio?...

Factors That Affect the Yield Curve Bond prices and yields move in opposite directions. Certain factors affect movements on either end of the yield curve. Short-term interest rates are sometimes referred to as the “short end” of the yield curve. They tend to be influenced by expectations for the U.S. Federal Reserve policy. These short-term rates often rise when the Federal Reserve is about to raise interest rates. They fall when it’s on the verge of cutting rates....