A 529 Account is a tax favored account that allows for saving for college. The earning that result from investing the savings in the 529 account may be withdrawn tax-free to pay for college expenses of the beneficiary.

Form 1040 is the main form used to file personal income tax returns with the Internal Revenue Service. Tax returns are normally due on April 15^th. Tax returns must be filed by anyone who might owe income taxes – for a single person, the threshold for 2020 is income of more than $12,400. Dependents with unearned income may also have to file a tax return, and other special circumstances exist. While Form 1040 is the main form used to file personal income tax returns, there is a version of the form, 1040-SR, designed for taxpayers over the age of 65.

A W-2 is a form given by an employer to every employee who earned at least $600 in a year, or who had tax withheld. It lists wages paid to the employee, along with taxes withheld, and related information for an entire calendar year. The W-2 form is used to file an Income Tax return, and is normally provided by January 31st for the previous year. A copy is also provided by the employer to the Internal Revenue Service.

An IRA is an Individual Retirement Account, a tax favored account that allows savings for retirement. In return for the tax benefits, account owners are prohibited in most cases from using the funds prior to retirement.

A Savings Bond is a bond issued by the government which can be purchased by individuals. Savings Bonds are a safe investment with no risk of loss, but earn interest rates which are generally lower than available through other investments.

Savings Bonds have been a popular gift and investment for many years.

Their characteristics have changed over the years. In 2020 there are two types of Savings Bonds available:

The first type is the Series EE savings bond which is held in an account at the Treasury Department. Series EE savings bonds earn a fixed rate of interest based on purchase date. However, the value of the bond will double in 20 years, even if the interest rate is low. This means that If you hold the savings bond for exactly 20 years, your effective interest rate is approximately 3.5%.

The second type is the Series I savings bond, which can either be held in an account at the Treasury Department or issued as a paper bond. Series I savings bonds earn a fixed rate of interest based on purchase date and an amount tied to inflation which changes twice a year.

More information on these savings bonds can be found at: www.savingsbonds.gov

Stock Gifting has a long history, but has come into focus in 2020, due in part to COVID-19. The idea is that most gifts lose value and eventually end up as trash. Gifts of stock represent an investment who value has the potential to grow over time. Other benefits include motivating the recipient to learn about investing, and providing a platform to accumulate the value of future cash gifts.

Stock Gifting has become much easier due to the availability of fractional shares, which allow purchases to be made in dollar amounts rather than buying a whole number of stock at a fluctuating price. Stock gifting is supported by several companies and teaches the value of buy-and-hold investing. It is possible to obtain stock certificates which can be visually attractive, but doing so adds cost that could better be applied to the investment value.

An ETF is an Exchange Traded Fund, a portfolio of securities. The performance of the ETF is the result of adding together the performance of each element of the portfolio. Most ETFs are traded on an exchange just like stock. Most ETFs are passively managed, and often reflect an index. Unlike regular stock, the number of shares of an ETC can change when the underlying portfolio changes in size.

An Option is a financial security (a derivative) that provides the option holder the right to buy or sell the underlying security at a pre-agreed upon price. Options are categorized as Call Options (right to buy) or Put Options (right to sell).

Underwriters help manage risk in a number of industries. In the stock market, and underwriter ensures that a stock offering, typically an IPO, is successful. The Underwriter does this by promising to buy unsold stock and resell them to others. In order to perform this function, the Underwriter works with the offeror to ensure that the stock is priced appropriately, and assists in marketing the stock.

A short squeeze occurs when rising prices of a security cause short sellers to buy the security, increasing demand and causing the security’s price to increase further. This typically occurs when there are a large number of short sales of a stock, and an unexpected positive news causes the stock price to rise.