The IRS wants parents to be aware of the tax rules that affect their children’s investment income. The following four facts will help parents determine whether their child’s investment income will be taxed at the parents’ rate or the child’s rate. (more…)
Archive for the ‘Investments’ Category
Four Facts Every Parent Should Know about Their Child’s Investment Income
by P. Lewis RobinsonFeb
25
10/13/08 – What Type of Money Market Do You Have?
by P. Lewis RobinsonDec
10
What Type of Money Market Do You Have?
The current economic crisis is causing many of us to worry about our money market accounts. Although this is a legitimate concern, it is important to know the difference between money market accounts and money market funds. The names of these savings vehicles are very similar, but their functions are very different.
Money market accounts are merely savings accounts offered by banks that pay a higher rate of interest than normal savings accounts or interest-bearing checking accounts. Banks usually require there to be a minimum of $1,000 to $2,500 in these accounts, and typically only allow up to three checks to be written from an account each month. Usually, FDIC insured banks provide up to $100,000 of protection for each account holder. If the institution files bankruptcy, account holders are still entitled to all of their money that does not exceed $100,000.
The recent volatile economy has led the FDIC to increase the deposit insurance limit from $100,000 to $250,000 per account holder. This temporary increase became effective on October 3, 2008 and will extend through December 31, 2009. For more information please visit: http://www.fdic.gov/news/news/financial/2008/fil08102a.html
Money market funds are mutual funds that invest in short-term debt securities, such as Treasury bills. These funds do not qualify for FDIC insurance even if they are purchased through your bank. Insurance is not usually a concern with mutual funds, because these high-quality, short-term maturity, money market funds historically maintain a stable share price of $1.00. This stability has made money market funds very popular investment vehicles.
However, in recent weeks investors have seen their money market fund share prices drop below the norm. This has prompted the U.S. Treasury to create a temporary guarantee program that protects money market shareholders from losses. This program only covers the shares owned in a participating fund as of September 19, 2008. It is currently in effect for three months, but the Treasury Secretary has the authority to extend it through September 18, 2009. For further information on the Treasury Temporary Guarantee Program please visit: http://www.ustreas.gov/press/releases/hp1163.htm
