How Well Do You Know Stock Market Lingo?
Take it straight from a millennial: Being a young stock market investor can feel intimidating. Many of us are just getting the hang of financial independence, and the thought of delving into the world of investing is no doubt daunting. As it turns out, investing in the stock market is actually quite approachable. Anyone can invest, and we can absolutely start small — we're talking $5 small.
Together with Robinhood, we're here to equip you with knowledge (and confidence!) to get your feet wet with investing. We've created a brand new FREE online class Investing 101: A Millennial's Guide on How to Start Investing in the Stock Market. This free course, taught by millennial money expert Tonya Rapley, will teach you the fundamentals of investing in the stock market. You'll learn essential terminology, investment options, and how to confidently buy your own stock on the Robinhood app — right from your phone. Check out the teaser below!
So, consider this article your pre-course homework: vocabulary! Familiarize yourself with the following investment terminology and you'll already be making great strides toward being an informed and savvy investor. Let's get to it.
WHAT’S A STOCK? A stock is essentially a piece of a company. Use this beach ball as an example. The beach ball symbolizes an entire company. Each slice of color represents a share. As the company, or in this case, ball, grows larger and is doing well financially, so does the value of your individual shares. The profit you make is the difference between what you paid for each share and what the share is currently worth in the market. Your investment isn’t guaranteed to grow over time, there’s also the chance that this beach ball can deflate - meaning the company can lose money and you can lose value in your individual shares.
WHAT'S A PORTFOLIO? Your portfolio consists of all of your financial assets (stocks, bonds, cash, etc). A portfolio can be held and managed by the investor alone, someone can manage it for you, or it can be held by a company who manages the assets for the investor.
WHAT ARE EXCHANGES? Exchanges are the markets where stock buyers and stock sellers meet. The largest exchanges in the United States are the New York Stock Exchange NYSE) and Nasdaq. Think of it similar to a shopping mall where you to go buy products from a variety of sellers. The U.K., China, Japan, and Canada are a few other countries that have their own exchanges.
WHAT'S A BROKER? A broker is a person or entity that can buy and sell stock from the exchanges. Stockbrokers are usually associated with a brokerage firm and handle transactions for customers.
Thanks to advances in tech, you no longer have to go into a physical brokerage office, or even talk to a broker on the phone to trade stocks in the market. An advisor is a good idea if you're purchasing large volumes of stock, or if you'd like to outline an initial investment strategy with a professional. Investment advisors and most brokerages do charge fees for their services and to place your trade in the market. But with Robinhood, you could literally purchase your first or next stock, by yourself, without any commission fees, before this class is over.
The Robinhood mobile app allows people to buy and sell stocks, certain cryptocurrencies (select states), ETFs, and options, all commission-free from anywhere you want!
WHAT'S A DIVIDEND? A dividend is defined as a payment made by a corporation to its shareholders. It’s essentially a reward given to shareholders for owning stock in the corporation. Sometimes these distributions are on a quarterly basis, other times they are annual, and sometimes they are a special event. Every company doesn’t pay dividends, and dividend payments can be made in cash or in the form of additional shares of stock.
WHAT'S THE DIFFERENCE BETWEEN A BEAR MARKET AND A BULL MARKET?
BULL MARKET: Market participants often refer to any period of rising stock prices as a “bull market,” but the commonly accepted definition of a bull market is any period of time when stocks have increased by 20 percent. This can apply to a certain sector of the market and not necessarily all of it.
BEAR MARKET: A “bear market” is the opposite of a bull market. Any time that stocks enter a period where they have declined by 20 percent, it’s commonly considered a bear market.
Want to learn more? Check out our brand new FREE class, Investing 101, paid for by Robinhood. You'll learn the basics of investing in the stock market, VIP terminology, and how to confidently buy your own stock on the Robinhood app — right from your phone.
This article was made in partnership with Robinhood.
This advertisement contains information and materials provided by Robinhood Financial LLC and its affiliates ("Robinhood") and Brit + Co, which is a third party not affiliated with Robinhood. The information and materials is for educational purposes only and is not a recommendation to buy or sell any security or other investment product.
All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Securities offered through Robinhood Financial LLC and Robinhood Securities LLC, which are members of FINRA and SIPC. Cryptocurrency trading offered through Robinhood Crypto LLC. Neither Brit+Co nor Robinhood Crypto are members of FINRA or SIPC and cryptocurrencies are not stocks and your cryptocurrency investments are not protected by either FDIC or SIPC insurance.
Free stock offer only valid for selected individuals and are subject to the terms and conditions at here. Free stock randomly chosen as detailed on the website and the free stocks listed above are subject to change. Individual must sign up through britco.robinhood.com to be eligible.
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Welcome to Selfmade Finance School, our new money series with Block Advisors to help small business owners with their tax, bookkeeping, and payroll needs year-round. This week, we explore the tax implications of bringing family members into your business.
The question for today is this: Does hiring your family members make sense for your business? Let me be clear. This is not a piece about whether hiring your family members makes sense for your relationships with those family members. As someone who is part of a family business, I could fill up a lot more than 600 words on my opinions about that. For today's purposes, we focus on whether it makes sense from an overall "good business and tax implication" perspective. As it turns out, there is a decent amount of tax nuance when it comes to employing your family. Let's break it down based on relationship to the employee:
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Spouses Who Are In Business Together
Personally, if I had to be in business with my husband, it would not go well. However, many couples build viable, strong businesses together and I say, good for them! Depending on how you have your business entity structured, it will make a big difference on the tax treatment of you and your spouse working as partners. Because a business jointly owned and operated by a married couple is generally treated as a partnership for Federal tax purposes, the spouses must comply with filing and record keeping requirements imposed on partnerships and their partners. The election to file two Schedule C (Form 1040) forms, (one for each spouse) permits certain married co-owners to avoid filing partnership returns, provided that each spouse separately reports a share of all the businesses' items of income, gain, loss, deduction, and credit. Under the election, both spouses will be subject to self-employment tax and on net earnings from self-employment and receive credit for Social Security earnings.
One Spouse Employs Another
If you have a dynamic where your spouse is an employee of your business, then your spouse's wages are subject to income tax withholding, Social Security and Medicare taxes. If you are self-employed (not a corporation or a partnership), your spouse's pay does not have to be included in your federal unemployment tax account (FUTA) contributions and payments. However, if your business is a corporation or a partnership you must include that spouse's pay in your unemployment tax contribution calculation.
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You Employ Your Child
First, let's be clear. I work in my family business, but I am an adult, so I am treated just like a normal employee. However, if you, for example, run a family restaurant and want to hire your children under 18 to work for you, there are some tax benefits. But first, you should check with your state for rules on how many hours minors can work (in non-agricultural jobs) and reference the Fair Labor Standards Act for information on limitations on the kinds of work children can perform.
"This is an often overlooked or under-utilized strategy. Paying your children for true services they provide in your business can be a powerful tax-saving tool," says Cathi Reed, Block Advisors Regional Director. "If you are a sole-proprietorship or single member LLC, and the child is less than 18 years of age, the business is not required to withhold FICA or payroll taxes. The child can use his or her standard deduction against income you pay."
You Hire Your Parent
Oh dear. If you are brave enough to do this, know that you will need to pay Social Security and Medicare taxes on your parent's wages and make the appropriate withholdings, but you don't have to pay unemployment taxes. Now all you have to do is convince your parent that you are the boss. Have fun with that!
Is Hiring Family Members Worth It For The Tax Benefits?
"There are some positive tax advantages to hiring family members. It's important to treat a family member like any other employee. Hiring your children can result in substantial savings for businesses. Make sure your child has real, age-appropriate work to do and a reasonable pay rate, comparable to other employees. Consult with a Block Advisors small business certified tax pro to ensure that you are complying with all requirements," advises Reed. "Block Advisors, a team within H&R Block, is dedicated to meeting the tax, bookkeeping and payroll needs of small business owners year-round. To start working with the tax experts at Block Advisors, visit blockadvisors.com."
In my opinion, you should not hire a family member solely because of the tax benefits. You should always hire based on whether that person is right for the job and keep in mind how this hire could materially impact your relationship with that person and others in your family. Finally, as I mentioned, make sure you have a tax professional on your team when making these determinations. As you can see, things can get a little tricky!
*All details were sourced from IRS.gov and blockadvisors.com
The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regards to your individual situation. Comments concerning the past performance are not intended to be forward looking and should not be viewed as an indication of future results. Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. O'Keeffe Financial Partners and any other entity listed herein is not affiliated with Kestra IS or Kestra AS Investor Disclosures: https://bit.ly/KF-Disclosures