#investing basics

One word covers two things that share almost nothing. A single premium immediate annuity is longevity insurance with no annual fee, and its payout includes a return source you cannot replicate on your own. Variable and indexed annuities are investment products that can run 1.5% to 3.5% all-in. The deserved criticism of the second gets used to dismiss the first.

Trip the wash sale rule in a taxable account and the loss is deferred, not lost: it moves into the cost basis of the replacement shares. Repurchase inside an IRA or HSA instead and there is no basis to move it to, so the deduction is gone permanently. Your broker will not flag it.

Same question, two credible answers, 0.8 percentage points apart. On a $1 million portfolio that is $8,000 a year of spending. The gap is not a disagreement about facts, it is a disagreement about whether to forecast the future or replay the past, and knowing which you are relying on matters more than the number.

On the ex-dividend date the share price drops by roughly the dividend. The cash did not appear from nowhere, it moved out of the share and into your account, and in a taxable account it moved through a tax on the way. Which is also why dividend capture fails twice over.

Capital gains has two kinds of number. The brackets get re-indexed for inflation every year. Two others have not moved since 1978 and 2013, and because they never move, they capture more people every year without anyone voting on it.

A REIT is a company legally forced to hand almost all its profit back to you every year. That one rule explains the fat 4% dividend, the odd tax bill, the interest-rate whiplash, and why you value it on FFO instead of earnings.

Everyone treats the HSA as a medical checking account. It is quietly the best tax shelter in the country: deductible going in, tax-free growth, tax-free out for medical, plus a payroll-tax escape no 401(k) or IRA offers. Here is how to actually use it.

A DCF says a stock is worth all the cash it will ever produce, discounted back to today. Four inputs move the answer, and one of them, the discount rate, swings 'fair value' by 40% on a change you could defend either way. Here is the whole method with a per-share worked example.

Diversification lowers the risk of your portfolio without lowering your expected return. That combination is rare enough that economists call it the closest thing to a free lunch in finance. Here is how it actually works, and where it stops working.

The honest answer is 'it depends, and the break-even is longer than realtors admit.' Here's the actual comparison: the multi-year hold you need, the opportunity cost of a down payment, and the phantom costs that never show up in the payment.

A bond is just a loan you make to a government or company, with the terms written down. Here is how the coupon, face value, and maturity fit together, why bond prices move opposite to interest rates, and what role bonds actually play in a regular investor's portfolio.

Ticker symbols look like they should be obvious abbreviations. They aren’t. They’re a 19th-century engineering compromise that survived the move to electronic markets, and they still carry the fingerprints of how the system worked in 1867.

A call is a bet that something will go up. A put is a bet that something will go down. That’s most of what you need to know, but the small print is where people lose money.

The NYSE closes for ten full holidays a year, plus three early-close days, plus the occasional emergency. Here’s the full calendar and the surprising history behind some of the dates.

Volatility isn’t the same thing as risk. It isn’t the same thing as direction. And the most-quoted volatility number on TV measures something almost nobody understands.

A $1 move in a $5 stock and a $1 move in a $500 stock are not the same thing. Here's why traders almost never talk in dollars, and the few cases where they actually do.

Everyone uses bull and bear without ever defining them. Here are the real cutoffs, where the terms came from, and the part most explainers skip about how they actually feel from the inside.

An index fund is the boring product that beats almost every clever one. Here's what it actually is, why it works, and the small print most explainers leave out.