From Wikipedia, the free encyclopediaThe Alternative Minimum Tax (AMT) system is part of the federal income tax system in the United States. There are two AMTs, one for individuals and the other for corporations. The AMT for individuals is addressed here.

The AMT is, in effect, a parallel tax system imposed under 26 U.S.C. § 55 that disallows many deductions and exemptions allowable in computing “regular” tax liability. (Regular tax liability is defined in 26 U.S.C. § 26(b), and does not include the alternative minimum tax and various other categories of taxes imposed under Chapter 1 of Subtitle A of the Internal Revenue Code.) The AMT was introduced by the Tax Reform Act of 1969,^[1] and became operative in 1970. It was intended to target 155 high-income households that had been eligible for so many tax benefits that they owed little or no income tax under the tax code of the time.^[2] Read the rest of this entry »

Investment clubs and questions about them have grown tremendously. This document answers some of the most common questions and directs you to sources of more information.

What is an investment club?

An investment club is a group of people who pool their money to make investments. Usually, investment clubs are organized as partnerships and, after the members study different investments, the group decides to buy or sell based on a majority vote of the members. Club meetings may be educational and each member may actively participate in investment decisions.

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The Internet serves as an excellent tool for investors, allowing them to easily and inexpensively research investment opportunities. But the Internet is also an excellent tool for fraudsters. That’s why you should always think twice before you invest your money in any opportunity you learn about through the Internet. This alert tells you how to spot different types of Internet fraud, what the SEC is doing to fight Internet investment scams, and how to use the Internet to invest wisely.

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Questions You Should Ask About Your Investments …and What To Do If You Run Into Problems That’s the best advice we can give you about how to invest wisely. We see too many investors who might have avoided trouble and losses if they had asked basic questions from the start.

We encourage you to thoroughly evaluate the background of any financial professional with whom you intend to do business—before you hand over your hard-earned cash.

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 What You Should Know About Professional Designations

Some financial professionals use designations that imply that they are experts at helping seniors with financial issues. Many seniors, however, don’t understand the sets of initials that may follow the names of these financial professionals or the meaning of the titles - such as “senior specialist” or “retirement advisor” - they use to market themselves.

The education, experience, and other requirements for receiving and maintaining a “senior” designation vary greatly. In some cases, a financial professional may need to study and pass several rigorous exams - after working in a designated field for several years - to receive a particular designation. In other cases, it may be relatively easy in terms of time and effort to receive a “senior” designation, even for an individual with no relevant experience

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A viatical settlement allows you to invest in another person’s life insurance policy. With a viatical settlement, you purchase the policy (or part of it) at a price that is less than the death benefit of the policy. When the seller dies, you collect the death benefit. Your return depends upon the seller’s life expectancy and the actual date he or she dies. If the seller dies before the estimated life expectancy, you may receive a higher return. But if the seller lives longer than expected, your return will be lower. You can even lose part of your principal investment if the person lives long enough so that you have to pay additional premiums to maintain the policy.

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Ultra-short bond funds are mutual funds that generally invest in fixed income securities with extremely short maturities, or time periods in which they become due for payment. Like other bond mutual funds, ultra-short bond funds may invest in wide range of securities, including corporate debt, government securities, mortgage-backed securities, and other asset-backed securities. Some investors don’t realize that there are material differences between ultra-short bond funds and other investments with relatively low risks, such as money market funds and certificates of deposit. Specifically, ultra-short bond funds tend to have higher risks than money market funds and certificates of deposit (CDs).

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Investors searching for relatively low-risk investments that can easily be converted into cash often turn to certificates of deposit (CDs). A CD is a special type of deposit account with a bank or thrift institution that typically offers a higher rate of interest than a regular savings account. Unlike other investments, CDs feature federal deposit insurance up to $100,000.Here’s how CDs work: When you purchase a CD, you invest a fixed sum of money for fixed period of time – six months, one year, five years, or more – and, in exchange, the issuing bank pays you interest, typically at regular intervals. When you cash in or redeem your CD, you receive the money you originally invested plus any accrued interest. But if you redeem your CD before it matures, you may have to pay an “early withdrawal” penalty or forfeit a portion of the interest you earned.

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A promissory note is a form of debt – similar to a loan or an IOU – that a company may issue to raise money. Typically, an investor agrees to loan money to the company for a set period of time. In exchange, the company promises to pay the investor a fixed return on his or her investment, typically principal plus annual interest.While promissory notes can be legitimate investments, those that are marketed broadly to individual investors often turn out to be scams. The SEC and state securities regulators across the nation have joined forces to combat the fraudulent sale of promissory notes to investors. But we can’t stop every fraud.

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Even if you are new to investing, you may already know some of the most fundamental principles of sound investing. How did you learn them? Through ordinary, real-life experiences that have nothing to do with the stock market. For example, have you ever noticed that street vendors often sell seemingly unrelated products - such as umbrellas and sunglasses? Initially, that may seem odd. After all, when would a person buy both items at the same time? Probably never - and that’s the point. Street vendors know that when it’s raining, it’s easier to sell umbrellas but harder to sell sunglasses. And when it’s sunny, the reverse is true. By selling both items- in other words, by diversifying the product line - the vendor can reduce the risk of losing money on any given day.

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