The main difference between RSUs and stock options is how employees receive company shares. Restricted stock units, or RSUs, generally represent a company’s promise to deliver shares or their cash equivalent after specified vesting conditions are satisfied. Employees usually do not pay an exercise price to receive vested RSU shares. Stock options give employees the…
The main difference between a 403(b) and a 401(k) is the type of employer that offers the plan. A 401(k) is commonly offered by private-sector employers. A 403(b) is generally available to employees of public schools, certain tax-exempt organizations, and some churches or religious organizations. Both are defined-contribution workplace retirement plans. They can allow employees…
The central difference between a pension and a 401k is who carries the responsibility for funding and managing retirement benefits. A traditional pension generally promises an eligible employee a defined retirement benefit based on a formula. The employer funds and manages the plan and bears most of the investment risk. A 401(k) is an individual…
Bonds and certificates of deposit can both provide interest income and greater predictability than stocks, but they do not work the same way. A certificate of deposit, or CD, is a time deposit offered by a bank or credit union. You agree to leave your money deposited for a specified period in exchange for interest….
The main difference between a margin account and a cash account is borrowing. A cash account requires you to pay the full purchase price of your investments, while a margin account may allow you to borrow money from your brokerage firm using eligible securities as collateral. Borrowing can increase your purchasing power, but it can…
Paying rent can help build your credit—but only when your payment history is reported to one or more credit bureaus and included in a credit-scoring model that considers rental data. Most landlords do not automatically report monthly rent payments the way credit card companies and lenders report account activity. This means you could pay rent…
A primary beneficiary is the first person or organization eligible to receive money from a life insurance policy, retirement account, annuity, or other financial account after the owner’s death. A contingent beneficiary is the backup who may receive the asset if the primary beneficiary cannot. Although these designations appear together on many financial forms, they…
Yes, you can lose money in a Roth IRA. A Roth IRA provides tax advantages, but it does not guarantee the value of the investments held inside the account. Your balance can decline when stocks, bonds, mutual funds, exchange-traded funds, or other investments lose value. You can also reduce your returns through high fees, excessive…
Keeping some physical cash at home can provide a useful backup when electronic payments are temporarily unavailable. A power outage, severe storm, evacuation, cyber incident, or banking disruption could prevent local businesses from accepting cards or make ATMs inaccessible. But how much cash should you keep at home? There is no universal amount that works…