If your 401 plan was diversified, meaning a mixture of cash, stocks and bonds, shares invested in the cash category is known as fix income. Fix income is usually the purchase of CDs or treasury inflated notes called safe havens.
If you have invested in allocation assets, it can be a mixture of various categories of cash, bonds, mutual funds and stock depending on the selection of the option plan your company offers. Interest rates are issued by the federal reserve and/or treasury department. However, investments are determind by the number of shares and its purchase price on the date purchased and is calculated by the market price on the date the shares were sold. This is known as market performance.
Note: If you former employer held onto your retirement plan at the time the market crashed, it?s a possibility that the employer may have protected your funds by moving it into a safe haven money market or brokerage account. They have this option when the employee opt out to transfer and rollover their plans to an IRA ? Individual Retirement Account.
Example of profit gains or losses from the sale of stock shares is known as stock performance as follows:
Date Purchase
12/1/2010
Purchase cost $50.00 x $2.50 per share = $125.00
Investment contribution
12/2/2010
Sold $50.00 x $2.75 per share = $137.50
12/2/2010
Total dividends gains per share: $0.25 = $12.50
Gains earned from the sale of stocks and/or mutual funds base on the number of shares purchased.
Cash earned interest only base on the number of shares purchase which usually buy CD?s or treasury bonds.
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