Reviewed by Michael J Boyle
Fact checked by Jiwon Ma

What Is Financial Analysis?

To understand and assign value to a company, analysts and investors examine its financial position by studying its financial statements and calculating certain ratios. Fortunately, it is not as difficult as it sounds to perform a financial analysis.

Evaluating the financial position of a company is similar to evaluating your own financial position, except businesses generally have much more to account for. You’ll need to locate its financial statements, collect data, and compare it to similar businesses.

Key Takeaways:

• Investors value a company by examining its financial position using financial ratios calculated from its financial statements.
• A publicly traded company’s value is based on the total market value of its outstanding shares.
• A company’s financial ratios must be compared to those of its competitors and industry benchmarks to determine whether it is under- or overvalued.

Important

Remember, at this point, you’re only trying to determine a company’s financial position and value, so the balance sheet is the primary statement used. Deciding to invest in a company is more in-depth and requires information from all of the statements and the annual report.

The Balance Sheet

A company’s financial situation is defined by its balance sheet, which generally includes three components: assets, liabilities, and shareholders’ equity. However, each company’s balance sheet line items will differ based on its financial structure and its accounting procedures.

Assets

A balance sheet’s assets component lists current and non-current assets, generally defined as being converted to cash within less than 12 months (current) and more than 12 months (non-current).

The following image is the assets component of Amazon’s 2023 balance sheet.

Liabilities

Current liabilities include existing (or accrued) obligations to suppliers, employees, the tax office, and short-term finance providers. Companies try to manage cash flow to ensure that funds are available to meet these short-term liabilities as they come due.

Amazon lists its liabilities and shareholders’ equity in the same section, but some companies will have separate sections.

Non-current assets or liabilities are those expected to extend beyond the next year. For a company like Amazon, its biggest non-current asset is the property and equipment needed to run its business.

Other companies might have long-term liabilities related to similar obligations under property, plant, and equipment leasing contracts and other debts.

Shareholders’ Equity

Amazon’s shareholders’ equity section (included with liabilities and labeled as stockholders’ equity) sums the values of all stocks and retained earnings for the period. At the bottom, you’ll notice that shareholders’ equity and liabilities are added and that this total should equal the total assets from the assets section.

What the Balance Sheet Demonstrates

The balance sheet formula is Assets = Liabilities + Shareholders’ Equity. This means that when all assets are totaled and compared to all liabilities and shareholders’ equity, the results should be the same.

Relevant Ratios for Financial Analysis

From the information provided on the balance sheet, you can generate several ratios that will help you in your valuation. Here are a few of the most used ratios.

The Current Ratio

The current ratio, also called the quick ratio or acid test, is a company’s total current assets divided by its total current liabilities. This is commonly used by analysts to assess the ability of a company to meet its short-term obligations (liquidity).

An acceptable current ratio varies across industries but should not be so low that it suggests impending insolvency or so high that it indicates an unnecessary build-up in cash, receivables, or inventory. Like any form of ratio analysis, the evaluation of a company’s current ratio should occur in relation to past ratios.

Price-to-Book Multiple

By comparing a company’s stock price to its book value, investors can, in part, determine whether a stock is under or overpriced. While the price-to-book multiple has shortcomings, it remains a crucial tool for value investors. Extensive academic evidence shows that companies with low market-to-book stocks perform better than those with high multiples. This makes sense since a low market-to-book multiple shows that the company has a strong financial position in relation to its price tag.

Amazon’s 2023 balance sheet showed 10.383 billion common shares outstanding, which at January 23, 2025’s closing price traded at $235.42. Amazon listed it’s book value at:

Total Shareholders’ Equity: $146.043 billion ÷ Shares Outstanding: 10.383 billion = $14.06

Dividing its market value per share by its book value gives you its price-to-book ratio (multiple):

$235.42 ÷ $14.06 = 16.74

This might seem high, but determining what can be defined as a high or low market-to-book ratio also depends on comparisons. To get a sense of whether Amazon’s book-to-market multiple is high or low, it should be compared to the multiples of similar companies—of which there aren’t many.

Annual Report Notes and Summaries

The Form 10-K (annual) and 10-Q (quarterly) reports are the ones you’ll want to gather information from. Many companies produce reports specific to shareholders, but they tend to be biased toward and designed to keep investors attracted with only positive facts and discussions rather than simply presenting and explaining financial data.

There is generally a wealth of information in the annual report notes, such as how the company calculated its earnings per share, expenses it included in certain calculations, impairments, descriptions of liabilities, the financial instruments it invests in, and much more. For instance, the image below is of Note 2 of Amazon’s 2023 annual report, which discusses over three pages its cash, cash equivalents, and marketable securities—all of which are line items on the balance sheet.

A sub-note for Note 2 says:

We are required to pledge or otherwise restrict a portion of our cash, cash equivalents, and marketable debt securities primarily as collateral for real estate, amounts due to third-party sellers in certain jurisdictions, debt, and standby and trade letters of credit. We classify cash, cash equivalents, and marketable debt securities with use restrictions of less than twelve months as “Accounts receivable, net and other” and of twelve months or longer as non-current “Other assets” on our consolidated balance sheets. See “Note 7 — Commitments and Contingencies.”

You’ll notice here that Amazon counts the cash it cannot use because it is restricted (pledged as collateral) in the short term in “Assets: Accounts Receivable, Net, and Other.” Cash pledged for more than 12 months is included in “Assets: Other Assets.” The note then points you to another note for further clarification.

You’ll see that Amazon had $503 million in restricted cash, equivalents, and marketable securities locked in 2023. For a company of Amazon’s size, this isn’t too concerning (although it doesn’t quite match the reported amounts in its assets). However, it points out the little details included in these reports and the maneuvers that can be taken to redirect attention that can make a difference when evaluating liquidity, solvency, longevity, and other factors. Some companies might try to hide things in these reports to appear more solvent, liquid, and profitable than they really are.

How Do You Analyze a Company’s Financial Position?

You’ll need to access its financial reports, begin calculating financial ratios, and compare them to similar companies.

How Do You Check the Financial Position of a Company?

The balance sheet, income statement, and statement of cash flows are generally referenced to begin checking a company’s financial position.

How Do You Summarize a Company’s Financial Position?

There are many different ways to summarize a financial position, but it always starts with analyzing its financial statements.

The Bottom Line

A company’s financial position tells investors about its general well-being. An analysis of a company’s financial statements—along with the footnotes in the annual report—is essential for any serious investor seeking to understand and value a company properly.

What Is Bitcoin Pizza Day?

Each year, May 22 marks the anniversary of the day a Florida man paid 10,000 BTC for two pizzas in the first Bitcoin transaction. The day has become legendary, first because it was the first commercial use of bitcoins, but more so because of Bitcoin’s worth in the following years. For the two pizzas, the man in question paid a fortune at today’s prices.

Key Takeaways

• May 22 has become a commemoration date of sorts for the cryptocurrency community.
• A man in Florida posted a request for someone to make or purchase, then deliver two pizzas on Bitcoin Forum and paid 10,000 BTC.
• This was the first commercial transaction using bitcoins.
• Years later, the transaction between two people was worth a fortune.

History of Bitcoin Pizza Day

On May 22, 2010, now known as “Bitcoin Pizza Day,” Laszlo Hanyecz, the Florida man, agreed to pay 10,000 bitcoins for the delivery of two Papa John’s pizzas. On the Bitcoin Talk forum, Hanyecz reached out for help. “I’ll pay 10,000 bitcoins for a couple of pizzas … like maybe 2 large ones so I have some left over for the next day,” Hanyecz wrote.

“I like having left over pizza to nibble on later. You can make the pizza yourself and bring it to my house or order it for me from a delivery place, but what I’m aiming for is getting food delivered in exchange for bitcoins where I don’t have to order or prepare it myself, kind of like ordering a ‘breakfast platter’ at a hotel or something, they just bring you something to eat and you’re happy!”

A British man took up Hanyecz’s offer and bought the two pizzas for him in exchange for 10,000 bitcoins. Even then, the recipient of the bitcoins got a bargain, paying about $25 for the pizzas, while 10,000 bitcoins were then worth around $41.

World’s Most Expensive Pizzas

Since that purchase, Hanyeczs’ pizzas have become far more costly. Nine months after the purchase, Bitcoin reached parity with the U.S. dollar, making the two pizzas worth $10,000. In 2015, the fifth anniversary of Bitcoin Pizza Day, the two pizzas were valued at $2.4 million. On May 22, 2024, Bitcoin was at just over $69,181 making the pizzas worth…you get the point.

Despite the massive rise in the price of Bitcoin, Hanyecz says he is not phased about his deal. “It wasn’t like bitcoins had any value back then, so the idea of trading them for a pizza was incredibly cool,” Hanyecz has said.

Did Someone Really Pay 10,000 Bitcoin for Pizza?

Yes, a person paid 10,000 BTC for two pizzas in 2010, when its prices were far less than today.

What Day Is Bitcoin Pizza Day?

Bitcoin Pizza Day is May 22, commemorating a 10,000 BTC pizza purchase.

How Much was 1 BTC Worth on Pizza Day?

According to the conversation on Bitcoin Forum, 1 BTC on May 22, 2010 was worth $0.0041, making the purchase amount $41.

The Bottom Line

Bitcoin’s value has gone up significantly since the first Bitcoin Pizza Day, illustrating the cryptocurrency’s impressive growth since its early days, when its worth was fungible for not more than a couple of pizzas. The rise in Bitcoin’s value is a testament to its increasing acceptance and use in digital transactions worldwide.

However, Bitcoin is highly volatile. Its price can fluctuate rapidly, potentially leading to momentous gains or significant losses. Thus, while the growth trajectory of Bitcoin attracts investors, caution and informed decision-making are paramount when investing in this cryptocurrency because of its elevated risk.

Reviewed by Marguerita Cheng

If you’ve started a new job, you may be overwhelmed with the choices in employee benefits, depending on your employer’s offerings, from 401(k) plans to life insurance. Most companies require the employee to work for specific periods—called vesting—before they become eligible to receive or restart benefits.

Understanding how the most common employee benefits work will help you choose the best options for your situation. Learn how to choose employee benefits that fit your needs and how to avoid mistakes.

Key Takeaways:

• Consider contributing as much as you can to a 401(k) plan, at least up to the employer match.
• Life insurance from an employer can help you provide some financial support for your beneficiaries if you die.
• Disability insurance can help ensure you remain in good financial health if an accident or illness prevents you from working.
• If your life circumstances change, revisit your benefit choices.

401(k) Plans

Many employers offer their employees a 401(k) plan, which provides a tax-advantaged way to save for retirement.

The Internal Revenue Service (IRS) allows you to contribute up to a set maximum, which changes from year to year. In 2025, the most you can contribute is $23,500, unless you’re 50 or older. In that case, you can contribute an additional $7,500 as a catch-up contribution, for $31,000 total.

Many experts agree that it’s best to contribute as much as you can afford as early as possible, so you can maximize the effects of compounding growth over time. A good rule of thumb is to aim to contribute between 10% and 20% of your gross salary. The later in life that you start, the more you’ll need to contribute. At minimum, try to contribute enough to snag your employer match. (The average employer match is 4.6%, and the median is 4.0%.)

Important

Many employers match employee contributions up to a certain amount. Not taking advantage of the full employer match is like leaving free money on the table.

Typically, you’ll have to decide how you want your contributions to be invested. Factor in your risk tolerance and investing goals when you choose how to invest through your 401(k). Generally, younger people can handle more risk because they have more time to weather the ups and downs of the market.

You’ll probably have the choice of investing in money market funds as well as stock and bond mutual funds. Mutual funds are essentially a basket of assets that you can invest in at once. One example is a target-date fund (also known as a life-cycle fund). This is a mutual fund that adjusts risk as you age.

In general, a younger person would probably do well to be in a more risky stock-based fund rather than a money market or bond mutual fund, which would be better for those who are nearing retirement.

Health Insurance

Another benefit employers often offer is health insurance. You may have to choose between a Health Maintenance Organization (HMO) and a Preferred Provider Option (PPO).

An HMO allows you to go to doctors that are contracted with a specific insurance company. If you have a specific doctor you like to use, verify they will be covered under the particular plan. HMOs can cost less, but you may have to be flexible about which doctor and hospitals you use.

A PPO is not as strict as an HMO with your provider options. The doctors still have relationships with the insurance company, but you can see a doctor that may not be on the PPO’s list and still receive partially covered services. You may have to accept more out-of-pocket expenses, but you’ll face fewer restrictions.

You will likely also have to decide on whether to sign up for a dental plan. In many cases, paying for dental insurance is worthwhile because the amount is minimal and it typically provides for, at minimum, routine cleaning and X-rays. If you have significant dental issues, dental insurance may be even more beneficial. It can cover some of the costs of dental work so you won’t have to pay for expensive repairs out-of-pocket.

When considering a vision plan, look at what services it covers and estimate whether you would use them. Vision plans often cover an eye exam and some payment toward glasses.

Life and Disability Insurance

Employer-provided life insurance is meant to compensate your survivors for your lost wages and income should you die. If you are single and not supporting anyone else, you may not require life insurance. If you have a family to support, you need to think about how much they would need to survive in the event of your death. Keep in mind that term life insurance provided by your employer will likely terminate when your employment ends.

Disability insurance provides payments for a source of income if you were to become disabled. It supports you and your family when you cannot work.

Other Employee Benefits

You may be wondering how your company benefits compare to those offered by other companies. Benefits can vary widely from company to company. In addition to retirement plans, health insurance, life insurance, and disability insurance, you might also be offered:

• A health savings account (HSA)
• A flexible spending account (FSA)
• Eldercare benefits
• Employee discounts
• Wellness benefits
• Counseling programs
• A pension plan
• Flexible time benefits

If you are offered a benefit that you do not understand, contact your human resources department or benefits administrator.

Making Changes to Employee Benefits

Most companies will allow you to change your benefits periodically. You’ll likely be able to change how much you contribute to your 401(k) and what you’re invested in as often as you want. With health insurance and life insurance, though, you’ll only be able to change your choices once per year, unless you qualify for a special enrollment period.

The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows you to stay on an employer’s group health plan after you leave a job. It is important that you file right away for coverage when your employment ends as there is a time limit. COBRA is a temporary solution that generally only covers you for up to 18 months after you part ways with your employer.

Can I Make Changes to My Benefits After I Choose Them?

Yes, you can make changes, but when that’s possible depends on the benefit. For example, unless you qualify for a special enrollment period, health insurance can only be changed once a year.

Why Do I Need Life Insurance?

Life insurance can offer you peace of mind. It ensures that your family will receive financial support in the event of your death. Life insurance from your company will often just cover one year’s wages and will typically end when your employment ends.

How Can I Learn More About My Company’s Benefits?

Many companies post information online to provide detailed information about their benefits. You can also contact your human resources department for more information.

The Bottom Line

Employers may provide a number of benefits, from tax-advantaged retirement savings accounts to health insurance.

Spend some time learning about your options so you can get the most out of your benefits. Remember to reevaluate your benefit choices when your life circumstances change. If you have questions about how to enroll or how your company’s benefits work, contact your human resources department.

The truth about the best market move for 2025 might surprise you. While the value of S&P 500 firms is historically high, inflation is still above the U.S. Federal Reserve’s target, bond yields are volatile, and media attention is on the potential effects of a returning U.S. president’s policies, you’d be forgiven for joining many on Wall Street who are nervous about the market in 2025. Still, experienced investors say the best thing to focus on this year is something else entirely—the power of patience.

Peter Oppenheimer, chief global equity strategist at Goldman Sachs and author of Any Happy Returns: Structural Changes and Super Cycles in Markets, put the lessons of past financial market cycles for most investors succinctly to Investopedia: “Staying the course” and relying on “compound returns over time is likely going to be more important” than short-term economic news.

Key Takeaways

• The S&P 500 is trading at a price-to-earnings (P/E) ratio of 30.42, significantly higher than the historical median of 17.93, prompting some to worry that the market is in a bubble.
• The smartest investment move for 2025 might be the simplest: staying invested for the long term.
• Market fears around politics, inflation, and high valuations rarely predict long-term returns.

The Market in 2025

The bearish outlook for stocks goes like this: Yes, fourth-quarter 2024 earnings were strong, inflation appears to be cooling, and artificial intelligence breakthroughs are still driving tech sector growth.

However, the S&P 500 Index is trading at a P/E ratio above 30, significantly above its historical median of 17.93—a level that preceded significant market declines all the way back to 1929. These valuations assume 20% annual earnings growth over the next five years, which seems overly optimistic even with AI’s potential. Add in stubborn inflation and political uncertainty, and many see a recipe for market turbulence ahead.

Why Buy and Hold Might Be the Best Strategy Right Now

So should you try to time the market for particular stock picks instead? Oppenheimer said that while certain sectors occasionally deliver exceptional short-term returns, that’s “not something you can consistently rely on.”

The logic is straightforward: stocks have historically moved upward over extended periods, reflecting long-term economic growth. Reviewing past cycles, Oppenheimer emphasized two key principles: taking a long-term view and diversifying your investments through a buy-and-hold strategy. “Having more diversified exposure helps to improve risk-adjusted returns over time,” he said.

While concentrating on hot sectors might work temporarily, “you can’t predict the future,” and history shows that spreading investments across different regions, asset classes, and styles reduces volatility and improves long-term performance.

This strategy also offers something valuable: peace of mind. Rather than stressing about market timing, investors can focus on what matters—letting their money grow over time through the power of compounding.

Simple Ways To Build Solid Long-Term Returns

So, how should you invest? For most, low-cost index funds offer the simplest path to diversification. These give you exposure to the returns of hundreds of stocks, automatically spreading risk while capturing the market’s historical 10.6% annual return since 1957.

Evidence shows most stock pickers—including professional fund managers—consistently underperform broad market indexes over time. Below is a chart showing the percentage of actively managed funds each year that failed to keep up with investing in major market indexes.

The optimal approach might combine both: build a foundation with index funds for broad market exposure, then selectively add individual stocks if you have the time and knowledge to research specific companies. This provides diversification while allowing you to invest in businesses you understand and believe in.

The Bottom Line

Investing can be stressful. Stocks and other assets move up and down. In an ideal world, you’d sell your stock just before the market falls, and buy just before it rises. But getting the timing right all the time is often just luck for many.

Nine times out of 10, the best strategy is to select a diversified group of long-term investments, then stick by them and ignore short-term price fluctuations. This strategy will save you a lot of stress and should pay off over the long term.

Reviewed by Michael J Boyle
Fact checked by Kirsten Rohrs Schmitt

Series 63 vs. Series 65 vs. Series 66: An Overview 

There are many things that a person who plans to enter the industry as an investment professional must consider. They must take certain qualification examinations and, more importantly, they must pass them. But there are multiple examinations that they must successfully complete before they’re prepared to fully function in their profession.

The Series 6 and Series 7 exams, which are offered by Financial Industry Regulatory Authority (FINRA), are normally among the core exams that an individual registered representative passes. After that, there’s at least one more hurdle that remains: the Series 63, 65, or 66 exams. A question in the minds of many is, “Which one do I need to pass?” In this article, we’ll show you how you can answer this question for yourself.

Key Takeaways

• An individual who wants to become an investment professional must first pass a number of exams regulated by the Financial Industry Regulation Authority.
• Those who wish to be IARs must pass the Series 66 and Series 7 exams.
• The newest of the three is the Series 66 exam, which is equivalent to taking both the Series 63 and Series 65 exams.
• There are no prerequisites for the Series 63 or Series 65 exams while the Series 7 exam is a corequisite for the Series 66 exam.
• These exams ensure that financial advisors have a firm grasp of the financial industry’s laws and best practices.

Series 63

In most states, a new registered representative must at least pass the Series 63 exam to satisfy state law registration requirements. The fee for the exam is $147. Formally known as the Uniform Securities Agent State Law Examination, this exam:

• Consists of 60 questions
• Focuses on the registration of persons and securities under the USA and ethics in the securities industry
• Has a time limit of 75 minutes

Candidates must answer 43 of the 60 questions correctly or score a 72% in order to receive a passing grade.

There are actually 65 questions on the exam. But only 60 of these count toward the candidate’s final score. The remaining five questions are pre-tested for possible inclusion in the overall question bank. These five aren’t identified and appear anywhere throughout the exam.

Interested candidates can use the Series 63 exam study guide from the North American Securities Administrators Association (NASAA) by accessing it on the organization’s website.

Important

NASAA provided candidates with the ability to use their personal camera-equipped computer to take qualification examinations. For more information, see NASAA’s website.

Series 65

The Series 65 exam was the first one created by NASAA to test the competency of individuals who wish to provide fee-based investment advisory services. It originally focused primarily on the Uniform Securities Act, NASAA amendments, and ethical practices in the securities industry. The fee to sit for the exam is $187.

Originally a 75-question exam that focused primarily on state securities laws (the Uniform Securities Act) and ethics, it became a 130-question competency exam with a time limit of 180 minutes. Like the Series 63 exam, this one has 10 experimental questions that are included in every test. The candidate must answer 94 of the 130 questions correctly (72%) to pass the exam.

In addition to questions about ethics, the exam includes questions on the subjects of economics, investment vehicles, investment strategies, analysis, and ethics.

The majority of those who take this exam are professionals in related fields within the financial services industry, such as accounting, who want to provide fee-only investment advice. This includes those who work for investment advisory firms and wish to become IARs. Securities professionals focused on the Series 7 don’t typically take the Series 65.

Series 66

The Series 66 exam is a combination of the Series 63 and Series 65 exams. But it does not include the product, analysis, and strategy questions that are a large part of the Series 65 exam. The cost to take this exam is $177.

The test is 100 questions that count toward the candidate’s score and 10 pretest questions. The time limit for the exam is 150 minutes. To pass the exam, a candidate must correctly answer 73 (73%) of the questions.

There is no prerequisite for taking the exam but the Series 7 exam is a corequisite, which means candidates must complete both successfully in order to register in their states. There’s no preference as to which one must be taken first as long as candidates successfully pass both.

NASAA assembled a committee of securities industry experts to avoid overlap with the Series 7 exam. This helped eliminated duplicate questions between the two tests. As a result, the Series 66 exam is considered by most to be an easier test. Like the Series 65 exam, it qualifies the individual to act as an IAR and fulfills the requirements for state registration.

Warning

There are exam fees for these exams that must be paid before taking them. If you work for a financial firm, it is not uncommon for your employer to cover these costs.

Exam Comparison

Special Considerations

All three of these examinations were created by NASAA and are administered, under contract from that organization, by the FINRA, formerly known as the National Association of Securities Dealers (NASD).

NASAA is an organization of securities administrators. The term administrator. refers to a generic title used to indicate the person who is responsible for enforcing the Uniform Securities Act in a state. In various states, this person is called a commissioner, director, or Secretary of State for Securities.

The organization predates the major federal securities laws, such as the Securities Act of 1933 and the Securities and Exchange Act of 1934. It was formed in Kansas in 1919 and made its first efforts at standardizing the securities laws of the states shortly thereafter. The organization’s goals included protecting the public, and it drafted model laws. These laws could be adopted by individual states to prevent fraud and register the persons involved in the securities business.

In the early days of securities regulation, a Kansas Supreme Court justice was quoted as saying that people were coming into his state and selling schemes that had no more substance than “so many feet of blue sky.” The Uniform Securities Act has, as a result, been commonly referred to as the Blue Sky Laws.

Investment Advisor Representatives (IARs) and Investment Providers

Investment advisor representatives (IARs) are individuals employed by an investment advisor who makes recommendations or otherwise gives financial or investment advice to clients. The IAR’s relationship with the investment advisory firm is similar to that of an agent who works for a broker-dealer.

NASAA’s Memorandum of Understanding (MoU) from 1997 on this subject deals with both the federal-covered investment advisor, which is a firm registered with the Securities and Exchange Commission (SEC), and the investment advisor representatives who work for the firm.

“If an investment advisor is registered with the SEC, the states may not require registration, licensing, or qualification of the investment advisor or its supervised persons, except that states may license, register, or otherwise qualify investment advisor representatives who have a place of business located within that state.”

This MoU refers to the National Securities Markets Improvement Act of 1966 (NSMIA) and lays out the requirements for testing persons who are to be IARs. In order to avoid costly penalties, investment advisory firms must ensure their IARs are registered correctly.

After the IAR meets the registration requirements they must pass the appropriate exams before providing any client financial advice. State requirements vary on this point, however, in most cases, the IAR must pass both the Series 63 and Series 65 or the Series 66 exam and the Series 7.

Career Path and Compensation

So what happens after you successfully pass your required exams and become registered? The career path you can take depends entirely on the tests you successfully pass. You can expect to find work with banks, insurance companies, brokerage firms, investment firms, and major corporations in the following capacities:

• Series 63 Exam: Financial advisor, insurance agent, financial broker, and any other position that allows you to buy and sell securities on behalf of your clients for a fee.
• Series 65 Exam: Financial advisor, compliance officer, securities instructor, investment consultant, and any other role that allows you to provide investment advice to your clients for a fee.
• Series 66 Exam: Financial advisor, retirement account advisor, wealth management associate, risk management officer, sales manager, and any other role that allows you to buy and sell securities for a fee.

The Bureau of Labor Statistics (BLS) provides up-to-date data about different occupations in the United States. This information, which includes salaries and job outlook, is updated on a regular basis. For instance:

• Securities, Commodities, and Financial Services Sales Agents: These professionals earned an annual median salary of $62,910 in 2021 and can expect job growth of 10% between 2021 and 2031, which is faster than average. This segment includes brokers, investment bankers, investment sales agents, traders, and financial services sales agents, among others.
• Personal Financial Advisors: The median annual salary for these professionals in 2021 was $94,170. The job outlook between 2021 and 2031 for this field was 15%, which is much faster than average.
• Insurance Sales Agents: These individuals earned an average annual salary of $49,840 in 2021. The job outlook was 6% between 2021 and 2031, which is as fast as the average. People in this field work in property insurance, health insurance, and life insurance.

How Long Does It Take to Study for the Series 63, Series 65, and Series 66 Exams?

While studying needs will vary between candidates, many firms that specialize in the Series 63 exam recommend devoting anywhere from 30 to 50 hours of studying for these exams. Because the Series 65 and 66 exams are longer, many recommend devoting 80 to 100 hours to studying.

Is It Harder to Pass the Series 65 or Series 66 Exams?

While the pass/fail rate for these exams is not publicly available, many consider the Series 66 exam less difficult than the Series 65 because the latter is longer. The Series 65 contains 130 questions and the Series 66 has only 100.

What Does a Series 65 Allow You to Do Versus a Series 7?

The Series 65 enables a financial professional to give clients investment advice and analysis. If the professional wishes to sell packaged investment products or to buy and sell securities they must pass the Series 7.

The Bottom Line

Passing the Series 63 exam for registration within a state is a requirement for all registered representatives. Those who wish to be IARs must pass the Series 66 exam and the Series 7 exam. The Series 66 exam is the equivalent of taking both the Series 63 and Series 65 exams. If an individual does not already have a Series 7 and wishes to be an IAR, the Series 65 exam is NASAA’s competency exam.

Check out our free study guides for the Series 65 and Series 63 exams.

Reviewed by Erika Rasure
Fact checked by Vikki Velasquez

Deposit Multiplier vs. Money Multiplier: An Overview

The terms “deposit multiplier” and “money multiplier” are often confused and used interchangeably because they are very closely related concepts and the distinction between them can be difficult to grasp.

The deposit multiplier provides the basis for the money multiplier, but the money multiplier value is ultimately less, due to excess reserves, savings, and conversions to cash by consumers.

Key Takeaways

• The deposit multiplier, also known as the deposit expansion multiplier, is the basic money supply creation process that is determined by the fractional reserve banking system.
• The money multiplier reflects the amplified change in the money supply that ultimately results from the injection into the banking system of additional reserves.
• The deposit multiplier provides the basis for the money multiplier, but the money multiplier value is ultimately less, due to excess reserves, savings, and conversions to cash by consumers.

Deposit Multiplier

The deposit multiplier, also known as the deposit expansion multiplier, is the basic money supply creation process that is determined by the fractional reserve banking system. Banks create what is termed checkable deposits as they loan out their reserves.

The bank’s reserve requirement ratio determines how much money is available to loan out and therefore the amount of these created deposits. The deposit multiplier is then the ratio of the amount of the checkable deposits to the reserve amount. The deposit multiplier is the inverse of the reserve requirement ratio.

A deposit multiplier minimizes the risk of a bank not having enough cash on hand to satisfy day-to-day withdrawal requests from its customers. Its reserve requirement ratio also determines how much money it has to loan out or otherwise invest.

The deposit multiplier is sometimes expressed as the deposit multiplier ratio, which is the inverse of the required reserve ratio. For example, if the required reserve ratio is 20%, the deposit multiplier ratio is (1/0.20) = 5x.

Money Multiplier

The money multiplier reflects the amplified change in the money supply that ultimately results from the injection into the banking system of additional reserves.

However, the money multiplier differs from the more basic deposit multiplier because banks tend to keep excess reserves, and bank customers tend to convert some portion of checkable deposits to savings deposits or cash.

Money that banks are not required to hold in reserve is redirected into funding loans, and the borrowed funds end up in the deposit accounts of other clients. The total amount of new deposits or new money that is created can be captured using the money multiplier formula.

The money multiplier is important in macroeconomics because it determines the money supply, which affects interest rates. It’s also important in banking because it impacts monetary policy and the stability of the banking sector.

Note

During economic uncertainty, people tend to deposit more money in banks as a safe haven, increasing reserves.

Special Considerations

Banks commonly keep excess reserves beyond the minimum reserve requirements set by the Federal Reserve Bank. This reduces the number of checkable deposits and the total supply of money that is created.

Borrowers do not spend all of the money received from bank loans. If they did, and if banks loaned out every possible dollar beyond the minimum reserve requirements, then the deposit multiplier and the money multiplier would be close to exactly equivalent.

In reality, borrowers typically transfer some of the money to savings deposits. Like banks keeping excess reserves, this limits the created money supply and the resulting money multiplier figure. Similarly, conversions of checkable deposits to currency reduce the money multiplier by taking away some amount of deposits and reserves from the system.

What Does the Money Multiplier Describe?

The money multiplier describes how much the money supply can increase given the amount of reserves held by banks. When banks receive deposits from customers, they keep a portion as reserves and lend out the rest. The lent money is deposited in other banks, whereby the process is repeated, which effectively creates more money. The size of the multiplier depends on the reserve requirement set by a country’s central bank; lower requirements lead to a larger multiplier, and vice versa.

How Do You Calculate the Deposit Multiplier?

The deposit multiplier is calculated as the inverse of the reserve ratio set by a central bank. The formula is Deposit Multiplier = 1 / Reserve Ratio. For example, if the reserve ratio is 10% (0.1), the deposit multiplier would be 1 / 0.1 = 10. This means each dollar of reserves can support $10 of deposits in the banking system. It shows how much money banks can create through lending based on their reserves.

What Is the Difference Between M1 and M2 Money?

M1 and M2 money are both measures of the money supply. M1 is money in its most liquid form, such as cash, coins, and checking account deposits, which are available for spending right away. M2 money is M1 money plus small-denomination time deposits (less than $100,000) and retail money market mutual fund shares.

The Bottom Line

The money multiplier and the deposit multiplier are important concepts to know in order to understand the money supply in a fractional reserve banking system.

While the deposit multiplier reflects the theoretical creation of money based on reserve requirements, the money multiplier accounts for practical limitations, such as banks holding excess reserves and customers converting deposits into savings and cash.

These actions decrease the money supply expansion, which makes the money multiplier a better measure of economic impact; at least a more realistic one.

Your net worth can tell you many things, but it is simply a way to gauge your own financial success. Many have calculated their net worth and come to the conclusion that it is in need of a revamp, yet improving it can seem very difficult. However, it only requires some guidance, a little willpower, and a lot of patience.

Key Takeaways

• The first step to increasing your net worth is by wiping away debt. Net worth is equity minus debt, so lowering that debt increases net worth considerably.
• Making smart investments, not just in stocks, is a surefire way to increase net worth. Buying a sensible car or a house, and keeping luxury expenses low, are all important steps.
• Net worth doesn’t need to mean rich. For some, a positive net worth is a goal they should be proud of. People with high levels of debt like those with medical bills and student loans should celebrate when their net worth finally turns positive.

Pay Off Your Debt

The money you owe is money that could be used to grow your net worth. Pay off all your debt as soon as you are able, but be aware of penalties that can be applied for early payment (like with mortgages).

Consolidating your debt by taking out a loan at a lower rate to pay down high-yield debt is a tried and true strategy. The bottom line here is to know what you owe and have a plan for paying it back. Make extra payments where possible and work to reduce your overall debt burden.

Important

Identify high-interest debt and target that first, paying off lesser debt along the way.

Max Out Your Retirement Contributions

Many private employers provide retirement plans that have desirable tax characteristics. Other tax-advantaged accounts (ex. a Roth IRA) are also available. In fact, many employers have matching programs that will help you grow your contribution faster.

By not taking advantage of such programs, you are leaving money on the table. Retirement contributions create a two-fold benefit. They defer your taxable income to your lowest earning years and increase your available generative assets. Taking action now for your retirement will help slow one of the biggest impediments to the growth of your net worth: taxes.

Cut Expenses By Realizing Expenses

Nobody likes to hear that they spend too much and need to cut back. We all know that eating out at restaurants or buying the latest gadgets catches up with us, but what we don’t realize is how quickly smaller expenses can add up, too.

Make a habit of noting your expenses every day for a week and you will be shocked by how much of your paycheck is trickling away. The intent is not to stop eating out or quit hobbies entirely, but instead to become aware of your spending habits and identify areas where you can make adjustments; a little goes a long way.

In addition, remember that debt from step one? A large bulk of that comes from credit cards. Cutting up your credit cards and using only the cash you have available will help to curb your spending.

Keep Money You Have Saved Where It Will Grow

You probably already have a savings account, but are you using it? Your checking account should be lean enough for your regular spending and everything else should be in interest-bearing accounts. Even better, invest what you can. Some people tend to be risk-averse, so take a look at guaranteed investment contracts (GICs) or bond funds.

If your savings are in a coffee tin above the fridge, you are not making your money work for you and are undermining your hard work. As a side note, resist the urge to immediately spend any windfalls you may receive; invest it to ensure that you will continue to reap the benefits well into the future.

Buy the Car You Will Drive Forever

It can be practically guaranteed that a vehicle purchased today will be worth much less in one year’s time. Couple this depreciation with maintenance costs and insurance premiums and you have a recipe for the true financial cost of owning a car.

Every new car you buy ultimately decreases your net worth. You can reduce the negative financial effects of owning an automobile by purchasing only the vehicle (or vehicles) you need, with an eye to driving it until it needs to be replaced.

Talk to a Professional

This is the most important step and yet the most overlooked. People don’t want to pay to consult an accountant or financial advisor often because they are embarrassed about the state of their finances.

With that said, talking to a professional can get you the latest information on how to utilize tax breaks or assist you in your budgeting. Never be ashamed to ask for help and use the resources that are available.

As of 2025, the UK and 30 EU countries require electronic travel authorization fees

Fact checked by Vikki Velasquez

Many countries will soon require travelers from nations with visa waiver programs (VWP) to preregister and prescreen before they travel. If you’re from a country on your destination’s visa-waivered list, you may now have to pay and register for an electronic travel authorization.

Key Takeaways

• Visa waiver programs (VWP) allow visitors from specific countries to enter without a visa.
• In 2025, the UK and EU are adding additional security measures for visa-waived visitors.
• Additional application fees mean more costs to travelers.

UK and EU Changes

Since 2008, the U.S. has required visitors who don’t need visas to preregister and pre-screen for travel through its Electronic System for Travel Authorization (ESTA). The United Kingdom’s version, Electronic Travel Authorisation (ETA), began in January 2025. These systems include a fee, increasing travel costs.

The European Union’s Entry and Exit System (EES) registers all travelers entering Europe. Its new Electronic Travel Information and Authorisation System (ETIAS) will begin in 2025 and link to a traveler’s passport.

Thirty EU countries, including Spain, Italy, and France, will require incoming visa-exempt travelers to have an ETIAS travel authorization. This includes travelers from 60 non-EU visa-exempt countries, such as Canada and the United States, who plan to visit any of the 30 European countries for up to 90 days.

Although most ETIAS applications are processed online immediately, travelers should plan for delays of up to 30 days and apply for an ETIAS at least one month before travel to the EU.

Entry Fees

• United States: Travelers from participating VWP countries can travel to the U.S. for up to 90 days if they have an electronic passport or “e-Passport” valid for at least six months before departure, complete the ESTA application online, and pay $21, which includes a $4 processing fee and a $17 authorization fee.
• United Kingdom: The new 2025 ETA changes cost £10 per application (approximately $12 or $13) and allow business or vacation travelers without visas to stay in the UK for up to six months.
• European Union: When the ETIAS changes begin, travelers will pay a fee of €7 (approximately $7) and the ETIAS allows them to travel up to 90 days.

Other Travel Requirements

Countries with existing ETA systems and applicable fees include, but are not limited to:

• New Zealand (Estimated fee is NZD 17)
• Canada
• Australia
• Korea (Visa-waivered country residents are exempt from needing an ETA until Dec. 31, 2025, to stimulate tourism)
• Japan (Called an eVISA)
• Israel

The Bottom Line

Travel can be expensive and costs increase as governments try to provide more security for those living within their borders. Travelers should review their destination’s travel rules as governments implement electronic pre-registration and screening.

Reviewed by Robert C. Kelly
Fact checked by Vikki Velasquez

The U.S. Constitution does not mention the need for a central bank, nor does it explicitly grant the government the power to create one. Those who adhere to a strict interpretation of the Constitution believe the government does not have any authority not specifically listed as one of the Enumerated Powers of Congress.

Critics also argue that the Federal Reserve Bank violates the Constitution by being too closely tied to the private sector and lacking transparency and accountability.

Key Takeaways

• Some people are opposed to the existence of the Federal Reserve, the central bank of the United States, arguing that it is unconstitutional.
• Those opposed to the Federal Reserve note that the U.S. Constitution does not specifically say a central bank is necessary; it also does not say the government has the right to create a central bank.
• Some critics think the Federal Reserve is too tied to the private sector to be constitutional, noting that the presidents of the 12 regional Federal Reserve Banks are appointed by a board of directors mostly drawn from the private sector.

Enumerated Powers

Article I, Section 8 of the U.S. Constitution lists most of what is commonly referred to as the Enumerated Powers of Congress. Among them are the power to borrow money on behalf of the United States and the power to coin money, establish currency, and determine its value.

Critics of the Federal Reserve point out that the Constitution makes no reference to a centralized bank to carry out these actions.

The 10th Amendment also states the federal government is only to have those powers expressly granted to it. Therefore, it is argued the creation of the Federal Reserve itself was a violation of the Constitution.

Combatting Financial Collapse

The Federal Reserve was formed as a reaction to the Panic of 1907, the latest of what had been regular collapses of the economy. Prior to the creation of the Fed, private business owners were counted on to revive the economy during times of crisis.

Critics argue that the problems the Federal Reserve was created to fix are no longer relevant to today’s much larger and more complex economy.

Note

To get through the Panic of 1907, J.P. Morgan convinced other tycoons to join him in flooding the system with capital, helping banks and businesses survive; shortly after, the Federal Reserve was formed so that the next time there was a crisis, the government wouldn’t have to again depend on private individuals.

Overseen by Private Board of Governors

All 12 regional Federal Reserve Banks are overseen by seven governors who sit on the Board of Governors of the Federal Reserve. This independent board and its chair are appointed by the U.S. president and are confirmed by the Senate.

The presidents of the regional banks, however, are nominated by a bank’s directors and approved by the Board of Governors. Detractors argue these officials typically have close ties to the banks they oversee and are therefore more likely to look the other way when policing bad behavior.

Critics believe this system violates constitutional law because public policymakers are being picked by a quasi-private structure. Once officials are appointed, it may be difficult for the government to remove them.

The Federal Reserve’s policies influence the nation’s economy and financial dealings worldwide. Critics of the Fed want more transparency and accountability within the organization.

It is argued that the public plays a role in electing officials in every branch of government yet has no say in who is appointed to the Fed or how it manages the economy. Note that this argument does not oppose all government positions, such as cabinet appointments made by the President.

12

The number of regional Federal Reserve Banks, all of which are overseen by a president.

Congress Seeks Transparency and Accountability

In 2015, the House Financial Services Committee approved legislation requiring the Fed to communicate its policy decisions to the American people.

While the Fed Oversight Reform and Modernization, or FORM, Act does not attempt to change the appointment process, it implements many changes critics have long requested. The Fed is required to disclose the salaries of employees and forces them to abide by the same ethical requirements as other federal financial regulators.

This legislation is meant to modernize the Federal Reserve and provide more information to the public, thus improving communication and transparency.

With more clarity on how the Fed operates, this legislation allows the public to learn more about one of the most powerful financial institutions in the world. Even with these changes, critics will likely continue their calls to bring an end to the Federal Reserve on the grounds of its perceived unconstitutionality.

How Does the Federal Reserve Control Interest Rates?

The Federal Reserve controls short-term interest rates through its open market operations, buying and selling government securities to influence the money supply and achieve its policy objectives.

Who Owns the Federal Reserve?

Contrary to some misconceptions, the Federal Reserve is not privately owned by individuals or corporations. The Fed is not owned by anyone and is an independent government agency. The Federal Reserve System is supported by its member banks, which are national and state-chartered banks that hold stock in their respective regional Federal Reserve Banks.

What Is the Federal Reserve’s Relationship with the U.S. Government?

While the Federal Reserve operates independently, it maintains a relationship with the U.S. government, with the Board of Governors being appointed by the President and confirmed by the Senate.

The Bottom Line

Some people argue that the Federal Reserve is unconstitutional because they believe the Constitution does not grant the federal government the authority to create a central banking system.

They contend that the power to control currency and monetary policy should rest solely with Congress, not an independent entity with unique characteristics like the Federal Reserve.

Fact checked by Vikki Velasquez

The IRS has implemented reporting thresholds for P2P payment platforms which will affect how you report income received through these apps. You must report this income to the IRS if you received more than $5,000 in payments for goods and services through platforms like Cash App or Venmo during the 2024 tax year.

Key Takeaways

• You must report the income to the IRS if you received over $5,000 in payments for goods and services through platforms like Cash App or Venmo.
• Failing to report this income can result in but isn’t limited to accuracy-related penalties, failure-to-pay penalties, and/or interest charges.
• Users of P2P payment platforms should keep accurate records, separate personal and business transactions, understand what’s taxable, and report all income regardless of whether they receive a Form 1099-K.

Why You Must Report This Income

The IRS requires reporting of this income for several reasons:

1. Tax compliance: The government wants to ensure that all taxable income is properly reported and taxed.
2. Closing the tax gap: The IRS aims to reduce the gap between taxes owed and taxes paid by lowering the reporting threshold.
3. Fairness: This requirement helps level the playing field between traditional businesses and those operating through digital platforms.
4. Accuracy in reporting: The threshold helps the IRS cross-reference reported income with information received from payment platforms.

How to Report the Income

You should receive a Form 1099-K from the payment provider by Jan. 31 of the following year if you’ve received more than $5,000 in business-related payments through Cash App, Venmo, or similar platforms. This form will detail the total amount of payments you received.

You must still report all taxable income on your tax return even if you don’t receive a 1099-K. Report your 1099-K income on Schedule C of your Form 1040 if you’re a sole proprietor or independent contractor. Don’t forget to deduct legitimate business expenses to reduce your taxable income. You can do this on Schedule C as well.

Important

You must report it to the IRS if you received more than $5,000 even if you don’t receive a Form 1099-K.

Consequences of Not Reporting

Failing to report income from P2P platforms can lead to consequences. Depending on the severity of the underreporting and the intent of the taxpayer, outcomes could include:

1. Accuracy-related penalty: The IRS may impose a 20% penalty on the amount of taxes you underpaid due to negligence or substantial understatement of income.
2. Failure-to-pay penalty: You’ll face a penalty of 0.5% of the unpaid taxes for each month or part of a month the tax remains unpaid, up to 25% of the unpaid amount, if you don’t pay the taxes owed by the due date.
3. Interest: You’ll owe interest on the unpaid tax from the due date until the date of payment in addition to penalties.

The Bottom Line

The reporting requirements for P2P payment platforms reflect the changing landscape of digital transactions and IRS efforts to ensure accurate tax reporting. By understanding these requirements and following best practices, such as reporting cash received if you received more than $5,000, you can stay compliant with tax laws and avoid potential penalties.