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How to calculate stock price (value) based on given values for equity and debt?
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There is no formula for calculating a stock price based on the financials of a company. A stock price is set by the market and always has a component built into it that is based on something outside of the current valuation of a company using its financials. Essentially, the stock price of a company per share is whatever the best price it can get on the open market. If you are looking at how to evaluate if a stock is a good value at the current price, then look at some of the answers, but I wanted to answer this based on the way you phrased the question.
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Understanding a Trailing Limit if Touched Order
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This is rather simple if you understand a trailing limit order but to be sure I am going to explain a limit, trailing limit, and trailing LIT order. I am going to use an example assuming that you already own a stock and want to sell it. Limit Order I place an order to sell 100 PG @ 65.00. This order will only be executed if the bid price of PG is at $65.0000 or greater. Trailing Limit Order I place an order to sell 100 CAT @ 85.25 with a trailing 5%. This order will be executed when CAT drops 5% below the highest point it reaches after you place this order. So if you place this order at 85.25 and the stock drops 5% to $80.9875, your order will be executed. However, if the stock jumps to $98, the order will not be executed until the stock falls to $93.10. The sell point will go up with the stock and will always remain at the specified % or $ amount behind the high point. Trailing Limit If Touched Order I place an order to sell 100 INTC @ 24.75 with a trailing 5% if the stock touches $25.00. Essentially, this is the same as the trailing limit except that it doesn't take effect until the stock first gets $25.00. I think the page they provide to explain this is confusing because I think they are explaining it from the shorting a stock perspective instead of the selling a stock you want to profit from. I could also be wrong in how I understand it. My advice would be to either call their customer support and ask for a better explanation or what I do in my finances, avoid things I don't understand.
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How does on-demand insurance company Trov prevent insurance fraud or high prices?
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There is not necessarily a need to prevent what you describe - 'turning insurance on before high risk situations'. They just need to calculate the premiums accordingly. For example, if an insurance needs to take 50$/year for insuring your house against flood, and a flood happens in average every 10 years, if you just insure the two weeks in the ten years where heavy rain is predicted, you might pay 500$ for the two weeks. The total is the same for the insurance - they get 500$, and you get insurance for the dangerous period. In the contrary; if a flooding (unexpectedly) happens outside your two weeks, they are out. From the home owners view, 500$ for two weeks when heavy rains and floods are expected, and nothing otherwise sounds pretty good, compared to 50$ every year. It is the same of course, but psychology works that way.
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Since many brokers disallow investors from shorting sub-$5 stocks, why don't all companies split their stock until it is sub-$5
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Vitalik has mentioned this in a comment but I think it ought to be expanded upon: Companies that aren't already penny stocks really don't stand to gain anything from trying to prevent short interest. Short selling does not inherently lower the stock price - not any more so than any other kind of selling. When somebody shorts a stock, it's simply borrowed from another investor's margin; as long as it's not a naked short resulting in an FTD (Failure To Deliver) then it does not add any "artificial" selling pressure. In fact, shorting can actually drive the price up in the long term due to stops and margin calls. Not a guarantee, of course, but if a rally occurs then a high short interest can cause a cascade effect from the short "squeeze", resulting in an even bigger rally than what would have occurred with zero short interest. Many investors actually treat a high short interest as a bullish signal. Compare with margin buying - essentially the opposite of short selling - which has the opposite effect. If investors buy stocks on margin, then if the value of that stock decreases too rapidly they will be forced to sell, which can cause the exact same cascade effect as a short interest but in the opposite direction. Shorting is (in a sense) evening out the odds by inflating the buying pressure at lower stock prices when the borrowers decide to cover and take profits. Bottom line is that, aside from (illegal) insider trading, it doesn't do businesses any good to try to manipulate their stock price or any trading activity. Yes, a company can raise capital by selling additional common shares, but a split really has no effect on the amount of capital they'd be able to raise because it doesn't change the actual market cap, and a dilution is a dilution regardless of the current stock price. If a company's market cap is $1 billion then it doesn't matter if they issue 1 million shares at $50.00 each or 10 million shares at $5.00 each; either way it nets them $50 million from the sale and causes a 5% dilution, to which the market will react accordingly. They don't do it because there'd be no point.
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Good habits pertaining to personal finance for someone just getting started?
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If you are not working, I believe you would be getting some money from your family to meet your expenses. In such a case, I would start with maintaining a Cash A/c which would list your monthly expenses and the money you received, which is what I used to do at your age. You can maintain it in a notebook with pen/pencil or using online tools such as Google Sheets. Enter each expense entries each day as debits and entries towards any money you receive as credits. At the end of the month, tally them and see how much you have left. Also, this gives you a clear picture of where your expenses are what is that you can avoid. On longer term, this can help you form an annual budget for your personal finances.
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Get interest on $100K by spending only $2K using FOREX rollovers?
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No free lunch You cannot receive risk-free interest on more money than you actually put down. The construct you are proposing is called 'Carry Trade', and will yield you the interest-difference in exchange for assuming currency risk. Negative expectation In the long run one would expect the higher-yielding currency to devalue faster, at a rate that exactly negates the difference in interest. Net profit is therefore zero in the long run. Now factor in the premium that a (forex) broker charges, and now you may expect losses the size of which depends on the leverage chosen. If there was any way that this could reliably produce a profit even without friction (i.e. roll-over, transaction costs, spread), quants would have already arbitraged it away. Intransparancy Additionaly, in my experience true long-term roll-over costs in relation to interest are a lot harder to compute than, for example, the cost of a stock transaction. This makes the whole deal very intransparant. As to the idea of artificially constructing a USD/USD pair: I regret to tell you that such a construct is not possible. For further info, see this question on Carry Trade: Why does Currency Carry Trade work?
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person on loan with cosigner
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This will probably require asking the SO to sign a quitclaim and/or to "sell" him her share of the vehicle's ownership and getting it re-titled in his own name alone, which is the question you actually asked. To cancel the cosigner arrangement, he has to pay off the loan. If he can't or doesn't want to do that in cash, he'd have to qualify for a new loan to refinasnce in his name only, or get someone else (such as yourself) to co-sign. Alternatively, he might sell the car (or something else) to pay what he still owes on it. As noted in other answers, this kind of mess is why you shouldn't get into either cosigning or joint ownership without a written agreement spelling out exactly what happens should one of the parties wish to end this arrangement. Doing business with friends is still doing business.
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Why do I see multiple trades of very small quantities?
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Probing for hidden limit orders usually involves sending the orders and then cancelling them before they get filled if they don't get filled. With trades actually going through multiple times for small amounts it looks more like a VWAP strategy where the trader is feeding small volumes into the market as part of a larger trade trying to minimize average cost. It could be probing but without seeing the orders and any cancels it would be difficult to tell. edit: I just had another thought; it could possibly be a market maker unwinding a bad position caused by other trading. Sometimes they drip trades into the market to prevent themselves from hitting big orders etc. that might move back against them. This is probably not right but is just another thought. source: I work for an organization that provides monitoring for these things to many large trading organizations.
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How to find if a public company has taken out a loan?
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Somewhat. The balance sheet will include liabilities which as Michael Kjörling points out would tell you the totals for the debt which would often be loans or bonds depending on one's preferred terminology. However, if the company's loan was shorter than the length of the quarter, then it may not necessarily be reported is something to point out as the data is accurate for a specific point in time only. My suggestion is that if you have a particular company that you want to review that you take a look at the SEC filing in full which would have a better breakdown of everything in terms of assets, liabilities, etc. than the a summary page. http://investor.apple.com/ would be where you could find a link to the 10-Q that has a better breakdown though it does appear that Apple doesn't have any bonds outstanding. There are some companies that may have little debt due to being so profitable in their areas of business.
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What should I be aware of when renting a home to a corporation instead of an individual?
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This is business as usual, except that you need to keep in mind that the corporate entity is separate from the individual. As such - all the background checks and references should be with regards to the actual renter - the corporation. You should be cautious as it is not so easy to dissolve an individual (well... Not as easy, and certainly not as legal), as it is to dissolve the corporation. So you may end up with a tenant who doesn't pay and doesn't have to pay because the actual renter, the corporation, no longer exists. So check the corporation background - age, credit worthiness, tax returns/business activity, judgements against, etc etc, as you would do for an individual.
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What makes an actual share valuable? [duplicate]
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What benefit do I get from buying a share The value of any financial asset is its ability to generate cash in the future, and thus the "value" of a share is heavily influenced by the dividends it pays and the equity value. The equity value can be calculated different ways. Two common ways are to just take "book" value, meaning assets - liabilities, or you can look at the projected free cash flows of the company discounted back to the present time. Voting rights don't typically influence a share price except in hostile takeover scenarios (meaning someone buys up a lot of shares to have more influence in company decisions)
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What is high trading volume in a stock indicative of? Is high liquidity a good thing or a bad thing?
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High liquidity doesn't necessarily mean that "everybody is getting rid of the stock", since somebody is obviously buying whatever stock that is being sold. Also, as mentioned, low liquidity may mean that you would have trouble selling the stock in the future.
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Is it possible to trade CFD without leverage?
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If you don't need leverage, then it's a better idea to just buy the underlying sock itself. This will net you the following benefits: Leverage is for speculating. If you don' want to be leveraged, then invest long term.
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Issuing bonds at discount - computing effective interest rate
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Yes, the "effective" and "market" rates are interchangeable. The present value formula will help make it possible to determine the effective interest rate. Since the bond's par value, duration, and par interest rate is known, the coupon payment can be extracted. Now, knowing the price the bond sold in the market, the duration, and the coupon payment, the effective market interest rate can be extracted. This involves solving large polynomials. A less accurate way of determining the interest rate is using a yield shorthand. To extract the market interest rate with good precision and acceptable accuracy, the annual coupon derived can be divided by the market price of the bond.
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Working on a tax free island to make money?
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According to Wikipedia, import duties on goods range from 5-22% on everything but cars (30-100%) and a handful of other goods (no import duties). Since almost everything must be imported, you will still be paying the taxman, just on the consumption side.
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Bitcoin Cost Basis Purchases
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As long as the IRS treats bitcoin as property, then whenever you use bitcoin to buy anything you are supposed to consider the capital gain or capital loss. There is no "until it's converted to fiat". You are paying local sales tax and capital gains, or paying local sales tax and reporting capital loss. As long as you are consistent, you can use either the total cost basis, or individual lot purchases. The same as other property like stocks (except without stock specific regulations like wash-sale rules :D ). There are a lot of perks or unintentional loopholes for speculators, with the property designation. There are a lot of disadvantages for consumers trying to use it like a currency. Someone mixing investment and spending funds across addresses is going to have complicated tax issues, but fortunately the exchanges have records of purchase times and prices, which you can compare with the addresses you control. Do note, after that IRS guideline, another federal agency designated Bitcoin as a commodity, which is a subset of "property" with its own more favorable but different tax guidelines.
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Should I sell when my stocks are growing?
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Try to find out (online) what 'the experts' think about your stock. Normally, there are some that advise you to sell, some to hold and some to buy. Hold on to your stock when most advise you to buy, otherwise, just sell it and get it over with. A stock's estimated value depends on a lot of things, the worst of these are human emotions... People buy with the crowd and sell on panic. Not something you should want to do. The 'real' value of a stock depends on assets, cash-flow, backlog, benefits, dividends, etc. Also, their competitors, the market position they have, etc. So, once you have an estimate of how much the stock is 'worth', then you can buy or sell according to the market value. Beware of putting all your eggs in one basket. Look at what happened to Arthur Andersen, Lehman Brothers, Parmalat, Worldcom, Enron, etc.
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How should I invest my money as a young graduate in Europe?
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Using a simple investment calculator to get a sense of scale here, to have 70k total, including the 500 a month invested, after ten years you just need returns of 2%. To earn 70k on top of the money invested you would need returns over 20%. To do that in five years you would need over 50% annual return. That is quite a big difference. Annualized returns of 20% would require high risk and a very large amount of time invested, skill and luck. 2% returns can be nearly guaranteed without much effort. I would encourage you to think about your money more holistically. If you get very unlucky with investments and don't make any money will you not go on the vacations even if your income allows? That doesn't make a lot of sense. As always, spend all your money with the current and future in mind. Investment return Euros are no different from any other Euros. At that point, the advice is the same for all investors try to get as much return as possible for the risk you are comfortable with. You seem to have a high tolerance for risk. Generally, for investors with a high risk tolerance a broadly diversified portfolio of stocks (with maybe a small amount of bonds, other investments) will give the most return over the long term for the risk taken. After that generally the next most useful way to boost your returns is to try to avoid taxes which is why we talk about 401(k)s so much around here. Each European country has different tax law, but please ask questions here about your own country as well as you mention money.se could use more ex-US questions.
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How do you measure the value of gold?
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There are three aspects of what to value gold over. It doesn't easily chemically react with anything, so it stays pure over a long period of time (vs, say a bar of iron or a bar of butter). So it's valuable so far as it doesn't rot. It is shiny, and there is the historical allure of having a bag of shiny, jingly gold coins. Other people will give you other items of perceived value in exchange for it. I believe it was Warren Buffett who stated his opinion on gold - paraphrased such: "You pay people to dig it out of the ground, you pay people to purify it and pour into forms, you pay people to verify the number of nine's purity in it, you pay people to build a secure building to store it in, and you pay people to stand around and guard it. Where is the value in that?"
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What options do I have at 26 years old, with 1.2 million USD?
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I'm surprised nobody else has suggested this yet: before you start investing in stocks or bonds, buy a house. Not just any house, but the house you want to live in 20 years from now, in a place where you want to live 20 years from now - but you also have to be savvy about which part of the country or world you buy in. I'm also assuming that you are in the USA, although my suggestion tends to apply equally anywhere in the world. Why? Simple: as long as you own a house, you won't ever have to pay rent (you do have to pay taxes and maintenance, of course). You have a guaranteed return on investment, and the best part is: because it's not money you earn but money you don't have to spend, it's tax free. Even if the house loses value over time, you still come out ahead. And if you live abroad temporarily, you can rent out the house and add the rent to your savings (although that does make various things more complicated). You only asked for options, so that is mine. I'll add some caveats. OK, now here are the caveats:
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How can one get their FICO/credit scores for free? (really free)
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It appears that you already know this, but FICO credit scores (as controlled by Fair Isaac Corporation) are the real official credit scores, and FICO takes a cut on their production no matter which of the 3 major credit bureaus calculates the official score (all using slightly different methods). Be careful when obtaining a score for making a big decision that it is a FICO score, because relatively few lenders will lend based on a non-FICO score. That said, some non-FICO scores are easy to obtain and can be roughly translated to an approximation of your score. Barclays US/ Juniper Bank credit cards offer a free Transunion "TransRisk"(TM) score. The TransRisk score is a 900 point scale, while the FICO score is an 850 point scale. This is a simple ratio and you can calculate your approximate FICO score by the formula:
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Are non-residents or foreigners permitted to buy or own shares of UK companies?
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It's easy to own many of the larger UK stocks. Companies like British Petroleum, Glaxo, and Royal Dutch Shell, list what they call ADRs (American Depositary Receipts) on the U.S. stock exchanges. That is, they will deposit local shares with Bank of NY Mellon, JP Morgan Chase, or Citicorp (the three banks that do this type of business), and the banks will turn around and issue ADRs equivalent to the number of shares on deposit. This is not true with "small cap" companies. In those cases, a broker like Schwab may occasionally help you, usually not. But you might have difficulty trading U.S. small cap companies as well.
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How do I analyse moving averages?
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One could use technical indicators in any number of ways...they aren't rigidly defined for use in any particular way. If they were, only computers would use them. Having said that, moving averages are frequently used by people operating on the assumption that short-term price movements will soon be reverted back to a longer-term mean. So if the price shoots up today, traders who use moving averages may believe it will come back down pretty soon. If this is the belief (and it usually is for this type of trader), a price significantly above a moving average could indicate an overpriced stock. A price below the moving average could indicate an underpriced stock. Similarly, a short-term moving average above the long-term moving average may indicate an overpriced stock. When you are dealing with more than one frequency, though, there is more disagreement about how to use technical indicators. Some traders would probably say the opposite: that a short term average above the long term average indicates an upward movement that will continue because they believe the stock has momentum. Note that I am not saying I believe in using these averages to predict mean reversion or momentum effects, just that traders who rely on moving averages frequently do.
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When Employees are “Granted” Stock Options, is the Company encouraging Long-Term investments from them?
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There are two things to consider: taxes - beneficial treatment for long-term holding, and for ESPP's you can get lower taxes on higher earnings. Also, depending on local laws, some share schemes allow one to avoid some or all on the income tax. For example, in the UK £2000 in shares is treated differently to 2000 in cash vesting - restricted stocks or options can only be sold/exercised years after being granted, as long as the employee keeps his part of the contract (usually - staying at the same place of works through the vesting period). This means job retention for the employees, that's why they don't really care if you exercise the same day or not, they care that you actually keep working until the day when you can exercise arrives. By then you'll get more grants you'll want to wait to vest, and so on. This would keep you at the same place of work for a long time because by quitting you'd be forfeiting the grants.
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Auto Loan and Balance Transfer
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This is what your car loan would look like if you paid it off in 14 months at the existing 2.94% rate: You'll pay a total of about $277 in interest. If you do a balance transfer of the $10,000 at 3% it'll cost you $300 up front, and your payment on the remaining $5,000 will be $363.74 to pay it off in the 14 month period. Your total monthly payment will be $1,099.45; $5,000 amortized at 2.94% for 14 months plus $10,300 divided by 14. ($363.74 + 735.71). Your interest will be about $392, $300 from the balance transfer and $92 from the remaining $5,000 on the car loan at 2.94%. Even if your lender doesn't credit your additional payment to principal and instead simply credits future payments, you'd still be done in 15 months with a total interest expense of about $447. So this additional administration and additional loan will save you maybe about $55 over 14 or 15 months.
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How to invest in a currency increasing in value relative to another?
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The increase of currency value in relation to another is a critical determinant of the economic health. It plays an important part in the level of trade and affects the world’s free market economy. But, they also effect on smaller scale as they create an impact on the portfolio of investors. So, it is suggested that the investors should make their trades wisely keeping in mind the value of other currencies that might your trade. Also, you should check the news daily to get regular updates and be well-informed of any changes happening in the market
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Why are American-style options worth more than European-style options?
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The value of an option has 2 components, the extrinsic or time value element and the intrinsic value from the difference in the strike price and the underlying asset price. With either an American or European option the intrinsic value of a call option can be 'locked in' any time by selling the same amount of the underlying asset (whether that be a stock, a future etc). Further, the time value of any option can be monitised by delta hedging the option, i.e. buying or selling an amount of the underlying asset weighted by the measure of certainty (delta) of the option being in the money at expiry. Instead, the extra value of the American option comes from the financial benefit of being able to realise the value of the underlying asset early. For a dividend paying stock this will predominantly be the dividend. But for non-dividend paying stocks or futures, the buyer of an in-the-money option can realise their intrinsic gains on the option early and earn interest on the profits today. But what they sacrifice is the timevalue of the option. However when an option becomes very in the money and the delta approaches 1 or -1, the discounting of the intrinsic value (i.e. the extra amount a future cash flow is worth each day as we draw closer to payment) becomes larger than the 'theta' or time value decay of the option. Then it becomes optimal to early exercise, abandon the optionality and realise the monetary gains upfront. For a non-dividend paying stock, the value of the American call option is actually the same as the European. The spot price of the stock will be lower than the forward price at expiry discounted by the risk free rate (or your cost of funding). This will exactly offset the monetary gain by exercising early and banking the proceeds. However for an option on a future, the value today of the underlying asset (the future) is the same as at expiry and its possible to fully realise the interest earned on the money received today. Hence the American call option is worth more. For both examples the American put option is worth more, slightly more so for the stock. As the stock's spot price is lower than the forward price, the owner of the put option realises a higher (undiscounted) intrinsic profit from selling the stock at the higher strike price today than waiting till expiry, as well as realising the interest earned. Liquidity may influence the perceived value of being able to exercise early but its not a tangible factor that is added to the commonly used maths of the option valuation, and isn't really a consideration for most of the assets that have tradeable option markets. It's also important to remember at any point in the life of the option, you don't know the future price path. You're only modelling the distribution of probable outcomes. What subsequently happens after you early exercise an American option no longer has any bearing on its value; this is now zero! Whether the stock subsequently crashes in price is irrelevent. What is relevant is that when you early exercise a call you 'give up' all potential upside protected by the limit to your downside from the strike price.
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Upward Spike in US Treasuries despite S&P Downgrade in August 2011
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US government bonds are where money goes when the markets are turbulent and investors are fleeing from risk, and that applies even if the risk is a downgrade of the US credit rating, because there's simply nowhere else to put your money if you're in search of safety. Most AAA-rated governments have good credit ratings because they don't borrow much money (and most of them also have fairly small economies compared with the US), meaning that there's poor liquidity in their scarce bonds.
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Which is the most liquid market for trading?
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Depends on how you measure liquidity. There's papers out there that approach this very question. Measured in order book spreads for a consolidated $100m trade, I'd say the second biggest market is FX swaps, followed or par'd by the money market (government bonds). If you disallow OTC venues, it's most definitely exchange listed government bonds. If, however, you happen to think in terms of sheer volume per time, the most liquid market phase could be considered the NYSE closing auction, as you can move billions in a matter of minutes, or expressed in speed terms: several m$/s (million dollars per second). You should pick a definition and we can provide you with a more accurate list of candidates and actual data.
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Why there's always a very huge volume of trades for AAPL every day before market close?
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A huge amount of money in all financial markets is from institutional investors, such as mutual funds, government pension plans, sovereign wealth funds, etc. For various reasons these funds do all of their trading at the end of the day. They care primarily that their end-of-day balances are in line with their targets and are easy to audit and far less about "timing the market" for the best possible trades. So, if you're looking at a stock that is owned by many institutional investors -- such as a stock (like AAPL) that makes up a significant portion of an index that many funds track -- there will be a huge amount of activity at this time relative to stocks that are less popular among institutions. Even just in its introduction this paper (PDF) gives a fair overview of other reasons why there's a lot of trading at end-of-day in general. (In fact, because of all this closing activity and the reliance on end-of-day prices as signposts for financial calculations, the end-of-day has for decades been the single most fraud-ridden time of the trading day. Electronic trading has done away with a lot of the straight-up thievery that floor traders and brokers used to get away with at the expense of the public, but it still exists. See, for example, any explanation of the term banging the close, or the penalties against 6 banks just last month for manipulating the FX market at the close.)
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How are people able to spend more than what they make, without going into debt?
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Bezos made very little "money." But he is very wealthy because of stock grants and options, from his previous years. Banks or brokerage firms will lend him (or anyone else) up to half the value of his stock. In Bezos' case, we're talking about billions. So he could, if he wanted to, cash out half of those billions. If the stock continues to go up (as it has), he will be able to cash out more each year. Imagine a person earning $1 a year in cash with $1 billion of stock, on which he can borrow up to $500 million. That, in a nutshell, is Bezos (with larger numbers).
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I'm getting gouged on prices for medical services when using my HSA plan. How to be billed fairly?
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First, as noted in the comments, you need to pay attention to your network providers. If you are unable to pay exorbitant prices out of pocket, then find an in-network medical provider. if you are unhappy with the in-network provider list (e.g. too distant or not specialists), then discuss switching to another plan or insurer with your employer or broker. Second, many providers will have out of pocket or uninsured price lists, often seen in outdated formats or disused binders. Since you have asked for price lists and not been provided one, I would pursue it with the practice manager (or equivalent, or else a doctor) and ask if they have one. It's possible that the clinic has an out of pocket price list but the front line staff is unaware of it and was never trained on it. Third, if you efforts to secure a price list fail, and you are especially committed to this specific provider, then I would consider engaging in a friendly by direct negotiation with the practice manager or other responsible person. Person they will be amenable to creating a list of prices (if you are particularly proactive and aggressive, you could offer to find out of pocket price lists from other clinics nearby). You could also flat out ask them to charge you a certain fee for office visits (if you do this, try to get some sort of offer or agreed price list in writing). Most medical practices are uncomfortable asking patients for money, so that may mean flat refusal to negotiate but it may also mean surprising willingness to work with you. This route is highly unpredictable before you go down it, and it's dependent on all sorts of things like the ownership structure, business model, and the personalities of the key people there. The easiest answer is to switch clinics. This one sounds very unfriendly to HSA patients.
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Credit rating in Germany
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The SCHUFA explicitly says on their website that their scoring system is a secret. However, if your goal is to be credit-worthy for example to get financing for a house or a car or whatever, just pay any loans and your credit card back on time and you'll be fine. There is no need to build a credit history. I just got a mortgage on a new house without any real credit history. I have one credit card which I only use on vacations because some countries don't take my debit card, and I always put money on it before I use it, so I've technically never borrowed money from a bank at all. My banker looked at my SCHUFA with me and we saw that there was nothing in there except for the credit card, which has a 500€ limit and if I maxed it out, the monthly interest would be 6,80€ so he added that 6,80€ to my expenses calculation and that was it. If you're having trouble getting a loan and you don't know why, you can ask the SCHUFA for the data they have on you and you can correct any mistakes they might have made. Sometimes, especially when you have the same full name and birth date as somebody else, the SCHUFA does get things mixed up and you have to sort it out.
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How much money should I lock up in my savings account?
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Firstly well done on building a really sold base of savings. An emergency fund needs to have two key characteristics: Be enough to get you through a typical emergency event (often seen as approx. ~6 months’ salary in your style of situation assuming you have no dependents etc) Be liquid and available to you instantly if an emergency arises Once you have decided how much you will need for 1), you then generally find the best interest available on an instant access savings account and leave it there. It's important to note that because you need it very liquid and very secure you will basically never make (nor should you expect to make) any sizeable rate of interest on your emergency fund. Once this is done, whatever left should be invested in an asset/mix of assets that best fit your risk profile - of which long term bonds are a completely legitimate option, but it's hard to say without knowing more about your long term aims/liabilities/job market etc.
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Shorting Obvious Pump and Dump Penny Stocks
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Assuming you have no non-public material information, it should be perfectly legal. I suspect it's not a great idea for the reasons that Joe outlined, but it should be legal.
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Car Loan upside down--refinance before selling?
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Having just gone through selling a car, I can tell you that CarMax will most likely not be the best solution. I recently sold my '09 Pontiac Vibe which had a KBB and Edmonds value (private party sale) of around $6k. Trade-in value was around $4,800. I took it to the local CarMax for a quote, and they came back with $3,500. Refinancing is tricky. Banks have a set limit on how old a car they will finance. Many won't even offer financing if the vehicle has over 100k miles. We looked at refinancing our other car, and even getting the APR down over a point we would only have saved $15/mo or so. Banks typically offer much higher interest rates for used non-dealership cars and refinancing than they do for new cars, or even used cars purchased from a dealership. Assuming you have 2-3 years left on your loan, I don't think that refinancing would save you enough to be worth considering. CarMax sells cars in 1 of 2 ways. They are also up front with you about the process. They do not reference KBB or Edmonds or any other valuation tool other than their own internal system. They either take the car, spruce it up a bit, then resell it on their lot, or they sell it at auction. If they determine your car will be sold at auction, then they will offer you a rock bottom price. The determining factors that come into play include age of the car, mileage, and of course overall condition. If you Mini is still in good shape and doesn't have a lot of miles, then they may try to resell it on their lot, for which they could offer you closer to personal-sale price than trade-in. How many 2007's are for sale in your area? How much are they selling for? I did sell them a truck back in 2005 and received $200 more than KBB valued it for, but it was in great shape, only a couple of years old, relatively low mileage, and it was in high demand. God bless the South and their love for trucks! I ended up selling my Pontiac to another local car dealership. They offered me $5,300 (after negotiating, leaving the dealership, then negotiating more over the phone). It took me a day and a half and really very little effort. I have several friends that have gone through the same thing with selling cars, and all have had similar luck going to other dealerships, where prices can be negotiated, rather than CarMax. CarMax has no incentive to "settle" or forgive your loan. If you really want to pay it off, save up what you believe the difference will be, then shop your car around the local dealerships and get prices for your Mini. Remember that dealers have to turn a profit, so be reasonable with your negotiation. If you can find comparable vehicles in your area listed for $X,000 then knock $1,500 off that price and tell the dealerships that's what you want.
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What is the options industry changing about option symbols in February, 2010?
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Here is what I could find on the net: http://education.wallstreetsurvivor.com/options-symbol-changes-coming-february-12th-2010 So it sounds like it does not affect how you invest in options but only how you look them up. I remember using a Bloomberg terminal and it wasn't clear what the expiry date of the option you were looking at was. It looks like the new quote system addresses this. HTH.
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Incorporating real-world parameters into simulated(paper) trading
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I think you're on the wrong track. Getting more and more samples from the real world does not make your backtest more accurate, it just confirms that your strategy can withstand one particular sample path of a stochastic process. The reason why you find it simple to incorporate fees, commissions, taxes, etc. is because they're a static and constant process -- well they might change over time but most definitely uncorrelated to the markets. Modelling overnight returns or the top levels of the order book the next day is serious work. First you have to select a suitable model (that's mostly theoretical work but experience can help a lot). Then, in order to do it data-driven, you'd have to plough through thousands of days of sample data on a set of thousands of instruments to get a "feeling" (aka significant model parameters). Apropos data mining, I think Excel might be the wrong tool for the job. Level-2 data (even just the first 10 levels) is a massive blob. For example, the NYSE OpenBook historical data weighs in at a massive 15 TB compressed (uncompressed 74 TB) for the last 10 years, and costs USD 200k. Anyway, as for other factors to take into account: So how to account for all this in a backtest? Personally, I would put in some penalty terms (as % on a return basis) for every factor you want to consider, don't hardcode them. You can then run a stress test by exploring these parameters (i.e. assign some values in the range of 0 to whatever fits). Explore them individually (only set one penalty term at a time) to get a feeling how the strategy might react to stress from that factor. Then you can run the backtest with typical (or observed) combinations of penalty factors and slowly stress them altogether. Edit Just to avoid confusion about terminology. A backtest in the strict sense (had I implemented this strategy X years ago, what would have happened?) won't benefit from any modelling simply because the real-world "does the sampling" for us. However, to evaluate a strategy's robustness you should account for the additional factors and run some stress tests. If the strategy performs well in the real-world or no-stress scenario but produces losses once a tiny slippage occurs every now and again, you could conclude that the strategy is very fragile. The key is to explore the maximum stress the strategy can handle (by whatever measure); if a lot you can call the strategy robust. The latter is what I personally call a backtest; the first procedure would go by the name "extension towards the past" or so. Some lightweight literature:
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Does a company's stock price give any indication to or affect their revenue?
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It would be very unusual (and very erroneous) to have a company's stock be included in the Long Term Investments on the balance sheet. It would cause divergent feedback loops which would create unrepresentative financial documents and stock prices. That's how your question would be interpreted if true. This is not the case. Stock prices are never mentioned on the financial documents. The stock price you hear being reported is information provided by parties who are not reporting as part of the company. The financial documents are provided by the company. They will be audited internally and externally to make sure that they can be presented to the market. Stock prices are quoted and arbitrated by brokers at the stock exchange or equivalent service. They are negotiated and the latest sale tells you what it has sold for. What price this has been reported never works its way onto the financial document. So what use are stock prices are for those within the company? The stock price is very useful for guessing how much money they can raise by issuing stock or buying back stock. Raising money is important for expansion of the company or to procure money for when avenues of debt are not optimal; buying back stock is important if major shareholders want more control of the company.
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Can I resubmit W8-BEN with W9 form?
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Since you're a US citizen, submitting W8-BEN was wrong. If you read the form carefully, when you signed it you certified that you are not a US citizen, which is a lie and you knew it. W9 and W8 are mutually exclusive. You're either a US person for tax purposes or you're not, you cannot be both. As a US citizen - you are a US person for tax purposes, whether you have any other citizenship or not, and whether you live in (or have ever been to) the US or not. You do need to file tax returns just like any other US citizen. If you have an aggregate of $10K or more on your bank accounts outside of the US at any given day - you need to file FBAR. FATCA forms may also be applicable, depending on your balances. From foreign banks' perspective you're a US person, with regard to their FATCA obligations. Whether or not you'll be punished is hard to tell. Whether or not you could be punished is easy to tell: you could. You knowingly broke the law by certifying that you're not a US citizen when you were. That is in addition to un-filed tax returns, FBAR, etc etc. The fact that you were born outside of the US and have never lived there is technically irrelevant. Not knowing the law is not a reasonable cause for breaking it. Get a US-licensed tax adviser (EA/CPA licensed in the US) to help you sort it out.
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Ballpark salary equivalent today of “healthcare benefits” in the US?
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Healthcare for the employee is more valuable to the employer than is providing healthcare for the rest of the family members. Depending on the family situation, you're going to see significant differences in price between out of pocket costs for insurance of just the employee, vs cost for insuring the entire family. This is because in the first instance the insurance is more subsidized by the company (as a percentage of the total cost). The costs to the company for insuring just the individual (mid-career) are in the neighborhood of $5000 per year. If this is all that's being negotiated (single person coverage) then I would use that amount as a baseline.
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If you buy something and sell it later on the same day, how do you calculate 'investment'?
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Another way to look at this is if we separate the owner's account from the business's account. At the start of the year, the owner puts $9 into the business account to get the business started. At the end of the first day, the business account has $10, and at the end of the second day, the business account has $11. The owner doesn't need to add any more of his own money into the business account. At the end of the 365th day, the business will have $374, which is $365 profit + $9 investment. Assuming the business has no other expenses, the business will calculate profit for the year like this: The author is making a strange point. The two numbers he is talking about are two different quantities. The business owner's return on investment is $365 / $9 = 4056%. But the business's profit margin is $365 / $3650 = 10%. Both are useful numbers when running the business. I disagree with the author's insinuation that a business is doing something tricky when calculating profit margin. Remember that, in addition to the business owner's monetary investment, he worked every day for a year to earn that $365.
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Setting up auto-pay. Should I use my bank that holds mortage or my personal bank?
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Depending on your bank you may receive an ACH discount for doing automatic withdrawals from a deposit account at that bank. Now, this depends on your bank and you need to do independent research on that topic. As far as dictating what your extra money goes towards each month (early payments, principal payments, interest payments) you need to discuss that with your bank. I'm sure it's not too difficult to find. In my experience most banks, so long as you didn't sign a contract on your mortgage where you're penalized for sending additional money, will apply extra money toward early payments, and not principal. I would suggest calling them. I know for my student loans I have to send a detailed list of my loans and in what order I want my extra payments toward each, otherwise it will be considered an early payment, or it will be spread evenly among them all.
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How do I begin investment saving, rather than just saving in a bank account?
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CDs may be one good option if you have a sense of when you may need the money(-ish), especially with more generous early withdrawal penalties. You can also take a look at investing in a mix of stock and bond funds, which will lower you volatility compared to stocks, but increase your returns over bonds.
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Where can I find a Third Party Administrator for a self-directed solo 401K?
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You setup a self-directed solo 401k by paying a one time fee for a company to setup a trust, name you the sole trustee, and file it with the IRS. None of these companies offer TPA because it opens them up to profit leaching liability. After you have your trust setup, you can open a brokerage account or several with any of the big names you want (Vanguard, Fidelity, Ameritrade, etc), or just use the money to flip houses, do P2P lending, whatever, the world is your investment oyster. If the company has recurring fees you need to ask what is going on because if they aren't offering TPA services, then what the heck could they be charging you for? I did see one company, I think it was IRA Financial Group, that had the option of having a CPA do TPA for you for a recurring fee, but I would pass on that. The IRS administration requirements are typically just the 5500-EZ that you have to file as a hard copy by July 31 if your investments are worth more than $250k, on December 31. Yes, you have to get the actual form from the IRS, write on it with a pen and mail it to them every year, barbaric. You can either have your accountant do it or do it yourself. If you're below $250k just google solo 401k rule change two or three times a year and don't try to launder money. If anything, the rules will loosen with time, I don't imagine the Republican Congress cracking down on small business owners any time soon.
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Long term investment for money
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Say you have $15,000 of capital to invest. You want to put the majority of your capital into low risk investments that will yield positive gains over the course of your working career. $5,000: Government bonds and mutual funds, split how you want. $9,500: Low risk, trusted companies with positive historical growth. If the stock market is very unfamiliar for you, I recommend Google Finance, Yahoo Finance, and Zack's to learn about smart investments you can make. You can also research the investments that hedge fund managers and top investors are making. Google "Warren Buffett or Carl Icahn portfolio", and this will give you an idea of stocks you can put your money into. Do not leave your money into a certain company for more than 25 years. Rebalance your portfolio and take the gains when you feel you need them. You have no idea when to take your profits now, but 5 years from now, you will be a smart and experienced investor. A safe investment strategy to start is to put your money into an ETF that mimics the S&P 500. Over the past 20 years, the S&P 500 has yielded gains of about 270%. During the financial crisis a few years back, the S&P 500 had lost over 50% of its value when it reached its low point. However, from when it hit rock bottom in 2009, it has had as high percentage gains in six years as it did in 12 years from 1995 to 2007, which about 200%. The market is very strong and will treat your money well if you invest wisely. $500: Medium - High risk Speculative Stocks There is a reason this category accounts for only approximately 3% of your portfolio. This may take some research on the weekend, but the returns that may result can be extraordinary. Speculative companies are often innovative, low priced stocks that see high volatility, gains or losses of more than 10% over a single month. The likelihood of your $500 investment being completely evaporated is very slim, but if you lose $300 here, the thousands invested in the S&P 500, low risk stocks, government bonds, and mutual funds will more than recuperate the losses. If your pick is a winner, however, expect that the $500 investment could easily double, triple, or gain even more in a single year or over the course of just a few, perhaps, 2-4 years will see a very large return. I hope this advice helps and happy investing! Sending your money to smart investments is the key to financial security, freedom, and later, a comfortable retirement. Good luck, Matt McLaughlin
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Do I need to report to FInCEN if I had greater than $10,000 worth of bitcoin in a foreign bitcoin exchange?
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Firstly you have to know exactly what you are asking here. What you have if you "own" bitcoins is a private key that allows you to make a change to the blockchain that can assign a piece of information from yourself to the next person. Nothing more nothing less. The fact that this small piece of information is considered to have a market value, is a matter of opinion, and is analagous to owning a domain name. A domain name is an entry in a register, that has equal weight to all other entries, but the market determines if that information (eg: CocaCola.com) has any more value than say another less well know domain. Bitcoin is the same - an entry in a register, and the market decides which entry is more valuable than another. So what exactly are you wanting to declare to FinCEN? Are you willing to declare the ownership of private key? Of course not. So what then? An uncrackable private key can be generated at will by anyone, without even needing to "own" or transact in bitcoins, and that same private key would be equally valid on any of the 1000's of other bitcoin clones. The point I want to make is that owning a private key in itself is not valuable. Therefore you do not need, nor would anyone advise notifying FinCEN of that fact. To put this into context, every time you connect to online banking, your computer secretly generates a new random private key to secure your communications with the bank. Theoretically that same private key could also be used to sign a bitcoin transaction. Do you need to declare every private key your computer generates? No. Secondly, if you are using any of the latest generation of HD wallets, your private key changes with every single transaction. Are you seriously saying that you want to take it on your shoulders to inform FinCEN every time you move information (bitcoin amounts) around even in your own wallets? The fact is FinCEN could never "discover" your ownership of bitcoins (or any of the 1000s of alt coins) other than by you informing them of this fact. You may want to carefully consider the personal implications of starting down this road especially as all FinCEN would need to do is subpoena your bitcoin private key to steal your so-called funds, as they have done recently to other more prominent persons in the community. EDIT to clarify the points raised in comments. You do not own the private key to the bitcoins stored on a foreign exchange, nor can you discover it. The exchange owns the private key. You therefore do not either technically have control over the coins (MtGox is a very good example here - they went out of business because they allowed their private keys to be used by some other party who was able to siphon off the coins). Your balance is only yours when you own the private keys and the ability to spend. Any other situation you can neither recover the bitcoin to sell (to pay for any taxes due). So you do not either have the legal right nor the technical right to consider those coins in your possession. For those who do not understand the technical or legal implications of private key ownership, please do not speculate about what "owning" bitcoin actually means, or how ownership can be discovered. Holding Bitcoin is not illegal, and the US government who until recently were the single largest holder of Bitcoin demonstrate simply by this fact alone that there is nothing untoward here.
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How to improve credit score and borrow money
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I had to apply for an American Express card, which was also rejected. Then I had searched for a Marbles Credit Card Stop applying for credit cards/loans. Doing so is just making your credit rating worse. Credit agencies will downgrade your credit rating if they see lots of signs of credit checking. It's a sign you're desperately looking for credit, which you are...! 44.9% APR This is very expensive credit. You can get personal loans on the high street for 3-4%. 44.9% is really bad value. You're simply going to make the situation worse. Am I taking off a loan from website as amingos loans to help me build up my credit rating Again this is 44% interest! You also need a guarantor. So you're not only going to get yourself in trouble but a family member too: don't do this! This will only help your credit rating if you pay it back successfully, which given your situation seems like a risk. Contact the Money Advice Service or the National Debt Line. Explain your situation in detail to them. They are a government-backed service designed for people in your situation. They will offer practical advice and can even help negotiate with your creditors, etc. Here's some general advice about getting out of debt from Money Saving Expert Traditional debt help says 'never borrow your way out of a debt problem'. But this ignores the varying cost of different debts. The MoneySaving approach is: "Never borrow more to get out of a debt problem."
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Bollinger Bands and TRENDING market
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If upper and Bollinger bands either converge ... or diverge ..., does that mean the market is TRENDING? No - Bollinger bands measure volatility, which is an measure of how much variation there is in the price of the instrument. It does not indicate a trend which means that the instrument tends to move in a consistent direction. When Bollinger bands are close together, that means volatility is relatively low, and vice-versa. They can be interpreted as signals that a stock might move in one direction or the other, but they are not a measure of directional movement.
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Why isn't money spent on necessities deductible from your taxes?
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Another way to look at it is that deductibles are intended as incentives or subsidies to particular industries (in this case the healthcare industry). Guaranteeing a decent standard of living and making sure everybody can meet the costs of “necessities” can be achieved much more easily by a low tax rate on the first XXX$ of income and/or generic welfare benefits rather than any measure focused on making healthcare, food or whatnot cheaper or free under certain conditions. Incidentally, many countries do have different forms of benefits or tax breaks for accommodation-related expenses.
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Does a larger down payment make an offer stronger?
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There is considerable truth to what your realtor said about the Jersey City NJ housing market these days. It is a "hot" area with lots of expensive condos being bought up by people working on Wall Street in NYC (very easy commute by train, etc) and in many cases, the offers to purchase can exceed the asking price significantly. Be that as is may, the issue with accepting a higher offer but smaller downpayment is that when the buyer's lender appraises the property, the valuation might come in lower and the buyer may have to come up with the difference, or be required to accept a higher interest rate, or be refused the loan altogether if the lender estimates that the buyer is likely to default on the loan because his credit-worthiness is inadequate to support the monthly payments. So, the sale might fall through. Suppose that the property is offered for sale at $500K, and consider two bids, one for $480K with 30% downpayment ($144K) and another for $500K with 20% downpayment ($100K). If the property appraises for $450K, say, and the lender is not willing to lend more than 80% of that ($360K), then Buyer #1 is OK; it is only necessary to borrow $480K - $144K = $336K, while Buyer #2 needs to come up with another $40K of downpayment to be able to get the loan, or might be asked to pay a higher interest rate since the lender will be lending more than 80% of the appraised value, etc. Of course, Buyer #2's lender might be using a different appraiser whose valuation might be higher etc, but appraisals usually are within the same ballpark. Furthermore, good seller's agents can make good estimates of what the appraisal is likely to be, and if the asking price is larger than the agent's estimate of appraised value, then it might be to the advantage of the selling agent to recommend accepting the lower offer with higher downpayment over the higher offer with smaller downpayment. The sale is more likely to go through, and an almost sure 6% of $480K (3% if there is a buyer's agent involved) in hand in 30 days time is worth more than a good chance of nothing at the end of 15 days when the mortgage is declined, during which the house has been off the market on the grounds that the sale is pending. If you really like a house, you need to decide what you are willing to pay for it and tailor your offer accordingly, keeping in mind what your buyer's agent is recommending as the offer amount (the higher the price, the more the agent's commission), how much money you can afford to put down as a downpayment (don't forget closing costs, including points that might be need to be paid), and what your pre-approval letter says about how much mortgage you can afford. If you are Buyer #1, have a pre-approval letter for $360K, and have enough savings for a downpayment of up to $150K, and if you (or your spouse!) really, really, like the place and cannot imagine living in any other place, then you could offer $500K with 30% down (and blow the other offer out of the water). You could even offer more than $500K if you want. But, this is a personal decision. What your realtor said is perfectly true in the sense that for Y > Z, an offer at $X with $Y down is better than an offer at $X with $Z down. It is to a certain extent true that for W > X, a seller would find an offer at $X with $Y down to be more attractive that an offer at $W with $Z$ down, but that depends on what the appraisal is likely to be, and the seller's agent's recommendations.
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Can I invest in gold through Vanguard (Or another instrument that should perform well in financial crisis)?
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The difficulty with investing in mining and gold company stocks is that they are subject to the same market forces as any other stocks, although they may whether those forces better in a crisis than other stocks do because they are related to gold, which has always been a "flight to safety" move for investors. Some investors buy physical gold, although you don't have to take actual delivery of the metal itself. You can leave it with the broker-dealer you buy it from, much the way you don't have your broker send you stock certificates. That way, if you leave the gold with the broker-dealer (someone reputable, of course, like APMEX or Monex) then you can sell it quickly if you choose, just like when you want to sell a stock. If you take delivery of a security (share certificate) or commodity (gold, oil, etc.) then before you can sell it, you have to return it to broker, which takes time. The decision has much to do with your investing objectives and willingness to absorb risk. The reason people choose mutual funds is because their money gets spread around a basket of stocks, so if one company in the fund takes a hit it doesn't wipe out their entire investment. If you buy gold, you run the risk (low, in my opinion) of seeing big losses if, for some reason, gold prices plummet. You're "all in" on one thing, which can be risky. It's a judgment call on your part, but that's my two cents' worth.
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Is there a significant danger to market orders as opposed to limit orders?
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If you want your order to go through no matter what then you should be using market orders rather than limit orders. With limit orders you may get the price you are after or better but you are not guaranteed to get your order transacted. With a market order you are guaranteed to get you order transacted but may get a price inferior to what you were after. Most times this should only be a few cents but can get much larger in a fast moving or less liquid market. You should incorporate this slippage into your trading plan. Maybe a better option for you, if you are looking at + or - 0.5% from the last price, would be to use conditional triggers (stop buy and sell orders) with your market orders. Once the market moves in your direction your conditional order will be triggered and the stock will be bought at current market price.
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What is a “fiat” currency? Are there other types of currency?
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There's two types of categories at play that define currency types - but I think the first is more like what you are after. The first is there are essentially three currency types now recognised - see them described here: http://finance.mapsofworld.com/money/types/ The second is currencies can be categorised by the type of economy from which they are generated (reserve/commodity/etc) - see them described here: http://www.forextraders.com/learn-forex-trading-course/major-currency-pairs.html
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New to investing — I have $20,000 cash saved, what should I do with it?
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You're not clueless at all. You don't mention that you have any debt, but if you have consumer debt, you might want to consider accelerating your payments on those debts unless you're already doing so. You and your wife have a baby on the way. They're an absolute joy (we have a 7-year-old), but they're also a financial strain. If I were in your shoes knowing what I know about your situation, I'd think carefully and go slowly with any investing until after you adjust to a larger family. That way you run less risk of having a sizable investment tank when you really need the money for your new baby. Continue to learn about investing. There's no reason to rush into something you're not comfortable with. If your goal is for a down payment on a house, then continue towards that. Cash is just fine for that. Shop around for a good house from someone who really needs to sell.
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Should I stockpile nickels?
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At one point it was illegal to melt silver coins in the US, but it is legal now. I don't know that will happen with copper coins, but that's what happened with silver coins. Accumulating nickels and leaving them as-is (in their spendable state) is legal. It's also a way to take physical ownership of copper. I expect to see more sales of nickels based on weight. People are already selling high-copper-content cents on eBay, by weight. There are machines in production that sort the zinc ones from the copper ones. Gresham's Law has small business backing. ;) Copper cents are already worth twice their face value in the copper content. Nickels will get up there, too. They are awfully heavy and bulky relative to their value, though. Precious metals give you better bang for your ounce.
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How do I build wealth?
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Another possibility is that a lot of it is bought using borrowed money. Especially if much of your own money is in the stock market, it may be beneficial to take out a loan to buy something compared to selling other assets to raise the same amount of cash. Even going by the likely relatively conservative £200K/year before taxes, you are looking at a very nice house going for perhaps around 3-5 years' worth of pre-tax income. Let's say you have good contacts at the bank and can secure a loan for £500K at 3.5% interest (not at all unreasonable if you make half that before taxes in a single year and purchase something that can be used as collateral for the money borrowed; with a bit of negotiating, I wouldn't be surprised if one could push the interest rate even lower, and stock in a publicly traded company can also trivially be used as collateral). That's less than £1500/month in interest, before any applicable tax effects -- less than 10% of the before-tax income. And like @Victor wrote, I think it's reasonable to say that especially if the company is publicly traded, the CEO makes more than £200K/year. Given an income of £200K/year and assuming 30% taxes on that amount (the marginal tax would likely be higher, and this includes e.g. interest expense deductions), the money left over after taxes and interest payments on a £500K 3.5% debt is still about £10K/month. Even with a pretty rapid amortization schedule and even if the actual tax rate is higher, that leaves quite a bit of money to be socked away in savings and other investments.
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Saving for retirement without employer sponsored plan
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You might consider working on getting your new employer to sponsor a 401k, there may be options where you can invest and they aren't required to add anything as a match (which gives you higher limits). If they don't match, they may just be liable for some administration fees. If you have any side business that you do, you might also be eligible for other "self-employed" options that have higher limits (SEP, Simple - I think they may go up to $15k) although, I'm not sure the nitty gritties of them.
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Annuities question - Equations of value
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These are the steps I'd follow: $200 today times (1.04)^10 = Cost in year 10. The 6 deposits of $20 will be one time value calculation with a resulting year 7 final value. You then must apply 10% for 3 years (1.1)^3 to get the 10th year result. You now have the shortfall. Divide that by the same (1.1)^3 to shift the present value to start of year 7. (this step might confuse you?) You are left with a problem needing 3 same deposits, a known rate, and desired FV. Solve from there. (Also, welcome from quant.SE. This site doesn't support LATEX, so I edited the image above.)
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I spend too much money. How can I get on the path to a frugal lifestyle?
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Get on a written budget at the BEGINNING of the month. If you dont write down where your money goes BEFORE you spend it, you have no way of keeping track of it. I couldn't do a thing until I got on a written budget but now that I am, I've paid off $10,000 in 7 months.
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Insurance company sent me huge check instead of pharmacy. Now what?
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You mentioned depositing the check and then sending a personal check. Be sure to account for time, since any deposit over $10,000 the money will be made available in increments, so it may take 10-14 days to get the full amount in your account before you could send a personal check. I would not recommend this option regardless, but if you do, just a heads up.
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Saving for a down payment on a new house, a few years out. Where do we put our money next?
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In October 2011 in the United States, you just don't have any options. Save your money in a savings account and that is the best you can do. Your desire to buy a house means you are a saver not an investor, and you risk tolerance on this pile of money is 0. Save it in a bank account; I highly doubt chasing an interest rate will pay off with any significance. (being highly dependent on your opinion of significant)
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What options exist to make money in the US on a work-restricted visa?
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Are you planning to not pay taxes? Any time someone has income in the U.S., it is subject to U.S. taxes. You must file tax returns (and pay taxes if necessary) if you have income above a certain threshold, regardless of whether you're not authorized to work or not. If you plan to intentionally not pay taxes, then that's a whole other matter from working without authorization. Working without authorization is an immigration issue. It probably violates the conditions of your status, which will make you to automatically lose your status. That may or may not affect when you want to want to visit, immigrate to, or get other immigration benefits in the U.S. in the future; and at worst you may be deported. It's a complicated topic, but not really relevant for this site.
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What should I do with my $25k to invest as a 20 years old?
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I don't like your strategy. Don't wait. Open an investment account today with a low cost providers and put those funds into a low cost investment that represents as much of the market as you can find. I am going to start by assuming you are a really smart person. With that assumption I am going to assume you can see details and trends and read into the lines. As a computer programmer I am going to assume you are pretty task oriented, and that you look for optimal solutions. Now I am going to ask you to step back. You are clearly very good at managing your money, but I believe you are over-thinking your opportunity. Reading your question, you need a starting place (and some managed expectations), so here is your plan: Now that you have a personal retirement account (IRA, Roth IRA, MyRA?) and perhaps a 401(k) (or equivalent) at work, you can start to select which investments go into that account. I know that was your question, but things you said in your question made me wonder if you had all of that clear in your head. The key point here is don't wait. You won't be able to time the market; certainly not consistently. Get in NOW and stay in. You adjust your investments based on your risk tolerance as you age, and you adjust your investments based on your wealth and needs. But get in NOW. Over the course of 40 years you are likely to be working, sometimes the market will be up, and sometimes the market will be down; but keep buying in. Because every day you are in, you money can grow; and over 40 years the chances that you will grow substantially is pretty high. No need to wait, start growing today. Things I didn't discuss but are important to you:
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Suitable Vanguard funds for a short-term goal (1-2 years)
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A bond fund like VBMFX or similar I think are a good choice. Bonds are far less volatile and less risky than stocks. With your 1-2 year time frame, I say definitely stay away from stocks.
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Why is the fractional-reserve banking not a Ponzi scheme?
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Your question contains two different concepts: fractional reserve banking and debt-based money. When thinking of these two things I think it is important to analyze these items separately before trying to understand how the whole system works. Fractional Reserve Banking As others have pointed out fractional reserve banking is not a ponzi scheme. It can be fraudulent, however. If a bank tells all its depositors that they can withdrawal their money at any time (i.e. on demand) and the bank then proceeds to loan out some portion of the depositors' money then the bank has committed fraud since there is no way they could honor the depositors' requests for their money if many of them came for their money at one time. This is true regardless of what type of money is deposited - dollars, gold, etc.. This is how most modern banks operate. Debt-based money Historically, the Fed would introduce new money by buying US Treasuries. This means Federal Reserve Notes (FRN) are backed by US Treasuries. I agree that this seems strange. Does this mean if I take my FRNs to the Fed I could redeem them for US Treasuries? But US Treasuries are promises to pay FRNs in the future. This makes my head hurt. Reminds me of the definition for recursion: see recursion. Here is an experiment. What if we wanted to recreate FRNs today and none existed? The US government would offer a note to pay 100 FRNs in one year and pay 5% interest on the note. The Fed would print up its first 100 FRNs to buy the note from the US government. The US government would spend the FRNs. The first 100 FRNs have now entered into circulation. At the end of the note's term the Fed should have 105 FRNs since the government agreed to pay 5% interest on the note. But how is the US government going to pay the interest and principal on the note when only 100 FRNs exist? I think this is the central point to your question. I can come up with only two answers: 1) the Fed must purchase some assets that are not debt based 2) the US government must continue to issue debt that is purchased by newly printed FRNs in order to pay back older debt and interest. This is a ponzi scheme. The record debt levels seem to indicate the ponzi scheme option was chosen.
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Corporate Finance
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If it's raising $25 million with a debt to equity ratio of 50% then it's raising $8.33 million of debt and $16.67 million of equity. You've priced it as if it were raising $25 million of debt and $25 million of equity, which would be raising $50 million with a debt to equity ratio of 100%.
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Confused about employee stock options: How do I afford these?
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Stock options represent an option to buy a share at a given price. What you have been offered is the option to buy the company share at a given price ($5) starting a given date (your golden handcuffs aka vesting schedule). If the company's value doubles in 1 year and the shares are liquid (i.e. you can sell them) then you've just made $125k of profit. If the company's value has gone to zero in 1 year then you've lost nothing other than your hopes of getting rich. As others have mentioned, the mechanics of exercising the option and selling the shares can typically be accomplished without any cash involved. The broker will do both in a single transaction and use the proceeds of the sale to pay the cost of buying the shares. You should always at least cover the taxable portion of the transaction and typically the broker will withhold that tax anyways. Otherwise you could find yourself in a position where you have actually lost money due to tax being owed while the shares decline in value below that tax. You don't have to worry about that right now. Again as people have mentioned options will typically expire 10 years from vesting or 90 days from leaving your employment with the company. I'm sure there are some variations on the theme. Make sure you ask and all this should be part of some written contract. I'm sure you can ask to see it if you wish. Also typical is that stock option grants have to be approved by the board which is normally a technicality. Some general advice:
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Why buy insurance?
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One reason is that insurance gives you tranquility. Without insurance, you live with the uncertainty of not knowing if/when disaster is going to strike. Insurance allows you to trade this uncertainty for regular monthly/yearly payments.
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Do I have to pay a capital gains tax if I rebuy different stocks?
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Probably. It sounds like you're looking for a 1031-exchange for stocks and bonds. From the wikipedia page for 1031-exchanges: To qualify for Section 1031 of the Internal Revenue Code, the properties exchanged must be held for productive use in a trade or business or for investment. Stocks, bonds, and other properties are listed as expressly excluded by Section 1031 of the Internal Revenue Code, though securitized properties are not excluded. 1031-exchanges usually are applicable in real estate.
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Can a company stop paying dividends?
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Yes. Companies increase, decrease, start paying and stop paying dividends when they think it appropriate. If a company has been going through some problems and makes a loss, or even a large decrease in profits, they can choose to stop paying dividends until things improve. Many companies did this during the Global Financial Crisis of 2007-08.
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Is there any downside snapping a picture (or scanning a copy) of every check one writes vs. using a duplicate check?
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When banks would return the actual physical cheque, at least you had some printing / writing from the other bank on it, as some type of not-easily-Photoshopped proof. Now many (most?) banks don't return the actual cheques anyway, just an image of it - sometimes a low quality shrunken B&W photocopy-like image too. You'd have to check with a lawyer or court in your area, but I suspect any photocopy or image, as well as a written or carbon-copy duplicate, would not be good enough proof for a law court, since they could all be easily re-written or Photoshopped. So I don't think there's a real upside anyway. Only an official bank statement saying that the name/people written actually cashed the cheque might be "good evidence" (I'm having doubts that the bank's own low quality "image" would even qualify, unless it's verified as coming directly from the bank somehow). I'd agree with Nate (+1) that a big downside could be identity theft, either online or alongside phone loss/theft.
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More money towards down payment versus long-term investments
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Another vote for a bigger downpayment, for the reasons Benjamin mentions. Also, from experience, I would save up at least a small pile as a separate house emergency fund because you will find things that are wrong and/or that got bodged by the previous owner and it's probably not going to last past the first few months of home ownership. In my case, the home inspector missed - amongst other things - that the shower on the 2nd floor was leaking both into the adjoining bedroom and the living room below. That added a little unexpected expenditure as you might guess.
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What are the marks of poor investment advice?
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To evaluate any advice, this lists some of the things to consider: There are good advisors out there. There are also Bernie Madoffs who give the entire industry a black eye. In the end, the best path is to educate yourself, read as much as you can before you invest. Better to lose a bit by staying out of the market than to lose it all by getting scammed.
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Should I pay more into company pension, or is there a better way to save?
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Re: Specifically, am I right in that everything I put on these is deducted from tax, or are there other rules? and Am I correctly understanding this as "anything above £3,600 per year will not be deducted from your tax"? Neither interpretation seems quite right… Unless what you mean is this: The contributions (to a pension, or to the share-save scheme) are deducted from your pay before it is taxed. That's how it works for employer-run pension schemes. In other words, you are paying the gross amount you earn into the pension, not the amount after tax. It's a tax-efficient way to save, because: compared to other forms of saving: (The bit about the £3,600: you can ignore this assuming you're earning more than £3,600 a year.) What happens to the pension if you decide to move back to France or another country? In some cases you can transfer tax free. Worst case, you'd pay some tax on the transfer but not more than 25%. [See here for the current rules: https://www.gov.uk/transferring-your-pension/transferring-to-an-overseas-pension-scheme. Re: the share scheme, if by 'salary exchange' you mean salary sacrifice (where your gross pay is officially reduced by that amount e.g. £150 a month), that's even more tax-efficient, because it saves you paying the National Insurance contribution too (approx 9% of the pay packet). Conclusion: Saving into pension and company share save schemes is supremely tax-efficient and, provided you're OK with your money being locked away until you're 57 (pension) or tied up in company shares, it's understandably many people's priority to make use of these schemes before considering other forms of saving where you pay into them from your salary after tax. Now, about this: I am trying to understand how much I should put into it Should I put money into these, or should look for another way to save (how will this work out if I go back to France or another country)? Nobody here can advise you what to do since individuals' goals and circumstances are different and we don't know enough of the picture. That said: FWIW, I'll tell you what I might do based solely on what you've told us in the question… First, I'd definitely contribute 6% to the company pension. This gets you the full employer match. That's free money (plus, remember the tax relief = more free money). If you're 27, a total of 12% salary into a pension a year is a decent rate to start saving for retirement. Actually, 14% would be generally advisable, and maybe more still – it's generally a case of 'the more the better' especially while young, as you have time for growth and you don't know what later priorities might change / financial needs might arise. Nevertheless, you said you might move overseas. So in your position I would then:
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What ways are there for us to earn a little extra side money?
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Have you considered doing some small freelance programming jobs? One site I like for this type of thing is eLance.com, but I am sure there are others. Heck, you are soon going to be up all night anyway, why not earn some cash during those hours the rest of us foolishly waste on sleep?
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How are mortgage interest rates determined?
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One will find that the fixed 30 year mortgage rate is tightly correlated to the 10 year treasury. An adder of 2-2.5% or so, changing slightly with the rest of the economy, as money can get tight or loose independent of the rate itself. In 2011 we are witnessing low rates yet tough loan standards, this is the phenomenon I am referencing.
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Why would we need a “stop-limit order” for selling?
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One practical application would be to protect yourself from a "flash crash" type scenario where a stock suddenly plunges down to a penny due to transient market glitches. If you had a stop-loss order that executed at a penny (for a non-penny stock) it would be probably be voided by the exchange, but you might not want to take that risk.
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Why do people buy insurance even if they have the means to overcome the loss?
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This person could buy another car at any moment without any money problems, so I don't really see any point in insuring, especially with such a ridiculously high price compared to the extremely low risk. Convenience. If you self-insure, then an accident means that you have to make arrangements to get the car towed, fixed, evaluated, etc. If you buy insurance, your insurer would prefer to do all that. They argue with the mechanic over prices, the lawyer over liability, etc. And of course, rich people need more liability insurance than other people, not less. So part of that $1400 is probably money that your friend would have to pay regardless.
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Overseas Foreign Earned Income; Can I take the Home Office Deduction for a home office based outside the United States?
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You are pushing your luck, but not because you're not in the US, because it is likely that you're not qualified. From what you said, I doubt you can take it (I'm not a professional though, get a professional opinion). You say "dedicated space". It has to be an exclusive room. You cannot deduct 10 sq. ft. from your living room because your computer that is used wholly for your business is there. It has to be a room that is used exclusively for your business, and for your business only. I.e.: nothing not related to the business is there, and when you're there the only thing you do is working on your business. Your office doesn't have to be in the US necessarily, to the best of my knowledge. Your office must be in your home. If you take primary residence exclusion as part of your FEI, then I doubt you can deduct as well.
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Historical Stock Prices of delisted company [duplicate]
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For those on a budget, check if your local library has access to / or a copy of the "Standard & Poor's Daily Stock Price Record". Access to that or a similar service may be available as part of your library patronage. If not available it may be available at your metropolitan central library. Comprehensive stock pricing data which provides adjustments for splits, mergers, capital distributions and other relevant events is still a premium product. External link to New York Public Library blog post on subject: http://www.nypl.org/blog/2012/04/09/finding-historical-stock-prices
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Inverse Relationship between Volatility and Beta
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For any isolated equity market, its beta will less resemble the betas of all other interconnected equity markets. For interconnected markets, beta is not well-dispersed, especially during a world expansion because richer nations have more wealth thus a dominant influence over smaller nations' equity markets causing a convergence. If the world is in recession, or a country is in recession, all betas or the recessing country's beta will start to diverge, respectively. If the world's economies diverge, their equity markets' betas will too. If a country is having financial difficulty, its beta too will diverge. Beta is correlation against a ratio of variance, so variance or "volatiliy" is only half of that equation. Correlation or "direction" is the other half. The ratio of variance will give the magnitude of beta, and correlation will give the sign or "direction". Therefore, interconnected emerging equity markets should have higher beta magnitudes because they are more variant but should generally over time have signs that more closely resemble the rest. A disconnected emerging equity market will improbably have average betas both by magnitude and direction.
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Where can one download or subscribe to end of day price data for Tokyo stocks?
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Google Finance certainly has data for Tokyo Stock Exchange (called TYO on Google) listings. You could create a "portfolio" consisting of the stocks you care about and then visit it once per day (or write a script to do so).
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Can zero-coupon bonds go down in price?
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Certainly, yes, a zero coupon bond can go down in price. If interest rates rise before your bond matures, the price of the bond will go down – and the longer to maturity, the more it will tend to drop. Depending on when you bought and how much interest rates rise, you can incur a capital loss. The bond is guaranteed to be worth a certain amount at maturity as long as the issuer hasn't defaulted, but before maturity the market price of the bond will fluctuate, primarily based on interest rate movements. In fact, zero coupon bonds are even more interest-rate-sensitive than regular bonds (which have periodic coupon interest payments.)
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Using Fibonacci Extensions to set profit targets?
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I have never seen a backtest showing that prices tended to be attracted by / to revert around Fibonacci levels. The fact that many people use them doesn't mean that they can be turned into a profitable system... I have on the other hand seen many backtests showing that they don't do anything, such as the one described in this article: At least in this sample of market data, using this particularly specification for swings, we find no evidence that Fibonacci ratios are significant in the market. Perhaps I have missed something significant, or perhaps I am merely completely wrong in my analysis, but one thing should be clear—the burden of proof should lie on the people offering arcane and complex methodologies, when simpler methods work just as well or better in the marketplace. If Fibonacci ratios are the key to the markets, where are the quantitative tests? Where’s the proof?
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Money Structuring
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There's a difference between your street level drug dealer sending you sales proceeds of $20,000 in $5,000 increments to avoid sending you $10,000 or $20,000 at once to avoid the scrutiny of a government agency that might not be thrilled with your business venture, and a tire shop paying a wholesaler $5,000 each time funds are available up to the amount owed of $20,000. The former is illegal for a few reasons, and the latter is business as usual.
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How should one structure a portfolio given the possibility that a Total Stock Market Index might decline and not recover for a long time?
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John Bogle never said only buy the S&P 500 or any single index Q:Do you think the average person could safely invest for retirement and other goals without expert advice -- just by indexing? A: Yes, there is a rule of thumb I add to that. You should start out heavily invested in equities. Hold some bond index funds as well as stock index funds. By the time you get closer to retirement or into your retirement, you should have a significant position in bond index funds as well as stock index funds. As we get older, we have less time to recoup. We have more money to protect and our nervousness increases with age. We get a little bit worried about that nest egg when it's large and we have little time to recoup it, so we pay too much attention to the fluctuations in the market, which in the long run mean nothing. How much to pay Q: What's the highest expense ratio that one should pay for a domestic equity fund? A: I'd say three-quarters of 1 percent maybe. Q: For an international fund? A: I'd say three-quarters of 1 percent. Q: For a bond fund? A: One-half of 1 percent. But I'd shave that a little bit. For example, if you can buy a no-load bond fund or a no-load stock fund, you can afford a little more expense ratio, because you're not paying any commission. You've eliminated cost No. 2....
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Can't the account information on my checks be easily used for fraud?
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I was a victim of this. I'm not sure who got my routing and account number off my check, but someone subscribed to Playboy.com using my bank account information. Luckily it was only for about $30 and the bank refunded my money. However, it was a mess in that I had to open a new checking account and keep the other one open until all checks cleared. The bank was extremely helpful and monitored the account to make sure only the checks I told them about were processed. I then had to close the old account. This is why I believe checks are much less secure than credit cards or debit cards. A paper check can lay on someone's desk for anyone to pick up or write the information down off of it. I avoid checks if at all possible. For things like Craig's list, I would try to use PayPal or some other intermediate processing service.
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eurodollar future
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If they short the contract, that means, in 5 months, they will owe if the price goes up (receive if the price goes down) the difference between the price they sold the future at, and the 3-month Eurodollar interbank rate, times the value of the contract, times 5. If they're long, they receive if the price goes up (owe if the price goes down), but otherwise unchanged. Cash settlement means they don't actually need to make/receive a three month loan to settle the future, if they held it to expiration - they just pay or receive the difference. This way, there's no credit risk beyond the clearinghouse. The final settlement price of an expiring three-month Eurodollar futures (GE) contract is equal to 100 minus the three-month Eurodollar interbank time deposit rate.
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Rental Property - have someone look for you
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Actually sounds like an interesting concept for a business, potentially! (grin) You know, depending on where you live and how big the market is, you might see if there's a local "concierge" service. These are companies that will act like personal shoppers/assistants for you in all kinds of ways. I can't speak to the quality of their services or the pricing they use, but it would be a great place to start. I'm sure you can find listings of them on the web.
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Should I invest in real estate to rent, real estate to live in, or just stocks and bonds to earn 10-15%?
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That your asking is a good first step towards taking control of your future. But truly, you must seek the advice of a personal consultant that is much more in tune with your finances that anyone out here in the public will be. You can get this type of advice locally, or if you want something online, I suggest oDesk or something similar to find a large pool of people and to efficiently find the right person for suited for your situation.
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What's the point of a chargeback when they just ask the merchant whether they owe money to the buyer?
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When you initiate a chargeback, the merchant has the right to dispute the chargeback. If they can provide proof that the purchase actually took place, the chargeback will fail. We don't know all the details of your situation, of course, but it appears from what you have said that the tax chain probably has documents that you signed agreeing to the charges. They prepared your return (even if they did a poor job), and so from their perspective, they have decided that they deserve to be paid. Whether or not they did a good job is a matter of opinion, of course; their position might be that they did it correctly, and the second business did it poorly. The chargeback is a powerful tool, but it is not a magic button that makes a charge disappear. If the merchant can show that a sale did indeed take place and show that the proper amount was charged, the chargeback will fail. For a service, it isn't enough usually to simply state that you were unsatisfied; if you received the service at the agreed-upon price, the charge is valid. A chargeback is sort of a nuclear option when it comes to getting a refund. There are negative ramifications and expenses every time a merchant gets a chargeback (even if they ultimately win), and so often they will be willing to work something out to avoid a chargeback. You should go to the merchant first, if you can, and ask for a refund before considering the chargeback option. If you file a chargeback without even giving them the opportunity to work it out with you, the merchant will usually want to fight back.
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How can an Indian citizen get exposure to global markets?
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It isn't just ETFs, you have normal mutual funds in India which invest internationally. This could be convenient if you don't already have a depository account and a stockbroker. Here's a list of such funds, along with some performance data: Value Research - Equity: International: Long-term Performance. However, you should also be aware that in India, domestic equity and equity fund investing is tax-free in the long-term (longer than one year), but this exemption doesn't apply to international investments. Ref: Invest Around the World.
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What are my risks of early assignment?
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The put vs call assignment risk, is actually the reverse: in-the-money calls are more likely to be exercised early than puts. Exercising a call locks in profit for the option holder because they can buy the shares at below market price, and immediately sell them at the higher market price. If there are dividends due, the risk is even higher. By contrast, exercising an in-the-money put locks in a loss for the holder, so it's less common.
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How does Google Finance calculate the Institution Owned metric for a stock
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Institutional ownership has nearly lost all meaning. It used to mean mutual funds, investment banks, etc. Now, it means pension funds, who hold the rest of the equity assets directly, and insiders. Since the vast majority of investors in equity do not hold it directly, "institutions" are approaching 100% ownership on all major equities. Other sites still segment the data.
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Money market account for emergency savings
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From a quick look at sources on the web, it looks to me like Money Market Accounts and savings accounts are both paying about the same rate today: around 1%, give or take maybe 0.4%. I suppose that's better than nothing, but it's not a whole lot better than nothing. (I saw several savings accounts advertising 0.1% interest. If they mailed you a check, the postage could be more than the returns.) Personally, I keep a modest amount of emergency cash in my checking account, and I put my "savings" in a very safe mutual fund. That generally gets somewhere from making maybe 3% a year to losing a small amount. Certainly nothing to sing about, but better than savings or money markets. Whether you are willing to tolerate the modest risk or the sales charges is a matter for your personal situation and feelings.
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How is stock price determined?
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You can interpret prices in any way you wish, but the commonly quoted "price" is the last price traded. If your broker routes those orders, unlikely because they will be considered "unfair" and will probably be busted by the exchange, the only way to drive the price to the heights & lows in your example is to have an overwhelming amount of quantity relative to the order book. Your orders will hit the opposing limit orders until your quantity is exhausted, starting from the best price to the worst price. This is the functional equivalent to a market order.
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Should I Use an Investment Professional?
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I am sure there would be many views on the above topic, my take is that DIY takes the following: Now, for many, one or more of the other factors are missing. In this case, it is probably best to go for a financial adviser. There are others who have some of the above in place and are interested but probably cannot spend enough time. For them a middle ground of Mutual Funds probably is a good choice. Here they get to choose the fund they invest in and the fund manager manages the fund. For the people who have the above more or less in place and also are willing to take risk and learn, they probably can do a DIY for a while and find out the actual result. Just my views and opinion.
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How can I improve my credit score if I am not paying bills or rent?
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You can improve your credit score simply by being an authorized user on someone's credit card account. They don't even physically have to give you a card to use, they can just add you to the account as an authorized user and your credit score will be affected. Be forewarned though, it can be negatively impacted as well. Only participate in such a scheme if it's with someone trustworthy and reliable.
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Home insurance score drastically decreases after car insurance claim?
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Credit risk and insurance risk are highly correlated for a single legal party. Trouble with one could indicate trouble with another. Any increase in credit risk such as new borrowing will be perceived to be an increased likelihood of insurance risk, manifested as a fraudulent or subconsciously induced claim. Any claim of insurance will be perceived to be an increased likelihood of default, manifested as a default, voluntary or not. To a creditor/insurer, only the law applies; therefore, private arrangements between the borrower/insured and third parties do not factor because the creditor/insurer has no hope of recourse against such third parties in most places around the world. Regardless of whether there is a price ceiling on compensation for damages to assets, limiting an insurers costs, if a risk is realized then it can be presumed through sequential sampling as well as other reliable statistical techniques that future risk has risen. The aforementioned risk dominoes subsequently fall. Generally speaking, the lower one's financial variance, the lower the financial costs. In other words, uncertainty can be mostly quantified with variance and other mathematical moments as well. Any uncertainty is a cost to a producer thus a cost to the consumer. A consumer who is perfectly predictable with good outcomes will pay much lower costs on average than not, so one who keeps a tight financial ship, not exposing oneself to financial risks and better yet not realizing financial risks, will see less financial variance, thus will enjoy lower costs to financing, which includes insuring.
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