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Purchasing options between the bid and ask prices, or even at the bid price or below? | I understand the question, I think. The tough thing is that trades over the next brief time are random, or appear so. So, just as when a stock is $10.00 bid / $10.05 ask, if you place an order below the ask, a tick down in price may get you a fill, or if the next trades are flat to higher, you might see the close at $10.50, and no fill as it never went down to your limit. This process is no different for options than for stocks. When I want to trade options, I make sure the strike has decent volume, and enter a market order. Edit - I reworded a bit to clarify. The Black–Scholes is a model, not a rigid equation. Say I discover an option that's underpriced, but it trades under right until it expires. It's not like there's a reversion to the mean that will occur. There are some very sophisticated traders who use these tools to trade in some very high volumes, for them, it may produce results. For the small trader you need to know why you want to buy a stock or its option and not worry about the last $0.25 of its price. |
New company doesn't allow 401k deposits for 6 months, what to do with money I used to deposit? | $9000 over 6 months is great, I'd use it for long term savings regardless of the 401(k) situation. There's nothing wrong with a mix of pre and post tax money for retirement. In fact, it's a great way to avoid paying too much tax should your 401(k) withdrawals in retirement push you into a higher bracket. Just invest this as you would your other long term money. |
Technical Analysis not working | You cannot just read one book and some articles on Technical Analysis and some indicators and expect to be an expert and everything to just start falling into place and give you signals that will tell you when to buy and sell with precision and massive profits all the time. It is like someone reading a book on how to drive a car and then expecting to drive flawlessly the first time they sit in the driver's seat, or someone reading a book on brain surgery and expecting to be able to operate on a live patient the next day. It looks like you are using 3 or 4 indicators to get daily buy and sell signals on a daily chart for an EFT you're looking to hold for decades. So firstly you are using short term indicators for a long term outlook. You need to decide what timeframe you plan to hold your investments for and use chart periods and indicators that suit that timeframe. Secondly, each indicator can be used in a number of ways and the settings you use for each indicator can determine whether you get earlier or later signals. Also, you need to work out which indicators work well together and are complementary, compared to those that don't work well together and give conflicting signals. All this information will come together for you the more you read about and practice the art of Technical Analysis. If your timeframe is very long-term (decades) I would be using mainly a weekly chart, with a longer period MA, the ROC indicator and possibly some trend lines. Keep it simple. The price itself is very important too. You can determine when a trend is starting or has ended purely using the price. The definition of an uptrend is higher highs and higher lows, so on the weekly chart if there is a lower high followed by a lower low - this could be the end of the uptrend. If we get a lower low followed by a lower high - this again could be the end of the uptrend. These could be a good time to start getting cautious and maybe looking to sell. If you are using stop losses (which I recommend) this may be a good time to tighten your stops. Similarly, a downtrend is defined as lower lows and lower highs. If we get a higher low followed by a higher high it could be the end of the downtrend and maybe the start of an uptrend. This could be a good time to start getting ready to buy. You need to learn about how and where to set your buy and sell orders (including stops) and whether you wait for confirmation when you get a signal. All this takes some time, but the more you read, the more you attend live events and the more you practice the more they will become second nature. In order to get the best out of Technical Analysis you will need to learn, plan, practice and execute. A good book to help you prepare your trading plan is "Smart Trading Plans" by Justine Pollard. One of my favourite books is "The Complete Trading Course - Price Patterns, Strategies, Setups, and Execution Tactics" by Corey Rosenbloom. And another good book is "Trade your Way to Financial Freedom" by Van Tharp. |
Should I purchase a whole life insurance policy? (I am close to retirement) | I'll start by saying that if this is being explored to scratch a specific itch you have then great, if this was a cold call it's probably safe to ignore it. Certain whole life products (they vary in quality by carrier) can make sense for very high earners who are looking for additional tax preferred places to store money. So after you IRA, 401(k), etc options are maxed out but you still have income you'd like to hide from taxes whole life can be a potential vehicle because gains and death benefit are generally exempt from income taxes. Be on the look out for loads charged to your money as it comes in to the policy. Life insurance in general is meant to keep your dependents going without having to sell off assets in the event of your death. People may plan for things like school tuition, mortgage/property tax for your spouse. If you own a business with a couple of partners it's somewhat common for the partners to buy policies on each other to buyout a spouse to avoid potential operating conflicts. Sometimes there can be estate planning issues, if you're looking to transfer assets when you ultimately pass it can make sense to form a trust and load cash in to a whole life policy because death benefits can be shielded from income tax and the estate tax calculation; the current estate tax exemption is about $5.5 million today (judging from your numbers you might actually be close to that including the net value of the homes). Obviously, though, the tax rules are subject to change and you need to be deliberate in your formation of the trust in order to effectively navigate estate tax issues. You seem to have a very solid financial position from this perspective it looks like your spouse would be in good shape. If you are specifically attempting to manage potential estate tax liability you should probably involve an financial planner with experience forming and managing trusts; and you should be very involved with the process because it will absolutely make your finances more complicated. |
What tax can I expect on US stocks in a UK ISA? | non-resident aliens to the US do not pay capital gains on US products. You pay tax in your home country if you have done a taxable event in your country. http://www.investopedia.com/ask/answers/06/nonusresidenttax.asp#axzz1mQDut9Ru but if you hold dividends, you are subject to US dividend tax. The UK-US treaty should touch on that though. |
Is foreign stock considered more risky than local stock and why? | It is very important to note the strength and reputation of the country's regulatory agency. You cannot assume the standards of say the SEC (US Securities and Exchange Commission) apply in other countries (even well-developed ones). These regulations force companies to disclose certain information to inform and protect investors. The standards for such practices vary internationally. |
A guy scammed me, but he gave me a bank account number & routing number. Can I use that to take out what he owes me? | OK, reading between the lines here it looks like the services offered by your company are of an "adult" (possibly illegal?) nature and that this individual has actually paid you in full for the services rendered up to this point. The wrinkle here is that you say that you've been offered large cash "gifts" in return for unspecified future favours, but that your client hasn't provided a real Paypal account to do so. When you pressed him on it, he sent a fake email and invented a "financial adviser" to fob you off, then hasn't contacted you since. It's pretty clear that he hasn't got any intention of making these payments to you. What you're now proposing to do is to use his known banking details to collect money to cover those verbal promises. In pretty much every part of the world, that's a crime. Without a written agreement to use that payment method for those promises, he could easily call the police and have you arrested for theft of funds. The further wrinkle is that his actions (claiming to have made payment via paypal, forged email headers, etc) strongly suggest that this individual is involved in cyber-crime and may well have used a fake bank account to pay for your initial services. The bottom line here is that you need real legal advice, from an actual lawyer. |
What factors make someone buy or sell a stock? | why sell? Because the stock no longer fits your strategy. Or you've lost faith in the company. In our case, it's because we're taking our principal out and buying something else. Our strategy is, basically, to sell (or offer to sell) after the we can sell and get our principal out, after taxes. That includes dividends -- we reduce the sell price a little with every dividend collected. |
Does a failed chargeback affect my credit score? | I think your confusion comes from the negative impact when a creditor writes off your bad credit and ceases attempting to collect it. "Chargebacks" as you call them are an attempt to undo fraudulent charges on your card, whether from stolen credit card info or from a merchant who is using shady business practices. For what it's worth, if you joined on December 20, January 20 seems like a reasonable date for the next billing cycle, with the December 31 date reflecting the fact that their system couldn't automatically bill you the day you joined. I also think it's reasonable for you to ask them to refund the bill for the second month if you do not plan to use their gym further. So the dispute seems like a reasonable one on both sides. Good luck. |
Filling Balance sheet in ITR4 for freelancers | ITR-4 is for incorporated business. For freelancing, You can fill ITR 2 and declare the freelancing income as "income from other source". Refer to the Income Tax website for more details |
Why would I vote for an increase in the number of authorized shares? | I'll skip the "authorizing...." and go right to uses of new shares: Companies need stock as another liquid asset for a variety of purposes, and if not enough stock is available, then may be forced to the open market to acquire, either by exchanging cash or taking on debt to get the cash. |
Buying a house. I have the cash for the whole thing. Should I still get a mortgage to get the homeowner tax break? | Getting a mortgage for the interest write-off is like buying packs of baseball cards for the gum. That said, I'd refer you to The correct order of investing as much of that question really overlaps with this. This question boils down to priorities, the best use of the funds. There are those who suggest that a mortgage brings risk. Of course it does, just not for the borrower, the risk is borne by the lender. Risk comes from lack of liquidity. Say your girlfriend buys the house with cash, and leaves little reserve. She loses her job, and it's great that she has no mortgage. But she does have every other cost life brings, including a tax bill that can turn into a house getting foreclosed on. The details that you didn't disclose are those needed to look at the rest of the "priorities" list. A fully funded 401(k) with appropriate balance, and no other debt? And a 1 year emergency fund? I wouldn't argue against buying the house with cash. No real savings and passing on the 401(k) matched deposit? I'd think carefully about the longterm impact of the cash purchase. |
Who sets the prices on government bonds? | Who sets the prices? Effectively the market does, like basically all openly traded things. The Greek government could well have said "5% is as high as we will go". As a result, investors may not have chosen to buy the securities. The global bond market is highly liquid, and investors who have a choice could well then choose to go elsewhere. The reasons could well be varied, but primary among them would be that investors view Greek investments as more than 5% risky. If I can get 5% from a country that I deem less risky than from Greece, my choice is clear. Therefore to be compensated for loaning them my money, I am expecting a return of 7% because there is the possibility that they will default. As for not selling them at all, if they could avoid issuing bonds, most governments would. They may not have had much of a choice. If they just print more money, that does other potentially bad things to the economy. The government needs funds to operate, if they are not collecting enough in taxes, for example, and do not want to print money as I mentioned, then bonds are one other common way to raise cash. Notwithstanding that in your example you are referring to the interest rate, not the price, the principal is the same. |
Can this year's free extension-to-pay be filed electronically? IRS Form 1127 | Form 1127 (updated link) should be filed in paper (with the supporting documents) to the IRS office that has jurisdiction in the area where you live. From the instructions (see the link above): File Form 1127 with the Internal Revenue Service (Attn: Advisory Group Manager), for the area where you maintain your legal residence or principal place of business. See Pub. 4235, Collection Advisory Group Addresses, to find the address for your local advisory group. However, if the tax due is a gift tax reportable on Form 709, send Form 1127 to: Department of the Treasury Internal Revenue Service Center Cincinnati, OH 45999 |
Is 401k as good as it sounds given the way it is taxed? | If you pay 20% tax now and none later or if you pay no tax now and 20% later, it doesn't make a difference. Mathematically, it's the same. You have to guess about which tax rate (now vs later) will be higher for you in order for you to make the best choice. Predicting tax rates 40 years in advance is hard. Everybody pretends like they can do this accurately. I would suggest going half and half. If you have 20k and put half in pre-tax (10k in) and half in post-tax (only 8k in) you end up with 18k total in which is right in the middle of where you would be if you went with the whole 20k in either extreme. It would also leave you owing 2k in tax rather than the possible 4k in tax if you had gone with all pre-tax. When you split down the middle, you are guaranteed to have 50% in the "right" side, the side with the best outcome. Being guaranteed to be 50% on the right side is pretty good compared to maybe being 100% on the wrong side. |
How can I invest my $100? | A safe investment would be to get a 5-year CD from Ally Bank. No minimum deposit and no monthly maintenance fees. 1.74% APY at the moment. I would choose a 5-year CD since the early withdrawal penalty is only 60 days interest, which will be negligible for a $100 investment and increasing the term significantly increases your interest rate. Regarding other suggestions: Even if you find a way purchase stock commission free, it will probably cost a $5-$10 commission to sell, wiping out probably a year or two of gains. Also, I-Bonds must be held for a year minimum, which is problematic. At the end of the day, it's probably not really worth your time to do any of these. $2 a year or $5 a year, it's still fairly insignificant and your time is surely worth more than that. |
Why is it rational to pay out a dividend? | It comes down to the practical value of paying dividends. The investor can continually receive a stream of income without selling shares of the stock. If the stock did not pay a dividend and wanted continual income, the investor would have to continually sell shares to gain this stream of income, incurring transaction costs and increased time and effort involved with making these transactions. |
why would closing price of a stock be different from different sources, and which would you take as the real price? | There is more than one exchange where stock can be traded. For example, there is the New York Stock Exchange and the London Stock Exchange. In fact, if you look at all the exchanges, there is essentially continuous trading 24/7 for many financial instruments (eg US government bonds). The closing price quoted in papers is usually the price at the close on the NYSE. However, options close after that and so there is after-the-close trading in many stocks with active options, so the price at the close of options trading at CBOE is often used. The "real" price is always changing. But for the purpose of discussion, using the closing price in NYSE (for NYSE listed stocks) is pretty standard and unlikely to be questioned. Likewise, using Bloomberg's price makes sense. Using some after-hours or small market quote could lead to differences with commonly accepted numbers - until tomorrow :) |
Most effective Fundamental Analysis indicators for market entry | Unfortunately, there is very little data supporting fundamental analysis or technical analysis as appropriate tools to "time" the market. I will be so bold to say that technical analysis is meaningless. On the other hand, fundamental analysis has some merits. For example, the realization that CDOs were filled with toxic mortgages can be considered a product of fundamental analysis and hence provided traders with a directional assumption to buy CDSs. However, there is no way to tell when there is a good or bad time to buy or sell. The market behaves like a random 50/50 motion. There are many reasons for this and interestingly, there are many fundamentally sound companies that take large dips for no reason at all. Depending on your goal, you can either believe that this volatility will smooth over long periods and that the market has generally positive drift. On the other hand, I feel that the appropriate approach is to remain active. You will be able to mitigate the large downswings by simply staying small and diversifying - not in the sense of traditional finance but rather looking for uncorrelated products. Remember, volatility brings higher levels of correlation. My second suggestion is to look towards products like options to provide a method of shaping your P/L - giving up upside by selling calls against a long equity position is a great example. Ground your trades with fundamental beliefs if need be, but use your tools and knowledge to combat risks that may create long periods of drawdown. |
Where can I trade FX spot options, other than saxobank.com? | To other users save yourselves time, do not test any of the alternatives mentioned in this post. I have, to no avail. At the moment (nov/2013) Saxobank unfortunately seems to be the only broker who offers OTC (over-the counter) FX options trading to Retail Investors. In other words, it is the only alternative for those who are interested in trading non-exchange options (ie, only alternative to those interested in trading FX options with any date or strike, rather than only one date per month and strikes every 50 pips only). I say "unfortunately" because competition is good, Saxo options spreads are a rip off, and their platform extremely clunky. But it is what it is. |
Can an unmarried couple buy a home together with only one person on the mortgage? | It depends on the bank - In some cases(mine included :) ) the bank allowed for this but Emma had to sign on a document waiving the rights for the house in case the bank needs to liquidate assets in to recover their mortgage in case of delays or non-payment of dues in time. This had to be signed after taking independent legal advice from a legal adviser. |
Why would selling off some stores improve a company's value? | I'd like to modify the "loss" idea that's been mentioned in the other two answers. I don't think a retail location needs to be losing money to be a candidate for sale. Even if a retail location is not operating at a loss, there may be incentive to sell it off to free up cash for a better-performing line of business. Many large companies have multiple lines of business. I imagine Sunoco makes money a few ways including: refining the gas and other petroleum products, selling those petroleum products, selling gas wholesale to franchised outlets or other large buyers, licensing their brand to franchised outlets, selling gas and convenience items direct to consumers through its own corporate-owned retail outlets, etc. If a company with multiple lines of business sees a better return on investment in certain businesses, it may make sense to sell off assets in an under-performing business in order to free up the capital tied up by that business, and invest the freed-up capital in another business likely to perform better. So, even "money making" assets are sometimes undesirable relative to other, better performing assets. Another case in which it makes sense to sell an asset that is profitable is when the market is over-valuing it. Sell it dear, and buy it back cheap later. |
How can I pay for school to finish my degree when I can't get a student loan and have bad credit? | Wesley gave a great answer and a follow up comment. Heed his advice. If you cannot make ends meet by working two jobs, either you are working very few hours or you have a spending problem. I feel it is more of a spending problem as you should have been able to complete your program and stay within the FAFSA limit. This is a tough situation of your own making. If you are at UNC and an engineering student, you have a good mind. You should use it to find a solution. Then learn the lessons and do not make those decisions again. While many people in authority told you that it was a good idea to go to school on student loans one of the paramount lessons to learn is that sometimes those people give bad advice. In your case that is exactly what happened. |
What taxes are assessed on distributions of an inherited IRA? | Distributions from an inherited IRA will be taxed as ordinary income and there are required minimum distributions for the inherited account. Assuming you were 55 at the time of your mother's death, your life expectancy according to the IRS is 29.6 years. Your required yearly distributions on $200,000 would be roughly $6800. For each year that you didn't withdraw that, you would owe a 50% penalty of the distribution amount (~$3400). That's probably better than the tax hit you would take if you pulled it all in as income in a 5 year window (ie. all right now since you're at the end of the window). |
Is an interest-only mortgage a bad idea? | It seems you understand the risks, it seems like a fine enough idea. Hopefully it works out for you. However, you may want to talk to a few local banks about getting a short term home equity loan. I know someone who was able to do this getting a very low rate for 7 years. At the time of the loan, the prevailing rate for a 15 year was 3.25, but they were able to get the HEL at 2.6 fixed. There was no closing costs. The best part about it was the payment was not that much more. While going from ~1200 to ~1800 is a 50% increase it was not that much in dollars in relationship to his household income. Note that I did not say Home Equity Line of Credit, which are vairable rates and amount borrowed. |
Borrow from 401k for down payment on rental property? | Make sure you can really do what you plan on doing: Look at the maximum loan length and the maximum loan amount. From the IRS- retirement plans faqs regarding loans A qualified plan may, but is not required to provide for loans. If a plan provides for loans, the plan may limit the amount that can be taken as a loan. The maximum amount that the plan can permit as a loan is (1) the greater of $10,000 or 50% of your vested account balance, or (2) $50,000, whichever is less ... A plan that provides for loans must specify the procedures for applying for a loan and the repayment terms for the loan. Repayment of the loan must occur within 5 years, and payments must be made in substantially equal payments that include principal and interest and that are paid at least quarterly. Loan repayments are not plan contributions. The referenced documents also discuss the option regarding multiple loans, and the maximum amount of all active and recent loans Having a 401K loan will still count against the maximum amount of monthly payments you can afford. Also check the interest rate, and yes they required to charge interest. Some companies will not allow you to make contributions to a 401K while you have an outstanding loan. If that is true with your company then you will miss out on the matching funds. |
Applying for and receiving business credit | I'm afraid the great myth of limited liability companies is that all such vehicles have instant access to credit. Limited liability on a company with few physical assets to underwrite the loan, or with insufficient revenue, will usually mean that the owners (or others) will be asked to stand surety on any credit. However, there is a particular form of "credit" available to businesses on terms with their clients. It is called factoring. Factoring is a financial transaction whereby a business sells its accounts receivable (i.e., invoices) to a third party (called a factor) at a discount in exchange for immediate money with which to finance continued business. Factoring differs from a bank loan in three main ways. First, the emphasis is on the value of the receivables (essentially a financial asset), not the firm’s credit worthiness. Secondly, factoring is not a loan – it is the purchase of a financial asset (the receivable). Finally, a bank loan involves two parties whereas factoring involves three. Recognise that this can be quite expensive. Most banks catering to small businesses will offer some form of factoring service, or will know of services that offer it. It isn't that different from cheque encashment services (pay-day services) where you offer a discount on future income for money now. An alternative is simply to ask his clients if they'll pay him faster if he offers a discount (since either of interest payments or factoring would reduce profitability anyway). |
Should I buy or lease a car given that its not a super luxury car and I only drive 15 miles/d on avg? | I have a few recommendations/comments: The trick here is to make it clear to the dealer that you will not be getting a new car from them and their only hope of making some money is to sell you your own car. You need to be prepared to walk away and follow through. DON'T buy a new car from them even if you end up turning it in! They could still come back a day later and offer a deal. Leasing a new car every 3 years is not the best use of money. You have to really, really like that new car feeling every three years and be willing to pay a premium for it. If you're a car nut (like me) and want to spend money on a luxury car, it's far wiser to purchase a slightly used luxury vehicle, keep it for 8+ years, and that way you won't have a car payment half the time! |
Can I trust the Motley Fool? | I've had a MF Stock Advisor for 7 or 8 years now, and I've belong to Supernova for a couple of years. I also have money in one of their mutual funds. "The Fool" has a lot of very good educational information available, especially for people who are new to investing. Many people do not understand that Wall Street is in the business of making money for Wall Street, not making money for investors. I have stayed with the Fool because their philosophy aligns with my personal investment philosophy. I look at the Stock Advisor picks; sometimes I buy them, sometimes I don't, but the analysis is very good. They also have been good at tracking their picks over time, and writing updates when specific stocks drop a certain amount. With their help, I've assembled a portfolio that I don't have to spend too much time managing, and have done pretty well from a return perspective. Stock Advisor also has a good set of forums where you can interact with other investors. In summary, the view from the inside has been pretty good. From the outside, I think their marketing is a reflection of the fact that most people aren't very interested in a rational & conservative approach to investing in the stock market, so MF chooses to go for an approach that gets more traffic. I'm not particularly excited about it, but I'm sure they've done AB testing and have figured out what way works the best. I think that they have had money-back guarantees on some of their programs in the past, so you could try them out risk free. Not sure if those are still around. |
Comprehensive tutorial on double-entry personal finance? | I had to implement a simplistic double-entry accounting system, and compiled a list of resources. Some of them are more helpful than others, but I'll share them all with you. Hope this helps! Simplifying accounting principles for computer scientists: http://martin.kleppmann.com/2011/03/07/accounting-for-computer-scientists.html See this excellent article on how Debits and Credits work: http://accountinginfo.com/study/je/je-01.htm See this article for an example Chart of Accounts with lots of helpful descriptions: http://www.netmba.com/accounting/fin/accounts/chart/ Excellent PDF by Martin Fowler on Accounting Patterns using an event-drive system: http://www.martinfowler.com/apsupp/accounting.pdf Additional useful resources by Martin Fowler: http://martinfowler.com/articles.html#ap Ideas on using Domain-Driven-Design (DDD): https://stackoverflow.com/questions/5482929/how-to-use-object-oriented-programming-with-hibernate Double Entry Accounting in Relational Databases: http://homepages.tcp.co.uk/~m-wigley/gc_wp_ded.html Double Entry Accounting in Rails: http://www.cuppadev.co.uk/dev/double-entry-accounting-in-rails/ Joda-Money: http://joda-money.sourceforge.net/ Joda-Money Notes: http://joda-money.svn.sourceforge.net/viewvc/joda-money/JodaMoney/trunk/Notes.txt?revision=75&view=markup Blog entry with good comments: http://www.jroller.com/scolebourne/entry/joda_money Related Blog Entry: http://www.jroller.com/scolebourne/entry/serialization_shared_delegates JMoney: http://jmoney.sourceforge.net/wiki/index.php/Main_Page JMoney QIF Plugin: http://jmoney.sourceforge.net/wiki/index.php/Qif_plug-in Ledger on GitHub: https://github.com/jwiegley/ledger/tree/master/src/ Implementing Money class in Java: http://www.objectivelogic.com/resources/Java%20and%20Monetary%20Data/Java%20and%20Monetary%20Data.pdf Martin Fowler's implementation in Patterns of Enterprise Application Architecture page 489, View partial content in Google Books: http://books.google.com/books?id=FyWZt5DdvFkC&printsec=frontcover&dq=Patterns+of+Enterprise+Application+Architecture&source=bl&ots=eEFp4xYydA&sig=96x5ER64m5ryiLnWOgGMKgAsDnw&hl=en&ei=Kr_wTP6UFJCynweEpajyCg&sa=X&oi=book_result&ct=result&resnum=7&ved=0CEQQ6AEwBg#v=onepage&q&f=false XML based API for an accounting service, might get some ideas from it: http://www.objacct.com/Platform.aspx |
Trading large volumes with penny profits per share | How do you know the shares will go up after you buy? The ultimate risk in your scenario is that you buy at a peak, and then that peak is never reached again. Over time, stock markets go up [more or less because there is a net increase in the overall production of the economy as time goes on]. However, you won't experience much of that gain, because you will be selling only after tiny amounts of profit have been achieved. So your upside is low, your plan is capital-expensive [because it requires you to have significant amount of cash available to make the initial purchase], and your downside [though unlikely] has massive risk. |
Is a company allowed to give employees an option for a bonus to be paid out as a 401k match or cash? | I have worked for companies that have done this. One did have a match and the other did not. When they figured their profit at the end of the year a portion was given to the employees as a 401K deposit. retirement-topics-401k-and-profit-sharing-plan-contribution-limits Total annual contributions (annual additions) to all of your accounts in plans maintained by one employer (and any related employer) are limited. The limit applies to the total of: elective deferrals employer matching contributions employer nonelective contributions allocations of forfeitures The annual additions paid to a participant’s account cannot exceed the lesser of: 100% of the participant's compensation, or $54,000 ($60,000 including catch-up contributions) for 2017; $53,000 ($59,000 including catch-up contributions) for 2016. So as long as everything stays below that $54,000 limit you are good. In one case the decision was made by the company for the employee, the other company gave us the option of bonus check or 401K. I heard that most of the employees wanted the money in the 401K. |
Frustrated Landlord | You're worried about your tenant. That just means you're a nice guy, and it's ok to be nice. At the same time, you can't be expected to lose money on the property or charge well below market on the rent. My suggestions: You know what? She'll totally understand. You've been super nice in keeping the rent low for so many years, and she's been a great tenant, too. At a certain point, inflation kicks in and you have to raise the rent. She'll get that. If she can find a cheaper place, that's a win for both of you. Help her move if you want to be extra nice. Then decide if you want to sell the place or raise the rent. Either option is fine. Listen to your wife. That's just general advice. |
Owner-Financed home sale or Land Contract — how to handle the transaction and the ongoing entity? | I've done this, but on the other side. I purchased a commercial property from someone I had a previous relationship with. A traditional bank wouldn't loan me the money, but the owner was willing to finance it. All of the payments went through a professional escrow company. In our case it was a company called Westar, but I'm sure there are plenty out here. They basically serve as the middle-man, for a fee (something like $5 a payment, plus something to set it up). They have the terms of the loan, and keep track of balances, can handle extra principle payments and what that does to the term of the loan, etc. You want to have a typical mortgage note that is recorded with the local clerk's office. If you look around, you should be able to find a real estate lawyer who can set all this up for you. It will cost you a bit up front, but it is worth it to do this right. As far as taxes, my understanding is that the property itself is taxed the same as any other property transfer. You would owe taxes on the difference between the value of the property when you inherited it and when you sold it. The interest you get from the loan would be taxed as regular income. The escrow company should send you tax forms every year listing the amount of interest that you received. There are also deductions you can take for expenses in the process. |
Why is day trading considered riskier than long-term trading? | Well, let me take your question for baremetal, and aknowledge you did not asked about the difference between daytrading and investing which is obviously leverage. I would not consider daytrading more risky as long as you keep leverageout of the equation. Daytrading can be turbolent and confusing, where things unfold in a very short amount of time, (let trade nfp payroll or some breaking event, yay), eventually the risk is more overseeable in long term trading, as soon as you put leverage into the equation things look vary different, indeed. |
What do these numbers mean? (futures) | No, it means that is only the notional value of that underlying asset of that contract, generally. The contract specification itself is listed on the exchange's websites, and there are really no assumptions you can make about a particular contract. Where S&P futures have one set of specifications, such as what it actually represents, how many each contract holds, how to price profits and losses... a different contract, such as FTSE 100 stock futures have a completely different set of specifications. Anyway in this one example the s&p 500 futures contract has an "initial margin" of $19,250, meaning that is how much it would cost you to establish that contract. Futures generally require delivery of 1,000 units of the underlying asset. So you would take the underlying asset's price and multiple it by 1,000. (what price you use is also mentioned in the contract specification), The S&P 500 index is $1588 you mentioned, so on Jun2013 you would have to delivery $1588 x 1000, or $1,588,000. GREAT NEWS, you only have to put up 1.2% in principal to control a 1.5 million dollar asset! Although, if even that amount is too great, you can look at the E-Mini S&P futures, which require about 1/10th the capital and delivery. This answer required that a lot of different subjects be mentioned, so feel free to ask a new question about the more specific topics. |
Is there a reason to buy a 0% yield bond? | No, there isn't. There are a number of reasons that institutions buy these bonds but as an individual you're likely better off in a low-yield cash account. By contrast, there would be a reason to hold a low-yield (non-zero) bond rather than an alternative low-yield product. |
Is a currency “hedged” ETF actually a more speculative instrument than an unhedged version? | Currency hedge means that you are somewhat protected from movements in currency as your investment is in gold not currency. So this then becomes less speculative and concentrates more on your intended investment. EDIT The purpose of the GBSE ETF is aimed for investors living in Europe wanting to invest in USD Gold and not be effected by movements in the EUR/USD. The GBSE ETF aims to hedge against the effects of the currency movements in the EUR/USD and more closely track the USD Gold price. The 3 charts below demonstrate this over the past 5 years. So as is demonstrated the performance of the GBSE ETF closely matches the performance of the USD Gold price rather than the EUR Gold price, meaning someone in Europe can invest in the fund and get the appropriate similar performance as investing directly into the USD Gold without being affected by currency exchange when changing back to EUR. This is by no way speculative as the OP suggests but is in fact serving the purpose as per the ETF details. |
Other than being able to borrow to invest, how is a margin trading account different from a cash account? | Probably the most significant difference is the Damocles Sword hanging over your head, the Margin Call. In a nutshell, the lender (your broker) is going to require you to have a certain amount of assets in your account relative to your outstanding loan balance. The minimum ratio of liquid funds in the account to the loan is regulated in the US at 50% for the initial margin and 25% for maintenance margins. So here's where it gets sticky. If this ratio gets on the wrong side of the limits, the broker will force you to either add more assets/cash to your account t or immediately liquidate some of your holdings to remedy the situation. Assuming you don't have any/enough cash to fix the problem it can effectively force you to sell while your investments are in the tank and lock in a big loss. In fact, most margin agreements give the brokerage the right to sell your investments without your express consent in these situations. In this situation you might not even have the chance to pick which stock they sell. Source: Investopedia article, "The Dreaded Margin Call" Here's an example from the article: Let's say you purchase $20,000 worth of securities by borrowing $10,000 from your brokerage and paying $10,000 yourself. If the market value of the securities drops to $15,000, the equity in your account falls to $5,000 ($15,000 - $10,000 = $5,000). Assuming a maintenance requirement of 25%, you must have $3,750 in equity in your account (25% of $15,000 = $3,750). Thus, you're fine in this situation as the $5,000 worth of equity in your account is greater than the maintenance margin of $3,750. But let's assume the maintenance requirement of your brokerage is 40% instead of 25%. In this case, your equity of $5,000 is less than the maintenance margin of $6,000 (40% of $15,000 = $6,000). As a result, the brokerage may issue you a margin call. Read more: http://www.investopedia.com/university/margin/margin2.asp#ixzz1RUitwcYg |
Getting Cash from Credit Card without Fees | This was actually (sort of) possible a few years ago. The US Mint, trying to encourage use of dollar coins, would sell the coins to customers for face value and no shipping. Many people did exactly what you are proposing: bought hundreds/thousands of dollars worth of coins with credit cards, reaped the rewards, deposited the coins in the bank, and paid off the credit cards. See here, for example. Yeah, they don't have that program any more. Of course, this sort of behavior was completely predictable and painfully obvious to the credit card companies, who, as far as I know, never let users net rewards on cash advances. They're trying to make money after all, unlike the Mint, which, uh, well... |
Indie Software Developers - How do I handle taxes? | Congratulations! I would start with an attorney. As a 17 year old, you legally cannot sign contracts, so you're going to have to setup some sort of structure with your parents first. Get attorney references -- your parents can ask around at work, if you're friendly with any business owners, ask them, etc. Talk to a few and pick someone who you are comfortable with. Ask your attorney for advice re: sole proprietor/S-Corp/LLC. You have assets, and your parents presumably have some assets, so you need advice about isolating your business from the rest of your life. Do the same thing for accountant references, but ask your attorney for a reference as well. |
What are the best software tools for personal finance? | I just switched (from the abandoned, but good MS Money) to Moneydance 2010 |
Optimal way to use a credit card to build better credit? | Most business credit cards do not report to the personal credit report unless the person pays the card late. Given that fact, any debt carried on these cards does not hurt the credit score if it is not reported. You can carry credit card debt on these cards without hurting your credit score. Just apply for business credit cards now to start building this segment of your credit. |
How is taxation for youtube/twitch etc monetization handled in the UK? | Unless your video does very well, it's unlikely that your income from it will exceed your expenses incurred in making it, such as the purchase prices of your computer and video camera and the cost of your broadband connection, so there shouldn't be any tax to pay. |
Should I take out a loan vs pay off with mother's help? | Is it a gift or a loan? Either way, ask the same lawyer who will do the closing to record a mortgage on the property, your mother holds it. You are required to pay her market interest, 4% or so should pass IRS scrutiny. If it's truly a loan, decide on the payoff time and calculate the payments, she'll have a bit of interest income which will be taxable to her, and you might have a write-off if you itemize, which is unlikely. If it's a gift, since you mentioned gift concerns, she can forgive the interest, and principal each year to total $13K, or file the popular Form 709 to declare the whole gift against her $1M unified lifetime gift exclusion (which negates the whole mortgage/lien thing) |
Why would I buy a bond with a negative yield? | It would be preferable to purchase a bond with a negative yield if the negative yield was the smallest compared to similar financial securities. The purchase or sale of a security is rarely a mutually exclusive event. An individual may have personal reasons or a desire to contribute to the activity the bond is financing. To an entity, the negative yield bond may be part of a cost averaging plan, diversification strategy, a single leg of a multi-leg transaction, or possibly to aid certainty as a hedge in a pairs trade. And of course there may be other unique situations specific to the entity. Said another way, is the Queen of Spades a good card? It depends on the game being played and what is in your hand. |
What do I do with a P11D Expenses & Benefits form? | The P11D is a record of the total benefits you've received in a tax year that haven't been taxed in another way, a bit like the P60 is a record of the total pay and tax you've paid in a tax year. Note that travel for business purposes shouldn't be taxable, and if that's what's being reported on the P11D you may need to make a claim for tax relief to HMRC to avoid having to pay the tax. I'm not sure whether it's normal for such expenses to be reported there. HMRC will normally collect that tax by adjusting your tax code after the P11D is issued, so that more tax is taken off your future income. So you don't need to do anything, as it'll be handled automatically. As to how you know it's accurate, if you have any doubts you'd need to contact your former employer and ask them to confirm the details. In general you ought to know what benefits you actually received so should at least be able to figure out if the number is plausible. If your "travel" was a flight to the USA, then probably it was. If it was a bus ticket, less so :-) If you fill in a tax return, you'll also have to report the amount there which will increase the tax you owe/reduce your refund. You won't be charged twice even if your tax code also changes, as the tax return accounts for the total amount of tax you've already paid. For travel benefits, the exact treatment in relation to tax/P11Ds is summarised here. |
Why are American Express cards are not as popular as Visa or MasterCard? | I have a merchant account and accept Visa, Mastercard, and Discover but not AMEX. I don't take AMEX because they want me to go through another approval process (on top of what was required to get merchant status) and their fees are a percent or two higher than the other cards. This doesn't sound like a lot - but for a business that grosses $1M per year, an extra 2 percentage points is $20K. I don't gross $1M, but the additional cost for me to take AMEX would still use the word "thousand" and I don't see any reason to jump through extra hoops and fill out more forms for the privilege of giving extra money away. I haven't found anyone yet who wanted to pay me with AMEX who can't pay me with another card or a check instead. |
How are exchange rates decided for each country? | Today the rates are arrived simply on the basis of demand and supply. Historically rates were pegged to Gold, when all currencies were printed depending on the Gold reserves. So if one country printed 100 units of currency of a 1gm of gold and other country 10 units of currency for 1 gm of gold, the rate would be 1:10. However In the seventies with shortages of Gold and other reasons, USD became the default standard, so the rate started being pegged to the USD reserves the countries started maintaining. However later in the early eighties, US backing out, the rate purely started getting pegged to market demand and supply. So for most currencies there was a default rate to begin with and today its changed ... Incase of USD/EUR, the initial rate was determined by the weighted average of the currencies that it sought to replace. After that its been market supply and demand. Since most of the trade in international market is US denominated, largest being Oil, each country has created a huge reserves of USD. So technically if China were to bank half its USD denominated treasury bills, the USD would come crashing down, but then China itself would be at disadvantage as its value of USD its holding would become less and it cannot buy the same items. Hence all countries keep hording USD and this means US if they print more money, the value will not come down, because it that happens, all countries holding USD would loose their value of reserve. In essence a country can print as much as currency it wants if all(majority) its debts and trades are denominated in local currencies. This is 100% true for US and hence it can get away by printing money. This is also true to a large extent for Japan as bulk of its Debts are denominated in JPY. |
Does an industry 'standard' have any affect on when a stock might split? | You ask if Tesla being a car company should feel a pressure to split their stock because their share price is much higher than the other car companies. But is Tesla a car company? It was founded by Elon Musk who founded PayPal and SpaceX. He sees him self as the next generation of entrepreneurs that came after Jobs and Gates. So he compares Tesla ($142) companies to Google ($856), Amazon ($284) and eBay ($52). But even if you see Tesla as a car company, Musk sees it more like Audi ($828) or BMW ($100) then he does Ford ($16.30) just because the base price of their models ($80,000+) is much greater than Ford or GM. The theory is that keeping the share price in a lower range helps investors. But since 40% of the company is owned by mutual funds is that really a concern? Therefore most small investors get the company though a mutual fund. |
Currently sole owner of a property. My girlfriend is looking to move in with me and is offering to pay 'rent'. Am I at risk here? | Disclaimer: I am a law student, not a lawyer, and don't claim to have a legal opinion one way or another. My answer is intended to provide a few potentially relevant examples from case law in order to make the point that you should be cautious (and seek proper advice if you think that caution is warranted). Nor am I claiming that the facts in these cases are the same as yours; merely that they highlight the flexible approach that the courts take in such cases, and the fact that this area of law is complicated. I don't think it is sensible to just assume that there is no way that your girlfriend could acquire property rights as a rent paying tenant if arranged on an informal basis with no evidence of the intention of the arrangement. One of the answers mentions a bill which is intended to give non-married partners more rights than they have presently. But the existence of that bill doesn't prove the absence of any existing law, it merely suggests a possible legal position that might exist in the future. A worst-case assumption should also be made here, since you're considering the possibility of what can go wrong. So let's say for the sake of the argument that you have a horrible break up and your girlfriend is willing to be dishonest about what the intentions were regarding the flat (e.g. will claim that she understood the arrangement to be that she would acquire ownership rights in exchange for paying two thirds of the monthly mortgage repayment). Grant v Edwards [1986] Ch 638 - Defendant had property in the name of himself and his brother. Claimant paid nothing towards the purchase price or towards mortgage payments, but paid various outgoings and expenses. The court found a constructive trust in favor of the claimant, who received a 50% beneficial interest in the property. Abbot v Abbot [2007] UKPC 53, [2008] 1 FLR 1451 - Defendant's mother gifted land to a couple with the intention that it be used as a matrimonial home. However it was only put into the defendant's name. The mortgage was paid from a joint account. The claimant was awarded a 50% share. Thompson v Hurst [2012] EWCA Civ 1752, [2014] 1 FLR 238 - Defendant was a council tenant. Later, she formed a relationship with the claimant. They subsequently decided to buy the house from the council, but it was done in the defendant's name. The defendant had paid all the rent while a tenant, and all the mortgage payments while an owner, as well as all utility bills. The claimant sometimes contributed towards the council tax and varying amounts towards general household expenses (housekeeping, children, etc.). During some periods he paid nothing at all, and at other times he did work around the house. Claimant awarded 10% ownership. Aspden v Elvy [2012] EWHC 1387 (Ch), [2012] 2 FCR 435 - The defendant purchased a property in her sole name 10 years after the couple had separated. The claimant helped her convert the property into a house. He did much of the manual work himself, lent his machinery, and contributed financially to the costs. He was awarded a 25% share. Leeds Building Society v York [2015] EWCA Civ 72, [2015] HLR 26 (p 532) - Miss York and Mr York had a dysfunctional and abusive relationship and lived together from 1976 until his death in 2009. In 1983 Mr York bought a house with a mortgage. He paid the monthly mortgage repayments and other outgoings. At varous times Miss York contributed her earnings towards household expenses, but the judge held that this did "not amount to much" over the 33 year period, albeit it had helped Mr York being able to afford the purchase in the first place. She also cooked all the family meals and cared for the daughter. She was awarded a 25% share. Conclusion: Don't make assumptions, consider posting a question on https://law.stackexchange.com/ , consider legal advice, and consider having a formal contract in place which states the exact intentions of the parties. It is a general principle of these kinds of cases that the parties need to have intended for the person lacking legal title to acquire a beneficial interest, and proof to the contrary should make such a claim likely to fail. Alternatively, decide that the risk is low and that it's not worth worrying about. But make a considered decision either way. |
Reinvesting dividends and capital gains | No, the reinvestment is done as a courtesy. Consider, one can have, say, 100 shares of a $50 stock. A 2% dividend is $100/yr or $25/quarter. It would be a pretty bad deal if brokers charged you even $5 for that trade. When cap gains and dividends are grouped as you suggest, it refers to Mutual Funds. My funds will have a year end dividend and cap gain distribution. In a non-retirement account, one has to pay the tax due, and be sure to add this to your cost basis, as it's money you are effectively adding to your account. It does not mean cap gain the same as when you sell your shares of Apple for a huge gain. Those check boxes seem to offer you a chance to put all your holding on the same reinvestment plan for div/cap gain. You should also be able to choose one by one what you'd like to do. |
Why do card processing companies discourage “cash advance” activities | I thought this was because credit card companies charge the retailer a fee to accept credit card payments. If you spend $100, the retailer pays $1 (or whatever percentage they have negotiated) to the credit card provider. Handing over $100 cash and paying $1 fee to Visa means a loss to the retailer. The same transaction on $100 worth of product means the loss is accepted out of the profit margin which the retailer accepts to attract custom. |
Form 1040 - where to place my stipend? | Some of the 45,000 might be taxable. The question is how was the stipend determined. Was it based on the days away? The mile driven? The cities you worked in? The IRS has guidelines regarding what is taxable in IRS Pub 15 Per diem or other fixed allowance. You may reimburse your employees by travel days, miles, or some other fixed allowance under the applicable revenue procedure. In these cases, your employee is considered to have accounted to you if your reimbursement doesn't exceed rates established by the Federal Government. The 2015 standard mileage rate for auto expenses was 57.5 cents per mile. The rate for 2016 is 54 cents per mile. The government per diem rates for meals and lodging in the continental United States can be found by visiting the U.S. General Services Administration website at www.GSA.gov and entering "per diem rates" in the search box. Other than the amount of these expenses, your employees' business expenses must be substantiated (for example, the business purpose of the travel or the number of business miles driven). For information on substantiation methods, see Pub. 463. If the per diem or allowance paid exceeds the amounts substantiated, you must report the excess amount as wages. This excess amount is subject to income tax with-holding and payment of social security, Medicare, and FUTA taxes. Show the amount equal to the substantiated amount (for example, the nontaxable portion) in box 12 of Form W-2 using code “L" |
Need something more basic than a financial advisor or planner | What you are looking for is a Money Coach or a Personal Finance Coach. From mymoneycoach.com: "Money Coach: Everyone uses money, but few people fully understand how to use it wisely. To be debt free and enjoy a comfortable lifestyle takes special skills. Money coaches provide solutions for household budgeting, investing, using credit wisely, and saving for retirement. With the principles offered by a money coach, you can live the life you want to live." Usually money coaches or personal finance coaches will not tell you "you should put your money here or there" but instead they will work with you to identify and correct bad money behaviours that affect more than just your investments, and they will not sell you anything. Maybe you could take a look at some coaches in your area, but a lot of them work via the internet too. Good luck! |
Who can truly afford luxury cars? | I will answer the question from the back: who can NOT afford luxury cars? Those whose parents paid for their college education, cannot afford luxury cars, but buy them anyway. Why? I have what may seem a rather shocking proposition related to the point of not saving for kids' college: parents do NOT owe children a college education. Why should they? Did your parents fund your college? Or did you get it through a mix of Pell grants, loans, and work? If they did, then you owe them $ back for it, adjusted for inflation. If they did not, well then why do you feel your children deserve more than you deserved when you were a child? You do not owe your children a college education. They owe it to themselves. Gifts do not set one up for success, they set one up for dependence. I will add one more hypothesis: financial discipline is best learned through one's own experiences. When an 18+ year old adult gets a very large amount of money as a gift every year for several years (in the form of paid tuition), does that teach them frugality and responsibility? My proposition is that those who get a free ride on their parents' backs are not well served in terms of becoming disciplined budgeters. They become the subjects of the question in this post: those why buy cars and houses they cannot afford, and pay for vacations with credit cards. We reap what we sow as a society. Of course, college is only one case in point, but a very illustrative one. The bigger point is that financial discipline can only be developed when there are opportunities to develop it. Such opportunities arise under one important condition: financial independence. What does buying children cars for their high-school graduation, buying them 4 years of college tuition, and buying them who knows what else (study abroad trips, airfare, apartment leases, textbooks, etc. etc.) teach? Does it teach independence or dependence? It can certainly (at least that's what you hope for) teach them to appreciate when others do super nice things for them. But does free money instill financial responsibility? Try to ask kids whose parents paid for their college WHY they did it. "Because my parents want me to succeed" is probably the best you can hope for. Now ask them, But do your parents OWE you a college education? "Why yes, I guess they do." Why? "Well, I guess because they told me they do. They said they owe it to me to set me up for success in life." Now think about this: Do people who become financially successful achieve that success because someone owed something to them? Or because they recognized that nobody owes them anything, and took it upon themselves to create that success for themselves? These are not very comfortable topics to consider, especially for those of you who have either already sunk many tens of thousands of dollars into your childrens' college education. Or for those who have been living very frugally and mindfully for the past 10-15 years driven by the goal of doing so. But I want to open this can of worms because I believe fundamentally it may be creating more problems than it is solving. I am sure there are some historical and cultural explanations for the ASSUMPTION that has at some point formed in the American society that parents owe their children a college education. But as with most social conventions, it is merely an idea -- a shared belief. It has become so ingrained in conversations at work parties and family reunions that it seems that many of those who are ardent advocates of the idea of paying for their childrens' education no longer even understand why they feel that way. They simply go with the flow of social expectations, unwilling or unable to question either the premises behind these expectations, or the long-term consequences and results of such expectations. With this comment I want to point to the connection between the free financial gifts that parents give to their (adult!) children, and the level of financial discipline of these young adults, their spending habits, sense of entitlement, and sense of responsibility over their financial decisions. The statistics of the U.S. savings rate, average credit card debt, foreclosures, and bankruptcy indeed tell a troubling story. My point is that these trends don't just happen because of lots of TV advertising and the proverbial Jones's. These trends happen because of a lack of financial education, discipline, and experience with balancing one's own checkbook. Perhaps we need to think more deeply about the consequences of our socially motivated decisions as parents, and what is really in our children's best interests -- not while they are in college, but while they live the rest of their lives after college. Finally, to all the 18+ y.o. adult 'children' who are reeling from the traumatic experience of not having their parents pay for their college (while some of their friends parents TOTALLY did!), I have this perspective to offer: Like you are now, your parents are adults. Their money is theirs to spend, because it was theirs to earn. You are under no obligation to pay for your parents' retirement (not that you were going to). Similarly your parents have no obligation to pay for your college. They can spend their money on absolutely whatever they want: be it a likeside cottage, vacations, a Corvette, or slots in the casino. How they spend their money is their concern only, and has nothing to do with your adult needs (such as college education). If your parents mismanage their finances and go bankrupt, it is their obligation to get themselves back in the black -- not yours. If you have the means and may be so inclined, you may help them; if you do not or are not, fair enough. Regardless of what you do, they will still love you as their child no less. Similarly, if your parents have the means and are so inclined, they may help you; if they do not or are not, fair enough. Regardless of what they do, you are to love them as your parents no less. Your task as an adult is to focus on how you will meet your own financial needs, not to dwell on which of your needs were not met by people whose finances should well be completely separate from yours at this point in life. For an adult, to harbor an expectation of receiving something of value for free is misguided: it betrays unjustified, illusory entitlement. It is the expectation of someone who is clueless as to the value of money measured by the effort and time needed to earn it. When adults want to acquire stuff or services, they have to pay for these things with their own money. That's how adults live. When adults want to get a massage or take a ride in a cab, are they traumatized by their parents' unfulfilled obligation to pay for these services? No -- they realize that it's their own responsibility to take care of these needs. They either need to earn the money to pay for these things, or buy them on credit and pay off the debt later. Education is a type of service, just like a massage or a cab ride. It is a service that you decide you need to get, in order to do xyz (become smarter, get a better paying job, join a profession, etc.). Therefore as with any other service, the primary responsibility for paying for this service is yours. You have 3 options (or their combination): work now so that you can earn the money to pay for this service later; work part-time while you are receiving this service; acquire the service on credit and work later to pay it off. That's it. This is called the real world. The better you can deal with it, the more successful you will become in it. Good luck! |
Why did my number of shares of stock decrease? | During a stock split the only thing that changes is the number of shares outstanding. Typically a stock splits to lower its price per share. Sometimes if a company's value is falling it will do a reverse split where X shares will be exchanged for Y shares. This is typically done to avoid being de-listed from an exchange if the price per share falls below a certain threshold, usually $1. Again the only thing changing is the number of shares outstanding. A 20 for 1 reverse split means for every 20 shares outstanding the shareholder will be granted one new share. Example X Co. has 1,000,000 shares outstanding for a price of $100 per share. It does a 1 for 10 split. Now there are 10,000,000 shares outstanding for a price of $10 per share. Example Y Co has 1,000,000 shares outstanding for a price of $1 per share. It does a 10 for 1 reverse split. Now there are 100,000 shares outstanding for a price of $10. Quickly looking at the news for ASTI it looks like it underwent a 20 for 1 reverse split. You should probably look at your statements and ask your broker how the arithmetic worked in your case. Investopedia links for Reverse Stock Split and Stock Split |
How to report a personal expense for an LLC partnership paid in one year and reimbursed in another? | You report it when the expense was incurred/accrued. Which is, in your case, 2014. There's no such thing as "accounts payable" on tax forms, it is an account on balance sheet, but most likely it is irrelevant for you since your LLC is probably cash-based. The reimbursement is a red-herring, what matters is when you paid the money. |
Why would someone buy a way out-of-the-money call option that's expiring soon? | I think the best answer that doesn't make the buyer look like a moron is this. Buyer had previously sold a covered call. They wanted to act on a different opportunity so they did a closing buy/write with a spread of a couple cents below asking for the stock, but it dipped a couple cents and the purchase of those options to close resolved at 4 cents due to lack of sellers. |
How does the currency between countries relate | Firstly currency prices, like any asset, depend on supply and demand. Meaning how many people want to exchange a currency to another one vs. wanting to buy that currency using another currency. Secondly, it really depends on which country and economy you are talking about. In emerging economies, currencies are very often influenced by the politics of that country. In cases like the US, there are a myriad reasons. The USD is mostly governed by psychology (flight to safety) and asset purchases/sales. In theory, currencies balance, given the inflation of a country and its trade with other countries. e.g. Germany, which was always exporting more than it was importing, had the problem of a rising currency. (Which would make its exports more expensive on foreign markets. This is the balancing act.) |
What is the fastest way to retire, using passive income on real estate | It is worth noting first that Real Estate is by no means passive income. The amount of effort and cost involved (maintenance, legal, advertising, insurance, finding the properties, ect.) can be staggering and require a good amount of specialized knowledge to do well. The amount you would have to pay a management company to do the work for you especially with only a few properties can wipe out much of the income while you keep the risk. However, keshlam's answer still applies pretty well in this case but with a lot more variability. One million dollars worth of property should get you there on average less if you do much of the work yourself. However, real estate because it is so local and done in ~100k chunks is a lot more variable than passive stocks and bonds, for instance, as you can get really lucky or really unlucky with location, the local economy, natural disasters, tenants... Taking out loans to get you to the million worth of property faster but can add a lot more risk to the process. Including the risk you wouldn't have any money on retirement. Investing in Real Estate can be a faster way to retirement than some, but it is more risky than many and definitely not passive. |
When to buy and sell bonds | Why does selling a bond drive up the yield? The bond will pay back a fixed amount when it comes due. The yield is a comparison of what you pay for the bond and what will be repaid when it matures (assuming no default). Why does the yield go up if the country is economically unstable? If the country's economy is unstable, that increases the chance that they will default and not pay the full value of the bonds when they mature. People are selling them now at a loss instead of waiting for a default later for a greater loss. So if you think Greece is not going to default as it's highly likely a country would completely default, wouldn't it make sense to hold onto the bonds? Only if you also think that they will pay back the full value at maturity. It's possible that they pay some, but not all. It's also possible that they will default. It's also possible that they will get kicked out of the Euro and start printing Drachmas again, and try to pay the bonds back with those which could devalue the bonds through inflation. The market is made of lots of smart people. If they think there are reasons to worry, there probably are. That doesn't mean they can predict the future, it just means that they are pricing the risk with good information. If you are smarter than the herd, by all means, bet against them and buy the bonds now. It can indeed be lucrative if you are right, and they are wrong. |
Does a stock's price represent current liquidation of all shares? | Is the stock's price at any given moment the price at which all shares could be sold to new investors? No. For the simple fact that the current bid/offer always have sizes associated. What you should be looking at is the consolidated price to buy/sell X shares (10bn doesn't really work as not everyone is willing to sell/buy). If you look at the spread of the consolidated price at your quantity level, you'd notice it would be in stark contrast to the spread of the best bid/offer but (by definition) that would be the price to buy or sell X shares to new investors. Edit Calculation of the consolidated price of X shares: You go through the order book and calculate the size-weighted average price until you covered X. Example: So the consolidated price for 3000 shares would be $39.80, the consolidated price for 2000 shares would be $39.90. |
Small withdrawals from IRA | First - Welcome to Money.SE. You gave a lot of detail, and it's tough to parse out the single question. Actually, you have multiple issues. $1300 is what you need to pay the tax? In the 25% bracket plus 10% penalty, you have a 65% net amount. $1300/.65 = Exactly $2000. You withdraw $2000, have them (the IRA holder) withhold $700 in federal tax, and you're done. All that said, don't do it. Nathan's answer - payment plan with IRS - is the way to go. You've shared with us a important issue. Your budget is running too tight. We have a post here, "the correct order of investing" which provides a great guideline that applies to most visitors. You are missing the part that requires a decent sized emergency fund. In your case, calling it that, may be a misnomer, as the tax bill isn't an unexpected emergency, but something that should have been foreseeable. We have had a number of posts here that advocate the paid in full house. And I always respond that the emergency fund comes first. With $70K of income, you should have $35K or so of liquidity, money readily available. Tax due in April shouldn't be causing you this grief. Please read that post I linked and others here to help you with the budgeting issue. Last - You are in an enviable position, A half million dollars, no mortgage, mid 40s. Easily doing better than most. So, please forgive the soapbox tone of the above, it was just my "see, that's what I'm talking about" moment from my tenure here. |
Loan to son - how to get it back | I started a business a few years ago. At one point it wasn't going so well and my father "loaned" me an amount not too dissimilar to what you've done. From a personal perspective, the moment I took that loan there was a strain the relationship. Especially when I was sometimes late on the interest payments... Unfortunately thoughts like "he doesn't need this right now, but if I don't pay the car loan then that is taken away" came up a few times and paying the interest fell to the bottom of the monthly bill payment stack. At some point my wife and I finally took a hard look at my finances and goals. We got rid of things that simply weren't necessary (car payment, cable tv, etc) and focused on the things we needed to. Doing the same with the business helped out as well, as it helped focus me to to turn things around. Things are now going great. That said, two of my siblings ran into their own financial trouble that our parents helped them on. When this happened my father called us together and basically forgave everyone's debt by an equal amount which covered everything plus wrote a check to the one that was doing fine. This "cleared the air" with regards to future inheritance, questions about how much one sibling was being helped vs another, etc. Honestly, it made family gatherings more enjoyable as all that underlying tension was now gone. I've since helped one of my children. Although I went about it an entirely different way. Rather than loan them money, I gave it to them. We also had a few discussions on how I think they ought to manage their finances and a set of goals to work towards which we co-developed. Bearing in mind that they are an individual and sometimes you can lead a horse... Given the current state of things I consider it money well "spent". |
Book or web site resources for an absolute beginner to learn about stocks and investing? | The Motley Fool's How to Invest How To Invest Benjamin Graham's The Intelligent Investor The Intelligent Investor If you like The Intelligent Investor then try Benjamin's Security Analysis. But that one is not a beginner book. |
Can you explain the mechanism of money inflation? | Assuming constant velocity, inflation is caused by the difference between the growth in the money supply and growth in real output. In other words, this means that the money supply growing faster than output is expanding causes inflation to arise. |
What happens to options if a company is acquired / bought out? | When the buyout happens, the $30 strike is worth $10, as it's in the money, you get $10 ($1000 per contract). Yes, the $40 strike is pretty worthless, it actually dropped in value today. Some deals are worded as an offer or intention, so a new offer can come in. This appears to be a done deal. From Chapter 8 of CHARACTERISTICS AND RISKS OF STANDARDIZED OPTIONS - FEB 1994 with supplemental updates 1997 through 2012; "In certain unusual circumstances, it might not be possible for uncovered call writers of physical delivery stock and stock index options to obtain the underlying equity securities in order to meet their settlement obligations following exercise. This could happen, for example, in the event of a successful tender offer for all or substantially all of the outstanding shares of an underlying security or if trading in an underlying security were enjoined or suspended. In situations of that type, OCC may impose special exercise settlement procedures. These special procedures, applicable only to calls and only when an assigned writer is unable to obtain the underlying security, may involve the suspension of the settlement obligations of the holder and writer and/or the fixing of cash settlement prices in lieu of delivery of the underlying security. In such circumstances, OCC might also prohibit the exercise of puts by holders who would be unable to deliver the underlying security on the exercise settlement date. When special exercise settlement procedures are imposed, OCC will announce to its Clearing Members how settlements are to be handled. Investors may obtain that information from their brokerage firms." I believe this confirms my observation. Happy to discuss if a reader feels otherwise. |
Equation to determine if a stock is oversold and by how much? | There are those who would suggest that due to the Efficient Market Hypothesis, stocks are always fairly valued. Consider, if non-professional posters on SE (here) had a method that worked beyond random chance, everyone seeking such a method would soon know it. If everyone used that method, it would lose its advantage. In theory, this is how stocks' values remain rational. That said, Williams %R is one such indicator. It can be seen in action on Yahoo finance - In the end, I find such indicators far less useful than the news itself. BP oil spill - Did anyone believe that such a huge oil company wouldn't recover from that disaster? It recovered by nearly doubling from its bottom after that news. A chart of NFLX (Netflix) offers a similar news disaster, and recovery. Both of these examples are not quantifiable, in my opinion, just gut reactions. A quick look at the company and answer to one question - Do I feel this company will recover? To be candid - in the 08/09 crash, I felt that way about Ford and GM. Ford returned 10X from the bottom, GM went through bankruptcy. That observation suggests another question, i.e. where is the line drawn between 'investing' and 'gambling'? My answer is that buying one stock hoping for its recovery is gambling. Being able to do this for 5-10 stocks, or one every few months, is investing. |
Is 6% too high to trade stocks on margin? | That seems a little high in my experience. I've used a home equity line of credit instead, as the rates are much lower (~3.5%). |
Make punctual contributions to IRS based on earnings | I will answer this question broadly for various jurisdictions, and also specifically for the US, given the OP's tax home: Generally, for any tax jurisdiction If your tax system relies on periodic prepayments through the year, and a final top-up/refund at the end of the year (ie: basically every country), you have 3 theoretical goals with how much you pre-pay: Specifically, for the U.S. All information gathered from here: https://www.irs.gov/businesses/small-businesses-self-employed/estimated-taxes. In short, depending on your circumstance, you may need to pay quarterly estimated tax payments to avoid penalties on April 15th. Even if you won't be penalized, you, may benefit from doing so anyway (to force yourself to save the money necessary by April 15th). I have translated the general goals above, into US-specific advice: |
Estate taxes and the top 1 percent by net worth | Data is a funny thing. There are many different ways of constructing data sets. Keep in mind, the cite you linked is fine, I follow this kind of site when I am data mining. They got their data from the Government, and there's no reason to doubt its validity. Keep in mind, it's a survey. They extrapolate from a survey of a small population - In the 2016 survey, 6,254 families were interviewed, and in the 2013 survey, 6,026 were interviewed. 1) Let's set that aside, and look at the numbers as if they were gospel. $10.37M net worth to be top 1%. That's people at all different ages, and not the wealth cutoff for those dying, else the estate tax would hit closer to the 1%. Given the limited data set, I'd only hypothesize, if we graphed the age (along the bottom, X axis) vs number of people, the curve would peek in mid to late 60's, as people retire. With 20 years for the couple to spend and gift, it's not tough to imagine that by the time they pass away, the taxable estate $11M couple falls to just .2%. 2) When the estate tax impacted estates over just $600K, and my daughter was born, we set up a trust. Out net worth was barely positive, but insurance alone would have created enough wealth to have our orphaned child be subject to the tax of our estate before she received a dime. We also used the trust to fund her college. As a completed gift, had we made some bad decisions and lost it all, at least that money would be protected. Keep in mind, there are different flavors of trusts, but it's safe to say that in a survey to collect data, the million dollar+ trusts are considered family wealth. Not tough to imagine a good fraction of those families over $10M have a nice chunk already protected this way. 3) Last - For any illiquid assets, there's a discount that gets applied, typically 30%. I own a ranch, and want to start gifting it to the kids, the process involves creating stock, with restrictions, as a way to transfer the fractions required to gift the $14K/yr per person combination. (That is, a couple can gift 14x4 = $56K to a child with a spouse. 4 kids, all married, and the gifting is $224K/yr, $320K at full valuation. Again, these gifts may be to irrevocable trusts, and still thought of as their wealth. |
Switch from DINK to SIWK: How do people afford kids? | I see three areas of concern for your budget: This is way high. I am not sure how much of a house you live in, but the total of these two numbers should be around 25% not 41%. I am a person that considers giving an important part of wealth building, and gives to my local church. But as one other person has rightly said, this amount is irresponsible. I am okay at 12%, but would like to see you at 10% until you are in a little better shape. That is pretty vague for a significant portion of your income. What makes up that other category? You are doing pretty darn good financially, although I would like to see some contributions to investments. I think you are kind of failing there. Your debt management is spot on. That is okay, we can all get better at some stuff. There needs to be some numbers behind these percentages. The bottom line is if you make an average household income, say around 55K, you are going to struggle with or without children. If you guys make about 110K, and your wife makes 50% of your income, and she quits work to take care of the kidlets, then you will be in that "boat". Having said all that I find 37% of your income as questionable. At least 5% of that should be invested, so we are kind of like at 32%. That is a significant amount of money. |
Is the need to issue bonds a telltale sign that the company would have a hard time paying coupons? | Apple is currently the most valuable company in the world by market capitalisation and it has issued bonds for instance. Amazon have also issued bonds in the past as have Google. One of many reasons companies may issue bonds is to reduce their tax bill. If a company is a multinational it may have foreign earnings that would incur a tax bill if they were transferred to the holding company's jurisdiction. The company can however issue bonds backed by the foreign cash pile. It can then use the bond cash to pay dividends to shareholders. Ratings Agencies such as Moody's, Fitch and Standard & Poor's exist to rate companies ability to make repayments on debt they issue. Investors can read their reports to help make a determination as to whether to invest in bond issues. Of course investors also need to determine whether they believe the Ratings Agencies assesments. |
How does investment into a private company work? | To me this sounds like a transaction, where E already owns a company worth 400k and can therefore pocket the money from D and give D 25% of the profits every year. There is nothing objective (like a piece of paper) that states the company is worth 400K. It is all about perceived value. Some investors may think it is worth something because of some knowledge they may have. Heck, the company could be worth nothing but the investor could have some sentimental value associated to it. So is it actually the case that E's company is worth 400k only AFTER the transaction? It is worth what someone pays for it when they pay for it. I repeat- the 400K valuation is subjective. In return the investor is getting 25% ownership of the product or company. The idea is that when someone has ownership, they have a vested interest in it being successful. In that case, the investor will do whatever he/she can to improve the chances of success (in addition to supplying the 100K capital). For instance, the investor will leverage their network or perhaps put more money into it in the future. Is the 100k added to the balance sheet as cash? Perhaps. It is an asset that may later be used to fund inventory (for instance). ... and would the other 300k be listed as an IP asset? No. See what I said about the valuation just being perception. Note that the above analysis doesn't apply to all Dragons Den deals. It only applies to situations where capital is exchanged for ownership in the form of equity. |
What are “trailing 12-month total returns”? | Total Return is the percent change in value (including andy dividends) of an instrument. The "trailing 12-month" means that your starting point is the value 12 months ago. So the formula is: where V is the value of the instrument on the reference date, V0 is the value of the instrument 12 months prior to the reference date, and D is the amount of dividends paid between the two dates. |
I am Brasilian resident, how to buy shares on NYSE? | There are ETFs listed on the Brazilian stock market. Specifically there is one for S&P500 - SPXI11, which might fulfill your requirements, though as one commenter has observed, it doesn't answer your original question. |
What is the minimum lot size (number of shares) for the London Stock Exchange? | 1 lot is 100 shares on London stock exchange |
How do I analyse moving averages? | Moving Average is mere average line based on historical period; broadly use to view the trend. But it has no relation to price action in due future course. If price is going below 20 SMA then in near future even the SMA will start directing toward south. In your case if price has fallen below all the short period average lines and long period average line then it is bearish in nature. Soon in few days you may find 20 SMA leading downwards followed by closest period and then long. Also SMA and EMA can best be observed in charting software in candlestick mode. Because these moving averages can also be adjusted and viewed based on Opening price, High prices, Low Price or closing price. In you case I guess the data is of closing price data. Overlapping of averages may be sign of reversals. So if you want to buy this stock you may have to wait till all the average lines cross-over and when new trend begins with SMA of shortest avg period (20) leading above the long avg period (90 days in your case). Then you can buy and just follow the trend. I hope it answers you question. |
Value of credit score if you never plan to borrow again? | According to Money Girl, home insurance premiums are higher if you have a poor credit score. You might self-insure though if you are wealthy. |
What actions can I take against a bank for lack of customer service? | Figure out who regulates the bank. Complain to your state banking/consumer affairs department. Complain to your state Attorney General. The Feds regulate most banks too, there are several different agencies, and I believe the way they regulate banks has changed recently. Try contacting the US Comptroller of the Currency. |
Can I write off time spent learning my trade - Two-Man S-Corp | I'm not sure what you mean by "writing off your time," but to answer your questions: Remember that, essentially, you are a salaried employee of a corporation. So if you are spending time at your job, even if you are not billing anything to a client, you are earning your salary. If there are costs involved with these activities (maybe class fees, a book purchase, or travel expenses), the corporation should be paying the costs as business expenses. However, the logistics of this, whether the corporation writes a business check to the vendor directly, or you put the expenses on a personal credit card and are reimbursed with an expense check from the corporation, don't matter. Your accountant can show you the right way to do this. |
Purchasing options between the bid and ask prices, or even at the bid price or below? | I frequently do this on NADEX, selling out-of-the-money binary calls. NADEX is highly illiquid, and the bid/ask is almost always from the market maker. Out-of-the-money binary calls lose value quickly (NADEX daily options exist for only ~21 hours). If I place an above-ask order, it either gets filled quickly (within a few minutes) due to a spike in the underlying, or not at all. I compensate by changing my price hourly. As Joe notes, one of Black-Scholes inputs is volatility, but price determines (implied) volatility, so this is circular. In other words, you can treat the bid/ask prices as bid/ask volatilities. This isn't as far-fetched as it seems: http://www.cmegroup.com/trading/fx/volatility-quoting-fx-options.html |
Changing Bank Account Number regularly to reduce fraud | We change it every so often to reduce fraud. This is idiocy. They receive regular payments. They are asking the people who pay them to regularly change where their money is being sent. This increases their exposure to fraud dramatically as each time the account is changed, there is a risk it will be changed to an account they do not control. This is a huge red flag. Confirm that this is authentic and, if so, insist that they sign an agreement accepting all liability for the risks this crazy policy causes, otherwise, you should refuse to go through the effort of confirming new accounts and risking typing or communication errors on a regular basis. This is definitely a "what were they thinking?!" kind of thing. If it's not fake entirely. (This answer assumes that you were given a correct explanation, that they change it regularly believing that will reduce fraud.) |
What does it mean “sell on ask” , “sell on bid” in stocks? | Honestly, I wonder if the other answerers aren't overthinking it. Their answers are detailed and correct, but what your coach may be saying is this: When you have bought a stock, on cash or margin, and you are watching it rise you are evaluating when you sell on the price of the stock you are seeing. In reality, you should look at the bid (price buyers will give you for the stock) and ask (price sellers will charge you for the stock) prices. If the stock is going up, odds are the price of the stock is very close to the ask price because it is purchases that are driving it up, but that's not what you're going to get when you sell. You're going to get something around the bid price. If the spread between the two is large (i.e. a volatile stock) this could be many cents or more lower than the ask price. Therefore, what your coach may mean by "Selling on Ask" is you're using the stock price when it's equal or close to the ask price to decide when to sell, instead of letting the stock peak and drop (when its price will approach the bid price) or letting the trailing bid offers catch up to your desired sell point and selling then (i.e. letting the stock point grow PAST your sell point, dragging the bid price up with it). Just a thought, but that sounds like a term a coach would come up with to mean selling and getting less than you thought you were going to from the sale. (I know it's a necro reply, but the Interwebs are immortal and people come via Google... I did) |
Is buying or selling goods for gold or silver considered taxable? | Of course. The rationale is exactly the same as always: profit is taxed. The fact that you use intermediate barter to make that profit is irrelevant. To clarify, as it seems that you think it makes a difference that no money "changed hands". Consider this situation: So far your cost is $10000. How will the tax authority address this? They will look at the fair market value of the barter. You got gold worth of $20000. So from their perspective, you got $20000, and immediately exchanged it into gold. What does it mean for you? That you're taxed on the $10000 gain you made on your product X (the $20000 worth of barter that you received minus the $10000 worth of work/material/expenses that you spend on producing the merchandise), and that you have $20000 basis in the gold that you now own. If in a year, when you plan to sell the gold, its price drops - you can deduct investment losses. If its price goes up - you'll have investment gain. But for the gain you're making on your product X you will pay taxes now, because that's when you realized it - sold the merchandize and received in return something else of a value. |
When a company liquidates, are earlier investors paid back first? | Assuming no debt, as you've specified in the comments to your question, the assets should generally be distributed proportional to ownership share. BUT, without any sort of agreement, there might be contention on what each investor's share is and that might get fought out in court. With a corporation issuing shares, the corporate charter probably defines the relationship between different classes of shares (or specifies only one class). For a partnership though, you could conceivable have people making claims of ownership stake based on labor in addition to any cash that they put up. Messy if there's no up-front agreement. |
In general, is it financially better to buy or to rent a house? | An important factor you failed to mention is the costs associated with owning a home. For example, every 10 / 15 years, you have to replace your AC unit ($5k) and what about replacing a roof (depends on size, but could be $10k)? Not to mention, paying a couple thousand annually for property taxes. When renting, you never have to worry about any of these three..... |
If I have all this stock just sitting there, how can I lend it out to people for short selling? | Typically, as an individual, you can't just decide you want to lend out some securities. There is a lot of legalities that must take place in order to engage in such a transaction. It's a regulated industry and the contractual obligations that exist between borrower and seller are taken care of ahead of time by the broker with their client, prior to any actual transaction taking place. http://en.wikipedia.org/wiki/Securities_lending I say typically, becuase I'm guessing that if you are a large enough client and own a substantial block of shares (I really mean a lot) you may be in the unique position of being able to lend out. I'm not sure what the logistics of this would look like, but I think the brokerage house would approach you and negotiate a borrowing rate. In that situation, you may negotiate lending to the the brokerage house and not necessarily directly to the borrower. |
How to get a down payment for your next home? Use current home as the down payment on the new one? | This is of course a perfectly normal thing to happen. People trade up to a bigger house every day. When you've found a bigger house you want to move to and a buyer for your existing one, you arrange 'closing dates' for both i.e. the date on which the sale actually happens. Usually you make them very close, either on the same day or with an overlap of a few weeks. You use the equity (i.e. the difference between the house value and the mortgage) in the old house as the down payment on the new house. You can't of course use the part of the old house that is mortgaged. If the day you buy the new and sell the old is the same, your banks and lawyers do everything for you on that day. If there is an overlap then you need something called 'bridge financing' to cover the period when you own two houses. Banks are used to doing this, and it's not really that expensive when you take into account all the other costs of moving house. Talk to them for details. As a side note, it is generally reckoned not to be worth buying a house if you only intended to live there one or two years. The costs involved in the process of buying, selling and moving usually outweigh any gains in house value. You may find yourself with a higher down payment if you rent for a year or two and save up a down payment for your 'bigger' house instead. |
New car cash vs finance | Yes, maybe. Sometimes the mother company (that makes the car) covers a bit of the loss that comes from the super-offer loan, so the dealer loses a bit less. But generally, you are right. you should be able to talk them into some rebate that gets you around the given number, depending on how good you are a negotiator (and how urgently they need to sell a car) |
How does start-up equity end up paying off? | Equity could mean stock options. If that's the case if the company makes it big, you'll have the option to buy stocks cheap (which can then be sold at a huge profit) How are you going to buy those without income? 5% equity is laughable. I'd be looking for 30-40% if not better without salary. Or even better, a salary. To elaborate, 5% is fine, and even normal for an early employee taking a mild pay cut in exchange for a chance at return. That chance of any return on the equity is only about 1/20 (94% of startups fail) There is no reason for an employee to work for no pay. An argument could be made for a cofounder, with direct control and influence in the company to work for equity only, but it would be a /lot/ more (that 30-40%), or an advisory role (5% is reasonable) I also just noticed you mentioned "investing" in the startup with cash. As an angel investor, I'd still expect far more than 5%, and preferred shares at that. More like 16-20%. Read this for more info on how equity is usually split. |
Buying a house, Bank or rent to own? | With no numbers offered, it's not like we can tell you if it's a wise purchase. -- JoeTaxpayer We can, however, talk about the qualitative tradeoffs of renting vs owning. The major drawback which you won't hear enough about is risk. You will be putting a very large portion of your net worth in what is effectively a single asset. This is somewhat risky. What happens if the regional economy takes a hit, and you get laid off? Chances are you won't be the only one, and the value of your house will take a hit at the same time, a double-whammy. If you need to sell and move away for a job in another town, you will be taking a financial hit - that is, if you can sell and still cover your mortgage. You will definitely not be able to walk away and find a new cheap apartment to scrimp on expenses for a little while. Buying a house is putting down roots. On the other hand, you will be free from the opposite risk: rising rents. Once you've purchased the house, and as long as you're living in it, you don't ever need to worry about a local economic boom and a bunch of people moving into town and making more money than you, pushing up rents. (The San Francisco Bay Area is an example of where that has happened. Gentrification has its malcontents.) Most of the rest is a numbers game. Don't get fooled into thinking that you're "throwing away" money on renting - if you really want to, you can save money yourself, and invest a sum approximately equal to your down payment in the stock market, in some diversified mutual funds, and you will earn returns on that at a rate similar to what you would get by building equity in your home. (You won't earn outsized housing-bubble-of-2007 returns, but you shouldn't expect those in the housing market of today anyway.) Also, if you own, you have broad discretion over what you can do with the property. But you have to take care of the maintenance and stuff too. |
What are the alternatives to compound interest for a Muslim? | My understanding of Muslim finance is that you may not lend money at interest, including investing in in things that pay interest. However you may still make investments: it just has to be in places where you get a share of profit, rather than a fixed rate of return. You would be better asking the Muslim community specifically for more details. The benefits of compound interest apply, more or less, to other non-fixed-interest investments. If you invest $1000 in a business and get a 10% rate of return, you have $1100 to invest in your next venture, which means it will be more profitable and so on. That's why the growth happens, not specifically because it is interest. Stocks do not pay interest, and the 'magic' applies to them too. The fact that you might lose as well as win complicates things, but doesn't change the principle. |
Refinancing a vehicle, longer term with extra in the kitty, or shorter term and just make scheduled payment? | Refinancing a car for anything other than lowering the rate is not a good idea. Keep the same term, or take a shorter one. Remember that unlike real property, a car only loses value. So when you make your payments on your 84 month (!) loan, those payments are amortized so that the interest is front loaded. The problem is, when your car gets totalled around month 24, insurance will generally only pay what the car is worth, and you'll owe more. |
Will depositing $10k+ checks each month raise red flags with the IRS? | Your main concern seems to be to be accused of something called 'smurfing' or structuring. http://en.wikipedia.org/wiki/Structuring Depositing money amounts (cash or checks) under the 10k limit to circumvent the reporting requirement. People have been investigated for depositing under the limit, e.g. small business owners. If you're always above 10k you should be fine, as your deposits are reported and shouldn't raise IRS or FBI suspicions. |
How does delta of an option change with time if underlying price is constant? | As the option approaches expiry, the delta will approach zero or one, depending on whether you're in or out of the money. This might be easiest to conceptualise if you look at the option value as a function of the stock price, and then realise that the delta is the slope of that curve. Now, as we get closer to expiry, time value fades away, and we get closer and closer to the intrinsic value, which looks like this hockey stick: __/ As you see, close to expiry, if you're out of the money, you have nothing (with delta zero), while if you're in the money, you have a forward (with delta one). |
What should I do with $4,000 cash and High Interest Debt? | Patti - I realize, of course, that you pose an either/or question. It seems the question closes the door on other potential solutions. |
Are credit cards not viewed as credit until you miss one payment? | There's a difference between missing a payment and "carrying a balance" (making an on-time payments that are less than the full balance due). I have heard mortgage brokers claim that, if you have no other credit history, carrying a small balance here and there on a credit card may improve your score. ("Small" is in relation to your available credit and your ability to pay it off.) But actually missing a payment will probably hurt your score. Example: You have a card with a credit limit of $1000. In July you charge $300 worth of stuff. You get the next statement and it shows the balance due of $300 and a minimum payment of $100. If you pay the entire $300 balance in that cycle, most cards won't charge you any interest. You are not carrying a balance, so the credit scores may not reflect that you actually took a $300 loan and paid it off. If you instead pay $200, you'll be in good standing (because $200 is greater than the minimum payment). But you'll be carrying a $100 balance into the next statement cycle. Plus interest will accrue on that $100. If you do this regularly, your credit score will probably take into account that you've taken a small loan and made the payments. For those with no other credit history, this may be an appropriate way to increase your credit score. (But you're paying interest, so it's not free.) And if the average balance you carry is considered high relative to your ability to pay or to the total credit available to you, then this could adversely affect your score (or, at least, the amount of credit another provider is willing to extend to you). If you instead actually miss a payment, or make a payment that's less than the minimum payment, that will almost certainly hurt your credit score. It will also incur penalties as well as interest. You want to avoid that whenever possible. My guess is that, in the game of telephone from the banker to you, the "carrying a balance" was misinterpreted as "missing a payment." |
Should I get a personal loan to pay on my mortgage to go “above water” to qualify for a refinance? | It depends on how long it will take you to pay off the personal loan, the rate for the personal loan, the refi rate you think you can get, how much principal you will have to add to get the refi (may have gone up since then). Since you did not provide all the necessary details, the general answer is to sketch out your total payments (mortgage + personal loan) with and without the refi over the life of the mortgage and see if you end up with more money in your pocket with the refi. My overall impression based on the details you did provide is that you will probably find it worthwhile to do the refi. |
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