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Where can publicly traded profits go but to shareholders via dividends? | If a company earns $1 Million in net profit (let's say all cash, which is not entirely realistic), it can do one of three things with it: On the balance sheet - profits that have not been distributed show up as "retained earnings". When dividends are paid, Retained Earnings and cash are reduced. None of the other options change the fact that it is still "profit" - they all just affect the balance sheet, not the income statement: Note that when a company issues dividends, it reduces its per-share value since cash is leaving the door with nothing in return. In Apple's case, since a significant amount of its profit was earned in other countries (where it was not taxed by the US), it would pay a significant amount in US corporate tax by bringing it back to the US by investing it or paying dividends. They are betting that at some point, the US will change the rules to make it more favorable to "repatriate" the money and reduce their tax significantly. |
Do the nasdaq small cap stocks or penny stocks get promoted? | Promotion of any stock should be treated with extreme suspicion, since the purpose is generally to make money for the promoter, not to inform the public. |
What are some good ways to control costs for groceries? | You may use an app called Flipp (or one that serves your area) to check fliers while in the store. If your preferred store has a price match policy, this can save you a few bucks every trip. Just look up at the app what you are buying and price match it over the cashier. It may or may not work on your store, always ask first. Try to learn some of the products you always buy regular prices. That way you can tell a real special from a fake one, like I write here about the 2/$5 specials. Buy generic brands for things you don't care that much, like bleach and other cleaning products that does not have a real quality difference from the branded ones. Try different cheaper brands until you find one that is ok for you. There are lots of ways to save money on groceries, you just need the will to do so ;) Good luck! |
How can I invest my $100? | Sure. For starters, you can put it in a savings account. Don't laugh, they used to pay noticeable interest. You know, back in the olden days. You could buy an I-bond from Treasury Direct. They're a government savings bond that pays a specified amount of interest (currently 0%, I believe), plus the amount of the inflation rate (something like 3.5% currently, I believe). You don't get paid the money -- the I-bond grows in value till you sell it. You can open a discount brokerage account, and buy 1 or more shares of stock in a company you like. Discount brokerages generally have a minimum of $500 or so, but will waive that if you set the account up as an IRA. Scot Trade, for instance. (An IRA, in case you didn't know, is a type of account that's tax free but you can't touch it till you turn 59 1/2. It's meant to help you save for retirement.) Incidentally, watch out of "small account" fees that some brokerages might charge you. Generally they're annual or monthly charges they'd charge you to cover their costs on your account -- since they're certainly not going to make it in commissions. That IRA at Scot Trade is no-fee. Speaking of commissions, those will be a big chunk of that $100. It'll be like $7-$10 to buy that stock -- a pretty big bite. However, many of these discount brokerages also offer some mutual funds for no commission. Those mutual funds, in turn, have minimums too, but once again if your account's an IRA many will waive the minimum or set it low -- like $100. |
Multiple people interested in an Apartment | I'm surprised by all these complicated answers. Yes @Victor, you can create a form that asks people to put down their financial information but you want to be careful and not put off potential tenants by asking for too many details. Depending on the OP's typical tenants, an extensive background and credit check may not be necessary. For example, if I have proof that someone is a graduate student at the local university, that's usually good enough for me because I am willing to bet that they will follow my contract. Bidding war doesn't sound doable, you advertise a price correct? You can only be haggled down not up. So my suggestion is to look at other rental advertisements in the area. Compare what you're offering (location, quality of house, cleanliness, amenities, etc) to the competition and price accordingly. If you're getting a flood of interest, then you're probably pricing below the average price in your area. Or you live in an area where demand is just much higher than supply, in which case you can also raise your rent. |
Where can I find a Third Party Administrator for a self-directed solo 401K? | Fidelity Investments offers Solo 401(k) plans without any management fees. The plan administrator is typically the employer itself (so, your business, or you as the principal manager). You (as the individual employee) are the participant. |
Would investing equally in all 30 companies which comprise the DJIA net the same performance as the DJIA? | DJIA is a price weighted index (as in the amount of each component company is weighted by its price) and the constituents change occasionally (51 times so far). With these two effects you would not get anything like the same return by equally weighting your holdings and would have to rebalance every so often. Note that your premise was most obviously flawed thinking the number of near bankruptcies there have been in that time. More details of the differing make-ups of the index are available on Wikipedia. When you ask about the "average investment" you would have to be a lot more specific; is it limited just to US shares, to shares, to shares and fixed income securities, should I include all commodities, etc. see also What's the justification for the DJIA being share-price weighted? |
Investment for beginners in the United Kingdom | Most investors should not be in individual stocks. The market, however you measure it, can rise, yet some stocks will fall for whatever reason. The diversification needed is to have a number of shares of different stocks, and that a bit higher than most investors are able to invest and certainly not one starting out. I suggest you look at either mutual funds or ETFs, and keep studying. (I'm told I should have offered the UK equivalent Investment Trusts , OEIC, or Unit Trusts) |
Why having large capital is advantageous to trading | You wouldn't want to trade with too small amount of capital - it becomes harder and more expensive to diversify with a small account. Also, the bigger the account the more discounts and special may be offered by your broker (especially if you are a frequent trader). You are also able to trade more often, and have a buffer against a few losses in a row not wiping out your entire account. |
Saving for a non-necessity | The same as you would save for anything else, buget and make sure your expenses are less than your income each week. Put away a little each week for the item you want to buy, and when you have saved up enough for the item you can buy it. In the mean time whilst you are saving for it, you can shop around to see where you can buy it at the lowest price. |
Can I borrow against my IRA to pay off debt or pay for a car? | No. Borrowing is not allowed, but if you take a withdrawal, you have 60 days to deposit into another IRA account. This effectively creates a 60 day loan. Not what you're really looking for. If you take this withdrawal and re-deposit to new account within 60 days, no problem. If not, you owe tax on the untaxed amount as well as a 10% penalty. This comes from IRS' Publication 590, I have the document memorized by substance, not page number. |
How to calculate P/E ratio for S&P500 sectors | To calculate a sector (or index) P/E ratio you need to sum the market caps of the constituent stocks and divide it by the sum of the total earnings of the constituent stocks (including stocks that have negative earnings). There are no "per share" figures used in the calculation. Beware when you include an individual stock that there may be multiple issues associated with the company that are not in the index.... eg. Berkshire Hathaway BRK.B is in the S&P 500 but BRK.A is not. In contrast, Google has both GOOGL and GOOG included in the S&P 500 index but not its unlisted Class B shares. All such shares need to be included in the market cap and figuring out the different share class ratios can be tricky. |
ETFs are a type of mutual fund, correct? | For a non-ETF mutual fund, you can only buy shares of the mutual fund from the mutual fund itself (at a price that the mutual fund will reveal only at the end of the day) and can only shares back to the mutual fund (again at a price that the mutual fund will reveal only at the end of the day). There is no open market in the sense that you cannot put in a bid to buy, say, 100 shares of VFINX at $217 per share through a brokerage, and if there is a seller willing to sell 100 shares of VFINX to you at $217, then the sale is consummated and you are now the proud owner of 100 shares of VFINX. The only buyer or seller of VFINX is the mutual find itself, and you tell it that you "want to buy 100 shares of VFINX and please take the money out of my checking account". If this order is entered before the markets close at 4 pm, the mutual fund determines its share price as of the end of the day, opens a new account for you and puts 100 shares of VFINX in it (or adds 100 shares of VFINX to your already existing pile of shares) and takes the purchase price out of your checking account via an ACH transfer. Similarly for redeeming/selling shares of VFINX that you own (and these are held in an account at the mutual fund itself, not by your brokerage): you tell the mutual fund to that you "wish to redeem 100 shares and please send the proceeds to my bank account" and the mutual fund does this at the end of the day, and the money appears in your bank account via ACH transfer two or three days later. Generally, these transactions do not need to be for round lots of multiples of 100 shares for efficiency; most mutual fund will gladly sell you fractional shares down to a thousandth of a share. In contrast, shares of an exchange-traded fund (ETF) are just like stock shares in that they can be bought and sold on the open market and your broker will charge you fees for buying and selling them. Selling fractional shares on the open market is generally not possible, and trading in round lots is less expensive. Also, trades occur at all times of the stock exchange day, not just at the end of the day as with non-ETF funds, and the price can fluctuate during the day too. Many non-ETF mutual funds have an ETF equivalent: VOO is the symbol for Vanguard's S&P 500 Index ETF while VFINX is the non-ETF version of the same index fund. Read more about the differences between ETFs and mutual funds, for example, here. |
How can I compare the risk of different investing opportunities? | First of all, setting some basics: What is a sound way to measure the risk of each investment in order to compare them with each other ? There is no single way that can be used across all asset classes / risks. Generally speaking, you want to perform both a quantitative and qualitative assessment of risks that you identify. Quantitative risk assessment may involve historical data and/or parametric or non-parametric models. Using historical data is often simple but may be hard in cases where the amount of data you have on a given event is low (e.g. risk of bust by investing in a cryptocurrency). Parametric and non-parametric risk quantification models exist (e.g. Value at Risk (VaR), Expected Shortfall (ES), etc) and abound but a lot of them are more complicated than necessary for an individual's requirements. Qualitative risk assessment is "simply" assessing the likelihood and severity of risks by using intuition, expert judgment (where that applies), etc. One may consult with outside parties (e.g. lawyers, accountants, bankers, etc) where their advisory may help highlighting some risks or understanding them better. To ease comparing investment opportunities, you may want to perform a risk assessment on categories of risks (e.g. investing in the stock market vs bond market). To compare between those categories, one should look at the whole picture (quantitative and qualitative) with their risk appetite in mind. Of course, after taking those macro decisions, you would need to further assess risks on more micro decisions (e.g. Microsoft or Google ?). You would then most likely end up with better comparatives as you would be comparing items similar in nature. Should I always consider the worst case scenario ? Because when I do that, I always can lose everything. Generally speaking, you want to consider everything so that you can perform a risk assessment and decide on your risk mitigating strategy (see Q4). By assessing the likelihood and severity of risks you may find that even in cases where you are comparatively as worse-off (e.g. in case of complete bust), the likelihood may differ. For example, keeping gold in a personal stash at home vs your employer going bankrupt if you are working for a large firm. Do note that you want to compare risks (both likelihood and severity) after any risk mitigation strategy you may want to put in place (e.g. maybe putting your gold in a safety box in a secure bank would make the likelihood of losing your gold essentially null). Is there a way to estimate the probability of such events, better than intuition ? Estimating probability or likelihood is largely dependent on data on hand and your capacity to model events. For most practical purposes of an individual, modelling would be way off in terms of reward-benefits. You may therefore want to simply research on past events and assign them a 1-5 (1 being very low, 5 being very high) risk rating based on your assessment of the likelihood. For example, you may assign a 1 on your employer going bankrupt and a 2 or 3 on being burglarized. This is only slightly better than intuition but has the merit of being based on data (e.g. frequency of burglary in your neighborhood). Should I only consider more probable outcomes and have a plan for them if they occur? This depends largely on your risk appetite. The more risk averse you are, the more thorough you will want to be in identifying, tracking and mitigating risks. For the risks that you have identified as relevant, or of concern, you may opt to establish a risk mitigating strategy, which is conventionally one of accepting, sharing (by taking insurance, for example), avoiding and reducing. It may not be possible to share or reduce some risks, especially for individuals, and so often the response will be either to accept or avoid the given risks by opting in or out on an opportunity. |
Can you explain the mechanism of money inflation? | Your question asks about the mechanism of money inflation - not price inflation. Money inflation occurs when new money is introduced into an economy. The value of money is subject to supply and demand like other items in the economy. The effects of new money can be difficult to predict. One of the results of additional money can be rising prices. These rising prices can be concentrated in one particular area - stocks, homes, food - or they can be spread out over many items. This is true regardless of the form of money being inflated - gold, silver, or paper money. There were times in history when large discoveries of gold and silver were found that caused prices to rise as a result. Of course, the large discoveries of gold and silver pale in comparison to the gigantic discoveries by central banks of new fiat currency. |
Car insurance (UK) excludes commute to and from work, will not pay on claim during non-commute | Having worked in insurance, I can give you a few pointers. Firstly, state that you "may have to complain". Insurers hate complaints because they really complicate matters, are loads of work and must be tracked. I would advise not actually escalating it to a complaint until later as this may cause a delay as the actual process is quite convoluted. Mentioning the possibility of complaint sometimes makes people a bit more active. Try and resolve the issue, and if you aren't getting anywhere then make a complaint. Maintain a friendly, assertive, polite demeanor. If you get angry and aggressive you'll not likely get far. Remember that the people on the end of the phone are both human and more knowledgeable about insurance than you. You want them on your side, not against you. Make copious notes. If you can, record calls. If you are recording calls you will likely legally need to give them the option of not being recorded, so make sure you mention that you're recording each individual call as soon as you start speaking to the handler. Refer to your notes and make sure you carry out actions you say you will. If you spend a few days sending something you said you'd email over that day, and you then chase them a few days after that they may not have had the document through their workflow yet. It also engenders urgency if you're acting promptly, and suggests that you don't really care if you're taking your time. Get Names. This is an important step, as this gives the handler someone to talk to who may be familiar with your case. You may end up speaking to the same people more than once, so try and build a rapport if you do. "I like this guy" may lead to a bit more effort being put in, and a potentially better outcome. In my experience, GoSkippy can be a bit slow to respond to things, so you'll likely have to chase them up. If you chase them up and say "I called on X date, discussing Y with Z and Z said they would do A, B and C. Has this been done yet?" it looks better than saying "I called about a week ago and spoke to one of your colleagues who said he'd do something for me. He's not done it, what's going on?", As to a plan of action, I would split this into two points: Mis-sold policy and definition of commuting. Mis-sold policy - If they truly gave your wife two options, then they messed up. The standard 3 offered by goskippy are Social Domestic and Pleasure (SDP), SDP+Commuting, and SDP+C and Business use. Other companies sometimes roll commuting into SDP as standard. On the comparison sites however, there are usually the three separate options, and if you used one to set the policy up and clicked "SDP Only" then you may be in trouble. Social domestic and pleasure only DOES NOT include commuting. Whilst it is your responsibility to thoroughly check any documentation that comes through, it could be argued that if given two options between Business Use and SDP, then a reasonable person could be considered to assume that Goskippies definition of SDP did include commuting. Therefore, they need to prove to you that there were three options offered and that your wife specifically excluded commuting. IF they can't, then you should be able to argue that only two were offered and that commuting could have reasonably been assumed to be included. Use that term "reasonable person" btw, it's used in a lot of internal literature - at least at the insurer, I worked at. not commuting - Firstly, clarify their definition of "commuting". If your wife was on her way to work afterwards, then they may well consider she was commuting. For instance, at present, I drive from my house to my son's childminders, then to my wife's work and finally to mine. My commute could be argued to be 1 minute (my workplace is probably a minutes drive from my wife's, but I can't park in her car-park), but if I were to have an accident between my house and my son's childminder (~15 mins drive) the insurers would probably consider that commuting. If she was not on her way to work afterwards, and assuming your wife arranged her visit via text (or whatsapp, fb messenger or similar) you should easily be able to show that your wife had driven from a friends house to the childminder. If she was on a holiday day or was not working on that day, then that's also something you should be able to prove either with proof of her working pattern or proof of her holiday. If she doesn't have a job at all, then again, that's something that's provable. Proof reigns king in claims, so if you can prove certain key facts then you should be on to a winner. |
What does the Fed do with the extra money it is printing? | First of all, just for the sake of clarity, the Federal Reserve doesn't actually "print" money - that's the job of the BEP. What they do is they buy US Treasury bonds - i.e., loan money to the US government. The money they do it with are created "from thin air" - just by adding some numbers in certain accounts, thus it is described as "printing money". The US government then spends the money however it wishes to. The idea is that this money is injected into the economy - since the only way the US government can use the money from these loans is to spend them on buying something or give it to some people that would spend them. As it is a loan, sometime in the future the US government would pay these loans back, and in this moment the Fed would decide - if they want to "contract" the supply of money back, they just "destroy" the money they've got, by erasing the numbers they created before. They could also do it by selling the bonds they hold on the open market and then again "destroy" the money they got as proceeds, thus lowering the amount of money existing in the economy. This way the Fed can control how much money is out there and thus supposedly influence inflation and economic activity. The Fed could also inject money in the economy by buying any assets after creating the money - for example, right now they own about a trillion dollars worth of various mortgage-based securities. But since buying specific security would probably give unfair advantage to the issuers and owners of this security, usually US treasury bonds if what they buy. The side effect of increased supply of money denominated in dollars would be, as you noted, devaluation of dollars compared to other currencies. |
Should I pay off my credit card online immediately or wait for the bill? | If you carried a balance from the last month, then pay the card off as soon as possible. Otherwise I agree with @mbhunter that you should wait until close to time for the bill to become due. Then always pay the credit card off in full and you will borrowing Chase's money interest free for up to 30 days. |
Getting started in stock with one special field of activity | I don't think investing in only one industry, which you may know well, is very wise. You may want to invest in that industry but you should not restrict yourself from investing solely in that industry. There are many times when your chosen industry may not be performing very well and other industries are performing much better. If you restrict yourself to just one industry you may be either out of the market for long periods of time or your portfolio may show negative returns for extended periods of time. You may want to know an industry or a number of companies very well but do not fall in love with them. The worst thing you can do is get emotional about an investment, an investment is there to make you money not for you to get emotional about. Don't restrict yourself, instead look to maximise your returns with investments that are performing better at the time. |
In a house with shared ownership, if one person moves out and the other assumes mortgage, how do we determine who owns what share in the end? | Both names are on the deed, so the property is jointly owned. You're going to need the second person's signature to be able to sell the property. Ideally the way to know "what happens now" is to consult the written agreement you made before you purchased the house together. The formula for dividing up assets when dissolving your partnership is whatever you agreed to up front. (Your up-front agreement could have said "if you move out, you forfeit any claim to the property".) It sounds like you don't have that, so you'll have to come to some (written) agreement with your partner before you proceed. If you can't come to an agreement, then you'll end up in court, a judge will split up the assets, and the only winners there are the lawyers... |
If a company I bought stock in was de-listed but is now listed again under a new symbol, what happened to my shares? | If the company went bankrupt, the issued public shares that were outstanding at the time most likely were voided, in which case your shares are most definitely gone. The company might have done a new stock issuance coming out of bankruptcy with a different symbol, and while it could be substantially the same company, it doesn't mean much for you. It's unfortunate this may be the case, but it is one of the risks of investing. |
Paying extra on a mortgage. How much can I save? [duplicate] | Paying $12,000 in lump sumps annually will mean a difference of about $250 in interest vs. paying $1,000 monthly. If front-load the big payment, that saves ~$250 over paying monthly over the year. If you planned to save that money each month and pay it at the end, then it would cost you ~$250 more in mortgage interest. So that's how much money you would have to make with that saved money to offset the cost. Over the life of the loan the choice between the two equates to less than $5,000. If you pay monthly it's easy to calculate that an extra $1,000/month would reduce the loan to 17 years, 3 months. That would give you a savings of ~$400,000 at the cost of paying $207,000 extra during those 17 years. Many people would suggest that you invest the money instead because the annual growth rates of the stock market are well in excess of your 4.375% mortgage. What you decide is up to you and how conservative your investing strategy is. |
Are lottery tickets ever a wise investment provided the jackpot is large enough? | A lot of these answers are really weak. The expected value is pretty much the answer. You have to also though, especially as many many millions of tickets are purchased--make part of the valuation the odds of the jackpot being split x ways. So about 1 in 290--> the jackpot needs to be a take-home pot of $580 million for the $2 ticket. Assume the average # of winners is about 1.5 so half the time you're going to split the pot, bringing the valuation needed for the same jackpot to be $870 million. It's actually somewhat not common to have split jackpots because the odds are very bad + many people pick 'favourite numbers'. |
As a sole proprietor can I charge a fee for being paid by check or card | You can charge a fee to accept checks, although I think the better solution might be to offer a small discount for early payment of your invoices. As some people here have suggested, why not add a small bit to your fees to begin with to cover your inconvenience in the case they choose to pay by check? I often will give clients a small discount of 1.5% for paying my invoices within 10 days, which does motivate some to pay sooner, depending on the client and the amount of the invoice. If you've already added a small amount to your fees in the first place then providing the discount is good public relations that doesn't actually cost you anything. You can always add a "convenience fee" for accepting checks, but this is a more negative approach, as though you're penalizing the client for paying by check rather than electronically. Some people do see it this way, despite any efforts you make to explain otherwise. As to your question about adding fees for accepting credit cards, be very careful! There are sometimes state or local laws on this, and you could find yourself in trouble very quickly if you run afoul of one. Here's a good article to read on the subject: Adding fees for accepting credit cards from CreditCards.com Site I hope this is helpful. Good luck! |
Does a withdrawal of $10000 for 1st home purchase count against Roth IRA basis? | From Schwab With a Roth, withdrawals of contributions are always tax-free because you've already paid income taxes on that money. So are withdrawals of earnings of up to $10,000 under the homebuyer exemption, assuming you've had the Roth for five-plus years. But if you withdraw more than $10,000 in earnings, that money will be subject to both ordinary income taxes and the 10 percent penalty. |
Should I be claiming more than 1 exemption? | It's not possible to determine whether you can "expect a refund" or whether you are claiming the right number of exemptions from the information given. If your wife were not working and you did not do independent contracting, then the answer would be much simpler. However, in this case, we must also factor in how much your contracting brings in (since you must pay income tax on that, as well as Medicare and, probably, Social Security), whether you are filing jointly or separately, and your wife's income from her business. There are also other factors such as whether you'll be claiming certain child care expenses, and certain tax credits which may phase out depending on your income. If you can accurately estimate your total household income for the year, and separate that into income from wages, contracting, and your wife's business, as well as your expenses for things like state and local income and property taxes, then you can make a very reasonable estimate about your total tax burden (including the self-employment taxes on your non-wage income) and then determine whether you are having enough tax withheld from your paycheck. Some people may find that they should have additional tax withheld to compensate for these expenses (see IRS W-4 Line #6). |
If banks offer a fixed rate lower than the variable rate, is that an indication interest rates may head down? | Usually that is the case that when fixed rates are lower than the variable rates, it is an indication that the banks feel the next movement in rates could be down. You also need to look at the fixed rates for different periods, for example 1 year fixed compared to 3 year fixed and 5 year fixed rates. If you find the 3 and 5 year fixed rates are higher than the 1 year fixed rates this could be an indication that the banks feel rates will fall in the short term but the falls won't last long and will continue to rise after a year or so. If the 3 year fixed rates are also low in comparison, then the banks may feel that the economy is heading for a longer term down trend. The banks won't want to lose out, so will change their fixed rates on their perception of where they feel the economy is headed. Since your post in May 2011, the standard variable rate has since dropped twice (in November and December) to be at 7.30%. You will also find that fixed rates have also been dropped further by the banks, indicating additional future cuts in the variable rates. Regards, Victor |
Is the stock market a zero-sum game? | No, the stock market and investing in general is not a zero sum game. Some types of trades are zero sum because of the nature of the trade. But someone isn't necessarily losing when you gain in the sale of a stock or other security. I'm not going to type out a technical thesis for your question. But the main failure of the idea that investing is zero sum is the fact the a company does not participate in the transacting of its stock in the secondary market nor does it set the price. This is materially different from the trading of options contracts. Options contracts are the trading of risk, one side of the contract wins and one side of the contract loses. If you want to run down the economic theory that if Jenny bought her shares from Bob someone else is missing out on Jenny's money you're free to do that. But that would mean that literally every transaction in the entire economy is part of a zero sum game (and really misses the definition of zero sum game). Poker is a zero sum game. All players bet in to the game in equal amounts, one player takes all the money. And hell, I've played poker and lost but still sometimes feel that received value in the form of entertainment. |
Why does short selling require borrowing? | A simple way to ask the question might be to say "why can't I just use the same trick with my own shares to make money on the way down? Why is borrowing someone else's shares necessary to make the concept a viable one? Why isn't it just the inverse of 'going long'?" A simple way to think about it is this: to make money by trading something, you must buy it for less than you sell it for. This applies to stocks like anything else. If you believe the price will go up, then you can buy them first and sell them later for a higher price. But if you believe the price will go down, the only way to buy low and sell high is to sell first and buy later. If you buy the stock and it goes down, any sale you make will lose you money. I'm still not sure I fully understand the point of your example, but one thing to note is that in both cases (i.e., whether you buy the share back at the end or not), you lost money. You say that you "made $5 on the share price dropping", but that isn't true at all: you can see in your example that your final account balance is negative in both cases. You paid $20 for the shares but only got $15 back; you lost $5 (or, in the other version of your example, paid $20 and got back $5 plus the depreciated shares). If you had bought the shares for $20 and sold them for, say, $25, then your account would end up with a positive $5 balance; that is what a gain would look like. But you can't achieve that if you buy the shares for $20 and later sell them for less. At a guess, you seem to be confusing the concept of making a profit with the concept of cutting your losses. It is true that if you buy the shares for $20 and sell them for $15, you lose only $5, whereas if you buy them for $20 and sell for $10, you lose the larger amount of $10. But those are both losses. Selling "early" as the price goes down doesn't make you any money; it just stops you from losing more money than you would if you sold later. |
Why are earning credit card rewards often tied to groceries and gas? | There absolutely is a specific model that makes this so popular with so many credit card companies, and that model is "per transaction fees". Card companies also receive cost-sharing incentives from certain merchants. There is also a psychological reasoning as an additional incentive. When you want to accept credit cards as a source of payment as a business, you generally have three kinds of fees to pay: monthly/yearly subscription fees, percentage of transaction fee, and per transaction fee. The subscription fees can be waived and sometimes are expressed as a "minimum cost", so the business pays a certain amount whether you actually have people use credit cards or not. Many of these fees don't actually make it to the credit card companies, as they just pay the service providers and middle-men processing companies. The percentage of transaction fee means that the business accepting payment via credit card must pay a percentage usually ranging from 1-3% of the total transactions they accept. So if they get paid $10,000 a month by customers in the form of credit cards, the business pays out $100-300 a month to the credit card processor - a good portion of which will make it back to the credit card issuing company, and is a major source of income for them. The per transaction fee means that every time a transaction is run involving a card, a set fee is incurred by the business (which is commonly anywhere from $0.05 to $0.30 per transaction). If that $10,000 a month business mentioned previously had 10 customers paying $1,000 each at $0.10 a transaction, that's only $1 in fees to the credit card processors/companies. But if instead that business was a grocery store with an average transaction of $40, that's $25 in fees. This system means that if you are a credit card company and want to encourage people to make a specific kind of purchase, you should encourage purchases that people make many times for relatively small amounts of money. In a perfect world you'd want them to buy $1 bottles of water 5 times a day with their credit card. If the card company had 50,000 card holders doing this, at the end of 1 year the company would have $91,250,000 spread across 91,250,000 transactions. The card company might reasonably make $0.05 per transaction and %1 of the purchase total. The Get Rewarded For Drinking More campaign might earn the card company $912,500 in percentage fees and over $4.5 million in transaction fees. Yet the company would only have to pay 3% in rewards from the percentage fees, or $2.7 million, back to customers. If the card company had encouraged using your credit card for large once-yearly purchases, they would actually pay out more money in rewards than they collect in card-use fees. Yet by encouraging people to make small transactions very often the card company earns a nice net-income even if absolutely every customer pays their balance in full, on time, and pays no annual/monthly fees for their card - which obviously does not happen in the real world. No wonder companies try so hard to encourage you to use your card all the time! For card companies to make real money they need you to use your credit card. As discussed above, the more often you use the card the better (for them), and there can be a built-in preference for small repeated transactions. But no matter what the size of transaction, they can't make the big bucks if you don't use the card at all! Selling your personal information isn't as profitable if they don't have in-depth info on you to sell, either. So how do they get you to make that plastic sing? Gas and groceries are a habit. Most people buy one or the other at least once a weak, and a very large number of us make such purchases multiple times a week. Some people even make such purchases multiple times a day! So how do people pay for such transactions? The goal of the card companies is to have you use their product to pay as much as possible. If you pay for something regularly you'll keep that card in your wallet with you, rather than it getting lost in a drawer at home. So the card companies want you to use your card as a matter of habit, too. If you use a card to buy for gas and groceries, why wouldn't you use it for other things too? Lunch, dinner, buying online? If the card company pays out more and makes less for large, less-regular purchases, then the ideal for them is to have you use the card for small regular purchase and yet still have you use the card for larger infrequent purchases even if you get reduced/no rewards. What better way to achieve all these goals than to offer special rewards on gas and groceries? And because it's not a one-time purchase, you aren't so likely to game the system; no getting that special 5% cash-back card, booking your once-per-decade dream vacation, then paying it off and cancelling it soon after - which would actually make the card company lose money on the deal. In the end, credit card companies as a whole have a business model that almost universally prefers customers who use their products regularly and preferably for small amounts a maximum number of times. They want to reduce their expenses (like rewards paid out) while maximizing their revenue. They haven't figured out a better way to do all of this so well as to encourage people to use their cards for gas and groceries - everything else seems like a losing proposition in comparison. The only time this preference differs is when they can avoid paying some or all of the cost of rewards, such as when the merchants themselves honor the rewards in exchange for reduced or zero payment from the card companies. So if you use an airline card that seems to give you 10% back in airline rewards? Well, that's probably a great deal for the card company if the airline provides that reward at their own expense to try to boost business. The card company keeps the transaction-related fees and pays out almost nothing in rewards - the perfect offer (for them)! And this assumes no shenanigans like black-out periods, "not valid with any other offers" rewards like on cars where only a fool pays full MSRP (and sometimes the rewards are tagged in this sort of way, like not valid on sale/clearance items, etc), expiring rewards, the fact that they know not everyone uses their rewards, annual fees that are greater than the rewards you'll actually be obtaining after accounting for all the other issues, etc. And credit card industries are known for their shenanigans! |
Where to start with personal finance in Canada? | There are some great answers on this site similar to what you asked, with either a non-jurisdictional or a US-centric focus. I would read those answers as well to give yourself more points of view on early investing. There are a few differences between Canada and the US from an investing perspective that you should also then consider, namely tax rules, healthcare, and education. I'll get Healthcare and Education out of the way quickly. Just note the difference in perspective in Canada of having government healthcare; putting money into health-savings plans or focusing on insurance as a workplace benefit is not a key motivating factor, but more a 'nice-to-have'. For education, it is more common in Canada for a student to either pay for school while working summer / part-time jobs, or at least taking on manageable levels of debt [because it is typically not quite as expensive as private colleges in the US]. There is still somewhat of a culture of saving for your child's education here, but it is not as much of a necessity as it may be in the US. From an investing perspective, I will quickly note some common [though not universal] general advice, before getting Canadian specific. I have blatantly stolen the meat of this section from Ben Miller's great answer here: Oversimplify it for me: the correct order of investing Once you have a solid financial footing, some peculiarities of Canadian investing are below. For all the tax-specific plans I'm about to mention, note that the banks do a very good job here of tricking you into believing they are complex, and that you need your hand to be held. I have gotten some criminally bad tax advice from banking reps, so at the risk of sounding prejudiced, I recommend that you learn everything you can beforehand, and only go into your bank when you already know the right answer. The 'account types' themselves just involve a few pages of paperwork to open, and the banks will often do that for free. They make up their fees in offering investment types that earn them management fees once the accounts are created. Be sure to separate the investments (stocks vs bonds etc.) vs the investment vehicles. Canada has 'Tax Free Savings Accounts', where you can contribute a certain amount of money every year, and invest in just about anything you want, from bonds to stocks to mutual funds. Any Income you earn in this account is completely tax free. You can withdraw these investments any time you want, but you can't re-contribute until January 1st of next year. ie: you invest $5k today in stocks held in a TFSA, and they grow to $6k. You withdraw $6k in July. No tax is involved. On January 1st next year, you can re-contribute a new $6K, and also any additional amounts added to your total limit annually. TFSA's are good for short-term liquid investments. If you don't know for sure when you'll need the money, putting it in a TFSA saves you some tax, but doesn't commit you to any specific plan of action. Registered Retirement Savings Plans allow you to contribute money based on your employment income accrued over your lifetime in Canada. The contributions are deducted from your taxable income in the year you make them. When you withdraw money from your RRSP, the amount you withdraw gets added as additional income in that year. ie: you invest $5k today in stocks held in an RRSP, and get a $5k deduction from your taxable income this year. The investments grow to $6k. You withdraw $6k next year. Your taxable income increases by $6k [note that if the investments were held 'normally' {outside of an RRSP}, you would have a taxable gain of only 50% of the total gain; but withdrawing the amount from your RRSP makes the gain 100% taxable]. On January 1st next year, you CANNOT recontribute this amount. Once withdrawn, it cannot be recontributed [except for below items]. RRSP's are good for long-term investing for retirement. There are a few factors at play here: (1) you get an immediate tax deduction, thus increasing the original size of investment by deferring tax to the withdrawal date; (2) your investments compound tax-free [you only pay tax at the end when you withdraw, not annually on earnings]; and (3) many people expect that they will have a lower tax-rate when they retire, than they do today. Some warnings about RRSP's: (1) They are less liquid than TFSA's; you can't put money in, take it out, and put it in again. In general, when you take it out, it's out, and therefore useless unless you leave it in for a long time; (2) Income gets re-characterized to be fully taxable [no dividend tax credits, no reduced capital gains tax rate]; and (3) There is no guarantee that your tax rate on retirement will be less than today. If you contribute only when your tax rate is in the top bracket, then this is a good bet, but even still, in 30 years, tax rates might rise by 20% [who knows?], meaning you could end up paying more tax on the back-end, than you saved in the short term. Home Buyer Plan RRSP withdrawals My single favourite piece of advice for young Canadians is this: if you contribute to an RRSP at least 3 months before you make a down payment on your first house, you can withdraw up to $25k from your RRSP without paying tax! to use for the down payment. Then over the next ~10 years, you need to recontribute money back to your RRSP, and you will ultimately be taxed when you finally take the money out at retirement. This means that contributing up to 25k to an RRSP can multiply your savings available for a down payment, by the amount of your tax rate. So if you make ~60k, you'll save ~35% on your 25k deposited, turning your down payment into $33,750. Getting immediate access to the tax savings while also having access to the cash for a downpayment, makes the Home Buyer Plan a solid way to make the most out of your RRSP, as long as one of your near-term goals is to own your own home. Registered Pension Plans are even less liquid than RRSPs. Tax-wise, they basically work the same: you get a deduction in the year you contribute, and are taxed when you withdraw. The big difference is that there are rules on when you are allowed to withdraw: only in retirement [barring specific circumstances]. Typically your employer's matching program (if you have one) will be inside of an RPP. Note that RPP's and RRSP's reduce your taxes on your employment paycheques immediately, if you contribute through a work program. That means you get the tax savings during the year, instead of all at once a year later on April 30th. *Note that I have attempted at all times to keep my advice current with applicable tax legislation, but I do not guarantee accuracy. Research these things yourself because I may have missed something relevant to your situation, I may be just plain wrong, and tax law may have changed since I wrote this to when you read it. |
How does giving to charity work? | If something is tax-deductible in the US, it means that, in the eyes of the Internal Revenue Service, you effectively didn't earn that money. Within restrictions, your adjusted gross income, which is the income that your tax is calculated on, is reduced by the amount of your tax deductions. In the case of the ASPCA, they've jumped through the appropriate hoops to become a 501(c)(3) organization, which, among other things, means that donations to them are tax-deductible by the donor (a) if they itemize, and (b) if they haven't reached a donation cap. That's the carrot that encourages donations to these organizations. There are restrictions, meaning that there can be only certain types of privileges or exchange between the donor and the organization. Essentially, it has to be a donation, and not a purchase of substantial goods or services. Your donation to these kinds of organizations doesn't hurt their funding elsewhere, or shouldn't. As mentioned above, if you don't itemize your deductions, you won't gain any extra tax savings from the donation. (You shouldn't itemize if you're better off taking the standard deduction.) Having said that, though, please give whatever you're led to give, after considering all of the ramifications (financial and spiritual). The tax deduction is only a subsidy; the IRS doesn't "pick up the whole tab" but only refunds a fraction to you in the form of tax savings through itemized deductions. If you don't feel you have the money, then donate your time. It might be more needed anyway! |
Can saving/investing 15% of your income starting age 25, likely make you a millionaire? | As others have shown, if you assume that you can get 6% and you invest 15% of a reasonable US salary then you can hit 1 million by the time you retire. If you invest in property in a market like the UK (where I come from...) then insane house price inflation will do it for you as well. In 1968 my parents bought a house for £8000. They had a mortgage on it for about 75% of the value. They don't live there but that house is now valued at about £750,000. Okay, that's close to 60 years, but with a 55 year working life that's not so unreasonable. If you assume the property market (or the shares market) can go on rising forever... then invest in as much property as you can with your 15% as mortgage payments... and watch the million roll in. Of course, you've also got rent on your property portfolio as well in the intervening years. However, take the long view. Inflation will hit what a million is worth. In 1968, a million was a ridiculously huge amount of money. Now it's 'Pah, so what, real rich people have billions'. You'll get your million and it will not be enough to retire comfortably on! In 1968 my parents salaries as skilled people were about £2000 a year... equivalent jobs now pay closer to £50,000... 25x salary inflation in the time. Do that again, skilled professional salary in 60 years of £125000 a year... so your million is actually 4 years salary. Not being relentlessly negative... just suggesting that a financial target like 'own a million (dollars)' isn't a good strategy. 'Own something that yields a decent amount of money' is a better one. |
Taxable Website Ad Revenue | I'm not a tax advisor, but I've done freelance work, so... If any of your side-business revenue is reported on a 1099, you're now a business owner, which is why Schedule C must be filled out. As a business owner, minimum wage doesn't apply to you. All revenue is income to you, and you owe taxes on the profit, after subtracting legitimate (verifiable) business expenses. You'll want to talk to a real tax advisor if you're going to start expensing mileage, part of your house (if you use a home office), etc. Don't forget that you'll owe self-employment tax (the employer's half of your payroll tax). You can't save money on business taxes by paying yourself a wage and then counting it as an expense to the business. You'll definitely want to talk to a tax expert if you start playing around with finances as an (the) owner of the business. Income that is not reported on a 1099 should be reported as hobby income. |
When are equal-weighted index funds / ETFs preferable to market-cap-weighted funds? | As Dheer pointed out, the top ten mega-cap corporations account for a huge part (20%) of your "S&P 500" portfolio when weighted proportionally. This is one of the reasons why I have personally avoided the index-fund/etf craze -- I don't really need another mechanism to buy ExxonMobil, IBM and Wal-Mart on my behalf. I like the equal-weight concept -- if I'm investing in a broad sector (Large Cap companies), I want diversification across the entire sector and avoid concentration. The downside to this approach is that there will be more portfolio turnover (and expense), since you're holding more shares of the lower tranches of the index where companies are more apt to churn. (ie. #500 on the index gets replaced by an up and comer). So you're likely to have a higher expense ratio, which matters to many folks. |
Why diversify stocks/investments? | Diversifying is the first advice given to beginner in order to avoid big loss. For example in 2014 the company Theranos was really appealing before it fail in 2016. So a beginner could have invest ALL his money and lose it. But if he has deverified he wouldn't lost everything. As an investor goes from beginner to experience some still Diversify and other concentrate. Mostly it depends how much confident you are about an investement. If you have 20 years of experience, now everything about the company and you are sure there will be profit you can concentrate. If you are not 100% sure there will be a profit, it is better to Diversify. Diversifying can also be profitating when you loose money: because you will pay tax when you earn money, if you diversify you can choose to loose money in some stock (usually in december) and in this way cut your taxes. |
What would I miss out on by self insuring my car? | Insurance is to mitigate risk you can't handle yourself. (All insurance, not just car insurance.) The expected value of the insurance will always cost more than the expected value of your loss, that's how the insurance company makes money. But sometimes the known fixed cost is better for your ability to sleep at night than the unknown (though likely lower) variable cost. If you were suddenly hit with a bill the size of your car tomorrow, would you be ok? If so, then you can handle the risk yourself and don't need insurance. If not, then you need the insurance. The insurance company sells thousands of policies and it's much easier to predict the number out of 1000 people that will get in an accident tomorrow than the chance that you specifically will get in an accident tomorrow. So they can manage the risk by making a small amount of money from 999/1000 people and buying the other guy a new car. |
Should I sell my stocks when the stock hits a 52-week high in order to “Buy Low, Sell High”? | I bought 1000 shares of Apple, when it was $5. And yet, while the purchase was smart, the sales were the dumbest of my life. "You can't go wrong taking a profit" "When a stock doubles sell half and let it ride", etc. It doubled, I sold half, a $5000 gain. Then it split, and kept going up. Long story short, I took gains of just under $50,000 as it rose, and had 100 shares left for the 7 to 1 split. The 700 shares are worth $79,000. But, if I simply let it ride, 1000 shares split to 14,000. $1.4M. I suppose turning $5,000 into $130K is cause for celebration, but it will stay with me as the lost $1.3M opportunity. Look at the chart and tell me the value of selling stocks at their 52 week high. Yet, if you chart stocks heading into the dotcom bubble, you'll see a history of $100 stocks crashing to single digits. But none of them sported a P/E of 12. |
What is a reasonable salary for the owner and sole member of a small S-Corp? | You can get audited for anything Business owners are more likely to get audited than people filing 1040-EZ's for their simplistic income tax obligation. According to HR Block I hope you enjoy the process where you explain the source of your earnings |
Why are interbank payment (settlement) systems closed for weekends and holidays? | TARGET2 is a high value realtime settlement system across Europe and for this to be open on weekends would mean all the Banks including Central Banks in the Euro Zone work. Quite a few times to manage intra day liquidity, banks borrow from each other, hence there is an active monitering of the liquidity by Banks. The borrowing happens over phone and fax and the lending bank sending a high value transaction that credits the borrowing banks. These is the day to day job of treasury group [highly paid individuals] to manage liquidity. Now if on weekends the volume is less, it does not make sense to keep these people, the cost of supporting this for very insiginificant business gain is not driving to build such systems. On the other hand on retail transactions, say Cards [Debit / Credit], ATM, the value is not high and hence there is no treasury function involved and there is a huge need, everything is automated. So no issues. |
Multi-year profit/tax question | This is called "Net Operating Loss", and it is in fact applicable for individuals as well. You can, under certain circumstances, have NOL even as an individual. But it is far more common in the corporate world. What happens is that you can carry it back or forward, and get refund on taxes paid or adjust income for taxes to pay. In your example, you could carry the $75 NOL back and deduct it from the prior year earnings, reducing the taxable income from $100 to $25, getting $18.75 of the $25 paid as taxes - back. The link is for individual NOL, corporate rules are different, but the principle is the same. |
Is forward P/E calculated using current price(if yes, how useful is it)? | generally Forward P/E is computed as current price / forward earnings. The rationale behind this is that buying the stock costs you the current price, and it gives you a claim on the future earnings. |
Fund equalisation / dividend | Do all/most unit trusts have equalisation policy? It is really that some value of the fund is given to the investor, so the fund value goes down by that much per unit. It depends on the type of mutual funds. For example, there are growth type mutual funds that do not give any dividend and the total value of the fund is reflected in its price. Do the companies whose stocks we owned directly apply equalisation policy on their dividends as well? Why not? As far a stock price is concerned, it usually decrease by the same amount of the dividend payout at ex-date, so in effect, the market in a way does the equalization, the company directly does not do it. |
How does start-up equity end up paying off? | You will probably never see it. The startup at some point may start issuing dividends to the shareholders (which would be the owners, including you if you are in fact getting equity), but that day may never come. If they hire others with this method, you'll likely lose even that 5% as more shares are created. Think of inflation that happens when government just prints more money. All notes effectively lose value. I wouldn't invest either, most startups fail. Don't work for free on the vague promise of some future compensation; you want a salary and benefits. Equity doesn't put food on your table. |
Books, Videos, Tutorials to learn about different investment options in the financial domain | Those are some very broad questions and I don't think I can answer them completely, but I will add what I can. Barron's Finance and Investment Handbook is the best reference book I have found. It provides a basic description/definition for every type of investment available. It covers stocks, preferred stocks, various forms of bonds as well as mortgage pools and other exotic instruments. It has a comprehensive dictionary of finance terms as well. I would definitely recommend getting it. The question about how people invest today is a huge one. There are people who simply put a monthly amount into a mutual fund and simply do that until retirement on one side and professional day traders who move in and out of stocks or commodities on a daily basis on the other. |
Thrift Saving Plan (TSP) Share Price Charts | If you're looking to generate your own charts, you can get up-to-date TSP fund share prices in a Google Docs spreadsheet by "scraping" the data from the HTML of certain TSP webpages. You'll need to do this because the GoogleFinance function does not recognize "private" funds or collective trusts like those of the TSP. See this thread for tips: Bogleheads • View topic - GoogleFinance price quotes for TSP Funds |
Do ETF dividends make up for fees? | It depends. Dividends and fees are usually unrelated. If the ETF holds a lot of stocks which pay significant dividends (e.g. an S&P500 index fund) these will probably cover the cost of the fees pretty readily. If the ETF holds a lot of stocks which do not pay significant dividends (e.g. growth stocks) there may not be any dividends - though hopefully there will be capital appreciation. Some ETFs don't contain stocks at all, but rather some other instruments (e.g. commodity-trust ETFs which hold precious metals like gold and silver, or daily-leveraged ETFs which hold options). In those cases there will never be any dividends. And depending on the performance of the market, the capital appreciation may or may not cover the expenses of the fund, either. If you look up QQQ's financials, you'll find it most recently paid out a dividend at an annualized rate of 0.71%. Its expense ratio is 0.20%. So the dividends more than cover its expense ratio. You could also ask "why would I care?" because unless you're doing some pretty-darned-specific tax-related modeling, it doesn't matter much whether the ETF covers its expense ratio via dividends or whether it comes out of capital gains. You should probably be more concerned with overall returns (for QQQ in the most recent year, 8.50% - which easily eclipses the dividends.) |
Online tools for monitoring my portfolio gains/losses in real time? | This functionality is widely available, not only on brokerage sites, but also financial management and even financial information sites. For instance, two of the latter are Google Finance and Yahoo Finance. If you are logged in, they let you create "portfolios" listing your stocks and, optionally, the size of your holdings in that stock (which you don't need if you are just "watching" a stock). Then you can visit the site at any time and see the current valuations. |
How can I find a list of self-select stocks & shares ISA providers? | Try fool.co.uk for getting more information about ISAs: Everything You Need To Know About ISAs |
If throwing good money after bad is generally a bad idea, is throwing more money after good Ok? | To expand a bit on what TripeHound said in the comment section, past performance is not indicative of future performance, which is why the best advice is to ignore if you already own the stock or not. If the stock goes down, but you've done your research and think it will come back, then investing more isn't a bad idea. If the stock is doing well and it will continue to do well, then invest more. Treat investing more into a stock you already own as a new investment and do your research. TL;DR of your question, it's a very case-by-case basis |
Should I pay off my student loan before buying a house? | It might be a good idea, because later in life if a large expense shows up or an income source disappears, you will only have the mortgage payment, rather than a mortgage AND a student loan payment. |
Why are American Express cards are not as popular as Visa or MasterCard? | Those extra treat points have to come from somewhere, and they come from American Express charging merchants a higher percentage than Visa or Mastercard. So it's less attractive for those merchants to accept it. |
Loan to son - how to get it back | As per JohnFx's comment above, consider whether it's worth more to you to just write this off. If not, if you feel that your son will be able to consider this without taking it personally, or you're willing to risk that relationship, then talk to him about it. Lay out the reasons why you need the money. If there are other children, it might be a simple matter of fairness to them. Based on your idea of deducting the money from his inheritance, I assume that the value you're docking from his inheritance will go somewhere else. Offer alternatives. You say that you can't take any money from him now, but letting him know that he can pay you in the future in lieu of loss of inheritance might be worthwhile. Be prepared with an idea of what to suggest if he says he can pay you some amount of money. Figure out what might be an acceptable payment plan and how to handle it if, at some point, he can't make payments for a time. This is a potentially ugly situation, and I can't guarantee that it will turn out better, but the more you prepare for the questions he's going to ask, the better off you're going to be. |
I want to invest in a U.S.-based company with unquoted stocks, but I am a foreigner. How to do this? | The recommendation is not to make the investment. In general, a company does not have to sell their shares to you or allow you to become an investor, because, as you have stated, it is a private company not quoted on the stock market. If everyone were trustworthy, you could buy the tools for $11000 -- so that you own the tools -- and sign a lease of the tools to the company whereby they pay you $X/month. The lease should be reviewed by a lawyer before it is signed, and perhaps give the buyer the right to demand back the tools at any time. However, even this arrangement is very risky, because the "company" could simply steal or damage the tools and disappear. It is not an investment that I would make, because it sounds too good to be true. $2800/mo steady cash flow for $11,000 invested. No, I don't think so. The following information may also be useful, either to you, or future readers: If you still want to make this investment, then you should know that: The offering for sale of shares by companies located in the USA is subject to a wild array of complex laws. This is true in many other countries as well. These laws, called securities laws or regulations, can require certain disclosures, require that investors have a high net worth so that they can afford to lose the money or conduct their own investigations and legal actions, or require that the investors know the company founders personally, and can prohibit or limit resale by the buyer/investor. Promoters who say you can still invest and are ignoring or disobeying the securities laws are being at least negligent, but more likely are dishonest and probably criminal. Even if you trust in the investment, can you trust negligent managers to do a good job executing that investment? What about dishonest managers? What about criminals and thieves? |
Are services provided to Google employees taxed as income or in any way? | In many countries, giving something free to the employee is considered a taxable income equivalent, and taxes have to be paid on it. As it cannot be assigned to specific employees, the company pays a flat tax on it, so it actually costs the company more. Also, not all employees value it equally, or consider it as a part of their income, so reducing the salary accordingly would not be considered ok by many employees. As a result, the company can only do it as an additional offer, which is too expensive for small businesses. |
How do I figure out if I will owe taxes | Do I get a write off for paying student loans? Maybe. See https://www.irs.gov/publications/p970/ch04.html Generally, personal interest you pay, other than certain mortgage interest, isn't deductible on your tax return. However, if your modified adjusted gross income (MAGI) is less than $80,000 ($160,000 if filing a joint return) there is a special deduction allowed for paying interest on a student loan (also known as an education loan) used for higher education. For most taxpayers, MAGI is the adjusted gross income as figured on their federal income tax return before subtracting any deduction for student loan interest. This deduction can reduce the amount of your income subject to tax by up to $2,500. Read the whole document to be sure, but that's the basics. You'll have to fill out a 1040 or 1040A to claim a student loan deduction. It won't be on the 1040EZ. You do not have to itemize though. What kinds of write-offs and credits are available for someone who is single and lives in an apartment with two roommates? As a practical matter, in 2016 you'll get the standard deduction for someone who is single ($6300) and the personal exemption ($4050). It's extremely unlikely that you'll be able to deduct more by itemizing. Most people who itemize are taking a mortgage interest deduction. Major medical bills are another possibility, but they have to be more than 10% of your adjusted gross income (it's one of the lines on your tax return). Assuming you rent and are reasonably healthy, you are unlikely to have enough to itemize. The most likely additional deduction would be the one for an IRA (Individual Retirement Account). Although you might be better off doing a Roth anyway (no tax deduction). If you are self-employed or making more than $100,000 a year, there are additional issues. But most people aren't. If you filled out a W-4 and will get a W-2 back, you aren't self-employed. Hopefully you have a rough idea of your annual income. The first $9275 over your deductions will pay 10%. After that, up to $37,650 you pay 15%. The 2016 link above has a link (PDF) to the full table if you need more than that. Note that that is the first $48,000 in income with your $10,350 in deductions. |
What is a negotiable security and how are they related to derivatives? | As Dheer pointed out, Wikipedia has a good definition of what a negotiable instrument is. A security is an instrument or certificate that signifies an ownership interest in something tangible. 1 share of IBM represents some small fraction of a company. You always have the ability to choose a price you are willing to pay -- which may or may not be the price that you get. A derivative is a level of abstraction linked by a contract to a security... if you purchase a "Put" contract on IBM stock, you have a contractural right to sell IBM shares at a specific price on a specific date. When you "own" a derivative, you own a contract -- not the actual security. |
Recommendation on Options Back Testing tool please | Power Options is one such example of what you seek, not cheap, but one good trade will recover a year's fee. There's a lot you can do with the stock price alone as most options pricing will follow Black Scholes. Keep in mind, this is a niche, these questions, while interesting to me, generate little response here. |
What's the catch with biweekly mortgage payments? | Another thing to consider is that paying extra principal (either via one of these services, or by including something extra with your normal mortgage payment and designating that it go to principal rather than be held to reduce next month's payment, or just sending an additional payment to the bank and designating it as reducing the principal) shortens the term of your loan. Is this good? Maybe. Consider that banks lend with a variety of terms. Usually the 15-year fixed rate mortgage has a lower interest rate than the 30-year fixed-rate mortgage, and the 5-year home-equity-loan has an even lower rate. When you prepay your loan, your interest rate stays the same, but the bank gets its money back sooner. This makes more profit for the bank as it can then invest the money in other things. That profit could have been yours if you had made that investment instead of prepaying your mortgage. |
Are warehouse clubs like Costco and Sam's Club worth it? | Only select items. First - I agree, beware the Goldfish Factor - any of those items may very well lead to greater consumption, which will impact your waistline worse than your bottom line. And, in this category, chips, and snacks in general, you'll typically get twice the size bag for the same price as supermarket. For a large family, this might work ok. If one is interested in saving on grocery items, the very first step is to get familiar with the unit cost (often cents per ounce) of most items you buy. Warehouse store or not, this knowledge will make you a better buyer. In general, the papergoods/toiletries are cheaper than at the store but not as cheap as the big sale/coupon cost at the supermarket or pharmacy (CVS/RiteAid). So if you pay attention you may always be stocked up from other sources. All that said, there are many items that easily cover our membership cost (for Costco). The meat, beef tenderloin, $8.99, I can pay up to $18 at the supermarket or butcher. Big shrimp (12 to the lb), $9.50/lb, easily $15 at fish dept. Funny, I buy the carrots JCarter mentioned. They are less than half supermarket price per lb, so I am ahead if we throw out the last 1/4 of the bag. More often than not, it's used up 100%. Truth is, everyone will have a different experience at these stores. Costco will refund membership up to the very end, so why not try it, and see if the visit is worth it? Last year, I read and wrote a review of a book titled The Paradox of Choice. The book's premise was the diminishing return that come with too many things to choose from. In my review, I observed how a benefit of Costco is the lack of choice, there's one or two brands for most items, not dozens. If you give this a bit of thought, it's actually a benefit. |
Dad paying for my new home in cash. How can I buy the house from him? | You have four basic options. |
What is the preferred way to set up personal finances? | The absolute best advice I ever received was this: You will need three categories of savings in your life: 1) Retirement Savings This is money you put away (in 401-Ks and IRAs) for the time in your life when you can no longer earn enough income to support yourself. You do not borrow against it nor do you withdraw from it in emergencies or to buy a house. 2) Catestrophic savings This is money you put back in case of serious events. Events like: prolonged job loss, hospitalization, extended illness, loss of home, severe and significant loss of transportation, very large aplliance loss or damage. You do not take trips to the Bahamas or buy diamond rings with this money. 3) Urgent, relatively small, need savings. This is the savings you can use from time to time. Use it for bills that arise unexpectedly, unforseen shortfalls in your budget, needed repairs such as car repairs and small appliance repairs, surprising fines, fees, and bills. Put 10% of your income into each category of savings. 10% intro retirement savings, another, separate, 10% intro Catestrophic savings, and yet another 10% intro urgent, small need, savings. So, as you can see, already 30% of your income is already spoken for. Divide up the remaining 70% intro fixed (I recommend 50% toward fixed expenses) and variable expenses. Fixed includes those things that you pay once every month such as housing, utilities, car payment, debt repayment, etc. Variable includes discretionary things like eating out, gifts, and splurges. Most importantly, partner with someone who is your opposite. If you are a saver at heart partner with a spender. If you are a spender partner with a saver. There are three rules to live by regarding the budget: A) no one spends any money unless it is in the budget B) the budget only includes those things to which both the saver and the spender agree C) the budget can, and will, be modified as the pay period unfolds. A budget is a plan not a means to beat the other person up. Plans change as new information arises. A budget must be flexible. The urgent use savings will help to make the budget flexible. Edit due to comments: @enderland Perhaps you do not have children living with you. I am a saver, my wife is a spender. When it came time to do the budget I would forget things like the birthdays of my children, school fees due next pay period, shopping for Christmas gifts, needed new clothes and shoes for the children, broken small appliances that needed to be fixed or replaced, special (non reoccurring) house maintenence (like steam cleaning the carpet), gifts to relatives and friends, exceptional assistance to relatives, etc. As my wife was the spender she would remind me of these things. Perhaps you do not have these events in your life. I am glad to have these events in my life as that means that I have people in my life that I care about. What good is a fat savings account if I have no loved ones that benefit from it? |
Do ETF dividends make up for fees? | Any ETF has expenses, including fees, and those are taken out of the assets of the fund as spelled out in the prospectus. Typically a fund has dividend income from its holdings, and it deducts the expenses from the that income, and only the net dividend is passed through to the ETF holder. In the case of QQQ, it certainly will have dividend income as it approximates a large stock index. The prospectus shows that it will adjust daily the reported Net Asset Value (NAV) to reflect accrued expenses, and the cash to pay them will come from the dividend cash. (If the dividend does not cover the expenses, the NAV will decline away from the modeled index.) Note that the NAV is not the ETF price found on the exchange, but is the underlying value. The price tends to track the NAV fairly closely, both because investors don't want to overpay for an ETF or get less than it is worth, and also because large institutions may buy or redeem a large block of shares (to profit) when the price is out of line. This will bring the price closer to that of the underlying asset (e.g. the NASDAQ 100 for QQQ) which is reflected by the NAV. |
Effect of Job Change on In-Progress Mortgage Application | I recommend you ask this question to a qualified mortgage broker. We just closed on our first house. My wife & I have had several years of stable jobs, good credit scores, and a small side business with 1040 Schedule-C income... and we were surprised by the overwhelming amount of documentation we needed for the loan. For example, we had 3 checks deposited to our bank account for $37.95. We had to provide copies of the checks, deposit slip and a letter explaining the deposit. One reason we might have had so much trouble: the mortgage broker we selected sold our loan to a very picky lender. On the plus side, we obtained a competitive rate with extremely low closing costs on a 30 year fixed mortgage. However, I can't imagine the headaches we would've incurred if one of us were changing jobs to 1099 income. |
How much more than my mortgage should I charge for rent? | In order to arrive at a decision you need the numbers: I suggest a spreadsheet. List the monthly and annual costs (see other responses). Then determine what the market rate for rental. Once you have the numbers it will be clear from a numbers standpoint. One has consider the hassle of owning property from a distance, which is not factored into the spreadsheet |
Should I consolidate loans and cards, or just cards, leaving multiple loans? | My answer is similar to Ben Miller's, but let me make some slightly different points: There is one excellent reason to get a consolidation loan: You can often get a lower interest rate. If you are presently paying 19% on a credit card and you can roll that into a personal loan at 13.89%, you'll be saving over 5%, which can add up. I would definitely not consolidate a loan at 12.99% into a loan at 13.89%. Then you're just adding 1% to your interest rate. What's the benefit in this? Another good reasons for a consolidation loan is psychological. A consolidation loan with fixed payments forces you to pay that amount every month. You say you have trouble with credit cards. It's very easy to say to yourself, "Oh, just this month I'm going to pay just the minimum so I can use my cash for this other Very Important Thing that I need to buy." And then next month you find something else that you just absolutely have to buy. And again the next month, and the next, and your determination to seriously pay down your debt keeps getting pushed off. If you have a fixed monthly payment, you can't. You're committed. Also, if you have many credit cards, juggling payments on all of them can get complex and confusing. It's easy to lose track of how much you owe and to budget for payments. At worst, when there are many bills to pay you may forget one. (Personally I now have 3 bank cards, an airline card, and 2 store cards, and managing them is getting out of hand. I have good reasons for having so many cards: the airline card and the store cards give me special discounts. But it's confusing to keep track of.) As to adding $3,000 to the consolidation loan: Very, very bad idea. You are basically saying, "I have to start seriously paying down my debt ... tomorrow. Today I need a some extra cash so I'm going to borrow just a little bit more, but I'm going to get started paying it off next month." This is a trap, and the sort of trap that leads people into spiraling debt. Start paying off debt NOW, not at some vague time in the future that never seems to come. |
Should I pay off my credit card online immediately or wait for the bill? | Theoretically there is always a time value of money. You'll need to keep your cash in a Money Market Fund to realize its potential (I'm not saying MMFs are the best investment strategy, they are the best kind of account for liquid cash). Choose an accounts that's flexible with regard to its minimum required so you can always keep this extra money in it and remove it when you need to make a payment. |
Personal Loan issuer online service | http://www.calcamo.net/loancalculator/simulation/fixed-rate-loan.php5 This website is a calculator only and has some extra features that take into account late payments, paying extra to reduce principal, and has the ability to export amortization table to excel that you could use to keep track of the loan. If you are looking for a web site to manage and keep track of the whole process, reminder emails, accepting credit card payments, etc.. paybaq.com may be right for you. |
Where Can The Fully Diluted Outstanding Shares Of A Company Be Found? | You can calculate the fully diluted shares by comparing EPS vs diluted (adjusted) EPS as reported in 10K. I don't believe they report the number directly, but it is a trivial math exercise to reach it. The do report outstanding common stock (basis for EPS). |
What is the difference between equity and assets? | Not to detract from the other answers at all (which are each excellent and useful in their own right), but here's my interpretation of the ideas: Equity is the answer to the question "Where is the value of the company coming from?" This might include owner stakes, shareholder stock investments, or outside investments. In the current moment, it can also be defined as "Equity = X + Current Income - Current Expenses" (I'll come back to X). This fits into the standard accounting model of "Assets - Liabilities = Value (Equity)", where Assets includes not only bank accounts, but also warehouse inventory, raw materials, etc.; Liabilities are debts, loans, shortfalls in inventory, etc. Both are abstract categories, whereas Income and Expense are hard dollar amounts. At the end of the year when the books balance, they should all equal out. Equity up until this point has been an abstract concept, and it's not an account in the traditional (gnucash) sense. However, it's common practice for businesses to close the books once a year, and to consolidate outstanding balances. When this happens, Equity ceases to be abstract and becomes a hard value: "How much is the company worth at this moment?", which has a definite, numeric value. When the books are opened fresh for a new business year, the Current Income and Current Expense amounts are zeroed out. In this situation, in order for the big equation to equal out: Assets - Liabilities = X + Income - Expeneses the previous net value of the company must be accounted for. This is where X comes in, the starting (previous year's) equity. This allows the Assets and Liabilities to be non-zero, while the (current) Income and Expenses are both still zeroed out. The account which represents X in gnucash is called "Equity", and encompasses not only initial investments, but also the net increase & decreases from previous years. While the name would more accurately be called "Starting Equity", the only problem caused by the naming convention is the confusion of the concept Equity (X + Income - Expenses) with the account X, named "Equity". |
Why would people sell a stock below the current price? | People in this case, are large institutional investors. The "bid ask" spread is for "small traders" like yourself. It is put out by the so-called specialists (or "market makers") and is typically good for hundreds or thousands of shares at a time. Normally, 2 points on a 50 stock is a wide spread, and the market maker will make quite a bit of money on it trading with people like yourself. It's different if a large institution, say Fidelity, wants to sell, say 1 million shares of the stock. Depending on market conditions, it may have trouble finding buyers willing to buy in those amounts anywhere near 50. To "move" such a large block of stock, they may have to put the equivalent of K-Mart's old "Blue Light Special" on, several points below. |
What should I do about proxy statements? | On most proxy statements (all I have ever received) you have the ability to abstain from voting. Just go down the list and check Abstain then return the form. You will effectively be forfeiting your right to vote. EDIT: According to this, after January 1, 2010 abstaining and trashing the voting materials are the same thing. Prior to January 1, 2010 your broker could vote however they wanted on your behalf if you chose not to vote yourself. The one caveat is this seems to only apply to the NYSE (unless I am reading it wrong). So not sure about stocks listed on the NASDAQ. |
Buying a house, how much should my down payment be? | How much should my down payment be? Ideally 20% of the purchase price because with 20% of the purchase price, you don't have to pay a costly private mortgage insurance (PMI). If you don't have 20% down and come across a good property to purchase, it is still a good idea to go forward with purchasing with what you are comfortable with, because renting long term is generally never a good idea if you want to build wealth and become financially independent. How much should I keep in my emergency fund? People say 3-12 months of living expenses. Keep in mind though, in most cases, if you lose your job, you are entitled to unemployment benefits from the government. How long should my mortgage be? 30 year amortization is the best. You can always opt to pay more each month. But having that leverage with a 30 year loan can allow you to invest your savings in other opportunities, which can yield more than mortgage interest. Best of luck! |
Can I get a dividend “free lunch” by buying a stock just before the ex-dividend date and selling it immediately after? [duplicate] | Not minutes, but hours. The "ex-dividend" date is the deadline for acquiring a stock to receive a dividend. If you hold a stock at the beginning of this day, you will receive the dividend. So you could buy a stock right at the end of the day on the day before the ex-dividend date, and sell it the next day (on the ex-dividend date), and you would get your dividend. See this page from the SEC for more information. The problem with this strategy, however, is that the value of the stock typically drops by the same amount as the dividend on that day. If you take a look at the historical price of the stock you are interested in, you'll see this. Of course, it makes sense why: a seller knows that selling before the date results in a loss of the dividend, so they want a higher price to compensate. Likewise, a buyer on or after the date knows that the dividend is already gone, so they want to pay a lower price. |
What one bit of financial advice do you wish you could've given yourself five years ago? | Do your homework on all types bonds and other lower-risk instruments, including bond funds and ETFs. I left too much money sitting around as cash over the last 5 years. |
Personal finance in EFU and NAFA | I want to know why my investment is having loss in 4 to 5 months. As the funds invest in stock markets, the Pakistan stock market is going down in last 4-5 months from all time high. Should I liquidate my investment or wait in hope that it will grow again? This is opinion based and one cannot predict what will happen in future. The funds may grow or may loose value. If I loose all my investment value, is it insured. OR do I loose everything? The growth fund I understand is not guaranteeing any returns. in theory you can loose all the money, however practically there will be some value. If you need guaranteed returns maybe EFU Guaranteed Growth fund will be better choice. |
What could a malicious party potentially achieve by having *just* a name, account number, and sort code? | I think the answer to this must differ from country to country. I have lived in several countries where the normal everyday way of making a payment is to instruct my bank to transfer the money to the recipient's account. Of course this means I must know his name, SC and account number – but this is an accepted part of the system; businesses routinely display that information on invoices and correspondence. It is simply not regarded as confidential. DumbCoder's comment suggests that if he has that information he can take money from my account without my permission – in other words, my bank will pay money out of my account on someone else's request, without my authority. Is this correct? In which country or countries can this happen? (I must go there quickly and begin stealing people's money.) |
Recommended education path for a future individual investor? | It depends on whether you want a career as a fund manager/ analyst or if you want to be an investor/ trader. A fund manager will have many constraints that a private investor doesn’t have, as they are managing other people’s money. If they do invest their own money as well they usually would invest it differently from how they invest the fund's money. Many would just get someone else to invest their money for them, just as a surgeon would get another surgeon to operate on a family member. My suggestion to you is to find a job you like doing and build up your savings. Whilst you are building up your savings read some books. You said you don’t know much about the financial markets, then learn about them. Get yourself a working knowledge about both fundamental and technical analysis. Work out which method of analysis (if not both) suits you best and you would like to know more about. As you read you will get a better idea if you prefer to be a long term investor or a short term trader or somewhere in-between or a combination of various methods. Now you will start to get an idea of what type of books and areas of analysis you would like to concentrate on. Once you have a better idea of what you would like to do and have gained some knowledge, then you can develop your investment/trading plan and start paper trading. Once you are happy with you plan and your paper trading you can start trading with a small account balance (not more than $10,000 and preferably under $5,000). No matter how well you did with paper trading you will always do worse with real money at first due to your emotions being in it now. So always start off small. If you want to become good at something it takes time and a lot of hard work. You can’t go from knowing nothing to making a million dollars per year without putting in the hard yards first. |
What is the best way to learn investing techniques? | All the things you suggest are good, but I think like everything else the key is practice. Study some topics, then try them out. There are many many sites out there that have free or cheap virtual trading. |
What is the meaning of “short selling” or “going short” a stock? | The 'normal' series of events when trading a stock is to buy it, time passes, then you sell it. If you believe the stock will drop in price, you can reverse the order, selling shares, waiting for the price drop, then buying them back. During that time you own say, -100 shares, and are 'short' those shares. |
I have $100,000 in play money… what to do? | For any sort of investment you need to understand your risks first. If you're going to put money into the stock or bond market I would get a hold of Graham's "The Intelligent Investor" first, or any other solid value investing book, and educate yourself on what the risks are. I can't speak about real estate investing but I am sure there are plenty of books describing risks and benefits of that as well. I could see inflation/deflation having an effect there but I think the biggest impact on the landlord front is quality of life in the area you are renting and the quality of the tenant you can get. One crazy tenant and you will be driven mad yourself. As for starting a business, one thing I would like to say is that money does not automatically make money. The business should be driven by a product or service that you can provide first, and the backing seed capital second. In my opinion you will have to put energy and time worth much more than the 100k into a business over time to make it successful so the availability of capital should not be the driving decision here. Hope this helps more than it confuses. |
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? | What legal way can I take what I am owed from this guy? The legal ways are for this guy to transfer you the money or give you instructions that will allow you to get the money. Alternatively you would need to file a civil suite to recover the funds. What illegal way do people use this info if they had it? I don't want to get in trouble, but I'm just curious because you always hear how easy it is. There are quite a few illegal ways. I don't think this is the right forum to discuss this. |
institutional ownership — why is it so convoluted | The reason for such differences is that there's no source to get this information. The companies do not (and cannot) report who are their shareholders except for large shareholders and stakes of interest. These, in the case of GoPro, were identified during the IPO (you can look the filings up on EDGAR). You can get information from this or that publicly traded mutual fund about their larger holdings from their reports, but private investors don't provide even that. Institutional (public) investors buy and sell shares all the time and only report large investments. So there's no reliable way to get a snapshot picture you're looking for. |
Are credit cards not viewed as credit until you miss one payment? | Not sure what you mean by "missing". Credit card debt can be paid back in full when you get the bill, or you can "take a loan" and "pay in installments". If you do the latter, and pay back at least the minimum required amount on time, you are not "missing" your payment. Technically, you are taking a small, but expensive loan, and if you pay that loan back according to the terms and conditions that apply to your credit card, this is reported to the credit bureau and improves your credit. If you are really "missing your payment", paying late (more than a few days), less than minimum or nothing at all, this won't help to improve your credit. A "first-time offender" won't always be reported to the credit bureau, but if he is, it won't be a positive report. |
Car dealer saying that they cannot see any credit information for my co-applicant. Could this be a scam? | You say Also I have been the only one with an income in our household for last 15 years, so for most of our marriage any debts have been in my name. She has a credit card (opened in 1999) that she has not used for years and she is also a secondary card holder on an American Express card and a MasterCard that are both in my name (she has not used the cards as we try to keep them only for emergencies). This would seem to indicate that the dealer is correct. Your wife has no credit history. You say that you paid off her student loans some years back. If "some years" was more than seven, then they have dropped off her credit report. If that's the most recent credit activity, then she effectively has none. Even if you get past that, note that she also doesn't have any income, which makes her a lousy co-signer. There's no real circumstance where you couldn't pay for the car but she could based on the historical data. She would have to get a job first. Since they had no information on her whatsoever, they probably didn't even get to that. |
Why haven't there been personal finance apps or softwares that use regression modeling or A.I.? | What would they be trying to predict? The value YNAB and Mint provide is objective truth about what you've spent. They can force you to think about the tradeoffs inherent in budgeting by showing that you've overspent one category, and making you decide where to find the money to cover it. They can call your attention to a credit card swipe that's larger than you intended, to a subscription you didn't intend to keep, etc. by just generally getting you to read and think about your transaction history and the sums of transactions per category and overall. Prediction doesn't really enter into it. One way to understand Mint's business model is as a service that collects training data for machine learning models that do try to predict things, such as how stock prices will move or whether users will click on certain ads. |
Insider trading of a linked security like an ETF your company has a heavy weighting in | If you are in a position to have information that will impact the shares of a stock or index fund and you use that information for either personal gain or to mitigate the losses that you would have felt then it is insider trading. Even if in the end your quiet period passes with little or no movement of the stocks in question. It is the attempt to benefit from or the appearance of the attempt to benefit from inside information that creates the crime. This is the reason for the quiet periods to attempt to shield the majority of the companies employees from the appearance of impropriety, as well as any actual improprieties. With an index you are running a double edged sword because anything that is likely to cause APPLE to drop 10% is likely to give a bump to Motorola, Google, and its competitors. So you could end up in jail for Insider trading and lose your shirt on a poor decision to short a Tech ETF on knowledge that will cause Apple to take a hit. It is certainly going to be harder to find the trade but the SEC is good at looking around for activity that is inconsistent with normal trading patterns of individuals in a position to have knowledge with the type of market impact you are talking about. |
Is it a good investment for a foreigner to purchase a flat/apartment in China? | China is in the middle of a residential housing bubble, and now is probably a horrible time to invest in real estate in China. Even if China wasn't near the peak of its bubble it would probably still be a bad idea because owning real estate in a foreign country is expensive and risky. There are real currency risks, think what would happen if the yuan declined significantly against the dollar. There is also the risk of the government seizing foreign held investments (not extremely likely but plausible). Another consideration is that it would be next to impossible for you to get a loan to purchase a property US banks wouldn't touch it with a 10 ft pole and I doubt Chinese banks would be very interested in lending to foreigners. |
Is there a widely recognized bond index? | Keep in mind that the bond market is dominated by US Treasury securities... if there were an S&P 500 for bonds, the US would take positions 1-400. Be careful that you understand what's in your bond funds -- you may not be as diversified as you think. |
Where to start with personal finance? | First thing I'd say is don't start with investing. The foundation of solid finances is cash flow. Making more than you spend, reliably; knowing where your money goes; having a system that works for you to make sure you make more than you spend. Until you have that, your focus may as well be on getting there, because you can't fix much else about your finances until you fix this. A number you want to know is your percentage of income saved, and a good goal for that is about 15%, with 10-12% going to retirement savings and the rest to shorter-term goals and emergency fund and so forth. (Of course the right percentage here depends on your goals and situation, but for most people this is a kind of minimum savings rate to be in good shape.) Focus on your savings rate. This is your profitability, if you view yourself as a business. If it's crappy or negative, your finances will be a mess. Two ways to improve it are to spend less or to improve your earnings power. Doing both is even better. The book Your Money or Your Life by Dominguez and Robin is good for showing how to obsessively focus on cash flow, even though you may not share their zeal for early retirement. A simpler exercise than what they recommend: take 3 months of your checking and credit card statements, go through each expenditure and put them in a spreadsheet column, SUM() that column. Then add up 3 months of after-tax paychecks. Divide both numbers by three and compare. (The 3 months is to average out your spending, which probably varies a lot by month.) After positive cash flow and savings rate, the next thing I'd go through is insurance. Risk management for what you have. This can include checking you have all the important insurance coverages (homeowner's/renter's, auto, potentially umbrella, term life, disability, and of course health insurance, are some highlights); and also adjusting all your policies to be most cost-effective, which usually means raising the deductible if you have a good emergency fund. Often you can raise the deductible on policies you have, and use the savings to add more catastrophe coverage (such as term life if you didn't have it, or boosting the liability protection on your homeowner's, or whatever). Remember, cover catastrophes as cheaply and comprehensively as possible, but don't worry about reimbursement for non-catastrophic expenses. I like this book, Smart and Simple Financial Strategies for Busy People by Jane Bryant Quinn, because it covers all the main personal finance topics, not just investing; and because it is smart and simple. All the main stuff to think about is in the one book and the advice is solid and uncomplicated. Investing can truly be dead easy; most people would be fine with this advice: Honestly, I do micro-optimize and undermine my investing, and I'm guessing most people on this forum do. But it's not something I could defend objectively as a good use of time. It probably is necessary to do some reading to feel financially literate and confident in an investment plan, but the reading isn't really because a good plan is complicated, it's more to understand all the complicated things that you don't need to do, since that's how you'll know not to do them. ;-) Especially when salespeople and publications and TV are telling you over and over and over that you need to know a bunch of crap and do a bunch of things. People who have a profitable "business of me" are the ones who end up with a lot of money. Not people who spend a lot of time screwing with investments. (People who get rich investing invest professionally - as their "business of me" - they don't goof around with their 401k after work.) Financial security is all about your savings rate, i.e. your personal profitability. No shortcuts, other than lotteries and rich uncles. |
Cheapest way to wire or withdraw money from US account while living in Europe | There is a number of cheaper online options that you could use. TranferWise was already mentioned here. Other options i know are Paysera or TransferGo. They state that international transfers are processed on the next day and they are substantially cheaper than those of banks. Currency exchange rate is usually not bad. |
If a put seller closes early, what happens to the buyer? | An option is freely tradable, and all options (of the same kind) are equal. If your position is 0 and you sell 1 option, your new position in that option is -1. If the counterparty to your trade buys or sells more options to close, open, or even reopen their position afterwards, that doesn't matter to your position at all. Of course there's also the issue with American and European Options. European Options expire at their due date, but American Options expire at their due date or at any time before their due date if the holder decides they expire. With American Options, if a holder of an American Option decides to exercise the option, someone who is short the same option will be assigned as the counterparty (this is usually random). Expiry is after market close, so if one of your short American Options expires early, you will need to reopen the position the next day. Keep in mind dividends for slightly increased complexity. American and European Options do not in any way refer to the continents they are traded on, or to the location of the companies. These terms simply describe the expiry rules. |
How safe is a checking account? | In the case of bank failures You are protected by FDIC insurance. At the time I wrote this, you are insured up to $250,000. In my lifetime, it has been as high as $1,000,000 and as low as $100,000. I attached a link, which is updated by FDIC. In the case of fraud It depends. If you read this story and are horrified (I was too), you know that the banking system is not as safe as the other answers imply: In February 2005, Joe Lopez, a businessman from Florida, filed a suit against Bank of America after unknown hackers stole $90,000 from his Bank of America account. The money had been transferred to Latvia. An investigation showed that Mr. Lopez’s computer was infected with a malicious program, Backdoor.Coreflood, which records every keystroke and sends this information to malicious users via the Internet. This is how the hackers got hold of Joe Lopez’s user name and password, since Mr. Lopez often used the Internet to manage his Bank of America account. However the court did not rule in favor of the plaintiff, saying that Mr. Lopez had neglected to take basic precautions when managing his bank account on the Internet: a signature for the malicious code that was found on his system had been added to nearly all antivirus product databases back in 2003. Ouch. But let's think about the story for a second - he had his money stolen because of online banking and he didn't have the latest antivirus/antimalware software. How safe is banking if you don't do online banking? In the case of this story, it would have prevented keyloggers, but you're still susceptible to someone stealing your card or account information. So: In the bank's defense, how does a bank not know that someone didn't wire money to a friend (which is a loss for good), then get some of that money back from his friend while also getting money back from the bank, which had to face the loss. Yes, it sucks, but it's not total madness. As for disputing charges, from personal experience it also depends. I don't use cards whatsoever, so I've never had to worry, but both of my parents have experienced banking fraud where a fake charge on their card was not reversed. Neither of my parents are rich and can't afford lawyers, so crying "lawsuit" is not an option for everyone. How often does this occur? I suspect it's rare that banks don't reverse the charges in fraudulent cases, though you will still lose time for filing and possibly filling out paperwork. The way to prevent this: As much as I hate to be the bearer of bad news, there is no absolutely safe place to keep your money. Even if you bought metals and buried them in the ground, a drifter with a metal detector might run across it one day. You can take steps to protect yourself, but there is no absolute guarantee that these will work out. Account Closures I added this today because I saw this question and have only seen/heard about this three times. Provided that you get the cashier's check back safely, you should be okay - but why was this person's account closed and look at how much funds he had! From his question: In the two years I banked with BoA I never had an overdraft or any negative marks on my account so the only thing that would stick out was a check that I deposited for $26k that my mom left me after she passed. Naturally, people aren't going to like some of my answers, especially this, but imagine you're in an immediate need for cash, and you experience this issue. What can you do? Let's say that rent is on the line and it's $25 for every day that you're late. Other steps to protect yourself Some banks allow you to use a keyword or phrase. If you're careful with how you do this and are clever, it will reduce the risk that someone steals your money. |
Why is short-selling considered more “advanced” than a simple buy? | In addition to the higher risk as pointed out by @JamesRoth, you also need to consider that there are regulations against 'naked shorting' so you generally need to either own the security, or have someone that is willing to 'loan' the security to you in order to sell short. If you own a stock you are shorting, the IRS could view the transaction as a Sell followed by a buy taking place in a less than 30 day period and you could be subject to wash-sale rules. This added complexity (most often the finding of someone to loan you the security you are shorting) is another reason such trades are considered more advanced. You should also be aware that there are currently a number of proposals to re-instate the 'uptick rule' or some circuit-breaker variant. Designed to prevent short-sellers from driving down the price of a stock (and conducting 'bear raids etc) the first requires that a stock trade at the same or higher price as prior trades before you can submit a short. In the latter shorting would be prohibited after a stock price had fallen a given percentage in a given amount of time. In either case, should such a rule be (re)established then you could face limitations attempting to execute a short which you would not need to worry about doing simple buys or sells. As to vehicles that would do this kind of thing (if you are convinced we are in a bear market and willing to take the risk) there are a number of ETF's classified as 'Inverse Exchange Traded Funds (ETF's) for a variety of markets that via various means seek to deliver a return similar to that of 'shorting the market' in question. One such example for a common broad market is ticker SH the ProShares Short S&P500 ETF, which seeks to deliver a return that is the inverse of the S&P500 (and as would be predicted based on the roughly +15% performance of the S&P500 over the last 12 months, SH is down roughly -15% over the same period). The Wikipedia article on inverse ETF's lists a number of other such funds covering various markets. I think it should be noted that using such a vehicle is a pretty 'aggressive bet' to take in reaction to the belief that a bear market is imminent. A more conservative approach would be to simply take money out of the market and place it in something like CD's or Treasury instruments. In that case, you preserve your capital, regardless of what happens in the market. Using an inverse ETF OTOH means that if the market went bull instead of bear, you would lose money instead of merely holding your position. |
Can I prove having savings without giving out the account number? | Giving out your bank account number is not generally a security problem. The first time you write your landlord a security deposit or rent check, he'll have your account number. (It's printed on the check.) That having been said, in my experience, banks do not generally give out balance information to just anyone who calls them up and gives them an account number. Have you asked the landlord what he needs? Perhaps showing him a printout of a recent bank statement is enough. |
Can I sell my home with owner financing when I still have an FHA loan? (and should I?) | You have to pay off the balance on the loan first. Also, FHA loans are not supposed to be used for rental properties. I don't know how you living there for a number of years changes things or how often is that rule enforced but you might need to refinance even if you rent it out. |
How does a brokerage firm work? | The brokerage executes the transactions you tell them to make on your behalf. Other than acting as your agent for those, and maintaining your account, and charging a fee for the service, they have no involvement -- they do not attempt to predict optimal anything, or hold any assets themselves. |
Why don't banks give access to all your transaction activity? | A big issue for historical data in banking is that they don't/can't reside within a single system. Archives of typical bank will include dozen(s) of different archives made by different companies on different, incompatible systems. For example, see http://www.motherjones.com/files/images/big-bank-theory-chart-large.jpg as an illustration of bank mergers and acquisitions, and AFAIK that doesn't include many smaller deals. For any given account, it's 10-year history might be on some different system. Often, when integrating such systems, a compromise is made - if bank A acquires bank B that has earlier acquired bank C, then if the acquisition of C was a few years ago, then you can skip integrating the archives of C in your online systems, keep them separate, and use them only when/if needed (and minimize that need by hefty fees). Since the price list and services are supposed to be equal for everyone, then no matter how your accounts originated, if 10% of archives are an expensive enough problem to integrate, then it makes financial sense to restrict access to 100% of archives older than some arbitrary threshold. |
Pros/Cons of Buying Discounted Company Stock | The major pros tend to be: The major cons tend to be: Being in California, you've got state income tax to worry about as well. It might be worth using some of that extra cash to hire someone who knows what they're doing to handle your taxes the first year, at least. I've always maxed mine out, because it's always seemed like a solid way to make a few extra dollars. If you can live without the money in your regular paycheck, it's always seemed that the rewards outweighed the risks. I've also always immediately sold the stock, since I usually feel like being employed at the company is enough "eggs in that basket" without holding investments in the same company. (NB: I've participated in several of these ESPP programs at large international US-based software companies, so this is from my personal experience. You should carefully review the terms of your ESPP before signing up, and I'm a software engineer and not a financial advisor.) |
I am a contractor with revenue below UK's VAT threshold. Should I register for VAT? | If you are providing VAT-liable services (you probablly are) and you register normally for VAT then you will be able to reclaim VAT on your buisness purchases but you will have to charge VAT to your clients. So the question really comes down to will your clients regard you adding VAT to their invoices as a price increase or not. That is likely to depend on whether your clients are in a position to claim-back the VAT you charged them. If you are working mostly for VAT registered buisnesses who perform primerally vat-liable (including zero-rated) activities then registering for VAT is likely in your financial interests (though it does mean more paperwork). The flat-rate scheme may be better still. If you are working mostly for private individuals, non VAT registered buisnesses or buisnesses which primerally perform VAT exempt* activities then registering for VAT when you don't have to is most likely not in your financial interests. * Note: VAT exempt and zero rated for VAT are very different things even though they look similar to the customer. |
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