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How to Transition From Employee to Employer? | Having been both I see the pros and cons Employers: I personally hated all the paperwork. Government forms, legal protection, insurance, taxes, payroll, accounting, year ends, bank accounts, inventory tracking, expenses. The best bosses don't worry about the product, they worry about maintaining an environment that is good for the product. Good employees who are happy will make good products that you can sell to customers who are happy with your company. I personally went back to employee because I wanted to go home at night and forget about work. Employers cannot do that. |
Why do people buy US dollars on the black market? | The main reason people buy dollars (or other currency) on the black market is because they are prevented from exchanging currency on the official government market. Venezuela for example restricts citizens to a maximum number of dollars the citizen can buy or sell per year, depending on various factors such as whether or not the person is studying at a foreign university. If the citizen wants to exchange more dollars than legally allowed, that person must buy or sell at the "black" market rate, rather than through the official/government market. |
Mitigate Effects Of Credit With Tangible Money | Genius answer: Don't spend more than you make. Pay off your outstanding debts. Put plenty away towards savings so that you don't need to rely on credit more than necessary. Guaranteed to work every time. Answer more tailored to your question: What you're asking for is not realistic, practical, logical, or reasonable. You're asking banks to take a risk on you, knowing based on your credit history that you're bad at managing debt and funds, solely based on how much cash you happen to have on hand at the moment you ask for credit or a loan or based on your salary which isn't guaranteed (except in cases like professional athletes where long-term contracts are in play). You can qualify for lower rates for mortgages with a larger down-payment, but you're still going to get higher rate offers than someone with good credit. If you plan on having enough cash around that you think banks would consider making you credit worthy, why bother using credit at all and not just pay for things with cash? The reason banks offer credit or low interest on loans is because people have proven themselves to be trustworthy of repaying that debt. Based on the information you have provided, the bank wouldn't consider you trustworthy yet. Even if you have $100,000 in cash, they don't know that you're not just going to spend it tomorrow and not have the ability to repay a long-term loan. You could use that $100,000 to buy something and then use that as collateral, but the banks will still consider you a default risk until you've established a credit history to prove them otherwise. |
Why is property investment good if properties de-valuate over time? | When you buy a property the house or the building goes down in value every year (it gets depreciated) similar to when you drive a new car out of the lot. However, it is the land that increases in value over time. As land becomes scarcer the value of land in that area will increase in value, as does land in sought after areas. If more people want to live in a particular suburb the land value will keep on increasing year after year. Sometimes established areas with houses built in the 1980s or even earlier can be worth much more than newly built areas. It comes down to the supply and demand of land and houses in a particular area. You might even get a situation where a run-down dilapidated house in a very sought after suburb sells for more than a brand new house in a less sought-after suburb nearby. Properties can be a very good investment and they can be a very poor investment. It can largely depend on the decisions you make in buying your investment property. The first thing you need to make a decision on is the location of the property. If you buy a property in a good area that is well sought after you can make good capital and rental returns over the long run. If you buy poorly in an area no one wants to live in then you might have problems renting it out or only be able to rent it out to bad tenants who cause damage, and you may not get any capital gains over many years. The second thing you need to decide on is when in the property cycle you buy the property. If you buy at the right time you can get higher rents and make some quick capital gains over a relatively short time. I can provide a personal example of this situation. I had bought a house (in Australia) in 2007 for $240,000 at a time when interests where at their highest (9%), no one was buying property and rents were on the increase (with low vacancy rates). Today, eight years after, we are getting $410 per week rent and the house next door (in worse condition than ours) has been put on the market asking for between $500,000 to $550,000 (most houses in the area had been selling during this year for over $500,000). So you can say that our house has more than doubled in 8 years. However, up to a few months ago houses were selling within 2 weeks of being listed. The house next door however, has been listed for over a month and has not had very much interest. So from this you can conclude that in 2007 we had bought near the bottom of the market, whilst now we are near the top of the market. What you also need to remember is that different areas of a country can have different cycles, so there is not just one property cycle but many property cycles in the same country. |
How can I increase my hourly pay as a software developer? | You are paid hourly? I would have expected most IT people to be on salary Depends what your boss is like, he might be easy going and just give a raise if you ask for it. Failing that, do some self improvements, learn something new, take a course, maybe take some PHP certifications or even java certifications? Then at least you can say you're trying to move up In regards to pay, have a look on monster or some US job sites, at jobs similar to what you do and with the similar requirements, that should give you an idea of what you should be on. If all else fails, find a new job, that is always a good way of moving up Hope this helps |
Margin when entered into a derivative contract | Derivatives derive their value from underlying assets. This is expressed by the obligation of at least one counterparty to trade with the other counterparty in the future. These can take on as many combinations as one can dream up as it is a matter of contract. For futures, where two parties are obligated to trade at a specific price at a specific date in the future (one buyer, one seller), if you "short" a future, you have entered into a contract to sell the underlying at the time specified. If the price of the future moves against you (goes up), you will have to sell at a loss. The bigger the move, the greater the loss. You go ahead and pay this as well as a little extra to be sure that you satisfy what you owe due to the future. This satisfaction is called margin. If there weren't margin, people could take huge losses on their derivative bets, not pay, and disrupt the markets. Making sure that the money that will trade is already there makes the markets run smoothly. It's the same for shorting stocks where you borrow the stock, sell it, and wait. You have to leave the money with the broker as well as deposit a little extra to be sure you can make good if the market moves to a large degree against you. |
Are buying and selling futures based on objective data? | If you hold a future plus enough cash collateral it is economically equivalent to owning the underlying asset or shorting the underlying asset. In general financial assets such as stock indices have a positive expected return - that's the main difference between investing and gambling. There's nothing that special about futures, they are just another contractual form of asset ownership. Well, one difference is that regulations or brokerages allow individual investors more leverage with options and futures than with straight borrowing. But this is more a regulatory issue than a conceptual issue with the securities themselves. In theory regulators or brokers could require you to hold enough collateral to make a future equivalent to buying the underlying. |
How do Transfer Agents/Share Registrars get the names of beneficiary shareholders | In the United States, the stock certificate is updated to include beneficiary information. I expect it to be similar with other markets. TOD (Transfer on Death) From: http://www.nolo.com/legal-encyclopedia/free-books/avoid-probate-book/chapter3-2.html (emphasis added) If you have a brokerage account, contact the broker for instructions. Most likely, the broker will send you a form on which you’ll name beneficiaries to inherit your account. From then on, the account will be listed in your name, with the beneficiary’s name after it, like this: “Evelyn M. Meyers, TOD Jason Meyers.” If you have the actual stock certificates or bonds in your possession (most people don’t), you must get new certificates issued, showing that you now own the stock in beneficiary form. Ask your broker for help; if that doesn’t work, contact the transfer agent for the stock. You can get the address from your broker or the investor relations office of the corporation. The transfer agent will probably have you send in the certificates, a form called a stock or bond power (some stock certificates have the power printed on the back), and a letter explaining what you want to do. |
Which set of earnings is used to work out the P/E of a stock | @jlowin's answer has a very good discussion of the types of PE ratio so I will just answer a very specific question from within your question: And who makes these estimates? Is it the market commentators or the company saying "we'd expected to make this much"? Future earnings estimates are made by professional analysts and analytical teams in the market based on a number of factors. If these analysts are within an investment company the investment company will use a frequently updated value of this estimate as the basis for their PE ratio. Some of these numbers for large or liquid firms may essentially be generated every time they want to look at the PE ratio, possibly many times a day. In my experience they take little notice of what the company says they expect to make as those are numbers that the board wants the market to see. Instead analysts use a mixture of economic data and forecasting, surveys of sentiment towards the company and its industry, and various related current events to build up an ongoing model of the company's finances. How sophisticated the model is is dependent upon how big the analytics team is and how much time resource they can devote to the company. For bigger firms with good investor relations teams and high liquidity or small, fast growing firms this can be a huge undertaking as they can see large rewards in putting the extra work in. The At least one analytics team at a large investment bank that I worked closely with even went as far as sending analysts out onto the streets some days to "get a feeling for" some companies' and industries' growth potential. Each analytics team or analyst only seems to make public its estimates a few times a year in spite of their being calculated internally as an ongoing process. The reason why they do this is simple; this analysis is worth a lot to their trading teams, asset managers and paying clients than the PR of releasing the data. Although these projections are "good at time of release" their value diminishes as time goes on, particularly if the firm launches new initiatives etc.. This is why weighting analyst forecasts based on this time variable makes for a better average. Most private individual investors use an average or time weighted average (on time since release) of these analyst estimates as the basis for their forward PE. |
250k USD in savings. What's next? | Considering the historical political instability of your nation, real property may have higher risk than normal. In times of political strife, real estate plummets, precisely when the money's needed. At worst, the property may be seized by the next government. Also, keeping the money within the country is even more risky because bank accounts are normally looted by either the entering gov't or exiting one. The safest long run strategy with the most potential for your family is to get the money out into various stable nations with good history of protecting foreign investors such as Switzerland, the United States, and Hong Kong. Once out, the highest expected return can be expected from internationally diversified equities; however, it should be known that the value will be very variant year to year. |
Why charge gross receipts taxes to the customer? | I'll address one part of your question: There are other taxes that companies pay as well, such as income tax, but don't charge to the customer as a fee. So, why are gross receipts taxes charged to the customer? Things like income tax can't be passed on to the consumer in a direct way, because there's no fixed relationship between the amount of the tax and the price of an individual product. Income tax is paid on taxable income, which will incorporate deductions for the costs the company incurred to do business. So the final amount of corporate income tax can depend on things unrelated to the price of goods sold, like whether the business decided to repave their parking lot. Gross receipts taxes, by definition, are charged on the total amount of money taken in, so every dollar you spend on an item at the store will be subject to the gross receipts tax, and hence will cost the business 7 cents (or X% where X is the tax rate). This means there is a direct link between the price you pay for an individual item and the tax they pay on that transaction. The same is true for sales taxes, which are also often added at the time of sale. Of course, businesses could roll all of these into the posted price as well. The reason they don't is to get their foot in the door and make the price seem lower: you're more likely to buy something if you see it for the low, low, one-time-only price of $99.99, act now, save big, and then find out you owe an extra $7 at the register than if you saw $107 on the price tag. |
What's a good way to find someone locally to help me with my investments? | I would start by talking to a Fee-Only Financial Planner to make sure the portfolio fits with your goals. You can find a list here: http://www.napfa.org/ |
Do rental car agencies sell their cars at a time when it is risky for the purchaser? | A premium car rental agency will sell a car which is working very well and quite far from the verge of breaking apart. They don't want to take the risk that one of their premium customers paying premium rates receives a worn-looking car which runs less than absolutely perfect (or even breaks down). They need to keep up their premium reputation. These premium agency also have a major marketing impact for the car industry. That's probably the main reason why they receive such massive discounts (see thelem's post). Obviously, the Mercedes Benz AMG Edition rental car will have a lasting impression on the driver (and the people not renting it, but seeing the boastful ads of the car rental company). So both the car industry and the rental company want this lasting impression to be a perfect one. A holiday car rental agency may have much lower standards. They often don't have recurring customers. They don't rent premium cars to premium customers but cheap cars to cheap customers.They don't receive the discounts the premium agencies receive. And they will milk their car to the max. You will notice that they windows fall out of the car when you bang the door shut. You will find that opening the door will be more difficult than breaking into the car. The seats may be stained - at least in the spots where some of the upholsters is still present. On the plus side, if you are lucky, the heating still works. On the minus side, you might not be able to turn it off. Water might leak into the car when it's raining, but that's not much of a problem as it will drain out through the holes in the bottom. No fear that water might rush in through these holes when driving though a puddle - the engine will not start during humid weather, so that's a non-issue. In any case, car rental customer might have mistreated the car. The engine has most probably not been run in. However, this appears to be less than an issue with modern car than it has been in the past. And very very few rental car drivers think that they really have to absolutely emulate Michael Schumacher just because they drive a car which is not their own. And anyway, that is a risk you take with about any used car. |
Can I pay off my credit card balance to free up available credit? | The card you have is one where you had to deposit an amount equivelent to your card limit -a secured limit credit card. Capital One is one if the primary cards of this type. The typical rules of credit card usage and building your credit, do not apply. So, yes, you want to use the card as much as possible and pay off your balance as often as is necessary to keep your limit freed up. You can actually pay the full balance plus 10%, and gain a little extra limit. Use your card as much as possible and call them and ask for a limit increase every three months. usually about 4 - 5 months in, they will increase your limit and do so without asking for a corresponding security deposit. This is really cool, because it means you are becoming credit-worthy. I know so much about this because I applied for this card for my son and am helping him in his attempt to repair his credit. His score increased by almost 200 points last year. |
Why ever use a market order? | What you are saying is a very valid concern. After the flash crash many institutions in the US replaced "true market orders" (where tag 40=1 and has no price) with deep in the money limit orders under the hood, after the CFTC-SEC joint advisory commission raised concerns about the use of market orders in the case of large HFT traders, and concerns on the lack of liquidity that caused market orders that found no limit orders to execute on the other side of the trade, driving the prices of blue chip stocks into the pennies. We also applaud the CFTC requesting comment regarding whether it is appropriate to restrict large order execution design that results in disruptive trading. In particular, we believe there are questions whether it is ever appropriate to permit large order algorithms that employ unlimited use of market orders or that permit executions at prices which are a dramatic percentage below the present market price without a pause for human review So although you still see a market order on the front end, it is transformed to a very aggressive limit in the back end. However, doing this change manually, by selling at price 0 or buying at 9999 may backfire since it may trigger fat finger checks and prevent your order from reaching the market. For example BATS Exchange rejects orders that are priced too aggressively and don't comply with the range of valid prices. If you want your trade to execute right now and you are willing to take slippage in order to get fast execution, sending a market order is still the best alternative. |
Can I claim mileage for traveling to a contract position? | The short answer is yes you can, but you have to make sure you do it correctly. If you are employed by a tech company that does contract work at a separate location and you don't get reimbursed by your employer for travel expenses, you can claim the mileage between your home and location B as a business expense, but there's a catch - you have to subtract the mileage between your home and location A (your employer). So if it's 20 miles from your house to your employer (location A), and 30 miles from your house to the business you're contracting at (location B), you can only claim 10 miles each way (so 20 miles total). Obviously if the distance to location B is closer than your employer (location A), you're out of luck. You will have to itemize to take this deduction, by filling out a Schedule A for itemized deductions and Form 2106 to calculate how much of a deduction for travel expenses you can take. Google "should i itemize", if you're unsure whether to take the Standard Deduction or Itemize. Sources: |
For a car, what scams can be plotted with 0% financing vs rebate? | Here's a number-crunching example of how the "Zero interest rate" offer is misleading. Suppose the offer is that a car "costs $24,000.00 with zero percent financing over 24 months" or as an alternative, "$3,000.00 off for cash". Ignore the hype: the quoted prices and the quoted interest rates. Look at what really happens to two people who take advantage of the two offers, One person hands over $21,000.00 cash, and leaves with the new car. The second promises to make 24 payments of $1000.00, one a month, starting in one month's time, and also leaves with the same make and model new car. The two people have received exactly the same benefit, so the two payment schemes must have the same value. A mortgage program will tell you that paying off a $21,000.00 loan by making 24 monthly payments of $1000.00 requires an interest rate of 1.10% a month, or an effective annual rate of 14.03%. |
Passing money through a different account to avoid cash pay-in fees | Let me do the math. .6% * (not large) = really tiny. Since "not large" = "small" , etc. I suggest that even a small chance that you need to explain this to anyone in the future is a sign to avoid the risk. Yes, there are times that it's illegal. A real estate office may not deposit escrow funds into anything but a segregated escrow account. In your case, even if legal, it messes up 'the books' and can cost you more in grief than the 'tiny amount' saves you in cash. |
Magazine subscription leads to unauthorized recurring payment | In 2010, the Restore Online Shoppers' Confidence Act was passed, which prohibited certain activities, most of which had to do with online sites sharing your CC info with third parties. However, the final part of the act deals with "negative option" marketing, which is basically what you're describing - "We will charge you unless you say no". It requires three components to allow a negative option: If you did not explicitly enroll in automatic payment, and made the initial purchase online (or made your most recent purchase online, I suspect) then it sounds like this was a violation of this act. On the other hand, the act isn't terribly careful about defining terms, and is really quite vague in a lot of places, so it's possible they would argue they are not using a 'negative option' scheme but instead simply charging your bill similar to how your phone company might use autopay. If it was not online, then this probably doesn't apply. Instead, the FTC's rule on Negative Option with regard to sale of goods applies. Title 16 Part 425 covers this; this law is much less limiting as to what the marketer can do. |
Is a currency “hedged” ETF actually a more speculative instrument than an unhedged version? | I will just try to come up with a totally made up example, that should explain the dynamics of the hedge. Consider this (completely made up) relationship between USD, EUR and Gold: Now lets say you are a european wanting to by 20 grams of Gold with EUR. Equally lets say some american by 20 grams of Gold with USD. Their investment will have the following values: See how the europeans return is -15.0% while the american only has a -9.4% return? Now lets consider that the european are aware that his currency may be against him with this investment, so he decides to hedge his currency. He now enters a currency-swap contract with another person who has the opposite view, locking in his EUR/USD at t2 to be the same as at t0. He now goes ahead and buys gold in USD, knowing that he needs to convert it to EUR in the end - but he has fixed his interestrate, so that doesn't worry him. Now let's take a look at the investment: See how the european now suddenly has the same return as the American of -9.4% instead of -15.0% ? It is hard in real life to create a perfect hedge, therefore you will most often see that the are not totally the same, as per Victors answer - but they do come rather close. |
Might I need a credit score to rent, or for any other non-borrowing finances? | Alas, institutions do not always act rationally, and being an outlier by never having debt may be bad enough. Therein is your problem. The question, then, is do you want to do business with institutions that are not acting rationally? While I cannot specifically speak to Canadian business practices, I have to imagine that in terms of credit history as a prerequisite to a lease, it can't be too different than America. It is possible to live without a credit score. This is typically done by those with enough resources that do not need to borrow money. To make transactions that commonly use credit scores, such as a lease, they will provide personal financial statements (balance sheets, personal income statements, bank statements, pay stubs, tax returns, etc...) to show that they are credit-worthy. References from prior landlords may also be beneficial. Again, the caveat is to elect to only conduct business with those individuals and institutions that are intelligent and rational enough to be able to analyze your financial position (and ability to pay) without a credit score. Therefore, you'll probably have better luck working with individual landlords, as opposed to corporate-owned rental complexes. |
Is it a wise decision to sell my ESPP stock based on this situation? | ESPP tax treatment is complicated. If you received a discount on the purchase of your stock, that discount is taxable as ordinary income when you sell the stock. Any profit about the market value when the stock was purchased is taxed based upon the holding period of the stock. If you have held the stock less than a year, the profit is taxed at your marginal tax rate (ie taxed as ordinary income). If the stock is held for more than a year, it is taxed at a special capital gains tax rate, which ranges from 0-20% depending on your marginal tax rate (most people pay 15%). |
Do I need to pay taxes in the US as an Alien Resident for my Canadian stock capital gains | I will answer my own question. After calling my broker, they explained me this: |
Retirement planning: Pension or personal saving/investing? | You can never depend ONLY on pension. You must get financial education and invest your money. I recommend you to read The Intelligent Investor by Benjamin Graham...it's the bible of Warren Buffet. Besides, you don't need to be a Billionaire for retiring and be happy. I recommend you to get education in ETFs. I quote The Intelligent Investor by Benjamin Graham p. 131. According to Ibboston Associates, the leading financial research firm, if you had invested $12,000 in the Standard & Poor's 500-stock index at the beginning of september 1929, 10 years later you would have had only $7,223 left. But if you had started with a paltry $100 and simply invested another $100 every single month, then by August 1939, your money would have grown to $15,571! That's the power of disciplined buying-even in the face of the Great Depression and the worst bear market of all time. You are still young to make even bolder investments. But seriously you can never depend ONLY on pension. You won't regret learning how to invest your money, it doesn't matter if it's in the stock market, real state market, whatever market... Knowing what to do with your money is priceless. I hope this helps. Happy profits! |
Can I cash a cashier's check at any bank? | At least in the US, a Cashier's Check is just like a regular personal check - only it's guaranteed by the bank itself, so the person accepting it can be pretty certain the check won't be returned for insufficient funds...if the check is genuine! Most banks therefore have a policy for cashier's checks that is very similar to their policies on regular checks and money orders: if you are a member with an account in good standing, they'll make all or part of the money available to you according to their fund availability policy, which is usually anywhere from "immediately" to 7-10 days. With amounts over $5,000, banks will tend to put a hold on the funds to ensure it clears and they get their money. If you are not a member then many banks will refuse to cash the check at all, unless the cashier's check is drawn on on that brand of bank. So if the cashier's check is issued by, say, Chase Bank, Chase banks will usually be willing to cash out the entire check to you immediately (with properly provided ID). Because the bank is guaranteed by them they are able to check their system and ensure the check is real and can clear the check instantly. This policy isn't just up to individual banks entirely, as it is defined by United States federal banking policies and federal regulations on availability of funds. If you really must cash the check without a holding period and won't/can't have a bank account of your own to perform this, then you will generally need to go into a branch of the bank that is guaranteeing the check to be able to cash it out fully right away. Note that since the check might be issued by a bank with no branch near you, you should have a back-up plan. Generally banks will allow you to setup a special/limited savings-only account to deposit your check, even if you don't have a checking account, so if no other option works you might try that as well. The funds availability policies are the same, but at least you'll be able to cash it generally in 10 days time (and then close the account and withdraw your money). |
Simple and safe way to manage a lot of cash | You can move most or all of those financial products into a single account at one institution, but I wouldn't go with a "mutual fund account" like Vanguard. The big online brokerages should offer: Consolidating everything into one statement can vastly simplify your record keeping. With a balance of $250k, you should be able to get a paper statement without a fee. Depending on where the accounts are currently held (e.g. if the stocks are at a full-service broker), you may also be able to save on fees. |
VAT in UK, case of cultural industry and overseas invoices | Your answer will need loads of information and clarification, so I will ask you to visit the VAT and have a peruse. 1) Obligation is for you to find out the correct rate of VAT, charge and pay tax accordingly. You can call up the HMRC VAT helpline for help, which they will be happy to oblige. Normally everybody pays VAT every 3 months or you can pay once in a year. 2) Depends on your annual turnover, including VAT. Less than £150000 you join the Flat rate scheme. There are schemes for cultural activities. Might be good to check here on GOV.UK. 3) If you pay VAT in EU countries, you can reclaim VAT in UK. You need to reclaim VAT while filing in your VAT returns. But be careful about your receipts, which can be checked to verify you are not defrauding HMRC. The basic rule is that B2B services are, as the name suggests, supplies from one business to another. And, subject to some exceptions, are treated as made where the customer belongs. No VAT is chargeable on B2B supplies to an overseas customer. But where you make a B2C supply, VAT depends on where your customer is located: 1) if they are outside the EU, you don’t need to charge VAT 2) if they are located in an EU country, then you must charge VAT. Source All in all keep all records of VAT charged and paid to satisfy the taxman. If the rules get complicated, get an accountant to help you out. Don' take chances of interpreting the law yourself, the fines you might pay for wrong interpretation might be a deal breaker. |
After consulting HR Block, are you actually obligated to file your taxes with them, if they've found ways to save you money? | It sounds like they want to enter you into a contract in which they are allowed to charge a flat fee for filing contingent on money saving results from a tax review service, paid in full. Like those who answered before I have no legal experience. IRS Circular 230 defines the ethics for tax practitioners and the definition of a tax practitioner is broad enough (effective Aug 2011) to include those who are not EAs, CTRPs, CPAs as long as the person is compensated to prepare or assist in a substantial part of the preparation of a document pertaining to a taxpayer's liability for submission to the IRS. Section 10.27 Fees: (b)(2)A practitioner may charge a contingent fee for services rendered in connection with the Service’s examination of, or challenge to — (i) An original tax return Paragraph c defines what a contingent fee is basically a fee that depends on the specific result attained, in this case saving you money. In the section above 'Service's examination' is an audit in plain speak. If your 2013 return has not been submitted and you have not received a written notice for examination, H&R block can not charge a contingent fee, period. Furthermore, H&R Block cannot hold your tax documents, upon your request, they must return all original tax documents like W2s and 1099s ( they don't have to return the tax forms an employee prepared). Like I said above, I'm not a lawyer, unless I missed a key detail, I don't believe they were permitted to charge you a filing fee contingent on saving you money. |
Should I continue to invest in an S&P 500 index fund? | You shouldn't. The Dow has gained 7% annually on average since October 1915(inflation-adjusted). It has also lost 73% of its inflation-adjusted value from 1966 to 1982 meaning that it would have lost you 4.5% annually for 16 years. Furthermore, past performance is not indicative of future results. If stock markets keep performing like they have for the past 100 years, you can expect there will be a point within the next 60-or-so years your stocks will be higher in value than they were when you bought them. With funds you are paying the people managing them which means you are guaranteed to have pyramiding losses that your gains will have to offset. In your case, you are betting with no fundamental knowledge that S&P will be higher than now whenever you need the money which is not even supported by the above assumption. Dollar averaging just means you will be placing many bets which will reduce your expected losses(and your expected gains) when compared to just buying $100K worth of S&P right now. Whatever you invest in, and whatever your time-frame, don't gamble. If you can't say this company(ies) will be $X more valuable than now in X months with probability > Y, then you shouldn't be investing in it. Nobody ever made money by losing money. There are also safer investments than the stock market, like treasury bonds, even if the returns are lousy. |
What strike to choose if I want to sell weekly calls against a long LEAP put | So this is only a useful strategy if you already own the stock and want protection. The ITM put has a delta closer to 1 than an OTM put. But all LEAPS have massive amounts of theta. Since the delta is closer to 1 it will mimic the price movements of the underlying which has a delta of 1. And then you can sell front month calls on that over time. Note, this strategy will tie up a large amount of capital. |
Do I pay a zero % loan before another to clear both loans faster? | Keep in mind that by fully paying off one of your loans, you will reduce your minimum repayments. This will make you feel richer than you actually are. This will make you buy stuff that it seems like you can afford, probably putting some of it on credit. As you can't actually afford this, this will leave you, in a years time, with the same amount of debt you have now or more, but with a slightly bigger tv. Assuming your home loan has no penalties for paying off extra, then put all 11k into there to keep your monthly repayments as high as possible. |
Exotic Car Flipping as a Strategic Investment? (US-CAN) | You can greatly reduce the risk if you can line up a buyer prior to purchasing the car. That kind of thing is common in business, one example is drop shipping. Also there are sales companies that specialize in these kinds of things bringing manufacturers of goods together with customers. The sales companies never take delivery of the product, just a commission on the sales. From this the manufacturers are served as they have gained a customer for their goods. The buying company is served as they can make a "better" end product. The two parties may have not been brought together had it not been for the sales company so on some level both are happy to pay for the service. Can you find market inequalities and profit from them? Sure. I missed a great opportunity recently. I purchased a name brand shirt from a discount store for $20. Those shirts typically sell on ebay for $80. I should have cleaned out that store's inventory, and I bet someone else did as by the time I went back they were gone. That kind of thing was almost risk-less because if the shirts did not sell, I could simply return them for the full purchase price. That and I can afford to buy a few hundred dollars worth of shirts. Can you afford to float 45K CDN? What if it takes a year to sell the car? What if the economy goes sour and you are left "holding the bag"? Why are not car dealers doing exactly what you propose? Here in the US this type of thing is called "horse trading" and is very common. I've both lost and made money on these kind of deals. I would never put a significant amount of my net worth at risk. |
Why are some funds only recommended for investors starting out? | I am a firm believer in TD's e-series funds. No other bank in Canada has index funds with such low management fees. Index funds offer the flexibility to re-balance your portfolio every month without the need to pay commission fees. Currently I allocate 10% of my paycheck to be diversified between Canadian, US, and International e-series index funds. In terms of just being for beginners, this opinion is most likely based on the fact that an e-series portfolio is very easy to manage. But this doesn't mean that it is only for beginners. Sometimes the easiest solution is the best one! :) |
Is there anything I can do to prepare myself for the tax consequences of selling investments to buy a house? | Don't let tax considerations be the main driver. That's generally a bad idea. You should keep tax in mind when making the decision, but don't let it be the main reason for an action. selling the higher priced shares (possibly at a loss even) - I think it's ok to do that, and it doesn't necessarily have to be FIFO? It is OK to do that, but consider also the term. Long term gain has much lower taxes than short term gain, and short term loss will be offsetting long term gain - means you can lose some of the potential tax benefit. any potential writeoffs related to buying a home that can offset capital gains? No, and anyway if you're buying a personal residence (a home for yourself) - there's nothing to write off (except for the mortgage interest and property taxes of course). selling other investments for a capital loss to offset this sale? Again - why sell at a loss? anything related to retirement accounts? e.g. I think I recall being able to take a loan from your retirement account in order to buy a home You can take a loan, and you can also withdraw up to 10K without a penalty (if conditions are met). Bottom line - be prepared to pay the tax on the gains, and check how much it is going to be roughly. You can apply previous year refund to the next year to mitigate the shock, you can put some money aside, and you can raise your salary withholding to make sure you're not hit with a high bill and penalties next April after you do that. As long as you keep in mind the tax bill and put aside an amount to pay it - you'll be fine. I see no reason to sell at loss or pay extra interest to someone just to reduce the nominal amount of the tax. If you're selling at loss - you're losing money. If you're selling at gain and paying tax - you're earning money, even if the earnings are reduced by the tax. |
How can I set up a recurring payment to an individual (avoiding fees)? | Ask your bank or credit union. Mine will let me issue recurring payments to anyone, electronically if they can, if not a check gets mailed and (I presume) I get billed for the postage. |
Starting a new online business | Most US states have rules that go something like this: You will almost certainly have to pay some registration fees, as noted above. Depending on how you organize, you may or may not need to file a separate tax return for the business. (If you're sole proprietor for tax purposes, then you file on Schedule C on your personal Form 1040.) Whether or not you pay taxes depends on whether you have net income. It's possible that some losses might also be deductible. (Note that you may have to file a return even if you don't have net income - Filing and needing to pay are not the same since your return may indicate no tax due.) In addition, at the state level, you may have to pay additional fees or taxes beyond income tax depending on what you sell and how you sell it. (Sales tax, for example, might come into play as might franchise taxes.) You'll need to check your own state law for that. As always, it could be wise to get professional tax and accounting advice that's tailored to your situation and your state. This is just an outline of some things that you'll need to consider. |
Tips for insurance coverage for one-man-teams | While the OP disses the health insurance coverage offered through his wife's employer as a complete rip-off, one advantage of such coverage is that, if set up right (by the employer), the premiums can be paid for through pre-tax dollars instead of post-tax dollars. On the other hand, Health insurance premiums cannot be deducted on Schedule C by self-employed persons. So the self-employed person has to pay both the employer's share as well as the employee's share of Social Security and Medicare taxes on that money. Health insurance premiums can be deducted on Line 29 of Form 1040 but only for those months during which the Schedule C filer is neither covered nor eligible to be covered by a subsidized health insurance plan maintained by an employer of the self-employed person (whose self-employment might be a sideline) or the self-employed person's spouse. In other words, just having the plan coverage available through the wife's employment, even though one disdains taking it, is sufficient to make a Line 29 deduction impermissible. So, AGI is increased. Health insurance premiums can be deducted on Schedule A but only to the extent that they (together with other medical costs) exceed 10% of AGI. For many people in good health, this means no deduction there either. Thus, when comparing the premiums of health insurance policies, one should pay some attention to the tax issues too. Health insurance through a spouse's employment might not be that bad a deal after all. |
Differences in taxes paid for W2 employee vs. 1099 contractor working on sites like ODesk.com? | Yes, you've summarized it well. You may be able to depreciate your computer, expense some software licenses and may be home office if you qualify, but at this scale of earning - it will probably not cover for the loss of the money you need to pay for the additional SE tax (the employer part of the FICA taxes for W2 employees) and benefits (subsidized health insurance, bonuses you get from your employer, insurances, etc). Don't forget the additional expense of business licenses, liability insurances etc. While relatively small amounts and deductible - still money out of your pocket. That said... Good luck earning $96K on ODesk. |
How should I begin investing real money as a student? | I started my account with $500 so I know where you're coming from. For the words of caution, in about 2009 we entered a pretty significant bull market. During this period you could basically buy almost any big name company and do pretty well for yourself. So don't be too cocky about your ability to pick winners in the middle of a bull market. Over the last few years you'd have to try pretty hard to consistently pick losers. I absolutely think you should put real money in the game when you have this sort of interest. However, at your $400-600 level broker fees will eat any sort of active trading or short term profit you could muster. Stock trading is not a great way to make money in the short term. If you're looking to save for something specific you should put that money in a zero risk savings account. You should do more research on brokers. Find the lowest possible trade commission at an organization where you can meet the account opening minimum. A $10 commission is 11% more than a $9 commission. |
Why do people buy stocks at higher price in merger? | Microsoft wants to buy a majority in the stock. To accomplish that, they have to offer a good price, so the current share owners are willing to sell. Just because the CEO of LinkedIN agreed to the deal doesn't really mean much, only that he is willing to sell his shares at that price. If he does not own 50%, he basically cannot complete the deal; other willing sellers are needed. If Microsoft could buy 50+% of the shares for the current market price, they would have just done that, without any negotiations. That is called a hostile take-over. |
I'm only spending roughly half of what I earn; should I spend more? | Looks like you don't want to participate in the consumerist rush but feel that you just have to do that too. First of all, you don't have to do what you don't want. Then there're researches showing that joy from a compulsive purchase only lasts for a short period of time and then you are left with a relatively useless item in your house. So it's one thing if you really wanted that cool full-electronic sewing machine (or whatever DIY item you might want) to be able to repair all the stuff and craft all the nice things you wanted, but it's another thing if you look at the item and can't decide whether you really need it. The latter scenario is you struggling with the consumerism rush. If you feel really happy and can save half of what you earn just save the difference - it won't hurt. Having a good sum of money saved is really helpful in many scenarios. |
What is a subsidy? | subsidy - financial support. For example subsidized housing - when the government pays a part of your rent (usually for low income families). or subsidized student loan - when somebody else is paying interest on the money you borrowed while you are in school. |
How do I bring money overseas? | I'm an Australian who just got back from a trip to Malaysia for two weeks over the New Year, so this feels a bit like dejavu! I set up a 28 Degrees credit card (my first ever!) because of their low exchange rate and lack of fees on credit card transactions. People say it's the best card for travel and I was ready for it. However, since Malaysia is largely a cash economy (especially in the non-city areas), I found myself mostly just withdrawing money from my credit card and thus getting hit with a cash advance fee ($4) and instant application of the high interest rate (22%) on the money. Since I was there already and had no other alternatives, I made five withdrawals over the two weeks and ended up paying about $21 in fees. Not great! But last time I travelled I had a Commonwealth Bank Travel Money Card (not a great idea), and if I'd used that instead on this trip and given up fees for a higher exchange rate, I would have been charged an extra $60! Presumably my Commonwealth debit card would have been the same. This isn't even including mandatory ATM fees. If I've learned anything from this experience and these envelope calculations I'm doing now, it's these: |
Best way to start investing, for a young person just starting their career? | The most important thing is to start. Don't waste months and years trying to figure out the "optimal" strategy or trying to read all the best books before you start. Pick a solid, simple choice, like investing in your company sponsored 401(k), and do it today. This I Will Teach You To Be Rich post on barriers has some good insight on this. |
How to rebalance a portfolio without moving money into losing investments | You are very correct, rebalancing is basically selling off winners to buy losers. Of course the thinking is that selling a winner that has already increased 100% on the basis that it has doubled so it is likely to go down in the near future. However, just look at Apple as an example, if you bought Apple in June 2009 for $20 (adjusted price) and sold it as part of rebalancing when it rose to $40 (adjusted price) in September 2010, you would have missed out on it reaching over $95 2 years later. Similarly you look to rebalance by buying assets which have been battered (say dropped by 50%) on the basis that it has dropped so much that it should start increasing in the near future. But many times the price can fall even further. A better method would be to sell your winners when they stop being winners (i.e. their uptrend ends) and replace them with assets that are just starting their winning ways (i.e. their downtrend has ended and are now starting to Uptrend). This can be achieved by looking at price action and referring to the definitions of an uptrend and a downtrend. Definition of an uptrend - higher highs and higher lows. Definition of a downtrend - lower lows and lower highs. |
Investing: P/E Ratio basic question | While on the surface it might not make sense to pay more than one dollar to get just one dollar back, the key thing is that a good company's earnings are recurring each year. So, you wouldn't just be paying for the $1 dollar of earnings per share this year, but for the entire future stream of earnings per share, every year, in perpetuity -- and the earnings may grow over time too (if it remains a good company.) Your stock is a claim on a portion of the company's future. The brighter and/or more certain that future, the more investors are willing to pay for each recurring dollar of earnings. And the P/E ratio tells you, in effect, how many years it might take for your investment to earn back what you paid – assuming earnings remain the same. But you would hope the earnings would grow, too. When a company's earnings are widely expected to grow, the P/E for the stock is often higher than average. Bear in mind you don't actually receive the company's earnings, since management often decides to reinvest all or a portion of it to grow the company. Yet, many companies do pay a portion of earnings out as dividends. Dividends are money in your pocket each year. |
What are the reasons to get more than one credit card? | Another reason is that the amount of unused credit you have is a positive factor on your credit score. It's generally easier to open several different accounts for $X dollars each with different banks than to get your current bank to raise your limit severalfold in a single go. Your current bank has to worry about why you suddenly are asking for a large additional amount of credit; while other banks will be willing to offer you smaller amounts of credit in the hope that you transfer your business from your current bank to them. |
What evidence exists for claiming that you cannot beat the market? | No such evidence exists, because many people do beat the market. And many people fail to earn market rate of return. The way you achieve the former is generally to take risks that also increase the likelihood of the latter. The amount of time and effort you invest may bias that result, but generally risk and potential reward tend to track pretty closely since everyone else is making the same evaluations. You can't prove a negative. We can't prove unicorns don't exist either. We can advise you that hunting for one is probably not productive; many others have been trying, and if there was one we'd probably have seen at least something that encourages us to continue looking. Not impossible, but the evidence is far from encouraging. Market-rate-of-return can be achieved fairy reliably with minimal risk and minimal effort, and at mostly long-term tax rates. I consider that sufficient for my needs. Others will feel otherwise. |
Dad paid cash for house and we want to put it in my name | If your parents are not on the deed then I am not sure how it could be their house. It seems like the sale was done unofficially. If your parents or aunt pass away this could be a real mess. Make this official ASAP. It might be possible for your aunt to gift you the house. This may have tax implication but the article below suggests that it may not be an issue. http://www.bankrate.com/finance/real-estate/aunt-be-taxed-for-bargain-price-on-house.aspx As you're probably aware, owning a house is expensive. Make sure you can afford taxes, bills, and maintenance. Things add up fast. I should have address the "rent to own" plan. If you plan on transferring the house from your aunt to you by renting with $0 monthly payment and then claiming it is all paid off, then I think this would be considered a gifting of the house from your aunt to you. It sounds like fraud to claim you paid something that you didn't. In the end, it is either a gift from your parents or from your aunt. The sooner you get the house in your name the better |
At what interest rate should debt be used as a tool? | This is a very interesting question. I'm going to attempt to answer it. Use debt to leverage investment. Historically, stock markets have returned 10% p.a., so today when interest rates are very low, and depending on which country you live in, you could theoretically borrow money at a very low interest rate and earn 10% p.a., pocketing the difference. This can be done through an ETF, mutual funds and other investment instruments. Make sure you have enough cash flow to cover the interest payments! Similar to the concept of acid ratio for companies, you should have slightly more than enough liquid funds to meet the monthly payments. Naturally, this strategy only works when interest rates are low. After that, you'll have to think of other ideas. However, IMO the Fed seems to be heading towards QE3 so we might be seeing a prolonged period of low interest rates, so borrowing seems like a sensible option now. Since the movements of interest rates are political in nature, monitoring this should be quite simple. It depends on you. Since interest rates are the opportunity cost of spending money, the lower the interest rates, the lower the opportunity costs of using money now and repaying it later. Interest rates are a market mechanism so that people who prefer to spend later can lend to people who prefer to spend now for the price of interest. *Disclaimer: Historically stocks have returned 10% p.a., but that doesn't mean this trend will continue indefinitely as we have seen fixed income outperform stocks in the recent past. |
High expense ratio funds - are they worth it? | The 10 year comparison between your fund and the S&P 500 - I'd say more, but not sure it's needed. |
Can one use Google Finance to backtest (i.e. simulate trades in the past)? | Yes, add the stocks/mutual funds that you want and then you would just need to add all the transactions that you theoretically would have made. Performing the look up on the price at each date that you would have sold or bought is quite tedious as well as adding each transaction. |
Do the tax consequences make it worth it for me to hold ESPP stock? | To try to answer the three explicit questions: Every share of stock is treated proportionately: each share is assigned the same dollar amount of investment (1/176th part of the contribution in the example), and has the same discount amount (15% of $20 or $25, depending on when you sell, usually). So if you immediately sell 120 shares at $25, you have taxable income on the gain for those shares (120*($25-$17)). Either selling immediately or holding for the long term period (12-18 mo) can be advantageous, just in different ways. Selling immediately avoids a risk of a decline in the price of the stock, and allows you to invest elsewhere and earn income on the proceeds for the next 12-18 months that you would not otherwise have had. The downside is that all of your gain ($25-$17 per share) is taxed as ordinary income. Holding for the full period is advantageous in that only the discount (15% of $20 or $25) will be taxed as ordinary income and the rest of the gain (sell price minus $20 or $25) will be taxed at long-term capital gain tax rates, which generally are lower than ordinary rates (all taxes are due in the year you do sell). The catch is you will sell at different price, higher or lower, and thus have a risk of loss (or gain). You will never be (Federally) double taxed in any scenario. The $3000 you put in will not be taxed after all is sold, as it is a return of your capital investment. All money you receive in excess of the $3000 will be taxed, in all scenarios, just potentially at different rates, ordinary or capital gain. (All this ignores AMT considerations, which you likely are not subject to.) |
How can my friend send $3K to me without using Paypal? | Three ideas: PayPal is probably the best/cheapest way to transfer small/medium amounts of money overseas. |
Stock prices using candlesticks | No it does not. Candlesticks really have nothing to do with this, a stock price can open different then the previous day's close. Examining the chart of TSLA provides an example it closed on 1/18 at 238.8 it opened on 1/19 at 243.7 In candlestick parlance is is known as a "gap up". |
Shared groceries expenses between roommates to be divided as per specific consumption ratio and attendance | I asked how often grocery purchases are made in a comment, but I'm going to assume weekly for simplicity. If a roommate is present during the week following a grocery purchase, then they owe a share according to their preferences as you outlined them above. You will have to track the grocery cost by category for that week and calculate the balance owed by the person for that week. If there is a partial week where most expect to leave for a holiday or otherwise, then fewer groceries should be purchased for that week, and the cost of shares will decrease accordingly. One need only indicate preferences once, and weekly attendance thereafter. The only issue remaining is to determine how to record shares. If a normal person consumes 3 shares of milk, and .5 shares of butter, and so on, you simply add up all of the milk shares for the week and divide the milk bill by those shares. Same with the butter. The downside of this method is that you have to predict consumption in advance, so you may instead calculate by consumption after the fact with a deposit paid by all to create the initial grocery supply which will be refunded when that person leaves the grocery purchase co-op, and shares are calculated by who participated in the week prior to the grocery purchase. This also allows for a mid-week refresh if any commodity incurs higher than expected consumption, with the mid-week bill being added to the end of week refresh trip. |
Can I rollover an “individual retirement annuity” to an IRA? | Annuities, like life insurance, are sold rather than bought. Once upon a time, IRAs inherited from a non-spouse required the beneficiary to (a) take all the money out within 5 years, or (b) choose to receive the value of the IRA at the time of the IRA owner's death in equal installments over the expected lifetime of the beneficiary. If the latter option was chosen, the IRA custodian issued the fixed-term annuity in return for the IRA assets. If the IRA was invested in (say) 15000 shares of IBM stock, that stock would then belong to the IRA custodian who was obligated to pay $x per year to the beneficiary for the next 23 years (say). There was no investment any more that could be transferred to another broker, or be sold and the proceeds invested in Facebook stock (say). Nor was the custodian under any obligation to do anything except pay $x per year to the beneficiary for the 23 years. Financial planners loved to get at this money under the old IRA rules by suggesting that if all the IRA money were taken out and invested in stocks or mutual funds through their company, the company would pay a guaranteed $y per year, would pay more than $y in each year that the investments did well, would continue payment until the beneficiary died (or till the death of the beneficiary or beneficiary's spouse - whoever died later), and would return the entire sum invested (less payouts already made, of course) in case of premature death. $y typically would be a little larger than $x too, because it factored in some earnings of the investment over the years. So what was not to like? Of course, the commissions earned by the planner and the lousy mutual funds and the huge surrender charges were always glossed over. |
Options “Collar” strategy vs regular Profit/Loss stops | There are a few differences: |
Why the volume disparity between NUGT and DUST? | NUGT and DUST are opposites - DUST is a 'bear' (tracks 3x the inverse) and NUGT is a 'bull' (tracks 3x the actual). So if NUGT is much higher, sounds like people are betting on Gold (or specifically, on the NYSEARCA Gold Miners Index). When this Investopedia article was written in July 2016, the volumes were reversed: DUST traded ~18m and NUGT traded ~7m. Just differences in stock market activity. |
Why is the fractional-reserve banking not a Ponzi scheme? | No, fractional reserve banking isn't a scam. A simple exercise: replace dollars with time. You're trading some time now for time in the future, plus a bit of extra time. This is only a problem if you promise your entire life away, which we've helpfully outlawed. Once you realize that wealth is the result of human labor, and that money is simply a unit of account for it, it becomes far easier to see how simplistic models don't match reality. |
Is compounding interest on investments a myth? | The S&P 500 index from 1974 to present certainly looks exponential to me (1974 is the earliest data Google has). If you read Jeremy Siegel's book there are 200 year stock graphs and the exponential nature of returns on stocks is even more evident. This graph only shows the index value and does not include the dividends that the index has been paying all these years. There is no doubt stocks have grown exponentially (aka have grown with compound interest) for the past several decades and compounded returns is definitely not a "myth". The CAGR on the S&P 500 index from 1974 to present has been 7.54%: (1,783 / 97.27) ^ (1 / 40) - 1 Here is another way to think about compounded investment growth: when you use cash flow from investments (dividends, capital gains) to purchase more investments with a positive growth rate, the investment portfolio will grow exponentially. If you own a $100 stock that pays 10% dividends per year and spend the dividends every year without reinvesting them, then the investment portfolio will still be worth $100 after 40 years. If the dividends are reinvested, the investment portfolio will be worth $4,525 after 40 years from the many years of exponential growth: 100*(1 + 10%)^40 |
Can I work with two or more mortgage brokers at the same time? | While it is possible, it's not a really good use of your time or theirs. Mortgage brokers have access to dozens of lenders, can assemble deals you can't even dream of, and are much more intimately acquainted with the latest lending rule changes than you are. They are paid by the lenders to bring them business, so there is no cost to you. A mortgage broker has the advantage of leverage because he can be placing 10 mortgages per day, while you will be placing one, once. Your mortgage broker is working on your behalf. Get out of his way and let him do his job so you can concentrate on other matters. If your concern is that you want the lowest rate, share that with your broker and let him find the best rate for you. If you want a deal where you can put a larger prepayment down, let him know that and he will find you what you're looking for. |
Organizing Expenses/Income/Personal Finance Documents (Paperless Office) | I'm trying to organize my financial papers as well. I have a Fujitsu ScanSnap and it's tearing through my papers like a hot knife through butter (i.e. awesome). Here's how I'm addressing organizing the paper. I'm organizing mine a little bit organically. Here are the main parts: So anyway, all that to say that it's not necessary to organize the files to the hilt. If you want to, that's fine too, but it's a tradeoff: up-front organization for possibly some time savings later. The search function available is decreasing the advantage of organizing your files carefully. If throwing all of your files in a digital pile makes your skin crawl, then I won't force you otherwise, but I'm not worried about it for the time being. What you're doing with the other tracking sounds fine to me. Others may have different insights there. |
Should I get an accountant for my taxes? | Let me offer an anecdote to this - I started helping a woman, widowed, retired, who had been paying $500/yr to get her taxes done. As I mentioned in my comment here, she got a checklist each year and provided the info requested. From where I sat, it seemed a clerk entered the info into tax software. As part of the transition to me helping her, I asked the prior guy (very nice guy, really) for a quick consult. She took the standard deduction, but also showed a nice annual donation. Didn't take advantage of the QCD, donate directly from an IRA (she was over 70-1/2) to save on the tax of this sum. That could have saved her $500. She was in the 15% bracket, with some room left for a Roth conversion. Converting just enough to 'fill' that bracket each year seemed a decent strategy as it would avoid the 25% rate as her RMDs rose each year and would push her to 25%. To both items the guy suggested that this was not his area, he was not a financial planner. Yes, I understand different expertise. With how simple her return was, I didn't understand the value he added. If you go with a professional, be sure you have an understanding of what he will and won't do for you. |
Why big clients want the contractor to be incorporated before giving them work | They believe that it reduces the risk that Revenue Canada will deem you to be an employee and make them pay a whole pile of tax, EI, CPP and so on that should have been paid if you had been hired as an employee. It's my recollection that the employer gets dinged for both the employee and employer share of those withholdings (and generally the employer's share is larger than yours) so they really want to prevent it. There's a Revenue Canada publication about whether you're an employee or not. There's nothing on it about being incorporated, but still employers feel more protected when their contracts are incorporated. We did work as a sole proprietorship at the very beginning, so that we could deduct our losses against employment income earned earlier in the year, before we started the business. You can find clients who will take you on. We incorporated once the losses were over with (basically we had bought the equipment and office supplies we needed to get started.) It's a simple and relatively inexpensive thing to do, and gives clients a sense of protection. It won't protect you from your own poor decisions since you'll be a director of the firm. |
Brief concept about price movement of a particular stock [duplicate] | The problem with predicting with accuracy what a stock price will do in any given situation is that there are two main factors that affect a stocks price. The first factor is based somewhat in math as it takes into account numbers such as supply and demand, earnings per share, expected earnings, book value, debt ratio and a wide variety of other numbers. You can compile all those numbers into a variety of formulas and come up with a rational estimate of what the stock should sell for. This is all well and good and if the market were entirely rational it would rarely make news because it would be predictable and boring. This is where our second factor throws a wrench in the works. The second factor affecting stock price is emotional. There are many examples of people's emotions affecting stock price but if you would like a good example look up the price fluctuations of Apple (AAPL) after their last couple earnings reports. Numerically their company looks good, their earnings were healthy, their EPS is below average yet their price fell following the report. Why is that? There really isn't a rational reason for it, it is driven by the emotions behind unmet expectations. In a more general sense sometimes price goes down and people get scared and sell causing further decline, sometimes people get excited and see it as opportunity to buy in and the price stabilizes. It is much more difficult to anticipate the reaction the market will have to people's emotional whims which is why predicting stock price with accuracy is near impossible. As a thought along the same line ask yourself this question; if the stock market were entirely rational and price could be predicted with accuracy why is there such a wide range of available strike prices available in the options market? It seems that if stock price could be predicted with anything remotely reassembling accuracy the options market need a much smaller selection of available strike prices. |
Townhouse or stand-alone house for a first home? | Houses tend to appreciate more than condos. Houses are also more expensive. So it's a choice. You mention your girlfriend will be buying it with you. Take the time now to decide what will happen if you split up and put it in writing. Are you splitting the downpayment and mortgage 50/50? If not things can get complicated. Also consider home improvement costs, etc. If you think she is "the one" and you'll end up starting a family together, look at the location, nearby schools, etc. Sure, it may sound too early to be thinking about these things, but if you get a head start on finding a nice house you could save a lot of money and build a lot of equity with some smart decisions today. |
Where to find detailed information about stock? | You can take a look at EDGAR (Electronic Data Gathering, Analysis, and Retrieval), a big database run by the SEC where all companies, foreign and domestic, are required to file registration statements, periodic reports, and other forms electronically. |
Where do expense ratios show up on my statement? | For Vanguard: Vanguard does compare its fees with similar funds from its competitors on this tab, but then again, this is Vanguard giving you this information, so take with a grain of salt. |
What percent of my salary should I save? | What percent of my salary should I save? is tightly coupled with its companion, What size “nest egg” should my husband and I have, and by what age? Interestingly, Mr.Christer's answer, 10%, is the number that plugs into the equation that I reference. Jay's 25X rule is part of this. We start with the assumption that one's required income at retirement will be 80% of their pre-retirement income. That's high by some observations, low by others. A quick look at the expenses that go away in retirement - The above can total 35-40% It would be great if it ended there, but there are costs that go up. The above extra spending is tough to nail down, after all, you knew what you spent, and what's going away, but the new items? Crapshoot. (For non-native speakers - this refers to a game with dice, meaning a random event) Again, referencing Mr Christer's answer "financial planners whom you could pay to give you a very accurate number," I'm going to disagree with that soundbyte. Consider, when retirement is 30 years away, you don't know much If I can offer an analogy. I once had the pleasure of hearing Jim Lovell (The astronaut played by Tom Hanks in Apollo 13) give a speech. He said that for the first 99% of the trip to the moon, they simply aimed ahead of their target, never directly at the moon. In this manner, I suggest that with so many variables, accuracy is impossible, it's a moving target. Start young, take the 10% MrC offered, and keep saving. Every few years, stop and see if you are on target, if not, bump the number a bit. Better to turn 50 and find that after a good decade you've reached your number and can drop your savings to a minimum, perhaps just to capture a 401(k) match, than to turn 50 and realize you've undersaved and need to bump to an unsustainable level. Imagine planning ahead in 1999. You've seen 2 great decades of returns, and even realizing that 18%/yr couldn't continue, you plan for a below average 7%, this would double your 1999 balance in 10 years. Instead you saw zero return. For a decade. In sum, when each variable has an accuracy of +/-50% you are not going to combine them all and get a number with even 10% accuracy (as if MrC were wrong, but the pro would tell you 11% is right for you?). This is as absurd as packaging up a bunch of C rated debt, and thinking that enough of this paper would yield a final product that was AAA. |
Could the loan officer deny me even if I have the money as a first time home buyer? | There are loan options for those in your situation. It is very common. I am a licensed loan officer nmls 1301324 and have done many loans just like this. Your schooling is counted as your work history Contrary to popular belief. We want to write loans and guidelines are easing. Banks are a different story and their loan officers aren't licensed. If you talk to a bank you aren't getting an educated loan officer. They also have what are called overlays that make guidelines stricter. |
Should I avoid credit card use to improve our debt-to-income ratio? | If you pay it off before the cycle closes it will look like you have 100% available credit. So if you credit card statement closes on the 7th pay it off on the 6th in full don't pay it when its due 2/3 weeks later. Then after three months of doing that your credit score will go up based on the fact that your debt ratio is so low. That ratio is 30% of your credit score. It will help quite alot. |
A friend wants to use my account for a wire transfer. Is this a scam or is it legitimate? | I know people who work in the gulf and most contracts are of the 14 days on/ 14 days (or so) off flavor. I've never heard of someone being onboard a ship or platform for a year. I bet this is a scam. |
I have more than $250,000 in a US Bank account… mistake? | Build a trust. I have a trust account under my name and 3 dependents, FDIC confirmed we're good to 1m. Then I have personal accounts for the 4 of us and a corp account, all at the same bank, each also insured. |
Back of Check Images are Blank and not Endorsed | In general, a lack of endorsement (meaning nothing written by the receiver on the back of the check) is equivalent to it being endorsed "as deposit only" to a bank that the depositor has an account with. (See Uniform Commercial Code §4-205.) That is, the bank that receives a deposit without any endorsement promises to the banks that process the check along the line all the way back to your bank, that they properly deposited the money into the account of the entity that the check was made out to. With checks being processed with more and more automation, it's getting fairly common for there to be little writing needed on the check itself, as the digital copy gets submitted to the banking system for clearing. If you're concerned about there being some sort of fraud, that perhaps the entity that you're sending money to isn't the ones that should be getting it, or that they're not actually getting the money, or something like that, that's really an entirely different concern. I would expect that if you were saying that you paid something, and the payee said that you hadn't, that you would dispute the transaction with your bank. They should be able to follow the electronic trail to where the money went, but I suspect they only do so as part of an investigation (and possibly only in an investigation that involved law enforcement of some type). If you're just curious about what bank account number your deposit went into, then it just looks like you're the one trying to commit some sort of fraud (even if you're just being curious), and they don't have much incentive to try to help you out there. |
Why are estimated taxes due “early” for the 2nd and 3rd quarters only? | nan |
Settling before T+3? | The T+3 settlement date only affects cash accounts. In a cash account, you need to wait until the T+3 settlement date for your funds to be available to make your next trade. But if you convert your cash account into a margin account, then you do not need to wait until the T+3 settlement date for your next trade - your broker will allow you to make another trade immediately. |
Taxes on foreign and local dividends held in a TFSA | As far as I read in many articles, all earnings (capital gains and dividends) from Canadian stocks will be always tax-free. Right? There's no withholding tax, ie. a $100 dividend means you get $100. There's no withholding for capital gains in shares for anybody. You will still have to pay taxes on the amounts, but that's only due at tax time and it could be very minor (or even a refund) for eligible Canadian dividends. That's because the company has already paid tax on those dividends. In contrast, holding U.S. or any foreign stock that yields dividends in a TFSA will pay 15% withholding tax and it is not recoverable. Correct, but the 15% is a special rate for regular shares and you need to fill out a W8-BEN. Your broker will probably make sure you have every few years. But if you hold the same stock in a non-registered account, this 15% withholding tax can be used as a foreign tax credit? Is this true or not or what are the considerations? That's true but reduces your Canadian tax payable, it's not refundable, so you have to have some tax to subtract it from. Another consideration is foreign dividends are included 100% in income no mater what the character is. That means you pay tax at your highest rate always if not held in a tax sheltered account. Canadian dividends that are in a non-registered account will pay taxes, I presume and I don't know how much, but the amount can be used also as a tax credit or are unrecoverable? What happens in order to take into account taxes paid by the company is, I read also that if you don't want to pay withholding taxes from foreign > dividends you can hold your stock in a RRSP or RRIF? You don't have any withholding taxes from US entities to what they consider Canadian retirement accounts. So TFSAs and RESPs aren't covered. Note that it has to be a US fund like SPY or VTI that trades in the US, and the account has to be RRSP/RRIF. You can't buy a Canadian listed ETF that holds US stocks and get the same treatment. This is also only for the US, not foreign like Europe or Asia. Also something like VT (total world) in the US will have withholding taxes from foreign (Europe & Asia mostly) before the money gets to the US. You can't get that back. Just an honourable mention for the UK, there's no withholding taxes for anybody, and I hear it's on sale. But at some point, if I withdraw the money, who do I need to pay taxes, > U.S. or Canada? Canada. |
Sell your home and invest in growth stock mutual fund | It wouldn't surprise me to see a country's return to show Inflation + 2-4%, on average. The members of this board are from all over the world, but those in a low inflation country, as the US,Canada, and Australia are right now, would be used to a long term return of 8-10%, with sub 2% inflation. In your case, the 20% return is looking backwards, hindsight, and not a guarantee. Your country's 10 year bonds are just under 10%. The difference between the 10% gov bond and the 20% market return reflects the difference between a 'guaranteed' return vs a risky one. Stocks and homes have different return profiles over the decades. A home tends to cost what some hour's pay per month can afford to finance. (To explain - In the US, the median home cost will center around what the median earner can finance with about a week's pay per month. This is my own observation, and it tends to be correct in the long term. When median homes are too high or low compared to this, they must tend back toward equilibrium.) Your home will grow in value according to my thesis, but an investment home has both value that can rise or fall, as well as the monthly rent. This provides total return as a stock had growth and dividends. Regardless of country, I can't predict the future, only point out a potential flaw in your plan. |
Help Understanding Market/Limit Orders and Bid/Ask Price | Your logic breaks down because you assume that you are the only market participant on your side of the book and that the participant on the other side of the book has entered a market order. Here's what mostly happens: Large banks and brokerages trading with their own money (we call it proprietary or "prop" trading) will have a number of limit (and other, more exotic) orders sitting on both sides of the trading book waiting to buy or sell at a price that they feel is advantageous. Some of these orders will have sat on the book for many months if not years. These alone are likely to prevent your limit orders executing as they are older so will be hit first even if they aren't at a better price. On more liquid stocks there will also be a number of participants entering market orders on both sides of the book whose orders are matched up before limit orders are matched with any market orders. This means that pairing of market orders, at a better price, will prevent your limit order executing. In many markets high frequency traders looking for arbitrage opportunities (for example) will enter a few thousand orders a minute, some of these will be limit orders just off touch, others will be market orders to be immediately executed. The likelihood that your limit order, being as it is posited way off touch, is hit with all those traders about is minimal. On less liquid stocks there are market makers (large institutional traders) who effectively set the bid and offer prices by being willing to provide liquidity and fill the market orders at a temporary loss to themselves and will, in most cases, have limit orders set to provide this liquidity that will be close to touch. They are paid to do this by the exchange and inter-dealer brokers through their fees structure. They will fill the market orders that would hit your limit if they think that it would provide more liquidity in such a way that it fulfils their obligations. Only if there are no other participants looking to trade on the instrument at a better price than your limit (which, of course they can see unless you enter it into a dark pool) AND there is a market order on the opposite side of the book will your limit order be instantaneously be hit, executed, and move the market price. |
How to find out if I have a savings account already? | If you know what bank your parents used, call them and ask. (Or you might have to go there and show id). Chances are if such an account exists, it would be at the same bank. You can also search for unclaimed property. Here's the information link for Florida. |
Non Resident Alien Spouse Treated As Resident - Self Employment Income | First, the SSN isn't an issue. She will need to apply for an ITIN together with tax filing, in order to file taxes as Married Filing Jointly anyway. I think you (or both of you in the joint case) probably qualify for the Foreign Earned Income Exclusion, if you've been outside the US for almost the whole year, in which cases both of you should have all of your income excluded anyway, so I'm not sure why you're getting that one is better. As for Self-Employment Tax, I suspect that she doesn't have to pay it in either case, because there is a sentence in your linked page for Nonresident Spouse Treated as a Resident that says However, you may still be treated as a nonresident alien for the purpose of withholding Social Security and Medicare tax. and since Self-Employment Tax is just Social Security and Medicare tax in another form, she shouldn't have to pay it if treated as resident, if she didn't have to pay it as nonresident. From the law, I believe Nonresident Spouse Treated as a Resident is described in IRC 6013(g), which says the person is treated as a resident for the purposes of chapters 1 and 24, but self-employment tax is from chapter 2, so I don't think self-employment tax is affected by this election. |
Financial implications of purchasing a first home? | Congrats! Make sure you nail down NOW what happens to the house should you eventually separate. I know lots of unmarried couples who have stayed together for decades and look likely to do so for life; I've also seen some marriages break up that I wouldn't have expected to. Better to have this discussion NOW. Beyond that: Main immediate implications are that you have new costs (taxes, utilities, maintenance) and new tax issues (mortgage interest and property tax deductability) and you're going to have to figure out how to allocate those between you (if there is a between; not sure whether unmarried couples can file jointly these days). |
Options for dummies. Can you explain how puts & calls work, simply? | Here's my attempt at "Options for Kids" "Hey kid... So you have this video game that you paid $50 for that you want to sell two months from now" "Yes, Mr. Video Game Broker, but I want to lock in a price so I know how much to save for a new Tickle Me Elmo for my baby sister." "Ok, for $3, I'll sell you a 'Put' option so you can sell the game for $40 in two months." .... One month later .... "Hey, Mr. Video Game Broker, I can't wait to get this new Tickle Me Elmo for my little sister for Christmas, but its hard to get and I'm afraid prices will go up. I can only spend $100!" "Ok kid, for $4 I'll sell you a 'Call' option to buy a Tickle me Elmo on December 21st for $95. If you can find it cheaper, the option can expire, otherwise $95 is the most you will pay!" |
For a single company listed in multiple exchanges in different countries, are the shares being offered the same? | Yes and no. There are two primary ways to do this. The first is known as "cross listing". Basically, this means that shares are listed in the home country are the primary shares, but are also traded on secondary markets using mechanisms like ADRs or Globally Registered Shares. Examples of this method include Vodafone and Research in Motion. The second is "dual listing". This is when two corporations that function as a single business are listed in multiple places. Examples of this include Royal Dutch Shell and Unilever. Usually companies choose this method for tax purposes when they merge or acquire an international company. Generally speaking, you can safely buy shares in whichever market makes sense to you. |
Shorting Stocks And Margin Account Minimum | And what exactly do I profit from the short? I understand it is the difference in the value of the stock. So if my initial investment was $4000 (200 * $20) and I bought it at $3800 (200 * $19) I profit from the difference, which is $200. Do I also receive back the extra $2000 I gave the bank to perform the trade? Either this is extremely poorly worded or you misunderstand the mechanics of a short position. When you open a short position, your are expecting that the stock will decline from here. In a short position you are borrowing shares you don't own and selling them. If the price goes down you get to buy the same shares back for less money and return them to the person you borrowed from. Your profit is the delta between the original sell price and the new lower buy price (less commissions and fees/interest). Opening and closing a short position is two trades, a sell then a buy. Just like a long trade there is no maximum holding period. If you place your order to sell (short) 200 shares at $19, your initial investment is $3,800. In order to open your $3,800 short position your broker may require your account to have at least $5,700 (according to the 1.5 ratio in your question). It's not advisable to open a short position this close to the ratio requirement. Most brokers require a buffer in your account in case the stock goes up, because in a short trade if the stock goes up you're losing money. If the stock goes up such that you've exhausted your buffer you'll receive what's known as a "margin call" where your broker either requires you to wire in more money or sell part or all of your position at a loss to avoid further losses. And remember, you may be charged interest on the value of the shares you're borrowing. When you hold a position long your maximum loss is the money you put in; a position can only fall to zero (though you may owe interest or other fees if you're trading on margin). When you hold a position short your maximum loss is unlimited; there's no limit to how high the value of something can go. There are less risky ways to make short trades by using put options, but you should ensure that you have a firm grasp on what's happening before you use real money. The timing of the trades and execution of the trades is no different than when you take a plain vanilla long position. You place your order, either market or limit or whatever, and it executes when your trade criteria occurs. |
If I put a large down payment (over 50%) towards a car loan, can I reduce my interest rate and is it smart to even put that much down? | I had a strange experience buying a new car. They were offering a deal of 0.9% interest on the loan but only if the loan was above a certain amount. Below that amount, the interest rate was something like 3%. Given the amount I was willing to put down, it was cheaper to put less down and get the lower interest rate. So, once you agree to the purchase price, you need to discuss what finance options they offer. You might also check in advance with other loan providers (e.g. your bank) to see what offers they have. |
If one owns 75% of company shares, does that mean that he would have to take upon himself 75% of the company's expenses? | A firm is a separate legal person from its shareholders or owners (but doesn't get invited to parties much). Owners invest capital to get shares in the firm or may get shares for investing time, effort etc. but those shares are on a limited liability basis. That means that shareholders are only liable up to the value of their shares and that the firm itself is responsible for any expenses or liabilities. The firm will have working capital from its initial investors (i.e. any capital invested to get shares) and can borrow money on the bond market or issue new shares to cover outgoings. Share ownership simply entitles the owner to a proportion of the residual equity of the company and voting rights (for non-prefered equity). In a firm that I previously worked for, for example, one of the partners owned 51% of the firm but put up 100% of the firm's equity capital. The other partner owned 49% and provided 90% of the intellectual capital of the firm. They both took decisions equally. The distribution of ownership should, therefore, have no bearing on who finances deals. The owners (or managers in larger firms) should decide together how to use the company's capital for spending because it is exactly that; the company's capital; not any one of the investor's. Limited liability of owners is one of the major benefits of forming a company. |
Loan to son - how to get it back | I think you've made a perfectly valid suggestion, and, if your son is struggling somewhat financially now, one that may be very welcome. If you agree to forgive the debt at this time in lieu of a similar amount forgone in future inheritance, it will eliminate the never ending interest-only payments, free up $200+ a month for you son on a tight budget, and improve your own credit score once you pay off the credit line. It's also, in my opinion, a good idea to be open about this in advance with your other children heirs so that everyone will understand what is expected during the eventual probate. My paternal grandfather was the recipient of a great deal of financial largess from his wealthy mother during her life, and it was fully understood by him, her, and his siblings, that in exchange he would not share in her estate when she passed. He didn't, there were no problems, and he and his siblings stayed close for the rest of their lives. |
Selling To Close | Yes, if there is liquidity you can sell your option to someone else as a profit. This is what the majority of option trading volume is used for: speculative trading with leverage. |
How are days counted when funding a new account within 10 days | If the wording is "within 10 days" then its 10 days. Calendar days. Otherwise they would put "10 business days", for example. Usually, if you need to do something within 10 days from today, the first day to count is today. I would expect "within" to mean that you can fund in any of the days up to the 10th. But that's me, trying to read English as English. Why don't you call the bank and ask them? |
What is the difference between a bad/bounced check and insufficient funds? | This may vary some by the state, but the general facts are consistent broadly. The elements of check fraud typically are: This means that not only do you have to have presented a check that is returned for insufficient funds, but you must have known at the time that it wouldn't be honored. It must typically also be given for present consideration, which is why the comments to the other answer correctly note that the post-dated check "scam" cooked up by the payday loan folks shouldn't generally be relevant under these laws; on the same site, they note the cases that are clearly not present consideration: So if I give you a check for $50 and it's returned for NSF because I screwed up my bank accounts and had all my money in savings, that's probably not fraud. But if I decide I really want a Tesla X and give Tesla Motors a check for $95,000, knowing I don't have $95,000, that's fraud. How the prosecutor proves knowledge is probably beyond the scope of Personal Finance and Money Stack Exchange, though I imagine it tends to commonly be done so by showing the person doesn't normally have that much money in their account. |
Money market account for emergency savings | Most emergencies are less than 1,000 in nature. As such I would keep at least that amount in a checking/savings account at the bank from which you pay your bills or can get cash from. This amount may increase so you can avoid low balance fees, or because of the nature of your life style and income. Beyond that, you can search for yield. I personally like online savings accounts like Amex Personal Savings, Ally or others. Money market accounts will work equally well. There you can keep the bulk of your emergency savings and large purchase savings. Keep in mind you still won't earn much. A 40K emergency fund will only earn you $38/month at Ally. |
For young (lower-mid class) investors what percentage should be in individual stocks? | I would not advise any stock-picking or other active management (even using mutual funds that are actively managed). There is a large body of knowledge that needs learning before you even attempt that. Stay passive with index funds (either ETFs or (even better) low-cost passive mutual funds (because these prevent you from buying/selling). But I have not problem saying you can invest 100% in equity as long as your stomach can handle the price swings. If you freek out after a 25% drop that does not recover within a year, so you sell at the market bottom, then you are better off staying with a lot less risk. It is personal. There are a lot of valid reasons for young people to accept more risk - and equally valid reason why not. See list at http://www.retailinvestor.org/saving.html#norisk |
Is there any way to know how much new money the US is printing? | The Federal Reserve is not the only way that money can be "printed." Every bank does fractional reserve banking, thereby increasing the money supply every time they make a new loan. There's a number called the reserve requirement which limits how much money each bank can create. Lowering the reserve requirement allows banks to create more money. Raising it will destroy money. But banks can also destroy money by calling in loans or being less willing to make new loans. So when you look at the number of banks in the US, and the number of loans they all have, it's impossible to figure out exactly how much the money supply is expanding or contracting. |
Is a currency “hedged” ETF actually a more speculative instrument than an unhedged version? | The risk of any investment is measured by its incremental effect on the volatility of your overall personal wealth, including your other investments. The usual example is that adding a volatile stock to your portfolio may actually reduce the risk of your portfolio if it is negatively correlated with the other stuff in your portfolio. Common measures of risk, such as beta, assume that you have whole-market diversified portfolio. In the case of an investment that may or may not be hedged against currency movements, we can't say whether the hedge adds or removes risk for you without knowing what else is in your portfolio. If you are an EU citizen with nominally delimited savings or otherwise stand to lose buying power if the Euro depreciates relative to the dollar, than the "hedged" ETF is less risky than the "unhedged" version. On the other hand, if your background risk is such that you benefit from that depreciation, then the reverse is true. "Hedging" means reducing the risk already present in your portfolio. In this case it does not refer to reducing the individual volatility of the ETF. It may or may not do that but individual asset volatility and risk are two very different things. |
Is selling put options an advisable strategy for a retiree to generate stable income? | Selling options is a great idea, but tweak it a bit and sell credit spreads on both sides of the market, i.e. sell OTM bear call spreads and OTM bull put spreads. This is also known as an iron condor, and limits risk, and allows for much more flexibility. |
Why charge gross receipts taxes to the customer? | It sounds like "gross receipt tax" is essentially the same thing most states call "sales tax", which is always handled this way -- prices displayed are pre-tax, tax is added when the final price is calculated. One reason for doing it that way is that most prices result in taxes that involve fractions of pennies, and calculating from the total produces a more accurate result than calculating tax on each item individually. It is theoretically possible to set prices so the numbers come out evenly when tax is added. But that requires that the prices be in fractional cents, potentially to many decimal places. And in fact in some places it is illegal to display (only) the with-tax price. Otherwise I'm sure some stores and restaurants would be willing to deal with the mils and micros, purely on principle or as a marketing gimmick. Since customers have learned to expect sales tax, it really isn't worth the effort to fight it. The closest I've seen has been occasional "we'll pay your sales tax" offers, or statewide sales-tax holidays once a year. |
What kind of symbol can be shorted? | Some platforms/brokers have HTB indication for a stock symbol, meaning Hard To Borrow. That usually means you can't sell it short at the moment. |
Starting long-term savings account as a college student | Great question and great of you to be paying attention to this. Right now having the ability to save $2K per year might seem very out of reach. However with the right career path and by paying attention to personal finance saving 2K per month will become possible sooner than you may think. As a student you are already investing in your future, by building your greatest wealth building tool: your income. Right now concentrate on that. If you have extra money throw it in a boring old savings account and don't touch it other than emergencies. An emergency is defined as something that will preclude you from completing your education. It is not paying for the latest xbox game/skateboard/once in a lifetime trip. An important precursor to investing is having an emergency fund that sits in a boring old savings account earning almost nothing. Think of it as an insurance policy that prevents you from liquidating your investments in case of and emergency. Emergencies often come during economic downturns. If you have to liquidate your investment to cover these times then you will lock in negative returns. Once you are done with school, moved into a place of your own, and have your first job you will have a nice start on your emergency fund. Then you can start investing. Doing it in the right order you will be amazed how quickly your savings can accumulate. I'd be shooting for that 2 million by the time you are 40, not 65. |
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