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Can I open a Solo 401(k) if I am an independent contractor but also work part-time as an employee? | If you have self-employment income you can open a Solo 401k. Your question is unclear as to what your employment status is. If you are self-employed as an independent contractor, you can open a Solo 401k. You can still do this even if you also earn non-self-employment income (i.e., you are an employee and receive a W-2). However, the limits for contributions to a Solo 401k are based on your self-mployment income, not your total income, so if you have only a small amount of self-employment income, you won't be able to contribute much to the Solo 401k. You may be able to reduce your taxes somewhat, but it's not like you can earn $1000 of self-employment income, open a Solo 401k, and dump $5000 into it; the limits don't work that way. |
Car financed at 24.90% — what can I do? | If you are a subprime borrower, that may not be an unreasonable rate given the risk they are accepting. In any case, it's what you agreed to. As others have said, you could/should have shopped elsewhere for the loan. In fact, you can still shop elsewhere for a loan to refinance that vehicle and thus lower the rate, unless the existing loan has equally obnoxious rules about that. |
How is income tax calculated in relation to selling used items? | If the items you sold are items you previously bought for a higher price, the money you get selling them is not income, as you are taking a loss. However, you cannot deduct such losses. If you sell anything for more than what you paid for, the difference is a gain and is taxable. See this IRS web site for the explanation: https://www.irs.gov/businesses/small-businesses-self-employed/tax-tips-for-online-auction-sellers |
How to measure a currencies valuation or devaluation in relevance to itself | The measure of change of value of a currency in relation to itself is inflation (or deflation). |
What is the meaning of “writing put options”? | Suppose you're writing a put with a strike price of 80. Say the share's(underlying asset) price goes down to 70. So the holder of the put will exercise the option. Ie he has a 'right to sell' a share worth 70 for rs 80. Whereas a put option writer has an 'obligation to buy' at rs 80 a share trading at rs 70. Always think from the perspective of the holder. If the holder exercises the option, the writer will suffer a loss. Maximum loss he suffers will be the break even FSP, which is Strike price reduced by the premium paid.. If he doesn't exercise the option the writer will make a profit, which can maximum be the put premium received. |
Ray Dalio - All Weather Portfolio | Here are the specific Vanguard index funds and ETF's I use to mimic Ray Dalio's all weather portfolio for my taxable investment savings. I invest into this with Vanguard personal investor and brokerage accounts. Here's a summary of the performance results from 2007 to today: 2007 is when the DBC commodity fund was created, so that's why my results are only tested back that far. I've tested the broader asset class as well and the results are similar, but I suggest doing that as well for yourself. I use portfoliovisualizer.com to backtest the results of my portfolio along with various asset classes, that's been tremendously useful. My opinionated advice would be to ignore the local investment advisor recommendations. Nobody will ever care more about your money than you, and their incentives are misaligned as Tony mentions in his book. Mutual funds were chosen over ETF's for the simplicity of auto-investment. Unfortunately I have to manually buy the ETF shares each month (DBC and GLD). I'm 29 and don't use this for retirement savings. My retirement is 100% VSMAX. I'll adjust this in 20 years or so to be more conservative. However, when I get close to age 45-50 I'm planning to shift into this allocation at a market high point. When I approach retirement, this is EXACTLY where I want to be. Let's say you had $2.7M in your retirement account on Oct 31, 2007 that was invested in 100% US Stocks. In Feb of 2009 your balance would be roughly $1.35M. If you wanted to retire in 2009 you most likely couldn't. If you had invested with this approach you're account would have dropped to $2.4M in Feb of 2009. Disclaimer: I'm not a financial planner or advisor, nor do I claim to be. I'm a software engineer and I've heavily researched this approach solely for my own benefit. I have absolutely no affiliation with any of the tools, organizations, or funds mentioned here and there's no possible way for me to profit or gain from this. I'm not recommending anyone use this, I'm merely providing an overview of how I choose to invest my own money. Take or leave it, that's up to you. The loss/gain incured from this is your responsibility, and I can't be held accountable. |
What are the procedures or forms for a private loan with the sale of a vehicle? | The Nebraska DMV web site has a neat page about this. It seems to be fairly simple, and not costly to record a lien and later release it. Just go there with the title and the sales agreement that details the terms, and pay the $7 fee. |
What is the different between 2 :1 split and 1:1 split | There is no such thing as a "one for one" split. It's either N for 1, or 1 for N in a reverse split. And for either, N can't be 1. Yes a 3:2 can happen, but I still read it as 1.5 for 1. |
How do top investors pull out 20% ROI? | It's called leverage. Here's an example from real estate. The underlying appreciation on a house in certain parts of America is something like 7% a year. So if you bought the house "all cash," your return would be something like 7% a year. (Actually, a little more, because of the rent you would be collecting, or saving, if you were the "renter.") Suppose you buy the same house, 20% down, 80% mortgage. The rent pays for your mortgage, taxes, insurance, etc. like it is supposed to. The house goes up the same 7% each year. But now your rate of return is 35%, that is 7%/20% (your down payment). You get the whole appreciation but put up only 20% of the money. The bank (and your renter) did the rest. |
Why call option price increases with higher volatility | When volatility is higher, the option is more likely to end up in-the-money. Moreover, when it ends up in-the-money, it is likely to be over the strike price by a greater amount. Consider a call option. With high volatility, moves in the stock price are big - both up moves and down moves. If the stock moves up by a lot, the call option holder will benefit greatly. On the other hand, when the stock moves down, below a certain point the option holder does not care how big a down move the stock has. His downside is limited. Hence, the value of the option is increased by high volatility. I know everyone who searches this is looking for this answer. Bump so people are able to get this concept instead of looking all over the web for it. |
Would you withdraw your money from your bank if you thought it was going under? | The article you link scares me; but I still have faith that the FDIC will keep me protected. Personally, if the FDIC goes broke, there is something more fundamentally wrong with the government as a whole and dollars won't worry me much. There are lots of issues with the FDIC, and I think the answers lie outside of simply printing more money and funding the FDIC further. There is likely more bad before this storm is over, and I might be ignorant, but I still want to operate normally. My money would stay where it is with things being how I see them in today |
Why do people use mortgages, when they could just pay for the house in full? | I believe the reason is because society and the economy is set up a certain way, and re-enforced by the government. Your options are: So, people usually go with the most attractive of their limited options, getting a mortgage. If you want to dig deeper, do some research as to why housing is expensive. Some things to consider: you need the government's permission to build houses, thus limiting the competition in the home building market, the housing bubble, artificially setting house prices, etc.) To summarize: people need mortgages because houses are expensive, and houses are expensive for many reasons, big ones having to do with the government. |
Can an unmarried couple buy a home together with only one person on the mortgage? | I will expand on Bacon's comment. When you are married, and you acquire any kind of property, you automatically get a legal agreement. In most states that property is owned jointly and while there are exceptions that is the case most of the time. When you are unmarried, there is no such assumption of joint acquisition. While words might be said differently between the two parties, if there is nothing written down and signed then courts will almost always assume that only one party owns the property. Now unmarried people go into business all the time, but they do so by creating legally binding agreements that cover contingencies. If you two do proceed with this plan, it is necessary to create those documents with the help of a lawyer. Although expensive paying for this protection is a small price in relation to what will probably be one of the largest purchases in your lives. However, I do not recommend this. If Clayton can and wants to buy a home he should. Emma can rent from Clayton. That rent could any amount the two agree on, including zero. If the two do get married, well then Emma will end up owning any equity after that date. If they stay together until death, it is likely that she (or her heirs) will own half of it anyway. Also if this house is sold, the equity pass into larger house they buy after marriage, then that will be owned jointly. If they do break up, the break up is clean and neat. Presumably she would have paid rent anyway, so nothing is lost. Many people run into trouble having to sell at a bad time in a relationship that coincides with a weak housing market. In that case, both parties lose. So much like Bacon's advice I would not buy jointly. There is no upside, and you avoid a lot of downside. Don't play "house" by buying a home jointly when you are unmarried. |
Splitting Hackathon Prize Money to minimize tax debt | I would deduct all the other payments out as subcontractors, but I typically have all the paperwork and entities set up to make that applicable. In Turbotax I do this with as subcontracting expense under my business entity, but for the IRS the categories of the deductions do not matter This isn't tax advice, it is what I would do, and how I would defend it under an audit. Everyone else that was paid also needs to report it. The lack of reciprocal filing (you deducted income paid to someone else, the person did not report that income, or reported it in a different way) is a number one thing to trigger IRS scrutiny. Although accurate, you need to be aware that you are shifting the tax burden away from yourself, by deducting it. |
What is an “International Equity”? | International equity are considered shares of companies, which are headquartered outside the United States, for instance Research in Motion (Canada), BMW (Germany), UBS (Switzerland). Some investors argue that adding international equities to a portfolio can reduce its risk due to regional diversification. |
What emergencies could justify a highly liquid emergency fund? | I tend to agree that the need for liquidity is overplayed in this day and age. We live in a world of electronic transfers that take only a couple days at most. With my brokerage account I can go from stock to gas in my tank via debit card in about 3 days. We're a long way away from the days when it took weeks, phone calls, and physical checks in the mail to go from stock to cash in your hand. We've also moved a long way away from limited credit/debit card acceptance. It was not long ago that my mechanic didn't accept credit cards. Locksmiths didn't carry a square reader on their iPhone 10 years ago. However, don't expect debt to always be available. Many many many people with strong income and stellar credit histories had their credit/HELOC limits slashed from 2008-2010 while banks pared back risk. A cash position of a size that makes sense gives you a high level of short term control; you aren't reliant on someone else's money. Liquidity isn't the main issue with emergency funds. The main issue is psychological. Build a foundation rather than overly optimistically chasing yield. |
How can contractors recoup taxation-related expenses? | Anything is negotiable. Clearly in the current draft of the contract the company isn't going to calculate or withhold taxes on your behalf - that is your responsibility. But if you want to calculate taxes yourself, and break out the fees you are receiving into several "buckets" on the invoice, the company might agree (they might have to run it past their legal department first). I don't see how that helps anything - it just divides the single fee into two pieces with the same overall total. As @mhoran_psprep points out, it appears that the company expects you to cover your expenses from within your charges. Thus, it's up to you to decide the appropriate fees to charge, and you are assuming the risk that you have estimated your expenses incorrectly. If you want the company to pay you a fee, plus reimburse your expenses, you will need to craft that into the contract. It's not clear what kind of expenses you need to be covered, and sometimes companies will not agree to them. For specific tax rule questions applicable to your locale, you should consult your tax adviser. |
Does it make sense to refinance a 30 year mortgage to 15 years? | Unless I'm missing something, this doesn't make sense at all. Why take out money at 3.25% (the Heloc) to reduce the balance on a 3% loan (the refi)? It would be better to move as much from the Heloc to the refi as possible to get the best rate. If this results in a lower monthly payment, keep paying the higher payment and you'll be better off. |
Are there any disadvantages to DHA Investment Properties? | Well, I am an investor/ Lessor under DHA properties. Oflate, DHA lost it identity as a Govt agency and try to imitate a worst (not the best) real eastate agent. Every year rental valuation is a drama or waste of time and money to lessor. They pull down the rent by 10 to 22% and ask for a secondary valuation for no reasons. They don't even agree with market evidence and start bullying or black mailing tactics to force you to aceept a below market rent or the threat of third review , a very expensive review shared 50% by lessor and rest the poor tax payers! The thir review also badly influenced by DHA by submitting biased valuations and thereby destroying the independence of valuation. The API appointed valuer neither follow the DHA gudie nor the API guide and also ignore the market reality and take the average rent for the area. You also losse 14 to 18% as management fees paid to DHA. Selling also a problem and its high time the CWG and the Minster in charge of the DHA must institute an independent investigation to expose the potential nexus between the valuers and the DHA and how the lessor (a self funded retiree, pensioners and others). I already lodged a complaint with Ombudsman and waiting for a reply. There are 14 Lessors all in a Private street (Only DHA leased property in that street) near 213 Ray rd Epping 2121 that are leased to DHA for more than 10 years. Please note most of those Lessors almost lost $10000 per year because DHA under cut the rent to them when they paid me the market rent for many years. DHA by mistake send the rent paid to all. We have called for the details of rent paid to all the 14 lessors in that private street from 2008 todate under the Freedom of Information Act and waiting. |
What's the difference between Market Cap and NAV? | At any given moment, one can tally the numbers used for NAV. It's math, and little more. The Market Cap, which as you understand is a result of share value. Share value (stock price) is what the market will pay today for the shares. It's not only based on NAV today, but on future expectations. And expectations aren't the same for each of us. Which is why there are always sellers for the buyers of a stock, and vice-versa. From your question, we agree that NAV can be measured, it's the result of adding up things that are all known. (For now, let's ignore things such as "goodwill.") Rarely is a stock price simply equal to the NAV divided by the number of shares. Often, it's quite higher. The simplest way to look at it is that the stock price not only reflects the NAV, but investors' expectations looking into the future. If you look for two companies with identical NAV per share but quite different share prices, you'll see that the companies differ in that one might be a high growth company, the other, a solid one but with a market that's not in such a growth mode. |
Is the gross amount of US debt dangerous for the small investor? | Not a lot, directly. Your biggest direct risk is that you could buy the debt, and buy it at too high a price (i.e. too low an interest rate) and not make as much money as you ought (and maybe not enough to cover inflation, especially if you buy long-term bonds at low interest rates.) The indirect risks are mostly that the debt could weigh on economic growth: There is also a question of monetary policy, inflation, and interest rates set by the Federal Reserve. Theoretically the government could be tempted to keep interest rates low (to save money) and buy its own bonds ("printing money"), which could cause inflation. Theoretically, they shouldn't, as price stability is one of the Fed's primary mandates. But if they did, inflation makes everything less predictable and is generally obnoxious, which makes everything more risky and drags on the economy. Also, if the nominal value of an asset rises due to inflation, you will likely need to pay taxes on that at some point if you sell it, even though its real value is the same. |
Switch from DINK to SIWK: How do people afford kids? | Others have tip-toed around this, but I'll just come out and say it. The amount of money you're giving to the church is bordering on irresponsible given that you're just barely breaking even yourself. The best thing you can do if you want to have children is to stop paying such a high amount to the church, and redirect most, if not all, of that money to your savings account. |
Exercise ISO or NSO in solo 401k? | You have a Solo 401(k). You can fund it with cash, or I believe, with shares of your own company. You can't pull in other assets such as the ISOs from another employer. I see why that's desirable, but it's not allowed. You wrote "this will mitigate all tax complications with employee stock options." But - you can't transfer the ISOs from your job into your Solo 401(k). As littleadv notes, it's self dealing. Once the ISO is exercised there's no hiding the gain into that 401(k). |
Making an offer on a property - go in at market price? | From then on we've felt he was really pushy and rushing us to make a decision (we need to lock in a good rate, its a sellers market, it'll go fast, snooze loose, etc). This is the first reason for walking away. I understand that all those factors might be true but my question is: How do I know we made a good offer? I'm going to be blunt, here: You don't. You work out ahead of time what you will pay (ignore the agent) and you make the offer on the basis of your own research, research you spent months undertaking. The listed price on the location is $375,000 and according to our agent similar units over the last few years had sold for that amount. So our agent suggested making an offer at market price. According to the agent. I'm going to be blunt here, what do any of the real estate sites out there - that offer a wealth of information for free - indicate? If you don't know, then yet again you don't know if you made the right offer or not. Do some research now by yourself. I would be shocked if your offer was at the right level. Set your emotions aside - there are a gazillion houses out there. |
Non-EU student, living in Germany, working for a Swiss company - taxes? | I'll assume that you would work as a regular (part-time) employee. In this case, you are technically a Grenzgänger. You will need a specific kind of Swiss permit ("Grenzgängerbewilligung") allowing you to work in Switzerland. Your employer typically takes care of this - they have more experience than you. You being non-EU might make matters a bit more complicated. Your employer will withhold 4.5% of your gross income as source taxes ("Quellensteuer"). When you do your tax declaration, your entire income will be taxed in Germany, since this is where you live. This will happen after your first year of work. Be prepared for a large tax bill (or think of this as an interest-free loan from Germany to you). However, due to the Doppelbesteuerungsabkommen (DBA), the 4.5% you already paid to Switzerland will be deducted from the taxes you are due in Germany. Judging from my experience, the tax authorities in Germany are not fluent in the DBA - particularly in areas far away from the Swiss border. I had to gently remind them to deduct the source taxes, explicitly referring to the DBA. The bill was revised without problems, but I strongly recommend making sure that your source taxes are correctly deducted from your German tax liability. Once your local German tax office understands your situation, you will be asked to make quarterly prepayments, which will be calculated in a way to minimize your later overall tax liability. Budget for these. You didn't ask, but I'll tell you anyway: social security will normally be handled by Switzerland as the country of employment - not the country of residence. Your employer will automatically deduct old age, unemployment and accident insurance and contribute to a pension plan, all in Switzerland. However... ... if you do a lot of your work in Germany (>25%), which certainly applies if you plan on mostly working remotely, your social security will be handled by your country of residence. This is a major pain for your employer, because now your Swiss employer needs to understand the German social security system, how much and to whom to co-pay and so forth. This is a major area of study, and your employer may not want to spend all this effort. My employer has looked at this and requires anyone living outside of Switzerland to limit working from home to less than 25%, because by extension, they would some day also need to do the same for employees living in France, Italy, Austria... or even the UK. They don't want to dig through half the EU states' social security regulations. Therefore, you would not be able to work remotely from Germany for my employer. This is actually a fairly recent development that only entered in force at the beginning of 2015 (before that, this was all a bit of a gray area). Your prospective employer may not be aware of all details. So you will need to think about whether you actively want to point them at this (possibly ruining your plans of working remotely), or not (and possibly getting major problems and post-payments years later). Finally, I think you can choose whether you want to have your health insurance in Switzerland or in Germany (unless your Swiss obligation to be insured is waived because of your part-time status). Some Swiss health insurers offer plans where they cooperate with German health insurers, so you can go to German doctors just like a German resident. Source: I have been a Grenzgänger from Germany into Switzerland off and on for over ten years now. I can't say anything about whether your German visa restricts you from working in Switzerland. You may want to ask about this at Expatriates.SE, but I'd much rather ask your local German authorities than random strangers on the internet. |
Ensuring payment from client | You should absolutely have a contract between you and your client stipulating the quid-pro-quos of the arrangement. They get the product, you get the money. First off, this contract should specify what you must do, and what they must do, for the contract to be "satisfied". This isn't necessarily just product for money; your client may be under deadlines to approve the product in various stages of work in process. Depending on the product, the client may be required to provide starting materials (like existing logos/slogans for advertising/marketing graphics), information on or access to computer systems (for software or infrastructure consulting, or accounting auditing), etc. Second, if you provide a tangible product like graphics or software, the contract should clearly state that "intellectual property transfers on satisfaction of contract"; they don't own what you have made until they have accepted it and paid you accordingly. If they try to stiff you by taking what you made them and using it before you've been paid, you can take them to the cleaner's for copyright violations. Third, you should structure a payment schedule; don't do too much for free. You can get the money in thirds, for instance; a third up front, a third at some defined halfway point and a third on final delivery and acceptance. Lastly, you should stipulate that the client is responsible for all expenses incurred by you as a result of their failure to pay as stipulated, up to and including attorney's fees. Definitely have a lawyer draft these agreements; contract law is a many-layered area of law with hundreds of years of case law and slightly different nuances in every state. A competent lawyer will know things that can and can't be stipulated in a contract, and if you try to do it alone you'll wish you hadn't when the contract's tossed out by a judge because of some technicality. If they refuse to pay, get the lawyer on the phone and file suit. A well-written contract drafted by a competent lawyer, which you have lived up to on your end, will give your client no loopholes to slip through. As far as recovering damages, it shouldn't matter whether he's in the U.S. or not; if he does business in the U.S. then he very probably has money in banks that have to listen to U.S. courts (or at least court orders). |
What suggested supplemental income opportunities exist for a 70 year old Canadian retiree? | My initial thoughts would be an ESL teacher or a private tutor for various subjects would likely be the easiest ones to consider. Possibly there are some people that could use the help in their education that would work well. |
Can PayPal transfer money automatically from my bank account if I link it in PayPal? | See this help article from Paypal about payment methods for purchases. When you don’t have a PayPal balance or don’t have enough in your PayPal balance, we’ll use your bank account as the default payment method unless you select a different way to pay. So yes, Paypal will automatically deduct from your bank account when you make a purchase, unless you link another payment method and make that your default. |
Motley fool says you can make $15,978 more per year with Social Security. Is this for real? | The purpose of this spammy Motley Fool video ad is to sell their paid newsletter products. Although the beginning of the video promises to tell you this secret trick for obtaining additional Social Security payments, it fails to do so. (Luckily, I found a transcript of the video, so I didn't have to watch it.) What they are talking about is the Social Security File and Suspend strategy. Under this strategy, one spouse files for social security benefits early (say age 66). This allows the other spouse to claim spousal benefits. Immediately after that is claimed, the first spouse suspends his social security benefits, allowing them to grow until age 70, but the other spouse is allowed to continue to receive spousal benefits. Congress has ended this loophole, and it will no longer be available after May 1, 2016. |
What is the true value, i.e. advantages or benefits, of building up equity in your home? | Taking out your equity when refinancing means that you take out a new loan for the full value of your house (perhaps less 20% as a down payment on the new mortgage, otherwise you'll be paying insurance), pay off your old lender, and keep the rest for yourself. The result is much the same as using as a HELOC or home equity loan (or a second mortgage), except it's all rolled into a single new mortgage. The advantage is that the interest rate on a first mortgage is going to be lower than on HELOC or equivalent, and the equity requirements may be lower (e.g. a HELOC may only let you borrow against the amount of equity that exceeds 25% or 30%, while a new mortgage will require you only to have 20% equity). This is especially attractive to those whose homes have appreciated significantly since they bought them, especially if they have a lot of high-interest debt (e.g. credit cards) they want to pay off. Of course, rolling credit card debt into a 30-year mortgage isn't actually paying it off, but the monthly payments will be a lot lower, and if you're lucky and your home appreciates further, you can pay it off fully when you sell the property and still have paid a lot less interest. The downside is that you have turned unsecured debt into secured debt, which puts your home at risk if you find yourself unable to pay. In your case, you don't yet have even 20% equity in your home, so I wouldn't recommend this. :-) Equity is simply the difference between the amount you still owe on your home and the amount you'd get if you were to sell it. Until you do sell it, this amount is tentative, based on the original purchase price and, perhaps, an intervening appraisal that shows that the property has appreciated. That is really all that it is and there's nothing magic about it, except that since you own your home, you have equity in it, while as a renter, you would not. It used to be (decades ago, when you needed 20% down to get a mortgage) that selling was the only time you'd be able to do anything with the equity in your home. Now you can "take it out" as described above (or borrow against it) thanks to various financial products. It is sometimes tempting to consider equity roughly equivalent to "profit." But some of it is your own money, contributed through the down payment, your monthly principal payment, and improvements you have made -- so "cashing out" isn't all profit, it's partly just you getting your own money back. And there are many additional expenses involved in owning a home, such as interest, property taxes, maintenance, utilities, and various fees, not to mention the commissions when you buy or sell, which the equity calculation doesn't consider. Increasing equity reflects that you own a desirable property in a desirable location, that you have maintained and maybe even improved it, that you are financially responsible (i.e., paying your mortgage, taxes, etc.), and that your financial interests are aligned with your neighbors. All those things feel pretty good, and they should. Otherwise, it is just a number that the banks will sometimes let you borrow against. :-) |
Option on an option possible? (Have a LEAP, put to me?) | As with most strategies there are pros and cons associated with this approach: Advantages of using LEAPS: Disadvantages of using LEAPS: Read more about it in great detail on my blog: http://www.thebluecollarinvestor.com/leaps-and-covered-call-writing-2/ |
How can I figure out when I'll be able to write call options of a stock? | Call the CBOE, the Chicago Board of Options Exchange I've requested options on several IPOs in the past. You mainly have to convince them that there is a market for them (or they won't be inclined to provide liquidity). The CBOE could talk to the company in question to help convince them, or the CBOE will just tell you when the options will begin trading. Oh yeah, sometimes they'll ask you who you work for, just try to avoid that question, they don't like to talk to individual/retail investors. |
Why invest for the long-term rather than buy and sell for quick, big gains? | The problem is that short-term trends are really unpredictable. There is nobody who can accurately predict where a fund (or even moreso, a single stock or bond) is going to move in a few hours, or days or even months. The long-term trends of the entire market, however, are (more or less) predictable. There is a definite upward bias when you look at time-scales of 5, 10, 20 years and more. Individual stocks and bonds may crash, and different sectors perform differently from year to year, but the market as a whole has historically always risen over long time scales. Of course, past performance never guarantees future performance. It is possible that everything could crash and never come back, but history shows that this would be incredibly unlikely. Which is the entire basis for strategies based on buying and holding (and periodically rebalancing) a portfolio containing funds that cover all market sectors. Now, regarding your 401(k), you know your time horizon. The laws won't let you withdraw money without penalty until you reach retirement age - this might be 40 years, depending on your current age. So we're definitely talking long term. You shouldn't care about where the market goes over a few months if you won't be using the money until 20 years from now. The most important thing for a 401(k) is to choose funds from those available to you that will be as diverse as possible. The actual allocation strategy is something you will need to work out with a financial advisor, since it will be different for every person. Once you come up with an appropriate allocation strategy, you will want to buy according to those ratios with every paycheck and rebalance your funds to those ratios whenever they start to drift away. And review the ratios with your advisor every few years, to keep them aligned with large-scale trends and changes in your life. |
Is short selling a good hedging strategy during overzealous market conditions? | Below is just a little information on short selling from my small unique book "The small stock trader": Short selling is an advanced stock trading tool with unique risks and rewards. It is primarily a short-term trading strategy of a technical nature, mostly done by small stock traders, market makers, and hedge funds. Most small stock traders mainly use short selling as a short-term speculation tool when they feel the stock price is a bit overvalued. Most long-term short positions are taken by fundamental-oriented long/short equity hedge funds that have identified some major weaknesses in the company. There a few things you should consider before shorting stocks: Despite all the mystique and blame surrounding short selling, especially during bear markets, I personally think regular short selling, not naked short selling, has a more positive impact on the stock market, as: Lastly, small stock traders should not expect to make significant profits by short selling, as even most of the great stock traders (Jesse Livermore, Bernard Baruch, Gerald Loeb, Nicolas Darvas, William O’Neil, and Steven Cohen,) have hardly made significant money from their shorts. it is safe to say that odds are stacked against short sellers. Over the last century or so, Western large caps have returned an annual average of between 8 and 10 percent while the returns of small caps have been slightly higher. I hope the above little information from my small unique book was a little helpful! Mika (author of "The small stock trader") |
Is it a good investment for a foreigner to purchase a flat/apartment in China? | It is a lousy investment to purchase an apartment in China. Chinese citizens purchase apartments in China because, well... here's how China works: There's some fundamentals driving Chinese property values higher, but mostly it's a bubble caused by those reasons. |
Determine share price from S-1 for company that was bought before going public | The value of a share depends on the value of the company, which involves a lot more than the value of its assets -- it requires making decisions about what you think will happen to the company in the future. That's inherently not something that can be reduced to a single formula, at least not unless you can figure out how to represent your guesses and your confidence in them in the formula ... and even if you could do all that it would only say what you think the stock is worth; others will be using different numbers and legitimately get different results. Disagreement over value is what the stock market is all about, I'm afraid. |
Living in my own rental property | When you live in your own rental property, it no longer counts as your 'rental property'. It becomes your own living property and legally you cannot get tax benefits. |
Refinance when going to sell? | In the first years of a loan, most of what you're paying is interest, so my guess is that this is a bad idea. But there are lots of mortgage calculators offered for free on the web (your bank's website may have one) so I'd suggest that you spend some time running actual numbers before deciding. Reminder: Most renovations do NOT pay for themselves in increased sales price, not least because you'll lose the buyers who don't like what you've done but would have been happy to renovate it themselves to their own tastes. Unless there is something which will actively impair your ability to sell the house, you should usually renovate when you plan to stay there for a while and take your returns in enjoying the house more, NOT on the way out. (There's been some recent discussion of this over in Home Improvement, pointing out that the changes which return more than they cost are usually simple things like refreshing the paint, "staging" the house so it looks lived in but not cluttered, replacing damaged blinds, washing windows, putting out a few more flowers, and so on.) |
Can I claim a tax deduction for working from home as an employee? I work there 90% of the time | 90% sounds like "principal place of business" but check these IRS resources to make sure. |
Ask for credit decrease | Aside from an annual fee, if any, the card issuer makes money 2 ways, the transaction fee, about 1.5%-2% charged to the merchant, and interest from you if you leave a balance month to month. Obviously, the bank has some cost in processing statements and maintaining your account. If up front you are saying you will not have any chance of providing a certain profit level, they may have no interest in your business. (As you updated.) Other card issuers (almost surely with fees) might. Put the cards on ice. A bag of water in freezer. Don't be so hasty that you ding your report this way. By trashing the history as well as utilization, you may impact your score enough to do some harm if you actually need credit in the near future. I know this is a game with the credit agencies, a "how good a borrower am I" game, but it can really impact your bottom line if you don't play along. In reply to Michael's comment 1/5/15, if I have one card and am budgeted for $1000/mo in spending, in order to keep utilization down to less than 20%, I'd need a line of more than $5000. Even if I ignore utilization, my January spending is $1000, but the bill is cut on the 31st and not due till Feb 25th. So a line of nearly $2000 is required unless you wish to make mid cycle payments on an ongoing basis. |
Is Bitcoin a commodity or a currency [duplicate] | Its neither. Its a scam. there's no value underlying it, and it has proven to be the most speculative and untrustworthy investment there is. The scam works like a pyramid scam, so the more people come later on the more people who came in earlier on gain, so that is why you see so much hype around it encouraged and fueled by those early adopters who'll cash out at your expense. Imagine people who jumped on the bandwagon when each coin was worth a mere fraction of a dollar - they want you to "invest" at the current price of hundreds of dollars per unit so that they could cash out. You'd be better off with tulips, really. (And don't be discouraged by the downvotes on this answer, of course those scamers will try to shut me down. That will just prove the point.) |
How much should a new graduate with new job put towards a car? | What are your goals in life? If one of them is to appear wealthy then buying a high price import is a great place to start. You certainly have the salary for it (congratulations BTW). If one of your goals is to build wealth, then why not buy a ~5000 to ~6000 car and have a goal to zero out that student loan by the end of the year? You can still contribute to your 401k, and have a nice life style living on ~60K (sending 30 to the student loan). Edit: I graduated with a CS degree in '96 and have been working in the industry since '93. When I started, demand was like it is now, rather insane. It probably won't always be like that and I would prepare for some ups and downs in the industry. One of the things that encouraged me to lead a debt free lifestyle happened in 2008. My employer cut salaries by 5%...no big deal they said. Except they also cut support pay, bonuses, and 401K matching. When the dust cleared my salary was cut 22%, and I was lucky as others were laid off. If you are in debt a 22% pay cut hurts bad. |
How to calculate S corporation distribution from past K-1s? | Disclaimer: I'm not a tax professional, or an expert on S-Corps. However, I do have my own S-Corp, and my decision process for taking a distribution has nothing (directly) to do with K-1 past or present, or profit and loss. If I have "extra" cash in my S-Corp, I take a distribution. Assuming I do my taxes correctly, the money will be taxed whether I take a distribution or leave it in the business. So it really comes down to how much cash the business requires to continue operating and meeting its expenses. |
Is trading stocks easier than trading commodities? | One reason why you may have gotten this advice is that stocks have an expected real return over time, while commodities do not. Therefore, when gambling on individual stocks, odds are in your favor that they will ultimately go up over time. You may do better or worse than the market as a whole, but they will likely go up as the whole market, on average, rises over time. Commodities, on the other hand, have no expected real return. It is more zero-sum. In fact, after costs, a real loss should be expected on average, making gambling in here more risky. |
Is it possible for US retail forex traders to trade exotic currencies? | You are in a difficult situation because of US regulation, that is much more demanding to fulfill than in EU or rest of the world. Second, Interactive Brokers stopped serving FX for US clients. Third, EU brokers - like Saxo Bank - don't accept US clients: Almost any private client can open an account with Saxo Bank, although there are few exceptions. You can’t open an account if you are US, Iranian or North Korean resident - Brokerchooser: Saxo Bank Review Working for Brokerchooser, I would say you are limited to Oanda or Gain Capital. The latter is an ECN broker, and operates through other white label partners, you could try Forex.com also. |
Wash sale rule impact on different scenarios between different types of accounts | Brokerage->Brokerage 13-16 The loss from the previous purchase will be added to the cost basis of the security for the second purchase. Since you sold it at a loss again it would increase your losses. Your loss from the first sale will be disallowed. Your loss will be added to the cost basis of the next purchase. Your gains will be taxed on the total of the cost basis which will reduce your gains. Which you will taxed 'less'. Your gains will be taxed. Your loss is allowed. You will be taxed on both. Wash Sales really only applies to losses. If you sell for gain, the tax man will be happy to take his share. From my understanding, it does not matter if it is IRA or Brokerage, the wash sale rule affects them all. Check this link: http://www.marketwatch.com/story/understanding-the-wash-sale-rules-2015-03-02 |
What are the primary investment strategies people use and why do they use them? | There are two umbrellas in investing: active management and passive management. Passive management is based on the idea "you can't beat the market." Passive investors believe in the efficient markets hypothesis: "the market interprets all information about an asset, so price is equal to underlying value". Another idea in this field is that there's a minimum risk associated with any given return. You can't increase your expected return without assuming more risk. To see it graphically: As expected return goes up, so does risk. If we stat with a portfolio of 100 bonds, then remove 30 bonds and add 30 stocks, we'll have a portfolio that's 70% bonds/30% stocks. Turns out that this makes expected return increase and lower risk because of diversification. Markowitz showed that you could reduce the overall portfolio risk by adding a riskier, but uncorrelated, asset! Basically, if your entire portfolio is US stocks, then you'll lose money whenever US stocks fall. But, if you have half US stocks, quarter US bonds, and quarter European stocks, then even if the US market tanks, half your portfolio will be unaffected (theoretically). Adding different types of uncorrelated assets can reduce risk and increase returns. Let's tie this all together. We should get a variety of stocks to reduce our risk, and we can't beat the market by security selection. Ideally, we ought to buy nearly every stock in the market so that So what's our solution? Why, the exchange traded fund (ETF) of course! An ETF is basically a bunch of stocks that trade as a single ticker symbol. For example, consider the SPDR S&P 500 (SPY). You can purchase a unit of "SPY" and it will move up/down proportional to the S&P 500. This gives us diversification among stocks, to prevent any significant downside while limiting our upside. How do we diversify across asset classes? Luckily, we can purchase ETF's for almost anything: Gold ETF's (commodities), US bond ETF's (domestic bonds), International stock ETFs, Intl. bonds ETFs, etc. So, we can buy ETF's to give us exposure to various asset classes, thus diversifying among asset classes and within each asset class. Determining what % of our portfolio to put in any given asset class is known as asset allocation and some people say up to 90% of portfolio returns can be determined by asset allocation. That pretty much sums up passive management. The idea is to buy ETFs across asset classes and just leave them. You can readjust your portfolio holdings periodically, but otherwise there is no rapid trading. Now the other umbrella is active management. The unifying idea is that you can generate superior returns by stock selection. Active investors reject the idea of efficient markets. A classic and time proven strategy is value investing. After the collapse of 07/08, bank stocks greatly fell, but all the other stocks fell with them. Some stocks worth $100 were selling for $50. Value investors quickly snapped up these stocks because they had a margin of safety. Even if the stock didn't go back to 100, it could go up to $80 or $90 eventually, and investors profit. The main ideas in value investing are: have a big margin of safety, look at a company's fundamentals (earnings, book value, etc), and see if it promises adequate return. Coke has tremendous earnings and it's a great company, but it's so large that you're never going to make 20% profits on it annually, because it just can't grow that fast. Another field of active investing is technical analysis. As opposed to the "fundamental analysis" of value investing, technical analysis involves looking at charts for patterns, and looking at stock history to determine future paths. Things like resistance points and trend lines also play a role. Technical analysts believe that stocks are just ticker symbols and that you can use guidelines to predict where they're headed. Another type of active investing is day trading. This basically involves buying and selling stocks every hour or every minute or just at a rapid pace. Day traders don't hold onto investments for very long, and are always trying to predict the market in the short term and take advantage of it. Many individual investors are also day traders. The other question is, how do you choose a strategy? The short answer is: pick whatever works for you. The long answer is: Day trading and technical analysis is a lot of luck. If there are consistent systems for trading , then people are keeping them secret, because there is no book that you can read and become a consistent trader. High frequency trading (HFT) is an area where people basically mint money, but it s more technology and less actual investing, and would not be categorized as day trading. Benjamin Graham once said: In the short run, the market is a voting machine but in the long run it is a weighing machine. Value investing will work because there's evidence for it throughout history, but you need a certain temperament for it and most people don't have that. Furthermore, it takes a lot of time to adequately study stocks, and people with day jobs can't devote that kind of time. So there you have it. This is my opinion and by no means definitive, but I hope you have a starting point to continue your study. I included the theory in the beginning because there are too many monkeys on CNBC and the news who just don't understand fundamental economics and finance, and there's no sense in applying a theory until you can understand why it works and when it doesn't. |
Should I buy or lease a car given that its not a super luxury car and I only drive 15 miles/d on avg? | Which to do is determined by how you like to consume cars. If you don't drive a lot and like to get a new car every 2-3 years, leasing is often the better choice. If you drive a lot or want to keep a car longer than 3 years, you're normally better buying. |
To pay off a student loan, should I save up a lump sum payoff payment or pay extra each month? | As a new graduate, aside from the fact that you seem to have the extra $193/mo to pay more towards your loan, we don't know anything else. I wrote a lengthy article on this in response to a friend who had a loan, but was also pondering a home purchase in the future. Student Loans and Your First Mortgage discusses the math behind one's ability to put a downpayment on a house vs having that monthly cash to pay towards the mortgage. In your case, the question is whether, in 5 years, the $8500 would be best spent as a home down payment or to pay off the 6.8% loan. If you specifically had plans toward home ownership, the timing of that plan would affect my answer here, as I discuss in the article. The right answer to your question can only come by knowing far more of your personal situation. Meanwhile, the plan comes at a cost. Your plan will get rid of the loan in about 5 years, but if you simply double up the payments, advising the servicing company to apply the extra to principal, it would drop to just a couple month over over 4. As you read more about personal finance, you'll find a lot of different views. Some people are fixated on having zero debt, others will focus on liquidity. In the end, you need to understand each approach and decide what's right for you. |
If I make over 120k a year, what are my options for retirement plans? | Put in the maximum you can into the 401(k), the limit should be $16,500 so long as the highly compensated rules don't kick in. Since you cannot deduct the traditional IRA, it's a great option to deposit to a traditional IRA and immediately convert that balance to a Roth account. That puts you at $21,500/yr saved, nearly 18%. There's nothing stopping you from investing outside these accounts. A nice ETF with low expenses, investing in a stock index (I am thinking SPY for the S&P 500) is great to accumulate long term. |
If I get cash compensation for my stocks (following a merger for example) does that qualify for capital gains tax? | In the US this is considered a sale, and the proceeds will be taxed as if you've sold the stocks in any other way. The decision about the treatment (capital, ordinary, etc) is dependent on what kind of stock that is, how you acquired it, how long have you held it, etc. If it is a regular stock that you bought as an investment and held it for more than a year - then it will likely to be a capital gain treatment. However, this is only relevant for the US taxation. Since you're a UK person, you should also check how it is handled in the UK, which may or may not be different. |
401(k) lump sum distribution limited because of highly compensated employees? | It's legal. In fact, they are required to do this, assuming you are in fact a HCE (highly compensated employee) to avoid getting in trouble with the IRS. I'm guessing they don't provide documentation for the same reason they don't explain to you explicitly what the income thresholds are for social security taxes, etc - that's a job for your personal accountant. Here's the definition of a HCE: An individual who: Owned more than 5% of the interest in the business at any time during the year or the preceding year, regardless of how much compensation that person earned or received, or For the preceding year, received compensation from the business of more than $115,000 (if the preceding year is 2014; $120,000 if the preceding year is 2015, 2016 or 2017), and, if the employer so chooses, was in the top 20% of employees when ranked by compensation. There are rules the restrict distributions from plans like 401ks. For example, treasury reg 1.401a(4)-5(b)(3) says that a plan cannot make a distribution to a HCE if that payment reduces the asset value of the plan to below 110% of the value of the plan's current liabilities. So, after taking account all distributions to be made to HCEs and the asset value of the plan, everyone likely gets proportionally reduced so that they don't run afoul of this rule. There are workarounds for this. But, these are options that the plan administrators may take, not you. I suppose if you were still employed there and at a high enough level, a company accountant would have discussed these options with you. Note, there's a chance there's some other limitation on HCEs that I'm missing which applies to your specific situation. Your best bet, to understand, is simply ask. Your money is still there, you just can't get it all this year. |
Whole life insurance - capped earnings | Pretty simple: When is Cash Value Life Insurance a good or bad idea? It is never a good idea. How can life insurance possibly work as investment? It can't. Just as car, home, or health insurance is not an investment. Note for counter example providers: intent to commit insurance fraud is not an investment. Why not live your life so in 15 or 20 years you are debt free, have a nice emergency fund built and have a few 100 thousand in investments? Then you can self-insure. If you die with a paid off home, no debt, 20K in a money market, and 550,000 in retirement accounts would your spouse and children be taken care of? |
What are some factors I should consider when choosing between a CPA and tax software | Largely it comes down to the complexity of your return (likely relatively simple if it's your first time filing) and your comfort level with using software. More complex returns would include filing business claims, handling stocks and investments, special return forms, etc. One benefit to most of the software options out there such as TurboTax, HR Block, and Tax Slayer, are that they are free to use and you only pay when you're ready to file. You could give them a shot to see how easy/difficult they are and if you feel overwhelmed, then contact a CPA (whose time won't be free). Also remember that those HR Block seasonal places that open up are not CPA's, but are temps hired and trained to use the software that you would find online. You didn't indicate they were an option, but I like to point that out to those who might not know otherwise. My opinion would be to use one of the online options because of cost and their ease of use. They also allow you to take your time and save your progress, so you can start using it and go ask questions/do research on your own time. |
What is the farthest someone would likely be stopped out from their stop loss without setting a stop limit? | It depends on how you place your stop order and the type of stop orders available from your broker. If you place a stop market order and the following day the stock opens below your stop your stock will be stopped out at or around the opening price, meaning you can potentially end up with quite a large gap. If you place a stop limit order, say you place your stop at $10.00 with a limit price of $9.90, and if the price opens below $9.90, say at $9.50, your limit sell order of $9.90 will be placed onto the market but it will not be executed until the price goes back up to $9.90 or above. The third option is to place a Guaranteed Stop Loss, and as specified you are guaranteed your stop price even if the price gaps down below your stop price. You will be paying an extra fee for the Guaranteed Stop Loss Order, and they are usually mainly available with CFD Brokers (so if you are in the USA you might be out of luck). |
Free service for automatic email stock alert when target price is met? | http://finance.yahoo.com/stock-alerts/stock-watch/add/?.done=/stock-alerts/ You will have to have a yahoo account. If you want to provide an alternative delivery email address, visit the URL above. Click "Stocks Watch", enter ticker(s) and price(s) at which you want alerts, then at the bottom select the "email" radio button. If your preferred email address is not listed, click the "Add an email address" link and follow the instructions. I don't know what their limit is, but I currently have three addresses set up -- two to non-@yahoo addresses -- and it works fine. |
Buying USA Stocks from Sri Lanka | I'm not aware of any method to own US stocks, but you can trade them as contract for difference, or CFDs as they are commonly known. Since you're hoping to invest around $1000 this might be a better option since you can use leverage. |
Is there a return-on-investment vs risk graph anywhere? | There may well be several such graphs, I expect googling will turn them up; but the definition of risk is actually quite important here. My definition of risk might not be quite the same as yours, so the relative risk factors would be different. For example: in general, stocks are more risky than bonds. But owning common shares in a blue-chip company might well be less risky than owning bonds from a company teetering on the edge of bankruptcy, and no single risk number can really capture that. Another example: while I can put all my money in short-term deposits, and it is pretty "safe", if it grows at 1% so that my investment portfolio cannot fund my retirement, then I have a risk that I will run out of money before I shuffle off this mortal coil. How to capture that "risk" in a single number? So you will need to better define your parameters before you can prepare a visual aid. Good Luck |
Effective returns on investment in housing vs other financial instruments | Thinking of personal residence as investment is how we got the bubble and crash in housing prices, and the Great Recession. There is no guarantee that a house will appreciate, or even retain value. It's also an extremely illiquid item; selling it, especially if you're seeking a profit, can take a year or more. ' Housing is not guaranteed to appreciate constantly, or at all. Tastes change and renovations rarely pay for themselves. Things wear out and have costs. Neighborhoods change in popularity. Without rental income and the ability to write off some of the costs as business expense, it isn't clear the tax advantage closes that gap, especislly as the advantage is limited to the taxes upon your mortgage interest (by deducting that from AGI). If this is the flavor of speculation you want to engage in, fine, but I've seen people screw themselves over this way and wind up forced to sell a house for a loss. By all means hope your home will be profitable, count it as part of your net wealth... but generally Lynch is wrong here, or at best oversimplified. A house can be an investment (or perhaps more accurately a business), or your home, but -- unless you're renting out the other half of a duplex,which splits the difference -- trying to treat it as both is dangerous accounting. |
How to find a public company's balance sheet and income statement? | Filter by the filings when you look at the search results. The 10-K will include the annual report, which included fiscal year-end financial statements. Quarterly reports and statements are in the 10-Q filing. The filing will include a LOT of other information, but there should be a section called "Financial Statements" or something similar that will include all pertinent financials statements. You can also find "normalized" balance sheets and income statements on the "finance" pages of the main web search sites (Google, Yahoo, MSN) and other sites that provide stock quotes. If you're looking to do basic comparisons versus in-depth statement analysis those may be sufficient for you. |
When I google a ticker like XLE or something, I see a price which updates frequently (about every second or so), where can I find this for options? | you can try CME DataSuite. Your broker gives you real time options quotes. If you do not have one you can open a scottrade account with just $500 deposit. When I moved my money from scottrade to ameritrade they did not close my account even till this day I can access my scottrade account and see real time quotes and the same research they offered me before. You can try withdrawing your deposit and see if it stays open like mine did. |
Is debt almost always the cause of crashes and recessions? | The root cause can be said to always be a crisis in confidence. It may be due to a very real event. However, confidence is what pushes the markets up and worries are what bring them down. |
Are my parents ripping me off with this deal that doesn't allow me to build my equity in my home? | No It's not a loan. It's an equity investment. Think of it as a business. The parents bought 75% of the equity with $115K, and are entitled to 75% of the sale proceeds, should you someday liquidate the business (i.e. selling the house). The $500 per month is just business revenue and is paid to your parents as a dividend. Imagine you rent it out to your self and charge a $666.66 rent - you take 25% of that back and give your parents the rest. Like any equity investment, the risk for them is that if the value of the house goes down, they will have to shoulder the loss. And you are right, there is no way to build equity. You already sold that to your parents. |
What assets does the term “security” encompass? | A good reference to what encompasses "securities" are detailed in the Securities Act of 1933, which was enacted by the United States federal government. One main exception, which I would still consider securities for your purposes, would be "commercial paper". These are exempt from the securities act because they mature in 270 days of less, but they function much like bonds or promissory notes Therefore though, it would not encompass currencies and commodities. It really comes down to the structure of the agreement for transferring or holding the particular kind of underlying asset. |
How feasible would it be to retire just maxing out a Roth IRA? | I wouldn't settle for 10%, and I certainly wouldn't settle for a Roth. I'd recommend not retiring. I'd recommend building up a side business in your "free" time while you're working that's closer to your calling that you can "retire into." Don't be complacent. |
Selecting between investment vehicles for income | It sounds like you are interested in investing in the stock market but you don't want to take too much risk. Investing in an Index EFT will provide some diversification and can be less risky than investing in individual stocks, however with potentially lower returns. If you want to invest your money, the first thing you should do is learn about managing your risk. You are still young and you should spend your time now to increase your education and knowledge. There are plenty of good books to start with, and you should prepare an investment plan which incorporates a risk management strategy. $1000 is a little low to start investing in the stock market, so whilst you are building your education and preparing your plan, you can continue building up more funds for when you are ready to start investing. Place your funds in an high interest savings account for now, and whilst you are learning you can practice your strategies using virtual accounts. In fact the ASX has a share market game which is held 2 or 3 times per year. The ASX website also has some good learning materials for novices and they hold regular seminars. It is another good source for improving your education in the subject. Remember, first get educated, then plan and practice, and then invest. |
Is the Swiss stock market inversely correlated with the Swiss Franc like Japan today? | Roughly about 1 of 2 Swiss francs is won abroad. So, yes it is easier for Swiss companies to export when the Swiss franc is not "too high" as it has been those last years. The main export market for Switzerland is the UE. Some companies are doing most or all of their business on the Swiss market. Others are much more exposed to the the health of the global economy. When the Swiss franc appreciates, some companies suffer a lot from that and other less. It depends on their product portfolio, competitors, and other factors. The last decades have shown that how the Swiss Franc valuation is less and less correlated with the performance of the Swiss economy. The Swiss franc is used as a safe haven when the global economy goes bad or is uncertain. In those times, the Swiss franc can be overevaluated, at least as compared to the purchasing power. When the global economy is improving, the over-appreciation of the Swiss franc tends to disapear ; this is happening now (in Mid-2017). As a summary, the Swiss franc itself is not truly correlated with the competitiveness of the Swiss economy, but more about how people in the world are anxious. In this regard, it behaves a little bit like gold. |
How to invest Rs.10k in India | I am going to assume that this is going to be a long term investment and you don't need this money before 5-6years at the very least. My advise would be to invest in one of the following funds : IDFC Premier equity fund growth plan (Direct) (Only SIP allowed right now) ICICI Discovery fund growth plan (Direct) DSP microcap fund growth plan (Direct) In case you do not want to be invested in small and mid cap and want a little less volatility then my first choice for that would be : Quantum long term equity fund dividend plan Whatever you go for make sure you go directly with the fund house and not through a broker as you end up getting charged an extra .63% extra as opposed to going direct and you will also be paying for a demat account which can be avoided if you invest directly with a fund house. Out of the above mentioned funds Quantum has the lowest expense ratio of 1.25% and it is a huge benefit if you are talking 10+ years because it makes a lot of difference. Source : My own research and experience as an investor. |
Short term parking of a large inheritance? | Here's what I suggest... A few years ago, I got a chunk of change. Not from an inheritance, but stock options in a company that was taken private. We'd already been investing by that point. But what I did: 1. I took my time. 2. I set aside a chunk of it (maybe a quarter) for taxes. you shouldn't have this problem. 3. I set aside a chunk for home renovations. 4. I set aside a chunk for kids college fund 5. I set aside a chunk for paying off the house 6. I set aside a chunk to spend later 7. I invested a chunk. A small chunk directly in single stocks, a small chunk in muni bonds, but most just in Mutual Funds. I'm still spending that "spend later" chunk. It's about 10 years later, and this summer it's home maintenance and a new car... all, I figure it, coming out of some of that money I'd set aside for "future spending." |
Any experience with maxing out 401(k)? | You want to take the hit now. There are tons of calculators out there, but the rule of 70 should be enough to help convince you: Assume you can put an extra $10k in a 401k now, or keep it. If you pay ~30% in taxes, you can have either: A) $7k now, or: B) What $10K will grow to in your 40 years till retirement less taxes at the end. The rule of 70 is a quick, dirty way to calculate compounded returns. It says that if you divide 70 by your assumed return, you get the approximate number of years it will take to double your money. So let's say you assume a 5% rate of return (you can replace that with whatever you want): 1) 70/5 is 14, so you'll double your $10k every 14 years. 2) In 40 years, you'll double your money almost 3 times (2.86) 3) That means you'll end up with almost $80k before taxes 4) Even if we assume the same tax rate at retirement of 30% (odds are decent it's lower, since you'll have less income, presumably), you still have $56k. Whatever you think inflation will be, $56k later is a LOT better than $7k now. |
Why buy insurance? | The fundamental flaw here is conflating net worth with utility, at least failing to recognize that there's a nonlinear relationship between the two. In the extreme example imagine taking a bet that will either make you twice as rich or completely broke. Your expected return is zero, but it would be pretty dumb to take it since being flat broke could ruin your life while being twice as rich may only improve it marginally. In more realistic cases most of your income is tied up in fixed costs, which magnifies relatively small perturbations to your net worth. Losing something essential (like your house or car), even if it's only 20% of your net worth, renders you effectively broke until you scrape together enough cash to get another one. That situation robs you of much more utility than you'd gain from a 20% increase in net worth. In either case, avoiding the risk is completely rational as long as you believe in nonlinear utility as a function of net worth, it's not just an issue of humans being "risk averse". |
Should Emergency Funds be Used for Infrequent, but Likely, Expenses? | This is probably a very opinion-based Q&A. But anyway: My solution to such questions is to have multiple layers of emergency funds. I have one amount in a bank account that I do not like to tap, but can (and do) when I need money. This is most close to your infrequent but not completely surprising moments of cash need. I have a second layer in the form of stocks. As I understand that selling stocks should not be done when you need money, but when the stock price is good, this provides a fairly high barrier to selling it on a whim. Before I do so, especially if the stock price isn't at a local max, it would have to be an emergency. My third layer is even more fixed investment which I can't access with online brokerage. The physical aspect makes sure that it has to be a real, serious emergency before I turn that into cash. If you have such a layered approach, the question is not black and white anymore, and easier to answer. |
If I believe a stock is going to fall, what options do I have to invest on this? | Aganju has mentioned put options, which are one good possibility. I would suggest considering an even easier strategy: short selling. Technically you are borrowing the stock from someone and selling it. At some point you repurchase the stock to return to the lender ("covering your short"). If the stock price has fallen, then when you repurchase it, it will be cheaper and you keep the profit. Short selling sounds complicated but it's actually very easy--your broker takes care of all the details. Just go to your brokerage and click "sell" or "sell short." You can use a market or limit order just like you were selling something you own. When it sells, you are done. The money gets credited to your account. At some point (after the price falls) you should repurchase it so you don't have a negative position any more, but your brokerage isn't going to hassle you for this unless you bought a lot and the stock price starts rising. There will be limits on how much you can short, depending on how much money is in your account. Some stocks (distressed and small stocks) may sometimes be hard to short, meaning your broker will charge you a kind of interest and/or may not be able to complete your transaction. You will need a margin account (a type of brokerage account) to either use options or short sell. They are easy to come by, though. Note that for a given amount of starting money in your account, puts can give you a much more dramatic gain if the stock price falls. But they can (and often do) expire worthless, causing you to lose all money you have spent on them. If you want to maximize how much you make, use puts. Otherwise I'd short sell. About IPOs, it depends on what you mean. If the IPO has just completed and you want to bet that the share price will fall, either puts or short selling will work. Before an IPO you can't short sell and I doubt you would be able to buy an option either. Foreign stocks? Depends on whether there is an ADR for them that trades on the domestic market and on the details of your brokerage account. Let me put it this way, if you can buy it, you can short sell it. |
How to protect a Stock you still want to own from a downturn? | Adding on to all the fine answers, you can consider selling a covered call. You will have to own a minimum of 100 shares. It will offer a bit of protection, but limit your upside. If your confident long term, but expect a broader market pull back then a covered call might give you that small protection your looking for. |
Does a stock holder profit from a reverse-stock split? | These are not real gains. Wherever you're looking this up, the prices are not adjusted for corporate actions. In a reverse stock split the price of a single share multiplies by five, but as a shareholder you hold only one share after for every five that you did before. |
Are underlying assets supposed to be sold/bought immediately after being bought/sold in call/put option? | When you can exercie your option depends on your trading style. In the american options trading style (the most popular) you're allowed to exercice your options and make profit (if any) whenever you want before the expiration date. Thus, the decision of exercising your option and make a profit out of it does not rely only on the asset price. The reason is, you already paid for the premium to get the option. So, if taken into account the underlying price AND your premium, your investment is profitable then you can exercice your contract anytime. |
A stop order won't be automatically fired in after-hours trading? | Stop orders and stop limit orders typically do not execute during extended hours after the general market session has closed. Stop orders are market orders and market orders especially are not executed during extended hours. Although there are exceptions because a broker can say one thing and do another thing with the way order types are presented to customers vs what their programming actually does. The regulatory burden is a slap on the wrist, so you need to ask the broker what their practices are. Orders created during normal market hours do not execute in extended sessions, different orders would have to be made during the extended session. Your stop order should execute if the normal market hour price stays below your stop price. So a stop limit would actually be worse here, because a stop limit will create a limit order which may never get hit (since it is above the best bid best ask) |
A calculator that takes into account portfolio rebalancing? | Quicken has tools for this, but they have some quirks so i hesitate to actually recommend it on that basis. |
Snowball debt or pay off a large amount? | Pay the highest rate debt first, it's as simple as that. When that debt is paid (the 24% card in this case) pay off the next one. As far as having an emergency fund is concerned, I consider it a second priority. If one owes 24% money, that $2000 emergency fund is costing $480/yr. Ouch. Avoid the behaviors that got you into debt in the first place, and pay the cards off as fast as you can. When you have no balance, start to save, first into the emergency account, then toward retirement. |
Should one invest in smaller valued shares in higher amounts, or higher valued shares in smaller amounts? | There's a case to be made that companies below a certain market cap have more potential than the higher ones. Consider, Apple cannot grow 100 fold from its current value. At $700B or so in value, that would be a $70T goal, just about the value of all the combined wealth in the entire US. At some point, the laws of large numbers take over, and exponential growth starts to flatten out. On the flip side, Apple may have as good or better chance to rise 10% over the next 6-12 months as a random small cap stock. |
Selling put and call Loss Scenario Examples | The question you are asking concerns the exercise of a short option position. The other replies do not appear to address this situation. Suppose that Apple is trading at $96 and you sell a put option with a strike price of $95 for some future delivery date - say August 2016. The option contract is for 100 shares and you sell the contract for a premium of $3.20. When you sell the option your account will be credited with the premium and debited with the broker commission. The premium you receive will be $320 = 100 x $3.20. The commission you pay will depend on you broker. Now suppose that the price of Apple drops to $90 and your option is exercised, either on expiry or prior to expiry. Then you would be obliged to take delivery of 100 Apple shares at the contracted option strike price of $95 costing you $9,500 plus broker commission. If you immediately sell the Apple shares you have purchased under your contract obligations, then assuming you sell the shares at the current market price of $90 you would realise a loss of $500 ( = 100x($95-$90) )plus commission. Since you received a premium of $320 when you sold the put option, your net loss would be $500-$320 = $180 plus any commissions paid to your broker. Now let's look at the case of selling a call option. Again assume that the price of Apple is $96 and you sell a call option for 100 shares with a strike price of $97 for a premium of $3.60. The premium you receive would be $360 = 100 x $3.60. You would also be debited for commission by your broker. Now suppose that the price of Apple shares rises to $101 and your option is exercised. Then you would be obliged to deliver 100 Apple shares to the party exercising the option at the contracted strike price of $97. If you did not own the shares to effect delivery, then you would need to purchase those shares in the market at the current market price of $101, and then sell them to the party exercising the option at the strike price of $97. This would realise an immediate loss of $400 = 100 x ($101-$97) plus any commission payable. If you did own the shares, then you would simply deliver them and possibly pay some commission or a delivery fee to your broker. Since you received $360 when you sold the option, your net loss would be $40 = $400-$360 plus any commission and fees payable to the broker. It is important to understand that in addition to these accounting items, short option positions carry with them a "margin" requirement. You will need to maintain a margin deposit to show "good faith" so long as the short option position is open. If the option you have sold moves against you, then you will be called upon to put up extra margin to cover any potential losses. |
Best personal finance software for Mac for German resident | I haven't used it in years, but look at GnuCash. From the site, one bullet point under Feature Highlights: |
Does freedom to provide services allow me contracting in Germany without paying taxes there (but in my home EU country)? | Also within Germany the tax offices usually determine which tax office is responsible for you by asking where you were more than 180 days of the year (if e.g. you have a second flat where you work). That's a default value, though: in my experience you can ask to be handled by another tax office. E.g. I hand my tax declaration to my "home" tax office (where also my freelancing adress is), even though my day-job is 300 km away. So if you work mostly from Poland and just visit the German customer a few times, you are fine anyways. Difficulties start if you move to Germany to do the work at your customer's place. I'm going to assume that this is the situation as otherwise I don't think the question would have come up. Close by the link you provided is a kind of FAQ on this EU regulation About the question of permanent vs. temporary they say: The temporary nature of the service is assessed on a case-by-case basis. Here's my German-Italian experience with this. Background: I had a work contract plus contracts for services and I moved for a while to Italy. Taxes and social insurance on the Italian contracts had to be paid to Italy. Including tax on the contract for services. Due to the German-Italian tax treaty, there is no double taxation. Same for Poland: this is part of EU contracts. By the way: The temporary time frame for Italy seemed to be 3 months, then I had to provide an Italian residence etc. and was registered in the Italian health care etc. system. Due to the German-Italian tax treaty, there is no double taxation. Same for Poland: this is part of EU contracts. Besides that, the German tax office nevertheless decided that my "primary center of life" stayed in Germany. So everything but the stuff related to the Italian contracts (which would probably have counted as normal work contracts in Germany, though they is no exact equivalent to those contract types) was handled by the German tax office. I think this is the relevant part for your question (or: argumentation with the German tax office) of temporary vs. permanent residence. Here are some points they asked: There is one point you absolutely need to know about the German social insurance law: Scheinselbständigkeit (pretended self-employment). Scheinselbständigkeit means contracts that claim to be service contracts with a self-employed provider who is doing the work in a way that is typical for employees. This law closes a loophole so employer + employee cannot avoid paying income tax and social insurance fees (pension contributions and unemployment insurance on both sides - health insurance would have to be paid in full by the self-employed instead of partially by the employer. Employer also avoids accident insurance, and several regulations from labour law are avoided as well). Legally, this is a form of black labour which means that the employer commits a criminal offense and is liable basically for all those fees. There is a list of criteria that count towards Scheinselbständigkeit. Particularly relevant for you could be |
How often are preferred shareholders made whole after a company goes bankrupt? | From the Times A Reader Q.&A. on G.M.’s Bankruptcy Q. I own G.M. preferred shares. Should I be looking to sell them, or hold on? I bought them at $25 a share when they were issued in late 2001. — Karen, Manhattan A. When a company files for bankruptcy, its various stock and bondholders essentially get in line. The first investors to be repaid are secured debt holders, then senior bond investors, followed by subordinated debt holders. Preferred shareholders are next, and lastly, holders of common stock. In a bankruptcy, preferred shares are usually worthless, much like shares of common stock. But in the case of G.M., there may be some good — or at least somewhat better — news. Most of G.M.’s preferred shares are actually senior notes or “quarterly interest bonds,” which means you will be treated as a bondholder, according to Marilyn Cohen, president of Envision Capital Management. So you will be able to exchange your preferreds for G.M. stock (bondholders will receive 10 percent of the new company’s stock). It’s not the best deal, but it beats the empty bag true preferred shareholders would have been left holding. Of course this is just one example, and you were hoping to get some larger picture. The article stated "In a bankruptcy, preferred shares are usually worthless, much like shares of common stock" which at least is a bit closer to that, if you accept usually as a statistic. |
How do you find reasonably priced, quality, long lasting clothing? | Are specific brand recommendations allowed? I'm a big fan of Lands' End. They have good quality clothing at reasonable prices in all the basic styles. They have great customer service and you con order online and avoid clothes shopping at the mall (which I hate). |
Cost basis allocation question: GM bonds conversion to stock & warrants | I found additional evidence on TDAmeritrade's website that helps confirm that the 3/17/11 prices Jason found are the ones to use since all three were traded on that day. Although GM+A had prices and trading as early as 2/28/11, GM+B's price and trading shows up no earlier than 3/14/11, but there was no trading indicated for GM+A on 3/14 so 3/14 can't be used. The two warrants were not traded every day after they came out. The next date that I found when all three, GM, GM+A and GM+B had trades was 4/11/11. I found Google and Yahoo Finance unable to produce the historical prices for the warrants that far back. Unfortunately, you need to be a TDA accountholder in order to access TDA's historical price information for stocks. |
Problems with Enterprise Value and better valuation techniques | From Wikipedia: Usage Because EV is a capital structure-neutral metric, it is useful when comparing companies with diverse capital structures. Price/earnings ratios, for example, will be significantly more volatile in companies that are highly leveraged. Stock market investors use EV/EBITDA to compare returns between equivalent companies on a risk-adjusted basis. They can then superimpose their own choice of debt levels. In practice, equity investors may have difficulty accurately assessing EV if they do not have access to the market quotations of the company debt. It is not sufficient to substitute the book value of the debt because a) the market interest rates may have changed, and b) the market's perception of the risk of the loan may have changed since the debt was issued. Remember, the point of EV is to neutralize the different risks, and costs of different capital structures. Buyers of controlling interests in a business use EV to compare returns between businesses, as above. They also use the EV valuation (or a debt free cash free valuation) to determine how much to pay for the whole entity (not just the equity). They may want to change the capital structure once in control. Technical considerations Data availability Unlike market capitalization, where both the market price and the outstanding number of shares in issue are readily available and easy to find, it is virtually impossible to calculate an EV without making a number of adjustments to published data, including often subjective estimations of value: In practice, EV calculations rely on reasonable estimates of the market value of these components. For example, in many professional valuations: Avoiding temporal mismatches When using valuation multiples such as EV/EBITDA and EV/EBIT, the numerator should correspond to the denominator. The EV should, therefore, correspond to the market value of the assets that were used to generate the profits in question, excluding assets acquired (and including assets disposed) during a different financial reporting period. This requires restating EV for any mergers and acquisitions (whether paid in cash or equity), significant capital investments or significant changes in working capital occurring after or during the reporting period being examined. Ideally, multiples should be calculated using the market value of the weighted average capital employed of the company during the comparable financial period. When calculating multiples over different time periods (e.g. historic multiples vs forward multiples), EV should be adjusted to reflect the weighted average invested capital of the company in each period. In your question, you stated: The Market Cap is driven by the share price and the share price is determined by buyers and sellers who have access to data on cash and debts and factor that into their decision to buy or sell. Note the first point under "Technical Considerations" there and you will see that the "access to data on cash and debts" isn't quite accurate here so that is worth noting. As for alternatives, there are many other price ratios one could use such as price/earnings, price/book value, price/sales and others depending on how one wants to model the company. The better question is what kind of investing strategy is one wanting to use where there are probably hundreds of strategies at least. Let's take Apple as an example. Back on April 23, 2014 they announced earnings through March 29, 2014 which is nearly a month old when it was announced. Now a month later, one would have to estimate what changes would be made to things there. Thus, getting accurate real-time values isn't realistic. Discounted Cash Flow is another approach one can take of valuing a company in terms of its future earnings computed back to a present day lump sum. |
How is yahoo finance P/E Ratio TTM calculated? | The correct p/e for bp.l is 5.80. Bp.l is on the London stock exchange and prices are in local currency. The share price of 493 is reported in pence (not dollars). The EPS is reported in pounds. Using .85 pounds = 85 pence, you calculate the EPS as follows: 493.40/85 = 5.80 PE Yahoo totally screwed up. They converted the .85 pounds into US dollars ($1.34) but didn't convert the 493 pence. By using the 493 as dollars, they got 493.9/1.34 = 368 pe! Notice that Yahoo reports the American Depository Shares (symbol 'BP') with an EPS of $8.06. That correctly reflects that there are 6 shares of BP.l per ADS (1.34 * 6 = 8.04). But why is the share price listed at $46.69? Well... 493 GBp (pence) = 4.93 pounds 4.93 pounds = 7.73 USD 7.73 USD * 6 shares per ADS = 46.38 USD |
How to calculate my estimated taxes. 1099 MISC + Self Employment | There are a couple of things that are missing from your estimate. In addition to your standard deduction, you also have a personal exemption of $4050. So "D" in your calculation should be $6300 + $4050 = $10,350. As a self-employed individual, you need to pay both the employee and employer side of the Social Security and Medicare taxes. Instead of 6.2% + 1.45%, you need to pay (6.2% + 1.45%) * 2 = 15.3% self-employment tax. In addition, there are some problems with your calculation. Q1i (Quarter 1 estimated income) should be your adjusted annual income divided by 4, not 3 (A/4). Likewise, you should estimate your quarterly tax by estimating your income for the whole year, then dividing by 4. So Aft (Annual estimated federal tax) should be: Quarterly estimated federal tax would be: Qft = Aft / 4 Annual estimated self-employment tax is: Ase = 15.3% * A with the quarterly self-employment tax being one-fourth of that: Qse = Ase / 4 Self employment tax gets added on to your federal income tax. So when you send in your quarterly payment using Form 1040-ES, you should send in Qft + Qse. The Form 1040-ES instructions (PDF) comes with the "2016 Estimated Tax Worksheet" that walks you through these calculations. |
How do you translate a per year salary into a part-time per hour job? | All things being equal, a $55,000/year job with 25% benefit load is about $68,750/year. That's a little more than $34/hr. Your rate really depends on the nature of the work. If it's strictly a part-time job where you are an employee, you're probably looking at a $28-38/hr range. If you're an independent contractor, the rate should be higher, as you're paying the taxes, doing other administrative stuff. How much higher depends on the industry... software/it rates are usually 1.5-2x, construction is driven by the union scale in many places, etc. Note that you need to meet criteria defined by the IRS to successfully maintain independent contractor status from a tax POV. |
What is the fair value of a stock given the bid and ask prices? Is there such a relationship? | None of the above. The fair value is a term used to describe an analytical result of projecting the company's future dividends and profits into a present value. Such estimates are published by the likes of Morningstar, S&P and Value Line. It is quite common for a stock to trade well above or below such estimated fair values. |
Are car buying services worth it? | I haven't heard of these before! (And I'm on the board of a Credit Union.) The 0.99% on loans is great. It's especially great on a used car: the steep part of the depreciation curve was paid by the first owner. The network probably have a business relationship with the credit union. Credit unions do indirect lending -- approval of loans that happens at the point of sale, which then the credit union gets as assets. Depending on the cost of that program, it probably won't hurt. Your credit union wants to keep your business, because they know that you have a lot of options for where you bank and where you get loans. |
Does reading financial statements (quarterly or annual reports) really help investing? | Yes, especially if you are a value investor. The importance and relevance of financial statements depends on the company. IMO, the statements of a troubled "too big to fail" bank like Citibank or Bank of America are meaningless. In other industries, the statements will help you distinguish the best performers -- if you understand the industry. A great retail example was Bed, Bath and Beyond vs. Linens and Things. Externally, the stores appeared identical -- they carried the same product and even offered the same discounts. Looking at the books would have revealed that Linens and Things carried an enormous amount of debt that fueled rapid growth... debt that killed the company. |
1.4 million cash. What do I do? | I'm still recommending that you go to a professional. However, I'm going to talk about what you should probably expect the professional to be telling you. These are generalities. It sounds like you're going to keep working for a while. (If nothing else, it'll stave off boredom.) If that's the case, and you don't touch that $1.4 million otherwise, you're pretty much set for retirement and never need to save another penny, and you can afford to treat your girl to a nice dinner on the rest of your income. If you're going to buy expensive things, though - like California real estate and boats and fancy cars and college educations and small businesses - you can dip into that money but things will get trickier. If not, then it's a question of "how do I structure my savings?". A typical structure: Anywho. If you can research general principles in advance, you'll be better prepared. |
I'm thinking of getting a new car … why shouldn't I LEASE one? | I agree with Speedbird389 - I leased an economy car 10 years ago, paid the residual at the end of the lease because I knew the car would last a long time, but that cost me $5000 more than if I had bought it in the first place... |
What's the best online tool that can track my entire portfolio including gains/losses? | You can use a tool like WikiInvest the advantage being it can pull data from most brokerages and you don't have to enter them manually. I do not know how well it handles dividends though. |
VAT and duties payable when importing personal goods from Switzerland and the Channel Islands to the EU? | http://www.hmrc.gov.uk/customs/tax-and-duty.htm#3 explains the Import VAT situation quite well. As for who enforces and collects it, if you're talking about buying online and having it shipped to you then you'll notice on the parcel a Customs sticker declaring the contents and value. It is the responsibility of the courier company to collect any duty due from you and pass it on to HMRC. In practice what this means is that you receive a card or note from the courier saying "we're impounding your package until you pay the import duty" and they usually charge a fee on top of the duty itself. Of course you can always go out there yourself and bring something back, but then it is your responsibility to declare it at the customs checkpoint when you enter the country. |
Rent or buy with 0 down | Whether or not you choose to buy is a complicated question. I will answer as "what you should consider/think about" as I don't think "What should I do" is on topic. First off, renting tends to look expensive compared to mortgages until you factor in the other costs that are included in your rent. Property taxes. These are a few grand a year even in the worst areas, and tend to be more. Find out what the taxes are ahead of time. Even though you can often deduct them (and your interest), you're giving up your standard deduction to do so - and with the low interest regime currently, unless your taxes are high you may not end up being better off deducting them. Home insurance. This depends on home and area, but is at least hundreds of dollars per year, and could easily run a thousand. So another hundred a month on your bill (and it's more than renter's insurance by quite a lot). Upkeep costs for the property. You've got a lot of up-front costs (buy a lawnmower, etc. types of things) plus a lot of ongoing costs (general repair, plumbing breaks, electrical breaks, whatnot). Sales commission, as Scott notes in comments. When you sell, you're paying about 6% commission; so you won't be above water, if housing prices stay flat, until you've paid off 6% of your loan value (plus closing costs, another couple of percent). You hit the 90% point on a 15 year about year 2, but on a 30 year you don't hit it until about year 5, so you might not be above water when you want to sell. Risk of decrease in value. Whenever you buy property, you take on the risk of losing value as well as the potential of gaining value. Don't assume that because prices are going up they will continue to; remember that a lot of investors are well aware of possible profits from rising prices and will be buying (and driving prices up) themselves. 2008 was a shock to a lot of people, even in areas where it seemed like prices should've still gone up; you never know what's going to happen. If you buy a house for 20% or so down, you have a bit of a safety net (if it drops 10-20% in value, you're still above water, though you do of course lose money), while if you buy it for 0% down and it drops 20% in value, you won't be able to sell (at all) for years. All that together means you should really take a hard look at the costs and benefits, make a realistic calculation including all actual costs, and then make a decision. I would not buy simply because it seems like a good idea to not pay rent. If you're unable to make any down payment, then you're also unable to deal with the risks in home ownership - not just decrease in value, but when your pipe bursts and ruins your basement, or when the roof needs a replacement because a tree falls on it. Yes, home insurance helps, but not always, and the deductible will still get you. Just to have some numbers: For my area, we pay about $8000 a year in property taxes on a $280k house ($200k mortgage), $1k a year in home insurance, so our escrow payment is about $750 a month. A 15 year for $200k is about $1400 a month, so $2200 or so total cost. We do live in a high property tax area, so someone in lower tax regimes would pay less - say 1800-1900 - but not that cheap. A 30 year would save you 500 or so a month, but you're still not all that much lower than rent. |
What effect does a company's earnings have on the price of its stock? | A common (and important) measure of a stock's value is the price/earnings ratio, so an increase in earnings will normally cause the stock price to increase. However, the price of the stock is based on a guess of the value of the company some time (6 months?) in the future. So an increase in earnings today probably makes a higher earnings more likely in the future, and puts upward pressure on the price of the stock. There are a lot of other factors in stock prices, such as publicity, dividends, revenue, trends, company stability, and company history. Earnings is a very important factor, but not the only factor determine the value (and so stock price) of a company. |
Single investment across multiple accounts… good, bad, indifferent? | The main restrictions you see with IRA's involve contributions, and not the actual investments themselves. I would be indifferent to having a single investment across multiple accounts. It might be a bit trickier to manage, especially if your strategy involves some specific asset allocation. Other than account management though, there's no big issue. |
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