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Is A Company Abusing The Tax Code When It Does This, And How Does The IRS Prevent It? | A rather good IRS paper on the topic states that a donation of a business' in-kind inventory would be Under IRC 170(e)(1), however, the fair market value must be reduced by the amount of gain that would not be long-term capital gain if the property had been sold by the donor at the property's fair market value (determined at the time of the contribution). Under this rule, deductions for donated inventory are limited to the property's basis (generally its cost), where the fair market value exceeds the basis. There are references to IRC regulations in a narrative context you may find helpful: This paper goes on for 16 pages describing detailed exceptions and the political reasons for the exceptions (most of which are concerned with encouraging the donation of prepared food from restaurants/caterers to hunger charities by guaranteeing a value for something that would otherwise be trashed valueless); and a worked out example of fur coats that had a cost of goods of $200 and a market value of $1000. |
How can I find a report of dividend earned in a FY? | I know this question is old. I also have a kotak trading account. There is no way to get the dividend report from the trading account. The dividend is directly credited to your bank account by the companies through registrar. There is no involvement of trading account in there. So the best possible way will be to get the bank account statement for the financial year and filter out the dividend transactions manually. I know it is tedious, but there doesn't seem to be any easy way out there for this. Few days back I started using portfolio manager provided by economic times. It lists all the dividend earned in my stocks automatically. |
How much is inflation? | There is a thing called the consumer price index (CPI) There is a basket of goods that the people who keep the index basically shop for. It is much more detailed for the sake of accuracy, but bottom line is they shop for the same stuff each year. They measure the difference from year to year and that gives you a pretty good idea of inflation from a regular person point of view. http://www.inflationdata.com/Inflation/Consumer_Price_Index/HistoricalCPI.aspx But it isn't without its faults, people bicker about the methodology and what constitutes the index. http://www.investopedia.com/articles/07/consumerpriceindex.asp?viewed=1 |
What part of buying a house would make my net worth go down? | In general, buying a house will improve your net worth over the long haul, because unlike cars, houses don't suffer as much from depreciation. The problem with real property is that markets are very cyclic and aren't very liquid assets. Farmers with thousands of acres of valuable land are often cash poor for that very reason. A lot of people here are negative about housing ownership — this is illustrative of the fact that 2010 is a year where real estate is on the down-side of the cycle. |
Changing the price in a limit order | This depends on the stock exchange in question. Generally if you modify an existing order [including GTC], these are internally treated as Cancel/Replace Orders. Depending on the action, you may lose the time priority position and a new position would get assigned. More here. (f) Cancel/Replace Orders. Depending on how a quote or order is modified, the quote or order may change priority position as follows: (1) If the price is changed, the changed side loses position and is placed in a priority position behind all orders of the same type (i.e., customer or non-customer) at the same price. (2) If one side's quantity is changed, the unchanged side retains its priority position. (3) If the quantity of one side is decreased, that side retains its priority position. (4) If the quantity of one side is increased, that side loses its priority position and is placed behind all orders of the same type at the same price. |
How and Should I Invest (As a college 18 year old with minimal living expenses)? | The $1K in funds are by default your emergency fund. If absolutely necessary, emergency funds may need to come from debt, a credit capacity, focus on building credit to leverage lower rates for living expenses eventually needed. Profitable organizations & proprietors, borrow at a lower cost of capital than their return. Join your local credit union, you're welcome to join mine online, the current rates for the first $500 in both your checking and savings is 4.07%, it's currently the fourth largest in the U.S. by assets. You may join as a "family member" to me (Karl Erdmann), not sure what their definition of "family" is, I'd be happy to trace our ancestry if need be or consider other options. Their current incentive program, like many institutions have often, will give you $100 for going through the hassle to join and establish a checking and savings. Some institutions, such as this credit union, have a lower threshold to risk, applicants may be turned down for an account if there is any negative history or a low credit score, shooting for a score of 600 before applying seems safest. The web services, as you mentioned, have significantly improved the layman's ability to cost effectively invest funds and provide liquidity. Robinhood currently seems to be providing the most affordable access to the market. It goes without saying, stay objective with your trust of any platform, as you may have noticed, there is a detailed explanation of how Robinhood makes their money on this stack exchange community, they are largely backed by venture funding, hopefully the organization is able to maintain a low enough overhead to keep the organization sustainable in the long run. The services that power this service such as Plaid, seem promising and underrated, but i digress. The platform gives access for users to learn how investing works, it seems safest to plan a diversified portfolio utilizing a mix of securities,such as low Beta stocks or "blue chip" companies with clear dividend policies. One intriguing feature, if you invest in equities is casting votes on decisions in shareholder meetings. Another popular investment asset class that is less liquid and perhaps something to work toward is real estate. Google the economist "Matthew Rognlie" for his work on income equality on this type of investment. There are many incentives for first time homeowners, saving up for a down payment is the first step. Consider adding to your portfolio a Real Estate Investment Trust (REITs) to gain a market position. Another noteworthy approach to this idea is an investment commercial property cooperative organization, currently the first and only one is called NorthEast Investment Cooperative, one stock of class A is $1K. If you are interested and plan to focus on equities, consider dropping into your college's Accounting Capstone course to learn more about the the details of fundamental and technical analysis of an organization. The complexities of investing involve cyclical risk, macro and micro economic factors, understanding financial statements and their notes, cash flow forecasting - discounting, market timing, and a host of other details Wikipedia is much more helpful at detailing. It's safe to assume initial investment decisions by unsophisticated investors are mostly whimsical, and likely will only add up to learning opportunities, however risk is inherit in all things, including sitting on cash that pays a price of inflation. A promising mindset in long term investments are in organizations that focus on conscious business practices. Another way to think of investing is that you are already somewhat of a "sophisticated investor" and could beat the market by what you know given your background, catching wind of certain information first, or acting on a new trends or technology quickly. Move carefully with any perhaps biased "bullish" or "bearish" mindset. Thinking independently is helpful, constantly becoming familiar with different ideas from professions in a diverse set of backgrounds, and simulating decisions in portfolio's. Here is an extremely limited set of authors and outlets that may have ideas worth digging more into, MIT Tech Reviews (Informative), Bloomberg TV (it's free, informative), John Mackey (businessman), Paul Mason (provocative journalist). Google finance is a simple and free go-to application, use the "cost basis" feature for "paper" or real trades, it's easy to import transactions from a .csv. This seems sufficient to start off with. Enjoy the journey, aim for real value with your resources. |
What are Vanguard's Admiral Shares? | Vanguard's Admiral shares are like regular ("investor") shares in their funds, only they charge lower expense ratios. They have higher investment minimums, though. (For instance, the Vanguard Total Stock Market Index Fund has a minimum of $3,000 and an expense ratio of .18% for the Investor Shares class, but a minimum of $10,000 and an expense ratio of .07% for Admiral Shares). If you've bought a bunch of investor shares and now meet the (recently-reduced) minimum for Admiral shares, or if you have some and buy some more investor shares in the future and meet the minimums, you will qualify for a free, no-tax-impact conversion to the Admiral Shares and save yourself some money. For more information, see the Vanguard article on their recent changes to Admiral Shares minimums. Vanguard also offers institutional-class shares with even lower expense ratios than that (with a minimum of $5 million, .06% expense ratios on the same fund). A lot of the costs of operating a fund are per-individual, so they don't need to charge you extra fees for putting in more money after a certain point. They'd rather be competitive and offer it at cost. Vanguard's funds typically have very low expense ratios to begin with. (The investor shares I've been using as an example are advertised as "84% lower than the average expense ratio of funds with similar holdings".) In fact, Vanguard's whole reason for existing is the premise (stated in founder John C Bogle's undergraduate thesis at Princeton) that individuals can generally get better returns by investing in a cheap fund that tracks an index than by investing in mutual funds that try to pick stocks and beat the index and charge you a steep markup. The average real return of the stock market is supposedly something like 4%; even a small-looking percentage like 1% can eat a big portion of that. Over the course of 40 years waiting for retirement, saving 1% on expenses could leave you with something like 50% more money when you've retired. If you are interested in the lower expense ratios of the Admiral share classes but cannot meet the minimums, note that funds which are available as ETFs can be traded from Vanguard brokerage accounts commission-free and typically charge the same expense ratios as the Admiral shares without any minimums (but you need to trade them as individual shares, and this is less convenient than moving them around in specific dollar amounts). |
Why do so many NFL (pro football) players have charities? | In addition to tax-related benefits, one answer may be that it helps them avoid being inundated with requests to support other foundations. Most charities have access to public records that indicate potential donors based on income and demographic. They can use that info to solicit for donations. "Hey NFL Player, you have lots of money, and we have cute starving emus that really need your help!" Here's a blurb from Foundation Source about some of the benefits to starting your own foundation. Get an Immediate Tax Deduction, but Give Later: You get the tax deduction when the foundation is funded, then make your charitable gifts over time. Leave a Lasting Legacy: Foundations set up in perpetuity can burnish your name far beyond your lifetime. Because gifts are made from an endowment that generates investment revenue, the total gifts made by the foundation can far surpass the actual funding. Be Taken More Seriously as a Philanthropist: A foundation imparts a gravitas that causes people to take your philanthropy more seriously, due to the structured, organized approach you employ for your giving. Sidestep Unsolicited Requests: When you focus your foundation on specific giving areas, your mission statement can be used to politely turn down off-target funding requests. Deepen and Focus Your Philanthropy: Whereas individual donors often spread their giving among as many causes as possible, the formalized structure of a foundation often encourages donors to narrow their focus to specific causes. Build a Better Family: As family members take on philanthropic research, present their findings to the board, participate in the decision-making process, and track results, they hone skills that will serve them for years to come. Tax-Deductible Grants to Individuals in Need: A private foundation allows you to provide emergency assistance directly to individuals using dollars for which you’ve already received a tax deduction. Run Charitable Programs Without Setting Up a Separate Nonprofit: Direct charitable activities are IRS-approved programs that permit foundations to directly fund and carry out their own projects. Pay Charitable Expenses: All legitimate and reasonable expenses incurred in carrying out the foundation’s charitable mission can be paid by the foundation and will count toward the annual minimum distribution requirement. Provide Loans Instead of Grants: When used to support a charitable purpose, private foundations can employ loans, loan guarantees, and even equity investments, which are paid back (potentially with interest), so you can recycle your philanthropic capital for other charitable causes. https://www.foundationsource.com/resources/library/top-10-advantages-of-a-private-foundation/ There's a similar list here on the website for an attorney that specializes in philanthropy and non-profits. I won't copy/paste that list as it's similar, but I wanted to provide an additional source confirming the above benefits. This link contains some disadvantages as well. http://www.hurwitassociates.com/l_start_pros.php |
Why do I see multiple trades of very small quantities? | It looks more like someone is trying to pocket the spread. The trades are going off at the bid then the ask (from what I can tell without any L1 and L2 data, but the spread could be bigger than what the prices show, since the stock looks pretty volatile given the difference between current price and VWAP...). Looking through the JSE rule books I didn't find any special provisions on how they handle odd lots in their Central Order Book, but the usual practice in other markets is to display only round lot orders. So these 4 share orders would remain hidden from book participants and could be set there to trigger executions from those who are probing for limit orders. Or to make a market with very limited risk. |
Is it a good practice to keep salary account and savings account separate? | My wife and I do this. We have one account for income and one for expenditures (and around 7 others for dedicated savings.) Doing this we are forcing ourselves to keep track of all expenditures as we have to manually transfer funds from one to the other, we try to do this periodically (every Wednesday) and then keep the expenditures within what is actually on the account. It is a really good way to keep track of everything. Bear in mind that our bank provides a fast handy smartphone app where we both can check our account as well as transfer funds in less than 10 seconds. (Fingerprint authentication, instant funds transfer as well as zero fees for transfers.) Right now we have a credit card each attached to the expenditures account, but earlier we only had a debit card each and no credit cards. Meaning that when the weekly funds ran out we where simply not able to pay. We did this to mimic living only on cash and when the cash runs out you simply have to stop buying stuff. And at the same time we could accrue quite a bit of savings. I would definitely recommend this if you have problems with over expenditures. |
Can LLC legally lend money to a friend? | Tax accountant here. The money is yours and you can do what ever you want with it. Just make sure to put it on the books as Loan Receivable and have an Interest Income account. |
Am I considered in debt if I pay a mortgage? | Mortgage is a (secured) debt, a combination of a promissory note, and a security interest providing the mortage holder a secured interest in the property. Yes, you are "in debt". But that depends upon whether you define the term "in debt" as a debt appearing on the balance sheet, or the net of assets - liabilities is less than zero, whether you have a "debt" expense on the income statement (budget), or whether the net of income - expenses is less than zero. One person might look at their budget, find the (monthly) mortgage payment listed, and judge that they have a debt payment, and thus are "in debt". Or they might look at their expenses, find they exceed their income, and judge that they are "in debt". Another person might look at their balance sheet, compare assets to liabilities, and only say they were "in debt" when their liabilities exceeded their assets. Some people view mortgage debt as "good debt", as they view certain debts as "good" and others as "bad". Trust me, having a high mortgage payment (higher 30% of your net income) is hard, and over 40% is bad. Consider you balance sheet and your income statement. On your balance sheet, the house appears on the "asset" side with an (estimated) value, while the "mortgage" (really, the promissory note part of the mortgage) appears on the "liability" side. On your income statement, your house does not appear on the income side, but the mortgage (promissory note) payment appears on the expense side. So, you clearly have both a "liability" with a clearly-defined value and an "expense" with a clearly-defined payment. But do you have an "asset"? According to an accountant, you have an "asset" and a "liability". But you do not have a business asset that is producing revenue (income), nor do you have a business asset that can be amortized and expensed to reduce taxable income. When we think about an asset, does the word have the connotation of some thing with value, something that produces income? Well, by that measure, a house only provides income when we rent it out, and only has value when we consider selling it. As millions of families discovered during the housing (price) collapse, when the market price of your "asset" falls substantially, your personal financial status can fall negative and you can be "broke". |
online personal finance software that I can host myself | I generally concur with your sentiments. mint.com has 'hack me' written all over it. I know of two major open source tools for accounting: GNUCash and LedgerSMB. I use GNUCash, which comes close to meeting your needs: The 2.4 series introduced SQL DB support; mysql, postgres and sqlite are all supported. I migrated to sqlite to see how the schema looked and ran, the conclusion was that it runs fine but writing direct sql queries is probably beyond me. I may move it to postgres in the future, just so I can write some decent reports. Note that while it uses HTML for reporting, there is no no web frontend. It still requires a client, and is not multi-user safe. But it's probably about the closest to what you what that still falls under the heading of 'personal finance'. A fork of SQL Ledger, this is postgreSQL only but does have a web frontend. All the open source finance webapps I've found are designed for small to medium busineses. I believe it should meet your needs, though I've never used it. It might be overkill and difficult to use for your limited purposes though. I know one or two people in the regional LUG use LedgerSMB, but I really don't need invoicing and paystubs. |
Does cash back apply to online payments with credit card | Retail purchases are purchases made at retail, i.e.: as a consumer/individual customer. That would include any "standard" individual expenditure, but may exclude wholesale sales or purchases from merchants who identify themselves as service providers to businesses. Specifics of these limitations really depend on your card issuer, and you should inquire with the customer service at what are their specific eligibility requirements. As an example, here in the US many cards give high cash-back for gasoline purchases, but only at "retail" locations. That excludes wholesale/club sellers like Costco, for example. |
Someone asks you to co-sign a loan. How to reject & say “no” nicely or politely? | Oh, how about something like "I'd rather not. It exposes me to more financial liability than I want. If you were in the hospital, or some emergency like that, it might be different, but..." |
Why do only a handful of Canadian companies have options trading on their stocks? | First, your question contains a couple of false premises: Options in the U.S. do not trade on the NYSE, which is a stock exchange. You must have been looking at a listing from an options exchange. There are a handful of options exchanges in the U.S., and while two of these have "NYSE" in the name, referring to "NYSE" by itself still refers to the stock exchange. Companies typically don't decide themselves whether options will trade for their stock. The exchange and other market participants (market makers) decide whether to create a market for them. The Toronto Stock Exchange (TSX) is also a stock exchange. It doesn't list any options. If you want to see Canadian-listed options on equities, you're looking in the wrong place. Next, yes, RY does have listed options in Canada. Here are some. Did you know about the Montreal Exchange (MX)? The MX is part of the TMX Group, which owns both the Toronto Stock Exchange (TSX) and the Montreal Exchange. You'll find lots of Canadian equity and index options trading at the MX. If you have an options trading account with a decent Canadian broker, you should have access to trade options at the MX. Finally, even considering the existence of the MX, you'll still find that a lot of Canadian companies don't have any options listed. Simply: smaller and/or less liquid stocks don't have enough demand for options, so the options exchange & market makers don't offer any. It isn't cost-effective for them to create a market where there will be very few participants. |
Can I sell a stock immediately? | You can*, if the market is open, in a normal trading phase (no auction phase), works, and there is an existing bid or offer on the product you want to trade, at the time the market learns of your order. Keep in mind there are 2 prices: bid and offer. If the current bid and current offer were the same, it would immediately result in a trade, and thus the bid and offer are no longer the same. Market Makers are paid / given lower fees in order to maintain buy and sell prices (called quotes) at most times. These conditions are usually all true, but commonly fail for these reasons: Most markets have an order type of market order that says buy/sell at any price. There are still sanity checks put in place on the price, with the exact rules for valid prices depending on the stock, so unless it's a penny stock you won't suddenly pay ten times a stock's value. *The amount you can buy sell is limited by the quantity that exists on the bid and offer. If there is a bid or offer, the quantity is always at least 1. |
Economics of buy-to-let (investment) flats | but the flat would be occupied all the time. Famous last words. Are you prepared to have a tenant move in, and stop paying rent? In the US, it can take 6 months to get a tenant out of the apartment and little chance of collecting back rent. I don't know how your laws work, but here, they do not favor the landlord. The tiny sub 1% profit you make while funding principal payments is a risky proposition. It seems to me that even normal repairs (heater, appliances, etc) will put you to the negative. On the other hand, if this property has bottomed in terms of price and it rises in value, you may have a nice profit. But if you are just renting it out, it feels like it's too close to call. By the way, if you can go with a 30yr fixed, I'd suggest that. This would get you to a better cash flow sooner. A shorter mortgage simply means more money to principal each month. EDIT - as far as equity goes, at the beginning it seems the equity build up is really from your pocket, definitely so by switching from the 30 to the 15. What is your goal? The assumption I may have made is you wish to be a real estate investor with multiple properties. Doing so means saving up for the next down payment. Given the payoff time even if the property ran a high profit, I imagine you'd want to focus on cash flow, minimize the monthly expense, maximize what you can take each month to save for the next down payment. It's your choice, years from now to have one paid property, or 3 properties each with that 30% down payment, and let time be your friend. |
Is a “total stock market” index fund diverse enough alone? | Write off the entire asset class of corporate bonds? Finance theory says yes, the only two asset classes that you need are stocks and treasury bills (very short-term US government bonds). See the Capital Asset Pricing Model (CAPM). |
How do I figure out if I will owe taxes | Your employer pays the expected (but estimated) taxes for you. So the chances are you don't own more; but that might be different if you have other sources of income that he doesn't know about (interest on savings or a side-job or whatever). Also, you could have deductions that reduce the taxes you owe, which he again doesn't know, so you overpay. If you don't file, you don't get them back. Most tax software companies offer free usage of their tool for standard filings, and you can use it to find out your tax situation, and then buy the tool only when you want to file. If you use one of those, you can type in all your data, and depending on the result, decide to buy it and file right away. Note that if it turns out you owe taxes, you must file (and pay), but of course you can do it manually instead of buying the tool. If it turns out you get money back, it is your decision to file - you probably don't care for a small amount, but if you get 1000 $ back, you might want to file - again, buying the software of doing it manually. |
Consequences of buying/selling a large number of shares for a low volume stock? | First, If you buy $10K of a penny stock and try to sell it that afternoon, you probably won't get your money back. The bid/ask spread may cost you dearly. On the shady side, if you are able to afford to trade enough shares to attract attention, the interest of those who believe the volume is an indication of some real event happening, you may pump it high enough to make some nice money, selling into the ensuing rise. This is a classic pump and dump (which often but not always, includes posts on message boards) and it is illegal. The same way this volume attracts traders, it can also attract the attention of the SEC. This should be read as a narrative, not as advice. If anything, it's advice on what not to do. |
What prevents interest rates from rising? | There do not appear to be any specific legal measures to prevent bankruptcies. In fact, they seems to be part of the means for which rates are raised, for the consequent aim of lowering inflation. See: The Budgetary Implications of Higher Federal Reserve Board Interest Rates by Dean Baker, Center for Economic and Policy Research. The Federal Reserve Board (Fed) is widely expected to start raising interest rates some time in 2015. The purpose of higher interest rates is to slow the economy and prevent inflation. This is done by reducing the rate of job creation and thereby reducing the ability of workers to achieve wage gains. |
What are the fundamental levels that makes a Stock Ideal? (either to sell or buy) | I look at the following ratios and how these ratios developed over time, for instance how did valuation come down in a recession, what was the trough multiple during the Lehman crisis in 2008, how did a recession or good economy affect profitability of the company. Valuation metrics: Enterprise value / EBIT (EBIT = operating income) Enterprise value / sales (for fast growing companies as their operating profit is expected to be realized later in time) and P/E Profitability: Operating margin, which is EBIT / sales Cashflow / sales Business model stability and news flow |
What is a negotiable security and how are they related to derivatives? | The price for securities is negotiable. You totally have a right to make a lower offer when buying or ask for a higher price when selling. Securities don't trade at a fixed price, the price goes up and down throughout the day based on the price offers made by buyers and sellers and where they find agreement. If a stock last traded for $10, someone can put out an offer to buy the stock at $9.50, if they find someone who wants to sell and will accept that price, then a deal is made. unless something is falling rapidly in price however, an offer that far below the last price is not terribly likely to be accepted. Now if you want to be assured of making a sale or purchase, you generally trade 'at the market' and for small time players that is very much encouraged as it makes it easier for everyone. |
What do do with traditional IRA if I'm maxing out contributions to employer 401k and want to open a Roth | You have many options, and there is no one-size-fits-all recommendation. You can contribute to your IRA in addition to your 401(k), but because you have that 401(k), it is not tax-deductable. So there is little advantage in putting money in the IRA compared to saving it in a personal investment account, where you keep full control over it. It does, however, open the option to do a backdoor-rollover from that IRA to a Roth IRA, which is a good idea to have; you will not pay any taxes if you do that conversion, if the money in the IRA was not tax deducted (which it isn't as you have the 401(k)). You can also contribute to a Roth IRA directly, if you are under the income limits for that (193k$ for married, I think, not sure for single). If this is the case, you don't need to take the detour through the IRA with the backdoor-rollover. Main advantage for Roth is that gains are tax free. There are many other answers here that give details on where to save if you have more money to save. In a nutshell, In between is 'pay off all high-interest debt', I think right after 1. - if you have any. 'High-Interest' means anything that costs more interest than you can expect when investing. |
Does technical analysis work on small stock exchanges? | Assuming that you accept the premise that technical analysis is legitimate and useful, it makes sense that it might not work for a small market, or at the very least that it wouldn't be the same for a small market as it is for a large market. The reason for this is that a large stock market like the U.S. stock market is as close to a perfect market as you will find: Compare this to a small market in a small country. Market information is harder to get, because there are not as many media outlets covering the news. There aren't as many participants. And possibly it might be more expensive to participate in, and there might be more regulatory intervention than with the large market. All of these things can affect the prices. The closer you get to a perfect market, the closer you get to a point where the prices of the stocks reflect the "true value" of the companies, without external forces affecting prices. |
Should I refi a rental property to reduce income tax from positive cash flow and use the equity pulled out to fund an annuity? | You need to do a bit more research and as @littleadv often wisely advises, consult a professional, in this case a tax layer or CPA. You are not allowed to just pull money out of a property and write off the interest. From Deducting Mortgage Interest FAQs If you own rental property and borrow against it to buy a home, the interest does not qualify as mortgage interest because the loan is not secured by the home itself. Interest paid on that loan can't be deducted as a rental expense either, because the funds were not used for the rental property. The interest expense is actually considered personal interest, which is no longer deductible. This is not exactly your situation of course, but it illustrates the restriction that will apply to you. Elsewhere in the article, it references how, if used for a business, the interest deduction still will not apply to the rental, but to the business via schedule C. In your case, it's worse, you can never deduct interest used to fund a tax free bond, or to invest in such a tax favored product. Putting the facts aside, I often use the line "don't let the tax tail wag the investing dog." Borrowing in order to reduce taxes is rarely a wise move. If you look at the interest on the 90K vs 290K, you'll see you are paying, in effect, 5.12% on the extra 200K, due the higher rate on the entire sum. Elsewhere on this board, there are members who would say that given the choice to invest or pay off a 4% mortgage, paying it off is guaranteed, and the wiser thing to do. I think there's a fine line and might not be so quick to pay that loan off, an after-tax 3% cost of borrowing is barely higher than inflation. But to borrow at over 5% to invest in an annuity product whose terms you didn't disclose, does seem right to me. Borrow to invest in the next property? That's another story. |
Are variable rate loans ever a good idea? | What's going on here is that the variable rate loan is transferring some of the risk from the bank to you. In a reasonable deal taking on risk brings with it reward. It's the same thing as deductibles on insurance--they're transferring some risk to you and thus your expected total cost goes down. Thus the proper evaluation of such deals is whether you can afford the outcome if you draw the short straw. If you feel you can afford the highest payment that can result then the variable rate is a good deal. If you're near your limit then stay with the safe option of the fixed rate. For a house this is easy enough to evaluate--run the calculations assuming the highest payment and see what the debt-to-income ratio is. Note that when we were getting mortgages there was another factor involved: the variable rate loans had a higher initiation cost. Combined with the very low difference between fixed and ARM rates at the time we went fixed but given the rates you quote going variable would have been a no-brainer for us. |
Should I buy a house or am I making silly assumptions that I can afford it? | Having convinced myself that there is no point of paying someone's else mortgage Somewhat rhetorical this many years later, but I expect some other kid forcefed the obsession with propping up the housing market might be repeating the nonsense about "paying someone else's mortgage" and read this. Will you be buying your own farm to grow your own food, or are you happy with people using the money you spend on food for a mortgage? How about clothes? Will you be weaving your own clothes because you don't want money you spend on clothes to pay someone else's mortgage? What's special about the money you pay for rent that you get annoyed at how someone else spends it? Don't get a mortgage just because you don't like the idea of how other people might spend the money that's no longer yours after you pay them with it. As an aside, at your age with your income and no debt, you could be sensibly investing a lot of money. If you did that for five years, you'd be in a much better position that you would be tying yourself to whatever current scheme the UK is using to desperately prop up house prices. |
I have savings and excess income. Is it time for me to find a financial advisor? | I think you might be asking the wrong question. You have plenty of capital on the side that can be invested. Instead of asking whether you should get an adviser, you might want to examine what your end goal is. Are you looking to build long term growth of you capital? Are you asking about and adviser because you don't want to handle your money, or is it simply because "that's what people do?" I would imagine that the answer to 1. is yes and that the answer to 2. is that you want to handle your money, and you always considered this something best left to the advisers. I shall proceed on these hypothetical assumptions. In my humble opinion, I would do the following: Skip the adviser and the fees that go with it. For a young professional like yourself, especially with an engineering background, you can certainly handle the education required to learn the mechanics of investing. Invest some time to learn the fundamentals of the market such as asset classes, basic terminology ect. You will benefit in several ways. For one, you will learn an invaluable skill and save tens of thousands in fees during your lifetime. Moreover, you will have complete control of your risk profile, allocation, and every penny that belongs to you. I really am not bashing advisers, but no one will care as much about your money as you will. And don't be fooled. The market is efficient. An adviser does not have any more edge in a market than anyone else. And from first hand experience, they rarely outperform benchmarks net of fees. I assume you have made it to this step because you want to manage your own money and financial future. Sounds scary, how should one proceed? Let's assume that $100,000 is "in play". And since you are learning the ropes, let's leave $50,000 in cash for now. This leaves $50,000 to start a portfolio. I'd start by building a core position of all the major asset classes in ETF form. This means buying things like SPY or TLT. If you're comfortable, you can start selling monthly calls against these positions to reduce basis and earn some income. The point is, your only limitation at this point is taking time to learn the ropes. The technology is there, the free education is there, and liquidity and product mix is there. Next thing you know you're learning how gamma scalping works, or maybe you're more of a Buffett type. This is how I view finance in general, and truly hope you break through the initial barrier to controling your own finances. |
Is there any reason not to put a 35% down payment on a car? | Do you guys think it's a good idea to put that much down on the car ? In my opinion, it depends on a lot of factors. If you have nothing to pay, and are not planning to invest in something that cost a lot soon (I.E an house, etc). Then I see no problem in put "that much down on the car". Remember that the more you pay at first, the less you will pay interest on. However, if you are planning on buying something big soon, then you might want to pay less and keep moneys for your future investment. I would honestly not finance a car with the garage as I find their interest rate to high. Possibilities depends a lot of your bank accounts, but what I would personally do is pay it cash using my credit margin with the bank which is only 2.8% interest rate. Garage where I live rarely finance under 7% interest rate. You may not have a credit margin, but maybe you could get a loan with the bank instead ? Many bank keep an history of your loan which will get you a better credit name when trying to buy an home later. On the other side, having a good credit name is not really useful in a garage. What interest rate is reasonable based on my credit score? I don't think it is possible to give a real answer to this as it change a lot around the world. However, I would recommend to simply compare with the interest rate asked when being loan by the bank. |
I have about 20 000 usd. How can invest them to do good in the world? | Shariah compliant investments attempt to achieve your "ethical investing" ideals. Many countries around the world have a long list of shariah compliant investments and lots of journalists will go great lengths to reveal when a company is not really shariah compliant. Standard & Poors (S&P), an American financial services company, hosts a Shariah compliant index too, but on the Toronto Stock Exchange in Canada due to the Islamaphobia rampant in the United States. But of course, international companies are indifferent to any single country's social problems, and in your new pastime as an international speculator you will get the same luxury too and exemption from the political spectrum. S&P/TSX 60 information can be found here: http://web.tmxmoney.com/tmx_indices.php?section=tsx&index=%5ETXSI Business sectors prohibited from the Shariah index include: Gambling, Pornography, Tobacco, amongst others. In the United States, the concept has been renamed "B-Corporation" (a play on the federal term C-Corporation and S-Corporation), and has garnered enough of a movement that several states have created these as entities people can actually register them with the state, but these are not recognized as "B-Corporations" to the federal government. Shariah compliant investments will be easier to find worldwide, due to the popularity of the associated religion. |
Micro-investing: How to effectively invest frequent small amounts of money in equities? | In terms of building the initial investment using some kind of mutual fund, I'd suggest you see my answer to this similar question https://money.stackexchange.com/questions/9943/cheapest-or-free-online-broker-for-beginner For buying individual stocks later, you could look at sharebuilder, or a low cost broker, however most of them charge between $5-$7 per trade, and if you are doing small dollar value trades then that can really really eat into things if you try to trade a lot. |
What do I need to consider when refinancing one home to pay the down-payment of another? | What kind of financial analysis would make you comfortable about this decision? The HELOC and ARM are the biggest red flags to me in your current situation. While I don't expect interest rates to skyrocket in the near future, they introduce an interest rate risk that is easy to get rid of. Getting rid of the HELOC and converting to a fixed mortgage would be my first priority. If you also want to upgrade to a new home at the same time (meaning buy a new home contingent on the sale of your first, paying off the HELOC and mortgage), that's fine, but make sure that you can comfortably afford the payment on a fixed-rate mortgage with at least 20% down. I would not take additional cash out of your equity just to save it. You're going to pay more in interest that you're going to get in savings. From there things get trickier. While many people would keep the first property on a mortgage and rent it out, I am not willing to be a landlord for a part-time job, especially when the interest on the mortgage gouges my return on the rent. PLus leverage increases the risks as well - all it takes is to go one or two months without rent and you can find yourself unable to make a mortgage payment, wrecking your credit and possibly risking foreclosure. So my options in order of precedence would be: At what point does it make sense to become a landlord? The complicated answer is when the benefits (rent, appreciation) relative to the costs (maintenance, interest, taxes, etc.) and risks (lost rent, bad renters, home value variance) give you a better return that you could find in investments of similar risk. The simple answer is when you can pay cash for it. That takes interest and lost rent out of the equation. Again, some are willing to take those risks and pay 20% down on rental property. Some are able to make it work. Some of those go broke or lose their properties. when calculating the 20% down of a new property, does that need to be liquid funds, or can that be based on the value of the home you are selling You can make the purchase of the new home contingent on the sale of the first if you need to get the equity out of it to make the 20%. Do NOT refinance the first just to pull out the equity to make a down payment. It's not worth the fees of a refinance. |
How can I predict which way mortgage rates are moving? | Mortgage rates generally consist of two factors: The risk premium is relatively constant for a particular individual / house combination, so most of the changes in your mortgage rate will be associated with changes in the price of money in the world economy at large. Interest rates in the overall economy are usually tied to an interest rate called the Federal Funds rate. The Federal Reserve manipulates the federal funds rate by buying and/or selling bonds until the rate is something they like. So you can usually expect your interest rate to rise or fall depending on the policies of the Federal Reserve. You can predict this in a couple of ways: The way they have described their plans recently indicates that will keep interest rates low for an extended period of time - probably through 2014 or so - and they hope to keep inflation around 2%. Unless inflation is significantly more than 2% between now and then, they are extremely unlikely to change that plan. As such, you should probably not expect mortgage interest rates in general to change more than infinitesimally small amounts until 2014ish. Worry more about your credit score. |
Why is Insider Trading Illegal? | A practical issue is that insider trading transfers wealth from most investors to the few insiders. If this were permitted, non-insiders would rarely make any money, and they'd stop investing. That would then defeat the purpose of the capital markets which is to attract capital. A moral issue is that managers and operators of a company should act in shareholders' interests. Insider trading directly takes money from other shareholders and transfers it to the insider. It's a nasty conflict of interest (and would allow any CEO of a public company to make ton of money quickly, regardless of their job performance). In short, shareholders and management should succeed or suffer together, so their interests are as aligned as possible and managers have the proper incentives. |
How to avoid maintenance fee when balance drops below minimum? | Looks like you have three options: Outside of this you might need to look for a different type of account. Hope that helps. |
Are these really bond yields? | Those are the "right" yields. They are historically (but not "nonsensically") low. Those yields are reflective of the sluggish U.S. and global economic activity of the past decade. If global growth were higher, the yields would be higher. The period most nearly comparable to the past 10 years in U.S. and world history was the depressed 1930s. (I am the author of this 2004 book that predicted a stock market crash (which occurred in 2008), and the modern 1930s, but I was wrong in my assumption that the modern 1930s would involve another depression rather than 'slow growth.') |
I cosigned for a friend who is not paying the payment | I came across such a situation and I am still facing it. My friend borrowed my credit card for his expenses as he had misplaced his debit card and for the time being had asked for my credit card to handle the expenses he does. He paid for initial 2 months and then was not able to make payments, mainly due to not being able to arrange money or if it was a contri party, he would collect cash from friends but again spend the same. Months passes by... the bill had come upto 65k and calls from bank and other respective organizations Finally my dad came into picture and slowly the issue is resolving he has paid 50K remaining is still pending. So basically, the reason I shared this part of story was he is my Best friend and in order to not spoil our friendship I did not want to take any such step which would later on affect our friendship. This completely depends on the individuals how they react to the situation. Keeping Ego, superiority, favour sort of feelings and words apart things can be resolved between friends. You do not know what is the situation on the other side. Probably you can connect with him ask him to explain you why is not able to pay the debts and take action accordingly. If he is not able to provide a proper reason then you may take some actions like mentioned in initial answers, run after the assets he own or anything else.Stay Calm and patient. Do not take any such step which you would regret later on...! |
What is buying pressure? | Buying pressure means there are more interested buyers than there are ready sellers putting upward pressure on prices. That might include institutional buyers who are slowly executing buy orders because they still want the best prices possible without clearing out the market. Buying pressure doesn't have to be related to volume at all. If everyone who owns shares think they are going to be worth far more than recent market prices, they will not offer them for sale. That means there is more demand to buy than there is a supply of shares to be bought. That condition can exist regardless of trading volume. |
First job: Renting vs get my parents to buy me a house | Seriously. I can't tell you how many times I hear this scenario: Kid graduates college; kid runs out and signs lease on apartment "because that's what you do"**; kid complains that he's in financial trouble and can't make ends meet. Housemate sharing is most famously displayed in hit shows like Big Bang Theory or New Girl. They get a much nicer place with better furnishings for way less money. (However don't hook up with close neighbors or friends of other housemates, they do it for awkward laughs but it really results in awkward departure.) It's more financially responsible. It means the rest of your financial life will have more slack. And when you move, obviously, it's no big deal, you just give all the notice you can, and go to the next town and find another housemate share. ** I suspect a very significant factor is bringing home dates. Well, there's nothing sexy about taking your date to McDonalds because you can't afford anything more. See those shows... it works fine, you just have to be sensible about housemate choices. Pick housemates who view things the same way, and who themselves are invested in making the shared space attractive, and aren't going to mind some ...activities... once in awhile. |
Can rent be added to your salary when applying for a mortgage? | I can answer Scenario #3. If you are purchasing a property with buy-to-let intentions […] can you use the rental income exclusively to fund the mortgage repayments? Yes – this is exactly how buy-to-let mortgage applications are evaluated. Lenders generally expect you to fund the mortgage payments with rent. They look for the anticipated monthly rent income to cover a minimum of 125% of the monthly mortgage payment. This is to make sure you can allow for vacant periods, maintenance, compliance with rules and regulations, and still be in profit (i.e. generate a positive yield on your investment). However, buy-to-let (BTL) mortgage lenders also generally expect you to own your own home to begin with. It's up to them, but rare is the lender who will provide a buy-to-let mortgage to a non-owner-occupier. This is because of point 2 above. The lender doesn't want you to end up living in the property because then you'll need to repay the loan capital, since you'll always need somewhere to live. This makes the economics of BTL unfavourable. They look at your application as a business proposal: quite different to a residential mortgage application, which is what your question seems to be addressing. Bottom line: You're right about scenario #3 but it sounds like you're trying to afford a home first, whereas BTL is best viewed as an investment for someone who already has their main residence under ownership (mortgaged or otherwise). As for Scenarios #1 and #2 I can't offer first hand answers but I think Aakash M. and Steve Melnikoff have covered it. |
Received a late 1099 MISC for income I reported already, do I have to amend? | Why would the IRS be coming after you if you reported the income? If you reported everything, then the IRS will use the 1099 to cross-check, see that everything is in order, be happy and done with it. The lady was supposed to give you the 1099 by the end of January, and she may be penalized by the IRS for being late, but as long as you/wifey reported all the income - you're fine. It was supposed to be reported on Schedule C or as miscellaneous income on line 21 (schedule C sounds more suitable as it seems that your wifey is in a cleaning business). But there's no difference in how you report whether you got 1099 or not, so if you reported - you should be fine. |
Any reason to keep around my account with my old, 'big' bank? | From my experience, payments from banks and other financial entities, such as loyalty programs, generally aren't as large as payments that go the other direction from consumer to bank. Thus, keeping a bank account open simply for some reward/loyalty points may just be changing your behavior for the wrong reasons. The more important scenario is whether or not you have any automated ACH payments or whether your bank account is linked to other services. Perhaps the biggest tell that you're in the clear is when those transactions start occurring from your credit union account. For example: If you had a direct deposit to your BMO bank account, make sure you see deposits start to appear in the credit union account. If you're making automatic withdraws to an online savings or brokerage account, make sure those transfers are stopped and that you instead see them coming out of your new credit union account. You shouldn't need to move the auto loan, but you will need to make sure you can pay it from the new account. Some financial advisors, such as in this BankRate article titled, Lenders can tap bank account for mortgage, even recommend keeping liabilities and assets at different locations. If for whatever reason your financial situation turned bleak, it would be more difficult for the bank to help itself to what's in your checking account. To avoid getting nickel and dimed to death by "payment processing fees", I tend to pay insurance bills yearly or semi-annually. Thus, consider if there is anything that may be coming due in the next 6 months. If so, you might want to get your new account hooked up while you still have all the routing numbers and account numbers in your head. It's a pain to dig this stuff up while also rushing to not be late. If all that is in order, close the account. |
I have a horrible 401k plan, with high expenses. Should I stay with it or move my money elsewhere? | The first question is essentially asking for specific investment advice which is off-topic per the FAQ, but I'll take a stab at #2 and #3 (2) If my 401k doesn't change before I leave my job (not planned in the near future), I should roll it over into my Roth IRA after I leave due to these high expense ratios, correct? My advice is that you should roll over a 401K into an IRA the first chance you get (usually when you leave the job). 401K plans are NOTORIOUS for high expense ratios and why leave your money in a plan where you have a limited choice of investments anyway versus a self-directed IRA where you can invest in anything you want? (3) Should I still max contribute with these horrible expense ratios? If they are providing a match, yes. Even with the expense ratios it is hard to beat the immediate return of an employer match. If they aren't matching, the answer is still probably yes for a few reasons: You already are maxing out your ability to contribute to sheltered accounts, so assuming you still want to sock away that money for retirement, the tax benefits are still valuable and probably offset the expense ratios. Although you seem to be an exception, it is hard for most people to be disciplined enough to put money in a retirement account after they have it in their hands (versus auto-deduction from paychecks). |
Can the purchaser of a stock call option cancel the contract? | You bought the right – but not the obligation – to buy a certain number of shares at $15 from whomsoever sold you the option, and you paid a premium for it. You can choose whether you want to buy the shares at $15 during the period agreed upon. If you call for the shares, the other guy has to sell the shares to you for $15 each, even if the market price is higher. You can then turn around and promptly resell the purchased shares at the higher market price. If the market price never rises above $15 at any time while the option is open, you still have the right to buy the shares for $15 if you choose to do so. Most rational people would let the option expire without exercising it, but this is not a legal requirement. Doing things like buying shares at $15 when the market price is below $15 is perfectly legal; just not very savvy. You cannot cancel the option in the sense of going to the seller of the option and demanding your premium money back because you don't intend to exercise the option because the market price is below $15. Of course, if the market price is above $15 and you tell the seller to cancel the contract, they will be happy to do so, since it lets them off the hook. They may or may not give you the premium back in this case. |
Why would my job recruiter want me to form an LLC? | Your recruiter is likely trying to avoid having to pay the employer's side of employment taxes, and may even be trying to avoid having to file a 1099 for you by treating your relationship as a vendor/service provider that he is purchasing services from, which would make your pay just a business expense. It's definitely in his best interest for you to do it this way. Whether it's in your best interest is up to you. You should consult a licensed legal/tax professional to help you determine whether this is a good arrangement for you. (Most of the time, when someone starts playing tax avoidance games, they eventually get stung by it.) The next big question: If you already know this guy is a snake, why are you still working with him? If you don't trust him, why would you take legal/tax advice from him? He might land you a high-paying job. But he also might cause you years of headaches if his tax advice turns out to be flawed. |
Can I trust the Motley Fool? | The Motley Fool is generally regarded as relatively legit, at least in that they're not likely to do anything outright fraudulent and they definitely have reasonably in-depth content to provide you. The Motley Fool makes a fair amount of money off the subscriptions, though, and they do hawk them quite violently. If I didn't have a generally good opinion of them to begin with, I'd have been completely put off as well. It's pretty shameful. I don't think it's worth hundreds of dollars a year, but then again, I don't look at investing as a second career like the Fool likes to suggest, either. |
Medium-term money investment in Germany | Due to the zero percent interest rate on the Euro right now you won't find any investment giving you 5% which isn't equivalent to gambling. One of the few investment forms which still promises gains without unreasonable risks right now seems to be real estate, because real estate prices in German urban areas (not so in rural areas!) are growing a lot recently. One reason for that is in fact the low interest rate, because it makes it very cheap right now to take a loan and buy a home. This increased demand is driving up the prices. Note that you don't need to buy a property yourself to invest in real estate (20k in one of the larger cities of Germany will get you... maybe a cardboard box below a bridge?). You can invest your money in a real estate fund ("Immobilienfond"). You then don't own a specific property, you own a tiny fraction of a whole bunch of different properties. This spreads out the risk and allows you to invest exactly as much money as you want. However, most real estate funds do not allow you to sell in the first two years and require that you announce your sale one year in advance, so it's not a very liquid asset. Also, it is still a risky investment. Raising real estate prices might hint to a bubble which might burst eventually. Financial analysts have different opinions about this. But fact is, when the European Central Bank starts to take interest again, then the demand for real estate property will drop and so will the prices. When you are not sure what to do, ask your bank for investment advise. German banks are usually trustworthy in this regard. |
Margin Calculations Question | The setup is a purchase of 200 shares at $40 with a cash deposit of $4000 and margin loan of $4000 which a year later grew to $4240. With a margin requirement of 30%, the loan can be 70% or a total stock value of $6057. 1) $30.29 2) -24.3% (The stock fell to $30.29 from $40) 3) -54.6% (Your $4000 fell to $1817) |
Why is the dominant investing advice for individuals to use mutual funds, exchanged traded funds (ETFs), etc | Cost. If an investor wanted to diversify his portfolio by investing in the companies that make up the S&P 500, the per-share and commission costs to individually place trades for each and every one of those companies would be prohibitive. I can buy one share of an exchange-traded fund that tracks the S&P 500 for less than the purchase price of a single share in some of the companies that make up the index. |
What's the best way to make money from a market correction? | A lot of people here talk about shorting stocks, buying options, and messing around with leveraged ETFs. While these are excellent tools, that offer novel opportunities for the sophisticated investor, Don't mess around with these until you have been in the game for a few years. Even if you can make money consistently right out of the gate, don't do it. Why? Making money isn't your challenge, NOT LOSING money is your challenge. It's hard to measure the scope of the risk you are assuming with these strategies, much less manage it when things head south. So even if you've gotten lucky enough to have figured out how to make money, you surely haven't learned out how to hold on to it. I am certain that every beginner still hasn't figured out how to comprehend risk and manage losing positions. It's one of those things you only figure out after dealing with it. Stocks (with little to no margin) are a great place to learn how to lose because your risk of losing everything is drastically lower than with the aforementioned tools of the sophisticated investor. Despite what others may say you can make out really well just trading stocks. That being said, one of my favorite beginner strategies is buying stocks that dip for reasons that don't fundamentally affect the company's ability to make money in the mid term (2 quarters). Wallstreet loves these plays because it shakes out amateur investors (release bad news, push the stock down shorting it or selling your position, amateurs sell, which you buy at a discount to the 'fair price'.) A good example is Netflix back in 2007. There was a lawsuit because netflix was throttling movie deliveries to high traffic consumers. The stock dropped a good chunk overnight. A more recent example is petrobras after their huge bond sale and subsequent corruption scandal. A lot of people questioned Petrobras' long-term ability to maintain sufficient liquidity to pay back the loans, but the cashflow and long term projections are more than solid. A year later the stock was pushed further down because a lot of amateur Brazilians invest in Petrobras and they sold while the stock was artificially depressed due to a string of corruption scandals and poor, though temporary, economic conditions. One of my favorite plays back in 2008-2011 was First Solar on the run-up to earnings calls. Analysts would always come out of these meetings downgrading the stock and the forums were full of pikers and pumpers claiming heavy put positions. The stock would go down considerably, but would always pop around earnings. I've made huge returns on this move. Those were the good ole days. Start off just googling financial news and blogs and look for lawsuits and/or scandals. Manufacturing defects or recalls. Starting looking for companies that react predictably to certain events. Plot those events on your chart. If you don't know how to back-test events, learn it. Google Finance had a tool for that back in the day that was rudimentary but helpful for those starting out. Eventually though, moreso than learning any particular strategy, you should learn these three skills: 1) Tooling: to gather, manipulate, and visualize data on your own. These days automated trading also seems to be ever more important, even for the small fish. 2) Analytical Thinking learn to spot patterns of the three types: event based (lawsuits, arbitrage, earnings etc), technical (emas, price action, sup/res), or business-oriented (accounting, strategy, marketing). Don't just listen to what someone else says you should do at any particular moment, critical thinking is essential. 3) Emotions and Attitude: learn how to comprehend risk and manage your trigger finger. Your emotions are like a blade that you must sharpen every day if you want to stay in the game. Disclaimer: I stopped using this strategy in 2011, and moved to a pure technical trading regime. I've been out totally out of the game since 2015. |
Mortgage refinancing fees | 2.5%? Whoa, you are being robbed there. Straight-up, stripped-down, and bent-over-a-table robbed. Never agree to "fees". If they don't want to do the work to give you a loan, there are other lenders who do. Rarely agree to "points". If you know -- and I don't mean "think", I mean "know" -- if you know that you are going to hold that loan much longer than it would take to repay those points, then maybe. For example, if they are charging one point to lower your rate 0.25%, you want to be totally sure you will stay in the house at least four years, and probably more like six or eight years before moving or refinancing. It's more-or-less OK to pay for the appraisal. If something goes wrong with the loan application, the appraisal will be valid for a few more months, you can try again. I once had 14% cash for a down-payment. The loan officer said if I could come up with 15%, the rate would be reduced by 0.25%. To get the money, I took a "reverse point", which paid me 1% but raised my the rate by 0.25%. The loan officer, who wasn't too bright, asked, "Why did you do that? The two things cancel each other out." "I did it," I explained, "because you paid me 1% of the value of my house to sign my name twice." |
What kind of life insurance is cheaper? I'm not sure about term vs. whole vs. universal, etc | Wow, very amused by some of the answers. I will comment on those later. To directly answer your question, here is a link to a brochure that explains the three basic typs and is written in straightforward language. link text That is step one. Step 2 is a question, cheapest when, initially or for long term? Without a doubt term initially is the cheapest. However every 10 years or 20 years it increases in price. As the name term implies it is temporary. Coverage will end at some point, 75, or 80 depending upon plan design chosen. It is possible that if you choose Term you can outlive your coverage and all you have are a bunch of cancelled cheques. Young people with a mortgage, children and other debts should buy a lot of term as the mortgage will be paid off, the kids will no longer be dependent. These needs are temporary. However some needs are permanent. What about leaving a Legacy at Death to a Charity? Insurance is a good solution and can provide a tax deduction too. Term isn't a good fit. Or a business owner wishing to transfer his/her business at death to their children. Taxes will be due and permanent insurance such as Whole Life and Universal Life can be arranged to provide cash to pay tax whenever this happens. Let me ask you who received 10% in the last ten years on their equity portfolio. Almost zero people did. However a Whole Plan would have generated a guaranteed return of 3.0% plus a non-guaranteed return via dividends that the combined internal rate of return on a combined basis would be about 5.6% AFTER TAXES. Life a bond portfolio yield. (Internal rate of return is dependent on age at buying, years of investing. All insurance comany software can show you the internal rate of return.) IRR is essesntially: what is the return after tax that you must get to equal the equity or death benefit from a permanent insurance plan. Someone mentioned by Term and Invest the difference. That is what universal life is, Term and Invest the difference except the difference is growing tax sheltered.Outside investments with comparable risk are taxable! There is no easy answer for what type is right, often a combination is. The key question you should ask is How Much Is Enough? Then consider types based upon your needs and budget. Here is a link where you can calculate how much you need. I hope this helps a bit. |
How to record “short premium” in double-entry accounting? | Thanks for your reply. I’m not familiar with the term “Held-For-Trading Security”. My securities are generally held as collateral against my shorts. To clarify, I am just trying to track the “money in” and “money out” entries in my account for the shorts I write. The transaction is relatively straight forward, except there is a ton of information attached! In simple terms, for the ticker CSR and short contract CSRUQ8, the relevant entries look something like this: There are no entries for expiries. I need to ensure that funds are available for future margin calls and assignments. The sale side using covered calls is as involved. |
Why do grocery stores in the U.S. offer cash back so eagerly? | The cost to the store is small. They may have to pay a slightly greater fee because the transaction is now bigger. They do need additional cash on hand. Even though the majority of transactions are electronic (credit/debit) or check, the local grocery store still seems to have significant cash on hand. This is seen as a customer service. If there is a 2% fee the $50 advance costs them $1 for the minority of customers that take advantage of it. After more than 10 years of doing this they have figured this into the cost of groceries. Of course the credit card company could also waive the fee to store. My credit card online statement does tell me how much cash back was received. The line says date, store, amount ($40.00 cash over and $123.45 purchases) $163.45 total. Therefore the credit card company knows that cash back was used. |
Taxable income on full-time job + business earnings | Possible alternative: In my case, the part-time locksmithing is a small enough portion of my I come that I just submit it as hobby income, rather than trying to track it as a separate entity. |
Does it make sense to buy a house in my situation? | Just echoing the other answers here. You're not ready yet. 3% down, or no money down loans are what got so many of us into trouble these last few years. It sounds like you make a pretty good living and are able to squirrel away money despite paying rent. Let me suggest something that I haven't seen here yet. Save up for a 20% down payment. You will get better rates, won't have to buy mortgage insurance and it will give you enough of a cushion on your payment that you could better weather a job loss or other loss of income. Your priority for saving are, in order: Home prices aren't going up any time soon, so you're not going to miss out on a great deal. Keep your expenses low, treat yourself and your kids once in a while and keep saving. |
Is it possible to split taxation of funds earned from a crowdfunding campaign over multiple years? | I think you should really start a limited company for this. It'll be a lot simpler to spread the income over multiple years if your business and you have completely separate identities. You should also consult an accountant, if only once to understand the basics of how to approach this. Having a limited company would also mean that if it has financial problems, you don't end up having to pay the debts yourself. With a separate company, you would keep any money raised within the company initially and only pay it to yourself as salary over the three years, so from an income tax point of view you'd only be taxed on it as you received it. The company would also pay for project expenses directly and there wouldn't be any income tax to pay on them at all. You would have to pay other taxes like VAT, but you could choose to register for VAT and then you'd be able to reclaim VAT on the company's expenses but would have to charge VAT to your customers. If you start making enough money (currently £82,000/year) you have to register for VAT whether you want to or not. The only slight complication might be that you could be subject to corporation tax on the surplus money in the first year because it might seem like a profit. However, given that you would presumably have promised something to the funders over a three year period, it should be possible to record your promises as a "liability" for "unearned income" in the company accounts. In effect you'd be saying "although there's still £60,000 in the bank, I have promised to spend it on the crowdfunded thing so it's not profit". Again you should consult an accountant at least over the basics of this. |
Why are Bank of America and Citi trading so far below book value? | Its not just Citi and BoFA, even Barclays, HSBC and other large Banks are trading below book value in markets they are listed. Are there particular assets that are causing these two banks to be valued lower relative to their book values than the other banks? There no particular assets. Given the current economic situation most Banks are not making good returns, i.e. expected returns of markets are around 10-12% and the returns getting generated are around 4-6%. The overall slow down in various segments as well as regulations in most countries mean that banks have to relook at the business model in short term and generate more revenue. The market believes that Banks may loose money faster and hence the negative outlook and the trading below the book value. Note Book Value is derived in ideal conditions, i.e. when the company is healthy. If any company were to sell the assets in distress, the actual funds raised would be quite a bit less than Book Value. Its also to be noted that typically Banks would not close out and hence Book Value to an extent is just an indicator. Or is it a residual loathing based on their being the biggest losers of 2008 that are still around today? The 2008 has gone past. This is more recent. If you look most of these banks were doing quite well till last year and had recovered substantially after 2008. |
Estimated Tax on Unplanned Capital Gains | In general, you are expected to pay all the money you owe in taxes by the end of the tax year, or you may have to pay a penalty. But you don't have to pay a penalty if: The amount you owe (i.e. total tax due minus what you paid in withholding and estimated taxes) is less than $1000. You paid at least 90% of your total tax bill. You paid at least 100% of last year's tax bill. https://www.irs.gov/taxtopics/tc306.html I think point #3 may work for you here. Suppose that last year your total tax liability was, say, $5,000. This year your tax on your regular income would be $5,500, but you have this additional capital gain that brings your total tax to $6,500. If your withholding was $5,000 -- the amount you owed last year -- than you'll owe the difference, $1,500, but you won't have to pay any penalties. If you normally get a refund every year, even a small one, then you should be fine. I'd check the numbers to be sure, of course. If you normally have to pay something every April 15, or if your income and therefore your withholding went down this year for whatever reason, then you should make an estimated payment. The IRS has a page explaining the rules in more detail: https://www.irs.gov/help-resources/tools-faqs/faqs-for-individuals/frequently-asked-tax-questions-answers/estimated-tax/large-gains-lump-sum-distributions-etc/large-gains-lump-sum-distributions-etc |
How to approach building credit without a credit card | One possible route is to try to have no credit. This is different than bad credit. If you build up a good downpayment (20%), a number of banks would do manual underwriting for you. |
When will Canada convert to the U.S. Dollar as an official currency? | The conspiracy buffs think this is already in the works. If you are interested, Google this fictional currency called the "Amero." Or you could just look up the snopes article on Amero. |
Is paying off your mortage a #1 personal finance priority? | If you can make enough ROI from the capital you retain by not paying off your mortgage, then why not? I do, I could pay off a significant chunk of mortgage if I wanted but whilst interest rates are low there's little incentive. As for another crash... Well, there's no reason to expect a crash would result in high interest rates, more the opposite, but you should consider what you would or could do if interest rates did jump to 15% for whatever reason. As long as your investments aren't too risky or difficult to liquidate, etc, you could always consider paying off a big chunk then, when it makes sense. |
At what interest rate should debt be used as a tool? | It's not so much the rate of the debt as it is the total cost of the debt relative to the gain you expect to see from using it to purchase something of value. I've known people who were quite happy to pay 12% on personal loans used to buy investment properties for flipping. They're happy to pay that because conventional loans from banks require too much documentation and out-of-pocket expense. For some investors, 12% without all of the documentation burden is money well spent. So if I'm the investor, and the interest on this 12% loan is $5,000 and I can flip a property for $20,000 after all of the other expenses, then the 12% loan was an enabler to netting $15,000 profit. |
which types of investments should be choosen for 401k at early 20's? | If you don't want to pay much attention to your investments, target date funds -- assuming you find one (like Vanguard's) with no management fees beyond those acquired from the underlying funds -- are usually a great choice: when the target date is far off, they invest almost entirely (usually 90% or so) in (mutual funds that in turn consist of many) stocks, with the remainder in bonds; as the date gets closer, the mix is automatically shifted to more bonds and less stocks (i.e. less risk, but less potential return too). |
What is the dividend tax rate for UK stock | The link provided by DumbCoder (below) is only relevant to UK resident investors and does not apply if you live in Malaysia. I noticed that in a much older question you asked a similar question about taxes on US stocks, so I'll try and answer both situations here. The answer is almost the same for any country you decide to invest in. As a foreign investor, the country from which you purchase stock cannot charge you tax on either income or capital gains. Taxation is based on residency, so even when you purchase foreign stock its the tax laws of Malaysia (as your country of residence) that matter. At the time of writing, Malaysia does not levy any capital gains tax and there is no income tax charged on dividends so you won't have to declare or pay any tax on your stocks regardless of where you buy them from. The only exception to this is Dividend Withholding Tax, which is a special tax taken by the government of the country you bought the stock from before it is paid to your account. You do not need to declare this tax as it his already been taken by the time you receive your dividend. The rate of DWT that will be withheld is unique to each country. The UK does not have any withholding tax so you will always receive the full dividend on UK stocks. The withholding tax rate for the US is 30%. Other countries vary. For most countries that do charge a withholding tax, it is possible to have this reduced to 15% if there is a double taxation treaty in place between the two countries and all of the following are true: Note: Although the taxation rules of both countries are similar, I am a resident of Singapore not Malaysia so I can't speak from first hand experience, but current Malaysia tax rates are easy to find online. The rest of this information is common to any non-US/UK resident investor (as long as you're not a US person). |
How often do stocks become worthless? | Randomly selected stocks would probably become worthless at a similar rate of all businesses going out of business do. I'm not sure why you'd randomly select a stock though. Stocks in the S&P500 (or other similar index), or large-cap stocks probably become worthless at a much lower rate. |
Should we prepay our private student loans, given our particular profile? | See my recent answer to a similar question on prepaying a mortgage versus investing in IRA. The issue here is similar: you want to compare the relative rates of funding your retirement account versus paying down your debt. If you can invest at a better rate than you are paying on your debt, with similar risk, then you should invest. Otherwise, pay down your debt. The big difference with your situation is that you have a variable rate loan, so there's a significant risk that the rate on it will go up. If I was in your shoes, I would do the following: But that's me. If you're more debt-averse, you may decide to prepay that fixed rate loan too. |
If someone gives me cash legally, can my deposit trigger an audit for them? | Am I right to worry about both of these? Of course. Who carries $75K in cash for no good reason? Your friend got the cash from somewhere, didn't he? If its legit - there's paper trail to show. Same for your parents. If you/they can show the legit paper trail - there's nothing to worry about, the hassle, at worse, is a couple of letters to the IRS. If the money is not legit (your friend is selling crack to the kids in the hood and your parents robbed a 7/11 to give you the money, for example) - there may be problems. |
Why do some companies report how well their EBITDA performed even if their overall net profit did equally well? | EBITDA is in my opinion not a useful measure for an investor looking to buy shares on the stock market. It is more useful for private businesses open to changing their structuring, or looking to sell significant parts of their business. One of the main benefits of reporting Earnings Before Interest, Taxes, Depreciation & Amortization, is that it presents the company as it would look to a potential buyer. Consider that net income, as a metric, includes interest costs, taxes, and depreciation. Interest costs are (to put it simply) a result of multiplying a business's debt by its interest rate. If you own a business, and personally guarantee the loan that the company has with the bank, your interest rates might be artificially low. If you have a policy of reaching high debt levels relative to your equity, in order to achieve high 'financial leveraging', your interest cost might be artificially high. Either way, if I bought your business, my debt structure could be completely different, and therefore your interest costs are not particularly relevant to me, a potential buyer. Instead, I should attempt to anticipate what my own interest costs would be, under my plans for your business. Taxes are a result of many factors, including the corporate structure of the business. If you run your business as a sole proprietorship (ie: no corporation), but I want to buy it under my corporation, then my tax rates could look nothing like yours. Or if we operated in multiple jurisdictions. etc. etc. Instead of using your taxes as an estimate for mine, I should anticipate my taxes based on my plans for your business. Depreciation / amortization is a measure that estimates how much of a business's "fixed assets" were "used up" during the year. ie: how much wear and tear occurred on your fleet of trucks? It is generally calculated as a % of your overall asset value. It is a (very loose) proxy for the cash costs which will ultimately be incurred to make repairs/replacements. D&A is also something which could significantly change if a business changes hands. If the value of your building is much higher now than when you bought it, I will have higher D&A costs than you [because I will be recording a % of total costs higher than yours], and therefore I should forecast my own D&A. Removing these costs from Net Income is not particularly relevant for a casual stock investor, because these costs will not change when you buy shares. Whatever IBM's interest cost is, reflects the debt structuring policy that the company currently has. Therefore when you buy a share in IBM, you should consider the impact that interest has on net income. Similarly for taxes and D&A - they reflect costs to the business that impact the company's ability to pay you a dividend, and therefore you should look at net income, which includes those costs. Why would a business with 'good net income' and 'good EBITDA' report EBITDA? Because EBITDA will always be higher than net income. Why say $10M net income, when you could say $50M EBITDA? The fact is, it's easy to report, and is generally well understood - so why not report it, when it also makes you look better, from a purely "big number = good" perspective? I'm not sure that reporting EBITDA implies any sort of manipulative reporting, but it would seem that Warren Buffet feels this is a risk. |
Is 401k as good as it sounds given the way it is taxed? | This is an excellent topic as it impacts so many in so many different ways. Here are some thoughts on how the accounts are used which is almost as important as the as calculating the income or tax. The Roth is the best bang for the buck, once you have taken full advantage of employer matched 401K. Yes, you pay taxes upfront. All income earned isn't taxed (under current tax rules). This money can be passed on to family and can continue forever. Contributions can be funded past age 70.5. Once account is active for over 5 years, contributions can be withdrawn and used (ie: house down payment, college, medical bills), without any penalties. All income earned must be left in the account to avoid penalties. For younger workers, without an employer match this is idea given the income tax savings over the longer term and they are most likely in the lowest tax bracket. The 401k is great for retirement, which is made better if employer matches contributions. This is like getting paid for retirement saving. These funds are "locked" up until age 59.5, with exceptions. All contributed funds and all earnings are "untaxed" until withdrawn. The idea here is that at the time contributions are added, you are at a higher tax rate then when you expect to withdrawn funds. Trade Accounts, investments, as stated before are the used of taxed dollars. The biggest advantage of these are the liquidity. |
Pros and Cons of Interest Only Loans | Pros: Cons: Before the housing bubble the conventional wisdom was to buy as much home as you could afford, thereby borrowing as much you can afford. Because variable rates lead to lower mortgages, they were preferred by many as you could buy more house. This of course lead to many people losing their home and many thousands of dollars. A bubble is not necessary to trigger a chain of events that can lead to loss of a home. If an interest only borrower is late on a payment, this often triggers a rate increase. Couple that with some other things that can happen negatively, and you are up $hit's creek. IMO it is not wise. |
Re-financing/consolidating multiple student loans for medical school? | Several student loans are backed by government guarantee and this will allow you to get attractive rates. This may require them to consolidate the three classes of loans separately. Many commercial banks offer consolidation services, one example is Wachovia discussed at https://www.wellsfargo.com/student/private-loan-consolidation/ Other methods of "consolidation" are of course anything that pays off the original loan. If available, using a parent's home equity line of credit to pay of the loans and then paying back the parents can save money. An additional benefit of HELOC-style loans is that they are very flexible in their payment terms. For example you may pay $25 per year to keep the account open and then only be required to make interest payments. Links: https://origin.bankrate.com/finance/college-finance/faqs-on-student-loan-consolidation-1.aspx |
Is there any instance where less leverage will get you a better return on a rental property? | More leverage means more risk. There is more upside. There is also more downside. If property prices and/or rents fall then your losses are amplified. If you leverage at 90% then a 5% fall means you've lost half your money. |
I may earn a lot of cash soon through self-employment on a lucrative project. How to handle the tax? | I'm not familiar with Canadian taxes, but had your question been written about the United States, I'd advise you to at least consult for a couple of hours with an accountant. Taxes are complex, and the cost of making a mistake generally exceeds the cost of getting professional advice. |
Strategy to pay off car loan before selling the car | As far as ease of sale transaction goes you'll want to pay off the loan and have the title in your name and in your hand at the time of sale. Selling a car private party is difficult enough, the last thing you want is some administrivia clouding your deal. How you go about paying the remaining balance on the car is really up to you. If you can make that happen on a CC without paying an additional fee, that sounds like a good option. |
First time investing in real-estate, looks decent? | Congratulations, you are in great shape financially at a very young age. Great income, nice equity in a home, and mostly debt free. It seems like you are looking at taking out a loan of 400K, and to do so you will have to put your own home at risk as you do not have the 80K cash for a down payment. Correct? It also looks like after 2.1K per year without regard to taxes, maintenance, bad tenants, or vacancies. As such this will likely be a negative cash flow situation. I would say you should plan on a 912/month cost. Are you okay with that? While your income can probably cover this, no problem, is that your objective to have this property have a negative return for the next 10-15 years or so? For me, this is a no. Way too much risk for a negative cash flow. It is hard to talk to the upside as you did not give any profit predictions and I am unsure of the market. Why would you risk jeopardizing your great financial situation with a "hail mary" attempt to make money? Slow down, you will get there. Save for a few years so there is no need to tap your home's equity to make a down payment. It would really bother me to owe 600K on a 121K salary (75K+20K+26K). |
What are the ins/outs of writing-off part of one's rent for working at home? | Tax regulations vary from country to country - some permitting more deductions, some less - but here are a few guidelines. As regards the home-office: As regards the deductions: Think of it like this: in order to have space for a home-office you needed a bigger home. That leads to increased rates, heating, insurance and so on. Many tax regulators recognise that these are genuine expenses. The alternative is to rent a separate office and incur greater expenses, leading to increased deductions and less overall tax paid (which won't finance the deficit). The usual test for deductions is: was the expense legitimately incurred in the pursuit of revenue? The flexibility permitted will vary by tax authority but you can frequently deduct more than you expected. |
I have more than $250,000 in a US Bank account… mistake? | If you were married the 250K protection can be expanded by the use of joint and individual accounts. A separate limit also exists for IRA accounts. With out those options you will have to put some additional money into another banking institution. This could be a bank or credit union. You have to be careful to make sure that any additional accounts have FDIC or NCUA (for Credit Unions) coverage. Some banking institutions try and turn customers to non-covered accounts that are either investment accounts or use a 3rd party to protect them. You could also use it to invest in US government bonds through Treasury direct. Though for just the few months that you will be in the excess position it probably isn't worth the hassle of treasury direct. |
What is the best approach to save money for College for three kids? | Live where you live now untill your kids are about to go to college. Then move to Germany and send your children to college for FREE. The german universities may be not in the top 10 of the world (THE), but are still competitive enough on a worldwide scale. Also, if your children excell at college, it should not be a huge problem to transfer them to the top universities in the UK or US (with scholarships from Germany). In addition, your children can go on a exchange to other universities for a couple of months or multiple years, fully funded by the European Union or the german universities. |
How to calculate how far a shorted stock's price can rise before broker issues a margin call? | Most brokers have a margin maintenance requirement of 30%. In your example, it would depend on how much money you're borrowing from your broker on margin. Consider this: You have $250, and short AAPL at $500 on margin. This would be a common scenario (federal law requires investors to have at least 50% of their margin equity when opening a transaction). If your broker had a requirement of 30%, they would require that for your $500 position, you have at least $500 * .3 = $150 equity. Since you are currently above that number at $250, you will not be hit with a margin call. Say the price of AAPL doubles, and now your position is worth $1000. $1000 * .3 = $300, which is $50 above your initial equity. Your broker will now consider you eligible for a margin call. Most will not execute the call right away, you will often have some time to either sell/cover stock or add funds to your account. But not all brokers will warn you if you are breaking margin requirements, and sometimes margin calls can take you by surprise if you are not paying attention. Also, many will charge interest on extra margin borrowed. |
Finding a good small business CPA? | I have had better experiences with accountants in smaller towns. It seems they are used to working with small businesses and their reputation is very important to them. |
How might trading volume affect future share price? | Volumes are used to predict momentum of movement, not the direction of it. Large trading volumes generally tend to create a price breakout in either positive or negative direction. Especially in relatively illiquid stocks (like small caps), sudden volume surges can create sharp price fluctuations. |
How to prevent myself from buying things I don't want | I found the best way to do this was to make a spending plan at the beginning of the month with someone else. If you're married or in a relationship where you pool resources, then this is a natural way to sync up on your expectations. If you don't have a relationship of that nature, it's still good to have a friend that you talk to about things you are planning on buying. If I don't allow myself to buy things on a whim, if I have to take the time to justify my purchases to someone else, then I have to first think about the purchase and justify it to myself. Often the actual process of thinking it through is enough for me to talk myself out of it. Consider the tactics of car salesmen. Each time you attempt to leave the lot, to think about it overnight, they sweeten the offer to try to get you to buy before leaving. They know that if you leave the lot, you are much less likely to decide that you must have that car. You should have a policy of sleeping for one night before making any purchase over an arbitrary dollar amount say $250, or $500, or $1,000. Having that rule, and following it will save you a lot of buyers remorse. As an aside, I've had my eye on a 35mm prime lens for my camera for over a year now. I was ready to pay ~$500 for a nice lens that was discounted by $100, and I was a little sad that I missed the discount. However, I am very deliberate in my shopping, and I didn't want to buy until I read enough of the reviews to be certain about it. It turns out that the lens has a fatal flaw for landscape photography that most reviewers didn't notice because they were using it for portrait photography. I finally concluded that the lens I really wanted was an $800 lens. I looked at resale prices on my $600 lens and they are in the $350 range. So instead of missing out on a $100 discount, I missed out on a $150 loss trading up to the lens that I really want for the long term. |
How to determine how much to charge your business for rent (in your house)? | If you are talking about a home office, you don't "charge" the business anything. If the area is used exclusively as an office you pro-rate by square footage just the actual expenses. TurboTax recent published an article "Can I Take the Home Office Deduction?" which is a must read if you don't understand the process. (Note: I authored said article.) |
Is there a good forum where I can discuss individual US stocks? | I've used Wikinvest before and think that's close to what you're looking for - but in Wiki-style rather than forums. Otherwise, I agree with CrimsonX that The Motley Fool is a good place to check out. |
Is it inadvisable to leave a Roth IRA to charity upon death? | You need to keep in mind that there's an exemption amount of more than $5M (five million) dollars for estate tax. Unless you used all of it for gifts during your life time, it will more than cover all of your $70K estate, so there's no need in any additional planning. As to Roth vs Traditional IRA - if you want to leave something to your siblings, leave them the Roth. Why would you give the taxable income to your siblings when you can give them the nontaxable one? Charities are tax exempt anyway. |
If I have 10,000 stocks to sell with 23 B market cap | First a quick terminology correction: I believe you're proposing selling 10,000 shares of the stock of a company, not "10,000 stocks". When you sell, you need to decide whether you're selling for a specific minimum price or just selling for whatever price you can get. If you set a specific lower limit on asking price, then if people aren't interested at that price it doesn't sell. Which may mean you sell only a few shares, or none if your asking price isn't considered reasonable. If you want to sell independent of price, then as you begin to flood the market with your shares, the price you get per additional share may decline until it finds a buyer. What that lower limit is will depend on what people think the stock is currently worth. This is one of the many complications I don't want to deal with, which is why I stick with index funds. |
Are credit histories/scores international? | Some countries in European Union are starting to implement credit history sharing, for example now history from polish bureau BIK and German Schufa are mutually available. Similar agreements are planned between polish BIK and bureaus in the Netherlands and United Kingdom. |
Is there a financial product that allows speculation on GDP? | The closest thing that you are looking for would be FOREX exchanges. Currency value is affected by the relative growth of economies among other things, and the arbritrage of currencies would enable you to speculate on the relative growth of an individual economy. |
What's the smartest way to invest money gifted to a child? | I was in a similar situation with my now 6 year old. So I'll share what I chose. Like you, I was already funding a 529. So I opened a custodial brokerage account with Fidelity and chose to invest in very low expense index fund ETFs which are sponsored by Fidelity, so there are no commissions. The index funds have a low turnover as well, so they tend to be minimal on capital gains. As mentioned in the other answer, CDs aren't paying anything right now. And given your long time to grow, investing in the stock market is a decent bet. However, I would steer clear of any insurance products. They tend to be heavy on fees and low on returns. Insurance is for insuring something not for investing. |
How can I lookup the business associated with a FEIN? | In most cases you cannot do "reverse lookup" on tax id in the US. You can verify, but for that you need to have more than just the FEIN/SSN. You should also have a name, and some times address. Non-profits, specifically, have to publish their EIN to donors, so it may be easier than others to identify those. Other businesses may not be as easy to find just by EIN. |
Does Tennessee have anything like a principal residence exemption? | There's no homestead property tax exemption in TN. According to the TN comptroller site: Exemptions Exemptions are available for religious, charitable, scientific, and nonprofit educational uses, governmental property, and cemeteries. Most nongovernmental exemptions require a one-time application and approval by the State Board of Equalization (615/401-7883) and there is a May 20 application deadline. There is no "homestead" exemption, but low income elderly and disabled persons and disabled veterans may qualify for a rebate of taxes on a specified portion of the value of property used as their residence. Business inventories held for sale or exchange by merchants subject to the business gross receipts tax, are not assessable. Farm and residential tangible personal property are not assessable. |
Why is day trading considered riskier than long-term trading? | Short-term, the game is supply/demand and how the various participants react to it at various prices. On longer term, prices start to better reflect the fundamentals. Within something like week to some month or two, if there has not been any unique value affecting news, then interest, options, market maker(s), swing traders and such play bigger part. With intraday, the effects of available liquidity become very pronounced. The market makers have algos that try to guess what type of client they have and they prefer to give high price to large buyer and low price to small buyer. As intraday trader has spreads and commissions big part of their expenses and leverage magnifies those, instead of being able to take advantage of the lower prices, they prefer to stop out after small move against them. In practise this means that when they buy low, that low will soon be the midpoint of the day and tomorrows high etc if they are still holding on. Buy and sell are similar to long call or long put options position. And options are like insurance, they cost you. Also the longer the position is held the more likely it is to end up with someone with ability to test your margin if you're highly leveraged and constantly making your wins from the same source. Risk management is also issue. The leveraged pros trade through a company. Not sure if they're able to open another such company and still open accounts after the inevitable. |
No transaction fee ETF trades - what's the catch? | AFAIK, It's also possible that the ETF company is paying Ameritrade for every trade you make. Even if your brokerage doesn't make you pay a fee to trade ETFs, the company that created and runs the ETF is still making money when you purchase and use their ETFs. See "What motivates each player?" at Yahoo Finance. |
Tenant wants to pay rent with EFT | What you've described is the norm in Australia, where it's rare for anyone under sixty to use cheques. Assuming they're transferring the funds using internet banking, I would have the following suggestions: You make it clear that the the funds must reach your account by the due date for rent. It is their (the tenant's) responsibility to allow for the normal transfer delay from their account to yours. This will save unpleasant arguments later if the rent is late. If you're not comfortable with your tenant knowing your banking details, set up another account specifically for receiving rental income payments and paying your costs associated with the property. This may have the added benefit of simplifying things at tax time. Another alternative, which I think others have mentioned, is to use an escrow service like PayPal, but be aware that these kinds of services will usually charge a small percentage when you withdraw your funds. |
Why is company provided health insurance tax free, but individual health insurance is not? | The idea is that the premiums (or costs) associated with the plan are a business expense, you know that already. The distinction here is that employees don't pay premiums, they elect to contribute. The company sponsors a plan, the employees then choose to accept less salary in order to participate in the employer's plan. The idea is that you're foregoing income. Why is the employee not taxed on this cost? One major reason is that the employee has no say in, and often no idea, what the gross costs are (some find out if they ever receive COBRA election paperwork). There are more benefits than strict healthcare that are Section 125 eligible. The government has a vested interest in keeping the population healthy, and when the ERISA laws and Section 125 were written it was (and still is) a pretty low friction way to get health insurance out to more people. At this point, taking away the tax break from the employees would be a huge government take away from most of the population. Try to get a politician to take something away from taxpayers. Why doesn't the deduction exist in kind to people buying individual coverage? Ask your legislators. There are thousands of preferential tax treatment oddities, where some industry will get some sort of benefit or break. I'm not sure what leads you to think there needs to be some supremely logical reason for this oddity to exit. |
What does an x% inflation rate actually mean? | Inflation is a reflection on the expansion of the money supply, aka debt, being created by a central bank. Fiat currencies usually inflate, because there is no limit to the amount of debt that can be created. The consequences of reckless money supply expansion can be seen throughout history, see Zimbabwe, though there have been many others...Brazil, Argentinia, etc... |
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