Question stringlengths 14 166 | Answer stringlengths 3 17k |
|---|---|
Can dividends be exploited? | Yes, somebody could buy the shares, receive the dividend, and then sell the shares back. However, the price he would get when he sells the shares back is, ignoring other reasons for the price to change, exactly the amount he paid minus the dividend. |
Why are the banks and their customers in the United States still using checks? [duplicate] | Check use is declining here too, but it still has some practical advantages over electronic means: |
Why can't I short a stock that sells for less than $5? Is there another way to “go short” on them? | If this is the initial transaction, the rules of a short margin account say that if you shorted 1000 share of ABC at $5/share your credit balance would be $5000 from the short plus you would have to put up yourself $5000 cash or $10,000 of marginal securities. So this is not really leveraging using margin. You have to put in just as much as the short generates. Is that what this relates to? Once the initial purchase has been made the minimum maintenance for a stock trading under $5 per share is 100% of the short market value in the margin account or $2.50 per share whichever is greater. For stock trading at $5/share or greater the minimum maintenance requirement is $5/share or 30% of the short market value, whichever is greater. The minimum maintenance requirements can be tighter. |
What is today's price of 15 000 Euro given 15 years ago? | With no written agreement in place, the "right" rate is whatever both parties can agree to. I could argue that I could have invested the money in S&P 500 index funds and made about 9% annually over the last 15 years and the 15,000 would have been over 40,000. The "fair" rate would be whatever rate of return could have been expected from whatever your father would have done with the money otherwise - keep it in a bank account, pay off debt, invest in the market, start a business, whatever. Your father has the benefit of hindsight to know what would have been a good use of the funds over 15 years. Using the rate of inflation results in effectively a zero-percent loan in real interest terms (meaning no profit was made, just accounting for the time value of money). Both parties need to either decide on an amount or equivalent rate, or decide if squeezing the other for a few thousand Euros is worth the strife. |
Is house swapping possible? | Another possibility that you might consider is to find a renter for your current place and move to your destination. If you have a lease for your renter, your mortgage company can consider that as income for approving the purchase of a new house. I did something similar when I purchased my current home, but I was also able to get approved without selling or renting the old place. There's no reason that someone couldn't create a house swapping site for longer-term than a week. It may not initially have as much demand as a 1 week swap, but there are no such existing services that I am aware of. |
What emergencies could justify a highly liquid emergency fund? | Weather events and aging infrastructure. Cash will buy gasoline, food and water when there is no power or telephone connectivity to process ATMs and credit cards. |
Are Index Funds really as good as “experts” claim? | I actually love this question, and have hashed this out with a friend of mine where my premise was that at some volume of money it must be advantageous to simply track the index yourself. There some obvious touch-points: Most people don't have anywhere near the volume of money required for even a $5 commission outweigh the large index fund expense ratios. There are logistical issues that are massively reduced by holding a fund when it comes to winding down your investment(s) as you get near retirement age. Index funds are not touted as categorically "the best" investment, they are being touted as the best place for the average person to invest. There is still a management component to an index like the S&P500. The index doesn't simply buy a share of Apple and watch it over time. The S&P 500 isn't simply a single share of each of the 500 larges US companies it's market cap weighted with frequent rebalancing and constituent changes. VOO makes a lot of trades every day to track the S&P index, "passive index investing" is almost an oxymoron. The most obvious part of this is that if index funds were "the best" way to invest money Berkshire Hathaway would be 100% invested in VOO. The argument for "passive index investing" is simplified for public consumption. The reality is that over time large actively managed funds have under-performed the large index funds net of fees. In part, the thrust of the advice is that the average person is, or should be, more concerned with their own endeavors than they are managing their savings. Investment professionals generally want to avoid "How come I my money only returned 4% when the market index returned 7%? If you track the index, you won't do worse than the index; this helps people sleep better at night. In my opinion the dirty little secret of index funds is that they are able to charge so much less because they spend $0 making investment decisions and $0 on researching the quality of the securities they hold. They simply track an index; XYZ company is 0.07% of the index, then the fund carries 0.07% of XYZ even if the manager thinks something shady is going on there. The argument for a majority of your funds residing in Mutual Funds/ETFs is simple, When you're of retirement age do you really want to make decisions like should I sell a share of Amazon or a share of Exxon? Wouldn't you rather just sell 2 units of SRQ Index fund and completely maintain your investment diversification and not pay commission? For this simplicity you give up three basis points? It seems pretty reasonable to me. |
Why is property investment good if properties de-valuate over time? | Some of the other answers mention this, but I want to highlight it with a personal anecdote. I have a property in a mid-sized college town in the US. Its current worth about what we paid for it 9 years ago. But I don't care at all because I will likely never sell it. That house is worth about $110,000 but rents for $1500 per month. It is a good investment. If you take rental income and the increase in equity from paying down the mortgage (subtracting maintenance) the return on the down payment is very good. I haven't mentioned the paper losses involved in depreciation as that's fairly US specific: the laws are different in other jurisdictions but for at least the first two years we showed losses while making money. So there are tax advantages as well (at least currently, those laws also change over time). There is a large difference between investing in a property for appreciation and investing for income. Even in those categories there are niches that can vary widely: commercial vs residential, trendy, vacation/tourist areas, etc. Each has their place, but ensure that you don't confuse a truism meant for one type of real estate investing as being applicable to real estate investing in general. |
What is a good price to “Roll” a Covered Call? | An expiration 2 years out will have Sqr(2) (yes the square root of 2!) times the premium of the 1 year expiration. So if the option a year out sell for $1.00, two is only $1.41. And if the stock trades for $10, but the strike is $12, why aren't you just waiting for expiration to write the next one? |
Do I even need credit cards? | You don't need a credit card anymore than you need a TV or a car. There might be many circumstances where a credit card is a convenience, there might be things you give up because you don't have a credit card. There are even some upsides to a well managed card account. But no, you don't need it. |
Safe method of paying for a Gym Membership? | Shady isn't quite the right word. They know that most of their customers are going to quit soon after they begin -- as in "before the end of January" -- so they lock you in while you're motivated. And of course they're going to make it difficult for you to quit. No choice but to read their contract, understand it completely, follow their rules, and meet their deadlines. There's lots of freedom for them and lots of restrictions for you. It's like this if you're not the one writing up the contract. However ... do you have a YMCA around? Our YMCA has an initiation fee, but beyond that it's month to month. Most flexible gym membership I've heard of. If you lapse for too long they'll make you pay another initiation fee to rejoin, but there's no penalty for canceling. Not all Y's are like that, but check around to see. |
Friend was brainwashed by MLM-/ponzi investment scam. What can I do? | Your friend is investing time & money in a business that does not list an address or phone number on its website, not even in its 'press kit'. Even when they make a press release about moving into a new building, it does not list the address or even the street! C'mon, this is obviously a scam. No real business acts like this. |
Is an interest-only mortgage a bad idea? | Normally interest only mortgages are taken incase one planning to sell off the property after a few years and purchase of the property is for investment. In such a case instead of burdening oneself with a huge EMI, one opts for an interest only mortgage, and towards the end of the term, sell off the house at profit and repay back the entire principal. I am not to sure if interest only mortgages are encouraged for properties you plan to live in. Although I do not know about the ING scheme, normally there is no prepayment option on interest only mortgages, its Bank way of earning a fixed income for the contracted period and thats the reason why the interest rates are lower than a regular mortgage. If you do the math, you may be paying more in total interest than on a regular mortgage. |
Why do people take out life insurance on their children? Should I take out a policy on my child? | Adam Davis's answer is pretty good. However, I think he misses something with regard to the costs of a funeral. According to funeralplanning101.com, a traditional funeral can cost upwards of $15,000. Having just planned and paid for a funeral for an adult, I can assure you that this figure is low. I've heard "$10,000 - $30,000", and that seems a reasonable ball-park given my experience. Additionally, grief affects people differently. If your child died, would you be able to continue work afterwards? Most people can, but some people have to take extended leave (generally with no income) because of the emotional impact. Combined, these expenses can easily outstrip the savings for an average family. Almost by definition, insurance is not cost-effective; insurance companies profit by selling it to you, after all. But you may decide that it is appropriate to mitigate your risk by buying insurance. I do not have children and would likely not choose to insure them if I did. Nevertheless, other people may reasonably choose differently. |
May I Invest as a non accredited investor? | Does me holding stock in the company make me an accredited investor with this company in particular? No. But maybe the site will let you trade it your shares to another accredited investor. Just ask, if the site operators have a securities lawyer they should be able to accomodate |
How can you correlate a company stock's performance with overall market performance? | Generally, if you are trend trading, and if the market as a hole is going up strongly and an individual stock is falling sharply on the same day, I would tend to stay away from buying that stock at the moment. The market is showing strength whilst at the same time the stock is showing weakness. The general rule of thumb for trend trading is to buy rising stocks in a rising market. Or you could look to short sell falling stocks in a falling market. |
Is there such thing as a Checking account requiring pre-approval / white-list? | I don't believe there is such a process. My observation (i.e. my opinion) is that banks will have a level of security walls appropriate to the cost vs risk they experience. Since as Frazell says, your liability is limited for this type of fraud, you personally bear little if any risk. If this fraud were common enough that the cost of your proposal outweighed the expense, they would implement it. On a similar note. Credit card fraud can be reduced ten fold if a PIN were required for all purchases. The 3 digits on the back helps prove the card is there, and you just didn't steal the from 16 digits, but a 6-8 digit PIN required at point of sale would be tough for the thief to guess. How much software to do this would cost, I don't know, but the idea is brilliant, even if it's mine. 10 fold reduction, if not 100 fold. (Any bank guys reading?) |
How do used vehicle exchange programs at car dealerships work? | Yikes! Not always is this the case... For example, you purchased a new car with an interest rate of 5-6%or even higher... Why pay that much interest throughout the loan. Sometimes trading in the vehicle at a lower rate will get you a lower or sometimes the same payment even with an upgraded (newer/safer technology) design. The trade off? When going from New to New, the car may depreciate faster than what you would save from the interest savings on a new loan. Sometimes the tactics used to get you back to the dealership could be a little harsh, but if you do your research long before you inquire, you may come out on the winning end. Look at what you're paying in interest and consider it a "re-finance" of your car but taking advantage of the manufacturer's low apr special to off-set the costs. |
Why not pay in full upfront for a car? | There many car loans at zero percent interest. Finance the car at zero percent, then take your money and invest it. If you want to be super safe buy a CD the same length as the car loan. 5 years you will get 2%. If you still want safety and a better return take up a asset allocation strategy that moves your cash to risky assets when the market is performing well, then to cash, bonds, or cds when the market under-performs. Now you have your car with a zero percent loan and you are making the return on the money instead of the car company. |
Does U.S. tax code call for small business owners to count business purchases as personal income? | I am going to keep things very simple and explain the common-sense reason why the accountant is right: Also, my sister in law owns a small restaurant, where they claim their accountant informed them of the same thing, where a portion of their business purchases had to be counted as taxable personal income. In this case, they said their actual income for the year (through their paychecks) was around 40-50K, but because of this detail, their taxable income came out to be around 180K, causing them to owe a huge amount of tax (30K ish). Consider them and a similarly situated couple that didn't make these purchases. Your sister in law is better off in that she has the benefit of these purchases (increasing the value of her business and her expected future income), but she's worse off because she got less pay. Presumably, she thought this was a fair trade, otherwise she wouldn't have made those purchases. So why should she pay any less in taxes? There's no reason making fair trades should reduce anyone's tax burden. Now, as the items she purchased lose value, that will be a business loss called "depreciation". That will be deductible. But the purchases themselves are not, and the income that generated the money to make those purchases is taxable. Generally speaking, business gains are taxable, regardless of what you do with the money (whether you pay yourself, invest it, leave it in the business, or whatever). Generally speaking, only business losses or expenses are deductible. A purchase is an even exchange of income for valuable property -- even exchanges are not deductions because the gain of the thing purchased already fairly compensates you for the cost. You don't specify the exact tax status of the business, but there are really only two types of possibilities. It can be separately taxed as a corporation or it can be treated essentially as if it didn't exist. In the former case, corporate income tax would be due on the revenue that was used to pay for the purchases. There would be no personal income tax due. But it's very unlikely this situation applies as it means all profits taken out of the business are taxed twice and so small businesses are rarely organized this way. In the latter case, which is almost certainly the one that applies, business income is treated as self-employment income. In this case, the income that paid for the purchases is taxable, self-employment income. Since a purchase is not a deductible expense, there is no deduction to offset this income. So, again, the key points are: How much she paid herself doesn't matter. Business income is taxable regardless of what you do with it. When a business pays an expense, it has a loss that is deductible against profits. But when a business makes a purchase, it has neither a gain nor a loss. If a restaurant buys a new stove, it trades some money for a stove, presumably a fair trade. It has had no profit and no loss, so this transaction has no immediate effect on the taxes. (There are some exceptions, but presumably the accountant determined that those don't apply.) When the property of a business loses value, that is usually a deductible loss. So over time, a newly-purchased stove will lose value. That is a loss that is deductible. The important thing to understand is that as far as the IRS is concerned, whether you pay yourself the money or not doesn't matter, business income is taxable and only business losses or expenses are deductible. Investments or purchases of capital assets are neither losses nor expenses. There are ways you can opt to have the business taxed separately so only what you pay yourself shows up on your personal taxes. But unless the business is losing money or needs to hold large profits against future expenses, this is generally a worse deal because money you take out of the business is taxed twice -- once as business income and again as personal income. Update: Does the business eventually, over the course of the depreciation schedule, end up getting all of the original $2,000 tax burden back? Possibly. Ultimately, the entire cost of the item is deductible. That won't necessarily translate into getting the taxes back. But that's really not the right way to think about it. The tax burden was on the income earned. Upon immediate replacement, hypothetically with the exact same model, same cost, same 'value', isn't it correct that the "value" of the business only went up by the amount the original item had depreciated? Yes. If you dispose of or sell a capital asset, you will have a gain or loss based on the difference between your remaining basis in the asset and whatever you got for the asset. Wouldn't the tax burden then only be $400? Approximately, yes. The disposal of the original asset would cause a loss of the difference between your remaining basis in the asset and what you got for it (which might be zero). The new asset would then begin depreciating. You are making things a bit more difficult to understand though by focusing on the amount of taxes due rather than the amount of taxable gain or loss you have. They don't always correlate directly (because tax rates can vary). |
Closing a futures position | Futures exchanges are essentially auction houses facilitating a two-way auction. While they provide a venue for buyers and sellers to come together and transact (be that a physical venue such as a pit at the CME or an electronic network such as Globex), they don't actively seek out or find buyers and sellers to pair them together. The exchanges enable this process through an order book. As a futures trader you may submit one of two types of order to an exchange: Market Order - this is sent to the exchange and is filled immediately by being paired with a limit order. Limit Order - this is placed on the books of the exchange at the price you specify. If other participants enter opposing market orders at this price, then their market order will be paired with your limit order. In your example, trader B wishes to close his long position. To do this he may enter a market sell order, which will immediately close his position at the lowest possible buy limit price, or he may enter a limit sell order, specifying the price at or above which he is willing to sell. In the case of the limit order, he will only sell and successfully close his position if his order becomes the lowest sell order on the book. All this may be a lot easier to understand by looking at a visual image of an order book such as the one given in the explanation that I have published here: Stop Orders for Futures Finally, not that as far as the exchange is concerned, there is no difference between an order to open and an order to close a position. They're all just 'buy' or 'sell' orders. Whether they cause you to reduce/exit a position or increase/establish a position is relative to the position you currently hold; if you're flat a buy order establishes a new position, if you're short it closes your position and leaves you flat. |
Is there such a thing as a deposit-only bank account? | I would suggest opening a bank account that you use to accept deposits only, and then get a system set up where it automatically transfers the money over to your main account. If not instantly it could transfer the money hourly or daily. Of course you would have to pay a premium for this "peace of mind" ;) |
How much lump sum investment in stocks would be needed to yield a target stable monthly income? | If your requirements are hard (must have $1000/month, must have the same or bigger in capital at the end), stocks are a poor choice of investment. However, in many cases, people are willing to tolerate some level of risk to achieve the expected returns. You also do not mention inflation, which can take quite a lot out of your portfolio over the course of ten years. If we make some simplifying assumptions, you want to generate $12,000 a year. You can realistically expect the (whole) stock market, long term (i.e. over time periods substantially longer than 10 years), to return approximately 4 - 5% after factoring in inflation. That means an investment of $240,000 - $300,000 (the math is simplified somewhat here). If you don't care about inflation, you can up the percentage rather somewhat. According to this article, the S&P 500 returned an average of 11.31% from 1928 through 2010 (not factoring in inflation), which would require an investment of approximately $106,100. But! This opens you up to substantial risk. The stock market may go down 30% this year! According to the above article, the S&P returned only 3.54% from 2001 to 2010. Long-term, it goes up, but your investment case is really unsuited to investing in an index to the entire stock market given your requirements. You may be better suited investing primarily in stable bonds, or perhaps a mix of bonds and stocks. Alternatively, you may want to consider even more stable investments such as treasury notes. Treasury notes are all but guaranteed, but with a lousy rate of return. Heck, you could consider a GIC (that may be Canada-only) or even a savings account. There's also the possibility of purchasing an annuity, though almost everyone will advise against such. Personally, I'd go for a mutual fund which invested approximately 70% bonds and the rest in stocks over such a time period. Something like ING Direct's Streetwise Balanced Income Portfolio, if you were in Canada. It substantially lowers your expected return but also lowers your risk. I can't honestly say what the expected return there is; at this point, it's returned 4% per year (before inflation), but has been around only since the beginning of 2008. And to be clear, this is absolutely not free of risk. |
Are precious metals/collectibles a viable emergency fund? | If it were me, I would convert it to cash and keep it in a liquid account. The assumption that silver will increase in value is misguided. From 1985 to 2002, it was flat. It's gone up and been far more volatile since then, and there has been significant declines which could eat at the stability of an emergency fund. Precious metals are speculation, not investing. They do not create wealth. Investing is typically considered too volatile for an emergency fund, more so keeping the money in metals. Making it more difficult to get to, like keeping it in a separate account might also fight against frivolous or accidental spending. Also there tends to be high transaction costs when liquidating metals. I found the best way is to use eBay. After some further comments and clarification here I suspect you are dealing with something else. Namely, the "white picket fence". Again, this is supposition, but perhaps she envisions the two of you married and hosting a dinner party using the passed down silver. This could be a strong emotional bond, and as such it could trump the logical arguments. Keeping it as an emergency fund: foolish. You helping her keep it because you are planning a life together: smart. |
That “write your own mortgage” thing; how to learn about it | If an entity or individual has full rights to the land and land improvements, they can hold, transfer, delegate, or dispose of them on their terms. The only exception may be eminent domain. If the sovereignty meets the public necessity or public purpose tests they can assume or change the rights to your property in exchange for compensation. As others have said writing your own mortgage falls under the category of seller financing. A seller can write a mortgage with the help of a loan servicing company. Some loan service companies report to credit agencies, to help with buyer refinancing at a later point. Other forms of seller financing: Leasing Land contracts mineral contracts and more... Additionally, the seller can finance the minority of the property, called a junior mortgage. For example, the Bank finances 79% of the value, the seller finances 11%, and the buyer's 10% down payment covers the rest. If the buyer defaults, the superior mortgage (bank's) has collection priority. More commonly, the seller can option for a wrap-around mortgage or an 'all-inclusive mortgage'. The seller holds or refinances the existing mortgage and provides a junior mortgage in exchange for a secured promissory note and an all-inclusive trust deed. If the buyer defaults, the seller has foreclosure rights. It is not uncommon for entities or people to use financing strategies other than the traditional mortgage if they are unable to exclude the gain on sale. Check out section 1031 exchanges. In almost all cases I would tell people not to make decisions based on tax consequences alone, if your financial objective/goal for seller financing sounds like a 1031 exchange, take exception and carefully consider the tax consequences. |
How can I decide whether do a masters even if I have go into debt after doing it? | Strictly from an ROI perspective, this is likely very dependent on your field. Some masters degrees (quant finance, business, engineering) will be well worth the debt, since a degree from the right university will yield a respectable ROI, whereas other degrees/fields (philosophy, fine arts, etc) will be basically a waste of money. Regardless of the field you can input your information into an ROI calculator and see what you get. I typically err on the side of using the lowest average reported salary for the degree programs you're considering (self reported salary data is notoriously inflated). |
Who can truly afford luxury cars? | A while back I sold cars for a living. Over the course of 4 years I worked for 3 different dealerships. I sold new cars at 2 and used at the last one. When selling new cars I found that the majority of people buying the higher end cars honestly shouldn't have been - 80%+. They almost always came in owing more on their trades then they were worth, put down very little cash and were close to being financially strapped. From a financial perspective these deals were hard to close, not because the buyer was picky but rather because their finances were a mess. Fully half, and probably more, we had to switch from the car they initially wanted down to a much cheaper version or try to convert to a lease because it was the only way the bank would loan the money. We called them "$30,000 millionaires" because they didn't make a whole lot but tried to look like they did. As a salesman you knew you were in serious trouble when they didn't even try to negotiate. Around 2% of the deals I did were actual cash deals - meaning honest cash, not those who came in with a pre-approved loan from a bank. These were invariably for used cars about 3 to 4 years old and they never had a trade in. The people doing this always looked comfortable but never dressed up, you wouldn't even look at them twice. The negotiations were hard because they knew exactly how much that car should go for and wouldn't even pay that. It was obvious they knew the value of money. That said, I've been in the top 3% of wage earners for about 20 years and at no point have I considered myself in a position to "afford" a new "luxury" car. IMHO, there are far more important things you can do with that kind of money. |
What are the risks of Dividend-yielding stocks? | Having a good dividend yield doesn't guarantee that a stock is safe. In the future, the company may run into financial trouble, stop paying dividends, or even go bankrupt. For this reason, you should never buy a stock just because it has a high dividend yield. You also need some criteria to determine whether that stock is safe to buy. Personally, I consider a stock is reasonably safe if it meets the following criteria: |
What purchases, not counting real estate, will help me increase my cash flow? | You can increase your monthly cash flow in two ways: It's really that simple. I'd even argue that to a certain extent, decreasing expenses can be more cash-positive than increasing income by the same amount if you're spending post-tax money because increasing income generally increases your taxes. So if you have a chunk of cash and you want to increase your cash flow, you could decrease debt (like Chris suggested) and it would have the same effect on your monthly cash flow. Or you could invest in something that pays a dividend or pays interest. There are many options other than real estate, including dividend-paying stocks or funds, CDs, bonds, etc. To get started you could open an account with any of the major brokerage firms and get suggestions from their financial professionals, usually for free. They'll help you look at the risk/reward aspects of various investments. |
What should I be aware of as a young investor? | I'm 39 and have been investing since my very early 20's, and the advice I'd like to go back and give myself is the following: 1) Time is your friend. Compounding interest is a powerful force and is probably the most important factor to how much money you are going to wind up with in the end. Save as much as you possibly can as early as you can. You have to run twice as hard to catch up if you start late, and you will still probably wind up with less in the end for the extra effort. 2) Don't invest 100% of your investment money It always bugged me to let my cash sit idle in an investment account because the niggling notion of inflation eating up my money and I felt I was wasting opportunity cost by not being fully invested in something. However, not having enough investable cash around to buy into the fire-sale dips in the market made me miss out on opportunities. 3) Diversify The dot.com bubble taught me this in a big, hairy painful way. I had this idea that as a technologist I really understood the tech bubble and fearlessly over-invested in Tech stocks. I just knew that I was on top of things as an "industry insider" and would know when to jump. Yeah. That didn't work out so well. I lost more than 6 figures, at least on paper. Diversification will attenuate the ups and downs somewhat and make the market a lot less scary in the long run. 4) Mind your expenses It took me years of paying huge full-service broker fees to realize that those clowns don't seem to do any better than anyone else at picking stocks. Even when they do, the transaction costs are a lead weight on your returns. The same holds true for mutual funds/ETFs. Shop for low expense ratios aggressively. It is really hard for a fund manager to consistently beat the indexes especially when you burden the returns with expense ratios that skim an extra 1% or so off the top. The expense ratio/broker fees are among the very few things that you can predict reliably when it comes to investments, take advantage of this knowledge. 5) Have an exit strategy for every investment People are emotional creatures. It is hard to be logical when you have skin in the game and most people aren't disciplined enough to just admit when they have a loser and bail out while they are in the red or conversely admit when they have a winner and take profits before the party is over. It helps to counteract this instinct to have an exit strategy for each investment you buy. That is, you will get out if it drops by x% or grows by y%. In fact, it is probably a good idea to just enter those sell limit orders right after you buy the investment so you don't have to convince yourself to press the eject button in the heat of a big move in the price of that investment. Don't try to predict tops or bottoms. They are extremely hard to guess and things often turn so fast that you can't act on them in time anyway. Get out of an investment when it has met your goal or is going to far in the wrong direction. If you find yourself saying "It has to come back eventually", slap yourself. When you are trying to decide whether to stay in the investment or bail, the most important question is "If I had the current cash value of the stock instead of shares, would I buy it today?" because essentially that is what you are doing when you stick with an investment. 6) Don't invest in fads When you are investing you become acutely sensitive to everyone's opinions on what investment is hot and what is not. If everyone is talking about a particular investment, avoid it. The more enthusiastic people are about it (even experts) the MORE you should avoid it. When everyone starts forming investment clubs at work and the stock market seems to be the preferred topic of conversation at every party you go to. Get out! I'm a big fan of contrarian investing. Take profits when it feels like all the momentum is going into the market, and buy in when everyone seems to be running for the doors. |
To sell or to rent the house? | So either scenario has about $10K upfront costs (either realtor/selling expenses or fixing up for rental). Furthermore, I'm sure that the buyers would want you to fix all these things anyway, or reduce the price accordingly, but let's ignore this. Let's also ignore the remaining mortgage, since it looks like you can comfortably pay it off. Assuming 10% property management and 10% average vacancy (check your market), and rental price at $1000 - you end up with these numbers: I took very conservative estimates both on the rent (lower than you expect) and the maintenance expense (although on average over the years ,since you need to have some reserves, this is probably quite reasonable). You end up with 2.7% ROI, which is not a lot for a rental. The rule of thumb your wife mentioned (1% of cash equity) is indeed usually for ROI of leveraged rental purchase. However, if rental prices in your area are rising, as it sounds like they are, you may end up there quite soon anyway. The downside is that the money is locked in. If you're confident in your ability to rent and are not loosing the tax benefit of selling since it sounds like you've not appreciated, you may take out some cash through a cash-out refi. To keep cash-flow near-0, you need to cash out so that the payments would be at or less than the $3200/year (i.e.: $266/month). That would make about $50K at 30/yr fixed 5% loan. What's best is up to you to decide, of course. Check whether "you can always sell" holds for you. I.e.: how stable is the market, what happens if one or two large employers disappear, etc. |
Types of investments with built-in puts or similar safety features | Many mutual funds include such mechanisms. However, the higher fees for those funds (when compared to simple index funds) may cancel out any improvement the hedging strategy offers. |
ACH processing time of day | Each bank is different, so your question needs to be more specific. For instance, I believe Paypal and Chase settles at 7pm EST on business days. Bank of America at 5PM. |
Should I buy a house or am I making silly assumptions that I can afford it? | The rules of thumb are there for a reason. In this case, they reflect good banking and common sense by the buyer. When we bought our house 15 years ago it cost 2.5 times our salary and we put 20% down, putting the mortgage at exactly 2X our income. My wife thought we were stretching ourselves, getting too big a house compared to our income. You are proposing buying a house valued at 7X your income. Granted, rates have dropped in these 15 years, so pushing 3X may be okay, the 26% rule still needs to be followed. You are proposing to put nearly 75% of your income to the mortgage? Right? The regular payment plus the 25K/yr saved to pay that interest free loan? Wow. You are over reaching by double, unless the rental market is so tight that you can actually rent two rooms out to cover over half the mortgage. Consider talking to a friendly local banker, he (or she) will likely give you the same advice we are. These ratios don't change too much by country, interest rate and mortgages aren't that different. I wish you well, welcome to SE. |
Calculating Future and Present value into mortgage comparisons | Keep in mind the number of months or years before you break even. You pay money to lower the interest rate, and lower the monthly cost. But it takes a number of months, using your numbers $7,000 to save $160 a month will take ~43 months. That is before figuring in the future or present value. If you sell or refinance the mortgage, the initial points to lower the rate is gone. |
How much is inflation? | To add to MrChrister's answer: Canada also has a Consumer Price Index (CPI) used to measure inflation that is distinct and separate from that maintained by the United States. There are differences in inflation between the U.S. and Canada because our currencies are different, and there may be different items in the "basket" of goods that constitutes the index. You can find current information on the Canadian CPI at Statistics Canada, here: Latest release from the Consumer Price Index. Also, the Bank of Canada – our central bank – maintains a free online Inflation Calculator. The BoC's inflation calculator is handy because you can enter a dollar amount for a past date and it will figure out what that would be in today's dollars. For instance, $100 in 1970 dollars had the same purchasing power (under the CPI) as $561.76 in 2009 dollars! And you're right – if you get a salary increase that is less than the rate of inflation, then in theory you have lost purchasing power. So, anybody really looking for a raise ought to make an effort to get more than the increase in CPI. Of course, some employers are counting on you not knowing that, because any increase that's less than CPI is effectively a salary decrease; which could mean more profit for them, if they are able to increase their prices / revenues at inflation or better. Finally, consider that salary & wage increases also contribute to inflation! Perhaps you've heard of the wage/price inflation spiral. If you haven't, there's more on that here and here. |
Cheapest way to “wire” money in an Australian bank account to a person in England, while I'm in Laos? | I've used OFX quite a lot for international transfers. They are much faster than a normal international transfer from your bank. Instead it ends up being a local transfer on either end which just works a heck of a lot quicker. They also claim lower exchange rates. In the past we have compared and sometimes found them lower and sometimes found them a little higher. Their fees certainly are lower though. Only thing is I think there was a lag setting up the account initially (they need to contact you by phone), so if you're in a hurry this may be problematic. And yes, you will need internet banking to do this. Since the question is specifically about how to do this in the cheapest way possible, I think the answer is to use internet banking. |
Super-generic mutual fund type | Since you already have twice your target in that emergency fund, putting that overage to work is a good idea. The impression that I get is that you'd still like to stay on the safe side. What you're looking for is a Balanced Fund. In a balanced fund the managers invest in both stocks and bonds (and cash). Since you have that diversification between those two asset classes, their returns tend to be much less volatile than other funds. Also, because of their intended audience and the traditions from that class of funds' long history, they tend to invest somewhat more conservatively in both asset classes. There are two general types of balanced funds: Conservative Allocation funds and Moderate Allocation funds. Conservative allocation funds invest in more fixed income than equity (the classic mix is 60% bonds, 40% stocks). Moderate allocation funds invest in more equity than fixed income (classic mix: 40% bonds, 60% stocks). A good pair of funds that are similar but exemplify the difference between conservative allocation and moderate allocation are Vanguard's Wellesley Income Fund (VWINX) for the former and Vanguard's Wellington Fund (VWELX) for the latter. (Disclaimer: though both funds are broadly considered excellent, this is not a recommendation.) Good luck sorting this out! |
What could be the harm in sharing my American Express statements online? | If someone gains access to these data, he could use social engineering approach to impersonate you - i.e. call the American Express and ask tell he he is you and he lost the access to the account and he needs the access to be reset and sent to certain email, and if they doubt it's you he would send them the statement data, even on company letterhead (which he would be able to fake since he has the data from the statements, and AE has no idea how the authentic letterhead looks like). He could also do the opposite trick - like calling your assistant or even yourself and saying something like "I'm from American Express, calling about the transaction at this-and-this date and this-and-this time, this amount, please confirm you are {your name} and your address is {your address}, I need to confirm something" - which would make it appear as he is really from AE since he knows all these details - and then ask you some detail he's missing "for security" - like your birth date or last digits of SSID or anything like that - and then use these details to impersonate you to AE. So putting all this info together where it can be accessed by strangers does have risks. It may not work out if both you and AE personnel are vigilant and follow instructions to the letter, but we know it not always so. |
How to prevent myself from buying things I don't want | To me, your question emphasizes something I've heard many times before: personal finance is as much or more about behavior than it is about mathematics or "head knowledge". Sure, you know you shouldn't be wasting a lot of money on something you will use very infrequently, but how do you make this behavior stick? Here are a few tricks that might help: The other aspects of your question really touch more on psychology than finance. But getting yourself into a discipline habit with money will help. And realizing the full cash price of items in relation to how much your disposable income is will help you get control of your impulses, as you review your budget monthly, and keep limit yourself using the envelope system. But honestly, everybody wants stuff they don't have, it's human nature. The key is finding ways to put physical limits and guards on yourself to keep you from obeying the self-destructive impulses. |
For very high-net worth individuals, does it make sense to not have insurance? | The point about insurance is solidarity. Think about this: In London a few hundred years ago people first started insuring their houses against fire. There were several insurance companies, and if you used one you got a marker on your house. So if your house caught fire they would come and check, and they would put the fire out only if it had their marker on it. Now, in most places these days the fire brigade will always come and always put your fire out. We expect this, and we are happy to pay for this service by taxation, and we do not fret about wasted money if we pay it for decades without ever having a fire. We also do not complain if the neighbour's house burns, and they get the full fire service which we have been paying for. Now all the fire brigade do is rescue you and put your fire out. Here in Germany every house owner is also obliged to have fire insurance, so if your house burns it can be repaired or rebuilt. Everyone pays insurance premiums, and I never heard anyone complain if they paid for 50 years and never claimed anything. If you need a new house the payout is huge. But the premiums are low. This only works if everyone is insured. This can only work if we all accept the concept of solidarity. It is easy to say, I don't smoke so I don't need to insure against fire, or, I live a healthy life so I don't need to insure against cancer. But lightning does not check your CV before it strikes. It hits you or your fellow man, and how can you justify not helping your neighbour? Insurance can only work if we all take part. |
Is losing money in my 401K normal? | My two cents: I am a pension actuary and see the performance of funds on a daily basis. Is it normal to see down years? Yes, absolutely. It's a function of the directional bias of how the portfolio is invested. In the case of a 401(k) that almost always mean a positive directional bias (being long). Now, in your case I see two issues: The amount of drawdown over one year. It is atypical to have a 14% loss in a little over a year. Given the market conditions, this means that you nearly experienced the entire drawdown of the SP500 (which your portfolio is highly correlated to) and you have no protection from the downside. The use of so-called "target-date funds". Their very implication makes no sense. Essentially, they try to generate a particular return over the elapsed time until retirement. The issue is that the market is by all statistical accounts random with positive drift (it can be expected to move up in the long term). This positive drift is due to the fact that people should be paid to take on risk. So if you need the money 20 years from now, what's the big deal? Well, the issue is that no one, and I repeat, no one, knows when the market will experience long down moves. So you happily experience positive drift for 20 years and your money grows to a decent size. Then, right before you retire, the market shaves 20%+ of your investments. Will you recoup these damages? Most likely yes. But will that be in the timeframe you need? The market doesn't care if you need money or not. So, here is my advice if you are comfortable taking control of your money. See if you can roll your money into an IRA (some 401(k) plans will permit this) or, if you contribute less that the 401(k) contribution limit you make want to just contribute to an IRA (be mindful of the annual limits). In this case, you can set up a self-directed account. Here you will have the flexibility to diversify and take action as necessary. And by diversify, I don't mean that "buy lots of different stuff" garbage, I mean focus on uncorrelated assets. You can get by on a handful of ETFs (SPY, TLT, QQQ, ect.). These all have liquid options available. Once you build a base, you can lower basis by writing covered calls against these positions. This is allowed in almost all IRA accounts. In my opinion, and I see this far too often, your potential and drive to take control of your assets is far superior than the so called "professionals or advisors". They will 99% of the time stick you in a target date fund and hope that they make their basis points on your money and retire before you do. Not saying everyone is unethical, but its hard to care about your money more than you will. |
Valuing a company and comparing to share price | There are books on the subject of valuing stocks. P/E ratio has nothing directly to do with the value of a company. It may be an indication that the stock is undervalued or overvalued, but does not indicate the value itself. The direct value of company is what it would fetch if it was liquidated. For example, if you bought a dry cleaner and sold all of the equipment and receivables, how much would you get? To value a living company, you can treat it like a bond. For example, assume the company generates $1 million in profit every year and has a liquidation value of $2 million. Given the risk profile of the business, let's say we would like to make 8% on average per year, then the value of the business is approximately $1/0.08 + $2 = $14.5 million to us. To someone who expects to make more or less the value might be different. If the company has growth potential, you can adjust this figure by estimating the estimated income at different percentage chances of growth and decline, a growth curve so to speak. The value is then the net area under this curve. Of course, if you do this for NYSE and most NASDAQ stocks you will find that they have a capitalization way over these amounts. That is because they are being used as a store of wealth. People are buying the stocks just as a way to store money, not necessarily make a profit. It's kind of like buying land. Even though the land may never give you a penny of profit, you know you can always sell it and get your money back. Because of this, it is difficult to value high-profile equities. You are dealing with human psychology, not pennies and dollars. |
How hard for US customers make payments to non-resident freelancer by wire transfer? | I would look for an alternative wire transfer service that will charge less. I use ofx, but note that they don't do transfers to roubles. The rate adjusts by amount being transferred and there is a $15 fee for under $5000. Upside is it is bank-to-bank. 2 days tops. |
What are the tax implications of exercising options early? | The difference is whether your options qualify as incentive stock options (ISOs), or whether they are non-qualifying options. If your options meet all of the criteria for being ISOs (see here), then (a) you are not taxed when you exercise the options. You treat the sale of the underlying stock as a long term capital gain, with the basis being the exercise price (S). There is something about the alternative minimum tax (AMT) as they pertain to these kinds of options. Calculating your AMT basically means that your ISOs are treated as non-qualifying options. So if your exercise bumps you into AMT territory, too bad, so sad. If you exercise earlier, you do get a clock ticking, as you put it, because one of the caveats of having your options qualify as ISOs is that you hold the underlying stock (a) at least two years after you were granted the options and (b) at least one year after you exercise the options. |
Can There Be Partial Trade Fill Percentage? | I place a trade, a limit order on a thinly traded stock. I want to buy 1000 shares at $10. The current price is $10.50. Someone places a market order for 500 shares. Another trader has a limit order for $10.10 for 400 shares. His order fills, and I get 100 at my price. I wait another day to see if I get any more shares. This is just an example of how it can work. I can place my order as "all or none" if I wish to avoid this. |
If a stock doesn't pay dividends, then why is the stock worth anything? | If so, then if company A never pays dividends to its shareholders, then what is the point of owning company A's stock? The stock itself can go up in price. This is not necessarily pure speculation either, the company could just reinvest the profits and grow. Since you own part of a company, your share would also increase in value. The company could also decide to start paying dividend. I think one rule of thumb is that growing companies won't pay out, since they reinvest all profit to grow even more, but very large companies like McDonalds or Microsoft who don't really have much room left to grow will pay dividends more. Surely the right to one vote for company A's Board can't be that valuable. Actually, Google for instance neither pays dividend nor do you get to vote. Basically all you get for your money is partial ownership of the company. This still gives you the right to seize Google assets if you go bankrupt, if there's any asset left once the creditors are done (credit gets priority over equity). What is it that I'm missing? What you are missing is that the entire concept of the dividend is an illusion. There's little qualitative difference between a stock that pays dividend, and a stock that doesn't. If you were going to buy the stock, then hold it forever and collect dividend, you could get the same thing with a dividend-less stock by simply waiting for it to gain say 5% value, then sell 4.76% of your stock and call the cash your dividend. "But wait," you say, "that's not the same - my net worth has decreased!" Guess what, stocks that do pay dividend usually do drop in value right after the pay out, and they drop by about the relative value of the dividend as well. Likewise, you could take a stock that does pay dividend, and make it look exactly like a non-paying stock by simply taking every dividend you get and buying more of the same stock with it. So from this simplistic point of view, it is irrelevant whether the stock itself pays dividend or not. There is always the same decision of whether to cut the goose or let it lay a few more eggs that every shareholder has to make it. Paying a dividend is essentially providing a different default choice, but makes little difference with regards to your choices. There is however more to it than simple return on investment arithmetic: As I said, the alternative to paying dividend is reinvesting profits back into the enterprise. If the company decided to pay out dividend, that means they think all the best investing is done, and they don't really have a particularly good idea for what to do with the extra money. Conversely, not paying is like management telling the shareholders, "no we're not done, we're still building our business!". So it can be a way of judging whether the company is concentrating on generating profit or growing itself. Needless to say the, the market is wild and unpredictable and not everyone obeys such assumptions. Furthermore, as I said, you can effectively overrule the decision by increasing or decreasing your position, regardless of whether they have decided to pay dividend to begin with. Lastly, there may be some subtle differences with regards to things like how the income is taxed and so on. These don't really have much to do with the market itself, but the bureaucracy tacked onto the market. |
Should I use a bank or a credit union for my savings account? | In practical terms, these days, a credit union IS a small "savings and loan" bank -- the kind of bank that used to exist before bankers started making money on everything but writing loans. They aren't always going to offer higher interest and/or cheaper loans than the bank-banks, but they're almost always going to be more pleasant to deal with since they consider the depositors and borrowers their stockholders, not just customers. There are minor legal differences (different insurance fund, for example), and you aren't necessarily eligible to open an account at a randomly-chosen credit union (depending on how they've defined the community they're serving), but they will rarely affect you as an account holder. The main downside of credit unions is that, like other small local banks, they will only have a few branches, usually within a limited geographic area. However, I've been using a credit union 200 miles away (and across two state lines on that route, one if I take a large detour) for decades now, and I've found that between bank-by-mail, bank-by-internet, ATM machines, and the "branch exchange" program (which lets you use branches of participating credit unions as if they were branches of your own) I really haven't felt a need to get to the branch. I did find that, due to network limitations of $50K/CU/day, drawing $200,000 worth of bank checks on a single day (when I purchased the house) required running around to four separate branch-exchange credit unions. But that's a weird situation where I was having trouble beating the actual numbers out of the real estate agents until a few days before the sale. And they may have relaxed those limitations since... though if I had to do it again, I'd consider taking a scenic drive to hit an actual branch of my own credit union. If you have the opportunity to join a credit union, I recommend doing so. Even if you don't wind up using it for your "main" accounts, they're likely to be people you want to talk to when you're shopping for a loan. |
GnuCash and ledger/hledger | Answering my own question, I figured it out: yes, there is a way, with a tool called gnucash2ledger.py. Versions used: GnuCash 2.6.1, Ledger 2.6.2, hledger 0.22 |
What is the difference between a 'trader' and a 'stockbroker'? | Traders trade for a living, stockbrokers tell people to get involved in trades for a living. To be employed as a trader, you need a proven track record of being able to consistently make money. To be employed as a stockbroker, you need to get licensed but you don't need to prove you can consistently make money. |
Options for dummies. Can you explain how puts & calls work, simply? | So, child, your goal is to make money? This is usually achieved by selling goods (say, lemonade) at a price that exceeds their cost (say, sugar, water and, well, lemons). Options, at first, are very much same in that you can buy the right to engage in a specific future trade. You make money in this situation if the eventual returns from the scheduled trade cover the cost of purchasing the option. Otherwise you can simply opt out of the trade -- you purchased the right to trade, after all, not any type of obligation. Makes sense? Good. Because what follows is what makes options a little different. That is, if you sell that same right to engage in a specific trade the situation is seemingly reversed: you lock in your return at the outset, but the costs aren't fully realized until the trade is either consumed or declined by the owner of the option. And keep in mind that it is always the owner of the option who is in the driver's seat; they may sell the option, hold on to it and do nothing, or use it to engage in the anticipated trade. And that's really all there's to it. |
Why doesn’t every company and individual use tax-havens to pay less taxes? | There are tax free bonds in the United States. They are for things like public housing and other urban projects. They are tax free for everyone but only rich people buy them. Why? The issue is that the tax free nature of the bond is included in its yield. So rather than yielding say a 5% return, they figure that the owner is getting 20% off due to not paying taxes. As a result, they only give a 4% return but are as risky as a 5% return investment. Net result, only rich people invest in tax free bonds. "Rich" is defined here to mean people paying a 20% tax on long term investment returns. Or take the State and Local Tax (SALT) deduction, which has been in the news recently. Again, it is technically open to everyone. But there is also a standard deduction that is open to everyone. For the typical family, state and local taxes might be 5% of income. So for a family making $100k a year, that's $5k. The same family can take a $13k or so standard deduction instead of itemizing. So why would they take the smaller deduction? As a practical matter, two groups take the SALT deduction. People rich enough to pay more than $13k in state and local taxes and people who also take the mortgage interest deduction. So it helps a lot of people who are rich quite a bit. And it helps a few middle class people some. But if you are lower middle class with a $30k mortgage on a tiny house and paying 4% interest, then that's only $1200 a year. Add in property taxes of $3000 and SALT of $2.8k and that's only $7k. Even if the person gives $3k to charity, the $13k deduction is a lot better and requires less paperwork. Contrast that with someone who has $500k mortgage at 3.6% interest. That's $18k in interest alone. Add in a SALT of $7k and property taxes of $50k, and there's $75k of itemized deductions, much better than $13k. Now a $7k donation to charity is entirely deductible. And even after the mortgage interest deduction goes away, the other $64k remains. |
Calculating Pre-Money Valuation for Startup | Putting a dollar amount on the valuation of a start up business is an art form that often has very little at all to do with any real numbers and more to do with your "salesman" abilities when talking with the VC. That said, there are a few starting points: First is past sales, the cost of those sales and a (hopefully) realistic growth curve. However, you don't have that so this gets harder. Do you have any actual assets? Machinery, computers, desks, patents, etc. Things that you actually own. If so, then add those in. If this is a software start-up, "code" is an asset, but without sales it's incredibly hard to put a value on it. The best I've come up with is "How much would it cost for someone else to build it .. after they've seen yours". Yes, you may have spent 5,000 hours building something but could someone else duplicate it, or at least the major parts, in 200 hours after seeing a demo? Use the lower number. If I was you, I'd look hard at my business plan. Hopefully you were as honest as you can be when writing it (and that it is as researched as possible). What is it going to take to get that first sale? What do you actually need to get there? (hint: your logo on the side of a building is NOT a necessary expense. Nor is really nice office space.) Once you have that first sale, what is the second going to take? Can you extrapolate out to 3 years? How many key members are there? How much is their contribution worth? At what point will you be profitable? Next is to look at risks. You haven't done this before, that's huge - I'm assuming simply because you asked this question. Another is competitors - hopefully they already exist because opening a new market is incredibly hard and expensive; on the flip side, hopefully there aren't that many because entering a crowded market is equally hard and expensive. Note: each are possible, but take radically different approaches and sums of money - and $200k isn't going to cut it no matter what it is you are selling. That said, competition should be able to at least point you in the direction of a price point and estimate for how long sales take. If any are publicly traded then you have additional info to help you set a valuation. Are there any potential regulatory or legal issues? What happens if a key member leaves, dies or is otherwise no longer available? Insurance only helps so much if the one guy that knows everything literally gets run over. God help you if this person likes to go skydiving. I bring risks up because you will have to surmount them during this negotiation. For example, asking for $200k with zero hard assets, while trying to sell software to government agencies assuming a 3 week sales cycle will have you laughed at for naivety. Whereas asking for $10m in the same situation, with a team that has governmental sales experience would likely work. Another big question is exit strategy: do you intend to IPO or sell to a competitor or a business in a related category? If selling, do you have evidence that the target company actually buys others, and if so, how did those deals work out? What did they look for in order to buy? Exit strategy is HUGE to a VC and they will want to make several multiples of their money back in a relatively short amount of time. Can you realistically support that for how much you are asking for? If not then going through an Angel group would be better. They have similar questions, but very different expectations. The main thing is that no one knows what your business is worth because it is 100% unproven after 2 years and is therefore a huge financial risk. If the money you are asking for is to complete product development then that risk factor just went up radically as you aren't even talking about sales. If the money is purely for the sales channel, then it's likely not enough. However if you know what it's going to take to get that first sale and have at least an educated idea on how much it's going to cost to repeat that then you should have an idea for how much money you want. From there you need to decide how much of the business it is worth to you to give up in order to get that money and, voila, you have a "pre money valuation". The real trick will be to convince the VC that you are right (which takes research and a rock solid presentation) and negotiating from there. No matter what offer a small percentage of the business for the money you want and realize you'll likely give up much more than that. A few things you should know: usually by year 3 it's apparent if a start-up is going to work out or not. You're in year 2 with no sales. That doesn't look good unless you are building a physical product, have a competent team with hard experience doing this, have patents (at least filed), a proven test product, and (hopefully) have a few pre-orders and just need cash to deliver. Although in that situation, I'd probably tell you to ask your friends and family before talking to a VC. Even kickstarter.com would be better. $200k just isn't a lot of money and should be very easy to raise from Friends or Angels. If you can't then that speaks volumes to an institutional VC. A plus is having two or three people financially invested in the company; more than that is sometimes a problem while having only 1 is a red flag. If it's a web thing and you've been doing this for 2 years with zero sales and still need another $200k to complete it then I'd say you need to take a hard look at what you've built and take it to market right now. If you can't do that, then I'd say it might be time to abandon this idea and move on as you'll likely have to give up 80%+ to get that $200k and most VCs I've run into wouldn't bother at that level. Which begs the question: how did the conversation with the VC start? Did you approach them or did they approach you? If the latter, how did they even find out about you? Do they actually know anything about you or is this a fishing expedition? If the latter, then this is probably a complete waste of your time. The above is only a rough guide because at the end of the day something is only worth what someone else is willing to pay. $200k in cash is a tiny sum for most VCs, so without more information I have no clue why one would be interested in you. I put a number of hard questions and statements in here. I don't actually want you to answer me, those are for you to think about. Also, none of this shouldn't be taken as a discouragement, rather it should shock you into a realistic viewpoint and, hopefully, help you understand how others are going to see your baby. If the VC has done a bit of research and is actually interested in investing then they will bring up all the same things (and likely more) in order to convince you to give up a very large part of it. The question you have to ask yourself is: is it worth it? Sometimes it is, often it's not. |
I thought student loans didn't have interest, or at least very low interest? [UK] | From the description, you have a post-1998 income contingent loan. The interest rate on those is currently 1.5% but it has varied quite a bit in the last few years due to the formula used to calculate it, which is either the inflation rate (RPI), or 1% + the highest base rate across a group of banks - whichever is smaller. This is indeed really cheap credit compared to any commercial loan you could get, though whether you should indeed just repay the minimum depends on making a proper comparison with the return on any spare money you could get after tax elsewhere. There is a table of previous interest rates. From your description I think you've had the loan for about 4 years - your final year of uni, one year of working without repayments and then two years of repayments. A very rough estimate is that you would have been charged about £300 of interest over that period. So there's still an apparent mismatch, though since both you and I made rough calculations it may be that a more precise check resolves it. But the other thing is that you should check what the date on the statement is. Once you start repaying, statements are sent for a period ending 5th April of each year. So you may well not be seeing the effect of several months of repayments since April on the statement. Finally, there's apparently an online facility you can use to get an up to date balance, though the administration of the loans repaid via PAYE is notoriously inefficient so there may well be a significant lag between a payment being made and it being reflected in your balance, though the effect should still be backdated to when you actually made it. |
How can I determine which stores are regarded as supermarkets for a rewards credit card? | Looks like a user-contributed list is the only good solution to this question, so I'll start one by making this answer community wiki, meaning anyone can edit it. We only aim to add major chain, not every mom&pop store (which probably don't qualify). The rewards details page looks like this: The lists are in alphabetical order. |
How to calculate my real earnings from hourly temp-to-hire moving to salaried employee? | This arrangement is a scam to get around certain tax and benefits laws, both State and Federal. I know they can't get away with this with a person-as-contractor, but this "he's not a contractor, he's a business owner" may move it into a gray area. (I used to know this stuff cold, but I've been retired for a while.) The fact that they asked you to do this is at all is, IMNSHO, a Red Flag®. They think that this way they won't be paying 1/2 your FICA, your Workman's Comp, health insurance, overtime, sick leave or vacation time ... you will. A somewhat simplistic rule of thumb for setting contracting rates is to take your targeted annual salary as a full-time, full-benefits employee and double it. So $50,000 becomes $100,000 a year; $25/hour becomes $50/hour. You can tell them that driving to their workplace from your company's location is now a "site visit" and charge them your hourly rate for the one-way commute time. You could also tell them that your company charges 150% for hours worked over 40 hours/week, plus 150% on Saturdays and 200% on Sundays. Your company may also have a minimum 30 days notice of termination with a penalty kicker. Get it all in writing and signed by someone who has the authority to sign it. Also, Get A Lawyer. The most expensive contracts I've ever signed were ones I thought I was smart enough to draw up myself. |
Is it worth buying real estate just to safely invest money? | There are two parts to this. Firstly, if you are also living in the property you have bought, then you should not consider it to be an investment. You need it to provide shelter, and the market value is irrelevant unless/until you decide to move. Of course, if your move is forced at a time not of your choosing then if the market value has dropped, you might lose out. No-one can accurately predict the housing market any more than they can predict interest rates on normal savings accounts, the movement of the stock market, etc. Secondly, if you just have a lump sum and you want to invest it safely, the bank is one of the safest places to keep it. It is protected / underwritten by EU law (assuming you are in the EU) up to €100,000. See for example here which is about the UK and Brexit in particular but mentions the EU blanket protection. The other things you could do with it - buy property, gold, art works, stocks and shares, whatever thing you think will be least likely to lose value over time - would not be protected in the same way. |
Why do stores and manufacturers use mail in rebates? A scam, or is there a way to use them effectively? | Some notable percentage of buyers won't even try to do the rebate, or will forget - so it's a [relatively] cheap incentive to the consumer than most will miss out on. |
Is it ever logical to not deposit to a matched 401(k) account? | If your plan permits loans, deposit enough through the year to maximize the match and then take a loan from the plan. Use the loan portion to pay your student loan. Essentially you have refinanced your debt at a (presumably) lower rate and recieved the match. You pay yourself back (with interest) through your payroll. The rates are typically the prime rate + 1%. The loans are subject to a lesser of 50% vested account balance or $50,000 provision. |
Is it possible to get life insurance as a beneficiary before the person insured dies? | Generally no. It does not make sense for insurance company to alter terms and if there are such rules it can be subject to misuse. |
Is there a widely recognized bond index? | The iShares Barclays Aggregate Bond - ticker AGG, is a ETF that may fit the bill for you. It's an intermediate term fund with annual expenses of .20%. It "seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Barclays Capital U.S. Aggregate Bond Index" |
Scam or Real: A woman from Facebook apparently needs my bank account to send money | 100% scam. Run away. If you have already given the bank account, inform the bank and close the account. Else just close the new account opened. Do not contact the scammer or reply back.... Just ignore ... Don't read any of scammer email, they are very convincing in why it's right and why it's not a scam. |
Is there any evidence that “growth”-style indexes and growth ETFs outperform their respective base indexes? | You are correct that over a short term there is no guarantee that one index will out perform another index. Every index goes through periods of feat and famine. That uis why the advice is to diversify your investments. Every index does have some small amount of management. For the parent index (the S&P 500 in this case) there is a process to divide all 500 stocks into growth and value, pure growth and pure value. This rebalancing of the 500 stocks occurs once a year. Rebalancing The S&P Style indices are rebalanced once a year in December. The December rebalancing helps set the broad universe and benchmark for active managers on an annual cycle consistent with active manager performance evaluation cycles. The rebalancing date is the third Friday of December, which coincides with the December quarterly share changes for the S&P Composite 1500. Style Scores, market-capitalization weights, growth and value midpoint averages, and the Pure Weight Factors (PWFs), where applicable across the various Style indices, are reset only once a year at the December rebalancing. Other changes to the U.S. Style indices are made on an as-needed basis, following the guidelines of the parent index. Changes in response to corporate actions and market developments can be made at any time. Constituent changes are typically announced for the parent index two-to-five days before they are scheduled to be implemented. Please refer to the S&P U.S. Indices Methodology document for information on standard index maintenance for the S&P 500, the S&P MidCap 400,the S&P SmallCap 600 and all related indices. As to which is better: 500, growth,value or growth and value? That depends on what you the investor is trying to do. |
ISA - intra year profits and switching process | You're overthinking it. The ISA limit applies to the amount you invest into the ISA. In your example, £10,000. Whether that then fluctuates with performance is irrelevant. Even if you realise aprofit or a loss, nobody is watching it. You merely count the amount you originally contributed into the ISA wrapper. When they add up to £15,000; that's the limit reached. (And by the way, remember that only money going into the ISA is counted. It doesn't matter if you -let's say - put £15k in, then remove 10k. You've reached the limit. You don't again have the chance to put £10k 'back in'. |
Value of credit score if you never plan to borrow again? | You're definitely not the first to pose this question. During the peak of the housing crisis I noticed a decent amount of very high dollar properties get abandoned to their fates. Individuals who can afford the mortgage on a 5 million dollar home don't necessarily need their credit to survive so it made more sense to let the asset (now a liability) go and take the hit on their credit for a few years. Unsecured debt, as mentioned is a little trickier because its backed by default by your personal estate. If the creditor is active they will sue you and likely win unless there are issues with their paperwork. Thing is though, you might escape some impacts of the debt to your credit rating and you might not "need" credit, but if you were to act as a wealthy person and not "new money" you would observe the significant value of using credit. credit allows you to leverage your wealth and expand the capacity of your money to import your overall wealth picture. It may prove best to learn that and then make more wealth on your winnings than take the short sighted approach and welch on the debt. |
Should I take contributions out of my Roth IRA to live off of? | That's up to you, but I wouldn't play around with my retirement money if I was in your situation. Your earning potential during your retirement years will likely be at its nadir. Do you really want to risk being forced to be a Wal-Mart greeter when you are 80? Also, considering your earning potential now is probably at or near the peak, your opportunity cost for each hour of your life is much higher now than it will be later. So ultimately you'd be working a little harder now or a lot harder later for less money. |
Car Insurance - Black box has broken and insurance company wants me to pay? | Unless it is in the contract that you must replace it then this should be replaced by your insurance. They sent you a box that was defective, consumer grade electronics are designed for at least 85 deg C (185F) and unless they can prove your car was hotter than that they sent you a defective unit. That being said, I do not think it would be worth suing them for that low amount, I would suggest you get a new insurance company. The current company clearly values your business less than 185 pounds(?) and this issue will happen multiple times since the company has no incentive to buy better products if customers keep footing the bill. |
Previous owner of my home wants to buy it back but the property's value is less than my loan… what to do? | I would tell the former owner that you will sell him the house for you current loan balance. He wants the home, he may be willing to pay what you owe. You can't really do a short sale unless you are behind on your payments. Banks only agree to a short sale when they think they are going to have to foreclose on the property. Not to mention a short sale is almost as bad as a foreclosure and will wreck your credit. If the former buying is not willing to buy the house for what you owe your only real option is to come up with the difference. If he offers you say $50K less than you owe, you will have to give the mortgage holder the remaining balance $50K in this example for them to release the property. Another problem you will face, if the former owner is willing to pay more than what the house is worth, and he is going to finance it, he will have to have enough cash to put down so that the loan amount is not more than the property is worth. Finally if none of that works you can just hold on to the property until the value comes up or you mortgage is payed down enough to make the balance of the mortgage less than the value of the house. Then offer the property to the former owner again. |
At what point does it become worth it to file an insurance claim? | An article linked from cnn.com has some great advice, which I think are good rules of thumb. Also, at least my insurance gives a premium price for those who haven't filed a claim in 5 or more years for homeowners or rental insurance. See if you have a similar discount, will loose it, and guess how much that will cost you over 5 years. My rule of thumb: Your premium might go up quite a bit, possibly as much as triple, especially for a large claim. But, it is certainly worth it if you are going to get more than triple your premium through your claim. The worst case: Mortgage mandated insurance, which will be about triple your current cost. |
I am turning 18 and I am a Student, I need strategies on building great credit soon. Where should I start? | Your goals are excellent. I really admire your thoughts and plans, and I hold you in high esteem. Good credit is indeed an important thing to have, and starting young is THE smart idea with respect to this. I see that you have as a goal the purchase of a home. Indeed, another fine ambition. (Wow, you are a different breed from what I normally encounter on the internet; that's for sure !) Since this won't happen overnight, I would encourage you to think about another option. At this point in your life you have what few people have: options, and you have lots of them. The option I would like to suggest you consider is the debt free life. This does NOT mean life without a credit card, nor does it mean living with ones parents all their days. In its simplest form, it means that you don't owe anybody anything today. An adapted form of that; with the reality of leases and so on, is that you have more immediate cash in the bank than you have contractual responsibilities to pay others. e.g., if the rent on a place is X, and the lease is 12 months, then you don't sign until you have 12X in the bank. That's the idea. If there is anything good that these past 10 years of recession and financial disasters have provided us as a nation, it is a clear picture presented to our young people that a house is not a guaranteed way to riches. Indeed, I just learned this week of another couple, forced out by foreclosure again. Yes, in the 1970s and 1980s the formula which anyone could follow was to take a mortgage on a single family house; just about any house in any community; and ten years later double your money, while (during those ten years) paying about the same (and in a few years, actually less) amount of money as you would for an apartment with about half the space. Those days were then, not now, and I seriously doubt that I will ever see them again in my lifetime. You might, at your age, one day. In the mean time, I would like to suggest that you think about that word options again; something that you have that I don't. If your mind is made up for certain that a house is the one and only thing you want, okay; this does not apply. During this time of building your credit (we're talking more than a year) I would like to encourage you to look at some of the other options that are out there waiting for you; such as... I also encourage you to take a calculator and a spreadsheet (I would be surprised if there is no freeware out there to do this with a few clicks) and compare the past 30 years of various investments. For example... It is especially educational if you can see line charts, with the ups and downs along the way. One last thing; about the stock market, you have an option (I love that word when people your age are actually thinking) called "dollar cost averaging". If you are not aware of this concept, just ask and I will edit this post (although I'm confident it has been explained by others far better than myself on this very site). Hit just about any solid stock market investment (plain old mutual fund, even with a load, and it will still work) and I believe you'll see what I'm trying to get across. Still, yes, you need a roof, and a young person should clearly plan on leaving parents in a healthy and happy way; so again, if the house is the one and only goal, then go for it kid (uhm, "kid", if you're still under 18). All the best. Do remember that you will be fixing the pipes, not the maintenance guy. |
Is the stock market too risky for long term retirement funds? Why should a 20- or 30-something person invest in stocks? | The stock market, as a whole, is extremely volatile. During any 3 year period, the market could go up or down. However, and this is the important point,the market as a whole has historically been a good long term investment. If you need the money in 5 years, then you want to put it in something less volatile (so there's less chance of losing it). If you need the money in 50 years, put it in the market; the massive growth over those 50 years will more than make up for any short term drops, and you will probably come out ahead. Once you get closer to retirement age, you want to take the money out of stocks and put it in something safer; essentially locking in your profit, and protecting yourself from the possibility of further loss. Something else to consider: everyone lost money in 2008. There were no safe investments (well, ok, there were a few... but not enough to talk about). Given that, why would you choose another investment over stocks? Taking a 50% loss after decades of 10% annual returns is still better than a 50% loss after decades of 5% growth (in fact, after 20 years of growth, it's still 250% better - and that ratio will only improve the longer you leave it in). |
Why would a company sell debt in order to buy back shares and/or pay dividends? | It's a tax shelter. Foreign affiliates hold most of Microsoft's cash and investments. The cost of borrowing is much cheaper than repatriating the money and paying taxes. Those bonds are selling at rates similar to US Treasury Debt. Also, many people and organizations with lots of assets still borrow money for day to day expenses. Why? You tend to make a better return on investments which are committed for a number of years, and the timing of income from those investments may not coincide with your expenses. |
At what age should I start or stop saving money? | You've never saved money? Have you ever bought anything? There probably was a small window of time that you had to pool some cash to buy something. In my experience, if you make it more interesting by 'allocating money for specific purposes' you'll have better results than just arbitrarily saving for a rainy day. Allocate your money for different things (ie- new car, emergency, travel, or starting a new business) by isolating your money into different places. Ex- your new car allocation could be in a savings account at your bank. Your emergency allocation can be in cash under your bed. Your new business allocation could be in an investment vehicle like a stocks where it could potentially see significant gains by the time you are ready to use it. The traditional concept of savings is gone. There is very little money to be earned in a savings account and any gains will be most certainly wiped out by inflation anyway. Allocate your money, allocate more with new income, and then use it to buy real things and fund new adventures when the time is right. |
Why do VAT-registered businesses in the EU charge VAT to each other? | But why can't two companies exchange goods directly without paying VAT? This would make the famous carousel fraud scam impossible and businesses won't have to deal with complicated refunds. Sales tax in the United States works as you describe. Sales tax is charged only to end customers, not to businesses that themselves charge sales tax. But this means that a criminal business can charge tax and just pocket it unless someone else reports it. They can also evade income tax the same way. Not to mention other issues like cross jurisdiction taxes (e.g. internet sales often evade sales tax). The whole point of a Value Added Tax (VAT) is that they charge at each level. This creates a system where each buyer reports the tax paid to the seller so as to be able to deduct it. So the seller has to pay the VAT that they charged. Or the tax authorities know and can revoke their VAT license. If only the end user is charged tax, then fraud is easier than under a VAT. So easy, I doubt they have a special name for it. The fraudulent business just collects tax from end users and disappears. Or simply fails to record those transactions. You could call it missing transaction record fraud, but why bother? It's just straight up tax fraud. The complexity of the carousel fraud arises from the difficulty of evading a VAT. |
How can I buy an ETF? | First of all, you'll need a securities account. Nowadays, most large banks offer this as a standard product for all their customers, though it may require some extra paperwork. Then you need to buy shares in the ETF. This is indeed typically done through the stock market, but there are alternatives. Some banks will sell securities to you directly, but usually only those they create themselves (options and such). Some also offer ETF investment plans that allow you to buy shares for a fixed amount each month through the bank. In any case, the bank's online banking interface should support all these options. However, fees are an important consideration! With some banks, the securities account is free, others charge an annual fee. And the fees on stock market transactions and investment plans also vary considerably, so it could be worth it to consider some alternatives. |
Why would people sell a stock below the current price? | This happens on dark pools quite often. If I am a large institutional investor with tens of millions of shares, I may want to unload slowly and limit the adverse affects on the price of the stock. Dark pools offer anonymity and have buyers / sellers that can handle large volume. In the case of a day trader, they often trade stocks with light volume (since they have large fluctuations that can be quite profitable throughout the session). At the end of the session, many traders are unwilling to hold positions on margin and want to unload fast. |
Do I need to pay quarterly 1040 ES and 941 (payroll)? | I think I may have figured this out but if someone could double check my reasoning I'd appreciate it. So if my company makes $75000 and I decide to pay myself a $30000 salary, then the quarterly payment break down would be like this: 1040ES: Would pay income tax on non salary dividend ($45000) 941: Would pay income tax, SS, medicare on salary ($30000) (I'm the only person on payroll) So I think this answers my question in that after switching from filing as LLC to S-corp, I won't have to pay as much on 1040ES because some of it will now be covered on payroll. |
Wardrobe: To Update or Not? How-to without breaking the bank | If you budget for cloths and save up the money, you may be able to take advantage of sales when they are on. However only buy what you will use! You need to ask yourself what value you put on cloths compared to other things you can spend the money on. Also would you rather have money in the bank encase you need it rather than lots of cloths in the wardrobe? |
15 year mortgage vs 30 year paid off in 15 | All of the answers given so far are correct, but rather narrow. When you buy a 30-year-mortgage, you are buying the right to pay off the debt in as long as 30 years. What you pay depends on the interest rate and how long you actually take to pay it off (and principal and points and so on). Just as you are buying that right, the mortgager is selling you that right, and they usually charge something for it, typically a higher rate. After all, they, and not you, will be exposed to interest risk for 30 years. However, if some bank has an aneurism and is willing to give you a 30-year loan for the same price as or lower than any other bank is willing to go for a 15-year loan, hey, free flexibility. Might as well take it. If you want to pay the loan off in 15 year, or 10 or 20, you can go ahead and do so. |
What can I replace Microsoft Money with, now that MS has abandoned it? | MoneyDance Is the way to go. I've been using it for years and it works well. It keeps getting better, and best of all, it's completely cross platform! Mac, Windows and linux! |
Can anyone else make an online payment for me? | Your relative in the US could buy a pre-paid Visa (aka Visa gift card) and give you the numbers on that to pay. They're available for purchase at many grocery/convenience stores. In most (all??) cases there'll be a fee of a several dollars charged in addition to the face value of the card. The biggest headache I can think of would be that pre-paid cards are generally only available in $25/50/100 increments; unless the current SAT price matches one of the standard increments they'll have to buy the next card size up and then get the remaining money off it in a separate transaction. A grocery store would be one of the easier places for your relative to do this because cashiers there are used to splitting transactions across multiple payment sources (something not true at most other types of business) due to regularly processing transactions partially paid for via welfare benefits. |
Is it beneficial to convert non-investment real estate to rental if I need to make major repairs? (USA/Missouri) | I think you may have a significant misunderstanding here. You have been renting your property out for two years, now. There is no special "roommate" clause in the tax code; roommates are renters, and the rent they pay is rental income. (If they were roommates in a property you both rented from a third party, that would be different.) See publication 527, chapter 4 for more details on the subject (search on "Renting Part of Property"). You should be: You may also consider "Not renting for profit" section, which may be closer to what you're actually thinking - of changing from "Renting not for profit" to "Renting for profit". Not rented for profit means you can report on your 1040 as opposed to filing Schedule E, but it does mean you have to actually not make a profit (and remember, some of the money that goes to paying the mortgage is not deductible on this side of things since it's your property and you'll get that money back, presumably, when you sell it). If that is what you're asking about, it sounds like it's just a matter of money. Are you going to start making money? Or, are you going to start making enough significant upgrades/etc. to justify the tax deduction? You should consider the actual, specific numbers carefully, probably with the help of a CPA who is familiar with this sort of situation, and then make the decision that gives you the best outcome (keeping in mind that there may be long-term impacts of switching from not-for-profit to for-profit rental treatment). |
I am the sole owner of an LLC. Does it make a difference if I file as an S-Corp or a sole-member LLC? | In the United States, with an S-Corp, you pay yourself a salary from company earnings. That portion is taxed at an individual rate. The rest of the company earnings are taxed as a corporation, which often have great tax benefits. If you are making over $80K/year, the difference can be substantial. A con is that there is more paperwork and you have to create a "board" of advisors. |
Risk and reward of a synthetic option position | You sold a call, and have a risk if the stock rises. You bought a put and gain when the stock drops. You, sir, have a synthetic short position. It's Case 3 from your linked example: Suppose you own Long Stock and the company is going to report earnings but you’re going on vacation. How can you hedge your position without selling your stock? You can short the stock synthetically with options! Short Stock = Short Call + Long Put They conclude with the net zero remark, because the premise was an existing long position. A long plus this synthetic short results in a neutral set of positions (and the author's ability to go on vacation not concerned about any movement in the stock.) |
Reinvesting dividends and capital gains | I'd like to add that many companies offer Divident Re-Investment Plans or DRIPs, which is basically a regular automatic stock purchase program. More info here: http://en.wikipedia.org/wiki/Dividend_reinvestment_plan. While your stock broker may offer dividend reinvestment, this is not the same as a DRIP. DRIPs are offered directly by the company, rather than the stock broker. They have the added benefits that the stock purchases are almost always commission-free, and in some cases, the company even offers a discount on the stock price. It can take a little more effort to get enrolled in a DRIP, but if you are interested in holding the stock long-term, this is a good option to consider. |
Missing 401(k) dividends | Your investment is probably in a Collective Investment Trust. These are not mutual funds, and are not publicly traded. I.e. they are private to plan participants in your company. Because of this, they are not required* to distribute dividends like mutual funds. Instead, they will reinvest dividends automatically, increasing the value of the fund, rather than number of shares, as with dividend reinvestment. Sine you mention the S&P 500 fund you have tracks closely to the S&P Index, keep in mind there's two indexes you could be looking at: Without any new contributions, your fund should closely track the Total Return version for periods 3 months or longer, minus the expense ratio. If you are adding contributions to the fund, you can't just look at the start and end balances. The comparison is trickier and you'll need to use the Internal Rate of Return (look into the XIRR function in Excel/Google Sheets). *MFs are not strictly required to pay dividends, but are strongly tax-incentivized to do so, and essentially all do. |
Is it ever a good idea to close credit cards? | There's no harm in keeping them open. Like you said, closing the lines will potentially hurt your utilization. The extent of that impact will depend on your particular situation. There are situations where closing a line will have no actual impact on your utilization. If you have 100k of open credit and a debt load of $2k, if you close a $10k line you won't really have an issue because your utilization is 2% and closing the line will take you to 2.2%. |
Buy/Selling prices at the stock exchange represent someone Selling/Buying at that price? | You don't see Buying and Selling. You see Bid and Ask. Best Bid--Highest Price someone is willing to pay to buy a stock. Best Ask - Lowest price someone is willing to accept to sell a stock. As for your second question, if you can look up Accumulation/Distribution Algorithm and Iceberg Order, you will get basic idea. |
Why do people always talk about stocks that pay high dividends? | It has little to do with money or finance. It's basic neuroscience. When we get money, our brains release dopamine (read Your Money and Your Brain), and receiving dividends is "getting money." It feels good, so we're more likely to do it again. What you often see are rationalizations because the above explanation sounds ... irrational, so many people want to make their behavior look more rational. Ceteris paribus a solid growth stock is as good as a solid company that pays dividends. In value-investing terms, dividend paying stocks may appear to give you an advantage in that you can keep the dividends in cash and buy when the price of the security is low ("underpriced"). However, as you realize, you could just sell the growth stock at certain prices and the effect would be the same, assuming you're using a free brokerage like Robin Hood. You can easily sell just a portion of the shares periodically to get a "stream of cash" like dividends. That presents no problem whatsoever, so this cannot be the explanation to why some people think it is "smart" to be a dividend investor. Yes, if you're using a brokerage like Robin Hood (there may be others, but I think this is the only one right now), then you are right on. |
Finding out actual items bought via credit card issuer and not the store receipt? | The stores track the individual items for inventory planning and marketing purposes. Having worked in the transaction processing business for a time (writing one), I can say with confidence that the credit/debit card companies do not receive an itemized list of the items involved in the transaction. There is usually a description field in the information transmitted to the processor, which may or may not contain useful information. But it is not big enough to contain an itemized grocery list of any size. And it is not standardized in any way that would facilitate reliable parsing. There may be an amount of metadata about the transaction that would indicate the types of products involved in the transaction, which they can also infer from the merchant reporting the transaction. There are efforts to increase the amount of data reported, but they are not widely used yet, due to the overwhelming numbers of banks that would need to be upgraded. These efforts are rolling out only in specific and limited uses where the banks involved are willing to upgrade software and equipment. For now, the best way to know what you bought is to keep your receipts from the store. Shoeboxes work great for this. So do smartphone cameras and a folder on your hard drive. There are also mobile apps that track receipts for you, and may even try to OCR the data for you. |
Do stock prices drop due to dividends? | Share prices fall when dividends are paid out because the paid dividend (cash out) actually reduces the value of the company. Usually the share price falls by the amount of the dividend payment. |
Can written options be exercised against you prior to expiry when they become “in-the-money”? | Yes, if it's an American style option. American style options may be exercised at any time prior to expiration (even if they're not in-the-money). Generally, you are required to deliver or accept delivery of the underlying by the beginning of the next trading day. If you are short, you may be chosen by the clearinghouse to fulfill the exercise (a process called "assignment"). Because the clearinghouse is the counter-party to every options trade, you can be assigned even if the specific person who purchased the option you wrote didn't exercise, but someone else who holds a long position did. Similarly, you might not be assigned if that person did exercise. The clearinghouse randomly chooses a brokerage to fulfill an assignment, and the brokerage will randomly choose an individual account. If you're going to be writing options, especially using spreads, you need to have a plan ahead of time on what to do if one of your legs gets assigned. This is more likely to happen just before a dividend payment, if the payment is more than the remaining time value. |
Taking Losses To Save On Tax | As Dilip said, if you want actual concrete, based in tax law, answers, please add the country (and if applicable, state) where you pay income tax. Also, knowing what tax bracket you're in would help as well, although I certainly understand if you're not comfortable sharing that. So, assuming the US... If you're in the 10% or 15% tax bracket, then you're already not paying any federal tax on the $3k long term gain, so purposely taking losses is pointless, and given that there's probably a cost to taking the loss (commission, SEC fee), you'd be losing money by doing so. Also, you won't be able to buy back the loser for 31 days without having the loss postponed due to the wash sale that would result. State tax is another matter, but (going by the table in this article), even using the highest low end tax rate (Tennessee at 6%), the $50 loss would only save you $3, which is probably less than the commission to sell the loser, so again you'd be losing money. And if you're in a state with no state income tax, then the loss wouldn't save you anything on taxes at the state level, but of course you'll still be paying to be able to take the loss. On the high end, you'd be saving 20% federal tax and 13.3% state tax (using the highest high end tax state, California, and ignoring (because I don't know :-) ) whether they tax long-term capital gains at the same rate as regular income or not), you'd be saving $50 * (20% + 13.3%) = $50 * 33.3% = $16.65. So for taxes, you're looking at saving between nothing and $16.65. And then you have to subtract from that the cost to achieve the loss, so even on the high end (which means (assuming a single filer)) you're making >$1 million), you're only saving about $10, and you're probably actually losing money. So I personally don't think taking a $50 loss to try to decrease taxes makes sense. However, if you really meant $500 or $5000, then it might (although if you're in the 10-15% brackets in a no income tax state, even then it wouldn't). So the answer to your final question is, "It depends." The only way to say for sure is, based on the country and state you're in, calculate what it will save you (if anything). As a general rule, you want to avoid letting the tax tail wag the dog. That is, your financial goal should be to end up with the most money, not to pay the least taxes. So while looking at the tax consequences of a transaction is a good idea, don't look at just the tax consequences, look at the consequences for your overall net worth. |
Why naked call writing is risky compare to Covered call? | If the buyer exercises your option, you will have to give him the stock. If you already own the stock, the worst that can happen is you have to give him your stock, thus losing the money you spend to buy it. So the most you can lose is what you already spent to buy the stock (minus the price the buyer paid for your option). If you don't own the stock, you will have to buy it. But if the stock skyrockets in value, it will be very expensive to buy it. If for instance you buy the stock when it is worth $100, sell your covered call, and the next day the stock shoots to $1000, you will lose the $100 you got from the purchase of the stock. But if you had used a naked call, you would have to buy the stock at $1000, and you would lose $900. Since there is no limit to how high the stock can go, there is no limit to how much money you may lose. |
Index ETF or Index mutual fund - standard brokerage account | The main difference between a mutual fund and an ETF are how they are bought and sold (from the investors perspective). An ETF is transacted on the open market. This means you normally can't buy partial shares with your initial investment. Having to transact on the open market also means you pay a market price. The market price is always a little bit different from the Net Asset Value (NAV) of the fund. During market hours, the ETF will trade at a premium/discount to the NAV calculated on the previous day. Morningstar's fund analysis will show a graph of the premium/discount to NAV for an ETF. With a mutual fund on the other hand, your investment goes to a fund company, which then grants you shares while under the hood buying the underlying investments. You pay the NAV price and are allowed to buy partial shares. Usually an ETF has a lower expense ratio, but if that's equal and any initial fees/commissions are equal, I would prefer the mutual fund in order to buy partial shares (so your initial investment will be fully invested) and so you don't have to worry about paying premium to NAV |
I am not VAT registered. Do I need to buy from my supplier with excl VAT prices or incl VAT? | You only pay VAT if you buy from a VAT-registered company; if they are not registered, you don't pay. So, thinking about your supplier, if they are VAT-registered they will charge you VAT, if they are not they won't. The buyer's status makes no difference, the seller doesn't get involved in whether the buyer is able to reclaim or not (based on their VAT-registered status). |
Are BIC and SWIFT code the same things? | IBAN -> is International Bank Account Number. The number is constructed in such a way that it uniquely identifies your account in the world. I.e. it has a country in it, Bank (and branch) and the actual account number. This is an international standard adopted by the EU, Australia and NZ. Going forward it would be sufficient to just quote the IBAN for payment without any other details. BIC, SWIFT Code, SWIFT BIC, SWIFT ID [all mean the same] is a Bank Identifier Code [More correctly Business Identifier Code] that is again an International standard and used on all International payments. The SWIFT BIC is constructed as Hence SWIFT BIC can be 8 Chars or 11 Chars. The additional 3 Chars help bank identify the Branch where the account is held and where the payment needs to be made. So LOYDGB2L is the main head office If your branch is, say, in Canary Wharf, the SWIFT BIC would be LOYDGB21 [21-> Canary Wharf] with a 3 digit branch added. |
Is Bitcoin a commodity or a currency [duplicate] | I would classify Bitcoin as a hybrid. Currency : It is accepted by e-businesses as a form of payment Commodity : Chart illustrating the volatility and speculative nature of Bitcoin |
Paypal website donations without being a charity | Yes, Paypal has such a button you can use, but to be clear, the money you receive is taxable income. Your website is providing 'value' to the readers, and while they may feel they are making a gift to you, it's earned income as far as the IRS is concerned. (This assumes you are in the US, you may wish to add a tag to indicate your country) |
Work on the side for my wife's company | Depending on how much freelance work we're talking about you could set up a limited company, with you and your wife as directors. By invoicing all your work through the limited company (which could have many other benefits for you, an accountant/advisor would... well, advise...) it's the company earning the money, not you or her personally. You can then pay your wife up to £10,000 per year (as of writing this) without income tax kicking in. You would probably have to pay yourself a small amount to minimise exposure to HMRC's snooping, but possibly not... as far as I'm aware the rules do not state anything about working for free, for yourself - and I wouldn't worry about the ethics, you're already paying plenty into HMRC's bank account through your day job! Some good information here if you're interested: https://www.whitefieldtax.co.uk/web/psc-guide/pscguide-how-does-it-all-work-in-practice-salaries-and-dividends/ |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.