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Why do 1099 forms take so long for brokerages to prepare and send out? | There are probably many correct answers to this question, but for most people, the main reason is qualified dividends. To be a qualified dividend (and therefore eligible for lower tax rates), the dividend-paying stock or fund must be held for "more than 60 days during the 121-day period that begins 60 days before the ex-dividend date". Since many stocks and funds pay out dividends at the end of the year, that means it takes until mid- to late February to determine if you held them, and therefore made the dividend qualified. Brokerages don't want to send out 1099s in January and then possibly have to send out revised versions if you decide to sell something that paid a dividend in December that otherwise would have been qualified. |
Fringe Benefits (Lodging) for single member S-Corp | If you use "a room or other separately identifiable space" within your apartment exclusively for your business, then you might be able to recoup a fraction of your rent for that. Check the rules for home office at the IRS and adopt a consistent and well-documented approach. (I would pay your full rent out of your personal account, and then do an "expense report" for the portion that's legitimately business related, but that's not a unique approach.) Other than that, I agree with the answer by litteadv - You cannot reduce your tax by the full amount of your rent just by having the S Corp pay, and trying to do so is probably playing with fire. Generally speaking, don't comingle business and personal expenses like that. |
Most common types of financial scams an individual investor should beware of? | Pretty much any financial transaction where they start by calling you on the phone is a scam. They aren't doing it for your benefit and the caller is on commission. |
How can we get a hold of our finances again, with much less time to spend on accounting and budgeting, due to the arrival of our child? | Good question, very well asked! The key here is that you need to find a solution that works for you two without an overt amount of effort. So in a sense it is somewhat behavior driven, but it is also technology driven. My wife and I use spreadsheets for both checking account management and budgeting. A key time saver is that we have a template sheet that gets copied and pasted, then modified for the current month. Typically 90% of the stuff is the same and each month requires very little modification. This is one of my problems with EveryDollar. I have to enter everything each and every month. We also have separate checking accounts and responsibility for different areas of the family expenses. Doing this risks that we act as roommates, but we both clearly understand the money in one persons account equally belongs to the other and during hard times had to make up for shortfalls on the part of the other. Also we use cash for groceries, eating out, and other day to day expenses. So we don't have a great need to track expenses or enter transactions. That is what works for us, and it takes us very little time to manage our money. The budget meeting normally lasts less than a half hour and that includes goal tracking. We kind of live by the 80/20 principle. We don't see a value in tracking where every dime went. We see more value in setting and meeting larger financial goals like contributing X amount to retirement and things of that nature. If we overspent a bit at Walgreens who cares provided the larger goals are meant and we do not incur debt. |
Why does Warren Buffett say his fund performance, relatively, is likely to be better in a bear market than in a bull market? | Warren Buffet and Berkshire Hathaway took a 50% loss in each of the last two bear markets. His stock even lost 10% in 2015 when the S&P lost 8%. He doesn't have a track record to support the claim that his stock performs relatively better in a bear market, so perhaps it's best to take his letter with a grain of salt. Edit: As one commenter points out, Mr. Buffett is comparing the book performance of his fund to the market performance of an index. That is an apples to oranges comparison. It's deceptive at best. |
What is the proper way to report additional income for taxes (specifically, Android development)? | If this is truly hobby income (you do not intend to operate as a business and don't have a profit motive) then report the income on Line 21 ("other income") of form 1040. If this is a business, then the income and expenses belong on a Schedule C to form 1040. The distinction is in the treatment of profits and losses - your net profits on a business are subject to self-employment tax, while hobby income is not. Net losses on a business are deductible against other income; net losses on a hobby are miscellaneous itemized deductions in the "2%" box on Schedule A. From a tax point of view, selling apps and accepting donations are different. Arguably, donations are gifts; gifts are not taxable income. The hobby/business and income/gift distinctions are tricky. If the dollar amounts are small, nobody (including the IRS) really cares. If you start making or losing a lot of money, you'll want to get a good tax person lined up who can help you decide how to characterize these items of income and expens, how to put them on your return, and how to defend the return on audit if necessary. |
What happens to my stocks when broker goes bankrupt? | Here is my perception of the situation, obtained from reading Degiro's Client Agreement. If Degiro shuts down, it will notify you about the fact at least one month in advance, and you will have enough time to order a transfer of your positions to a different broker. If Degiro shuts down unexpectedly, your assets will remain to be held at SPV, a separate legal entity which Degiro uses to hold the financial instruments belonging to the clients. Since SPV does nothing else but holding the assets, it is very unlikely that something bad will happen with it on its own. With some help from Degiro and/or the regulator (AFM) you should be able to transfer your assets from SPV to a different custodian and broker and thus regain control over them. If you have a non-Custody account, you have slightly higher chances of losing your assets, because Degiro can borrow your securities held at SPV. If both the client for whom Degiro borrowed a security and Degiro itself go bankrupt at the same time, the lent security will not be returned to SPV, there will arise a shortage, which will be proportionally distributed among the accounts of the clients holding this particular security. However, then the investor compensation scheme should kick in and help you recover up to 20000 EUR of your losses. |
Money transfer from Australia to India - avoid receiving ends service tax | All Bank fees were included in the service tax ambit [For example Check bounce, issue of duplicate statement, fees charged for remittance etc]. However as quite a few Banks structured the Remittance Business to show less charges and cover the difference in the Fx rate involved, the Govt has redone the service tax and one needs to pay Rs 120 for an amount of Rs 100,000. There is no way to avoid service tax on remittance if you are using a remittance service. |
Money market account for emergency savings | Depends on how urgent your need for the emergency savings might be. If the money market account allows you to get your money in the same amount of time as the savings account then there is no real downside, but if the account takes a few days for you to access and you need your money sooner then you probably shouldn't. Also money market accounts DO give more interest than most savings accounts, but the interest rates are generally still pretty low, so it might be an improvement, but probably not a huge one |
Why can't the government simply payoff everyone's mortgage to resolve the housing crisis? | Could it be done? Yes, it could, subject to local law. A variant of such an approach has been suggested for those countries experiencing collapse of demand. One might consider whether whether it applied to secured loans (such as mortgages), unsecured loans, or both; whether it would be capped at a certain absolute (say £100k) or proportional (first 50%) of each mortgage; whether it would cover first homes only, or all homes; and so on. These details would radically change the feasibility and consequences of any such intervention. See the related question: https://economics.stackexchange.com/q/146/104 Such a policy of debt cancellation would have several consequences beyond initial stimulation of demand, that would need additional policies to deal with them. Inflation The resultant surge in demand would, in the absence of any other intervention, result in a massive surge in inflation. There are some interesting questions about whether this burst of inflation would be a one-off, or not. One could make an argument that as housing has become much more affordable (at least for home-owners), it would increase the downward pressure on wages, which would be in itself counter-inflationary in the medium-long term. Nevertheless, it would be injecting much more money into the economy than has been seen in QE to date, so the risks would be of extraordinarily high inflation, which might or might not get entrenched. In order to manage the short-term risk, and long-term inflation expectations, it might be necessary to incorporate a lot of tightening, either fiscal (higher taxes and/or lower public spending), or monetary: (higher interest rates, unwinding QE, new requirements for higher core capital for banks) Moral hazard There are risks of moral hazard for individuals: however, as a society, we were prepared to accept the moral hazard for financial institutions and their staff, so that may or may not be an issue: it is likely to be a question of long-term expectations. If the expectation is that this is at most a once-in-a-lifetime occurrence, then the consequential risk from moral hazard ought to be lower. Excess profits to lenders Lenders will typically work on the basis of a certain proportion of defaults, so paying off all loans effectively gives them an artificial boost to their profits. Worsening balance of payments There is to a degree a prisoners' dilemma facing nations here. Pressing the reset-button on personal debt across many of the countries experiencing demand-collapse would benefit all of them. However, if just one such country were to do it alone, they alone would increase domestic demand, resulting in a large increase in imports, but no significant increase in exports. |
Growth rate plus dividend yieid total? | The sum of the dividend yield plus capital growth is called total return. In your examples, you get to a total return of 7% through several different (and theoretically equivalent) paths. That is the right way of thinking. |
Should I finance a used car or pay cash? | I'd pay cash. Car loans are amortized, so sometimes you can get upside-down on the loan between 18-30 months because you are pre-paying interest. This can get you into trouble if you get into an accident. Given the low rate and the type of car you're buying, you're probably fine either way. |
Are marijuana based investments promising, or just another scam? | Is there any truth to this, or is this another niche scam that's been brewing the last few years? While it may not be an outright scam, such schemes do tend to be on borderline of scams. Technically most of what is being said claimed can be true, however in reality such windfall gains never happen to the investors. Whatever gains are there will be cornered by the growers, trades, other entities in supply chain leaving very little to the investors. It is best to stay away from such investments. |
Calculating required rate of return for an income-generating savings account | Line one shows your 1M, a return with a given rate, and year end withdrawal starting at 25,000. So Line 2 starts with that balance, applies the rate again, and shows the higher withdrawal, by 3%/yr. In Column one, I show the cumulative effect of the 3% inflation, and the last number in this column is the final balance (903K) but divided by the cumulative inflation. To summarize - if you simply get the return of inflation, and start by spending just that amount, you'll find that after 20 years, you have half your real value. The 1.029 is a trial and error method, as I don't know how a finance calculator would handle such a payment flow. I can load the sheet somewhere if you'd like. Note: This is not exactly what the OP was looking for. If the concept is useful, I'll let it stand. If not, downvotes are welcome and I'll delete. |
Foreign currency losing value — can I report this as a loss for tax purposes? | This loss would be unrealized and, assuming you're a cash-basis tax-payer, you would not be able to take a loss on your 2014 tax return. This is similar to if you held a stock that lost 50% of its value. You wouldn't be able to claim this loss until you finally sold it. The link that User58220 posted may come into play if you converted your UAH back to USD. |
Money market account for emergency savings | So long as you have complete, virtually instant access to funds through checks, debit card, or ATM transaction, then yes it would be a better option than a "vanilla" savings account. If it's in a brokerage account that you would need to process a transfer and potentially wait a few days for everything to settle, then I would just keep it in savings. The amount earned in interest isn't worth the extra hassle. A compromise might be to keep a few thousand in a savings account and the rest in a money market. That way you earn some interest and still have instant access to enough funds to cover most emergencies. |
Advantages of Shareholder over Director in new Company | I know the general principles of acting as a director in a company, and am familiar with the rights of shareholders. In the last ten years or so, I believe Australia has introduced legislation that strongly punishes those directors who do not act in a professional or prudent manner. While I will of course attempt to fulfill the duties required - I am new to conducting business at this level, and am concerned about mistakenly breaching some unknown rule/law and being subject to repercussions that I just don't know about. As you have already stated, the key to being director in a company is the additional responsibility. Legally you can be held in breach. At the same time you will be able to influence your decision much better if you a director and thus safeguard your interest. If you are only a shareholder, you cannot be held responsible for decision by company, individual malpractice may still be applicable, but this is less of a risk. However over a period of time, the board can take certain decision that may marginalize your holding in the company. |
Sell a stock and buy a new one | You have to wait for three (business) days. That's the time it takes for the settlement to complete and for the money to get to your account. If you don't wait - brokers will still allow you to buy a new stock, but may limit your ability to sell it until the previous sale is settled. Here's a FAQ from Schwab on the issue. |
What is the preferred way to set up personal finances? | You don't state where you are, so any answers to this will by necessity be very general in nature. How many bank accounts should I have and what kinds You should have one transaction account and one savings account. You can get by with just a single transaction account, but I really don't recommend that. These are referred to with different names in different jurisdictions, but the basic idea is that you have one account where money is going in and out (the transaction account), and one where money goes in and stays (the savings account). You can then later on, as you discover various needs, build on top of that basic foundation. For example, I have separate accounts for each source of money that comes into my personal finances, which makes things much easier when I sit down to fill out the tax forms up to almost a year and a half later, but also adds a bit of complexity. For me, that simplicity at tax time is worth the additional complexity; for someone just starting out, it might not be. (And of course, it is completely unnecessary if you have only one source of taxable income and no other specific reason to separate income streams.) how much (percentage-wise) of my income should I put into each one? With a single transaction account, your entire income will be going into that account. Having a single account to pay money into will also make life easier for your employer. You will then have to work out a budget that says how much you plan to spend on food, shelter, savings, and so on. how do I portion them out into budgets and savings? If you have no idea where to start, but have an appropriate financial history (as opposed to just now moving into a household of your own), bring out some old account statements and categorize each line item in a way that makes sense to you. Don't be too specific; four or five categories will probably be plenty. These are categories like "living expenses" (rent, electricity, utilities, ...), "food and eating out" (everything you put in your mouth), "savings" (don't forget to subtract what you take out of savings), and so on. This will be your initial budget. If you have no financial history, you are probably quite young and just moving out from living with your parents. Ask them how much might be reasonable in your area to spend on basic food, a place to live, and so on. Use those numbers as a starting point for a budget of your own, but don't take them as absolute truths. Always have a "miscellaneous expenses" or "other" line in your budget. There will always be expenses that you didn't plan for, and/or which don't neatly fall into any other category. Allocate a reasonable sum of money to this category. This should be where you take money from during a normal month when you overshoot in some budget category; your savings should be a last resort, not something you tap into on a regular basis. (If you find yourself needing to tap into your savings on a regular basis, adjust your budget accordingly.) Figure out based on your projected expenses and income how much you can reasonably set aside and not touch. It's impossible for us to say exactly how much this will be. Some people have trouble setting aside 5% of their income on a regular basis without touching it; others easily manage to save over 50% of their income. Don't worry if this turns out a small amount at first. Get in touch with your bank and set up an automatic transfer from your transaction account to the savings account, set to recur each and every time you get paid (you may want to allow a day or two of margin to ensure that the money has arrived in your account before it gets taken out), of the amount you determined that you can save on a regular basis. Then, try to forget that this money ever makes it into your finances. This is often referred to as the "pay yourself first" principle. You won't hit your budget exactly every month. Nobody does. In fact, it's more likely that no month will have you hit the budget exactly. Try to stay under your budgeted expenses, and when you get your next pay, unless you have a large bill coming up soon, transfer whatever remains into your savings account. Spend some time at the end of each month looking back at how well you managed to match your budget, and make any necessary adjustments. If you do this regularly, it won't take very long, and it will greatly increase the value of the budget you have made. Should I use credit cards for spending to reap benefits? Only if you would have made those purchases anyway, and have the money on hand to pay the bill in full when it comes due. Using credit cards to pay for things is a great convenience in many cases. Using credit cards to pay for things that you couldn't pay for using cash instead, is a recipe for financial disaster. People have also mentioned investment accounts, brokerage accounts, etc. This is good to have in mind, but in my opinion, the exact "savings vehicle" (type of place where you put the money) is a lot less important than getting into the habit of saving regularly and not touching that money. That is why I recommend just a savings account: if you miscalculate, forgot a large bill coming up, or for any other (good!) reason need access to the money, it won't be at a time when the investment has dropped 15% in value and you face a large penalty for withdrawing from your retirement savings. Once you have a good understanding of how much you are able to save reliably, you can divert a portion of that into other savings vehicles, including retirement savings. In fact, at that point, you probably should. Also, I suggest making a list of every single bill you pay regularly, its amount, when you paid it last time, and when you expect the next one to be due. Some bills are easy to predict ("$234 rent is due the 1st of every month"), and some are more difficult ("the electricity bill is due on the 15th of the month after I use the electricity, but the amount due varies greatly from month to month"). This isn't to know exactly how much you will have to pay, but to ensure that you aren't surprised by a bill that you didn't expect. |
What does it mean to be “offset against taxable gains”? | Offset against taxable gains means that the amount - $25 million in this case - can be used to reduce another sum that the company would otherwise have to pay tax on. Suppose the company had made a profit of $100 million on some other investments. At some point, they are likely to have to pay corporation tax on that amount before being able to distribute it as a cash dividend to shareholders. However if they can offset the $25 million, then they will only have to pay tax on $75 million. This is quite normal as you usually only pay tax on the aggregate of your gains and losses. If corporation tax is about 32% that would explain the claimed saving of approximately $8 million. It sounds like the Plaintiffs want the stock to be sold on the market to get that tax saving. Presumably they believe that distributing it directly would not have the same effect because of the way the tax rules work. I don't know if the Plaintiffs are right or not, but if they are the difference would probably come about due to the stock being treated as a "realized loss" in the case where they sell it but not in the case where they distribute it. It's also possible - though this is all very speculative - that if the loss isn't realised when they distribute it directly, then the "cost basis" of the shareholders would be the price the company originally paid for the stock, rather than the value at the time they receive it. That in turn could mean a tax advantage for the shareholders. |
How exactly is implied volatility assigned to an option's strike price? | As I understand it, Implied Volatility represents the expected gyrations of an options contract over it's lifetime. No, it represents that expected movement of the underlying stock, not the option itself. Yes, the value of the option will move roughly in the same direction the value of the stock, but that's not what IV is measuring. I even tried staring at the math behind the Options pricing model to see if that could make more sense for me but that didn't help. That formula is correct for the Black-Scholes model - and it is not possible (or at least no one has done it yet) to solve for s to create a closed-form equation for implied volatility. What most systems do to calculate implied volatility is plug in different values of s (standard deviation) until a value for the option is found that matches the quoted market value ($12.00 in this example). That's why it's called "implied" volatility - the value is implied from market prices, not calculated directly. The thing that sticks out to me is that the "last" quoted price of $12 is outside of the bid-ask spread of $9.20 to $10.40, which tells me that the underlying stock has dropped significantly since the last actual trade. If the Implied Vol is calculated based on the last executed trade, then whatever algorithm they used to solve for a volatility that match that price couldn't find a solution, which then choose to show as a 0% volatility. In reality, the volatility is somewhere between the two neighbors of 56% and 97%, but with such a short time until expiry, there should be very little chance of the stock dropping below $27.50, and the value of the option should be somewhere around its intrinsic value (strike - stock price) of $9.18. |
Why is it good to borrow money to buy a house? | In most cases of purchases the general advice is to save the money and then make the purchase. Paying cash for a car is recommended over paying credit for example. For a house, getting a mortgage is recommended. Says who? These rules of thumb hide the actual equations behind them; they should be understood as heuristics, not as the word of god. The Basics The basic idea is, if you pay for something upfront, you pay some fixed cost, call it X, where as with a loan you need to pay interest payments on X, say %I, as well as at least fixed payments P at timeframe T, resulting in some long term payment IX. Your Assumption To some, this obviously means upfront payments are better than interest payments, as by the time the loan is paid off, you will have paid more than X. This is a good rule of thumb (like Newtonian's equations) at low X, high %I, and moderate T, because all of that serves to make the end result IX > X. Counter Examples Are there circumstances where the opposite is true? Here's a simple but contrived one: you don't pay the full timeframe. Suppose you die, declare bankruptcy, move to another country, or any other event that reduces T in such a way that XI is less than X. This actually is a big concern for older debtors or those who contract terminal illnesses, as you can't squeeze those payments out of the dead. This is basically manipulating the whole concept. Let's try a less contrived example: suppose you can get a return higher than %I. I can currently get a loan at around %3 due to good credit, but index funds in the long run tend to pay %4-%5. Taking a loan and investing it may pay off, and would be better than waiting to have the money, even in some less than ideal markets. This is basically manipulating T to deal with IX. Even less contrived and very real world, suppose you know your cash flow will increase soon; a promotion, an inheritance, a good market return. It may be better to take the loan now, enjoy whatever product you get until that cash flows in, then pay it all off at once; the enjoyment of the product will make the slight additional interest worth it. This isn't so much manipulating any part of the equation, it's just you have different goals than the loan. Home Loan Analysis For long term mortgages, X is high, usually higher than a few years pay; it would be a large burden to save that money for most people. %I is also typically fairly low; P is directly related to %I, and the bank can't afford to raise payments too much, or people will rent instead, meaning P needs to be affordable. This does not apply in very expensive areas, which is why cities are often mostly renters. T is also extremely long; usually mortgages are for 15 or 30 years, though 10 year options are available. Even with these shorter terms, it's basically the longest term loan a human will ever take. This long term means there is plenty of time for the market to have a fluctuation and raise the investments current price above the remainder of the loan and interest accrued, allowing you to sell at a profit. As well, consider the opportunity cost; while saving money for a home, you still need a place to live. This additional cost is comparable to mortgage payments, meaning X has a hidden constant; the cost of renting. Often X + R > IX, making taking a loan a better choice than saving up. Conclusion "The general advice" is a good heuristic for most common human payments; we have relatively long life spans compared to most common payments, and the opportunity cost of not having most goods is relatively low. However, certain things have a high opportunity cost; if you can't talk to HR, you can't apply for jobs (phone), if you can't get to work, you can't eat (car), and if you have no where to live, it's hard to keep a job (house). For things with high opportunity costs, the interest payments are more than worth it. |
Do market shares exhaust? | Let's clarify some things. Companies allow for the public to purchase their shares through Initial Public Offering (IPO) (first-time) and Seasoned Public Offering (SPO) (all other times). They choose however many shares they want to issue depending on the amount of capital they want to raise. What this means is that the current owners give up some ownership % in exchange for cash (usually). In the course of IPOs and SPOs, it can happen that the public will not buy all shares if there is very little interest, but I would assume that the more probable scenario if very little interest is present is that the shares' value would take a big drop on their issuance date from the proposed IPO/SPO price. After those shares are bought by the public, they are traded on Exchanges which are a secondary and (mostly) do not affect the underlying company. The shares are exchanged from John Doe to Jane Doe as John Doe believes the market value for those shares will take a direction that Jane Doe believes in the opposite. Generally speaking, markets will find an equilibrium price where you can reasonably easily buy-sell securities as the price is not too far from what most participants in the market believe it should be. In cases where all participants agree on the direction (most often in case of a crash) it can be hard to find a party to make a trade with. Say a company just announced negative news with long-lasting effects on the business there will be a surge in sell orders with very few buyers. If you are willing to buy, you will likely very easily find a trading partner but if you are trying to sell instead then you will have to compete for the lowest price against all other sellers. All that to say that in such cases, while shares are technically sellable / purchasable, the end result can be that no shares are purchasable. |
How can I stop a merchant from charging a credit card processing fee? | You have no recourse on the spot to do anything to the vendor other than pay the fee, pay cash, or walk away. If you're on a mission with longer-term horizon than immediate satisfaction, your options will vary by state. If you're in a state where the fees are legal and the owner is (potentially) violating an agreement with the card company, you can report the vendor to the card company. They may or may not really care. If you're in a state where the fee is actually illegal, you'd need to see what options you have with the local authorities. You should keep in mind that if the vendor is violating an agreement that's between the vendor and the card company only, you have absolutely no rights to enforce that agreement. You only have legal rights if you're a party to the agreement in question or if the law gives you some special rights specific to given circumstances. (The lawyers call this having "standing.") Likewise if the vendor is doing something that's not consistent with the agreement between you and the card company, you also have no claim against the vendor (because the vendor is not party to your agreement with the card company), although you might have a claim against the card company. |
I have about 20 000 usd. How can invest them to do good in the world? | One of the best things you can do for this purpose, while getting a modest ROI on a passive investment, is invest in a company that profitably does whatever you want to see more of. For example, you could invest in a for-profit company that sells needed goods to low-income people at lower prices. Something like Wal-Mart, which is one of the most effective anti-poverty engines in the US. You might also say the same of something like Aldi (owner of Aldi stores and Trader Joe's), which is a discount store chain. This is true even though a company like Wal-Mart is seeking to make money first. Its customer base tends to skew heavily towards low-income consumers, and historically to rural and elderly consumers. When Wal-Mart is able to provide food, clothing, appliances and the like to poor people at a lower cost, it is making it marginally less painful to have a low income. Peter Suderman can explain why Wal-Mart is a humanitarian enterprise: Walmart’s customer base is heavily concentrated in the bottom income quintile, which spends heavily on food. The bottom income quintile spends about 25 percent of income on food compared to just 3.5 percent for the top quintile. So the benefits of Walmart’s substantially lower prices to the lowest earning cohort are huge, especially on food. As Suderman points out, this view of Wal-Mart dramatically lowering prices that low-income people pay for food was corroborated by an Obama adviser. That's just one company. You can pick the industry and company that best suits your personal preferences. Alternatively, you could invest in something like Whole Foods, a company with multiple missions to improve the planet and the community, in addition to the more typical mission of being a prosperous retail chain. Of course, as a general proposition, a less than entirely altruistic, charity-inclined investment doesn't need to be targeted at those with low incomes or at saving the planet. You could invest in almost anything you think is good (yachts, yo-yos, violins, energy production, industrial inputs, music performances) and the company will take care of making more of that good thing. You didn't say whether your goal was to help the poor, the planet, arts, sciences, knowledge, community, or whatever. What I understand you to be saying is you are willing to accept a lower ROI in exchange for some warm-fuzzies from your investment. That seems perfectly valid and reasonable to me, but it makes it much more subjective and particular to your tastes. So you'll need to pick something that's meaningful to you. If you're going to trade ROI for positive feelings, then you should pick whatever gives you your optimal blend of emotions and returns. Alternatively, you could invest in something stable and predictable to beat inflation (some sort of index or fund) and then annually use some portion of those profits to simply give to the charity of your choice. Your investment and your charity do not necessarily need to be the same vehicle. |
Tenant wants to pay rent with EFT | You can consider opening accounts either in Paypal or Google Wallet. In this way, you link your bank information to these accounts and the only information you need to provide your tenant is your e-mail id. Its safe and in this scenario -- just money transfer through bank account, there is no fee either for the sender (your tenant) or the receiver (you). |
When shorting a stock, do you pay current market price or the best (lowest) available ask price? | I would never use a market order. Some brokerages have an approval process your short-sale goes through before going to market. This can take some time. So the market prices may well be quite different later. Some brokerages use a separate account for short sales, so you must get their approval for the account before you can do the trade. I like the listing of shares available for shorting the Interactive Brokers has but I have experienced orders simply going into dead-air and sitting there on the screen, not being rejected, not going to market, not doing anything --- even though the shares are on the list. |
Peer to peer lending business model (i.e. Lending Club) | This is all answered in the prospectus. The money not yet invested (available/committed to a note but not yet funded) is held in pooled trust account insured by FDIC. Money funded is delivered to the borrower. Lending Club service their notes themselves. Read also my reviews on Lending Club. |
devastated with our retirement money that we have left | It sounds like the kinds of planners you're talking to might be a poor fit, because they are essentially salespersons selling investments for a commission. Some thoughts on finding a financial planner The good kind of financial planner is going to be able to do a comprehensive plan - look at your whole life, goals, and non-investment issues such as insurance. You should expect to get a document with a Monte Carlo simulation showing your odds of success if you stick to the plan; for investments, you should expect to see a recommended asset allocation and an emphasis on low-cost no-commission (commission is "load") funds. See some of the other questions from past posts, for example What exactly can a financial advisor do for me, and is it worth the money? A good place to start for a planner might be http://napfa.org ; there's also a franchise of planners providing hourly advice called the Garrett Planning Network, I helped my mom hire someone from them and she was very happy, though I do think your results would depend mostly on the individual rather than the franchise. Anyway see http://www.garrettplanningnetwork.com/map.html , they do require planners to be fee-only and working on their CFP credential. You should really look for the Certified Financial Planner (CFP) credential. There are a lot of credentials out there, but many of them mean very little, and others might be hard to get but not mean the right thing. Some other meaningful ones include Chartered Financial Analyst (CFA) which would be a solid investment expert, though not necessarily someone knowledgeable in financial planning generally; and IRS Enrolled Agent, which means someone who knows a lot about taxes. A CPA (accountant) would also be pretty meaningful. A law degree (and estate law know-how) is very relevant to many planning situations, too. Some not-very-meaningful certifications include Certified Mutual Fund Specialist (which isn't bogus, but it's much easier to get than CFP or CFA); Registered Investment Adviser (RIA) which mostly means the person is supposed to understand securities fraud laws, but doesn't mean they know a lot about financial planning. There are some pretty bogus certifications out there, many have "retirement" or "senior" in the name. A good question for any planner is "Are you a fiduciary?" which means are they legally required to act in your interests and not their own. Most sales-oriented advisors are not fiduciaries; they wouldn't charge you a big sales commission if they were, and they are not "on your side" legally speaking. It's a good idea to check with your state regulators or the SEC to confirm that your advisor is registered and ask if they have had any complaints. (Small advisors usually register with the state and larger ones with the federal SEC). If they are registered, they may still be a salesperson who isn't acting in your interests, but at least they are following the law. You can also see if they've been in trouble in the past. When looking for a planner, one firm I found had a professional looking web site and didn't seem sketchy at all, but the state said they were not properly registered and not in compliance. Other ideas A good book is: http://www.amazon.com/Smart-Simple-Financial-Strategies-People/dp/0743269942 it's very approachable and you'd feel more confident talking to someone maybe with more background information. For companies to work with, stick to the ones that are very consumer-friendly and sell no-load funds. Vanguard is probably the one you'll hear about most. But T. Rowe Price, Fidelity, USAA are some other good names. Fidelity is a bit of a mixture, with some cheap consumer-friendly investments and other products that are less so. Avoid companies that are all about charging commission: pretty much anyone selling an annuity is probably bad news. Annuities have some valid uses but mostly they are a bad deal. Not knowing your specific situation in any detail, it's very likely that 60k is not nearly enough, and that making the right investment choices will make only a small difference. You could invest poorly and maybe end up with 50K when you retire, or invest well and maybe end up with 80-90k. But your goal is probably more like a million dollars, or more, and most of that will come from future savings. This is what a planner can help you figure out in detail. It's virtually certain that any planner who is for real, and not a ripoff salesperson, will talk a lot about how much you need to save and so forth, not just about choosing investments. Don't be afraid to pay for a planner. It's well worth it to pay someone a thousand dollars for a really thorough, fiduciary plan with your interests foremost. The "free" planners who get a commission are going to get a whole lot more than a thousand dollars out of you, even though you won't write a check directly. Be sure to convert those mutual fund expense ratios and sales commissions into actual dollar amounts! To summarize: find someone you're paying, not someone getting a commission; look for that CFP credential showing they passed a demanding exam; maybe read a quick and easy book like the one I mentioned just so you know what the advisor is talking about; and don't rush into anything! And btw, I think you ought to be fine with a solid plan. You and your husband have time remaining to work with. Good luck. |
What is the tax treatment of scrip dividends in the UK? | The HMRC website says: Stock dividends are treated as income by virtue of CTA10/S1049, and taxable as savings income under Chapter 5 of Part 4 of ITTOIA05 (sections 409 to 414). ITTOIA05 is the Income Tax (Trading and Other Income) Act 2005, and says: 409 Charge to tax on stock dividend income (1) Income tax is charged on stock dividend income. (2) In this Chapter “stock dividend income” means the income that is treated as arising under section 410. 411 Income charged (1) Tax is charged under this Chapter on the amount of stock dividend income treated for income tax purposes as arising in the tax year. (2) That amount is the cash equivalent of the share capital on the issue of which the stock dividend income arises (see section 412), grossed up by reference to the dividend ordinary rate for the tax year. |
What capital gains taxes do I owe on stock sales in India? | Long term: Assuming you sold stock ABC through a registered stock exchange, e.g., the Bombay Stock Exchange or the National Stock Exchange of India, and you paid the Securities Transaction Tax (STT), you don't owe any other taxes on the long term capital gain of INR 100. If you buy stock BCD afterwards, this doesn't affect the long term capital gains from the sale of stock ABC. Short term: If you sell the BCD stock (or the ABC stock, or some combination therein) within one year of its purchase, you're required to pay short term capital gains on the net profit, in which case you pay the STT and the exchange fees and an additional flat rate of 15%. The Income Tax Department of India has a publication titled "How to Compute your Capital Gains," which goes into more detail about a variety of relevant situations. |
What happened to Home Depot's Stock in 1988? | It's got to be a bad chunk of data on Google. Yahoo finance does not show that anomaly for 1988, nor does the chart from Home Depot's investor relations site: |
How do I get into investing in stocks? | Start by paying down any high interest debt you may have, like credit cards. Reason being that they ultimately eat into any (positive) returns you may have from investing. Another good reason is to build up some discipline. You will need discipline to be a successful investor. Educate yourself about investing. The Motley Fool is probably still a good place to start. I would also suggest getting into the habit of reading the Wall Street Journal or at the very least the business section of the New York Times. You'll be overwhelmed with the terminology at first, but stick with it. It is certainly worth it, if you want to be an investor. The Investor's Business Daily is another good resource for information, though you will be lost in the deep end of the pool with that publication for sure. (That is not a reason to avoid getting familiar with it. Though at first, it may very well be overkill.) Save some money to open a brokerage account or even an IRA. (You'll learn that there are some restrictions on what you can do in an IRA account. Though they shouldn't necessarily be shunned as a result. Money placed in an IRA is tax deductible, up to certain limits.) ????? Profit! Note: In case you are not familiar with the joke, steps 4 & 5 are supposed to be humorous. Which provides a good time to bring up another point, if you are not having fun investing, then get out. Put your money in something like an S&P 500 index fund and enjoy your life. There are a lot more things to say on this subject, though that could take up a book. Come back with more questions as you learn about investing. Edit: I forgot to mention DRIPs and Investment Clubs. Both ideas are suggested by The Motley Fool. |
Would cross holding make market capitalization apparently more? | Initially, Each company has 10k shares. Company B has $500k money and possibly other assets. Every company has stated purpose. It can't randomly buy shares in some other firm. Company A issued 5k new shares, which gives it $500k money. Listed companies can't make private placements without regulatory approvals. They have to put this in open market via Public issue or rights issue. Company B does the same thing, issuing 5k shares for $500k money. Company A bought those 5k shares using the $500k it just got There is no logical reason for shareholder of Company B to raise 5K from Company A for the said consideration. This would have to increase. |
Is this mortgage advice good, or is it hooey? | Sounds like baloney to me. HELOCs are variable rate, so you are paying down the principal of a fixed rate loan with a variable rate loan. If you want to pay the mortgage down faster, make two half payments per month, and/or add a little extra to each payment (make sure with the bank that any extra will automatically go to principal). |
How do I figure out if I will owe taxes | If you want to predict the, the easiest solution is to get hold of a copy of last year's tax forms and fill them in with estimated numbers. Odds are that none of the more complicated deductions will apply to you this first time around, so I'd suggest just using the federal 1040EZ, and your state's equivalent, for this purpose. If it turns out that you can claim anything more than the standard deduction, that would reduce your taxes, so this is leaning toward the safe side. |
Are leverage/ko products the only reasonable way to trade stocks? | I am assuming you mean derivatives such as speeders, sprinters, turbo's or factors when you say "derivatives". These derivatives are rather popular in European markets. In such derivatives, a bank borrows the leverage to you, and depending on the leverage factor you may own between 50% to +-3% of the underlying value. The main catch with such derivatives from stocks as opposed to owning the stock itself are: Counterpart risk: The bank could go bankrupt in which case the derivatives will lose all their value even if the underlying stock is sound. Or the bank could decide to phase out the certificate forcing you to sell in an undesirable situation. Spread costs: The bank will sell and buy the certificate at a spread price to ensure it always makes a profit. The spread can be 1, 5, or even 10 pips, which can translate to a the bank taking up to 10% of your profits on the spread. Price complexity: The bank buys and sells the (long) certificate at a price that is proportional to the price of the underlying value, but it usually does so in a rather complex way. If the share rises by €1, the (long) certificate will also rise, but not by €1, often not even by leverage * €1. The factors that go into determining the price are are normally documented in the prospectus of the certificate but that may be hard to find on the internet. Furthermore the bank often makes the calculation complex on purpose to dissimulate commissions or other kickbacks to itself in it's certificate prices. Double Commissions: You will have to pay your broker the commission costs for buying the certificate. However, the bank that issues the derivative certificate normally makes you pay the commission costs they incur by hiding them in the price of the certificate by reducing your effective leverage. In effect you pay commissions twice, once directly for buying the derivative, and once to the bank to allow it to buy the stock. So as Havoc P says, there is no free lunch. The bank makes you pay for the convenience of providing you the leverage in several ways. As an alternative, futures can also give you leverage, but they have different downsides such as margin requirements. However, even with all the all the drawbacks of such derivative certificates, I think that they have enough benefits to be useful for short term investments or speculation. |
What are the benefits of opening an IRA in an unstable/uncertain economy? | Your are mixing multiple questions with assertions which may or may not be true. So I'll take a stab at this, comment if it doesn't make sense to you. To answer the question in the title, you invest in an IRA because you want to save money to allow you to retire. The government provides you with tax incentives that make an IRA an excellent vehicle to do this. The rules regarding IRA tax treatment provide disincentives, through tax penalties, for withdrawing money before retirement. This topic is covered dozens of times, so search around for more detail. Regarding your desire to invest in items with high "intrinsic" value, I would argue that gold and silver are not good vehicles for doing this. Intrinsic value doesn't mean what you want it to mean in this context -- gold and silver are commodities, whose prices fluctuate dramatically. If you want to grow money for retirement over a long period, of time, you should be invested in diversified collection of investments, and precious metals should be a relatively small part of your portfolio. |
Do retail traders get any advantage from learning methods of mathematical of finance? | If it could, it seems yet to be proven. Long Term Capital Management was founded by a bunch of math whizzes and they seem to have missed something. I'd never suggest that something has no value, but similar to the concept that "if time travel were possible, why hasn't anyone come back from the future to tell us" I'd suggest that if there were a real advantage to what you suggest, someone would be making money from it already. In my opinion, the math is simple, little more than a four function calculator is needed. |
How can I register a UK business without providing a business address? | You don't have to provide your personal home address per se. You can provide a legal address where Companies house can send across paper correspondence to. Companies house legally requires an address because directors are liable to their shareholders(even if you are the only shareholder) and to stop them from disappearing just like that with shareholder's money. Moreover your birth date will also be visible on websites which provide comapnies information. You can ask these websites to stop sharing your personal information. Every company must have a registered office within the UK which is the official legal address of the company. It must be a physical address (i.e. not a PO Box without a physical location) as Companies House will use this address to send correspondence to. To incorporate a private limited company you need at least one director, who has to be over 16 years of age. You may also have a secretary, but this is optional. The information you will need to supply for each officer includes: You may also have officers that are companies or firms, and for these you will need to supply the company or firm name, its registered office address, details of the legal form of the company, where it is registered and if applicable its registration number. |
Getting over that financial unease? Budgeting advice | Put your budget down on paper/spreadsheet/tool of choice (e.g Mint, YNAB, Excel). Track every cent for a few months. Seeing it written down makes The Financial Conversation easier. One simple trick is to pay yourself first. Take $100 and sock it away each month, or $25 per paycheck - send it to another account where you won't see it. Then live off the rest. For food - make a meal plan. Eggs are healthy and relatively cheap so you have breakfast covered. Oatmeal is about $2 for a silos' worth. Worst case you can live off of ramen noodles, peanut butter and tuna for a month while you catch up. Cut everything as some of the others have answered - you will be amazed how much you will not miss. Dave Ramsey's baby steps are great for getting started (I disagree with DR on a great many things so that's not advocating you sign up for anything). Ynab's methodology is actually what got me out of my mess - they have free classes in their website - where budgeting is about planning and not simply tracking. Good luck. |
Are variable rate loans ever a good idea? | The earlier you are in your career, the more willing you should be to take a better opportunity even if it has a short-term financial cost. You go to college even if McDonald's has an opening. After college you may take an entry level job with better long-term prospects even if a higher paying job is available. You may train for some professional qualification. Having expenses you have to pay limits your flexibility to do this. A variable rate loan that goes up later may give you the freedom to make better decisions early on. Thus in this case it may be worthwhile. That said - be very wary of variable rate loans. Unless you have iron discipline, they give the opportunity to bury yourself. |
find stock composition of a publicly traded fund | The big websites, Yahoo and the like, only give the 10 biggest positions of any fund. Download the annual report of the fund, go to page 18, you will find the positions on the 31st of December. However the actual positions could be different. The same applies to all funds. You need the annual report. |
Why do consultants or contractors make more money than employees? | There are a couple of reasons, including: |
What's are the differences between “defined contribution” and “defined benefit” pension plans? | Defined Benefit Plans: Defined benefit plans are disappearing because of their high cost to the companies that provide them. When an employee retires, the company must pay his pension for the rest of his life, even longer if the pension includes a survivor option. Thus the company's financial burden grows as more employees retire. By law, they must provide a fund that has sufficient resources to pay all present and future pensions. Low interest rates, such as we have now, place a greater burden on the amount that must be in these funds. For these reasons, most companies, including large ones like IBM and Lockheed Martin, have discontinued their pension plans and provide only defined contribution plans. Defined Contribution Plans: These require the company to only make contributions while the employee is working. Once the employee retires, the company's responsibility ends. Usually these plans employ a 401K type savings plan for which the employee contributes and the companies matches some or all of that contribution. Comparison: Although a fully company paid pension plan is the best, it is now almost unavailable. The defined contribution plan, if it includes company matching, can be a viable alternative if the investments are chosen wisely and perform as expected. Of course, this is not guaranteed but is probably the best option that most working people have at this time. |
How long can I convert 401(k) to Roth 401(k)? | Conversions must be done during the calendar year. This would apply to both IRA and 401(k) accounts. For IRAs, deposits may be made until 4/15, and the same holds for Solo 401(k) accounts. For conversions, the IRA permits a recharacterization, basically, a do-over, which reverses the conversion, any or all, in case you have any reason it should not have been done. That has a deadline of 10/15, i.e. 4/15 plus 6 month extension. The 401(k) conversion has no such provision. Simple answer 12/31 of the given year. |
How to calculate tax amounts withheld on mixed pre-tax and Roth 401(k) contributions, and match? | When you adjust your investments the following will happen: Initial condition: Modified condition: This means that after this change you will note that the amount of federal tax you pay each month via withholding will go up. You are now contributing less pre-tax, so your taxable income has increased. If you make no other changes, then in April you will either have increased your refund by 6 months x the additional $25 a month, or decreased the amount you owe by the same amount. There is no change in the total 401K balance at the end of the year, other than accounting for how much is held pre-tax vs. Roth post-tax. Keep in mind that employer contributions must be pre-tax. The company could never guess what your tax situation is. They withhold money for taxes based on the form you fill out, but they have no idea of your family's tax situation. If you fail to have enough withheld, you pay the penalty — not the company. *The tax savings are complex because it depends on marital status, your other pre-tax amounts for medical, and how much income your spouse makes, plus your other income and deductions. |
What should I do with my $10K windfall, given these options? | I think you've got competition on that list for where to put the money - I'd work out which option is costing me the most currently or will cost me the most in the future and take care of it. I'd be willing to bet that Eric is right, though, that it will need to be the roof. Not fixing it could cost you more in the long run than any of the other items on the list (assuming your circumstances remain roughly the same). General comments/other considerations: Any money that doesn't get spent on the roof (if any) - I would put in a rainy day fund. |
What are the alternatives to compound interest for a Muslim? | In the UK at least, we have Credit Unions. Credit Unions are not-for-profit organisations that don't pay interest on your balance, but instead give you a share of their profits at the end of the year (or at least my local branch do). This normally equates to around 1% of my balance. |
Is there an investment account where I can owe taxes only if the net of capital gain and dividend payment is positive? | Income and Capital are taxed separately in the uk. You probably can't get dividends paid gross even in ISA's you pay the basic rate of tax on dividends only higher rate tax payers get tax benefit from dividends. What you could do is invest in splits (Spilt capital investment trusts ) in the share class where all the return comes as capital and use up some of your yearly CGT allowance that way. |
Shouldn't a Roth IRA accumulate more than 1 cent of interest per month? | Terminology aside. Your gains for this year in a mutual fund do seem low. These are things that can be quickly, and precisely answered through a conversation with your broker. You can request info on the performance of the fund you are invested in from the broker. They are required to disclose this information to you. They can give you the performance of the fund overall, as well as break down for you the specific stocks and bonds that make up the fund, and how they are performing. Talk about what kind of fund it is. If your projected retirement date is far in the future your fund should probably be on the aggressive side. Ask what the historic average is for the fund you're in. Ask about more aggressive funds, or less if you prefer a lower average but more stable performance. Your broker should be able to adequately, and in most cases accurately, set your expectation. Also ask about fees. Good brokerages charge reasonable fees, that are typically based on the gains the fund makes, not your total investment. Make sure you understand what you are paying. Even without knowing the management fees, your growth this year should be of concern. It is exceptionally low, in a year that showed good gains in many market sectors. Speak with your broker and decide if you will stick with this fund or have your IRA invest in a different fund. Finally JW8 makes a great point, in that your fund may perform well or poorly over any given short term, but long term your average should fall within the expected range for the type of fund you're invested in (though, not guaranteed). MOST importantly, actually talk to your broker. Get real answers, since they are as easy to come by as posting on stack. |
Should I use put extra money toward paying off my student loans or investing in an index fund? | From a purely financial standpoint (psychology aside) the choice between paying off debt and investing on risky investments boils down to a comparison of risk and reward. Yes, on average the stock market has risen an average of 10% (give or take) per year, but the yearly returns on the S&P 500 have ranged from a high of 37.6% in 1995 to a low of -37% in 2008. So there's a good chance that your investment in index funds will get a better return than the guaranteed return of paying off the loan, but it's not certain, and you might end up much worse. You could even calculate a rough probability of coming out better with some reasonable assumptions (e.g. if you assume that returns are normally distributed, which historically they're not), but your chances are probably around 30% that you'll end up worse off in one year (your odds are better the longer your investment horizon is). If you can tolerate (meaning you have both the desire and the ability to take) that risk, then you might come out ahead. The non-financial factors, however - the psychology of debt, the drain on discretionary cash flow, etc. cannot be dismissed as "irrational". Paying off debt feels good. Yes, finance purists disagree with Dave Ramsey and his approaches, but you cannot deny the problems that debt causes millions of households (both consumer debt and student loan debt as well). If that makes them mindless "minions" because they follow a plan that worked for them then so be it. (disclosure - I am a listener and a fan but don't agree 100% with him) |
Why do people buy new cars they can not afford? | Many reasons So in general you are paying more for peace of mind when you buy a new car. You expect everything to be working and if not you can take it back to the dealer to have them fix it for free. |
Outstanding car bill, and I am primary but have not driven it for 2 years | What can you do? Pay the loan or face the debt collectors. The finance company don't care who now keeps the car, or who drives it. There's money outstanding on the loan, and your signature on the loan form. That's why co-signing a loan for someone else so often ends in tears. |
how do I calculate rate of return on call options that are spread | You don't necessarily have to use a LEAP to do a spread. Since you are doing a covered call, I'm assuming that you would be comfortable with having that call exercised and you are bullish on the stock. So doing a spread trade with the short call option would essentially be capping your maximum profit without risking the obligation to sell the stock below market value. An example for the payoff from a bull call spread: long lower strike call, short higher (covered) strike call can be found here |
UK Limited Company paying third party medical costs | One possibility to consider would be making an arrangement with a registered UK charity where you would donate the necessary amount for the specific purpose of covering medical costs of that particular person. Charitable donations are expressly deductible from business profits. Some charities may be genuinely interested in helping people from developing countries get quality medical help that's not available in those countries. There may be some organizations in the proposed beneficiary's country that have contacts among the UK charities. PS. I am not a lawyer or an accountant, nor do I claim to be either. The above is not a legal or accounting advice. Consider seeking professional assistance. |
Buying a mortgaged house | Based on what you asked and your various comments on other answers, this is the first time that you will be making an offer to buy a house, and it seems that the seller is not using a real-estate agent to sell the house, that is, it is what is called a FSBO (for sale by owner) property (and you can learn a lot of about the seller's perspective by visiting fsbo.com). On the other hand, you are a FTB (first-time buyer) and I strongly recommend that you find out about the purchase process by Googling for "first-time home buyer" and reading some of the articles there. But most important, I urge you DO NOT make a written offer to purchase the property until you understand a lot more than you currently do, and a lot more than all the answers here are telling you about making an offer to buy this property. Even when you feel absolutely confident that you understand everything, hire a real-estate lawyer or a real-estate agent to write the actual offer itself (the agent might well use a standard purchase offer form that his company uses, or the State mandates, and just fill in the blanks). Yes, you will need to pay a fee to these people but it is very important for your own protection, and so don't just wing it when making an offer to purchase. As to how much you should offer, it depends on how much you can afford to pay. I will ignore the possibility that you are rich enough that you can pay cash for the purchase and assume that you will, like most people, be needing to get a mortgage loan to buy the house. Most banks prefer not to lend more than 80% of the appraised value of the house, with the balance of the purchase price coming from your personal funds. They will in some cases, loan more than 80% but will usually charge higher interest rate on the loan, require you to pay mortgage insurance, etc. Now, the appraised value is not determined until the bank sends its own appraiser to look at the property, and this does not happen until your bid has been accepted by the seller. What if your bid (say $500K) is much larger than the appraised value $400K on which the bank is willing to lend you only $320K ? Well, you can still proceed with the deal if you have $180K available to make the pay the rest. Or, you can let the deal fall apart if you have made a properly written offer that contains the usual contingency clause that you will be applying for a mortgage of $400K at rate not to exceed x% and that if you can't get a mortgage commitment within y days, the deal is off. Absent such a clause, you will lose the earnest money that you put into escrow for failure to follow through with the contract to purchase for $500K. Making an offer in the same ballpark as the market value lessens the chances of having the deal fall through. Note also that even if the appraised value is $500K, the bank might refuse to lend you $400K if your loan application and credit report suggest that you will have difficulty making the payments on a $400K mortgage. It is a good idea to get a pre-approval from a lender saying that based on the financial information that you have provided, you will likely be approved for a mortgage of $Z (that is, the bank thinks that you can afford the payments on a mortgage of as much as $Z). That way, you have some feel for how much house you can afford, and that should affect what kinds of property you should be bidding on. |
Taking a car loan vs cash and effect on credit score | Imagine that your normal mode of using credit gets you a score of X. As time goes by your score trends upward if the positive items (length of credit) outweigh your negative items. But there are no big increases or decrease in your score. Then you make a one time change to how you use credit. If this is a event that helps your score, there will be a increase in your score. If it is bad thing your score will drop. But if you go back to your standard method of operating your score will drift back to the previous range. Getting a car loan for a few months to get a bump in your credit score, will not sustain your score at the new level indefinitely. Overtime the impact will lessen, and the score will return your your normal range. Spending money on the loan just to buy a temporary higher credit score is throwing away money. |
What options do I have at 26 years old, with 1.2 million USD? | Something not in answers so far: define your goals. What is important to you? My goals, if I were in your shoes, would include a debt-free home, passive (investment) income so I would not have to work, and have health insurance covered. I could think of many more details, and already have, but you get the idea. To help determine which investment information to learn first, consider how much risk you can tolerate. I know that's vague at this point, but if you're looking for safe investments first, you could learn about mutual funds, and then index funds specifically. At the risky extreme, you could learn about stock options, but I would not recommend such risk. |
Why does Yahoo Finance and Google Finance not match historical prices? | I work on a buy-side firm, so I know how these small data issues can drive us crazy. Hope my answer below can help you: Reason for price difference: 1. Vendor and data source Basically, data providers such as Google and Yahoo redistribute EOD data by aggregating data from their vendors. Although the raw data is taken from the same exchanges, different vendors tend to collect them through different trading platforms. For example, Yahoo, is getting stock data from Hemscott (which was acquired by Morningstar), which is not the most accurate source of EOD stocks. Google gets data from Deutsche Börse. To make the process more complicated, each vendor can choose to get EOD data from another EOD data provider or the exchange itself, or they can produce their own open, high, low, close and volume from the actual trade tick-data, and these data may come from any exchanges. 2. Price Adjustment For equities data, the re-distributor usually adjusts the raw data by applying certain customized procedures. This includes adjustment for corporate actions, such as dividends and splits. For futures data, rolling is required, and back-ward and for-warding rolling can be chosen. Different adjustment methods can lead to different price display. 3. Extended trading hours Along with the growth of electronic trading, many market tends to trade during extended hours, such as pre-open and post-close trading periods. Futures and FX markets even trade around the clock. This leads to another freedom in price reporting: whether to include the price movement during the extended trading hours. Conclusion To cross-verify the true price, we should always check the price from the Exchange where the asset is actually traded. Given the convenience of getting EOD data nowadays, this task should be easy to achieve. In fact, for professional traders and investors alike, they will never reply price on free providers such as Yahoo and Google, they will most likely choose Bloomberg, Reuters, etc. However, for personal use, Yahoo and Google should both be good choices, and the difference is small enough to ignore. |
Tenant wants to pay rent with EFT | Yes, it is safe, we have been doing it for years. We prefer our tenants to make their rent payments in this manner. In fact, we prefer that they set up an automatic payment for the rent, either through their online banking or through their bank directly. Apart from getting your rent on time, this method also has the added benefit of both parties having their own records of rent payments through their bank statements, in case there is a dispute about the rent sometime down the track. Having a separate bank account just for the rent does make sense as well, it makes it easier for you to check if rent has come in, it makes it easier if you need to compare your statement without having to highlight all the rent payments amongst all other payments (you might not want to show your other incomes and spending habits to others), and you can withdraw the rents to your other account (which might offer higher interest) after it has come in, leaving a small balance most of the time in your rent account. |
What to do with your savings in Japan | Been here in Japan 12 years mate, and you're right, the investment options here suck. Be very wary of them, they will take all your money in outrageous fees--3% in and 3% out of some "investment" options. It's a scam. Send the money back home and manage it there. I recommend setting up a Vanguard account back in the UK, then you can invest in Vanguard index funds. Vanguard charges no commission for buying and selling their funds when you have a Vanguard account. I have nearly all my money there (Vanguard US), and I use the free Personal Capital online software to understand how to best manage the allocations in my portfolio. Of course you'll lose a bit of money on wire transfer fees, but you'll more than make up for it if in the long-term, and they may also be offset by currency rate anyway (right now the yen is strong, so a good time to use it to buy GBP). Also you may never need to send the money back to Japan unless you plan on retiring here. |
What are “upstream investments” and “downstream investments” in this context? | Upstream is into businesses that supply the original business; downstream is into businesses that make use of the original product. So in that description, what they are saying is that the original business received products from plantations and sent products to manufacturing. This is also called vertical integration. Meaning that they are diversifying along their supply chain so that they control more of it. This is in contrast with horizontal integration, where they move into new products that either compete with the existing products or which are entirely separate. In general, the upside of vertical integration is that a company is less reliant on suppliers (and intermediate consumers) and has more control over its supply chain. The downside is that they have less opportunity to partner with other companies in the same supply chain, as they compete with them. Some companies are better at managing to do both. For example, Amazon.com has integrated fulfillment and sales. But partners can still do their own fulfillment and/or sales, choosing how much to send out to Amazon. If you are investing in individual stocks, integrated companies can be problematic in that they cut across diversification areas. So they can be harder to balance with other stocks. You can either buy plantations, transport, and manufacturing together or not buy at all. If your investment strategy says to increase plantations and reduce manufacturing, this can be difficult to implement with an integrated company. Of course, everyone else has the same problem, which can lead to integrated companies being undervalued. So they may be an opportunity as a value stock. |
“Inflation actually causes people not to spend”… could it be true? | Inflation can go up for a number of reasons. Boom times can cause inflation, as everyone is making and spending a lot of money, so prices and inflation goes up. In times like these central banks usually increase interest rates to curb spending and thus bring down inflation. By raising interest rates the central bank is increasing the cost of borrowing money. So with high prices and a higher cost to borrowing money, most people start reducing their spending. When this happens businesses sell less stock and have increased costs (due to higher interest rates) so have to lay off staff or reduce their hours at work, so people will have even less money to spend. This causes prices to fall and reduces inflation and can result in a recession. At this point in time central banks start reducing interest rates to make the cost of borrowing money cheaper and stimulate people to start spending again. And so the cycle continues. The result in this case is that inflation itself didn't kerb demand, but was helped along by the central bank rising interest rates. Another reason causing inflation can be a restriction on the supply of certain goods or services. An example we went through about 2 years ago was when floods caused banana crops up in Northern Australia to be devastated. This caused a lack of supply in bananas for almost a year across Australia. The normal price for bananas here is between $1 to $3 per kg. During this period banana prices skyrocketed up to $14 per kg. The result: very few were buying bananas. So the increase in price here caused a reduction in demand directly. |
Why not just invest in the market? | The market is efficient, but it is not perfectly efficient. There are entities out there that consistently, legitimately, and significantly outperform the market because of asymmetric information (not necessarily insider trading) and their competitive advantage (access to data and proprietary, highly sophisticated models)*. I say this despite most hedge funds performing worse than their respective benchmarks. For most people (even very smart people) it makes a lot of sense to invest in index funds with a reasonable asset allocation (based on desired volatility, tax situation, rebalancing methods etc.). * The usual example that is cited is RT's Medallion Fund because it has enjoyed quite dramatic returns. Other groups that have been successful include Citadel and Soros Fund Management. |
Why I cannot find a “Pure Cash” option in 401k investments? | There is no zero risk option! There is no safe parking zone for turbulent times! There is no such thing as a zero-risk investment. You would do well to get this out of your head now. Cash, though it will retain its principle over time, will always be subject to inflation risk (assuming a positive-inflation environment which, historically in the US anyway, has always been the case since the Great Depression). But I couldn't find a "Pure Cash - No investment option" - what I mean by this is an option where my money is kept idle without investing in any kind of financial instrument (stocks, bonds, other MFs, currencies, forex etc etc whatever). Getting back to the real crux of your question, several other answers have already highlighted that you're looking for a money market fund. These will likely be as close to cash as you will get in a retirement account for the reasons listed in @KentA's answer. Investing in short-term notes would also be another relatively low-risk alternative to a money market fund. Again, this is low-risk, not no-risk. I wanted such kinda option because things may turn bad and I may want nothing invested in the stock markets/bond markets. I was thinking that if the market turns bear then I would move everything to cash Unless you have a the innate ability to perfectly time the market, you are better off keeping your investments where they are and riding out the bear market. Cash does not generate dividends - most funds in a retirement account do. Sure, you may have a paper loss of principle in a bear market, but this will go away once the market turns bull again. Assuming you have a fairly long time before you retire, this should not concern you in the slightest. Again, I want to stress that market timing does not work. Even the professionals, who get paid the big bucks to do this, on average, get it right as often as they get it wrong. If you had this ability, you would not be asking financial questions on Stack Exchange, I can tell you that. I would recommend you read The Four Pillars of Investing, by William Bernstein. He has a very no-nonsense approach to investing and retirement that would serve you (or anybody) well in turbulent financial markets. His discussion on risk is especially applicable to your situation. |
Are there any risks from using mint.com? | Some banks allow mint.com read-only access via a separate "access code" that a customer can create. This would still allow an attacker to find out how much money you have and transaction details, and may have knowledge of some other information (your account number perhaps, your address, etc). The problem with even this read-only access is that many banks also allow users at other banks to set up a direct debit authorization which allows withdrawals. And to set the direct debit link up, the main hurdle is to be able to correctly identify the dates and amounts of two small test deposit transactions, which could be done with just read-only access. Most banks only support a single full access password per account, and there you have a bigger potential risk of actual fraudulent activity. But if you discover such activity and report it in a timely manner, you should be refunded. Make sure to check your account frequently. Also make sure to change your passwords once in a while. |
Receive money from US Client to Myself in India by selling services | You can receive funds from US Client as an individual. There is no legal requirement for you to have a company. If the transactions are large say more than 20 lacs in a year, its advisable to open a Private Ltd. Although its simple opening & Registering a company [A CA or a Laywer would get one at a nominal price of Rs 5000] you can do yourself. Whatever be the case, its advisable to have seperate accounts for this business / professional service transactions. Maintain proper records of the funds received. There are certain benefits you can claim, a CA can help you. Paying taxes in Advance is your responsibility and hence make sure you keep paying every quarter as advance tax. Related questions Indian citizen working from India as freelancer for U.S.-based company. How to report the income & pay tax in India? Freelancer in India working for Swiss Company Freelancing to UK company from India How do I account for money paid to colleagues out of my professional income? |
Money Saved on finance charges | Avoiding a cost (interest) isn't quite the same as income. There is no entry, nothing for you to consider for this avoided interest. What you do have is an expense that's no longer there, and you can decide to use that money elsewhere each month. |
When is an IPO considered failure? | Just skimming through the Wikipedia article on airberlin, I notice there is more to the story than simply "airberlin's IPO failed, so they postponed it and did it anyways." 3 points to keep in mind about IPOs: 1) An IPO is the mechanism for taking a private company and setting it up for shares to be owned by "the public". 2) The process of selling shares to the public often allows original owners and/or early investors to "cash out". Most countries (including member nations of the EU) limit some transactions like pre-IPO companies to "accredited investors". 3) Selling shares to the public also can allow the company to access more funds for growth. This is particularly important in a capital-intensive business like an airline; new B737-MAX costs >$110M. New A320neo costs >$105M USD. Ultimately, the question of a successful IPO depends on how you define success. Initially, there was a lot of concern that the IPO was set up with too much focus on goal #2... allowing the management & owners to cash out. It looks like the first approach was not meeting good opinions in the market during 2006. A major concern was that the initial approach focused on management only cashing out its shares and no money actually going to the company to support its future. The investment bankers restructured the IPO, including the issuance of more new shares so that more $ could end up in the company's accounts, not just in the accounts of the management. If anything, it's still a pretty successful IPO given that the shares were successfully listed, the company collected the money it needed to invest and grow, and the management still cashed out. |
Do I need to file taxes when selling on eBay or Amazon? | In simple terms, it is a business operation when it becomes a profit-making enterprise. It is a grey area, but there is a difference between selling occasional personal items on eBay and selling for profit. I would imagine the sort of considerations HM Revenue & Customs would take into account are the size of your turnover, the extent to which you are both buying and selling, and whether you are clearly specialising in one particular commodity as opposed of disposing of unwanted presents or clearing the loft. http://www.ebay.co.uk/gds/When-does-eBay-selling-become-taxable-/10000000004494855/g.html I don't believe that you selling your personal camera gear will be taxable, but as the link says, it is a grey area. They also recommend to do this It's far better than having to deal with an investigation a few years down the line. When it comes to completing your tax return, there is a section which is headed "other income", and it is here where you will enter the net earnings from the web business. "Net" here means your additional income, less all expenses associated with it. If you are still worried I would always encourage people to take a cautious approach and discuss their position with HMRC via its helpline on 08454 915 4515. |
What to do with your savings in Japan | The reason for these low interests is that the Japanese central bank is giving away money at negative interests to banks. Yes, negative. So, short of opening your own bank, you'll have to either choose less liquid investments or more risky ones. Get Japanese government bonds. Not a great interest, band not that liquid, but for a 5 years bond you'll do better than the bank can. Get Japanese corporate bonds. Still not great, and a bit more risky, it's better than nothing. Get a Japanese mutual fund. I can't recommend any though. Buy Japanese stock. Many Japanese stock have interesting kickbacks. For example if you buy enough stock of Book-Off you'll get some free books every month. it's risky though because I believe the next NIKKEI index crash is imminent. |
HSBC Hong Kong's “Deposit Plus” Product: What is it, and what strategies to employ? | HSBC Hong Kong's “Deposit Plus” Product" the same as "Dual Currency Product" . it's Currency link Sell base Currency Call / Alternative Currency Put FX Option It's not protected by the Deposit Insurance System in HK You can search Key Word "Dual Currency Product" & "Dual Currency Investment" & "Dual Currency Deposit" The only one of the world's foreign exchange structured product book 『雙元貨幣產品 Dual Currency Product』 ISBN 9789574181506 |
Options tax treatment | You would not owe any taxes in the 2015 year, unless you got exercised and called away in 2015. The premium would be short term capital gains barring some other exception I'm not aware of, and if you retain a gain on the underlying shares then that would still be long term capital gains. If it gets called in say April 2016, is the premium+profit+dividends all long term capital gains for the year 2016? The profits are long term capital gains and the premium serves to lower your cost basis, dividends have their own conditions so you'll have to do separate research on that, fortunately they'll likely be negligible compared to the potential capital gains and options premium. |
Where can end-of-day data be downloaded for corporate bonds? | Here is one from a Bloomberg partnership, it is free. To get the end of day prices, you may need some programming done. PM me if you need help with that. Getting bond quotes and general information about a bond issue is considerably more difficult than researching a stock or a mutual fund. A major reason for this is that there is not a lot of individual investor demand for the information; therefore, most bond information is available only through higher level tools that are not accessible to the average investor. Read more: Where can I get bond market quotes? | Investopedia http://www.investopedia.com/ask/answers/06/bondquote.asp#ixzz3wXVwv3s5 |
Equity market inflow meaning | Inflows to the US equity market can come from a variety of sources; for instance: You were paid a year-end bonus and decided to invest it in US equities instead of foreign equities, bonds, savings or debt reduction. You sold foreign equities, bonds, or other non-US equities and decided to invest in US equities. You decided a better use of cash in a savings account, CD or money market fund, was to invest in US equities. If for every buyer, there's a seller, doesn't that also mean that there were $25B in outflows in the same time period? Not necessarily. Generally, the mentions we see of inflows and outflows are net; that is, the gross investment in US equities, minus gross sales of US equities equals net inflows or outflows. The mere fact that I sold my position in, say, Caterpillar, doesn't mean that I had to re-invest in US equities. I may have bought a bond or a CD or a house. Because of fluctuations in existing stocks market value, bankruptcies and new issues, US equities never are and never will be a zero-sum game. |
Stock Option Value correlated to net worth of company | I'm guessing you're talking about options given to employees. The company can issue stock options at whatever strike price it wants. The difference between the strike price and the actual market value is considered income to the employee. You can get the options at $0 strike just as well (although companies generally just give RSUs instead in this case). |
How much time would I have to spend trading to turn a profit? | Sounds like you are a candidate for stock trading simulators. Or just pick stocks and use Yahoo! or Google finance tools to track and see how you do. I wouldn't suggest you put real money into it. You need to learn about research and timing and a bunch of other topics you can learn about here. I personally just stick to life cycle funds that are managed products that offer me a cruise control setting for investing. |
Is my mother eligible for SNAP? | If she lives by herself, my guess would be that she qualifies as a household of one. Either way, her monthly income is below the threshold, so she should be eligible. Per the linked website The only way to determine if your household is eligible for SNAP benefits is to apply. I'd say it's worth a try. |
What is the best source of funding to pay off debt? | Thirty thousand in credit card debt is a "big elephant to eat" so to speak. But you do it by taking a bite at a time. One positive is that you do not want to borrow from your 401K. Doing so is a horrible idea. The first question you have to ask yourself and understand, is how you accumulated 30K in credit card debt in the first place? Most people get there by running up a relatively small amount, say 5K, and playing the zero transfer game a few times. Then add in a late payment, and a negative event or two (like the car breaking down or a trip to the emergency room) and poof a large amount of credit card debt. Obviously, I have no idea if this is how you got there, and providing some insight might help. Also, your age, approximate income, and other debts might also help provide more insight. I assume you are still working and under age 59.5 as you are talking about borrowing from your 401K. Where I come from is that my wife (then girlfriend) found ourselves under stifling debt a few years ago. When we married, we became very intentional and focused on ridding ourselves of debt and now sit completely debt free (including the house). During our debt payoff time, we lived off of less than 25% of our salary. We both took extra jobs when we were able. Intensity was our key. If I were you, I would not refi the house. There are costs associated with this and why would you put more debt on your home? I might cash out the annuity provided that there are no negative tax consequences and depending on how much you can get for it. Numbers are the key here. However, I feel like doing so will not retire this debt. The first thing you need to do is get on a written budget. A game plan for spending and stick to it. If you are married, your spouse has to be part of this process. The budget has to be fresh each month, and each month you and your wife should meet. To deviate from the budget, you will also need to have a meeting. My wife and I still do this despite being debt free and enjoying very healthy incomes. Secondly, it is about cutting expenses. Cable: off. No eating out or vacations. Cut back on cell phone plans, only basic clothing. Gift giving is of the $5 variety and only for those very close to you. Forget lattes, etc. Depending on your income I would cut 401K contributions to zero or only up to the company match (if your household income is above 150K/year). Third, it is about earning more. Ebay, deliver pizzas, cut grass, overtime, whatever. All extra dollars go to credit card balance reduction. At a minimum, you should find an extra $1000/month; however, I would shoot for 2K. If you can find 2K, you will be done with this in 13 months. I know the math doesn't work out for that, but once you get momentum, you find more. How good will it feel to be out from under this oppression next March? I know you can do this without cashing in the annuity or refinancing. Do you believe it? |
How to move (or not move) an LLC from Illinois to New Mexico? | Why not just leave it as is and register as foreign entity in New Mexico? You won't avoid the gross receipts tax, but other than that - everything stays as is. Unless Illinois has some taxes that you would otherwise not pay - just leave it there. |
Are you allowed to have both a 401(k) and a SIMPLE IRA? If so, what about limits? | I am not 100% sure, but I think the answer is this: You can't max out both. You could theoretically max out the SIMPLE IRA ($11,500) and then contribute $4,000 to your 401k, but your total can't exceed the 401k limit of $16,500. This also means you could max out your 401k at $16,500, but you couldn't contribute anything to the SIMPLE IRA. Note that no matter what, you can't contribute more than $11,500 to your SIMPLE IRA. (Note that this is all independent from your Traditional or Roth IRA, which are subject to their own limits, and not affected by your participation in employer-sponsored plans.) As I understand it, a 401k and a SIMPLE IRA both fall under the umbrella of "employer-sponsored plans". Just like you can't max out two 401k's at two different employers, you can't do it with the 401k and the SIMPLE IRA. The only weird thing is the contribution limit differences between SIMPLE IRA and 401k, but I don't think the IRS could/would penalize you for working two jobs (enforcing the lower SIMPLE IRA limit for all employer-sponsored retirement accounts). You should probably run the numbers, factoring in the employer match, and figure out which account-contribution scenario makes the most financial sense for you. However, I'm not sure how the employer match helps you when you're talking about a small business that you own/run. You may also want to look at how the employer match of the SIMPLE IRA affects the taxes your business pays. Disclaimer #1: I couldn't find a definitive answer on your specific scenario at irs.gov. I pieced the above info from a few different "SIMPLE IRA info" sites. That's why I'm not 100% sure. It seems intuitively correct to me, though. Does your small business have an accountant? Maybe you should talk to him/her. Disclaimer #2: The $ amounts listed above are based on the IRS 2010 limits. |
What are the economic benefits of owning a home in the United States? | @Alex B already answered the first question. I want to respond to the second and third: I have heard the term "The equity on your home is like a bank". What does that mean? I suppose I could borrow using the equity in my home as collateral? Yes, you can borrow against the equity in your home. What you should keep in mind is that you can only borrow against the amount that you've paid on your house. For example, if you've paid $100,000 against your house, you can then borrow $100,000 (assuming the value hasn't changed). The argument that this is a good deal misses the obvious alternative: If you didn't spend that $100,000 on a house, then you'd still have it and wouldn't need to take out a loan at all. Of course, equity still has value, and you should consider it when doing the cost/benefit analysis, but make sure to compare your equity to savings you could have from renting. Are there any other general benefits that would drive me from paying $800 in rent, to owning a house? Economically: As you'll notice from my parenthetical remarks, this is extremely situational. It might be good to come up with a spreadsheet for your situation, taking all of the costs into account, and see if you end up better or worse. Also, there's nothing wrong with buying a house for non-economic reasons if that's what you want. Just make sure you're aware of the real cost before you do it. |
I got my bank account closed abruptly how do I get money out? | First, if your account has been closed you should not be able to use your debit card in any format. As you mentioned that you are able to use that so your back account is active. So this indicates it is a scam In case account is closed, bank confirms your address and will send you a cheque for the amount in your account. Don't worry. You money will never be lost |
My ex sold our car that still had money owed | It is a legal issue for two reasons. In the United States if both names were on the title both people would have had to sign the paperwork in order to transfer the title. If the car was collateral for the loan, then the bank would have had to be involved in the transaction. The portion of the check need to repay the loan would have had to have been made out to the bank. If the car was sold to a dealership, then paperwork must have been forged. If the car was sold to a person then it is possible that they were too naive to know what paperwork was required, but it is likely still fraud. You need legal advice to protect your money, and your credit score. They should also be able to tell you who needs to be contacted: DMV, the police, the dealership, the bank. |
Should I switch to this high rate checking account for my emergency fund? | Check out the "rewards checking" accounts listed on this thread at fatwallet finance forums. You could easily get 3.5% - 4% right now if you are willing to do the rewards checking dance. If not, you should look into the 1-2% accounts at the top. I use Alliant CU and their website is nice (and they give you your credit score every six months). |
Price Earnings Ratio | The P/E ratio is a measure of historic (the previous financial year) earnings against the current share price. If the P/E is high, this means that the market perceives a big increase in future earnings per share. In other words, the perception is that this is a fast growing company. Higher earnings may also equate to big increases in dividends and rapid expansion. On the other hand, if the P/E is low, then there is a perception that either earnings per share are decreasing or that future growth in earnings is negligible. In other words, low P/E equates to a perception of low future growth and therefore low prospects for future payout increases - possibly even decreases. The market is (rightly) usually willing to pay a premium for fast growing companies. |
What percentage of my stock portfolio should be international (non-US) stocks? | Rephrasing your question: Am I diversified if I have more than 50% US stocks? I would say that you can certainly be diversified and have more than 50% of your portfolio invested in US Stocks. I view the amount of international stocks (non-US) as a risk choice. My observations have been that my international stocks have higher risk which comes with a higher reward. I'm not comfortable with putting too much of my portfolio into a very high risk category. I personally invest 25% directly in mutual funds that invest in foreign stocks. When you couple that with the money I invest in US stocks via mutual funds that have foreign interests (Coke, GE, etc.), I'm somewhat over 25% international in my portfolio. |
Avoid Capital Gains on Rental | Just brainstorming here, but my gut feeling is it should be possible to sell your home to yourself with the sole purpose of resetting your basis. Taken at face value it feels illegal, but since I think we all would agree that you could sell your house to a third party and purchase the identical house next door for the same price (thus resetting your basis), why can't you purchase the same home right back? If one is legal, it seems odd for the other not to be. That being said, I have no idea how to legally do it. Perhaps you truly need a third party to step in which you sell it to, and then buy it back from them sometime in the future. Or perhaps you could start an LLC and have it purchase your home from you. Either way, I highly suggest finding an expert real estate attorney/accountant before attempting this, and don't be surprised if you get multiple opposite opinions. I suspect this is a gray area which will highly depend on how tax "aggressive" you are willing to be. |
Can an unmarried couple buy a home together with only one person on the mortgage? | It's not typically possible for someone to jointly own the house, who is not also jointly liable for the mortgage. This doesn't matter however, because it is possible for two people to get a mortgage together, where only one person's income is assessed by the lender. If that person could get a mortgage of that amount on their own, then the couple should also be able to get the same mortgage. Source: My wife and I got a mortgage like this. She is self-employed, rather than meet the very high requirements for proving her self-employment income, we simply said that we only wanted my income to be taken into consideration. |
In Australia, how to battle credit card debt? | Victor addressed the card issue with an excellent answer, I'd like to take a stab at the budget and income side. Your question clearly stated "I am left with no extra money" each month. Whenever I read such an assertion, I ask the person, "but surely, X% of people in your country get by on a salary that's 95% of yours." In other words, there's the juggling of the debt itself, which as Victor's math shows, is one piece of the puzzle. The next piece is to sift through your budget and find $100/mo you spend that could be better spent reducing your debt. Turn down the temperature in the winter, up in the summer, etc. Take lunch to work. No Lattes. Really look at the budget and do something. On the income side. There are countless ways to earn a bit of extra money. I knew a blogger who started a site called "Deliver away Debt." He told a story of delivering pizza every Friday and Saturday night. The guy had a great day job, in high tech, but it didn't lend itself to overtime, and he had the time available those two evenings to make money to kill off the debt he and his wife had. Our minimum wage is currently just over $7, but I happened to see a sign in a pizza shop window offering this exact position. $10/hr plus gas money. They wanted about 8 hours a weekend and said in general, tips pushed the rate to well over $15/hr. (They assumed I was asking for the job, and I said I was asking for a friend). This is just one idea. Next, and last. I knew a gal with a three bedroom small house. Tight budget. I suggested she find a roommate. She got so many responses, she took in two people, and the rents paid her mortgage bill in full. Out of debt in just over a year, instead of 4+. And in her case, no extra hours at all. There are sites with literally 100's of ideas. It takes one to match your time, interest, and skill. When you are at $0 extra, even finding $250/mo will change your life. |
Why does selling and then rebuying stock not lead to free money? | You are misunderstanding what makes the price of a stock go up and down. Every time you sell a share of a stock, there is someone else that buys the stock. So it is not accurate to say that stock prices go down when large amounts of the stock are sold, and up when large amounts of the stock are bought. Every day, the amount of shares of a stock that are bought and sold are equal to each other, because in order to sell a share of stock, someone has to buy it. Let me try to explain what actually happens to the price of a stock when you want to sell it. Let's say that a particular stock is listed on the ticker at $100 a share currently. All this means is that the last transaction that took place was for $100; someone sold their share to a buyer for $100. Now let's say that you have a share of the stock you'd like to sell. You are hoping to get $100 for your share. There are 2 other people that also have a share that they want to sell. However, there is only 1 person that wants to buy a share of stock, and he only wants to pay $99 for a share. If none of you wants to sell lower than $100, then no shares get sold. But if one of you agrees to sell at $99, then the sale takes place. The ticker value of the stock is now $99 instead of $100. Now let's say that there are 3 new people that have decided they want to buy a share of the stock. They'd like to buy at $99, but you and the other person left with a share want to sell at $100. Either one of the sellers will come down to $99 or one of the buyers will go up to $100. This process will continue until everyone that wants to sell a share has sold, and everyone who wants to buy a share has bought. In general, though, when there are more people that want to sell than buy, the price goes down, and when there are more people that want to buy than sell, the price goes up. To answer your question, if your selling of the stock had caused the price to go down, it means that you would have gotten less money for your stock than if it had not gone down. Likewise, if your buying the stock had caused it to go up, it just means that it would have cost you more to buy the stock. It is just as likely that you would lose money doing this, rather than gain money. |
Why should the P/E ratio of a growth stock match its percentage earnings growth rate? | To perhaps better explain the "why" behind this rule of thumb, first think of what it means when the P/E ratio changes. If the P/E ratio increases, then this means the stock has become more expensive (in relative terms)--for example, an increase in the price but no change in the earnings means you are now paying more for each cent of earnings than you previously were; or, a decrease in the earnings but no change in the price means you are now paying the same for less earnings. Keeping this in mind, consider what happens to the PE ratio when earnings increase (grow)-- if the price of the stock remains the same, then the stock has actually become relatively "cheaper", since you are now getting more earnings for the same price. All else equal, we would not expect this to happen--instead, we would expect the price of the stock to increase as well proportionate to the earnings growth. Therefore, a stock whose PE ratio is growing at a rate that is faster than its earnings are growing is becoming more expensive (the price paid per cent of earnings is increasing). Similarly, a stock whose PE ratio is growing at a slower rate than its earnings is becoming cheaper (the price paid per cent of earnings is decreasing). Finally, a stock whose P/E ratio is growing at the same rate as its earnings are growing is retaining the same relative valuation--even though the actual price of the stock may be increasing, you are paying the same amount for each cent of the underlying company's earnings. |
Is an open-sourced World Stock Index a pipe-dream? | I think that any ETF is "open source" -- the company issues a prospectus and publishes the basket of stocks that make up the index. The stuff that is proprietary are trading strategies and securities or deriviatives that aren't traded on the open market. Swaps, venture funds, hedge funds and other, more "exotic" derivatives are the things that are closed. What do you mean by "open source" in this context? |
Is there a legal deadline for when your bank/brokerage has to send your tax forms to you? | I can't find specific information for Form 1099-DIV for this tax year. However, I found this quote for next tax season that talks about Form 1099-B: Due date for certain statements sent to recipients. The due date for furnishing statements to recipients for Forms 1099-B, 1099-S, and 1099-MISC (if amounts are reported in box 8 or 14) is February 15, 2018. [emphasis added] I know many brokerages bundle the 1099-DIV with the 1099-B, so one might assume that the deadlines are the same. February 15 seems consistent with the messages I got from my brokerages that said the forms will be mailed by mid-February. |
Unable to understand logic behind why there is no exit load on liquid fund | Imagine that a fund had a large exit load that declined over several years. If you wanted to sell some or all of your investment in that fund you would face a large fee, unless you held it a long time. You would be hesitant to sell because waiting longer would save you money. That is the exact opposite of a liquid investment. Therefore the ideal level for a liquid fund is to have zero exit load. |
Deal with stock PSEC | It looks like it has to deal with an expiration of rights as a taxable event. I found this link via google, which states that Not only does the PSEC shareholder have a TAXABLE EVENT, but he has TWO taxable events. The net effect of these two taxable events has DIFFERENT CONSEQUENCES for DIFFERENT SHAREHOLDERS depending upon their peculiar TAX SITUATIONS. The CORRECT STATEMENT of the tax treatment of unexercised PYLDR rights is in the N-2 on page 32, which reads in relevant part as follows: “…, if you receive a Subscription Right from PSEC and do not sell or exercise that right before it expires, you should generally expect to have (1) taxable dividend income equal to the fair market value (if any) of the Subscription Right on the date of its distribution by PSEC to the extent of PSEC’s current and accumulated earnings and profits and (2) a capital loss upon the expiration of such right in an amount equal to your adjusted tax basis (if any) in such right (which should generally equal the fair market value (if any) of the Subscription Right on the date of its distribution by PSEC).” Please note, for quarterly “estimated taxes” purposes, that the DIVIDEND taxable events occur “ON THE DATE OF ITS DISTRIBUTION BY PSEC (my emphasis),” while the CAPITAL LOSS occurs “UPON EXPIRATION OF SUCH RIGHT” (my emphasis). They do NOT occur on 31 December 2015 or some other date. However, to my knowledge, neither of the taxable events he mentions would be taxed by 4/15. If you are worried about it, I would recommend seeing a tax professional. Otherwise I'd wait to see the tax forms sent by your brokerage. |
As an independent contractor, should I always charge the client the GST/HST? | Hourly rate is not the determinant. You could be selling widgets, not hours. Rather, there's a $30,000 annual revenue threshold for GST/HST. If your business's annual revenues fall below that amount, you don't need to register for GST/HST and in such case you don't charge your clients the tax. You could still choose to register for GST/HST if your revenues are below the threshold, in which case you must charge your clients the tax. Some businesses voluntarily enroll for GST/HST, even when below the threshold, so they can claim input tax credits. If your annual revenues exceed $30,000, you must register for GST/HST and you must charge your clients the tax. FWIW, certain kinds of supplies are exempt, but the kind of services you'd be offering as an independent contractor in Canada aren't likely to be. There's more to the GST/HST than this, so be sure to talk to a tax accountant. References: |
When I sell an OTC stock, do I have to check the volume of my sale in order to avoid an NSCC illiquid charge? | It's not enough just to check if your order doesn't exceed 10% of the 20 day average volume. I'll quote from my last answer about NSCC illiquid charges: You may still be assessed a fee for trading OTC stocks even if your account doesn't meet the criteria because these restrictions are applied at the level of the clearing firm, not the individual client. This means that if other investors with your broker, or even at another broker that happens to use the same clearing firm, purchase more than 5 million shares in an individual OTC stock at the same time, all of your accounts may face fees, even though individually, you don't exceed the limits. The NSCC issues a charge to the clearing firm if in aggregate, their orders exceed the limits, and the clearing firm usually passes these charges on to the broker(s) that placed the orders. Your broker may or may not pass the charges through to you; they may simply charge you significantly higher commissions for trading OTC securities and use those to cover the charges. Since checking how the volume of your orders compares to the average past volume, ask your broker about their policies on trading OTC stocks. They may tell you that you won't face illiquid charges because the higher cost of commissions covers these, or they may give you specifics on how to verify that your orders won't incur such charges. Only your broker can answer this with certainty. |
What happens to personal data I disclose for joining an employee stock plan? | You aren't getting a straight answer because nobody knows why those regulations are the way they are. Everyone has to give this information to open the brokerage account or for any access to the US financial system whether it is with a bank account, or a brokerage account. Everyone also typically gives this information to their employer to be employed at all for IRS regulations. The SEC isn't going to do anything with the data, unless you do something illegal related to the stock market, then they will know who you are. The IRS isn't going to do anything with the data, unless you are noncompliant in paying taxes, then they will know who you are. |
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