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Why do financial institutions charge so much to convert currency? | In my experience working at a currency exchange money service business in the US: Flat fees are the "because we can" fee on average. These can be waived on certain dollar values at some banks or MSBs, and sometimes can even be haggled. If you Google EURUSD, as an example, you also get something like $1.19 at 4pm, 9/18/2017. If you look at the actual conversion that you got, you may find your bank hit you with $1.30 or something close to convert from USD to Euro (in other words, you payed 10% more USD per Euro). And, if you sell your Euro directly back, you might find you only make $1.07. This spread is the real "fee" and covers a number of things including risk or liquidity. You'll see that currencies with more volatility or less liquidity have a much wider spread. Some businesses even go as far as to artificially widen the spread for speculators (see IQD, VND, INR, etc.). Typically if you see a 3% surcharge on international ATM or POS transactions, that's the carrier such as Visa or Mastercard taking their cut for processing. Interestingly enough, you also typically get the carrier-set exchange rate overseas when using your card. In other words, your bank has a cash EURUSD of $1.30 but the conversion you get at the ATM is Visa's rate, hence the Visa fee (but it's typically a nicer spread, or it's sometimes the international spot rate depending on the circumstances, due to the overhead of electronic transactions). You also have to consider the ATM charging you a separate fee for it's own operation. In essence, the fees exist to pad every player involved except you. Some cards do you a solid by advertising $0 foreign exchange fees. Unfortunately these cards only insulate you from the processing/flat fees and you may still fall prey to the fee "hidden" in the spread. In the grander scheme of things, currency exchange is a retail operation. They try to make money on every step that requires them to expend a resource. If you pay 10% on a money transaction, this differs actually very little from the mark-up you pay on your groceries, which varies from 3-5% on dry food, to 20% on alcohol such as wine. |
Where should I park my rainy-day / emergency fund? | This is probably a good time to note that credit is not a liquid asset, and not an emergency fund. Credit can be revoked or denied at any time, and Murphy's law states that you may have issues with credit when everything else goes wrong too. |
Can I buy only 4 shares of a company? | Simple answer: Yes A better question to ask might be "Should I invest all my savings to buy 4 shares of a single stock." My answer to that would be "probably not". If this is your first venture into the world of owning publicly traded companies, then you're better off starting with some sort of mutual fund or ETF. This will start your portfolio with some amount of diversification so you don't have all your eggs in one basket. If you really want to get into the world of picking individual stocks, a good rule of thumb to follow is to invest $1 in some sort of indexed fund for every $1 you invest in an individual stock. This gives you some diversification while still enabling you to scratch that itch of owning a part of Apple or whatever other company you think is going in the right direction. |
What exactly is a “bad,” “standard,” or “good” annual raise? If I am told a hard percentage and don't get it, should I look elsewhere? | What makes a "standard" raise depends on how well the economy is doing, how well your particular industry is doing, and how well your employer is doing. All these things change constantly, so anyone who says, "a good raise is 5%" or whatever number is being simplistic. Even if true when he said it, it won't necessarily be true next year, or this year in a different industry, etc. The thing to do is to look for salary surveys that are reasonably current and applicable. If today, in your industry, the average annual raise is 3% -- again, just making up a number -- then that's what you should think of as "standard". If you want a number, okay: In general, as a first-draft number, I look for a raise that's 2% or so above the current inflation rate. Yes, of course I'd LIKE to get a 20% raise every year, but that's not going to happen in real life. On the other hand if a company gives me raises that don't keep pace with inflation, than barring special circumstances I'm going to be looking for another job. But there are all sorts of special circumstances. If the economy is in a depression and unemployment in my field is 50%, I'll probably figure I'm lucky to have a job at all and not be too worried about raises. If the economy is booming and all my friends are getting 10% and 20% raises, then I'll want that too. As others have said, in the United States at least, the best way to get a pay raise is to change jobs. I think most American companies are absolutely stupid about this. They don't want to give current employees big raises, so they let them quit, and then hire replacements at a much higher salary than they were paying the guy they just drove to quit. And the replacement doesn't know the company and may have a lot to learn before he is fully productive. And then they congratulate themselves that they kept raises this year to only 3% -- even though total salaries paid went up by 10% because the new hires demanded higher salaries. They actively punish employees for staying with the company. (Reminds me of an article I read in a business magazine by an executive of a cell phone company. He bemoaned the fact that in the cell phone industry it is very hard to keep customers: they are constantly switching to other vendors. And I thought, Duh, maybe it's because you offer big discounts for the first year or two, and after that you jack your prices up through the roof. You actively punish your customers for staying with you more than 2 years, and then you wonder why customers leave after 2 years.) Oh, if you do change jobs: Absolutely do not buy a line of "we'll start you off with this lower salary but don't worry because you'll get a big raise in a year". When you're looking for a job, it's very easy to turn down a poor offer. Once you have taken a job, leaving to get another job is a big decision and a lot of work. So you have way more bargaining power on starting salary than on raises. And the company knows it and is trying to take advantage of it. Also consider not just percentage increase but what you're making now versus what other people with similar experience are making. If people comparable to you are making $50k and you're making $30k, you're more likely to get a big raise than if you're already making $80k. If the company says, "We just don't have the budget to give you a raise", the key question is, "Is that true?" If the company is tottering on the edge of bankruptcy and trying to cut costs everywhere, then even if they know you're a good and productive employee, they may really just not have the money to give you a good raise. But if business is booming, this could just be an excuse. It might be an excuse for "we're trying to bleed employees white so the CEO can get another million dollar bonus this year". Or it might be a euphemism for "you're really not a very useful employee and we're seriously thinking of firing you, no way we're going to give you a raise for the little bit of work you do when you bother to show up". My final word: Be realistic. What matters isn't what you want or think you need, but what you are worth to the company, and what other people with similar skills are willing to work for. If you are doing work that brings in $20k per year for the company, there is no way they are going to pay you more than $20k for very long. You can go on and on about how expensive it is these days to pay the mortgage and pay medical bills and feed your 10 children and support your cocaine addiction, but none of that is relevant to what you are worth to the company. Likewise if there are millions of people out there who would love to have your job for $20k, if you demand a lot more than that they're going to fire you and hire one of them. Conversely, if you're bringing in $100k a year for the company, they'll be willing to pay you a substantial percentage of that. |
Employer skipped payments, should I allow them to defer payment until Jan 2017? | First, let's look at the tax brackets for single taxpayers in 2016: The cutoff between the 25% and 28% tax bracket is $91,150. You said that your gross is $87,780. This will be reduced by deductions and exemptions (at least $10,350). Your rental income will increase your income, but it is offset in part by your rental business expenses. For this year, you will almost certainly be in the 25% bracket, whether or not you receive your backpay this year. Next year, if you receive your backpay then and your salary is $11k higher, I'm guessing you'll be close to the edge. It is important to remember that the tax brackets are marginal. This means that when you move up to the next tax bracket, it is only the amount of income that puts you over the top that is taxed at the higher rate. (You can see this in the chart above.) So if, for example, your taxable income ends up being $91,160, you'll be in the 28% tax bracket, but only $10 of your income will be taxed at 28%. The rest will be taxed at 25% or lower. As a result, this probably isn't worth worrying about too much. A bit more explanation, requested by the OP: Here is how to understand the numbers in the tax bracket chart. Let's take a look at the second line, $9,276-$37,650. The tax rate is explained as "$927.50 plus 15% of the amount over $9,275." The first $9,275 of your taxable income is taxed at a 10% rate. So if your total taxable income falls between $9,276 and $37,650, the first $9,275 is taxed at 10% (a tax of $927.50) and the amount over $9,275 is taxed at 15%. On each line of the chart, the amount of tax from all the previous brackets is carried down, so you don't have to calculate it. When I said that you have at least $10,350 in deductions and exemptions, I got that number from the standard deduction and the personal exemption amount. For 2016, the standard deduction for single taxpayers is $6,300. (If you itemize your deductions, you might be able to deduct more.) Personal exemptions for 2016 are at $4,050 per person. That means you get to reduce your taxable income by $4,050 for each person in your household. Since you are single with no dependents, your standard deduction plus the personal exemption for yourself will result in a reduction of at least $10,350 on your taxable income. |
What type of investments should be in a TFSA, given its tax-free growth and withdrawal benefits? | I think "optimal" is a term that needs to be better qualified - what's optimal investment for one person is not necessary optimal for another, as it depends on the investor's time horizon, risk tolerance, and investment knowledge. I would personally put fix-income (or products that generates incomes that CRA considers as "interest") products in the TFSA so the gains aren't taxed at all. I would consider putting preferred shares in this account as well, since dividend incomes are taxed higher than capital gain and preferred shares don't usually change in price unless the company's ability to pay the dividends are in-doubt. I don't want to put common equities in TFSA as that would take away your ability to leverage past losses to reduce future capital gains. If you are using TFSA as a way to accelerate saving for a near-term purchase, then you definitely want to employ fix-income products as the underlying saving vehicle, since market volatility would be your enemy (unless you are feeling very lucky). If you are using TFSA as a way to supplement your registered retirement saving account, then you can treat it the same way you would invest in your RRSP. |
How can I invest in gold without taking physical possession? | You could buy shares of an Exchange-Traded Fund (ETF) based on the price of gold, like GLD, IAU, or SGOL. You can invest in this fund through almost any brokerage firm, e.g. Fidelity, Etrade, Scotttrade, TD Ameritrade, Charles Schwab, ShareBuilder, etc. Keep in mind that you'll still have to pay a commission and fees when purchasing an ETF, but it will almost certainly be less than paying the markup or storage fees of buying the physical commodity directly. An ETF trades exactly like a stock, on an exchange, with a ticker symbol as noted above. The commission will apply the same as any stock trade, and the price will reflect some fraction of an ounce of gold, for the GLD, it started as .1oz, but fees have been applied over the years, so it's a bit less. You could also invest in PHYS, which is a closed-end mutual fund that allows investors to trade their shares for 400-ounce gold bars. However, because the fund is closed-end, it may trade at a significant premium or discount compared to the actual price of gold for supply and demand reasons. Also, keep in mind that investing in gold will never be the same as depositing your money in the bank. In the United States, money stored in a bank is FDIC-insured up to $250,000, and there are several banks or financial institutions that deposit money in multiple banks to double or triple the effective insurance limit (Fidelity has an account like this, for example). If you invest in gold and the price plunges, you're left with the fair market value of that gold, not your original deposit. Yes, you're hoping the price of your gold investment will increase to at least match inflation, but you're hoping, i.e. speculating, which isn't the same as depositing your money in an insured bank account. If you want to speculate and invest in something with the hope of outpacing inflation, you're likely better off investing in a low-cost index fund of inflation-protected securities (or the S&P500, over the long term) rather than gold. Just to be clear, I'm using the laymen's definition of a speculator, which is someone who engages in risky financial transactions in an attempt to profit from short or medium term fluctuations This is similar to the definition used in some markets, e.g. futures, but in many cases, economists and places like the CFTC define speculators as anyone who doesn't have a position in the underlying security. For example, a farmer selling corn futures is a hedger, while the trading firm purchasing the contracts is a speculator. The trading firm doesn't necessarily have to be actively trading the contract in the short-run; they merely have no position in the underlying commodity. |
Which Roth IRA is the best for a 21 year old who has about $1500? | You are young, and therefore have a very long time horizon for investing. Absolutely nothing you do should involve paying any attention to your investments more than once a year (if that). First off, you can only deposit money in an IRA (of whatever kind) if you have taxable income. If you don't, you can still invest, just without the tax benefits of a Roth. My suggestion would be to open an account with a discount brokerage (Schwab, Fidelity, eTrade, etc). The advantage of a brokerage IRA is that you can invest in whatever you want within the account. Then, either buy an S&P 500 or total market index fund within the account, or buy an index-based ETF (like a mutual fund, but trades like a stock). The latter might be better, since many mutual funds have minimum limits, which ETFs do not. Set the account up to reinvest the dividends automatically--S&P 500 yields will far outstrip current savings account yields--and sit back and do nothing for the next 40 or 50 years. Well, except for continuing to make annual contributions to the account, which you should continue to invest in pretty much the same thing until you have enough money (and experience and knowledge) to diversify into bond funds/international funds/individual stocks, etc. Disclaimer: I am not a financial planner. I just manage my own money, and this strategy has mostly kept me from stressing too badly over the last few years of market turmoil. |
Margin account: how to calculate the stock price that might trigger a liquidation of positions? | Thanks to this youtube video I think I understood the required calculation. Based on following notation: then the formula to find x is: I found afterwards an example on IB site (click on the link 'How to Determine the Last Stock Price Before We Begin to Liquidate the Position') that corroborate the formula above. |
Obtaining California SOS number for out-of-state LLC | SOS stands for Secretary of State. The California Department of State handles the business entities registration, and the website is here. See "Forms" in the navigation menu on the left. Specifically, you'll be looking for LLC-5. |
How do I fold side-income into our budget so my husband doesn't know? | I doubt that it is possible to keep something like this secret from your husband forever. If you get away with it once, I'd guess you'll probably try it again, and sooner or later he'll find out. He'll notice that things show up in the house that aren't accounted for in the budget, or he'll see a statement from your secret bank account, or one of your friends will carelessly say something about it when he's around, etc. I found out about some of my ex-wife's secret finances when she wasn't home one day, I got the mail, and found a credit card bill for an account I knew nothing about. If the preconditions on the question are that you're not going to tell him the truth (and you're not going to get a divorce), I think the only realistic answer is that there is no way of keeping this secret with a high probability of success. |
Are AAA private-sector corporate bonds safer than government bonds? | If you are afraid of your government defaulting, then you also have reason to fear that your country's so-called "AAA" corporate bonds might not be a safe investment. When governments default, they often do things like: In these scenarios, it is not predictable whether government bonds will suffer more or less than any particular corporate bonds. You might want to diversify into precious metals, foreign currencies, and/or foreign securities. For the most security, you might want to choose investment vehicles that your government would have a hard time confiscating. Of course, you will face currency fluctuation risks if you do so. |
Can another tax loss be used to offset capital gains taxes? How does it work? | Capital losses do mirror capital gains within their holding periods. An asset or investment this is certainly held for a year into the day or less, and sold at a loss, will create a short-term capital loss. A sale of any asset held for over a year to your day, and sold at a loss, will create a loss that is long-term. When capital gains and losses are reported from the tax return, the taxpayer must first categorize all gains and losses between long and short term, and then aggregate the sum total amounts for every single regarding the four categories. Then the gains that are long-term losses are netted against each other, therefore the same is done for short-term gains and losses. Then your net gain that is long-term loss is netted against the net short-term gain or loss. This final net number is then reported on Form 1040. Example Frank has the following gains and losses from his stock trading for the year: Short-term gains - $6,000 Long-term gains - $4,000 Short-term losses - $2,000 Long-term losses - $5,000 Net short-term gain/loss - $4,000 ST gain ($6,000 ST gain - $2,000 ST loss) Net long-term gain/loss - $1,000 LT loss ($4,000 LT gain - $5,000 LT loss) Final net gain/loss - $3,000 short-term gain ($4,000 ST gain - $1,000 LT loss) Again, Frank can only deduct $3,000 of final net short- or long-term losses against other types of income for that year and must carry forward any remaining balance. |
How Does A Special Memorandum Account Work | The Margin Account holds the funds that are MUST for any margin trades. Any funds excess of the MUST for margin trades are kept in the SMA account. These funds can be used for further Margin trades in new securities [funds get transfered into the Margin Account]. They cannot be used to met the Shortfall due to margin calls on existing trades. New funds need to be arranged. More at http://en.wikipedia.org/wiki/Special_memorandum_account |
Calculating pay off for credit card with multiple APRs | @Joe's original answer and the example with proportionate application of the payment to the two balances is not quite what will happen with US credit cards. By US law (CARD Act of 2009), if you make only the minimum required payment (or less), the credit-card company can choose which part of the balance that sum is applied to. I am not aware of any company that chooses to apply such payments to anything other than that part of the balance which carries the least interest rate (including the 0% rate that "results" from acceptance of balance transfer offers). If you make more than the minimum required payment, then the excess must, by law, be applied to paying off the highest rate balance. If the highest rate balance gets paid off completely, any remaining amount must be applied to second-highest rate balance, and so on. Thus, it is not the case that that $600 payment (in Joe's example) is applied proportionately to the $5000 and $1000 balances owed. It depends on what the required minimum payment is. So, what would be the minimum required payment? The minimum payment is the total of (i) all finance charges incurred during that month, (ii) all service fees and penalties (e.g. fee for exceeding credit limit, fee for taking a cash advance, late payment penalty) and other charges (e.g. annual card fee) and (iii) a fraction of the outstanding balance that (by law) must be large enough to allow the customer to pay off the entire balance in a reasonable length of time. The law is silent on what is reasonable, but most companies use 1% (which would pay off the balance over 8.33 years). Consider the numbers in Joe's example together with the following assumptions: $5000 and $1000 are the balances owed at the beginning of the month, no new charges or service fees during that month, and the previous month's minimum monthly payment was made on the day that the statement paid so that the finance charge for the current month is on the balances stated). The finance charge on the $5000 balance is $56.25, while the finance charge on the $1000 balance is $18.33, giving a minimum required payment of $56.25+18.33+60 = $134.58. Of the $600 payment, $134.58 would be applied to the lower-rate balance ($5000 + $56.25 = $5056.25) and reduce it to $4921.67. The excess $465.42 would be applied to the high-rate balance of $1000+18.33 = $1018.33 and reduce it to $552.91. In general, it is a bad idea to take a cash advance from a credit card. Don't do it unless you absolutely must have cash then and there to buy something from a merchant who does not accept credit cards, only cash, and don't be tempted to use the "convenience checks" that credit-card companies send you from time to time. All such cash advances not only carry larger rates of interest (there may also be upfront fees for taking an advance) but any purchases made during the rest of the month also become subject to finance charge. In other words, there is no "grace period" for new charges, and this state of affairs will last for one month beyond the first credit-card statement whose statement is paid off in full in timely fashion. Finally, turning to the question asked, viz. " I am trying to determine how much I need to pay monthly to zero the balance, ....", as per the above calculations, if the OP makes the minimum required payment of $134.58 plus $1018.33, that $134.58 will be applied to the low-rate balance and the rest $1018.33 will pay off the high-rate balance in full if the payment is made on the day the statement is issued. If payment is made later, but before the due date, that $1018.33 will be accruing finance charges until the date the payment is made, and these will appear as 22% rate balance on next month's statement. Similarly for the low-rate balance. What if several monthly payments will be required? The best calculator known to me is at https://powerpay.org (free but it is necessary to set up a username and password). Enter in all the credit card balances and the different interest rates, and the total amount of money that can be used to pay off the balances, and the site will lay out a payment plan. (Basically, pay off the highest-interest rate balance as much as possible while making minimum required payments on the rest). Most people are surprised at how much can be saved (and how much shorter the time to be debt-free is) if one is willing to pay just a little bit more each month. |
ESPP (Employee Stock Purchase Plan) Funds on Mortgage Loan Application | ESPP shares, once purchased, are just normal shares that you got at a discount. They're just as much a part of your current net wealth as any other shares of stock. What you can't do is claim that discount increases your salary, even if it does result in your effectively taking home more money. It's a benefit like the company contribution to your health plan, not a bonus. |
What happens to a call option in a cash/stock acquisition? | I believe that your option contracts will become "non-standard" and will be for a combination of ACE stock and cash. The allocation between stock and cash should follow that of the acquisition parameters of the underlying - probably with fractional shares converted to cash. Hence 1 call contract for 100 shares of CB will become 1 call contract for 60 shares of ACE + $6293 cash + a cash correction for the 0.19 fractional share of ACE that you would have had claim to get. The corrections should be 0.19 sh x $62.93/sh. |
What happens to all of the options when they expire? | Options that are not worth exercising just expire. Options that are worth exercising are typically exercised automatically as they expire, resulting in a transfer of stock between the entity that issued the option and the entity that holds it. OCC options automatically exercise when they expire if the value of the option exceeds the transaction cost for the stock transfer (1/4 point to 3/4 point depending). |
How can people have such high credit card debts? | I'm not sure if the rules in Canada and the US are the same. I'm as amazed as you are by the amounts of debts people have, but I can see how this credit can be extended. Generally, with good credit history and above average pay - it is not unheard of to get about $100K credit limit with a bunch of credit cards. What you do with that after that depends on your own ability to manage your finances and discipline. Good credit history is defined by paying your credit cards on time with at least minimum payment amount (which is way lower than the actual statement amount). Above average pay is $60K+. So you can easily have tons of debt, yet be considered "low risk" with good credit history. And that's the most lucrative market for the credit card issuers - people who do not default, but also have debt and pay interest. |
Why would a bank need to accept deposits from private clients if it can just borrow from the Federal Reserve? | Banks cannot just borrow from the Federal Reserve and use that money to make loans. The first thing you need to understand is how fractional reserve banking works. The banks can make loans with money that their customers have deposited in their accounts. The interest and fees from those loans go to pay the salaries of those working at the banks with leftover profit to pay dividends (interest on your bank accounts). The only reason that the Federal Reserve allows overnight lending is so that banks don't immediately become insolvent if they have larger than usual withdrawals by their depositors. The Federal Reserve keeps an eye on the balance sheets of the banks that are doing the borrowing, and if they didn't have assets in the form of deposits, they would force the banks to sell the loans that were made from those deposits. What does this have to do with personal finance? I think this question is only marginally on-topic here. This amount of money in circulation is affected specifically by the fraction of the money that can be used for making other loans. But the bigger influence is the rate that the Federal Reserve charges for overnight lending. They raise and lower the rates which affects the rates that the banks can lend at while remaining profitable. |
What is 'consolidating' debt and why do people do it? | Debt consolidation is basically getting all your debt into one loan. This is possibly more convenient, and lets you close the other accounts (in the case of credit cards, preventing you from incurring any more debt). Ideally, your consolidated debt will have a better interest rate, so it saves you money as well. If you're defaulting on your debt already, you're likely combining this process with some negotiation with your existing creditors. |
Retirement Savings vs. Student Loan payments | Your plan sounds quite sound to me. I think that between the choices of [$800 for Loans, $300 for Retirement] and [$1100 for loans], both are good choices and you aren't going to go wrong either way. Some of the factors you might want to consider: I like your retirement savings choices - I myself use the admiral version of VOO, plus a slightly specialized but still large ETF that allows me to do a bit of shifting. Having something that's at least a bit counter-market can be helpful for balancing (so something that will be going up some when the market overall is down some); I wouldn't necessarily do bonds at your age, but international markets are good for that, or a stock ETF that's more stable than the overall market. If you're using Vanguard, look at the minimums for buying Admiral shares (usually a few grand) and aim to get those if possible, as they have significantly lower fees - though VOO seems to pretty much tie the admiral version (VFIAX) so in that case it may not matter so much. As far as the target retirement funds, you can certainly do those, but I prefer not to; they have somewhat higher (though for Vanguard not crazy high) expense ratios. Realistically you can do the same yourself quite easily. |
What happens when a non-U.S. citizen who's been making money from the U.S. moves to the U.S.? | Its not for US citizens - its for US residents. If the US considers you as a tax resident - you'll be treated the same as a US citizen, regardless of your immigration status. The question is very unclear, since it is not mentioned whether your US sourced income "from the Internet" is sales in the US, sales on-line, services you provide, investments, or what else. All these are treated differently. For some kinds of US-sourced income you should have paid taxes in the US already, regardless of where you physically reside. For others - not. In any case, if you become US tax resident, you'll be taxed on your worldwide income, not only the $10K deposited in the US bank account. ALL of your income, everywhere in the world, must be declared to the US government and will be taxed. You should seek professional advice, before you move to the US, in order to understand your responsibilities, liabilities and rights. I suggest looking for a EA/CPA licensed in California and experienced with taxation of foreigners (look for someone in the SF or LA metropolitan areas). Keep in mind that there may be a tax treaty between the US and your home country that may affect your Federal (but not California) taxes. |
Is there a way I can get bid/ask price data on the NSE in real time? | Yes apply for live and dynamic data (you may have to pay for this depending on your broker and your country) and look at the market depth. |
Is threatening to close the account a good way to negotiate with the bank? | To avoid going on and on in the comments I'm going to add this point that seems to be missing from the other answers. "Banks often offer me deals while negotiating to open an account (since they are under high pressure to open an account)" Would these happen to be the regionally advertised account opening deals like a $200 new checking account bonus if you deposit at least $x and leave it for at least 90 days? This kind of deal is not unique to you. This is not offered to you because of your unique negotiating ability. You need to understand the authority of the person you're dealing with. Products are designed in the corporate arm of the bank. Once a product is ready, it's rolled out to branches to be sold; sometimes with some fancy sign-up bonus. A checking account is a product, just like an iPhone. Apple took the headphone jack out of the iPhone 7, no amount of negotiating with the Genius at the Apple store will put it back for you. Vote with your wallet, show the bank you're unhappy by leaving. |
Losing Money with Norbert's Gambit | There's a possibility to lose money in exchange rate shifts, but just as much chance to gain money (Efficient Market Hypothesis and all that). If you're worried about it, you should buy a stock in Canada and short sell the US version at the same time. Then journal the Canadian stock over to the US stock exchange and use it to settle your short sell. Or you can use derivatives to accomplish the same thing. |
Does financing a portfolio on margin affect the variance of a portfolio? | Financing a portfolio with debt (on margin) leads to higher variance. That's the WHOLE POINT. Let's say it's 50-50. On the downside, with 100% equity, you can never lose more than your whole equity. But if you have assets of 100, of which 50% is equity and 50% is debt, your losses can be greater than 50%, which is to say more than the value of your equity. The reverse is true. You can make money at TWICE the rate if the market goes up. But "you pay your money and you take your chances" (Punch, 1846). |
Is this follow-up after a car crash a potential scam? | Do not give them any money until you have a signed contract that releases your liability completely. It's imperative that this contract be drafted correctly. The contract needs proper consideration (money in exchange for release of liability), among other things. In other words, talk to a lawyer if you want to go this route. If you just cut them a check, there's nothing stopping them from taking your money and making an insurance claim anyway, or taking your money and then suing for "whiplash" or some other fake injury. The best way is just to go through insurance. It might cost a bit more, but you're covered in case they sue. |
At what age should I start or stop saving money? | Are you working? Does your employer offer a 401(k) and if so, is there any match? Saving should be taught to kids at the same time they are old enough to get an allowance. There are many numbers tossed around, but 10% is a start for any new saver. If a college graduate can start by saving even 15%, better still. If you find that the 10% is too much, just start with what you can spare, and work to build that up over time, perhaps by splitting any future raises, half going toward savings, half to spending. Good luck. Edit - my 12 yr old made good money this summer baby sitting. I'm opening a Roth IRA for her. A 10 yr head start on her retirement savings. Edit (Jan-2013) - she's 14 now, 3 deposits to the Roth total $6000, and she's planning to up the number this year. Her goal is to have $50K saved in her Roth by the time she graduates college. Edit, by request (July-2017) 18, and off to college next month. Just under $24K, all invested in an S&P low cost index. We are planning to continue deposits of $4-$5K/yr, so the $50K is still a good goal. |
Average Price of a Stock | That metric is not very useful for anything other than very extremely long trading periods. Most strategies or concerned with price movement over much shorter time frames, 15 mins, 1 hr, 4 hr, daily, weekly, monthly. The MA or moving average is a trend following lagging indicator used to smooth out price fluctuations and more accurately reflect the price of trading instrument such as a stock (AAPL), commodity, or currency pair. Traders are generally concerned with current market trends and price action of the instrument they are trading. As such, an extremely long MA (average daily price, over a period of 365 days) are generally not that important. |
Is Cost of Living overstated? | I live in Upstate NY. It's a great, reasonable cost place to live -- provided that you have a job. In NYC, there are probably a few hundred jobs with duties similar to mine in a 45-minute radius. Upstate, there may be 5-6. |
Can I just file a 1040-ES? | Yes, you can send in a 2012 1040-ES form with a check to cover your tax liability. However, you will likely have to pay penalties for not paying tax in timely fashion as well as interest on the late payment. You can have the IRS figure the penalty and bill you for it, or you can complete Form 2210 (on which these matters are figured out) yourself and file it with your Form 1040. The long version of Form 2210 often results in the smallest extra amount due but is considerably more time-consuming to complete correctly. Alternatively, if you or your wife have one or more paychecks coming before the end of 2012, it might be possible to file a new W-4 form with the HR Department with a request to withhold additional amounts as Federal income tax. I say might because if the last paycheck of the year will be issued in just a few days' time, it might already have been sent for processing, and HR might tell you it is too late. But, depending on the take-home pay, it might be possible to have the entire $2000 withheld as additional income tax instead of sending in a 1040-ES. The advantage of doing it through withholding is that you are allowed to treat the entire withholding for 2012 as satisfying the timely filing requirements. So, no penalty for late payment even though you had a much bigger chunk withheld in December, and no interest due either. If you do use this approach, remember that Form W-4 applies until it is replaced with another, and so HR will continue to withhold the extra amount on your January paychecks as well. So, file a new W-4 in January to get back to normal withholding. (Fix the extra exemption too so the problem does not recur in 2013). |
What is buying pressure? | Buying pressure is when there are more buy orders than sell orders outstanding. Just because someone wants to buy a stock doesn't mean there's a seller ready to fill that order. When there's buying pressure, stock prices rise. When there's selling pressure, stock prices fall. There can be high volume where buying and selling are roughly equal, in which case share prices wouldn't move much. The market makers who actually fill buy and sell orders for stock will raise share prices in the face of buying pressure and lower them in the face of selling pressure. That's because they get to keep the margin between what they bought shares from a seller for and what they can sell them to a new buyer for. Here's an explanation from InvestorPlace.com about "buying pressure": Buying pressure can basically be defined as increasingly higher demand for a particular stock's shares. This demand for shares exceeds the supply and causes the price to rise. ... The strength or weakness of a stock determines how much buying or selling interest will be required to break support and resistance areas. I hope this helps! |
Alternatives to Intuit's PayTrust service for online bill viewing and bill payment? | (Six years later...) I've used CheckFree for over 20 years, and my uncle started using it back in the early 1980s through a 300 baud modem. It has e-bills, EDI bills that you schedule yourself, and will also mail checks to people and small businesses. You can make your payments from an unlimited number of banks, can schedule multiple recurring payments for the same bill (I find that useful for when buying large/expensive items by CC: I create a different payment schedule for each), plus ad hoc payments. |
Why is auto insurance ridiculously overpriced for those who drive few miles? | First you have to understand that insurance is basically a social system, just with Shareholders. Insurance costs consist of 3 factors: Now, to encourage a low-risk behavior a separating factor is search in the vast amount of statistical data. Drivers experience, miles and type of car being the most common, but also other things like oldtimer-status etc. are possible. If it so happens that the 3-5000 miles driver do only in average have 80% of the damage-costs of a comparable group 5-8000 miles driver, you´ll get the 20% bonus on factor 1. So the answer is, it is not overpriced, there is just no linear relationship to mileage. You can´t divide your insureds in too many groups or you´ll miss the mutual aspect of insurance. If everybody just pays his own risk, he can just do so in his bank and save on overhead and profit. |
Previous owner of my home wants to buy it back but the property's value is less than my loan… what to do? | It's a short sale. See these for good overviews: http://www.realtor.org/library/library/fg335 http://homebuying.about.com/od/4closureshortsales/a/shortsalebasics.htm You'll want input from your lawyer and accountant (assuming the lender says they would accept such a sale). Best of luck - sounds like this could be a great opportunity for you if it all comes together. DO NOT talk to a realtor. |
How should I value personal use television for donation? | Is it a tube television, digital, analog, what? Tube televisions are no longer made in (or imported to) the U.S., and if it's an analog set then it would require a digital converter just for anyone to use it for watching broadcast signals, since analog television signals are gone and have been replaced by DTV. That makes all the difference in the world as far as valuation. If it doesn't have resale value to begin with then I doubt you can put a real value on it for donation purposes. |
Am I considered in debt if I pay a mortgage? | The statistic you cited comes from the Federal Reserve Board's Survey of Consumer Finances, a survey that they do every three years, most recently in 2013. This was reported in the September 2014 issue of the Federal Reserve Bulletin. They list the percentage of Americans with any type of debt as 74.5 in 2013, down slightly from 74.9 in 2010. The Bulletin also has a table with a breakdown of the types of debt that people have, and primary residence mortgages are at the top of the list. So the answer is yes, the 75% statistic includes Americans with home mortgages.* The bigger question is, are you really "in debt" if you have a home mortgage? The answer to that is also yes. When you take out a mortgage, you really do own the house. You decide who lives there, you decide what changes you are going to make to it, and you are responsible for the upkeep. But the mortgage debt you have is secured by the house. This means that if you refuse to pay, the bank is allowed to take possession of the house. They don't even get the "whole" house, though; they will sell it to recoup their losses, and give you back whatever equity you had in the house after the loan is satisfied. Is it good debt? Many people think that if you are borrowing money to purchase an appreciating asset, the debt is acceptable. With this definition, a car loan is bad, credit card debt is very bad, and a home mortgage might be okay. Even Dave Ramsey, radio host and champion of the debt-free lifestyle, is not opposed to home mortgages. Home mortgages allow people to purchase a home that they would otherwise be unable to afford. * Interestingly, according to the bulletin appendix, credit card balances were only included as debt for the survey purposes if there was a balance after the most recent bill was paid, not including purchases made after the bill. So people that do not carry a balance on their credit card were not considered "in debt" in this statistic. |
Non US-resident, need to file 83b election TODAY with the IRS - I have an SSN but it says “valid for work only with DHS auth” - is this OK? | Google that "valid for work..." phrase. You'll find that you have a SSN; it is valid for many purposes; it is valid for obtaining work, only when accompanied by DHS authorization. Doesn't anyone know how to use commas anymore? |
(Almost) no credit unions in New York City, why? | There are 2 credit unions in the Metro NY area that are open to everyone: You might also want to check out aSmarterChoice.org to see if there are other credit union options based on where you live, work, worship & more. |
Buy index mutual fund or build my own? | There are only three circumstances where building your own "index" portfolio make sense, in my opinion. |
New to Stock Trading | Good ones, no there are not. Go to a bookstore and pick up a copy of "The Intelligent Investor." It was last published in 1972 and is still in print and will teach you everything you need to know. If you have accounting skills, pick up a copy of "Security Analysis" by Benjamin Graham. The 1943 version was just released again with a 2008 copyright and there is a 1987 version primarily edited by Cottle (I think). The 1943 book is better if you are comfortable with accounting and the 1987 version is better if you are not comfortable and feel you need more direction. I know recent would seem better, but the fact that there was a heavy demand in 2008 to reprint a 1943 book tells you how good it is. I think it is in its 13th printing since 2008. The same is true for the 72 and 87 book. Please don't use internet tutorials. If you do want to use Internet tutorials, then please just write me a check now for all your money. It will save me effort from having to take it from you penny by penny because you followed bad advice and lost money. Someone has to capture other people's mistakes. Please go out and make money instead. Prudence is the mother of all virtues. |
What options do I have at 26 years old, with 1.2 million USD? | Others have given a lot of advice about how to invest, but as a former expat I wanted to throw this in: US citizens living and investing overseas can VERY easily run afoul of the IRS. Laws and regulations designed to prevent offshore tax havens can also make it very difficult for expats to do effective investing and estate planning. Among other things, watch out for: US citizens owe US income tax on world income regardless of where they live or earn money FBAR reporting requirements affect foreign accounts valued over $10k The IRS penalizes (often heavily) certain types of financial accounts. Tax-sheltered accounts (for education, retirement, etc.) are in the crosshairs, and anything the IRS deems a "foreign-controlled trust" is especially bad. Heavy taxes on investment not purchased from a US stock exchange Some US states will demand income taxes from former residents (including expats) who cannot prove residency in a different US state. I believe California is neutral in that regard, at least. I am neither a lawyer nor an accountant nor a financial advisor, so please take the above only as a starting point so you know what sorts of questions to ask the relevant experts. |
Why should I trust investment banks' ratings? | If there's indeed no reason to trust GS, i.e. those are just guides then the question is: Why do investors seem to care? Because there's a reason to trust. You're just reading the bottom line - the target price range. More involved investors read the whole report, including the description of the current situation, the premises for the analysis, the expectations on the firm's performance and what these expectations are based on, the analysis of how the various scenarios might affect the valuation, and the evaluation of chances of these scenarios to occur. You don't have to trust everything and expect it to be 100% correct, analysts are not prophets. But you do have an option of reading their reports and critically analyzing their conclusions. What you suspect GS of doing ("I tend to believe those guys just want themselves a cheap buy price a few days before Q2 earnings release") is a criminal offence. |
What to do with old company's 401k? [duplicate] | I suggest rolling it over to the 401(k) with your new employer. Particularly if they match any percentage of your contribution, it would be in your interest to take as much of that money as possible. When it comes to borrowing money from your 401(k), it looks like the issues AbraCadaver mentioned only apply if you don't pay back the money (http://www.kiplinger.com/article/real-estate/T010-C000-S002-borrowing-from-your-retirement-plan-to-buy-a-home.html). The reasonable argument against taking money out of your 401(k) to buy a home is that it leaves a dent in your retirement nest egg (and its earning power) during key earning years. On the plus side for borrowing from your 401(k), it's very low interest--and it's interest you're paying back to yourself over a 5-year period. At its current value, the most you could borrow from your 401(k) is $35K. If you're fortunate in where you live, that could be most or all of the downpayment. In my own experience, my wife borrowed against her 401(k) balance for the earnest money when we purchased a new home. Fortunately for us, an investor snapped up my previous home within 4 days of us listing it, so she was able to pay back her loan in full right away. |
Pay off car loan entirely or leave $1 until the end of the loan period? | Not sure if it is the same in the States as it is here in the UK (or possibly even depends on the lender) but if you have any amount outstanding on the loan then you wouldn't own the vehicle, the loan company would. This often offers extra protection if something goes wrong with the vehicle - a loan company talking to the manufacturer to get it resolved carries more weight than an individual. The laon company will have an army of lawyers (should it get that far) and a lot more resources to deal with anything, they may also throw in a courtesy car etc. |
Using pivot points to trade in the short term | Pivots Points are significant levels technical analysts can use to determine directional movement, support and resistance. Pivot Points use the prior period's high, low and close to formulate future support and resistance. In this regard, Pivot Points are predictive or leading indicators. There are at least five different versions of Pivot Points. I will focus on Standard Pivot Points here as they are the simplest. If you are looking to trade off daily charts you would work out your Pivot Points from the prior month's data. For example, Pivot Points for first trading day of February would be based on the high, low and close for January. They remain the same for the entire month of February. New Pivot Points would then be calculated on the first trading day of March using the high, low and close for February. To work out the Standard Pivot Points you use the High, Low and Close from the previous period (i.e. for daily charts it would be from the previous month) in the following formulas: You will now have 5 horizontal lines: P, R1, R2, S1 and S2 which will set the general tone for price action over the next month. A move above the Pivot Point P suggests strength with a target to the first resistance R1. A break above first resistance shows even more strength with a target to the second resistance level R2. The converse is true on the downside. A move below the Pivot Point P suggests weakness with a target to the first support level S1. A break below the first support level shows even more weakness with a target to the second support level S2. The second resistance and support levels (R2 & S2) can also be used to identify potentially overbought and oversold situations. A move above the second resistance level R2 would show strength, but it would also indicate an overbought situation that could give way to a pullback. Similarly, a move below the second support level S2 would show weakness, but would also suggest a short-term oversold condition that could give way to a bounce. This could be used together with a momentum indicator such as RSI or Stochastic to confirm overbought or oversold conditions. Pivot Points offer a methodology to determine price direction and then set support and resistance levels, however, it is important to confirm Pivot Point signals with other technical analysis indicators, such as candle stick reversal patterns, stochastic and general Support and Resistance Levels in the price action. These pivot points can be handy but I actually haven’t used them for trade setups and entries myself. I prefer to use candle sticks together with stochastic to determine potential turning points and then take out trades based on these. You can then use the Pivot Points Resistance and Support levels to help you estimate profit targets or areas to start becoming cautious and start tightening your stops. Say, for example, you have gone long from a signal you got a few days ago, you are now in profit and the price is now approaching R2 whilst the Stochastic is approaching overbought, you might want to start tightening your stop loss as you might expect some weakness in the price in the near future. If prices continue up you keep increasing your profits, if prices do reverse then you keep the majority of your existing profits. This would become part of your trade management. If you are after finding potential market turning points and take out trades based on these, then I would suggest using candlestick charting reversal patterns for your trade setups. The patterns I like to use most in my trading can be described as either the Hammer or One White Soldier for Bullish reversals and Shooting Star or One Black Crow for Bearish reversals. Below are diagrams of where to place your entries and exits on both Bullish and Bearish reversal patterns. Bullish Reversal Pattern So after some period of weakness in the price you would look for a bullish day where the price closes above the previous day’s high, you place your buy order here just before market close and place your initial stop just below the low of the day. You would apply this either for an uptrending stock where the price has retracted from or near the trendline or Moving Average, or a ranging stock where price is bouncing off the support line. The trade is reinforced if the Stochastic is in or near the oversold and crossing back upwards, volume on the up day is higher than volume on the down days, and the market as a whole is moving up as well. The benefit with this entry is that you are in early so you capture any bullish move up at the open of the next day, such as gaps. The drawbacks are that you need to be in front of your screen before market close to get your price close to the market close and you may get whipsawed if prices reverse at the open of the next day, thus being stopped out with a small loss. As the price moves up you would move your stop loss to just below the low of each day. Alternative Bullish Reversal Entry An alternative, entry would be to wait for after market close and then start your analysis (easier to do after market close than whilst the market is open and less emotions involved). Place a stop buy order to buy at the open of next trading day just above the high of the bullish green candle. Your stop is placed exactly the same, just below the low of the green bullish candle. The benefits of this alternative entry include you avoid the trade if the price reverses at the open of next day, thus avoiding a potential small loss (in other words you wait for further confirmation on the next trading day), and you avoid trading during market open hours where your emotions can get the better of you. I prefer to do my trading after market close so prefer this alternative. The drawback with this alternative is that you may miss out on bullish news prior to and at the next open, so miss out on some potential profits if prices do gap up at the open. This may also increase your loss on the trade if the prices gaps up then reverses and hits your stop on the same day. However, if you choose this method, then you will just need to incorporate this into your trading plan as potential slippage. Bearish Reversal Pattern So after some short period of strength in the price you would look for a bearish day where the price closes below the previous day’s low, you place your sell short order here just before market close and place your initial stop just above the high of the day. You would apply this either for an downtrending stock where the price has retracted from or near the trendline or Moving Average, or a ranging stock where price is bouncing off the resistance line. The trade is reinforced if the Stochastic is in or near the overbought and crossing back downwards, volume on the up day is higher than volume on the up days, and the market as a whole is moving down as well. The benefit with this entry is that you are in early so you capture any bearish move down at the open of the next day, such as gaps. The drawbacks are that you need to be in front of your screen before market close to get your price close to the market close and you may get whipsawed if prices reverse at the open of the next day, thus being stopped out with a small loss. As the price moves down you would move your stop loss to just above the high of each day. Alternative Bearish Reversal Entry An alternative, entry would be to wait for after market close and then start your analysis (easier to do after market close than whilst the market is open and less emotions involved). Place a stop sell short order to sell at the open of next trading day just below the low of the bearish red candle. Your stop is placed exactly the same, just above the high of the red bearish candle. The benefits of this alternative entry include you avoid the trade if the price reverses at the open of next day, thus avoiding a potential small loss (in other words you wait for further confirmation on the next trading day), and you avoid trading during market open hours where your emotions can get the better of you. I prefer to do my trading after market close so prefer this alternative. The drawback with this alternative is that you may miss out on bearish news prior to and at the next open, so miss out on some potential profits if prices do gap down at the open. This may also increase your loss on the trade if the prices gaps down then reverses and hits your stop on the same day. However, if you choose this method, then you will just need to incorporate this into your trading plan as potential slippage. You could also trade other candle stick patterns is similar ways. And with the long entries you can also use them to get into the market with longer term trend following strategies, you would usually just use a larger stop for longer term trading. To determine the size of your order you would use the price difference between your entry and your stop. You should not be risking more than 1% of your trading capital on any one trade. So if your trading capital is $20,000 your risk per trade should be $200. If you were looking to place your buy at 5.00 and had your initial stop at $4.60, you would divide $200 by $0.40 to get 500 stocks to buy. Using this form of money management you keep your losses down to a maximum of $200 (some trades may be a bit higher due to some slippage which you should allow for in your trading plan), which becomes your R-multiple. Your aim is to have your average win at 3R or higher (3 x your average loss), which will give you a positive expectancy even with a win ratio under 50%. Once you have written down your trading rules you can search stock charts for potential setups. When you find one you can backtest the chart for similar setup over the past few years. For each setup in the past jot down the prices you would have entered at, where you would have set your stop, work out your R, and go day by day, moving your stop as you go, and see where you would have been stopped out. Work out your profit or loss in terms of R for each setup and then add them up. If you get a positive R multiple, then this may be a good stock to trade on this setup. If you get a negative R multiple, then maybe give this stock a miss and look for the next setup. You can setup watch-lists of stocks that perform well for both long setups and short setups, and then trade these stocks when you get a new signal. It can take some time starting off, but once you have got your watch-lists for a particular setup, you just need to keep monitoring those stocks. You can create other watch-lists for other type of setups you have backtested as well. |
When I ask a broker to buy stock, what does the broker do? | You or the broker place an order to buy the share with the stock exchange. There has to be a matching sell order by someone. Once a match is made, you pay the money and get the share. |
Tenant wants to pay rent with EFT | Alternative solution with possibly better results: Use a 3rd party to transfer money between both of you. 2 Services you may want to look at: Rent share might be the best option. We are using it to split payment between 3 people in our unit. The owner is getting a single check that appears to be coming from all of us. The payment is automatic and goes through every month. I'm not sure if you as the owner could collect money electronically as opposed to receiving a check. It sounded like you didn't necessarily care about that though. |
How much should a new graduate with new job put towards a car? | Regardless of your circumstances, the amount of money you should put into a car is about $6000-8000 or the amount of cash you actually have, whichever is less. You can get a very reliable gently-used car in that price range, and a car that's plenty good to drive for basically whatever your budget is, down to about $1500-2000 or so. Spending more is never a financially sound decision; it's purely a luxury expenditure. Buying a car with a loan is always a financially bad decision. |
Is Real Estate ever a BAD investment? If so, when? | As Yishani points out, you always have to do due diligence in buying a house. As I mentioned in this earlier post I'd highly recommend reading this book on buying a house associated with the Wall Street Journal - it clearly describes the benefits and challenges of owning a house. One key takeaway I had was - on average houses have a "rate of return" on par with treasury bills. Its best to buy a house if you want to live in a house, not as thinking about it as a "great investment". And its certainly worth the 4-6 hours it takes to read the book cover to cover. |
Value of credit score if you never plan to borrow again? | There's many concrete answers, but there's something circular about your question. The only thing I can think of is that phone service providers ask for credit report when you want to start a new account but I am sure that could be worked around if you just put down a cash deposit in some cases. So now the situation is flipped - you are relying on your phone company's credit! Who is to say they don't just walk away from their end of the deal now that you have paid in full? The amount of credit in this situation is conserved. You just have to eat the risk and rely on their credit, because you have no credit. It doesn't matter how much money you have - $10 or $10000 can be extorted out of you equally well if you must always pay for future goods up front. You also can't use that money month-by-month now, even in low-risk investments. Although, they will do exactly that and keep the interest. And I challenge your assumption that you will never default. You are not a seraphic being. You live on planet earth. Ever had to pay $125,000 for a chemo treatment because you got a rare form of cancer? Well, you won't be able to default on your phone plan and pay for your drug (or food, if you bankrupt yourself on the drug) because your money is already gone. I know you asked a simpler question but I can't write a good answer without pointing out that "no default" is a bad model, it's like doing math without a zero element. By the way, this is realistic. It applies to renting in, say, New York City. It's better to be a tenant with credit who can withhold rent in issue of neglected maintenance or gross unfair treatment, than a tenant who has already paid full rent and has left the landlord with little market incentive to do their part. |
Is there a legal deadline for when your bank/brokerage has to send your tax forms to you? | Many of the custodians (ie. Schwab) file for an extension on 1099s. They file for an extension as many of their accounts have positions with foreign income which creates tax reporting issues. If they did not file for extension they would have to send out 1099s at the end of January and then send out corrected forms. Obviously sending out one 1099 is cheaper and less confusing to all. Hope that helps, |
What is the incentive for a bank to refinance a mortgage at a lower rate? | The reason is the same as with cell phones payment plans. As competition grows cell phone companies offer better payment plans for the same price or the same plans for lower price or both so that you stay with that cell operator. Banks also make better offers if the financial situation allows. Suppose several banks offer refinancing with better terms but prohibit refinancing loans from the same bank. Okay, you refinance from another bank and them maybe refinance the new loan again from the original bank - it's a new loan after the first refinance and prohibition no longer works. They just make you jump through more loops and it doesn't make sense neither for them nor for you |
Are there cons to paying monthly bills with a rewards card and then paying it off monthly? | There are hidden costs to using rewards cards for everything. The credit card company charges fees to the merchant every time you make a purchase. These fees are a small amount per transaction, plus a portion of the transaction amount. These fees are higher for rewards cards. (For example, the fees might be 35 cents for a PIN-transaction on a debit card, or 35 cents plus 2 percent for an ordinary credit card or signature transaction on a debit card, or 35 cents plus 3.5 percent on a rewards card.) After considering all of their expenses, merchant profit margins are often quite small. To make the same amount of profit by serving a rewards-card customer as a cash customer, the merchant needs to sell higher profit-margin items and/or more items to the rewards-card customer. People who "pay with plastic" tend to spend more than people who "pay with cash". If you pay with a rewards card, will you spend even more? |
Does material nonpublic information cover knowledge of unannounced products? | There's the question whether knowledge about unannounced products is actually "material" if everyone (the public) knows that something new will be released. If you work at Apple on the development of the iPhone 8, that's not material. If you worked at Apple and you knew that they stopped developing new phones, that would be very, very, very material information. The important thing as far as the stock market is concerned is what sales look like, and that's not something you know as a product developer. |
What are the best software tools for personal finance? | I like You Need A Budget (YNAB) Pros: Cons: |
I keep getting overcharged at the grocery store. Foul play? | Of course, there is no way for us to know whether or not the clerk is trying to rip you off $1.29 at a time, but I can't understand the possible motivation for doing so. I would imagine that most people would catch this at some point, so for a store to consistently overcharge for something like this is really bad for business. They would be risking upsetting a customer all for the potential gain of $1.29. I have to assume that it is not malice, but incompetence. We don't know what caused the clerk to be confused, but it is not really our concern. From what I can tell, you've gotten the right price in the end. You were ultimately charged for two drinks, and the extra $1.29 that you were charged was refunded. Since it happened three times, you have to decide how badly you want these drinks in the future. If you choose to return, you'll just have to expect the possibility that it will ring up incorrectly, and you'll have to get it fixed. If that seems like too much hassle, then don't return to this store. |
What to do with an expensive, upside-down car loan? | You could do a voluntary repossession. While a repossession never looks good on your credit a voluntary repossession is slightly better. A good friend of mine had a situation like this about 11 years ago. She was in an accident didn't have replacement coverage insurance and was left with a large chunk of debt on a wrecked vehicle that she then rolled into a new car. In the end it came down to the simple fact that she could not afford a car loan on a vehicle that never was worth as much as she owed. Since the car was worth less than the loan she really couldn't sell it to fix the problem. She called and arranged a voluntary repossession. She stopped making payments, and parked the car till they came and picked it up. (Took about 4 months and 20 phone calls from her for them to come get it.) In the mean time, I purchased her a much older used but decent car for a couple thousand and she paid me back over the next year. The total she paid me back was less than the money she would have paid in the 4 months it took them to come get the car. In fact by the time they picked up the car she had paid back over half on the car I bought her. Yes the repossession did stay on her credit for seven years but during that time she was approved for a mortgage, cellphone plans, and credit cards etc. Therefore I don't know that it did that much damage to her credit. When her car was sold at auction by the repo company it sold for much less than the loan amount. Technically she was on the hook for the remaining amount. The outstanding balance on the loan was then sold several times to several different collection agencies. Over the years since then she has gotten letters every now and then demanding she pay the amount off, she ignores these. Most of these letters even included very favorable terms (full forgiveness for 20% of the amount) At this point the statute time has run out on the debt so there is no recourse for anyone to collect from her. The statute time limit varies from state to state. Some states it is as long as 10 years in others it is as short as 3 years. What this means is that counting from the date of the repossession, incurrance of debt, last payment, or agreement to pay whichever is later if the statute period has elapsed and the lender/collector has not filed a suit against you by the end of the period then they have effectively abandoned the debt and cannot collect. Find out what that period of time is in your state. If you can avoid the collection agencies till that period runs out you are scott free. You just have to make sure that you do not ever send them any money, or agree to pay them anything as this resets the calendar. If you do not want to wait for the calendar to run out if you wait long enough you will probably be offered favorable terms to pay only a fraction of the remaining amount, you just have to wait it out. Note, I normally would not endorse anyone not paying off their debts. However sometimes it is necessary and it is for this type of situation that we have things like this and bankruptcy. |
When should I walk away from my mortgage? | To put a different spin on it, suppose you loaned someone $100K, expecting that they would pay it back, and then a little later they decided not too. They are perfectly capable of paying back the money, but just decided they didn't want to, and it seems the laws of your state said you couldn't make them. How would you feel about that? Since this is supposed to be an answer to the question, the answer is: "only if you can't afford to repay it". That's what foreclosure is supposed to be about, not you deciding you would rather not pay your debts. Let's not forget who pays that bill for you - every one of your bank's other customers. EDIT:For the people decrying the moral aspect and saying "it's perfectly alright because the law says that's the punishment and I'm willing to pay it", the law also says "if you kill someone, you go to prison for life". Does that mean that someone who decides they are going to kill someone has a perfect right to do it as long as they are prepared to take the consequences? |
Should you always max out contributions to your 401k? | To be clear, a 401K is a vehicle, you make investments WITHIN it, if you choose poorly such as say putting all your money into company stock when working for the next Enron, you can still get hurt badly. So it is important to have diversity and an appropriate risk level based on your age, tolerance for risk, etc. That said, as vehicles go it is outstanding, and the 'always max your 401K' is very very common advice for a large number of investing professionals, CFA's, pundits, etc. That said there are a few priorities to consider here. First priority, if there is some level of company matching, grab that, it's hard to beat that kind of 'return' in almost any other case. Second, since you never want to tap into a 401K (if you can at all avoid it) before you are ready to retire, you should first be sure you have a good 'emergency fund' set aside in the event you lose your job, or some other major catastrophy happens. Many recommend setting aside at least 6 months of basic living expenses. Third, if you have any high interest debt (like credit card debt) pay that stuff down as fast as you can. You'll save a ton of interest (it's pretty much the same as investing the money you use to pay it down, and getting a return equal to the interest rate you are paying, with zero risk.. can't be beat. You'll also end up with a lot better cash flow, and the ability to start saving first and spending out of savings, so you earn interest instead of paying it. Once you have those things out of the way, then it is time to think about fully funding the 401K. and keep in mind, since you don't pay taxes on it, the 'felt effect' to you pocket is about 80% or even less, of what goes into the account, so it's not as painful as you might think, and the hit to your take home may be less than you'd expect. Contributing as much as you can, as early as you can also lets you benefit from the effect of compounding, and has a far larger affect on the balance than money put into the account closer to retirement. So if you can afford to max it out, I surely would advise you to do so. |
New to investing — I have $20,000 cash saved, what should I do with it? | My advice to you is not to take any advice from anyone when it comes to investing, especially when you don't know much about what you are investing in. mbhunter is correct, take your time to learn about what you want to invest in. If your goal at the moment is short term don't invest in stocks unless you really know what you are doing. Put your money where you can get the highest interest rate, continue saving and do a lot of research on the house you wish to buy. Even if you are not ready to buy a house yet, start looking so that by the time you are ready to buy, you know how much the house is really worth. Before buying our house we spent about 7 months looking and researching and looked at more than 100 houses. |
What are the best software tools for personal finance? | Mint.com—Easy solution to provide insight into finances. Pros: Cons: |
How can one protect oneself from a dividend stock with decreasing price? | An alternative options strategy to minimize loss of investment capital is to buy a put, near the money around your original buy price, with a premium less than the total dividend. The value of the put will increase if the stock price falls quickly. Likely, a large portion of your dividend will go towards paying the option premium, this will however ensure that your capital doesn't drop much lower than your buy price. Continued dividend distributions will continue to pay to buy future put options. Risks here are if the stock does not have a very large up or down movement from your original buy price causing most of the dividend to be spent on insuring your position. It may take a few cycles, but once the stock has appreciated in value say 10% above buying price, you can consider either skipping the put insurance so you can pocket the dividend, or you can bu ythe put with a higher strike price for additional insurance against a loss of gains. Again, this sacrifices much of the dividend in favor of price loss, and still is open to a risk of neutral price movement over time. |
Calculating the profit earned from a leveraged futures contract | I'm not entirely sure about some of the details in your question, since I think you meant to use $10,000 as the value of the futures contract and $3 as the value of the underlying stock. Those numbers would make more sense. That being said, I can give you a simple example of how to calculate the profit and loss from a leveraged futures contract. For the sake of simplicity, I'll use a well-known futures contract: the E-mini S&P500 contract. Each E-mini is worth $50 times the value of the S&P 500 index and has a tick size of 0.25, so the minimum price change is 0.25 * $50 = $12.50. Here's an example. Say the current value of the S&P500 is 1,600; the value of each contract is therefore $50 * 1,600 = $80,000. You purchase one contract on margin, with an initial margin requirement1 of 5%, or $4,000. If the S&P 500 index rises to 1,610, the value of your futures contract increases to $50 * 1,610 = $80,500. Once you return the 80,000 - 4,000 = $76,000 that you borrowed as leverage, your profit is 80,500 - 76,000 = $4,500. Since you used $4,000 of your own funds as an initial margin, your profit, excluding commissions is 4,500 - 4,000 = $500, which is a 500/4000 = 12.5% return. If the index dropped to 1,580, the value of your futures contract decreases to $50 * 1,580 = $79,000. After you return the $76,000 in leverage, you're left with $3,000, or a net loss of (3,000 - 4000)/(4000) = -25%. The math illustrates why using leverage increases your risk, but also increases your potential for return. Consider the first scenario, in which the index increases to 1,610. If you had forgone using margin and spent $80,000 of your own funds, your profit would be (80,500 - 80,000) / 80000 = .625%. This is smaller than your leveraged profit by a factor of 20, the inverse of the margin requirement (.625% / .05 = 12.5%). In this case, the use of leverage dramatically increased your rate of return. However, in the case of a decrease, you spent $80,000, but gained $79,000, for a loss of only 1.25%. This is 20 times smaller in magnitude than your negative return when using leverage. By forgoing leverage, you've decreased your opportunity for upside, but also decreased your downside risk. 1) For futures contracts, the margin requirements are set by the exchange, which is CME group, in the case of the E-mini. The 5% in my example is higher than the actual margin requirement, which is currently $3,850 USD per contract, but it keeps the numbers simple. Also note that CME group refers to the initial margin as the performance bond instead. |
What options do I have at 26 years old, with 1.2 million USD? | Since the question asked for options, rather than advice, I’ll offer a few. And you can ignore the gratuitous advice that may sneak in. There are countries that will happily give you citizenship for a fee. And others where an investment of far less than your million will get you well on your way. Having citizenship and a passport from another country can be handy if your current one is or becomes unpopular or unstable. From data at numbeo.com, I estimate that my lifestyle would cost me $3300 (US) in Geneva, Switzerland, and that everywhere else on the planet would be less. I haven’t been to Geneva, but I have spent only $2500 (average) per month in eleven countries over three years, and could have been comfortable on far less. $2500/month will go through 1.2 million in only forty years, but if you use it to generate income, and are less wasteful than me, ... With the first few dollars you get, you might take steps to hedge the possibility of not actually getting it all. Appeals can take a long time, and if the defendant runs out of money or figures out how to hide, the size of the judgment is irrelevant. Believe strongly enough in something to donate money for/to it? I’ll leave the investment options to others. |
Credit card transactions for personal finances | I use mint.com for tracking my finances. It works on mobile phones, tablets, and in a browser. If you don't mind the initial hassle of putting in the credentials you use to access your account online, you'll find that you're able to build a comprehensive picture of the state of your finances relatively quickly. It does a great job of separating the various types of financial transactions you engage in, and also lets you customize those classifications with tags. It's ad-supported, so there's no out-of-pocket cost to you, and it doesn't preclude you from using the personal finance software you already have on your phone. |
Do I need to keep paper records for my business? | Scanned or electronic copies of invoices should be sufficient as long as they are accurate and you can deliver them during an audit. Also, if you have an accountant prepare your taxes you would either need to provide them a copy of the invoices or a summary of them with the corresponding amounts to be claimed. Personally I prefer to print out a paper copy and file that away with that quarter's and year's other tax documents. I do my own taxes and find paper copies handy as I can go through each invoice/receipt and make sure I have entered its information by ticking it. I find that when handling a large number of documents that paper copies are more easy to handle than electronic ones. In the end you will need to use a system that you feel comfortable with and are able to use effectively. |
Is there a general guideline for what percentage of a portfolio should be in gold? | My personal gold/metals target is 5.0% of my retirement portfolio. Right now I'm underweight because of the run up in gold/metals prices. (I haven't been selling, but as I add to retirement accounts, I haven't been buying gold so it is going below the 5% mark.) I arrived at this number after reading a lot of different sample portfolio allocations, and some books. Some people recommend what I consider crazy allocations: 25-50% in gold. From what I could figure out in terms of modern portfolio theory, holding some metal reduces your overall risk because it generally has a low correlation to equity markets. The problem with gold is that it is a lousy investment. It doesn't produce any income, and only has costs (storage, insurance, commissions to buy/sell, management of ETF if that's what you're using, etc). The only thing going for it is that it can be a hedge during tough times. In this case, when you rebalance, your gold will be high, you'll sell it, and buy the stocks that are down. (In theory -- assuming you stick to disciplined rebalancing.) So for me, 5% seemed to be enough to shave off a little overall risk without wasting too much expense on a hedge. (I don't go over this, and like I said, now I'm underweighted.) |
Tax implications of diversification | If so, are there ways to reduce the amount of taxes owed? Given that it's currently December, I suppose I could sell half of what I want now, and the other half in January and it would split the tax burden over 2 years instead, but beyond that, are there any strategies for tax reduction in this scenario? One possibility is to also sell stocks that have gone down since you bought them. Of course, you would only do this if you have changed your mind about the stock's prospects since you bought it -- that is, it has gone down and you no longer think it will go up enough to be worth holding it. When you sell stocks, any losses you take can offset any gains, so if you sell one stock for a gain of $10,000 and another for a loss of $5,000, you will only be taxed on your net gain of $5,000. Even if you think your down stock could go back up, you could sell it to realize the loss, and then buy it back later at the lower price (as long as you're not worried it will go up in the meantime). However, you need to wait at least 30 days before rebuying the stock to avoid wash sale rules. This practice is known as tax loss harvesting. |
Can I use an HSA to pay financed payments for LASIK? | From HSA Resources - I understand that I can reimburse myself from my HSA for qualified medical expenses that I pay out-of-pocket but is there a time limit? Do I need to reimburse myself in the same year? You have your entire lifetime to reimburse yourself. As long as you had your HSA established at the time the expense was incurred, you save the receipt and it was not otherwise reimbursed, you can reimburse yourself for the expense from your HSA even years later. The important thing not asked or mentioned above is that the HSA must be in place before the expense occurred. In your case, should the LASIK procedure be before the HSA is established, it's not an eligible expense. |
If a employers supposed to calulate drive time pay with your weekly gross pay | Reimbursements for business expenses are generally not taxable, but the commute from home to the job and back is not considered business travel and if they're paying for that it is taxable income. I don't think carpooling changes that, but I am not a tax lawyer or accountant. The rest of your questions seem to be company policy issues. There is no "should" here. You aren't required to pick up the other guys, but he isn't required to reimburse those miles (or employ you) so think carefully about your priorities before pushing back. Never invoke what thou canst not banish. |
What's an economic explanation for why greeting cards are so expensive? | As one answer points out, people buying greeting cards care little about whether they cost 25 cents or $5. Those are both small amounts of money and it's not something you buy often---also people feel the need to spend money because it's a gift. On the supplier side, it should be noted that the cost of cards has little to do with the paper they are printed on. There is an expectation that cards are new and unique...something the buyer and recipient have never seen. So they have writers and graphic designers constantly cranking out a large variety of cards and replacing existing cards with new ones, of which only a small number get sold before they move to the next model. Relatively speaking, there is a lot of human effort per thousand cards sold. Then of course there is the real estate they occupy in the store (disproportionate to a bunch of pieces of paper) and other retail, marketing, and distribution costs. I'm not saying margins are particularly thin, but if they were crazy high we probably would see more entry as you suggest. |
Can't the account information on my checks be easily used for fraud? | When an someone as esteemed and smart as Donald Knuth tells you the chequing system is busted it's time to close your cheque account, or I guess live with the associated risk. Answer to question, yes your account information can be used to commit fraud on you via your bank. |
Are my parents ripping me off with this deal that doesn't allow me to build my equity in my home? | The time to have looked into this is before you bought the condo, not now. You are presumably an adult. Your parents have apparently made it possible for you to have a roof of your own over your head for what is probably below rental rates (but I don't know your area, so can't say). From their point of view, they may have been doing you a favor, while giving themselves an investment opportunity. What would they be doing with that money otherwise, and at a higher or lower rate of return, and with greater or lesser risk? Where and how would you be living otherwise? More Importantly, if you can't talk to them about this you have bigger problems than money. |
Which U.S. online discount broker is the best value for money? | For self-service type online customers, OptionsXpress gives me far better trading features(like technicals advanced conditions) and tools, ACH money management & scheduling, fullfillment too. $9 stock trades. I don't know if they yet share Schwab's (their new parent company?) commission-free ETFs getting so trendy nowadays. |
Are there index tracking funds that avoid the “buy high - sell low” problem? | There are some index funds out there like this - generally they are called "equal weight" funds. For example, the Rydex S&P Equal-Weight ETF. Rydex also has several other equal weight sector funds |
Is it better to buy US stocks on US stock exchanges as a European? | Liquidity on dual listed equities is rarely the same on both exchanges. More liquidity means you would typically get a better price assuming you execute the trades using the same order types. It's recommended to trade where the liquidity is greater unless your trading method benefits somehow from it being lower. It's important to remember that some ADRs (some European companies listed in US) have ADR fees which vary. USD/EUR transaction fees are low when using a decent broker but you're obviously participating in the currency risk. |
How should I pay off my private student loans that have a lot of restrictions? | Excellent question and it is a debate that is often raised. Mathematically you are probably best off using option #1. Any money that is above and beyond minimum payments earns a pretty high interest rate, about 6.82% in the form of saved interest payments. The problem is you are likely to get discouraged. Personal finance is a lot about behavior, and after working at this for a year, and still having 5 loans, albeit a lower balance, might take a bit of fight out of you. Paying off such a large balance, in a reasonable time, will take a lot of fight. With the debt snowball, you pay the minimum to the student loan, save in an outside account, and when it is large enough, you execute option #2. So a year from now you might only have three loans instead of five. If you behaved exactly the same your balance would be higher after that year then using the previous method. However often one does not behave the same. Because the goals are shorter and more attainable it is easier to delay some gratification. The 8 dollars you are saving in your weekly gas budget, because of low prices, is meaningful when saving for a 4K goal, where it is meaningless when looking at it as a 74K goal. With the 4K goal you are more apt to put that money in your savings, where the 74K goal you might spend it on a latte. For me, the debt snowball worked really well. With either option make sure that excess payments actually go to a reduction in principle not a prepayment of interest. Given this you may be left with no option. For example if method #1 you only prepay interest, you are forced to use option #2. |
When trading put options, is your total risk decreased if you are in a position to exercise the option? | You should also consider what the cost of the Put is, especially if the strike price is set at the current price, vs the average price delta of the security during the period between when you buy the put, and the expiration date. Also note the prices for puts on stocks with a lot of price volatility. There are a good number of situations where you may come out behind. If the stock stays the same price, you are out the premium you paid for the put. If the stock price rises less than the premium, you are out the difference between the two. If the stock price falls less than the premium, you are out the difference between the two. In order to be 'in the money' when writing a protective put, the stock has to either rise more than the premium you paid for the put (and you MUST sell, or hold and write off the expense of the put) or the stock price has to fall below the strike price to a level lower than the premium you paid, and you must SELL via the exercising the option. and you've protected yourself from a loss (presuming you were going to sell and not hold and see if the stock recovers. And since selling is required in both cases, if you've held the stock less than a year, then pay on any profits at short term rates (taxed as regular income) and if the price went down, you can't claim any loss (unless strike price was below your buy price), and would still need to pay if you had a net gain, and you likely can't deduct the price you paid for the put. |
How are startup shares worth more than the total investment funding? | The net worth is based on an estimate of how much he would get if he relinquished his stake. The total funding is based on how much he has relinquished thus far. Suppose I have a candy jar with 100 candies. I'm not sure how much these candies are worth, so I start off by selling 10% of the jar for $10. Now I have 90 candies and $10, a total value of $100. Then someone comes along offering $100 for another 10% (of the original jar, or 10 candies), which I accept. Now I have 80 candies and $110. Since I value each candy at $10 now, I calculate my worth as $910. Then I do another deal selling 10% for $1000. Now I have $1110 in cash and 70 candies valued at $100 each. My total worth is now $8110 (cash + remaining candies), while the candy jar has only received $1110 in funding. Replace candies with equity in The Facebook, Inc. and you get the idea. |
What does ES1 refer to in this picture? | That looks like a Bloomberg terminal. And like @Jer said, it would appear to be the symbol for the S&P 500 E-mini index future. Although it doesn't look right all on its own, as it should have a modifier indicating the month (or quarter) of expiry. However, since it appears on a Bloomberg terminal in the image, I checked a source for Bloomberg Symbol Lists and found one of two possibilities for ES1. It is most likely the S&P 500 e-mini future: CME E-Mini Futures E-Mini S&P 500 ES1 INDEX the only alternative was LIFFE 3 Month Euroswiss ES1 COMDTY I think the former is far more likely, as the latter has the COMDTY commodity tag instead of INDEX as the tag in the image. Also, it isn't the ESI which pertains to Ethibel Sustainability Indices and something with the Eurozone (also Bloomberg Indices). Here we go! Excerpt straight is from a presentation presentation on charting from a business school PDF see pp.12-13, and appears to be a straight excerpt from September 2007 Bloomberg documentation. I didn't know any other way to imbed it besides taking a screen shot then uploading to imgur. Or of course, see pp.12-13 in the referenced PDF I've attached. See |
What happens if my order exceeds the bid or ask sizes? | Sure. Depending on how you configure your order, it will either be fulfilled partially or wait until it can be fulfilled. You can set a time limit on your order (usually its either 1 day or 60 days, but may vary between brokerages), and allow or disallow partial fulfilment. |
Should I sell a 2nd home, or rent it out? | It sounds like you plan to sell sooner or later. If your opinion is that there is still room for the housing market to grow, make your bet and sell later. The real estate market is much less liquid than other markets you might be invested in, so if you do end up seeing trouble (another housing crash) you may be stuck with your investment for longer than you hoped. I see more risk renting the house out, but I don't see significantly more reward. If you are comfortable with the risk, by all means proceed with your plan to rent. My opinion is contrary to many others here who think real estate investments are more desirable because the returns are less abstract (you can collect the rent directly from your tenants) but all investments are fraught with their own risks. If you like putting in a little sweat equity (doing your own repairs when things break at your rental) renting may be a good match for you. I prefer investments that don't require as much attention, and index funds certainly fit that bill for me. |
How can I verify that a broker I found online is legitimate? | Both Scottrade and ING Direct (CapitalOne) have physical branches. Scottrade are wide-spread, ING/CapitalOne are less common (in California where I live, I have a bunch of Scottrade branches around where I live, but the only ING presence I know of is in LA on Sepulveda at Santa Monica). So one way to verify the company is legit is to go to their physical location and talk to the people there. Similarly, you can find physical locations in major metropolitan areas for many other web-based discount brokers. In my area (SF Bay Area) we have Scottrade, ETrade, Fidelity, TD Ameritrade, and that's just those I've actually seen with my own eyes. You can just walk in and talk to the people there about their options and their web operations. It is hard and unlikely for a sting operation to set up a web of brick-and-mortar offices across the nation. Even Madoff had only one or two offices. Of course I totally agree with Chris's answer, especially with regards to the SSL certificates' verification and spoofing and phishing avoidance. |
What should I do with $4,000 cash and High Interest Debt? | If your credit is good, you should immediately attempt to refinance your high rate credit cards by transferring the balance to credit cards with lower interest rates.You might want to check at your local credit union, credit unions can offer great rates. Use the $4000 to pay off whatever is left on the high rate cards. If your credit is bad, I suggest you call your credit card company and try to negotiate with them. If they consider you a risk they might settle your account for fraction of what you own if you can send payment immediately. Don't tell them you have money, just tell them your are trying to get your finances under control and see what they can offer you. This will damage your credit score but will get you out of depth much sooner and save you money in the long term. Also keep in mind that if they do settle, they'll close your account. That way, you leverage the $4000 and use it as a tool to get concessions from the bank. |
Are non-residents or foreigners permitted to buy or own shares of UK companies? | Yes it is legal, in fact according to statistics.gov.uk, foreign investors are the largest holders of UK shares (as of 2008). Investors from outside the UK owned 41.5 per cent of shares listed on the London Stock Exchange at the end of 2008, up from 40.0 per cent at end of 2006, according to the latest Office for National Statistics report on share ownership. |
Why could rental costs for apartments/houses rise while buying prices can go up and down? | Average rent rates will typically rise and fall, and are market-dependent just like real estate. In the short term, a collapse in housing like the one we saw in 2008 can induce a spike in rental costs as people walk away or get foreclosed on, and move back into apartments. That then tends to self-adjust, as the people who had been in the apartments find a deal on a foreclosed house and move out. However, one thing I've seen to be near-constant in the apartment business is that a landlord will offer you a deal to get in, then increase the rent on you from year to year until you get fed up and move. This is a big reason I didn't have the same address for two years in a row until I bought my house. The landlord is basically betting that you won't want to deal with the hassle of moving, and so will pay the higher rent rate, even if, when you do the math, it makes more sense to move even to maintain the same rent rate. Eventually though, you do get fed up, look around, find the next good deal, and move, "resetting" your rent rate. I have never, not once in my life, seen or heard of any landlord offering a drop in rent as a "loyalty" move to keep you from going somewhere else. It's considered part of the game; retailers will price match, but most service providers (landlords, but also utility providers) expect a large amount of "churn" in their customer base as people shop around. It averages out. |
Why would anyone want to pay off their debts in a way other than “highest interest” first? | Let's say I have two loans (say 2 car loans), and the high interest loan has a higher balance. Both have a monthly payment of, say, $500. My income fluctuates a lot, so occasionally I only have $750. I get hit with big fees those months, or maybe I just have to eat beans for those months. I come on some extra money. Maybe enough to get rid of the low interest small loan. Paying off the smaller loan frees up cash. I don't have to eat beans on the bad months. |
Considering buying a house in town with few major employers (economic stability) | BLUF: Continue renting, and work toward financial independence, you can always buy later if your situation changes. Owning the house you live in can be a poor investment. It is totally dependent on the housing market where you live. Do the math. The rumors may have depressed the market to the point where the houses are cheaper to buy. When you do the estimate, don't forget any homeowners association fees and periodic replacement of the roof, HVAC system and fencing, and money for repairs of plumbing and electrical systems. Calculate all the replacements as cost over the average lifespan of each system. And the repairs as an average yearly cost. Additionally, consider that remodeling will be needful every 20 years or so. There are also intangibles between owning and renting that can tip the scales no matter what the numbers alone say. Ownership comes with significant opportunity and maintenance costs and is by definition not liquid, but provides stability. As long as you make your payments, and the government doesn't use imminent domain, you cannot be forced to move. Renting gives you freedom from paying for maintenance and repairs on the house and the freedom to move with only a lease to break. |
Why do 10 year-old luxury cars lose so much value? | +1 They are over priced to begin with - More specifically they are expensive to create exclusivity, which raises their value to people who value that kind of thing. Perhaps folks who buy those cars aren't buying them for value or quality or performance, but are buying them for the badge and the intangible factors. I frequently hear about rich people who earned their millions driving around in cars Consumer Reports rank highly, so it isn't because they are so much better than a mid priced car. A car for $140,000 is either equipped for the A-Team or is a status symbol. The status symbol notion is very expensive, but fades very quickly, hence the mighty depreciation. |
If I sell a stock that I don't have, am I required to buy it before a certain amount of time? | I'm just began playing in the stock market. I assume you mean that you're not using real money, but rather you have an account with a stock simulator like the one Investopedia offers. I am hopeful that's the case due to the high level of risk involved in short selling like you're describing. Here is another post about short selling that expands a bit on that point. To learn much more about the ins and outs of short selling I will point again to Investopedia. I swear I don't work for them, but they do have a great short selling tutorial. When you short sell a stock you are borrowing the stock from your broker. (The broker typically uses stock held by one or more of his clients to cover the loan.) Since it's basically a loan you pay interest. Of course the longer you hold it the more interest you pay. Also, as Joe mentioned there are scenarios in which you may be forced to buy the stock (at a higher price than you sold it). This tends to happen when the stock price is going against the short sell (i.e. you lose money). Finally, did anyone mention that the potential losses in a short sell are infinite? |
Does renting a room on AirBnB make all interest taxable? | What theyre fishing for is whether the money was earned in the U.S. It's essentially an interest shelter, and/or avoiding double taxation. They're saying if you keep income you make outside the US in a bank inside the US, the US thanks you for storing your foreign money here and doesn't tax the interest (but the nation where you earned that income might). There is no question that the AirBNB income is "connected with a US trade or business". So your next question is whether the fraction of interest earned from that income can be broken out, or whether IRS requires you to declare all the interest from that account. Honestly given the amount of tax at stake, it may not be worth your time researching. Now since you seem to be a resident nonresident alien, it seems apparent that whatever economic value you are creating to earn your salary, is being performed in the United States. If this is for an American company and wages paid in USD, no question, that's a US trade or business. But what if it's for a Swedish company running on Swedish servers, serving Swedes and paid in Kroner to a Swedish bank which you then transfer to your US bank? Does it matter if your boots are on sovereign US soil? This is a complex question, and some countries (UK) say "if your boots are in our nation, it is trade/income in our nation"... Others (CA) do not. This is probably a separate question to search or ask. To be clear, the fact that your days as a teacher or trainee do not count toward residency, is a separate question from whether your salary as same counts as US income. |
Why does gold have value? | I use to play marbles at school. Marbles were like gold the more you had the richer you were. They were a scarce commodity only a few in circulation. Once I secured a wealth of marbles I realized they were of little real value. They were only of illusory value. As long as we all were deceived into believe they had value they I was rich. Sure marble could be used to make marble floors ;) they were lovely to look at, and every one wanted them. Then one day, I discovered the emperor had no clothes. Wow, the day that everyone sees the true value of gold, what a stock market crash that will be. I tried to avoid gold as much as possible, but this is hard to do in todays stock market. My solace is that we will all be in the same golden (Titanic) boat, only I hope to limit my exposure as much as possible. Anyone want a gold watch for a slice of bread? |
Can I use stop limit orders on vanguard orders to prevent loss? | You've laid out a strategy for deciding that the top of the market has passed and then realizing some gains before the market drops too far. Regardless of whether this strategy is good at accomplishing its goal, it cannot by itself maximize your long-term profits unless you have a similar strategy for deciding that the bottom of the market has passed. Even if you sell at the perfect time at the top of the market, you can still lose lots of money by buying at the wrong time at the bottom. People have been trying to time the market like this for centuries, and on average it doesn't work out all that much better than just plopping some money into the market each week and letting it sit there for 40 years. So the real question is: what is your investment time horizon? If you need your money a year from now, well then you shouldn't be in the stock market in the first place. But if you have to have it in the market, then your plan sounds like a good one to protect yourself from losses. If you don't need your money until 20 years from now, though, then every time you get in and out of the market you're risking sacrificing all your previous "smart" gains with one mistimed trade. Sure, just leaving your money in the market can be psychologically taxing (cf. 2008-2009), but I guarantee that (a) you'll eventually make it all back (cf. 2010-2014) and (b) you won't "miss the top" or "miss the bottom", since you're not doing any trading. |
In a competitive market, why is movie theater popcorn expensive? | Theaters make pennies off the tickets if any money at all. Their profits come from the concession stand. If a theater priced their popcorn 50 cents less than a nearby competing theater the few if any customers that notice and seek those small savings would be far less than the losses due to charging less. They compete to get you there: providing better sound systems, seating, screens -- even taking a loss on tickets with special deals (like Tuesday bargains). Once inside profit is made by customers willing to pay the concession price premium, and sour patch kids for 15 cents more isn't going to be a deal breaker. |
Get free option quotes | A number of sites provide delayed option chains online. Yahoo Finance is one example: I linked to Apple's chain, but to get one yourself, put the ticker you want in the search box, then click the "options" link in the sidebar that I called out in the image. |
How can I find out which ETFs has holdings in a particular stock? | An ETF does not track any one individual stock. It "is a marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund." Check out this link to learn more about ETFs. The easiest way see what ETF tracks a stock is to determine what sector and industry that company is in and find some ETF that trade it. The ETF will likely trade that stock, assuming that its market cap and exchange it trades on fits within the parameters of the ETF. |
Can stock market gains be better protected under an LLC arrangement? | All corporate gains are taxed at the same rate as corporate income, for the corporate entity, so this actually can be WORSE than the individual capital gains tax rates. There are a lot of things you can do with trading certain asset classes, like opening you up to like-kind re-investment tax perks, but I can't think of anything that helps with stocks. Also, in the US there is now a law against doing things solely to avoid tax if they have no other economic purpose. So be conscious about that, you'll need to be able to rationalize at least a thin excuse for why you jumped through all the hoops. |
How to get the lowest mortgage rate on a new purchase? | Purchase loans tend to be more challenging to get the best possible rate, because you have to balance closing the loan and getting the contract. So there isn't as much time to shop around as when you do a refinance. I disagree with the sentiment to go with your local bank. Nothing wrong with asking at your local bank and using their numbers as a baseline, but chances are they won't be competitive. There are many reputable online mortgage originators that will show accurate fees and rates upfront assuming you provide accurate information. In the past there were a lot of issue with Good Faith Estimates being pretty much worthless. There were a fair number of horror stories about people showing up to closing and finding out fee or rates had increased dramatically. There was a law passed after the housing debacle that severely limits the shenanigans that lenders can do at closing and so there is less risk when going with a lesser known lender. In fact I would say the only real risk with a lender now days is choosing one that happens to be overloaded and or just has poor customer service in general. Personally I have found the most competitive rates from Zillow's mortgage service and the now defunct Google mortgage. The lenders tend to be smaller, but highly efficient. They are very much dependent on their online reputations. I have heard good things about a number of larger online lenders, but I don't have personal experience so I will leave them off. I personally wouldn't worry much about whether the loan is sold or not. Outside of refinancing I don't think I have ever talked to the bank servicing my mortgage about my mortgage. There just isn't much need to talk to them. |
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