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Can someone explain a stock's “bid” vs. “ask” price relative to “current” price? | Both prices are quotes on a single share of stock. The bid price is what buyers are willing to pay for it. The ask price is what sellers are willing to take for it. If you are selling a stock, you are going to get the bid price, if you are buying a stock you are going to get the ask price. The difference (or "spread") goes to the broker/specialist that handles the transaction. |
Abundance of Cash - What should I do? | People have asked a lot of good questions about your broader situation, tolerance for risk, etc, but I'm going to say the one-size-fits-most answer is: split some of your monthly savings (half?) into the VEU Vanguard FTSE All-World ex-US ETF and some into VTI Vanguard Total Stock Market ETF. This can be as automatic and hassle-free as the money market deposit and gives a possibility of getting a better return, with low costs and low avoidable risk. |
Can individual investors buy precious metals at the spot price? | The futures market allows you to take delivery at the lowest cost. Most people don't deal in 100oz gold bars and 5000oz of 1000oz silver bars though, especially at the retail level. That said, when you are at the retail level, often times you will find reputable Internet dealers offering the lowest cost of ownership. Keep in mind brand name though when you're doing this. Reputable refiners/mints will often see higher premiums versus generic, and this does matter to some extent. Quantity and weights also matter in terms of pricing; the more you buy the lower the premium. |
Does a growing economy mean the economy is becoming less efficient? | It's a kook movie made by folks who combine conspiracy quackery with repackaged socialism. If you're into socialist theory, read Marx or some other intellectual socialist. That said, growth and efficiency are not the same thing. If I'm running a lemonade stand, I can grow by hiring more people at $X/hr or increase efficiency by purchasing an electric juicer and hiring fewer people. |
Filing Taxes for Two Separate Jobs Being Worked at the Same Time? | You file taxes as usual. W2 is a form given to you, you don't need to fill it. Similarly, 1099. Both report moneys paid to you by your employers. W2 is for actual employer (the one where you're on the payroll), 1099 is for contractors (where you invoice the entity you provide services to and get paid per contract). You need to look at form 1040 and its instructions as to how exactly to fill it. That would be the annual tax return. It has various schedules (A, B, C, D, E, F, H, etc) which you should familiarize yourself with, and various additional forms that you attach to it. If you're self employed, you're expected to make quarterly estimate payments, but if you're a salaried employee you can instruct your employer to withhold the amounts you expect to owe for taxes from your salary, instead. If you're using a tax preparation software (like TurboTax or TaxAct), it will "interview" you to get all the needed information and provide you with the forms filled accordingly. Alternatively you can pay someone to prepare the tax return for you. |
Uncashed paycheck 13 years old | Even going to small claims court the burden would be on you to prove that they never paid you. The 13 year gap would be the core of the argument by the company that they have no obligation to keep records from 13 years ago. That is far longer than they need to keep them for tax purposes. Even if they sent you a replacement check the next year, that happened to me once, the record of that transaction would have been 12 years ago. The bank will not cash it because of the date being 13 years ago. As we move forward with more and more of the checks being deposited via phone/scanner the banks will be even less likely to handle stale checks because the fact you have the check in your hand doesn't mean it wasn't cashed. |
How will a 1099 work with an existing W-2? | You can have multiple W2 forms on the same tax return. If you are using software, it will have the ability for you to enter additional W2 forms. If you are doing it by paper, just follow the instructions and combine the numbers at the correct place and attach both. Similarly you can also have a 1099 with and without a W2. Just remember that with a 1099 you will have to pay the self employment tax ( FICA taxes, both employee and employer) and that no taxes will be withheld. You will want to either adjust the withholding on your main job or file quartely estimated taxes. Travel reimbursement should be the same tax exempt wise. The difference is that with a 1098, you will need to list your business expenses for deduction on the corresponding tax schedule. The value on the 1099 will include travel reimbursement. But then you can deduct your self employment expenses. I believe schedule C is where this occurs. |
Is buying or selling goods for gold or silver considered taxable? | This isn't new. Even before silver hit $50 in 1980, silver coins were worth 3-4X face value for 'junk' silver. There were people writing articles on how one could sell their house and specify a lower price, but paid in silver coins. Since silver coins have a face value, it was suggested that this was a legitimate process. These people also suggested that if you paid your tax bill in silver coins, the IRS won't credit you for for than face value, ergo, the deal was legit. As littleadv responded, it's barter. And barter is taxable. And once again, "if it quacks like a duck...." |
What are these fees attached to mutual fund FSEMX? | Annual-report expense ratios reflect the actual fees charged during a particular fiscal year. Prospectus Expense Ratio (net) shows expenses the fund company anticipates will actually be borne by the fund's shareholders in the upcoming fiscal year less any expense waivers, offsets or reimbursements. Prospectus Gross Expense Ratio is the percentage of fund assets used to pay for operating expenses and management fees, including 12b-1 fees, administrative fees, and all other asset-based costs incurred by the fund, except brokerage costs. Fund expenses are reflected in the fund's NAV. Sales charges are not included in the expense ratio. All of these ratios are gathered from a fund's prospectus. |
Is it adventageous to expedite my wedding before the new year for tax savings? | You are correct. If you get married by December 31, you will file as married for this year (Married Filing Jointly or Married Filing Separately) instead of Single. That could indeed save you some amount of taxes, if your situation is as you described. Some people do plan their date of marriage in such a way to optimize tax savings. Whether your marriage date should be set in such a way is your personal decision. |
Why would my job recruiter want me to form an LLC? | I don't know about the US, but in the UK this is common practice, even required in some situations, and not sketchy at all. It's perfectly legal, saves you tax, and protects you from a legal standpoint. (i.e. what if you break something and your employer wants to sue you?) This is what companies are for, they are legal entities that are separate from an individual. There is no requirement for a company to have more than one employee. |
What financial data are analysed (and how) to come up with a stock recommendation? | The short answer: it depends. The long answer.. Off the top of my head, there are quite a number of factors that an analyst may look at when analyzing a stock, to come up with a recommendation. Some example factors to look at include: The list goes on. Quite literally, any and all factors are fair game for a recommendation. So, the question isn't really what analysts do with financial data, it is what do analysts do with financial data that meets your investment needs? As an example, if you have two analysts, one who is focused on growth stocks, and one who is focused on dividend growth, they may have completely different views on a company. If both analysts were to analyze Apple (AAPL) 5 years ago, the dividend analyst would likely say SELL or at the most HOLD, because back then Apple did not have a dividend. However, an analyst focused on growth would likely have said BUY, because Apple appeared to be on a clear upward trend in terms of growth. Likewise, if you have analysts who are focused on shorting stocks, and ones who are focused on deep value investing, the sell analyst may be selling SELL because they are confident the stock will go down in price, so you can make money on the short position. Conversely, the deep value investor may be saying BUY, because they believe that based on the companies strong balance sheet, and recent shake-ups in management the stock will eventually turn around. Two completely different views for the same company: the analyst focused on shorting is looking to make money by capitalizing on falling share price, while the analyst focused on deep value is looking for unloved companies in a tailspin whom s/he believe will turn around, the thesis being that if you dollar-cost-average as the price drops, when it corrects, you'll reap the rewards. That all said, to answer the question about what analysts look for: So really, you should be looking for analysts who align with your investment style, and use those recommendations as a starting point for your own purchases. Personally, I am a dividend investor, so I have passed many BUY recommendations from analysts and my former broker because those were based on growth stories. That does not mean that the analysts, my former broker, or myself, are wrong. But we were all incorrect given the context of how I invest, and what they recommend. |
Why does 'further borrowing' always mean permanent extra mortgage accounts? | It is possible to consolidate mortgages with Nationwide, in some circumstances. Quote from their website: It is possible to consolidate different mortgages and other debts such as personal loans and credit cards. However it does depend on your individual circumstances, including the exact type of loans you want to consolidate and whether you are still in a special deal period I, personally, would be amazed if you couldn't get them all in one mortgage without changing provider. But... I wouldn't be at all surprised if they forced you to have this one mortgage as a new mortgage, rather than adding balances to an existing one. My reasoning is as follows: Coming at it from a different angle: whatever there was that required your further borrowing to be in new mortgages, rather than added to your existing mortgage, will also preclude your multiple mortgages being added to one of your existing mortgages. |
Where can I find open source portfolio management software? | Have you looked into GnuCash? It lets you track your stock purchases, and grabs price updates. It's designed for double-entry accounting, but I think it could fit your use case. |
Dividends - Why the push to reinvest? | There is a basis for that if you consider the power of compounding. So, the sooner you re-invest the dividends the sooner the time will give you results (through compounding). There is also the case of the commissions, if they are paid with a percentage of the amount invested they automatically gain more from you. Just my 2cents, though the other answers are probably more complete. |
What exactly happens during a settlement period? | During the settlement period, the buyer transfers payment to the seller and the seller transfers ownership to the buyer. This is really a holdover from the days when so much of stock trading was done by individual human traders, and computers were still not a huge part of the operation. Back then, paper tickets for trades exchanged hands, and the time period was actually 5 days, so 3 days is an improvement. A settlement period was necessary for everyone to figure out their trades and do what was necessary to make the settlements happen, so it was not always a quick process, mainly because of smaller trading firms that didn't have technology to help them along. Nowadays, technology makes settlements easy, and they usually occur at the end of the trading day. The trading firms sum up their trades, figure out who they owe, and send lump sum settlements to the counterparties to their trades. If anything, the 3-day period may just be used now to let parties verify trades before settling. I hope this helps. Good luck! |
401K - shift from agressive investment to Money Market | If you look at history, it shows that the more people predict corrections the less was the chance they came. That doesn't prove it stays so, though. 2017 is not any different than other years in the future: Independent of this, with less than ten years remaining until you need to draw from your money, it is a good idea to move away from high risk (and high gain); you will not have enough time to recover if it goes awry. There are different approaches, but you should slowly and continuously migrate your capital to less risky investments. Pick some good days and move 10% or 20% each time to low-risk, so that towards the end of the remaining time 90 or 100% are low or zero risk investments. Many investment banks and retirement funds offer dedicated funds for that, they are called 'Retirement 2020' or 'Retirement 2030'; they do exactly this 'slow and continuous moving over' for you; just pick the right one. |
How Should I Go About Buying a Car? (College Student) | So you want to buy a car but have no money saved up.... That's going to be hard!! I'd suggest you get a part-time job, save up and buy a used car. Even with the minimum wage pay in the U.S., if you are in the U.S., you could save up and buy a car in less than a month. This route would be the quickest way for you to get a car but it would also teach you the responsibility of having one since it appears you have never owned a car before. Now the car will most definitely not be fancy or look like the cars that your peer's parents bought but at least it will get you from point A to point B. I'd look on Craigslist or your local neighborhood for cars that have not moved in a while or have for sale signs. Bring a mechanically inclined friend with you and contact the owner and explain them your situation. There are nice people out there that would give you deep discounts based on the fact that you are a student trying to get by. Now you have to get registration and insurance. There are many insurance companies that give discounts to students as well who have good GPAs and driving records. If you happen to get a car for a good deal, take good car of it. Once you graduate and further your career, you can resell it for a profit. I also would not suggest you get any loans for a car given your situation. |
How inflation in China makes real exchange rate between China and US to rise? | Chinese currency is not freely convertible. Its exchange rate is not determined by the market but rather by the Chinese government. Thus the counter-intuitive result. In essence, the Chinese government is subsidizing exports (which is reasonable since exports is what drives the Chinese economy). |
Why the need for human brokers while there are computers? | There are still human brokers on the floor primarily due to tradition. Their numbers have certainly dwindled, however, and it's reasonable to expect the number of floor traders to decrease even more as electronic trading continues to grow. A key reason for human brokers, however, is due to privacy. Certain private exchanges such as dark pools maintain privacy for high profile clients and institutional investors, and human brokers are needed to execute anonymous deals in these venues. Even in this region, however, technology is supplanting the need for brokers. I don't believe there is any human-broker-free stock exchange, but Nasdaq and other traditionally OTC (over the counter) exchanges are as close as it gets since they never even had trading floors. |
Why does gold have value? | Everything is worth what its purchaser will pay for it. --Publilius Syrus. Gold has value because people want to buy it. Electronics manufacturers like the fact that it's conductive. Jewellers like that its shiny. Glenn Beck likes that he's selling it and his audience will buy it. Proponents of gold claim that it has "real" value, as opposed to fiat currency (which has no commodity backing). Opponents of gold claim that all wealth is illusory, and that gold has no more inherent value than the paper we use now. I'm inclined to agree with the latter (money is only money because we agree that it is, and the underlying material is meaningless), however the issue is hotly debated. |
How do I get a list of the top performing funds between two given dates? | I found one such tool here: Point-to-Point Returns tool |
In the UK what are citizens legally obliged to do (in order to not be fined) | Edited to add an important one that I forgot, because I don't have a TV myself. You need to: That's really about it, unless you're employing people or running a business turning over more than £81,000 per year (or doing one of a number of relatively unlikely things that require specific paperwork, such as owning a horse or farm animal (but not a dog or cat or similar)). It's not a bureaucratic country. None of those things except the driving licence/car tax/MOT test/car insurance will be a police matter if omitted, but you could be fined for them (although it's vanishingly unlikely that you'd be fined for not registering to vote and for jury service). You don't need to understand the law before being on a jury, because it's the judge's job to ensure that the jury understand the law as it relates to the case in front of them. A few pieces of paperwork jargon for you: |
First concrete steps for retirement planning when one partner is resistant | Bringing your spouse on board a financial plan is key to success. The biggest part is to have a shared dream. Having retirement saving doesn't mean that you can't work. It does mean that you both will have some level of security as you age. Does your husband really want you to be impoverished when he dies? I doubt it, he probably just hasn't given it much thought. A strong nest-egg can help you after his is gone even if you are still working. My wife and I follow Dave Ramsey's baby steps. It has worked like a champ for us and can help you as well. You can look up his plan, most of the materials are free. A few highlights: So in short, don't worry about retirement until you two are out of debt. Once you two are out of debt then save for your retirement, kids college and pay off your home early. Building a shared dream with your husband is the best way to get him onboard. Talk about helping the kids, freedom to vacation, your parents struggle, whatever gets him to see the importance of having some savings. |
First time home buyer: Can you withdraw funds from a Roth 401k for a first time home purchase? | The rules are quite different. There is no special home purchase penalty-free withdrawal. In the case that your account has been open for five years, you can withdraw the principal (but not the earnings) without penalty. You may want to talk to a professional for further details. The real question is: why do you want to borrow against your future to finance your present? Your down payment funds should come from another source than your retirement. Retirement funds should only be touched in the direst financial straights. |
Do I need to register as self employed in Ontario, Canada? | If your business name is your name, you are automatically considered a sole-proprietorship and any income you generate and expenses you incur can be calculated on your personal tax return. You can use QuickTax Home & Business tax software to lead you through the steps; you don't even need an accountant. One drawback of a sole-proprietorship in your name is liability. You are personally responsible for the business because you are the business. If you get sued, you can lose everything. To limit that liability you can look into opening a corporation. If the corporation gets sued you are insulated from that; the corporation goes bankrupt, not you. A lawyer and an accountant will be required to give you solid advice on this direction. |
Is it ever a good idea to close credit cards? | It is an issue of both utilization and average age of accounts. If your cards with $0 balances on them are: A) newer cards than the ones you are carrying balances on and you don't want them B) much lower limit cards than the ones you are carrying balances on then you can raise your score by closing them, as the utilization change won't be a large factor and you can raise the average age of your open accounts. |
What factors of a stock help determine its potential | Knowing the answer to this question is generally not as useful as it may seem. The stock's current price is the consensus of thousands of people who are looking at the many relevant factors (dividend rate, growth prospects, volatility, risk, industry, etc.) that determine its value. A stock's price is the market's valuation of the cash flows it entitles you to in the future. Researching a stock's value means trying to figure out if there is something relevant to these cash flows that the market doesn't know about or has misjudged. Pretty much anything we can list for you here that will affect a stock's price is something the market knows about, so it's not likely to help you know if something is mispriced. Therefore it's not useful to you. If you are not a true expert on how important the relevant factors are and how the market is reacting to them currently (and often even if you are), then you are essentially guessing. How likely are you to catch something that the thousands of other investors have missed and how likely are you to miss something that other investors have understood? I don't view gambling as inherently evil, but you should be clear and honest with yourself about what you are doing if you are trying to outperform the market. As people become knowledgeable about and experienced with finance, they try less and less to be the one to find an undervalued stock in their personal portfolio. Instead they seek to hold a fully diversified portfolio with low transactions costs and build wealth in the long term without wasting time and money on the guessing game. My suggestion for you is to transition as quickly as you can to behave like someone who knows a lot about finance. |
What is your effective tax rate if you work from home in Montreal for a company in Toronto? | For tax purposes, what matters is your province of residence at December 31st. Quebec Tax abatement therefore applies if you were living in Quebec, regardless of your employer, assuming you are an employee. As for effective tax, your question misses some data and does not quite make sense as effective tax is the result of dividing your total taxes paid after deductions and tax credits by your total income. As such, one cannot tell you your effective tax rate without knowing taxes paid after deductions and tax credits and total income. |
Ideal investments for a recent college grad with very high risk tolerance? | I am in a very similar situation as you (software engineer, high disposable income). Maximize your contributions to all tax-advantaged accounts first. From those accounts you can choose to invest in high risk funds. At your age and date-target funds will invest in riskier investments on your behalf; and they'll do it while avoiding the 30%+/- haircut that you'll be paying in taxes anyhow. If, after that, you're looking for bigger risk plays then look into a brokerage account that will let you buy and sell options. These are big risk swingers and they are sophisticated, complicated products which are used by many people who likely understand finance far better than you. You can make money with them but you should consider it akin to gambling. It might be more to your liking to maintain a long position in a stock and then trade options against your long position. Start with trading covered calls, then you could consider buying options (defined limited downside risk). |
What are the advantages and disadvantages of leasing out a property or part of a property (such as a basement apartment)? | The obvious advantage is turning your biggest liability into an income-generating asset. The downside are: (1), you have to find tenants (postings, time to show the place, credit/background check, and etc) (2), you have to deal with tenants (collection of rent, repairs of things that broke by itself, complaints from neighbors, termination, and etc) (3), you have to deal with the repairs In many ways, it's no different from running another (small) business, so it all boils down to how much time you are willing to invest and how handy you are in doing reno's and/or small repairs around the house. For profitability/ROI analysis, you want to assume collection of 11 months of rent per year (i.e. assume tenant doesn't renew after year, so you have the worst case scenario) and factor in all the associated expense (be honest). Renting out a second property is a bit tricky as you often have to deal with a large operating expense (i.e. mortgage), and renting a basement apartment is not bad financially and you will have to get used to have "strangers" downstairs. |
When the market crashes, should I sell bonds and buy equities for the inevitable recovery? | The problem with the proposed plan is the word "inevitable". There is no such thing as a recovery that is guaranteed (though we may wish it to be so), and even if there was there is no telling how long it will take for a recovery to occur to a sufficient degree. There are also no foolproof ways to determine when you have hit the bottom. For historical examples, consider the Nikkei. In 2000 the value fell from 20000 to 15000 in a single year. Had you bought then, you would have found the market still fell and didn't get back to 15k until 2005...where it went up and down for years, when in 2008 it fell again and would not get back to that level again until 2014. Lest you think this was an isolated international incident, the same issues happened to the S&P in 2002, where things went up until they fell even lower in 2009 before finally climbing again. Will there be another recession at some point? Surely. Will there be a single, double, or triple dip, and at what point is the true bottom - and will it take 5, 10, or 20+ years for things to get back above when you bought? No one really knows, and we can only guess. So if you want to double down after a recession, you can, but it's important you not fool yourself into thinking you aren't greatly increasing your risk exposure, because you are. |
What are the financial advantages of living in Switzerland? | Some of the advantages of Switzerland: Not everything is about money. |
What are the alternatives to compound interest for a Muslim? | I am not sure if these are available today in your country: but supposedly, back when Catholic countries similarly forbade usury, sinecures were invented to circumvent religious restrictions on finance. Meaning literally 'without care', sinecures were formally prestigious salary-paying jobs with few responsibilities. They were bought by the wealthy from the Church or State. The salaries for sinecures, accumulated over time, exceeded the initial purchase price. As such, some moderns consider sinecures usury in all but name. |
What determines a tax resident in Florida | Plenty of retired people do stay in the US for longer than 60 days and don't pay taxes. In this IRS document 60 days stay appears to be the test for having a 'substantial presence' in the US, which is part of the test for determining residency. However the following is also written: Even if you meet the substantial presence test, you can be treated as a nonresident alien if you are present in the United States for fewer than 183 days during the current calendar year, you maintain a tax home in a foreign country during the year, and you have a closer connection to that country than to the United States. In other words, if your property in the US is not your main one, you pay tax in another country, and you stay there less than half the year, you should be treated as a non-resident (I am not a lawyer and this is not advice). This IRS webpage describes the tax situation of nonresident aliens. As I understand it, if you are not engaged in any kind of business in the US and have no income from US sources then you do not have to file a tax return. You should also look into the subject of double tax agreements. If your home country has one, and you pay taxes there, you probably won't need to pay extra tax to the US. But again, don't take my word for it. |
Why do people buy new cars they can not afford? | The car you dream of might not be available in your local used car market. Or if it is, there might be something wrong with it. Here are some reasons that a person might want to buy a new car. Basically, if you have a picture in your mind of what your next car should look like, it is easier to shop for a new car: New cars are getting better. Here are some reasons that a person might want a newer generation car rather than an older generation car: Cars wear out. Here are some reasons a person shopping for a car might pass on a used car: In other words, there are good reasons to want a car that is either brand new, exactly two years old, or 3 - 5 years old. The brand new car might be better than the old car ever was. |
How can I find a list of self-select stocks & shares ISA providers? | My go-to response whenever anyone asks me this is the Monevator table of platform fees. It looks a little complicated at first, but scroll past the table for a couple of paragraphs of useful info to help narrow down your search. The general tone of the page is geared more towards investors in index funds, but the fees on share-dealing are right there in the table too. There are also special notes if there are discounts for frequent traders and that sort of thing, so not too much passive-investor elitism on show! |
Definitions of leverage and of leverage factor | Your original example is a little confusing because just shorting for 1k and buying for 1k is 100% leveraged or an infinitive leverage ratio. (and not allowed) Brokerage houses would require you to invest some capital in the trade. One example might be requiring you to hold $100 in the brokerage. This is where the 10:1 ratio comes from. (1000/10) Thus a return of 4.5% on the 1000k bond and no movement on the short position would net you $45 and voila a 45% return on your $100 investment. A 40 to 1 leverage ratio would mean that you would only have to invest $25 to make this trade. Something that no individual investor are allowed to do, but for some reason some financial firms have been able to. |
Are PINs always needed for paying with card? | Like email and spam, fighting creditcard fraud is a cat and mouse game, with technology and processes constantly being developed to reduce fraud. The CVV on the back of the card is just one more layer of security. Requiring the CVV generally requires you to physically have access to the card. CVV should not be stored by any merchant. This frustrates card skimming fraud as the CVV is not present in the track data and fraud caused by database compromises. You should never use your PIN online. MC/VISA both have implementations of 3D-Secure (SecureCode for MC and Verified by VISA) which require a password / code to confirm card ownership. Depends on both Issuer and Merchant implementing the standard. Regarding not needing a PIN at the airport, some low value transactions no longer need PINs, depending on the Issuer and Scheme (VISA/MC). MasterCard PayPass or VISA PayWave enable low value contactless transactions without PIN. In Australia, the maximum value for a contactless transactions is $100 AUD. At some merchants (McDonalds for example) a PIN is not required for for meals purchased with VISA (at least, for the cheeseburger I bought there as a test). This makes sense - if you don't need a PIN for a contactless purchase, why do you need it for a chip based purchase? So - why allow PIN free transactions? On average customers report stolen credit cards / wallet very quickly and the losses are correspondingly small. As card issuers are always online, cards can be cancelled very quickly after being reported lost / stolen. Finally, by performing transactions for just a few cents or pennies, the merchant (Spotify) can likely validate you are the owner of the card as you'd need access to your online bank to confirm the transactions. PayPal do this with bank account to confirm ownership. (Unless I've misunderstood your statement). |
How do I analyse moving averages? | If you are going to be a long term investor you are only going to buy and hold. You will not sell. Thus future price is not relevant. Only dividend payout is relevant. Divide the dividend by the price you paid to get the yeald. Edit: once again the sitesite will not allow me to add a comment, so I have to edit a previous post... What you call 'active investor' is not really investing, it is speculating. When you try to 'buy low, sell high' you have, at best, a 50-50 chance of picking the low. You then pay a commission on that buy. After you buy then you have a 50-50 chance, at best, of picking the high. You also have to pay the commission on the sell. 50% times 50% is 25%.So you have, at best a 25% chance of buying low and selling high. You are churning your account which makes money for the broker whether you make money or not. If, instead, you buy and hold a dividend paying security then the going price is irrelevant. You paid for the security once and do not have to pay for it again. Meanwhile the dividends roll in forever. 'Buy low, sell high' is a fools game. Warren Buffet does not do it, he buys and holds. |
Why would anyone want to pay off their debts in a way other than “highest interest” first? | I recently paid off a line of credit on an investment property that I own. I had some surplus cash and decided to pay off the line of credit rather than to make a principal payment on the primary mortgage with a higher interest rate. The interest rate on the line of credit was tiny and the balance was also pretty low. My reasoning was that by paying off the line of credit I would be done with that account and would have one less bill to pay each month, one less risk of something going wrong and a late payment hurting my credit, one less statement to reconcile each month, and one less bookkeeping core to manage. I could have grown my net worth by few couple of dollars each month had I kept the line of credit and made a principal payment on the primary loan. I judged that it wasn't worth the hassle and risks. |
How can I stop wasting food? | Try to choose less perishable items. Besides canned and bottled are adequate for some foods, and frozen foods for a wider range, such as vegetables and prepared foods. Dairy has a limited life, but some types live longer, like yogurt. Fruits like apples and oranges will last a good deal longer in the fridge (bananas too, but the peels discolor). Bread items and leafy vegetables just won't keep long for fresh use; pick them up when you're actually about to use them. (Keeping bread in the freezer for toasting works well, though.) |
Is engaging in stocks without researching unwise? | I don't see balance sheet in what you're looking at, and I'd definitely suggest learning how to read a balance sheet and looking at it, if you're going to buy stock in a company, unless you know that the recommendations you're buying on are already doing that and you're willing to take that risk. Also, reading past balance sheets and statements can give you an idea about how accurate the company is with their predictions, or if they have a history of financial integrity. Now, if you're going the model portfolio route, which has become popular, the assumption that many of these stock buyers are making is that someone else is doing that for them. I am not saying that this assumption is valid, just one that I've seen; you will definitely find a lot of skeptics, and rightly so, about model portfolios. Likewise, people who trade based on what [Person X] does (like Warren Buffett or David Einhorn) are assuming that they're doing the research. The downside to this is if you follow someone like this. Yeah, oops. I should also point out that technical analysis, especially high probability TA, generally only looks at history. Most would define it as high risk and there are many underlying assumptions with reading the price movements by high probability TA types. |
How do I report book royalties for tax purposes? | (Insert the usual disclaimer that I'm not any sort of tax professional; I'm just a random guy on the Internet who occasionally looks through IRS instructions for fun. Then again, what you're doing here is asking random people on the Internet for help, so here goes.) The gigantic book of "How to File Your Income Taxes" from the IRS is called Publication 17. That's generally where I start to figure out where to report what. The section on Royalties has this to say: Royalties from copyrights, patents, and oil, gas, and mineral properties are taxable as ordinary income. In most cases, you report royalties in Part I of Schedule E (Form 1040). However, if you hold an operating oil, gas, or mineral interest or are in business as a self-employed writer, inventor, artist, etc., report your income and expenses on Schedule C or Schedule C-EZ (Form 1040). It sounds like you are receiving royalties from a copyright, and not as a self-employed writer. That means that you would report the income on Schedule E, Part I. I've not used Schedule E before, but looking at the instructions for it, you enter this as "Royalty Property". For royalty property, enter code “6” on line 1b and leave lines 1a and 2 blank for that property. So, in Line 1b, part A, enter code 6. (It looks like you'll only use section A here as you only have one royalty property.) Then in column A, Line 4, enter the royalties you have received. The instructions confirm that this should be the amount that you received listed on the 1099-MISC. Report on line 4 royalties from oil, gas, or mineral properties (not including operating interests); copyrights; and patents. Use a separate column (A, B, or C) for each royalty property. If you received $10 or more in royalties during 2016, the payer should send you a Form 1099-MISC or similar statement by January 31, 2017, showing the amount you received. Report this amount on line 4. I don't think that there's any relevant Expenses deductions you could take on the subsequent lines (though like I said, I've not used this form before), but if you had some specific expenses involved in producing this income it might be worth looking into further. On Line 21 you'd subtract the 0 expenses (or subtract any expenses you do manage to list) and put the total. It looks like there are more totals to accumulate on lines 23 and 24, which presumably would be equally easy as you only have the one property. Put the total again on line 26, which says to enter it on the main Form 1040 on line 17 and it thus gets included in your income. |
Why do shareholders participate in shorting stocks? | When I have stock at my brokerage account, the title is in street name - the brokerage's name and the quantity I own is on the books of the brokerage (insured by SIPC, etc). The brokerage loans "my" shares to a short seller and is happy to facilitate trades in both directions for commissions (it's a nice trick to get other parties to hold the inventory while you reap income from the churn); by selecting the account I have I don't get to choose to not loan out the shares. |
How do dividend reinvestment purchases work? | As far as I know, it has the same price, and effects on the market, as any other transaction... |
Can I open a bank account in the US remotely? Will I pay taxes for the money on it? | Answering for US tax only: The bank account makes absolutely zero difference. If you are not a US national and not resident in the US, but earn income from a US employer/client/customer, generally that income is not subject to US tax (no matter where it is banked). However there are (complicated) exceptions, particularly if you are considered to be operating a 'trade or business' in the US or US real estate is involved. Start at https://www.irs.gov/individuals/international-taxpayers/nonresident-aliens and proceed through pub 519 if you have time to spend. I do not know (or answer) about Argentinian taxes. Whether you can find a US bank that wants to open and maintain an account for a foreigner (which is extra paperwork and regulation for them) is a different Q, that is already asked and answered: B1/B2 visas do not allow you to work, but that isn't really in scope of money.SX and belongs over on travel.SX (or expatriates.SX for longer stay); https://travel.stackexchange.com/questions/25416/work-as-freelancer-while-tourist-in-us-for-an-already-existing-us-client seems to cover it. |
Do people tend to spend less when using cash than credit cards? | One study found that, while people using gift certificates bought no more items than those who used cash, they tended to spend more per item. In "Study 3" the paper "Monopoly money: The effect of payment coupling and form on spending behavior", sets up a case where shoppers are given $50 in cash and $50 in gift certificates (the leftover of which can be exchanged for cash). They were asked to choose different brands and types of items to buy. They study found that There was no difference in the number of items purchased as a function of payment form for scrip However means across all product categories show that participants spent more per item when they were given [the gift certificate] |
How much time would I have to spend trading to turn a profit? | Very subjective question. some may do it in the first year, some lose money all their life. Some make a fortune and then lose it. Investing time is only a small part of it. some people can never do it just because investing is not for everyone. Just like any other business. or you can invest into t-bill and CDs, you'll be profitable from day one. |
Converting annual interbank rates into monthly rates | The formula you're looking for is Thus, from 3% p.a. you get ca. 0.247% per month. However, as you see 0.25% is a good approximation (generally, small rates give good approximation). |
Paying extra on a mortgage. How much can I save? [duplicate] | How much can I save? Depends on inflation and what other investment opportunities you have. It could end up costing you millions. Can I pay $12,000 extra once a year or $1000 every month - which option is better? It depends on how risk adverse you are. The first option does sound better, but for a 30 year mortgage, is it that significant? How much of your time is it going to cost you to do it every month? What is keeping you from doing it every day? How much is your time worth to you. Giving the bank its money sooner is always better than giving it it's money from a saving interest perspective. When is the best time to pay? See above. |
For a major expensive home renovation (e.g. addition, finished basement, or new kitchen) should one pay cash or finance with a loan? Would such a loan be “good” debt? | The crucial question not addressed by other answers is your ability to repay the debt. Borrowing is always about leverage, and leverage is always about risk. In the home improvement loan case, default comes with dire consequences-- to extinguish the debt you might have to sell your home. With a stable job, reliable income, and sufficient cash flow (and, of course, comfort that the project will yield benefits you're happy to pay for), then the clear answer is, go ahead and borrow. But if you work in a highly cyclical industry, have very little cash saved, or for whatever other reason are uncertain about your future ability to pay, then don't borrow. Save until you are more comfortable you can handle the loan. That doesn't necessarily mean save ALL the money; just save enough that you are highly confident in your ability to pay whatever you borrow. |
How to donate to charity that will make a difference? | I can't say specifically about charities to help Greece. If someone on here has specific knowledge, please chime in. The only shortcut I know to tell if a charity is legitimate is to consult one of the ratings/watchdog type groups that monitor charities. For example, for explicitly Christian charities, there's a group called the Evangelical Council for Financial Accountability. To be a member in good standing a charity has to meet a bunch of criteria, like having an independent board of directors, i.e. you can't start a charity, make yourself the president and your brother-in-law the vice president and you're not answerable to anyone else; their fund-raising and administrative costs can't be more than a certain percentage of total income, etc. There are similar groups with similar standards for more general charities. I'm not naming any of those groups because there's a potential catch: How reputable is the group that rates other people's reputations? And I don't want to recommend someone without knowing. Years ago I came across a news story about an organization that rated colleges, and that had given one particular college their top rating. But, the news story said, investigators found that that one college was the ONLY college they ever gave a rating to, and that their address was the same as the college's address. It turned out, of course, that the college was a scam. The other method is to take some time to investigate the charity. For starters, get a copy of their annual report or their newsletter. If they're total frauds, often they don't have an annual report or a newsletter. Of course a fraud could make up beautiful flyers describing all the wonderful work they do, with pictures of people they helped and detailed case histories, and it's all complete fiction. But that's more work than most con men go to. I've gotten lots of pleas for contributions from people who call on the phone or come to my door or send an email. If the message does not have a logo, a mailing address and phone number, reasonably coherent English, and a fair amount of text describing what they do, I don't give them anything. They COULD be a new start up that hasn't had time to prepare these things. They COULD believe that pretty flyers are a waste of money and they want to put all their resources into helping the needy. But more likely it's a scam that somebody through together in his basement. Of course the best thing is if you personally know people who are officers in the organization. (Well, assuming you personally know them AND you know that they are honest people. If you know the president and you know he's a sleazy con man, you might want to stay away from that group.) See if you can find information about the charity in the news or on-line. If they're being investigated for fraud by the Justice Department, you might want to avoid them. Etc. Maybe you've thought this through, but you also might want to think about exactly who in Greece you want to help, and what your philosophy of charity is. Do you want to help people who lost their jobs because of the economic problems there and who are now unemployed? Do you want to donate to the government to help them balance the budget? Do you want to help support an orphanage or a homeless shelter, or give money directly to needy people? Etc. And one piece of unsolicited advice: Unless you have millions to give -- and I'm assuming you don't as you said your first gift would be $50 -- I'd pick one or two charities and give regularly to them. I think you can do more good by giving $X per month to a single charity than to give to a different charity every month. You make more difference. |
How can a 529 plan help me save for my child's college education? | You get to put money away with special tax incentives (ie - no or less taxes to pay) They are state sponsored and therefore pretty reliable, but some states are better than others. Like with many of these tax incentive type accounts (FSA, Dependent Care Spending Accounts) they are use it or lose it. (In a 529, use it or transfer it). So the money put away is a sunk cost towards education and cannot be repurposed for something else should your kid not want to attend school. http://money.howstuffworks.com/personal-finance/financial-planning/529.htm |
Should I pay half a large balance this month before I get my CC statement? | From what I have heard on Clark Howard if you pay your balance off before the statement's closing date it will help your utilization score. He has had callers confirm this but I don't have first hand knowledge for this to be true. Also this will take two months to make the difference. So it will be boarder line if you will get the benefit in time. Sign up for credit karma if you like. You can get suggestions on how to help your score. |
What does “/” and “^” mean in ticker symbols? How to translate these symbols into yahoo? | On NASDAQ the ^ is used to denote other securities and / to denote warrents for the underlying company. Yahoo maybe using some other designators for same. |
What are good games to play to teach young children about saving money? | I've found that good old fashioned "Monopoly" teaches children about cash flow, mortgaging properties, and paying income taxes. |
Buying from an aggressive salesperson | As described by the other answers, there are pretty harmless explanations for that behaviour. You could be slightly worried because he gave you exceptionally good deals for both instruments, but that's neither here nor there. Maybe he simply prices all items way up to be able to give a great discount on either sale. You can't ever know; the actual price you pay in the end is what counts. What I would do: If I expect in advance (or if I notice during the negotiation) that I am put under pressure in this way, I usually try to do exactly the same, in reverse. That is, I take a minute to explain up front that I will not, under any circumstance, buy right now, but that this is a purely informational event. I will make sure not to have my money/card with me. Any high-end salesman worth his sale should have no problem with that at all. Money aside, you are shopping for something that will mean a lot to you. The salesman is not some peddler of arbitrary wares. Everybody understands that not only do you not want to pay too high a price, but also that you want to really get the item you want, and want to be happy with it for a long time. This is a tough decision, often, and if the salesman cannot, or does not want to respect that, then it would be a clear signal for me that dubious things are going on. In fact, you would probably be unhappier if you got the wrong item for a great price than if you got a great item for a slightly too-high price. That is something you should probably not tell the salesman ;), but can keep in mind. So getting the greatest deal of all times is probably not so high on your priority list. |
Should I use a credit repair agency? | I've kind of been there myself. I stretched my finances for the deposit on a house, and lived off my credit card for a few months to build up what I was short on the deposit. Add some unexpected car repairs, and I ended up with £10k on the card. The problem I had then was that interest on the card ran at around 20%, and although I could meet the interest payments I couldn't clear the £10k. I simply went and talked to my bank. In the UK there are some clear rules about banks giving customers a chance to restructure their debts. That's the BANK doing it, not some shady loan-shark. We went through my finances and established that in principle it was repayable. So I got a 2-year unsecured loan at around 5%, cleared the card, and spent the next 2 years paying off a loan that I could afford. My credit score is still aces. Forget the loan-sharks. Talk to your bank. If they're crap, talk to another bank. If no bank is going to help you, consider bankrupcy as per advice above. Debt restructuring companies are ALWAYS a con, no exceptions. |
If one owns 75% of company shares, does that mean that he would have to take upon himself 75% of the company's expenses? | From your question, it seems your problem is that you have a company that wants to make a deal, but does not currently have enough money to go through with it. Therefore it needs to raise capital. Assuming that you cannot get a loan from a bank and you do not want to seek funding from other sources, the two owners must provide the funds themselves somehow. Option A: The easiest and fairest way to do this is for the two shareholders to provide 75%, and 25% of the funding as a loan to the company. They will provide this loan knowing it may not be paid back if the company goes under. Note that it would not be fair for one of the shareholders to provide more, as that shareholder would be taking all the risk, while the other still reaps the rewards (although you could add a large interest rate to account for this). Option B: But say one of the shareholders cannot provide additional funds. In that case, the company should issue new shares, and each shareholder can purchase however many of the new shares he/she wants (each shareholder is entitled to purchase at least 75% or 25% respectively, but does not have to). The result of this may be that company ownership percentages have changed after the capital raising. This is more complex as it require valuing the company accurately to be fair, and probably requires reporting to a government (depending on the jurisdiction). |
Is there any flaw in this investment scheme? | The process of borrowing shares and selling them is called shorting a stock, or "going short." When you use money to buy shares, it is called "going long." In general, your strategy of going long and short in the same stock in the same amounts does not gain you anything. Let's look at your two scenarios to see why. When you start, LOOT is trading at $20 per share. You purchased 100 shares for $2000, and you borrowed and sold 100 shares for $2000. You are both long and short in the stock for $2000. At this point, you have invested $2000, and you got your $2000 back from the short proceeds. You own and owe 100 shares. Under scenario A, the price goes up to $30 per share. Your long shares have gone up in value by $1000. However, you have lost $1000 on your short shares. Your short is called, and you return your 100 shares, and have to pay interest. Under this scenario, after it is all done, you have lost whatever the interest charges are. Under scenario B, the prices goes down to $10 per share. Your long shares have lost $1000 in value. However, your short has gained $1000 in value, because you can buy the 100 shares for only $1000 and return them, and you are left with the $1000 out of the $2000 you got when you first sold the shorted shares. However, because your long shares have lost $1000, you still haven't gained anything. Here again, you have lost whatever the interest charges are. As explained in the Traders Exclusive article that @RonJohn posted in the comments, there are investors that go long and short on the same stock at the same time. However, this might be done if the investor believes that the stock will go down in a short-term time frame, but up in the long-term time frame. The investor might buy and hold for the long term, but go short for a brief time while holding the long position. However, that is not what you are suggesting. Your proposal makes no prediction on what the stock might do in different periods of time. You are only attempting to hedge your bets. And it doesn't work. A long position and a short position are opposites to each other, and no matter which way the stock moves, you'll lose the same amount with one position that you have gained in the other position. And you'll be out the interest charges from the borrowed shares every time. With your comment, you have stated that your scenario is that you believe that the stock will go up long term, but you also believe that the stock is at a short-term peak and will drop in the near future. This, however, doesn't really change things much. Let's look again at your possible scenarios. You believe that the stock is a long-term buy, but for some reason you are guessing that the stock will drop in the short-term. Under scenario A, you were incorrect about your short-term guess. And, although you might have been correct about the long-term prospects, you have missed this gain. You are out the interest charges, and if you still think the stock is headed up over the long term, you'll need to buy back in at a higher price. Under scenario B, it turns out that you were correct about the short-term drop. You pocket some cash, but there is no guarantee that the stock will rise anytime soon. Your investment has lost value, and the gain that you made with your short is still tied up in stocks that are currently down. Your strategy does prevent the possibility of the unlimited loss inherent in the short. However, it also prevents the possibility of the unlimited gain inherent in the long position. And this is a shame, since you fundamentally believe that the stock is undervalued and is headed up. You are sabotaging your long-term gains for a chance at a small short-term gain. |
Is there data and proof that a diversified portfolio can generate higher returns than the S&P 500 Index? | Yes, a diversified portfolio can generate greater returns than the S&P 500 by going OUTSIDE it. For instance, small stocks (on average) generate higher returns than the "large caps" found in the S&P 500. So if you own a diversified portfolio of stocks, some of which are smaller (in market cap) than the typical S&P 500 stock, you have a chance to outperform. You might also outperform by owning other asset classes than stocks such as gold, real estate, and timber (among others) at appropriate times. (You may also be able to get the relevant exposure by owning gold and timber stocks and REITS.) This was a lesson that David Swensen of the Yale endowment taught us. |
Finding a good small business CPA? | Ask for at least 10 references. Ask for 10 because it will be harder for them to refer you to ringer references like their family or friends. |
Corporate Finance | Your company wants to raise $25,000,000 for a new project, but flotation costs are incurred by issuing securities (underwriting, legal fees, etc) First you must determine how much of the $25,000,000 is going to be debt and equity. The company's target D/E ratio is 50% (or .50). For every $0.50 of debt raised they want to raise $1.00 in equity. $1.00 + $0.50 = $1.50 $0.50/$1.50 = 1/3 debt, that leaves the equity portion being 2/3. $25,000,000 * (1/3) = $8,333,333.33 (DEBT) and $25,000,000 * (2/3) = $16,666,666.67 (EQUITY) Using the Weighted Average Cost then you would do something like this: = (1/3) * .04 + 2/3 * .12 = .09333333 =$25,000,000/(1-.093333) = $27,573,529.40 |
If the U.S. defaults on its debt, what will happen to my bank money? | If you are actually referring to all the political rhetoric and posturing over the debt ceiling issue. That's a long ways from the US actually defaulting on paying debts. A lot of government offices might shut down, but I expect anyone holding US debt to be paid off. (they have the printing presses after all) If that's what you are referring to, based on the LAST time that the governement had to shut down because they didn't raise the debt ceiling, it won't be a big deal. Last time, no debt was defaulted on, a bunch of the less essential government offices shut down for a few days, and the stock market did a collective 'meh' over the whole thing. It was basically a non event. I've no reason to expect it will be different this time. (btw, where were all these republican budget cutters hiding when 10 years ago they started with a nearly balanced budget, and ended up blowing up the national debt by about 80% in 8 years time? (from roughly $6B to $11B) I wish they'd been screaming about the debt as much then as they are now. Not that there isn't ample blame to go around, and both sides have not been spending in ways that make a drunken sailor look like the paragon of a fiscal conservative, but to hear nearly any of them tell it, their party had nothing to do with taking us from a balanced budget to the highest burn rate ever while they were in control (with a giant financial crisis through in as pure 'bonus') |
Is it smart to only invest in mid- and small-cap stock equity funds in my 401(k)? | Your initial premise (mid-cap and small-cap company stocks have outperformed the market) is partially correct - they have, over many 40 yr periods, provided higher returns than large caps (or bond funds). The important thing to consider here is that risk adjusted, the returns from a diversified portfolio are far more robust - with proper asset allocation you and expect high returns and reduce your risk simultaneously. Imagine this scenario - you decide to stick to small / mid caps for 10 - 15 yrs and move into a more diversified portfolio then. Had you made that decision during a sustained period of poor small cap performance (late 80s or the 40's) you would have lost a boatload of return, as those were periods were small / mids underperformed the market as a whole, and large caps in particular. As an example, from 1946 to 1958 large caps outperformed small every single year. If 2016 were to be the first year of a similar trend, you've done yourself a major disservice. Since the dot com crash small /mids have outperformed for sure, pretty much every year - but that doesn't mean that they will continue to do so. The reason asset allocation exists is precisely this - over a 40 yr period, no single asset class outperforms a diversified portfolio. If you attempt to time the market, even if you do so with a multi-decade time horizon in mind, there a good chance that you will do more poorly. |
Does high frequency trading (HFT) punish long-term investment? | I disagree strongly with the other two answers posted thus far. HFT are not just liquidity providers (in fact that claim is completely bogus, considering liquidity evaporates whenever the market is falling). HFT are not just scalping for pennies, they are also trading based on trends and news releases. So you end up having imperfect algorithms, not humans, deciding the price of almost every security being traded. These algorithms data mine for news releases or they look for and make correlations, even when none exist. The result is that every asset traded using HFT is mispriced. This happens in a variety of ways. Algos will react to the same news event if it has multiple sources (Ive seen stocks soar when week old news was re-released), algos will react to fake news posted on Twitter, and algos will correlate S&P to other indexes such as VIX or currencies. About 2 years ago the S&P was strongly correlated with EURJPY. In other words, the American stock market was completely dependent on the exchange rate of two currencies on completely different continents. In other words, no one knows the true value of stocks anymore because the free market hasnt existed in over 5 years. |
Separate bank account for security deposit from tenant | Per Md. REAL PROPERTY Code Ann. § 8-203: (d) (1) (i) The landlord shall maintain all security deposits in federally insured financial institutions, as defined in § 1-101 of the Financial Institutions Article, which do business in the State. (ii) Security deposit accounts shall be maintained in branches of the financial institutions which are located within the State and the accounts shall be devoted exclusively to security deposits and bear interest. (iii) A security deposit shall be deposited in an account within 30 days after the landlord receives it. (iv) The aggregate amount of the accounts shall be sufficient in amount to equal all security deposits for which the landlord is liable. (2) (i) In lieu of the accounts described in paragraph (1) of this subsection, the landlord may hold the security deposits in insured certificates of deposit at branches of federally insured financial institutions, as defined in § 1-101 of the Financial Institutions Article, located in the State or in securities issued by the federal government or the State of Maryland. (ii) In the aggregate certificates of deposit or securities shall be sufficient in amount to equal all security deposits for which the landlord is liable. As such, one or more accounts at your preference; it's up to the bank how to treat the account, so it may be a personal account or it may be a 'commercial' account depending on how they treat it (but it must be separate from your personal funds). A CD is perhaps the easiest way to go, as it's not a separate account exactly but it's easily separable from your own funds (and has better interest). You should also note (further down on that page) that you must pay 3% interest, once per six months; so try to get an account that pays as close as possible to that. You likely won't get 3% right now even in a CD, so consider this as an expense (and you'll probably find many people won't take security deposits in many situations as a result). |
How to diversify IRA portfolio given fund minimum investments and IRA contribution limits? | There are fund of funds,e.g. life cycle funds or target retirement funds, that could cover a lot of these with an initial investment that one could invest into for a few years and then after building up a balance large enough, then it may make sense to switch to having more control. |
As an investor or speculator, how might one respond to QE3 taper? | Any answer for what to do in a taper will assume ceteris paribus because how markets initially react when they suspect a taper may immediately change depending on what data are released after the taper. For instance, I've seen Soros and a few other hedge fund managers hold shorts when expecting a taper because the theory is that the market may fall. However, suppose the market falls 5%, but then positive employment numbers are released. What then? The same holds true for betting against Emerging Markets (EM), something I've seen Jesse Colombo and others suggest; the claim that Emerging Markets are in a bubble thanks to the U.S. Federal Reserve (the more money they release, the more the money goes overseas ...). Again, this is possibly true, but if good data are released after the taper for these emerging markets, they could see growth and those with the shorts could get killed. TL;DR - when we ask about what happens after the taper, we have to remember we're assuming some things about everything else. I do think that the "safest play" post taper is what Bill Gross mentioned about bonds (basically a bubble), as we should see interest rates rise and the Chinese seem to be reluctant to buy as much of U.S. bonds as they have in the past (though some, like Mish, assert the U.S. would welcome this). The other play I like is the VIX (if you think the market will fall) or against (if you think the market will rise). SVXY has been one of the best plays since 2011 (compare it to the SPY for the same time period). |
What's the best way to make money from a market correction? | As ChrisInEdmonton describes, shorting has an asymmetric risk/reward ratio. And put options have a time cost, if you think the market is overvalued and buy lots of puts, but they expire before the market finally corrects, you can lose your entire investment. Betting on market timing of any kind is extremely difficult to do, some would argue it's impossible. "The market can remain irrational longer than you can remain solvent" is a favorite wall street trader saying. Instead of playing a game that's difficult to win, the better option is to play one you can win. That's to learn how to value individual investments well and accumulate cash until you can find investments that are under-valued to invest in. The best way to learn to value investments is to read Graham and Buffett. "The Intelligent Investor" is a good starting point, and you can read all of Buffett's investor letters for the last 30 years + for free on the Berkshire Hathaway web site. Finally the textbook on valuing stocks and other investments is "Securities Analysis" the 6th edition is only version to get, it was updated with Buffett and other leading value investors oversight. A basic overview of valuing investments is that every investment has an "intrinsic value" consisting of it's future cash flows, discounted for the time it takes to receive them. The skill is being able to estimate how likely those cash flows are to happen. a) Is it a good business? Does it have a moat, i.e. barriers that make it hard for competitors to duplicate it? b) Will management invest or distribute those cash flows wisely? Then your strategy is to not even worry about the market, spend your time looking at individual stocks and investments and wait until some come along that's well undervalued. That may be during a market correction, or it may be tomorrow. And it's not just good enough to intelligently value your investments, you also have to have psychological fortitude to not panic and to think for yourself. Buffett describes it best. Ben Graham, my friend and teacher, long ago described the mental attitude toward market fluctuations that I believe to be most conducive to investment success. He said that you should imagine market quotations as coming from a remarkably accommodating fellow named Mr. Market who is your partner in a private business. Without fail, Mr. Market appears daily and names a price at which he will either buy your interest or sell you his. Even though the business that the two of you own may have economic characteristics that are stable, Mr. Market’s quotations will be anything but. For, sad to say, the poor fellow has incurable emotional problems. At times he feels euphoric and can see only the favorable factors affecting the business. When in that mood, he names a very high buy-sell price because he fears that you will snap up his interest and rob him of imminent gains. At other times he is depressed and can see nothing but trouble ahead for both the business and the world. On these occasions he will name a very low price, since he is terrified that you will unload your interest on him. Mr. Market has another endearing characteristic: He doesn’t mind being ignored. If his quotation is uninteresting to you today, he will be back with a new one tomorrow. Transactions are strictly at your option. Under these conditions, the more manic-depressive his behavior, the better for you. But, like Cinderella at the ball, you must heed one warning or everything will turn into pumpkins and mice: Mr. Market is there to serve you, not to guide you. It is his pocketbook, not his wisdom, that you will find useful. If he shows up some day in a particularly foolish mood, you are free to ignore him or to take advantage of him, but it will be disastrous if you fall under his influence. Indeed, if you aren’t certain that you understand and can value your business far better than Mr. Market, you don’t belong in the game. Lastly learning to value investments isn't just useful in the stock market, they are applicable to investing in any investment such as bonds, real estate, and even buying your home or running a business. |
The Asset Allocation Paradox | I recommend you take a look at this lecture (really, the whole series is enlightening), from Swenson. He identifies 3 sources of returns: diversification, timing and selection. He appears to discard timing and selection as impossible. A student kinda calls him out on this. Diversification reduces risk, not increase returns. It turns out they did time the market, by shorting .com's before the bubble, and real estate just before the downturn. In 1990, Yale started a "Absolute Return" unit and allocated like 15 percent to it, mostly by selling US equities, that specializes in these sorts of hedging moves. As for why you might employ managers for specific areas, consider that the expense ratio Wall Street charges you or me still represent a very nice salary when applied to the billions in Yale's portfolio. So they hire internally to reduce expenses, and I'm sure they're kept busy. They also need people to sell off assets to maintain ratios, and figuring out which ones to sell might take specialized knowledge. Finally, in some areas, you functionally cannot invest without management. For example, Yale has a substantial allocation in private equity, and by definition that doesn't trade on the open market. The other thing you should consider is that for all its diversification, Yale lost 25 percent of their portfolio in 2009. For a technique that's supposed to reduce volatility, they seem to have a large range of returns over the past five years. |
Is it better to miss the dividend and buy the undervalued stock? | As yet another explanation of why it does not really matter, you can look at this from the valuation point of view. Stock price is the present value of its future cash flows (be it free cash flow of the firm or dividends, depending on the model). Let's have a look at the dividends case. Imagine, the price of the stock is based on only three dividends streams $5 dollars each: dividend to be paid today, in year 1, and in year 2. Each should be discounted back to today (say, at 10%), except today's dividend, since today is now. Once that dividend is paid, it is no longer in the stream of cash flows. So if we just delete that first $5 from the formula, the price will adjust itself down by the amount of the dividend to $8.68. NOTE that this is a very simple example, since in reality cash flows streams are arguably infinite and because there are many other factors affecting stock price. But simply for your understanding, this example should provide you with the reason simply from the valuation perspective. |
Retirement planning 401(k), IRA, pension, student loans | You asked specifically about the ROTH IRA option and stated you want to get the most bang for your buck in retirement. While others have pointed out the benefits of a tax deduction due to using a Traditional IRA instead, I haven't seen anyone point out some of the other differences between ROTH and Traditional, such as: I agree with your thoughts on using an IRA once you maximize the company match into a 401k plan. My reasoning is: I personally prefer ETFs over mutual funds for the ability to get in and out with limit, stop, or OCO orders, at open or anytime mid-day if needed. However, the price for that flexibility is that you risk discounts to NAV for ETFs that you wouldn't have with the equivalent mutual fund. Said another way, you may find yourself selling your ETF for less than the holdings are actually worth. Personally, I value the ability to exit positions at the time of my choosing more highly than the impact of tracking error on NAV. Also, as a final comment to your plan, if it were me I'd personally pay off the student loans with any money I had after contributing enough to my employer 401k to maximize matching. The net effect of paying down the loans is a guaranteed avg 5.3% annually (given what you've said) whereas any investments in 401k or IRA are at risk and have no such guarantee. In fact, with there being reasonable arguments that this has been an excessively long bull market, you might figure your chances of a 5.3% or better return are pretty low for new money put into an IRA or 401k today. That said, I'm long on stocks still, but then I don't have debt besides my mortgage at the moment. If I weren't so conservative, I'd be looking to maximize my leverage in the continued low rate environment. |
Should I switch to this high rate checking account for my emergency fund? | I would also check into whether you can keep using your credit card instead of switching to a debit card tied to your checking account. The credit card provides you protection from someone wiping your account out. Most banks will help you get the money back if this happens while using a debit card. But you are out the money while the bank figures out who is wrong. In the credit cards case none of your money is actually taken from your account while you dispute the charge. I also agree with the others that having all your money in one account is more difficult to keep real spending money separate from emergency fund money. |
Is it financially advantageous and safe to rent out my personal car? | I'm going to address a couple of extra issues over and above mhoran_psprep's great answer. Insurance A lot of the jobs you describe require that you have additional insurance over and above what you currently have, normally insurance that lets you drive for payment. You should insist that anyone you rent to has this insurance. If not, you may find yourself liable and uninsured. Also you should be aware of this story: "Quebec Uber drivers have cars seized, fined up to $7,500". |
How to rescue my money from negative interest? | The problem is that every option comes with risk - as you note, if you put money in stocks, you could lose (and many stocks are overpriced). If you put money in bonds, you could lose (many bonds are overpriced). If you buy precious metals, they could fall further currently. If you hold cash, central banks might try to ban cash (we'll hear the typical "This will never happen" from financial advisers - and they'll be wrong). Cryptocurrencies are an option, but boy do they fluctuate, so there's risk here too. Those are options and all come with risks, and here's my preferred approach to handling negative interest rates: |
How some mutual funds pay such high dividends | Look at their dividend history. The chart there is simply reporting the most recent dividend (or a recent time period, in any event). GF for example: http://www.nasdaq.com/symbol/gf/dividend-history It's had basically two significant dividends and a bunch of small dividends. Past performance is not indicative of future returns and all that. It might never have a similar dividend again. What you're basically looking at with that chart is a list of recently well-performing funds - funds who had a good year. They obviously may or may not have such a good year next year. You also have funds that are dividend-heavy (intended explicitly to return significant dividends). Those may return large dividends, but could still fall in value significantly. Look at ACP for example: it's currently trading near it's 2-year low. You got a nice dividend, but the price dropped quite a bit, so you lost a chunk of that money. (I don't know if ACP is a dividend-heavy fund, but it looks like it might be.) GF's chart is also indicative of something interesting: it fell off a cliff right after it gave its dividend (at the end of the year). Dropped $4. I think that's because this is a mutual fund priced based on the NAV of its holdings - so it dividended some of those holdings, which dropped the share price (and the NAV of the fund) by that amount. IE, $18 a share, $4 a share dividend, so after that $14 a share. (The rest of the dividends are from stock holdings which pay dividends themselves, if I understand properly). Has a similar drop in Dec 2013. They may simply be trying to keep the price of the fund in the ~$15 a share range; I suspect (but don't know) that some funds have in their charter a requirement to stay in a particular range and dividend excess value. |
Can I transfer money from a personal pension to a SIPP, while leaving the original pension open? | Yes it's entirely possible; see below. If you can't find anything on transfers out (partial or otherwise) on anyone's site it's because they don't want to give anyone ideas. I have successfully done exactly what you're proposing earlier this year, transferring most of the value from my employer's group personal pension scheme - also Aviva! - to a much lower-cost SIPP. The lack of any sign of movement by Aviva to post-RDR "clean priced" charge-levels on funds was the final straw for me. My only regret is that I didn't do it sooner! Transfer paperwork was initiated from the SIPP end but I was careful to make clear to HR people and Aviva's rep (or whatever group-scheme/employee benefits middleman organization he was from) that I was not exiting the company scheme and expected my employee and matching employer contributions to continue unchanged (and that I'd not be happy if some admin mess up led to me missing a month's contributions). There's a bit more on the affair in a thread here. Aviva's rep did seem to need a bit of a prod to finally get it to happen. With hindsight my original hope of an in-specie transfer does seem naive, but the out-of-the-market time was shorter and less scary than anticipated. Just in case you're unaware of it, Monevator's online broker list is an excellent resource to help decide who you might use for a SIPP; cheapest choice depends on level of funds and what you're likely to hold in it and how often you'll trade. |
Do the activities of my LLC need to be limited to a particular field? | No. When you file your Articles of Organization, simply state that your business will operate under the law. You don't need to give any further specification. |
What is the “point” (purpose) of the S&P 500? | I hate to point to Wikipedia as an answer, but it does describe exactly what you are looking for... The S&P 500 is a free-float capitalization-weighted index published since 1957 of the prices of 500 large-cap common stocks actively traded in the United States. The stocks included in the S&P 500 are those of large publicly held companies that trade on either of the two largest American stock market exchanges; the New York Stock Exchange and the NASDAQ. The components of the S&P 500 are selected by committee... The committee selects the companies in the S&P 500 so they are representative of the industries in the United States economy. In addition, companies that do not trade publicly (such as those that are privately or mutually held) and stocks that do not have sufficient liquidity are not in the index. The S&P is a capitalization weighted index. If a stock price goes up, then it comprises more of the total index. If a stock goes down, it comprises less, and if it goes down too much, the committee will likely replace it. So to answer your question, if one stock were to suddenly skyrocket, nothing would happen beyond the fact that the index was now worth more and that particular stock would now make up a larger percentage of the S&P 500 index. |
As a Brit, how do I invest in US ETFs | Vanguard has just recently started listing its funds in London but it doesn't look like the High Dividend Yield ETF is available yet. You'll need to either get a broker who can trade on the U.S. markets (there might be tax and exchange rate complications), or wait until Vanguard lists this stock on the London exchange. |
found a 1994 uncashed profit sharing retirement plan check | Checks (in the US, anyway) are only good for six months after they have been written. After that. under the US Uniform Commerical Code they are considered "stale checks" and banks need not accept them. My experience is that they generally won't -- but you probably shouldn't count on that, either when figuring out whether to try depositing an old check or figuring out how much cash you need to keep in your checking account to cover recent stale checks. The check you now hold is certainly a statement of intent to pay you and thus is a useful document to supplement other evidence that they still owe you the money -- but since checks can be cancelled and/or a replacement check may have been issued, its value for that purpose may be limited. You can try depositing it and see what happens. If that doesn't work (or you don't want to bother trying it) you can contact the retirement plan, point out that this check went uncashed, and ask them to send you a replacement. If they haven't already done so (you might want to check your own records for that), there shouldn't be any problem with this. (Note: Many business checks have a statement printed on them that they're only good for 90 days or so. If yours does, you can skip trying to cash it; just contact the retirement plan offices.) |
Frequency of investments to maximise returns (and minimise fees) | Wow, this turns out to be a much more difficult problem than I thought from first looking at it. Let's recast some of the variables to simplify the equations a bit. Let rb be the growth rate of money in your bank for one period. By "growth rate" I mean the amount you will have after one period. So if the interest rate is 3% per year paid monthly, then the interest for one month is 3/12 of 1% = .25%, so after one month you have 1.0025 times as much money as you started with. Similarly, let si be the growth rate of the investment. Then after you make a deposit the amount you have in the bank is pb = s. After another deposit you've collected interest on the first, so you have pb = s * rb + s. That is, the first deposit with one period's growth plus the second deposit. One more deposit and you have pb = ((s * rb) + s) * rb + s = s + s * rb + s * rb^2. Etc. So after n deposits you have pb = s + s * rb + s * rb^2 + s * rb^3 + ... + s * rb^(n-1). This simplifies to pb = s * (rb^n - 1)/(rb - 1). Similarly for the amount you would get by depositing to the investment, let's call that pi, except you must also subtract the amount of the broker fee, b. So you want to make deposits when pb>pi, or s*(ri^n-1)/(ri-1) - b > s*(rb^n-1)/(rb-1) Then just solve for n and you're done! Except ... maybe someone who's better at algebra than me could solve that for n, but I don't see how to do it. Further complicating this is that banks normally pay interest monthly, while stocks go up or down every day. If a calculation said to withdraw after 3.9 months, it might really be better to wait for 4.0 months to collect one additional month's interest. But let's see if we can approximate. If the growth rates and the number of periods are relatively small, the compounding of growth should also be relatively small. So an approximate solution would be when the difference between the interest rates, times the amount of each deposit, summed over the number of deposits, is greater than the fee. That is, say the investment pays 10% per month more than your bank account (wildly optimistic but just for example), the broker fee is $10, and the amount of each deposit is $200. Then if you delay making the investment by one month you're losing 10% of $200 = $20. This is more than the broker fee, so you should invest immediately. Okay, suppose more realistically that the investment pays 1% more per month than the bank account. Then the first month you're losing 1% of $200 = $2. The second month you have $400 in the bank, so you're losing $4, total loss for two months = $6. The third month you have $600 in the bank so you lose an additional $6, total loss = $12. Etc. So you should transfer the money to the investment about the third month. Compounding would mean that losses on transferring to the investment are a little higher than this, so you'd want to bias to transferring a little earlier. Or, you could set up a spreadsheet to do the compounding calculations month by month, and then just look down the column for when the investment total minus the bank total is greater than the broker fee. Sorry I'm not giving you a definitive answer, but maybe this helps. |
Can you beat the market by investing in double long ETFs? [duplicate] | NO. All the leveraged ETFs are designed to multiply the performance of the underlying asset FOR THAT DAY, read the prospectus. Their price is adjusted at the end of the day to reflect what is called a NAV unit. Basically, they know that their price is subject to fluctuations due to supply and demand throughout the day - simply because they trade in a quote driven system. But the price is automatically corrected at the end of the day regardless. In practice though, all sorts of crazy things happen with leveraged ETFs that will simply make them more and more unfavorable to hold long term, the longer you look at it. |
Under what circumstance will the IRS charge you a late-payment penalty for taxes? | Assuming US/IRS: If you filed on time and paid what you believed was the correct amount, they might be kind and let it go. But don't assume they will. If you can't file on time, you are supposed to file estimated taxes before the deadline, and to make that payment large enough to cover what you are likely to owe them. If there is excess, you get it back when you file the actual forms. If there is a shortfall, you may be charged fees, essentially interest on the money you still owe them calculated from the submission due date. If you fail to file anything before the due date, then the fees/interest surcharge is calculated on the entire amount still due; effectively the same as if you had filled an estimated return erroneously claiming you owed nothing. Note that since the penalty scales with the amount still due, large errors do cost you more than small ones. And before anyone asks: no, the IRS doesn't pay interest if you submit the forms early and they owe you money. I've sometimes wondered whether they're missing a bet there, and if it would be worth rewarding people to file earlier in order to spread out the work a bit better, but until someone sells them on that idea... |
What's the benefit of opening a Certificate of Deposit (CD) Account? | One reason why you can get a better rate with a CD compared to a regular savings account is that they lock you into that account for the period of the CD. You can get out of the CD early, but you will forfeit some of the interest. You also generally can't move a portion of the money out of the CD, you have to pull it all out, and then start a new CD with the portion you don't spend. You have to check the terms and conditions for that particular CD. Some people use them to hold their emergency fund. This is the 3-6 months of expenses you set aside in case of a major problem such as a medical emergency or a job loss. The rate is better than the regular savings account, so it can come closer to inflation. The goal is preservation of capital, not investing for the future. So if you understand the risks, and the CD is backed with the same guarantees as the savings account, then it is a viable way to store some or all of the emergency fund. |
Should I pay off my car loan within the year? | Your plan isn't bad, but it probably isn't worth the cost for the small amount of credit building it will achieve. If you do decide to continue with it though, you'll save in interest if you make the big payment now rather than in 6 months. In other words, you can take the minimum payment, multiply it by 5, subtract that amount from the total you owe and pay the difference immediately. This way you'll still get the 6 months of reporting to the credit bureaus, but you'll pay less interest since you'll have less principle each month. I would recommend applying for the credit card right now. I believe you'll probably get approved now. If you do, then pay off the car loan without thinking about it. (If you don't get approved, think about it, then probably still pay it off.) Regarding the full coverage insurance, even after the loan is paid off and you aren't required to have it, you may still want to keep it. Even if you're the best driver on earth, if someone hits you and doesn't have insurance, or they have insurance and drive off, or a deer runs in front of you, etc, you'll lose your car and won't be reimbursed. Also, as Russell pointed out in the comments below, without collision coverage your insurance company has no incentive to work on your behalf when someone else hits you, so even if it's not your fault you may still not get reimbursed. So, I wouldn't pass on the full coverage unless your car isn't worth very much or you can stomach losing it if something happens. Good luck, and congrats on being able to pay for a car in full at 19 years old. |
Ex-dividend date and time zones | Ex-Date is a function of the exchange, as well as the dividend. Consider Deutsche Bank AG, DB on the NYSE, DKR on Xetra. For a given dividend, each exchange sets the ex-date for trades on that exchange. (See http://www.sec.gov/answers/dividen.htm for a description of how it works in the US; other exchanges/countries are similar.) This ex-date is normally based on the dividends record date, which is when you must be on the company's books as a shareholder to receive the dividend, and based on when trades for an exchange are settled. The ex-date is the first date for which trades on that date will not settle until after the record date. This means that the ex-date can be different for different exchanges. If you sell your shares on an exchange before the ex-date for that exchange, you will not get the dividend. If you sell your shares on or after the ex-date for the exchange, you do not get the dividend. So it depends on the time zone of the exchange. Most stock exchanges trade T+3, but this can still come into play if there are bank holidays in different countries at different times. |
What are the marks of poor investment advice? | Anybody that offers a bigger return than a deposit claiming 100% safe is a fraud. There is always a risk: Yes, you can gain 30% in a year, but nobody can guarantee that you'll repeat that gain the next. My own experience (and I do take risks), one year I go up, the next year I go down... |
Effect of Job Change on In-Progress Mortgage Application | Best advice is to ask your lender. That being said, if you are changing jobs, but keeping the same type of job you are usually ok and if the loan was approved before, it would still be approved. If you switch from W-2 to 1099 or vice-versa, permanent to contract, switch industries (software dev to accountant), or make less money there is a strong risk of the loan being declined. |
Merits of buying apartment houses and renting them | Carnegie Mellon University (CMU) and the University of Pittsburgh (Pitt) have different end of term dates but by less than a month. Both have summer sessions, but most students do not stay over the summer. You can rent over the summer, but prices fall by a lot. Thirty to forty thousand students leave over the summer between the two. Only ten to twenty thousand remain throughout the year and not all of those are in Oakland (the neighborhood in Pittsburgh where the universities are located). So many of the landlords in Oakland have the same problem. Your competitors will cut their rates to try to get some rent for the summer months. This also means that you have to handle eight, nine, and three month leases rather than year long and certainly not multiyear leases. You're right that you don't have to buy the latest appliances or the best finishes, but you still have to replace broken windows and doors. Also, the appliances and plumbing need to mostly work. The furnace needs to produce heat and distribute it. If there is mold or mildew, you will have to take care of it. You can't rely on the students doing so. So you have to thoroughly clean the premises between tenants. Students may leave over winter break. If there are problems, the pipes may freeze and burst, etc. Since they're not there, they won't let you know when things break. Students drop out during the term and move out. You probably won't be able to replace them when that happens. If you have three people in two bedrooms, two of them may be in a romantic relationship. Romantic relationships among twenty-year olds end frequently. Your three people drops back to two. Your recourse in that case is to evict the remaining tenants and sue for breach of contract. But if you do that, you may not replace the tenants until a new term starts. Better might be to sue the one who left and accept the lower rent from the other two. But you likely won't get the entire rent amount for the remainder of the lease. Suing an impoverished student is not the road to riches. Pittsburgh is expected to have a 6.1% increase in house prices which almost all of it is going to be pure profit. I don't know specifically about Pittsburgh, but in the national market, housing prices are about where they were in 2004. Prices were flat to increasing from 2004 to 2007 and then fell sharply from 2007 to 2009, were flat to decreasing from 2009 to 2012, and have increased the last few years. Price to rent ratios are as high now as in 2003 and higher than they were the twenty years before that. Maybe prices do increase. Or maybe we hit a new 20% decrease. I would not rely on this for profit. It's great if you get it, but unreliable. I wouldn't rely on estimates for middle class homes to apply to what are essentially slum apartments. A 6% average may be a 15% increase in one place and a 3% decrease in another. The nice homes with the new appliances and the fancy finishes may get the 15% increase. The rundown houses in a block where students party past 2 AM may get no increase. Both the city of Pittsburgh and the county of Allegheny charge property taxes. Schools and libraries charge separate taxes. The city provides a worksheet that estimates $2860 in taxes on a $125,000 property. It doesn't sound like you would be eligible for homestead or senior tax relief. Realtors should be able to tell you the current assessment and taxes on the properties that they are selling you. You should be able to call a local insurance agent to find out what kinds of insurance are available to landlords. There is also renter's insurance which is paid by the tenant. Some landlords require that tenants show proof of insurance before renting. Not sure how common that is in student housing. |
Live in California but work for Illinois-based company | They might be concerned with having to charge sales tax in California if they have a single employee in California, creating a nexus situation with CA. If that's the case, or even if there is some other issue, you might be able to switch from being a W2 employee to being a 1099 independent contractor. There's a host of additional issues this could cause, but it alleviate the nexus problem (if THAT is the problem). Here's a terrible solution you can bring up, but shouldn't do under any circumstances: offer to set up a mailing address in an allowed State, and give your company plausible deniability with regards to your legal residence. Obviously, this is a terrible idea, but exploring that option with your employer would help you suss out what the actual objection is. Ultimately, anything said here about the reason is just conjecture. You need to talk to the decision maker(s) about the real reason behind the denial. Then you can talk through solutions. Also - don't forget that you can get another job. If you are serious about a future with your girlfriend, you should put that relationship ahead of your current employment comfort and security. If you are willing to walk away from your position, you are in a much better situation to negotiate. |
Closing a futures position | Assuming these are standardized and regulated contracts, the short answer is yes. In your example, Trader A is short while Trader B is long. If Trader B wants to exit his long position, he merely enters a "sell to close" order with his broker. Trader B never goes short as you state. He was long while he held the contract, then he "sold to close". As to who finds the buyer of Trader B's contract, I believe that would be the exchange or a market maker. Therefore, Trader C ends up the counterparty to Trader A's short position after buying from Trader B. Assuming the contract is held until expiration, Trader A is responsible for delivering contracted product to Trader C for contracted price. In reality this is generally settled up in cash, and Trader A and Trader C never even know each other's identity. |
What is the cause of sudden price spikes in the FOREX market? | If you do not understand the volatility of the fx market, you need to stop trading it, immediately. There are many reasons that fx is riskier than other types of investing, and you bear those risks whether you understand them or not. Below are a number of reasons why fx trading has high levels of risk: 1) FX trades on the relative exchange rate between currencies. That means it is a zero-sum game. Over time, the global fx market cannot 'grow'. If the US economy doubles in size, and the European economy doubles in size, then the exchange rate between the USD and the EUR will be the same as it is today (in an extreme example, all else being equal, yes I know that value of currency /= value of total economy, but the general point stands). Compare that with the stock market - if the US economy doubles in size, then effectively the value of your stock investments will double in size. That means that stocks, bonds, etc. tied to real world economies generally increase when the global economy increases - it is a positive sum game, where many players can be winners. On the long term, on average, most people earn value, without needing to get into 'timing' of trades. This allows many people to consider long-term equity investing to be lower risk than 'day-trading'. With FX, because the value of a currency is in its relative position compared with another currency, 1 player is a winner, 1 player is a loser. By this token, most fx trading is necessarily short-term 'day-trading', which by itself carries inherent risk. 2) Fx markets are insanely efficient (I will lightly state that this is my opinion, but one that I am not alone in holding firmly). This means that public information about a currency [ie: economic news, political news, etc.] is nearly immediately acted upon by many, many people, so that the revised fx price of that currency will quickly adjust. The more efficient a market is, the harder it is to 'time a trade'. As an example, if you see on a news feed that the head of a central bank authority made an announcement about interest rates in that country [a common driver of fx prices], you have only moments to make a trade before the large institutional investors already factor it into their bid/ask prices. Keep in mind that the large fx players are dealing with millions and billions of dollars; markets can move very quickly because of this. Note that some currencies trade more frequently than others. The main currency 'pairs' are typically between USD and / or other G10 country-currencies [JPY, EUR, etc.]. As you get into currencies of smaller countries, trading of those currencies happens less frequently. This means that there may be some additional time before public information is 'priced in' to the market value of that currency, making that currency 'less efficient'. On the flip side, if something is infrequently traded, pricing can be more volatile, as a few relatively smaller trades can have a big impact on the market. 3) Uncertainty of political news. If you make an fx trade based on what you believe will happen after an expected political event, you are taking risk that the event actually happens. Politics and world events can be very hard to predict, and there is a high element of chance involved [see recent 'expected' election results across the world for evidence of this]. For something like the stock market, a particular industry may get hit every once in a while with unexpected news, but the fx market is inherently tied to politics in a way that may impact exchange rates multiple times a day. 4) Leveraging. It is very common for fx traders to borrow money to invest in fx. This creates additional risk because it amplifies the impact of your (positive or negative) returns. This applies to other investments as well, but I mention it because high degrees of debt leveraging is extremely common in FX. To answer your direct question: There are no single individual traders who spike fx prices - that is the impact you see of a very efficient market, with large value traders, reacting to frequent, surprising news. I reiterate: If you do not understand the risks associated with fx trade, I recommend that you stop this activity immediately, at least until you understand it better [and I would recommend personally that any amateur investor never get involved in fx at all, regardless of how informed you believe you are]. |
how to show income from paypal as export income | PayPal pays with service tax, where ever you have exported you would have given the invoice, and the statement should be shown. I am also an exporter, I know the rules some times a CA might not be aware of PayPal. Just show your statement from PayPal and the deduction. |
How do I do double-entry bookkeeping for separately-managed investment accounts? | For any accounts where you have a wish to keep track of dividends, gains and losses, etc., you will have to set up a an account to hold the separately listed securities. It looks like you already know how to do this. Here the trading accounts will help you, especially if you have Finance:Quote set up (to pull security prices from the internet). For the actively-managed accounts, you can just create each managed account and NOT fill it with the separate securities. You can record the changes in that account in summary each month/year as you prefer. So, you might set up your chart of accounts to include these assets: And this income: The actively-managed accounts will each get set up as Type "Stock." You will create one fake security for each account, which will get your unrealized gains/losses on active accounts showing up in your trading accounts. The fake securities will NOT be pulling prices from the internet. Go to Tools -> Securities Editor -> Add and type in a name such as "Merrill Lynch Brokerage," a symbol such as "ML1," and in the "Type" field input something like "Actively Managed." In your self-managed accounts, you will record dividends and sales as they occur, and your securities will be set to get quotes online. You can follow the general GnuCash guides for this. In your too-many-transactions actively traded accounts, maybe once a month you will gather up your statements and enter the activity in summary to tie the changes in cost basis. I would suggest making each fake "share" equal $1, so if you have a $505 dividend, you buy 505 "shares" with it. So, you might have these transactions for your brokerage account with Merrill Lynch (for example): When you have finished making your period-end summary entries for all the actively-managed accounts, double-check that the share balances of your actively-managed accounts match the cost basis amounts on your statements. Remember that each fake "share" is worth $1 when you enter it. Once the cost basis is tied, you can go into the price editor (Tools -> Price Editor) and enter a new "price" as of the period-end date for each actively-managed account. The price will be "Value of Active Acct at Period-End/Cost of Active Acct at Period-End." So, if your account was worth $1908 but had a cost basis of $505 on Jan. 31, you would type "1908/505" in the price field and Jan. 31, 2017 in the date field. When you run your reports, you will want to choose the price source as "Nearest in Time" so that GnuCash grabs the correct quotes. This should make your actively-managed accounts have the correct activity in summary in your GnuCash income accounts and let them work well with the Trading Accounts feature. |
UK limited company and personal bank account | I don't think there is a legal requirement that you need a separate bank account. Just remember that you can only take money from your LLC as salary (paying tax), as dividend (paying tax), or as a loan (which you need to repay, including and especially if the LLC goes bankrupt). So make very sure that your books are in order. |
Is it true that 90% of investors lose their money? | The article "Best Stock Fund of the Decade: CGM Focus" from the Wall Street Journal in 2009 describe the highest performing mutual fund in the USA between 2000 and 2009. The investor return in the fund (what the shareholders actually earned) was abysmal. Why? Because the fund was so volatile that investors panicked and bailed out, locking in losses instead of waiting them out. The reality is that almost any strategy will lead to success in investing, so long as it is actually followed. A strategy keeps you from making emotional or knee-jerk decisions. (BTW, beware of anyone selling you a strategy by telling you that everyone in the world is a failure except for the few special people who have the privilege of knowing their "secrets.") (Link removed, as it's gone dead) |
4 months into a 30 month car loan, need new engine, can't sell any body parts | Without knowing the details of your financial situation, I can only offer general advice. It might be worth having a financial counselor look at your finances and offer some custom advice. You might be able to find someone that will do this for free by asking at your local church. I would advise you not to try to get another loan, and certainly not to start charging things to a credit card. You are correct when you called it a "nightmare." You are currently struggling with your finances, and getting further into debt will not help. It would only be a very short-term fix and have long-lasting consequences. What you need to do is look at the income that you have and prioritize your spending. For example, your list of basic needs includes: If you have other things that you are spending money on, such as medical debt or other old debt that you are trying to pay off, those are not as important as funding your basic needs above. If there is anything you can do to reduce the cost of the basic needs, do it. For example, finding a cheaper place to live or a place closer to your job might save you money. Perhaps accepting nutrition assistance from a local food bank or the Salvation Army is an option for you. Now, about your car: Your transportation to your job is very much one of your basic needs, as it will enable you to pay for your other needs. If you can use public transportation until you can get a working car again, or you can find someone that will give you a ride, that will solve this problem. If not, you'll need to get a working car. You definitely don't want to take out another loan for a car, as you are already having trouble paying the first loan. I'm guessing that it will be less expensive to get the engine repaired than it will be to buy a new car at this point. But that is just a guess. You'll need to find out how much it will cost to fix the car, and see if you can swing it by perhaps eliminating expenses that aren't necessary, even for a short time. For example, if you are paying installments on medical debt, you might have to skip a payment to fix your car. It's not ideal, but if you are short on cash, it is a better option than losing your job or taking out even more debt for your car. Alternatively, buying another, functional car, if it costs less than fixing your current car, is an option. If you don't have the money to pay your current car loan payments, you'll lose your current car. Just to be clear, many of these options will mess up your credit score. However, borrowing more, in an attempt to save your credit score, will probably only put off the inevitable, as it will make paying everything off that much harder. If you don't have enough income to pay your debts, you might be better off to just take the credit score ding, get back on your feet, and then work to eliminate the debt once you've got your basic needs covered. Sorry to hear about your situation. Again, this advice is just general, and might not all apply to your financial details. I recommend talking to the pastor of a local church and see if they have someone that can sit down with you and discuss your options. |
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