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When is the best time to put a large amount of assets in the stock market? | Trying to "time the market" is usually a bad idea. People who do this every day for a living have a hard time doing that, and I'm guessing you don't have that kind of time and knowledge. So that leaves you with your first and third options, commonly called lump-sum and dollar cost averaging respectively. Which one to use depends on where your preferences lie on the risk/reward scpectrum. Dollar cost averaging (DCA) has lower risk and lower reward than lump sum investing. In my opinion, I don't like it. DCA only works better than lump sum investing if the price drops. But if you think the price is going to drop, why are you buying the stock in the first place? Example: Your uncle wins the lottery and gives you $50,000. Do you buy $50,000 worth of Apple now, or do you buy $10,000 now and $10,000 a quarter for the next four quarters? If the stock goes up, you will make more with lump-sum(LS) than you will with DCA. If the stock goes down, you will lose more with LS than you will with DCA. If the stock goes up then down, you will lose more with DCA than you will with LS. If the stock goes down then up, you will make more with DCA than you will with LS. So it's a trade-off. But, like I said, the whole point of you buying the stock is that you think it's going to go up, which is especially true with an index fund! So why pick the strategy that performs worse in that scenario? |
When is an IPO considered failure? | Just skimming through the Wikipedia article on airberlin, I notice there is more to the story than simply "airberlin's IPO failed, so they postponed it and did it anyways." 3 points to keep in mind about IPOs: 1) An IPO is the mechanism for taking a private company and setting it up for shares to be owned by "the public". 2) The process of selling shares to the public often allows original owners and/or early investors to "cash out". Most countries (including member nations of the EU) limit some transactions like pre-IPO companies to "accredited investors". 3) Selling shares to the public also can allow the company to access more funds for growth. This is particularly important in a capital-intensive business like an airline; new B737-MAX costs >$110M. New A320neo costs >$105M USD. Ultimately, the question of a successful IPO depends on how you define success. Initially, there was a lot of concern that the IPO was set up with too much focus on goal #2... allowing the management & owners to cash out. It looks like the first approach was not meeting good opinions in the market during 2006. A major concern was that the initial approach focused on management only cashing out its shares and no money actually going to the company to support its future. The investment bankers restructured the IPO, including the issuance of more new shares so that more $ could end up in the company's accounts, not just in the accounts of the management. If anything, it's still a pretty successful IPO given that the shares were successfully listed, the company collected the money it needed to invest and grow, and the management still cashed out. |
Tenant wants to pay rent with EFT | Similar to @SoulsOpenSource's answer, I would suggest Venmo, which works like PayPal but is free for debit-card-to-debit-card transactions. More information here. |
How can I build up my credit history when I have nearly none | You're going to have a huge problem getting approved for anything as long as you have an unpaid bill on your report. Pay it and make sure its reported as paid in full - ASAP. Once that settled, your credit will start to improve slowly. Can't do anything about that, it will take time. You can make the situation improve a bit faster by lending money to yourself and having it reported regularly on your report. How? Easy. Get a secured credit card. What does it mean? You put X amount of money in a CD and the bank will issue you a credit card secured by that CD. Your credit line will be based on the amount in that CD, and you'll probably pay some fees to the bank for the service (~$20-50/year, shop around). You might get lucky and find a secured card without fees, if you look hard enough. Secured cards are reported as revolving credit (just as any other credit card) and are easy to get because the bank doesn't take the risk - you do. If you default on your payments - your CD goes to cover the debt, and the card gets cancelled. But make absolutely sure that you do not default. Charge between 10% and 30% of the credit limit each month, not more. Pay the balance shown on your credit card statement in full every month and by the due date shown on your monthly statement. It will take a while, but you would typically start noticing the improvement within ~6-12 months. Stop applying for stuff. Not store cards, not car loans, you're not going to get anything, and will just keep dragging your scores down. Each time you have a pull on your report, the score goes down. A lot of pulls, frequent pulls - the score goes down a lot. Lenders can see when one is desperate, and no-one wants to lend money to desperate people. Optimally lenders want to lend money to people who doesn't need loans, but in order to keep the business running they'll settle for slightly less - people who don't usually need loans, and pay the loans they do have on time. You fail on both, as you're desperate for a loan and you have unpaid bills on your report. |
What can I take from learning that a company's directors are buying or selling shares? | This could be another reason. "Companies buy their own stock in the market place to reduce the number of shares outstanding, and thus boosts the earnings per share. It also boosts the stock price, which benefits management that has stock options. " Taken from this article. http://www.forbes.com/sites/investor/2014/01/06/the-most-reliable-indicator-of-an-approaching-market-top/ and this article "Why are stock rising?" may help as well. http://www.forbes.com/sites/investor/2013/12/23/why-are-stocks-rising/ |
Balance Sheets: How a company can save money for further investments | A company CAN hold on to money. This is called retained earnings. Not all money is due back to the owners (i.e. stockholders), but only the amount that the board of directors chooses to pay back in the form of dividends. There is a lot more detail around this, but this is the simple answer to your question. |
Can a custodian refuse prior-year IRA/HSA deposit postmarked April 15? | I had a situation like this also. A client deposited an IRA check to his local P.O. prior to collection p/up, thinking this meant it would be postmarked April 15. It may have been picked up, but wasn't postmarked until the next day, and my firm refused to consider it as timely. I do remember discussing it w/my Retirement Services Dept. Maybe they made an exception for me and my client, but maybe not. I don't remember. Good luck. |
How to incentivize a real-estate broker to find me a cheap house | From your profile, I see you are in Israel. The process is probably different from in the US. In the US, an agent is usually happy to work with a buyer. After all, When I list a house, there are potential buyers all over my state and elsewhere. The best thing you can do is first, have your financing in order. A bank will be able to tell you how much you can afford and how much they'll lend you. If you approach an agent and tell them the exact range of price, area you're interested in, and other specifics such as number of bedrooms, etc, that agent should be happy to find houses to fit your request. Obviously, an agent listing million dollar homes, busy with those all day, is not going to want to handle a buyer looking for a $200K home. But in the end, the real estate agents aren't all listing high end, and someone is moving the smaller houses as well. Often, an office will have a call center where agents who are less busy will answer the phone hoping to get a client that will bring a sale. That's one way to go. The other is word of mouth. Just ask others who you work with or socialize with if they know a good agent. In my case, I'd be happy to get such a referral. |
How long can a company keep the money raised from IPO of its stocks? | You realize that most of the money raised through the IPO process doesn't go into the company's bank account? Those shares were shares that were held by the investors and original owners and it's those prior pre-IPO shareholders that got their money back along with a tidy profit. The cash on its books was there before the IPO, and after. The IPO process was more about a change in stock owners ship than anything else. Edit - as the SEC disclosure mentioned in comments below states, the Facebook IPO raised $6.7B for facebook's use, the rest of the transaction was from the investors selling their shares. Mark Zuckerberg still owns more than 55% of shares outstanding. The $6.7B is still about 10% of the company value. Nothing to ignore, but clearly, 'most' of the money from the IPO didn't go to the company. |
What argument(s) support the claim that long-term housing prices trend upward? | The Shiller data is inflation adjusted. In effect, a flat line means that long term, housing rises with inflation, no more no less. There's no argument, just the underlying data to support his charts. This, among them. As much as I respect Nobel Prize winning Robert Shiller, his approach and analysis of the boom ignored interest rates. Say we look at a $50K earning couple. This is just below median income. At 9%, they qualify to borrow $145K. As rates fell to 4%, they qualify for $244K. Same fixed 30 term. Ignoring all other factors, the swing in rates will generate an oscillation around the long term trend. And my own data crunching suggests the equilibrium median home price will tend toward the price supported by the median income. A similar, but not identical question - Why can't house prices be out of tune with salaries? In response to Chan-Ho's comment - I'd imagine Shiller understood the interest impact. To clarify, the chart, as presented, ignores it. |
Buying insurance (extended warranty or guarantee) on everyday goods / appliances? | IMO it's usually not worth it and here's why. There's a statistical distribution of how likely a unit may fail depending on its age. Probability is high for a short period after the unit comes into use because there are parts that were not thoroughly tested and manufacturing defects. Then all those defective parts fail and get replaces and the unit likely functions without faults for years. Then it reaches it lifetime end and again probability becomes much higher - parts wear out and start failing one by one. Every unit comes with a manufacturer warranty of one to two years already and that warranty will likely cover any defect causes by materials and manufacturing defects - the period when fault probability is initially high. "Extended warranty" only covers the unit for two-to-five years and most units have lifetime of about ten years. This means that the "extended warranty" is in effect when it is least useful. |
Why do people buy stocks that pay no dividend? | Instead of giving part of their profits back as dividends, management puts it back into the company so the company can grow and produce higher profits. When these companies do well, there is high demand for them as in the long term higher profits equates to a higher share price. So if a company invests in itself to grow its profits higher and higher, one of the main reasons investors will buy the shares, is in the expectation of future capital gains. |
Should I consolidate loans and cards, or just cards, leaving multiple loans? | First of all, congratulations on admitting your problem and on your determination to be debt-free. Recognizing your mistakes is a huge first step, and getting rid of your debt is a very worthwhile goal. When considering debt consolidation, there are really only two reasons to do so: Reason #1: To lower your monthly payment. If you are having trouble coming up with enough money to meet your monthly obligations, debt consolidation can lower your monthly payment by extending the time frame of the debt. The problem with this one is that it doesn't help you get out of debt faster. It actually makes it longer before you are out of debt and will increase the total amount of interest that you will pay to the banks before you are done. So I would not recommend debt consolidation for this reason unless you are truly struggling with your cashflow because your minimum monthly payments are too high. In your situation, it does not sound like you need to consolidate for this reason. Reason #2: To lower your interest rate. If your debt is at a very high rate, debt consolidation can lower your interest rate, which can reduce the time it will take to eliminate your debt. The consolidation loan you are considering is at a high interest rate on its own: 13.89%. Now, it is true that some of your debt is higher than that, but it looks like the majority of your debt is less than that rate. It doesn't sound to me that you will save a significant amount of money by consolidating in this loan. If you can obtain a better consolidation loan in the future, it might be worth considering. From your question, it looks like your reasoning for the consolidation loan is to close the credit card accounts as quickly as possible. I agree that you need to quit using the cards, but this can also be accomplished by destroying the cards. The consolidation loan is not needed for this. You also mentioned that you are considering adding $3,000 to your debt. I have to say that it doesn't make sense at all to me to add to your debt (especially at 13.89%) when your goal is to eliminate your debt. To answer your question explicitly, yes, the "cash buffer" from the loan is a very bad idea. Here is what I recommend: (This is based on this answer, but customized for you.) Cut up/destroy your credit cards. Today. You've already recognized that they are a problem for you. Cash, checks, and debit cards are what you need to use from now on. Start working from a monthly budget, assigning a job for every dollar that you have. This will allow you to decide what to spend your money on, rather than arriving at the end of the month with no idea where your money was lost. Budgeting software can make this task easier. (See this question for more information. Your first goal should be to put a small amount of money in a savings account, perhaps $1000 - $1500 total. This is the start of your emergency fund. This money will ensure that if something unexpected and urgent comes up, you won't be so cash poor that you need to borrow money again. Note: this money should only be touched in an actual emergency, and if spent, should be replenished as soon as possible. At the rate you are talking about, it should take you less than a month to do this. After you've got your small emergency fund in place, attack the debt as quickly and aggressively as possible. The order that you pay off your debts is not significant. (The optimal method is up for debate.) At the rate you suggested ($2,000 - 2,500 per month), you can be completely debt free in maybe 18 months. As you pay off those credit cards, completely close the accounts. Ignore the conventional wisdom that tells you to leave the unused credit card accounts open to try to preserve a few points on your credit score. Just close them. After you are completely debt free, take the money that you were throwing at your debt, and use it to build up your emergency fund until it is 3-6 months' worth of your expenses. That way, you'll be able to handle a small crisis without borrowing anything. If you need more help/motivation on becoming debt free and budgeting, I recommend the book The Total Money Makeover by Dave Ramsey. |
How is a long call and short stock portfolio equivalent to lending money | hmmm. I think it's because in both cases, you must pay for it up front, before the positions are closed out. You own nothing except the right to buy the stock re: the call, and the obligation to buy the stock re: the short. You buy a call, but must borrow the stock, for which you must put some margin collateral and there is a cost to borrow. You pay for that, of course. I wouldn't call it lending though. |
Are in-kind donations from my S-Corp tax-deductible in any way? | You should probably have a tax professional help you with that (generally advisable when doing corporation returns, even if its a small S corp with a single shareholder). Some of it may be deductible, depending on the tax-exemption status of the recipients. Some may be deductible as business expenses. To address Chris's comment: Generally you can deduct as a business on your 1120S anything that is necessary and ordinary for your business. Charitable deductions flow through to your personal 1040, so Colin's reference to pub 526 is the right place to look at (if it was a C-corp, it might be different). Advertisement costs is a necessary and ordinary expense for any business, but you need to look at the essence of the transaction. Did you expect the sponsorship to provide you any new clients? Did you anticipate additional exposure to the potential customers? Was the investment (80 hours of your work) similar to the costs of paid advertisement for the same audience? If so - it is probably a business expense. While you can't deduct the time on its own, you can deduct the salary you paid yourself for working on this, materials, attributed depreciation, etc. If you can't justify it as advertisement, then its a donation, and then you cannot deduct it (because you did receive something in return). It might not be allowed as a business expense, and you might be required to consider it as "personal use", i.e.: salary. |
How secure is my 403(b)? Can its assets be “raided”? | The simple answer is that with the defined contribution plan: 401k, 403b, 457 and the US government TSP; the employer doesn't hold on to the funds. When they take your money from your paycheck there is a period of a few days or at the most a few weeks before they must turn the money over to the trustee running the program. If they are matching your contributions they must do the same with those funds. The risk is in that window of time between payday and deposit day. If the business folds, or enters bankruptcy protection, or decides to slash what they will contribute to the match in the future anything already sent to the trustee is out of their clutches. In the other hand a defined a benefit plan or pension plan: where you get X percent of your highest salary times the number of years you worked; is not protected from the company. These plans work by the company putting aide money each year based on a formula. The formula is complex because they know from history some employees never stick around long enough to get the pension. The money in a pension is invested outside the company but it is not out of the control of the company. Generally with a well run company they invest wisely but safely because if the value goes up due to interest or a rising stock market, the next year their required contribution is smaller. The formula also expects that they will not go out of business. The problems occur when they don't have the money to afford to make the contribution. Even governments have looked for relief in this area by skipping a deposit or delaying a deposit. There is some good news in this area because a pension program has to pay an annual insurance premium to The Pension Benefit Guaranty Corporation a quai-government agency of the federal government. If the business folds the PBGC steps in to protect the rights of the employees. They don't get all they were promised, but they do get a lot of it. None of those pension issues relate to the 401K like program. Once the money is transferred to the trustee the company has no control over the funds. |
Mailed in One-time Payment by Check | I do know that a blank check has all the information they need for the electronic transfer. They probably add it as a customer service to streamline future payments. Though I don't think automatically adding it makes good business sense. It is possible that the form used to submit the check included a line to added the account to the list of authorized accounts. He might have been lucky he didn't set up a recurring payment. I would check the website to see if there is a tool to remove the account info from the list of payment options. There has to be a way to edit the list so that if you change banks you can update the information, yet not keep the old accounts on the list. Talk to customer service if the website doesn't have a way of removing the account. Tell them that you have to edit the account information. And give them your info. If they balk at the change tell them that they could be committing fraud if the money is pulled from an unauthorized account. |
How to spend more? (AKA, how to avoid being a miser) | People who choose "good enough" (satisficers) tend to be happier than people who choose "the best" (maximizers), see link. So decide you want to be a satisficer for most decisions, and then work at it: deliberately limit the amount of time you spend on a small decision, and celebrate a non-optimal decision. Decide to be good to yourself, and say it out loud. Practice the skill. |
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. |
Should I collect receipts after paying with a card? | It surely doesn't HURT to keep a receipt. I tend to pile up receipts in my desk drawer, never look at them, and then every few months throw them all out. If a vendor writes a receipt by hand or if the cash register is not tied in to the credit card system, keeping a receipt could give you evidence against mistakes or fraud. Like if the vendor gives you a receipt for $10 and then sends a transaction to the credit card company for $20, you could use the receipt as evidence of the problem. But if the vendor is trying to really cheat you, the most likely thing for him to do is run the legitimate transaction through, and then some time later run a fake transaction. So say today you go to vendor X, buy something for $20, and he bills your credit card $20. Then a few days later he bills you another $100 even though you never came back to the store. Sure, you have a receipt for $20. But you don't have a receipt for the $100 because you never authorized that transaction. Your receipt proves nothing -- presumably you're not disputing the $20. If you complain to the bank or go to the police or whatever, saying, "Hey look, I don't have a receipt for the $100" doesn't prove anything. How do they know you didn't just throw it away? It's difficult to prove that you never had such a receipt. |
How do credit card payments work? What ensures the retailer charges the right amount? | Your credit card limit is nothing more than a simple number. When you purchase something, the merchant receives a number (i.e. the amount of the transaction) from your card company (e.g. Visa) in their bank account, and that number is subtracted from your limit (added to your balance). The amount is recorded, and isn't changed, so that's how they get the "exact" amount you paid. Transferring a number is easier than the retailer having to wait for cash to get from you to your card company to them. Moving numbers around is the basis of the modern financial system. And yes, it is always a risk to let someone else have your credit card number. An untrustworthy company/person may use it to charge you without your permission, or if they have your full details they could use it as if they were you. With a reputable retailer like Amazon, the main risk is data theft: If a security hole is found in Amazon's system, someone could steal your credit card info and misuse it. |
What are the pitfalls of loaning money to friends or family? Is there a right way to do it? | I recently lent some money to my sister. While I generally agree with Phillip that lending to family and friends should be avoided, I felt I needed to make an exception. She really needed the cash, and my husband and I agreed that we would be ok without it. Here are some guidelines I used that may be helpful to others: In the end, I think lending to family and friends should be avoided, and certainly should not be done lightly, but by communicating clearly and directly, and keeping careful records, I think you can help someone out and still avoid the lingering awkwardness at future Thanksgivings when one person is convinced that the other owes one more payment, and the other swears it was paid in full. |
Why would you not want to rollover a previous employer's 401(k) when changing jobs? | I've changed jobs several times and I chose to rollover my 401k from the previous employer into an IRA instead of the new employer's 401k plan. The biggest reason not to rollover the 401k into the new employer's 401k plan was due to the limited investments offered by 401k plans. I found it better to roll the 401k into an IRA where I can invest in any stock or fund. |
Why call option price increases with higher volatility | Understanding the BS equation is not needed. What is needed is an understanding of the bell curve. You seem to understand volatility. 68% of the time an event will fall inside one standard deviation. 16% of the time it will be higher, 16%, lower. Now, if my $100 stock has a STD of $10, there's a 16% chance it will trade above $110. But if the STD is $5, the chance is 2.3% per the chart below. The higher volatility makes the option more valuable as there's a highr chance of it being 'in the money.' My answer is an over simplification, per your request. |
How to have a small capital investment in US if I am out of the country? | For $100 you better just hold it in Mexico. The cost of opening an account could eat 10% or more of your capital easily, and that won't be able to buy enough shares of an ETF or similar investment to make it worthwhile. |
Do precious metals and mining sector index funds grow as much as the general stock market? | Metals and Mining is an interesting special case for stocks. It's relationship to U.S. equity (SPX) is particularly weak (~0.3 correlation) compared to most stocks so it doesn't behave like equity. However, it is still stock and not a commodities index so it's relation to major metals (Gold for instance) is not that strong either (-0.6 correlation). Metals and Mining stocks have certainly underperformed the stock market in general over the past 25years 3% vs 9.8% (annualized) so this doesn't look particularly promising. It did have a spectacularly good 8 year period ('99-'07) though 66% (annualized). It's worth remembering that it is still stock. If the market did not think it could make a reasonable profit on the stock the price would decrease until the market thought it could make the same profit as other equity (adjusted slightly for the risk). So is it reasonable to expect that it would give the same return as other stock on average? Yes.. -ish. Though as has been shown in the past 25 years your actual result could vary wildly both positive and negative. (All numbers are from monthly over the last 25 years using VGPMX as a M&M proxy) |
What type of pension should I get? | If your new employer has a Final Salary or defined benefit type pension scheme, join it. DB plans are attractive because they are often less a risk for the employee. If your employer has a defined contribution scheme and contributes to it, join it and contribute at least up to the maximum amount that they will match – otherwise you are leaving free money on the table. You also probably need to sit down with an independent adviser for what to do with your existing pension (is it a DC or DB) and if you want to have a pension outside of your employer. |
Credit report - Not able to establish identity | The suggestion may be very delayed, have you personally gone to the Experian Office with all the documentation (in xerox copy and in original)? If not, please do so, there is always a difference between dealing with govt/semi-govt institutions over electronic channels and in person. |
Advice on replacing my savings account | Liquid cash (emergency, rainy day fund) should be safe from a loss in value. Mutual funds don't give you this, especially stock funds. You can find "high yield" savings accounts that are now at around .8% to .9% APY which is much better than .05% and will hopefully go up. Barclays US and American Express are two big banks that normally have the highest rates. Most/all Savings and Money Market accounts should be FDIC insured. Mutual funds are not, though the investment IRA, etc. holding them may be. |
How exactly could we rank or value how “rich” a company brand is? | Matt explains the study numbers in his answer, but those are the valuation of the brand, not the value of the company or how "rich" the company is. Presuming that you're asking the value of the company, the usual way for a publicly traded company to be valued is by the market capitalization (1). Market capitalization is a fairly simple measure, basically the total value of all the shares of stock in that company. You can find the market cap for any publicly traded company on any of the usual finance sites like Google Finance or Yahoo Finance. If by rich you mean the total value of assets (assets being all property, including cash, real property, equipment, and licenses) a company owns, that information is included in a publicly traded company's quarterly SEC filing and investor releases, but isn't usually listed on the popular finance sites. An example can be seen at Duke Energy's Investor Relation Site (the same information can be found for all companies on EDGAR, the SEC's search tool). If you open the most recent 8-K (quarterly filing), and go to page 8, you can see that they have $33B+ in assets, and a high level breakdown of those. Note that the numbers are given in millions of dollars For a privately held company this information may or may not be available and you'd have to track it down if it is available. I picked Duke Energy because it's the first thing that popped into my mind. I have no affiliation with Duke, and I don't directly own any of their stock. |
Why should we expect stocks to go up in the long term? | The total value of the stock market more or less tracks the total value of the companies listed in the stock market, which is more or less the total value of the US economy (since very few industries are nationalized or dominated by privately held companies). The US economy has consistently grown over time, thanks to the wonders of industrialization, the discovery of new markets, new natural resources, etc. Thus, the stock market has continued to grow as well. Will it forever? No. The United States will not exist for ever. But there's no obvious reason it won't continue to grow, at least for a while, though of course if I could accurately predict that I would be far richer than I am. Why do other countries not have the same result? China is its own ball of wax since it's a sort-of-market-sort-of-command economy. Japan has major issues economically right now and doesn't really have the natural or people resources; it also had a huge market bubble a while back that it's never recovered from. And many European countries are doing fine. German's DAX30 index was at around 2500 in 2004 and is now at nearly 13000. That's pretty fast growth. If you go back further (there was a crash ending in around 2004), you can see around the fall of the Berlin wall it was still around 2000; even going that far back, that's about an 8% annual bump. The FTSE was also around 2000 back then, around 8000 now, which is around 5% annual growth. Many of these indexes were more seriously hurt than the US markets in the two major crashes of this millenium; while the US markets fell a lot in 2008, they didn't fall nearly as much as many smaller markets in 2002, so had less to recover from. Both DAX and FTSE suffered similar falls in 2002 to 2008, and so even though during good periods they've grown quite quickly, they haven't overall done as well as they could have given the crashes. |
What effect does a company's earnings have on the price of its stock? | Your autograph analogy seems relevant to me. But it is not just speculation. In the long run, investing in stocks is like investing in the economy. In the long run, the economy is expected to grow , hence stock prices are expected to go up. Now in theory: the price of any financial instrument is equal to the net present value today of all the future cash flows from the instrument. So if company's earnings improve, shareholders hope that the earnings will trickle down to them either in form of dividends or in form of capital gain. So they buy the stock, creating demand for it. I can try to explain more if this did not make any sense. :) |
How can I make $250,000.00 from trading/investing/business within 5 years? | The answer to your question is Forex trading. You can get to 250K quicker than any other "investment" scheme. You'll just need to start with at least 500K. |
If there's no volume discount, does buying in bulk still make sense? | Let me add a counterpoint. I don't know about you, but for some psychological reason, when I know I have an abundance of something I tend to be less frugal about the way I consume it. For example: When there is a six pack of cokes in the fridge I feel like I am more prone to not drink them up so quickly so I have some for later on. However, if I knew I had 3 more cases in the pantry, I seem to go through a lot more of them. |
Why would a public company not initiate secondary stock offerings more often? | What prevents a company from doing secondary public stock offerings on regular basis? The primary goal of a company doing secondary public offering is to raise more funds, that can be utilized for funding the business. If no funding is needed [i.e. company has sufficient funds, or no expansion plans], this funding creates a drag and existing shareholder including promoters loose value. For example with the current 100 invested, the company is able to generate say 125 [25 as profit]. If additional 100 is taken as secondary public offering, then with 200, the company should mark around 250, else it looses value. So if the company took additional 100 and did not / is not able to deploy in market, on 200 they still make 25 as profit, its bad. There are other reasons, i.e. to fight off hostile acquisition or dilute some of promoters shares etc. Thus the reasons for company to do a secondary PO are few and doing it often reduces the value for primary share holders as well as minority share holders. |
The Asset Allocation Paradox | Asset Allocation serves many purposes, not just mitigating risk via a diversification of asset classes, but also allowing you to take a level of risk that is appropriate for a given investor at a given time by how much is allocated to which asset classes. A younger investor with a longer timeframe, may wish to take a lot more risk, investing heavily in equities, and perhaps managed funds that are of the 'aggressive growth' variety, seeking better than market returns. Someone a little older may wish to pull back a bit, especially after a bull market has brought them substantial gains, and begin to 'take money off the table' perhaps by starting to establish some fixed income positions, or pulling back to slightly less risky index, 'value' or 'balanced' funds. An investor who is near or in retirement will generally want even less risk, going to a much more balanced approach with half or more of their investments in fixed income, and the remainder often in income producing 'blue chip' type stocks, or 'income funds'. This allows them to protect a good amount of their wealth from potential loss at a time when they have to be able to depend on it for a majority of their income. An institution such as Yale has very different concerns, and may always be in a more aggressive 'long term' mode since 'retirement' is not a factor for them. They are willing to invest mostly in very aggressive ways, using diversification to protect them from one of those choices 'tanking' but still overall taking a pretty high level of risk, much more so than might be appropriate for an individual who will generally need to seek safety and to preserve gains as they get older. For example look at the PDF that @JLDugger linked, and observe the overall risk level that Yale is taking, and in addition observe the large allocations they make to things like private equity with a 27%+ risk level compared to their very small amount of fixed income with a 10% risk level. Yale has a very long time horizon and invests in a way that is atypical of the needs and concerns of an individual investor. They also have as you pointed out, the economy of scale (with something like #17B in assets?) to afford to hire proven experts, and their own internal PHD level experts to watch over the whole thing, all of which very few individual investors have. For either class of investor, diversification, is a means to mitigate risk by not having all your eggs in one basket. Via having multiple different investments (such as picking multiple individual stocks, or aggressive funds with different approaches, or just an index fund to get multiple stocks) you are protected from being wiped out as might happen if a single choice might fail. For example imagine what would have happened if you had in 2005 put all your money into a single stock with a company that had been showing record profits such as Lehman Brothers, and left it there until 2008 when the stock tanked. or even faster collapses such as Enron, etc that all 'looked great' up until shortly after they failed utterly. Being allocated across multiple asset classes provides some diversification all on it's own, but you can also be diversified within a class. Yale uses the diversification across several asset classes to have lower risk than being invested in a single asset class such as private equity. But their allocation places much more of their funds in high risk classes and much less of their funds in the lowest risk classes such as fixed income. |
Impact of EIN on taxation | Is it possible if (After getting EIN) I change my LLC type (disregarded entity or C type or S type or corporation or change in number of members) for tax saving ? You marked your question as "real-estate", so I'm guessing you're holding rental properties in your LLC. That means that you will not be able to qualify for S-Corp, only C-Corp treatment. That in turn means that you'll be subject to double taxation and corporate tax rate. I fail to see what tax savings you're expecting in this situation. But yes, you can do it, if you so wish. I suggest you talk to a licensed tax adviser (EA/CPA licensed in your State) before you make any changes, because it will be nearly impossible to reverse the check-the-box election once made (for at least 5 years). |
Borrowing 100k and paying it to someone then declaring bankruptcy | This is called a fraudulent conveyance because its purpose is to prevent a creditor from getting repaid. It is subject to claw back under US law, which is a fancy way of saying that your friend will have to pay the bank back. Most jurisdictions have similar laws. It is probably a crime as well, but that varies by jurisdiction. |
Can saving/investing 15% of your income starting age 25, likely make you a millionaire? | The really simple answer is that compound interest is compound not linear. Money invested for longer earns more interest, and the sooner you start investing, the longer it has to earn interest. These ideas come out of pension investment where 65 is the usual retirement age and what you invest in the 1st ten years of your pension (or any other compound interest fund) accounts for over 50% of what you will get out. 25 to 65 is forty years and $100 invested at 7% for 40 years is $1400. $100 invested every year for 40 years the pot would be worth just under $20,000. At 30 years, it would be worth under $10,000, and at 20 years it would be worth only $4099. If you double your investment amount every 10 years you would have invested $15700, and the pot would be worth $45,457. Do exactly the same but starting at 35 instead of 25 and your pot would only be worth $14,200. |
How to protect a Stock you still want to own from a downturn? | Adding on to all the fine answers, you can consider selling a covered call. You will have to own a minimum of 100 shares. It will offer a bit of protection, but limit your upside. If your confident long term, but expect a broader market pull back then a covered call might give you that small protection your looking for. |
Ideal investments for a recent college grad with very high risk tolerance? | Theoretically there is limited demand for risky investments, so higher-risk asset classes should outperform lower-risk asset classes over sufficiently long time periods. In practice, I believe this is true, but it could be several decades before a risky portfolio starts to outperform a more conservative one. Stocks are considered more risky than most assets. Small-cap stocks and emerging market stocks are particularly high-risk. I would consider low-fee ETFs in these areas, like VB or VWO. If you want to seek out the absolute riskiest investments, you could pick individual stocks of companies in dire financial situations, as Bank of America was a couple years ago. Most importantly, if you don't expect to need the money soon, I would maximize your contribution to tax-advantaged accounts since they will grow exponentially faster than taxable accounts. Over 50 years, a 401(k) or IRA will generally grow at least 50% more than a taxable account, maybe more depending on the tax-efficiency of your investments. Try to contribute the maximum ($17,500 for most people in 2014) if you can. If you can save more than that, I'd suggest contributing a Roth 401k rather than a traditional 401(k) - since Roth contributions are post-tax, the effective contribution limit is higher. Also contribute to a Roth IRA (up to $5,500 in 2014), using a backdoor Roth if necessary. |
Is it a good idea to teach children that work is linearly related to income? | Completely linear? We don't do that. Our daughter has a fixed allowance, and we expect a certain amount of help around the house as being part of the family. We don't make any explicit ties between the two, and we don't seem to have any problems. We bought an eBay lot of Polly Pockets and divided them up into $5 bags. (This is a better deal that what we could get in the store new.) Her allowance isn't enough that she can "buy" one every week. After sensing her frustration we gave her the opportunity to earn some more money by doing extra work. It happened to be cleaning up after our dogs in the back yard, a chore we had neglected for quite a while. She stuck with the job, and truly earned that money. (She'll be six in January.) What's more, it was a good deal for me. It needed to be done, and I didn't really want to do it. :) So, for now this seems like a fair balance. It prevents her from getting the idea that she won't work unless she gets paid, but she also knows that working harder does have its rewards. We still have time to teach her the idea of working smarter. (This isn't a formal study. It's just my experience.) |
$65000/year or $2500 every two weeks: If I claim 3 exemptions instead of zero, how much would my take home pay be? | Take a look at IRS Publication 15. This is your employer's "bible" for withholding the correct amount of taxes from your paycheck. Most payroll systems use what this publication defines as the "Percentage Method", because it requires less data to be entered into the system in order to correctly compute the amount of withholding. The computation method is as follows: Taxes are computed "piecewise"; dollar amounts up to A are taxed at X%, and then dollar amounts between A and B are taxed at Y%, so total tax for B dollars is A*X + (B-A)*Y. Here is the table of rates for income earned in 2012 on a daily basis by a person filing as Single: To use this table, multiply all the dollar amounts by the number of business days in the pay period (so don't count more than 5 days per week even if you work 6 or 7). Find the range in which your pay subject to withholding falls, subtract the "more than" amount from the range, multiply the remainder by the "W/H Pct" for that line, and add that amount to the "W/H Base" amount (which is the cumulative amount of all lower tax brackets). This is the amount that will be withheld from your paycheck if you file Single or Married Filing Separately in the 2012 TY. If you file Married Filing Jointly, the amounts defining the tax brackets are slightly different (there's a pretty substantial "marriage advantage" right now; withholding for a married person in average wage-earning range is half or less than a person filing Single.). In your particular example of $2500 biweekly (10 business days/pp), with no allowances and no pre-tax deductions: So, with zero allowances, your employer should be taking $451.70 out of your paycheck for federal withholding. Now, that doesn't include PA state taxes of 3.07% (on $2500 that's $76.75), plus other state and federal taxes like SS (4.2% on your gross income up to 106k), Medicare/Medicaid (1.45% on your entire gross income), and SUTA (.8% on the first $8000). But, you also don't get a refund on those when you fill out the 1040 (except if you claim deductions against state income tax, and in an exceptional case which requires you to have two jobs in one year, thus doubling up on SS and SUTA taxes beyond their wage bases). If you claim 3 allowances on your federal taxes, all other things being equal, your taxable wages are reduced by $438.45, leaving you with taxable income of $2061.55. Still in the 25% bracket, but the wages subject to that level are only $619.55, for taxes in the 25% bracket of $154.89, plus the withholding base of $187.20 equals total federal w/h of $342.09 per paycheck, a savings of about $110pp. Those allowances do not count towards other federal taxes, and I do not know if PA state taxes figure these in. It seems odd that you would owe that much in taxes with your withholding effectively maxed out, unless you have some other form of income that you're reporting such as investment gains, child support/alimony, etc. With nobody claiming you as a dependent and no dependents of your own, filing Single, and zero allowances on your W-4 resulting in the tax withholding above, a quick run of the 1040EZ form shows that the feds should owe YOU $1738.20. The absolute worst-case scenario of you being claimed as a dependent by someone else should still get you a refund of $800 if you had your employer withhold the max. The numbers should only have gotten better if you're married or have kids or other dependents, or have significant itemized deductions such as a home mortgage (on which the interest and any property taxes are deductible). If you itemize, remember that state income tax, if any, is also deductible. I would consult a tax professional and have him double-check all your numbers. Unless there's something significant you haven't told us, you should not have owed the gov't at the end of the year. |
Reasons for a warrant's intrinsic value and price not adding up? | While on the surface it may seem that the warrant you described is trading below intrinsic value, there are many reasons why that might not be the case. It's more likely that you are lacking information, than having identified a derivative instrument that the market has failed to reasonably price. For instance, might there be a conversion ratio on the warrants other than the 1:1 ratio that you seem to be assuming? Sometimes, warrant terms are such that multiple warrants are required to buy one share of stock. Consider: The conversion ratio is the number of warrants needed in order to buy (or sell) one investment unit. Therefore, if the conversion ratio to buy stock XYZ is 3:1, this means that the holder needs three warrants in order to purchase one share. Usually, if the conversion ratio is high, the price of the share will be low, and vice versa. (source) Conversion ratios are sometimes used so that warrants can be issued on a 1:1 basis to existing stockholders, but where the potential number of new shares to be issued is much less. Conversion ratio is just one such example that could lead to perceived mispricing, and there may be other restrictions on exercise. Warrants are not issued by an options exchange using standardized option contract terms, and so warrant terms vary considerably from issuer to issuer. Even series of warrants from the same issuer may have differing terms. Always look beyond any warrant quote to find a definitive source of the warrant's precise terms — and read those terms carefully before taking any position. |
Total ETF value decreased after underlying stock increased in price | According to your post, you bought seven shares of VBR at $119.28 each on August 23rd. You paid €711,35. Now, on August 25th, VBR is worth $120.83. So you have But you want to know what you have in EUR, not USD. So if I ask Google how much $845.81 is in EUR, it says €708,89. That's even lower than what you're seeing. It looks like USD has fallen in value relative to EUR. So while the stock price has increased in dollar terms, it has fallen in euro terms. As a result, the value that you would get in euros if you sold the stock has fallen from the price that you paid. Another way of thinking about this is that your price per share was €101,72 and is now €101,33. That's actually a small drop. When you buy and sell in a different currency that you don't actually want, you add the currency risk to your normal risk. Maybe that's what you want to do. Or maybe you would be better off sticking to euro-denominated investments. Usually you'd do dollar-denominated investments if some of your spending was in dollars. Then if the dollar goes up relative to the euro, your investment goes up with it. So you can cash out and make your purchases in dollars without adding extra money. If you make all your purchases in euros, I would normally recommend that you stick to euro-denominated investments. The underlying asset might be in the US, but your fund could still be in Europe and list in euros. That's not to say that you can't buy dollar-denominated investments with euros. Clearly you can. It's just that it adds currency risk to the other risks of the investment. Unless you deliberately want to bet that USD will rise relative to EUR, you might not want to do that. Note that USD may rise over the weekend and put you back in the black. For that matter, even if USD continues to fall relative to the EUR, the security might rise more than that. I have no opinion on the value of VBR. I don't actually know what that is, as it doesn't matter for the points I was making. I'm not saying to sell it immediately. I'm saying that you might prefer euro-denominated investments when you buy in the future. Again, unless you are taking this particular risk deliberately. |
Why would you elect to apply a refund to next year's tax bill? | It is a bad deal. It saves the government from processing your refund as a check or an ACH deposit, and lets them keep your money -- money that they overwithheld! -- interest-free for another year. Get it back. :) |
Making a big purchase over $2500. I have the money to cover it. Should I get a loan or just place it on credit? | From an Indian perspective, this is what I would do. This typically would not only keep your credit score healthy but also give you additional benefits on spends. |
How does remittance work? How does it differ from direct money transfer? | If you are a citizen of India and working in Germany, then you are most likely an NRI (NonResident Indian). If so, you are not entitled to hold an ordinary Indian bank account, and all such existing accounts must be converted to NRO (NonResident Ordinary) accounts. If your Indian bank knows about NRO accounts, then it will be eager to assist you in the process of converting your existing accounts to NRO accounts most likely it also offers a money remittance scheme (names like Remit2India or Money2India) which will take Euros from your EU bank account and deposit INR into your NRO account. Or, you can create an NRE (NonResident External) account to receive remittances from outside India. The difference is that interest earned in an NRO account is taxable income to you in India (and subject to TDS, tax deduction at source) while interest earned in an NRE account is not taxable in India. The remittance process takes a while to set up, but once in place, most remittances take 5 to 6 business days to complete. |
Prices go up and salary doesn't: where goes delta? | Purchasing commodities (whose prices are increasing rapidly), improving corporate profitability, buying imports (the US dollar is weaker than it was, so the price of everything imported has gone up), paying down corporate debt, etc. |
How to understand the caculation of interest for credit cards? | Suppose you have been paying interest on previous charges in the past. Your monthly statement is issued on April 12, and (since you just received your income tax refund), you pay it off in full on April 30. You don't charge anything to the card at all after April 12. Thus, on April 30, your credit card balance shows as zero since you just paid it off. But your April 12 statement billed you for interest only till April 12. So, on May 12, your next monthly bill will be for the interest for your nonzero balance from April 13 through April 30. Assuming that you still are not making any new charges on your card and pay off the May 12 bill in timely fashion, you will finally have a zero bill on June 12. What if you charge new items to your credit card after April 12? Well, your balance stopped revolving on April 30, and that's when interest is no longer charged on the new charges. But you do owe interest for a charge on April 13 (say) until April 30 when your balance is no longer revolving, and this will be added to your bill on May 12. Purchases made after April 30 will not be charged interest unless you fall off the wagon again and don't pay your May 12 bill in full by the due date of the bill (some time in early June). |
Did my salesman damage my credit? What can I do? | This shows the impact of the inquiries. It's from Credit Karma, and reflects my inquiries over the past two years. In my case, I refinanced 2 properties and the hit is after this fact, so my score at 766 is lower than when approved. You can go to Credit Karma and see how your score was impacted. If in fact the first inquiry did this, you have cause for action. In court, you get more attention by having sufficient specific data to support your claim, including your exact damages. |
Is it possible to sell a stock at a higher value than the market price? | The core issue is to understand what 'selling a share' means. There is no special person or company that takes the share from you; you are selling on the open market. So your question is effectively 'can I find a guy on the street that buys a 10$-bill for 11$ ?' - Well, maybe someone is dumb enough, but chances are slim. |
Is this Employee Stock Purchase Plan worth it when adding my student loan into the equation? | The closer the contribution is to the December 31st date, the more profitable that specific contribution is, only taking into consideration the 5% discount. On your case, the first contribution that beats your student loans interest rate is the August one, where you get about 9% annual return, the remaining contributions go up from there. |
What is the correct pronunciation of CAGR? | I always hear people pronounce it to rhyme with "bagger". |
What implications does having the highest household debt to disposable income ratio have on Australia? | It is basically the same situation what US was when the crash happened. People took on debt without the means to pay, even with awful credit records. But the problem isn't the debt people take on themselves, but with the limited disposable income they have how efficiently can their debts be serviced. And how do banks who lend out money can recover their money. When banks lend money to all and sundry, they have to take care of defaults and that is when financial wizardry comes into play. In US people have the option to default on their debt and refinance it, so banks assumed default and tried to hedge their risks. If this is an option in Australia, be ready for a crash else not to worry about much. If banks continue lending expect higher inflation rates, higher interest rates and maybe a downgrade of bonds issued by the Australian government. Higher import costs and a boom in exports because of devalued Australian dollar. |
Is it possible for US retail forex traders to trade exotic currencies? | The vast majority of retail Forex brokers are market makers, rather than ECNs. With that said, the one that fits your description mostly closely is Interactive Brokers, is US-based, and well-respected. They have a good amount of exoitcs available. Many ECNs don't carry these because of the mere fact that they make money on transactions, versus market makers who make money on transactions and even more on your losses. So, if the business model is to make money only on transactions, and they are as rarely traded as exotics are, there's no money to be made. |
New to investing — I have $20,000 cash saved, what should I do with it? | I don't agree with others regarding paying off debt ASAP. You only have auto loan and auto loans are actually good for your credit score. With a mere $6k balance, it is not like you are going to have a problem paying off the loan. Not only that you will build your credit score and this will come in handy when you are purchasing a home. With the Federal Reserve setting the interest rate at 0% until 2015, I can't understand why people would pay off anything ASAP. As long as you don't have revolving credit card balances, you are in the clear. I don't know your salary nor how big your porfolio is but I would save 5 months expense in cash and dump the rest in precious metals. Holding cash is the worst thing you could be doing (unless you predict a deflation). You said you already have 40% in precious metals. You are already way ahead of other 95% of Americans by protecting your purchasing power. Follow your gut. The stormg is coming and it's not going to get any better. |
What are some good, easy to use personal finance software? [UK] | I'm a big fan of Mint. I tried Wesabe prior to mint and at the time (about a year ago) it was lacking the integration of many of my accounts, so I had to go with Mint by necessity. Since then, Mint has gotten better almost monthly. I can do almost everything I want, and the budgeting tools (which would address your "6 months out" forecast desires) and deal alerts (basically tells you if you can get a better interest rate on savings/credit card/etc) are really helpful. Highly recommended! |
What is the purpose of the wash sale rule? | In a comment on this answer you asked It's not clear to me why the ability to defer the gains would matter (since you never materially benefit until you actually sell) but the estate step up in basis is a great point! Could you describe a hypothetical exploitive scenario (utilizing a wash sale) in a little more detail? This sounds like you still have the same question as originally, so I'll take a stab at answering with an example. I sell some security for a $10,000 profit. I then sell another security at a $10,000 loss and immediately rebuy. So pay no taxes (without the rule). Assuming a 15% rate, that's $1500 in savings which I realize immediately. Next year, I sell that same security for a $20,000 profit over the $10,000 loss basis (so a $10,000 profit over my original purchase). I sell and buy another security to pay no taxes. In fact, I pay no taxes like this for fifty years as I live off my investments (and a pension or social security that uses up my tax deductions). Then I die. All my securities step up in basis to their current market value. So I completely evade taxes on $500,000 in profits. That's $75,000 in tax savings to make my heirs richer. And they're already getting at least $500,000 worth of securities. Especially consider the case where I sell a privately held security to a private buyer who then sells me back the same shares at the same price. Don't think that $10,000 is enough? Remember that you also get the original value. But this also scales. It could be $100,000 in gains as well, for $750,000 in tax savings over the fifty years. That's at least $5 million of securities. The effective result of this would be to make a 0% tax on capital gains for many rich people. Worse, a poorer person can't do the same thing. You need to have many investments to take advantage of this. If a relatively poor person with two $500 investments tried this, that person would lose all the benefit in trading fees. And of course such a person would run out of investments quickly. Really poor people have $0 in investments, so this is totally impractical. |
What is the theory behind Rick Van Ness's risk calculation in the video about diversification? | He's calculating portfolio variance. The general formula for the variance of a portfolio composed of two securities looks like this: where w_a and w_b are the weights of each stock in the portfolio and the sigmas represent the standard deviation/risk of each asset or portfolio. In the case of perfect positive or negative correlation, applying some algebra to the formula relating covariance to the correlation coefficient (rho, the Greek letter that looks like "p"): tells us that the covariance we need in the original formula is simply the product of the standard deviations and the correlation coefficient (-1 in this case). Combining that result with our original formula yields this calculation: Technically we've calculated the portfolio's variance and not it's standard deviation/risk, but since the square root of 0 is still 0, that doesn't matter. The Wikipedia article on Modern Portfolio Theory has a section that describes the mathematical methods I used above. The entire article is worth a read, however. |
Which kind of investment seems feasible to have more cashflow every week or month? | Over the long run, you can expect to do about as well as the market itself. Depending on what time period you view, the stock market has typically provided returns of approximately 10%. Some years it is up, some years it is down. You may think you can get better returns, but you are mistaken. You may be able to do better over a short time period if you take on vastly more risk, but you won't be able to do so long term. In order to make $2000/month, then, you will need approximately $240,000 to invest. And even then, you won't make that kind of return reliably. Some months, some years, you'll make more. Other times, you'll lose money. If anyone tells you they can double your money in a month (which is what you are hoping for), walk away. Because it is either illegal or a scam. The only way your plan can work is if you are reliably able to predict stocks which will go up by 10% in the next two days. You cannot do this. You can't even predict which stocks will go up by 10% in the next year. |
NYSE vs. Nasdaq - can I tell what exchange a ticker traded on, based solely on the ticker? | Things are in fact more complicated. It really depends what you mean by "ticker" and who gave you this ticker. There is several codes to identify a security: The Bloomberg code contains a code to identify the exchange as in ALU:FP the FP part refers to Euronext Paris. The RIC code works the same way but with a different convention. Exchanges are identified by the MIC code.(they are in fact divided in market segments with each market segment having a main market segment) ISIN and SEDOL codes do not provide informations about the exchange so they are usually given with a MIC. There is no guarantee that Reuters and Bloomberg won't use the same company code to refer to different company. But they usually use the exchange ticker. This ticker is requested by each company and can be anything. They are accepted most of the time. But sometimes to avoid confusion some requests are rejected. (For instance FBI ticker was refused) For more info read: The evolution of ticker symbols Financial providers like Bloomberg provides services to be informed when a security is added/removed from a market. |
Double-entry bookkeeping: When selling an asset, does the money come from, Equity or Income? | There are basically two approaches, based on how detailed you want to be in your own personal accounting: Obviously the more like a business or like "real" accounting you want to be, the more complex you can make it, but in general I find that the purpose of personal accounting is (1) to track what I own, and (2) to ensure I have documented anything I need to for tax purposes, and as long as you're meeting those goals any reasonable approach is workable. |
What's the point of a chargeback when they just ask the merchant whether they owe money to the buyer? | When you initiate a chargeback, the merchant has the right to dispute the chargeback. If they can provide proof that the purchase actually took place, the chargeback will fail. We don't know all the details of your situation, of course, but it appears from what you have said that the tax chain probably has documents that you signed agreeing to the charges. They prepared your return (even if they did a poor job), and so from their perspective, they have decided that they deserve to be paid. Whether or not they did a good job is a matter of opinion, of course; their position might be that they did it correctly, and the second business did it poorly. The chargeback is a powerful tool, but it is not a magic button that makes a charge disappear. If the merchant can show that a sale did indeed take place and show that the proper amount was charged, the chargeback will fail. For a service, it isn't enough usually to simply state that you were unsatisfied; if you received the service at the agreed-upon price, the charge is valid. A chargeback is sort of a nuclear option when it comes to getting a refund. There are negative ramifications and expenses every time a merchant gets a chargeback (even if they ultimately win), and so often they will be willing to work something out to avoid a chargeback. You should go to the merchant first, if you can, and ask for a refund before considering the chargeback option. If you file a chargeback without even giving them the opportunity to work it out with you, the merchant will usually want to fight back. |
The Canadian dividend tax credit: Why is it that someone can earn a lot in dividends but pay no/little tax? | Basically, yes. That doesn't mean that it's easy to do. The government provides a dividend tax credit since an individual takes on more risk to invest in dividend-paying corporations rather than trading their human capital for an income. Thus, for the most part, $1 earned from dividends is taxed much less than $1 earned from income or interest. Finally, note that foreign dividends are not eligible for the dividend tax credit, and are not preferentially taxed. |
Difference between GOOGL and GOOG | Source |
How do I explain why debt on debt is bad to my brother? | Talk about opportunity cost. Show a rope, and put a tag with him on the end of it. Explain that since he has max out his credit, he can no longer get more. Without more credit here are the things he can't have The key to illustrate is that all the money he makes, for the next several years is obligated to the people he has already borrowed it from. Try to have him imagine giving his entire paycheck to a bank, and then doing that for the next five years. To drive it home, point out that there are 5 super bowls, 5 college championship games, 5 final fours, 5 annual concerts he likes, 5 model years of cars, 5 or more iPhone versions in those five years. Or whatever he is into. 5 years of laptops, 5 years of fishing trips. These things are not affordable to him right now. He has already spent his money for the next 5 years, and those are the things he cannot have because he is, in fact, out of cash. Furthermore, if he continues, the credit will dry up completely and his 5 year horizon could easily become ten. To illustrate how long 5 or 10 years is, have him remember that 10 years ago he might have been in college or the military. That 5 years ago Facebook was no big thing. That 5 years ago the Razr was an awesome phone. That 5 years ago we had a different president. |
How much should I be contributing to my 401k given my employer's contribution? | JoeTapayer has good advice here. I would like to add my notes. If they give a 50% match that means you are getting a 50% return on investment(ROI) immediately. I do not know of a way to get a better guaranteed ROI. Next, when investing you need to determine what kind of investor you are. I would suggest you make yourself more literate in investments, as I suggest to anyone, but there are basic things you want to look for. If your primary worry is loss of your prinicipal, go for Conservative investments. This means that you are willing to accept a reduced expected ROI in exchange for lower volatility(risk of loss of principal). This does not mean you have a 100% safe investment as the last market issues have shown, but in general you are better protected. The fidelity investments should give you some information as to volatility or if they deem the investments conservative. Conservative investments are normally made up of trading bonds, which have the lowest ROI in general but are the most secure. You can also invest in blue chip companies, although stock is inherently riskier. It is pointed out in comments that stocks always outperform bonds in the long term, and this has been true over the last 100 years. I am just suggesting ways you can protect yourself against market downturns. When the market is doing very well bonds will not give you the return your friends are seeing. I am just trying to give you a basic idea of what to look for when you pick your investments, nothing can replace a solid investment adviser and taking the time to educate yourself. |
Why would a company with a bad balance sheet be paying dividends? | Ford paid off a tremendous amount of debt prior to reinstating the dividend. While they still have a sizable amount of debt on the balance sheet, they've been able to refinance this debt to a much more affordable point. Their free cash flow + cash on the balance could enable them to pay it off in the very near future (12 - 16 months). Most auto companies have debt on their balance sheet if they choose to offer financial services. Their overall credit rating (if you really think such things are valid) has also improved. Generally speaking, I agree its a poor idea to give money back to shareholders if you have high-interest bearing debt. |
What's a good free checking account? | Capital One 360. No minimums balance, no fees. Everything's online. Make deposits using an app or an image of the check. ATMs are free almost everywhere. |
Historical Stock Prices of delisted company [duplicate] | For those on a budget, check if your local library has access to / or a copy of the "Standard & Poor's Daily Stock Price Record". Access to that or a similar service may be available as part of your library patronage. If not available it may be available at your metropolitan central library. Comprehensive stock pricing data which provides adjustments for splits, mergers, capital distributions and other relevant events is still a premium product. External link to New York Public Library blog post on subject: http://www.nypl.org/blog/2012/04/09/finding-historical-stock-prices |
Should I sell when my stocks are growing? | My thoughts are that if you've seen considerable growth and the profit amassed would be one that makes sense, you would have to seriously consider selling NOW because it could take yeoman's time to mimic that profit in the next 10 quarters or so. To analogize; If you bought a house for 100k and we're renting it for say 1,000/month and we're making $ 250/month profit and could sell it now for 125k, it would take you 100 months to recoup that $25k profit (or 8 years 4 months). Doesn't it make sense to sell now? You would have that profit NOW and could invest it somewhere else without losing that period of time, and TIME is the emphasis here. |
Are social media accounts (e.g. YouTube, Twitter, Instagram, etc.) considered assets? | The buyer of such an account is likely treating it as an asset, and if they ever resell it capital gains (or loss) would be realized. I don't see why this would be any different for the person that created the account initially, except that the basis starts at $0 making the entire sale price taxable. How you figure the value of the account before the initial sale would be more difficult, but fortunately you may not ever need to know the value (for tax purposes) until you actually sell it. |
Do I make money in the stock market from other people losing money? | The stock market is no different in this respect to anything that's bought or sold. The price of a stock like many other things reflects what the seller is prepared to sell it at and what the buyer is prepared to offer for it. If those things match then a transaction can take place. The seller loses money but gains stocks they feel represent equivalent value, the reverse happens for the buyer. Take buying a house for example, did the buyer lose money when they bought a house, sure they did but they gained a house. The seller gained money but lost a house. New money is created in the sense that companies can and do make profits, those profits, together with the expected profits from future years increase the value that is put on the company. If we take something simple like a mining company then its value represents a lot of things: and numerous other lesser things too. The value of shares in the mining company will reflect all of these things. It likely rises and falls in line with the price of the raw materials it mines and those change based on the overall supply and demand for those raw materials. Stocks do have an inherent value, they are ownership of a part of a company. You own part of the asset value, profits and losses made by that company. Betting on things is different in that you've no ownership of the thing you bet on, you're only dependent on the outcome of the bet. |
Retirement planning: Pension or personal saving/investing? | You can never depend ONLY on pension. You must get financial education and invest your money. I recommend you to read The Intelligent Investor by Benjamin Graham...it's the bible of Warren Buffet. Besides, you don't need to be a Billionaire for retiring and be happy. I recommend you to get education in ETFs. I quote The Intelligent Investor by Benjamin Graham p. 131. According to Ibboston Associates, the leading financial research firm, if you had invested $12,000 in the Standard & Poor's 500-stock index at the beginning of september 1929, 10 years later you would have had only $7,223 left. But if you had started with a paltry $100 and simply invested another $100 every single month, then by August 1939, your money would have grown to $15,571! That's the power of disciplined buying-even in the face of the Great Depression and the worst bear market of all time. You are still young to make even bolder investments. But seriously you can never depend ONLY on pension. You won't regret learning how to invest your money, it doesn't matter if it's in the stock market, real state market, whatever market... Knowing what to do with your money is priceless. I hope this helps. Happy profits! |
What does “100% stock dividend” mean? | Simply put, 100% stock dividend is 1:1 or 1 for 1 bonus share, as explained above, if you held 100 shares after 1:1 bonus you would have 200 shares (100 original, another 100 as bonus). The impact on the stock price is that the price becomes 1/2 the price of the stock before bonus (supply has doubled). 1:1 bonus is nor exactly like a 2:1 / 2 for 1 stock split, in a split the face value if the share would also go down. In effect, any bonus share is not of any fundamental value to the shareholder, as the companies usually capitalize reserves from previous year/years this way as the value of the company does not change fundamentally. In effect the company is taking your money and giving you shares instead. |
Dollar Cost Averaging (Or value averaging) vs Lot sizes, what am I missing? | Don't take it so literally. 100 is close to 98, so if your formula calls for 98, buy 100. |
How do you choose which mortgage structure is appropriate when buying a home? | There are several factors that you need to consider: If you have already decided on the house. Did you prequalify for the mortgage loan - If so, did you lock in the rate. If you have not already done than your research is still valid. Consider two calculators first - Affordability + Mortgage calculator Advice : If you can afford to pay 20% down then please do, Lesser monthly mortgage payment, you can save approx 400 $ per month, the above calculator will give you an exact idea. If you can afford go for 15 years loan - Lower interest rate over 2-5 years period. Do not assume the average ROI will + 8-10%. It all depends on market and has variable factors like city, area and demand. In terms of Income your interest payment is Tax deductible at the end of the year. |
How does a CFD work behind the scenes? | There are several ways that the issuers profit from CFDs. If the broker has trades on both sides (buy and sell) they can net the volumes off against each other and profit off the spread whilst using the posted margins to cover p&l from both sides. Because settlement for most securities is not on the same day that the order is placed they can also buy the security with no intention of taking delivery and simply sell it off at the end of day to pass delivery on to someone else. Here again they profit from the spread and that their volumes give them really low commissions so their costs are much lower than the value of the spread. If they have to do this rather than netting the position out the spreads will be wider. Sometimes that may be forced to buy the security outright but that is rare and the spreads will be even wider so that they can make a decent profit. |
If gold's price implodes then what goes up? | It seems that you're interested in an asset which you can hold that would go up when the gold price went down. It seems like a good place to start would be an index fund, which invests in the general stock market. When the gold market falls, this would mainly affect gold mining companies. These do not make up a sizable portion of any index fund, which is invested broadly in the market. Unfortunately, in order to act on this, you would also have to believe that the stock market was a good investment. To test this theory, I looked at an ETF index fund which tracks the S&P 500, and compared it to an ETF which invests in gold. I found that the daily price movements of the stock market were positively correlated with the price of gold. This result was statistically significant. The weekly price movements of the stock market were also correlated with the price of gold. This result was also statistically significant. When the holding period was stretched to one month, there was still a positive relationship between the stock market's price moves and the price of gold. This result was not statistically significant. When the holding period was stretched to one year, there was a negative relationship between the price changes in the stock market and the price of gold. This result was not statistically significant, either. |
Loan to son - how to get it back | A few ideas. I suggest it would wise to consider what lesson is learned as a result of any resolution of a financial issue. Is it a lesson of responsibility and of the importance of keeping one's word, or of getting away with whatever happens (poorly planned business) with no adverse consequences. "No" consequences (e.g. forgiven loan) is also a consequence, and it sends a message. Sounds like paying the loan from your savings automatically means it's deducted from inheritance, since the savings are part of that inheritance. This may seem like a square deal if we ignore inflation. Assuming Today the $54K is worth much more than, unless it is adjusted for inflation, the same $54K will be worth (i.e. will allow to buy) a few decades from now, when the inheritance materializes. So this option means your son is foregoing a significantly smaller financial loss in the future in exchange for foregoing his debt completely today. This is like borrowing $54K from a bank now, and only having to forego the same amount decades in the future when it is in fact worth much less. What borrower would not be happy with such arrangement, and what lender would do it? Only one's own loving parents :) You are in charge of what life lessons your son will walk away with from this situation. Good luck! |
Am I liable for an auto accident if I'm a cosigner but not on the title, registration, or insurance policy? | I am sure that laws differ from state to state. My brother and I had to take over my dads finances due to his health. He had a vehicle that had a loan on it. We refinanced the vehicle and it was in our name. One of our family members needed a vehicle and offered to take over the payment. Our attorney advised us to be on the insurance policy with them and make sure if was paid correctly. We are in Indiana. I know it is hard to discuss finances with family members. However, if you co-signed the loan I think it would be wise to either have your name added to the insurance policy or at least have your brother show proof it has been paid. If you are not comfortable with that it may be a good idea to make sure the bank has your correct address and ask if they would notify you if insurance has lapsed. If your on the loan and there is no insurance at the very least if the vehicle was damaged you would still be responsible to pay the loan. |
If I were to get into a life situation where I would not be able to make regular payments, do lenders typically provide options other than default? | I would say generally, the answer is No. There might be some short term relief to people in certain situations, but generally speaking you sign a contract to borrow money and you are responsible to pay. This is why home loans offer better terms then auto loans, and auto loans better than credit cards or things like furniture. The better terms offer less risk to the lender because there are assets that can be repossessed. Homes retain values better than autos, autos better than furniture, and credit cards are not secured at all. People are not as helpless as your question suggests. Sure a person might lose their high paying job, but could they still make a mortgage payment if they worked really hard at it? This might mean taking several part time jobs. Now if a person buys a home that has a very large mortgage payment this might not be possible. However, wise people don't buy every bit of house they can afford. People should also be wise about the kinds of mortgages they use to buy a home. Many people lost their homes due to missing a payment on their interest only loan. Penalty rates and fees jacked up their payment, that was way beyond their means. If they had a fixed rate loan the chance to catch up would have not been impossible. Perhaps an injury might prevent a person from working. This is why long term disability insurance is a must for most people. You can buy quite a bit of coverage for not very much money. Typical US households have quite a bit of debt. Car payments, phone payments, and either a mortgage or rent, and of course credit cards. If income is drastically reduced making all of those payments becomes next to impossible. Which one gets paid first. Just this last week, I attempted to help a client in just this situation. They foolishly chose to pay the credit card first, and were going to pay the house payment last (if there was anything left over). There wasn't, and they are risking eviction (renters). People finding themselves in crisis, generally do a poor job of paying the most important things first. Basic food first, housing and utilities second, etc... Let the credit card slip if need be no matter how often one is threatened by creditors. They do this to maintain their credit score, how foolish. I feel like you have a sense of bondage associated with debt. It is there and real despite many people noticing it. There is also the fact that compounding interest is working against you and with your labor you are enriching the bank. This is a great reason to have the goal of living a debt free life. I can tell you it is quite liberating. |
Solid reading/literature for investment/retirement/income taxes? | Something that introduces the vocabulary and treats the reader like an intelligent individual? It's a bit overkill for 'retirement', but Yale has a free online course in Financial Markets. It's very light on math, but does a good job establishing jargon and its history. It covers most of the things you'd buy or sell in financial markets, and is presented by Nobel Prize winner Robert Schiller. This particular series was filmed in 2007, so it also offers a good historical perspective of the start of the subprime collapse. There's a number of high profile guest speakers as well. I would encourage you to think critically about their speeches though. If you research what's happened to them after that lecture, it's quite entertaining: one IPO'd a 'private equity' firm that underperformed the market as a whole, another hedge fund manager bought an airline with a partner firm that was arrested for running a ponzi scheme six months later. The reading list in the syllabus make a pretty good introduction to the field, but keep in mind they're for institutional investors not your 401(k). |
What are the downsides that prevent more people from working in high-income countries, and then retiring in low-income (and cost of living) ones? | A lot of good answers, but there’s one more factor: ignorance. The majority haven’t considered it, or considered it and assumed it’s not an option without investigating. PLUS, the widespread myth that every other country is primitive, unhealthy, and dangerous. |
Are my parents ripping me off with this deal that doesn't allow me to build my equity in my home? | The time to have looked into this is before you bought the condo, not now. You are presumably an adult. Your parents have apparently made it possible for you to have a roof of your own over your head for what is probably below rental rates (but I don't know your area, so can't say). From their point of view, they may have been doing you a favor, while giving themselves an investment opportunity. What would they be doing with that money otherwise, and at a higher or lower rate of return, and with greater or lesser risk? Where and how would you be living otherwise? More Importantly, if you can't talk to them about this you have bigger problems than money. |
Trouble sticking to a budget when using credit cards for day to day transactions? | You can fairly simply make a spreadsheet in your favorite spreadsheet application (or in Google Docs if you want portability). I like to make an overview page that shows how much I take in per month and what fixed bills come out of that, then break the remaining total into four to get a weekly budget. Then, I make one page per month with four columns (one per week), with each row being a category. Sum the categories at the bottom, and subtract from your weekly total: voila, a quick reference of how much you can spend that week without going over budget. I then make a page for each month that lists what I bought and how much I spent on it, so I can trace where my money's gone; the category total is just a summation of the items from that page that belong in that category. Once you have a system, stop checking your bank balance except to ensure your paycheck is going in alright. Use the spreadsheet to determine how much you can spend at any time. Then make sure you pay off everything on the card before the end of the month so you don't incur interest. |
Is it true that if I work 6 months per year, it is better than to work for 1 calendar year and take a break for 1 year? | In many cases spanning across years will indeed be beneficial. Deductions: You get to take twice as much in deductions (twice the standard deduction, or itemizing - if you can) when you span over two years than in one. IRA: You can only contribute in years when you have earned income. You have all the income in year 1 and none in year 2 - you can only contribute in year 1. You have half of the income in year 1 and half of the income in year 2 - you can contribute in both years (up to the limit/earned income, whichever is less). Social Security: You get 4 credits for each year you earned ~16K in. You earned 32K in year 1, and nothing in year 2 - you get 4 credits. You split it in half for each year - you get 8 credits. The list can go on. If you can do the planning ahead of time and can chose the time periods of your work freely (which is not something most people can do), you can definitely plan ahead with taxes in mind. This is called Tax Planning. |
How to increase my credit score | Get a credit card is NOT the answer. The reason people have a bad (or no) credit score is often because they're new to the country, have just turned 18, have previously fallen into arrears or are just bad with money. Getting a credit card is risky because, if you don't stay on top of your payments, it'll just damage your score even more. Now, it sounds like I hate credit cards - but I don't, and they do have their benefits. But avoid them if possible because they can be more hassle than they're worth (ie, paying the credit back on-time, cancelling accounts when the interest comes in, moving money in and out of accounts). It's risky borrowing money from anywhere whether it's a payday lender, a bank, a credit card, etc., so use them as a last resort. If you've got your own income then that's amazing!, try not to live outside of your means and your credit score will look after (and increase) itself. It takes time to build a good credit score, but always make sure you pay the people you owe on time and the full amount. I'd stick with paying your phone provider (and any other direct debits you have setup) and avoid getting a credit card. I'd recommend Noddle to keep track of your credit score and read their FAQ on how to help build it. Unlike Experian, it's free forever so not quite as detailed... but Noddle are owned by CallCredit - one of the biggest Credit Reference Agencies in the UK so they should have the latest information on yourself. In conclusion, if you already have financial commitments like a mobile phone bill, gym membership, store cards, anything that gets paid monthly by direct debit... your credit score will increase (provided you pay the full-amount on time). I hope this helps. PS. I don't work for any of the companies here, but I've been working in the finance sector (more specifically, short-term loans) for 3+ years now. |
Can a husband and wife who are both members of the same LLC file a joint tax return? | Since from the question it seems that you're talking about the US taxation, I'll assume that. You can definitely continue filing jointly. Being members of a partnership has no bearing on how you file your own tax return. The partnership will distribute K-1 to each of you separately, but you'll report both of them on the same return. |
When does Ontario's HST come into effect? | It looks like the HST will be in effect in Ontario on July 1st, 2010. As to whether it will replace GST with HST for all services, it looks like some sectors may get special treatment: Ontario may exempt mutual funds from HST (National Post). But it doesn't look final yet. However, I would suggest that most service-based businesses in Ontario need to prepare to start charging 13% HST instead of 5% GST. It will be the law. On the "goods" side of the new harmonized tax, it looks like certain goods will still be exempt from the provincial portion. Here's a quote from the Ontario Budget 2009 News Release: "Books, diapers, children's clothing and footwear, children's car seats and car booster seats, and feminine hygiene products would be exempt from the provincial portion of the single sales tax." Here's some additional information on the introduction of the HST, from the province: General Transitional Rules for Ontario HST. And finally, another interesting article from the Ottawa Business Journal: Preparing For Ontario Sales Tax Harmonization – It's Not Too Early UPDATE: I just received an insert from Canada Revenue Agency included with my quarterly GST statement. Titled "Harmonization of the Sales Tax in Ontario and British Columbia", it contains a section titled "What this means for you" (as in, you the business owner). Here's an excerpt: [...] All Ontario and B.C. registrants would need to update their accounting and point-of-sale systems to accomodate the change in rate and new point-of-sale rebates for the implementation date of July 1, 2010. The harmonization of the sales tax in Ontario and B.C. may affect the filing requirements of registrants outside of these two provinces. Registrants will report their HST according to their current GST filing frequency. As a result of the harmonization, there will be changes to the rebates for housing and public service bodies. More information will be released as it becomes available. Visit the CRA web site often, at www.cra.gc.ca/harmonization, for the most up-to-date information on the harmonization of the sales tax and how it may affect you. [...] Last, I found some very detailed information on the HST here: NOTICE247 - Harmonized Sales Tax for Ontario and British Columbia - Questions and Answers on General Transitional Rules for Personal Property and Services. Chances are anything you want to know is in there. |
RSU Tax Implications of 83(b) Election | I can make that election to pay taxes now (even though they aren't vested) based on the dollar value at the time they are granted? That is correct. You must file the election with the IRS within 30 days after the grant (and then attach a copy to that year's tax return). would I not pay any taxes on the gains because I already claimed them as income? No, you claim income based on the grant value, the gains after that are your taxable capital gains. The difference is that if you don't use 83(b) election - that would not be capital gains, but rather ordinary salary income. what happens if I quit / get terminated after paying taxes on un-vested shares? Do I lose those taxes, or do I get it back in a refund next year? Or would it be a deduction next year? You lose these taxes. That's the risk you're taking. Generally 83(b) election is not very useful for RSUs of established public companies. You take a large risk of forfeited taxes to save the difference between capital gains and ordinary gains, which is not all that much. It is very useful when you're in a startup with valuations growing rapidly but stocks not yet publicly trading, which means that if you pay tax on vest you'll pay much more and won't have stocks to sell to cover for that, while the amounts you put at risk are relatively small. |
Job Offer - Explain Stock Options [US] | There are a few other items that you should be aware of when getting options: The strike price is usually determined by an independent valuation of the common shares (called a 409a valuation). This should give you a sense on what the options are worth. Obviously you are hoping that the value becomes many multiple of that. There are two kinds in the US: Non-quals (NQO) and Incentive Stock Options (ISOs). The big difference is that when you exercise Non-quals, you have to pay the tax on the difference between the "fair" market value on the shares and what you paid for them (the strike price). This is important because if the company is private, you likely can not sell any shares until it is public. With ISOs, you don't pay any tax (except AMT tax) on the gain until you actually sell the shares. You should know what kind your getting. Some plans allow for early exercise, essentially allowing you to buy the shares early (and given back if you leave before they vest) which helps you establish capital gains treatment earlier as well as avoid AMT if you have ISOs. This is really complicated direction and you would want to talk to a tax professional. And always a good idea to know how many total shares outstanding in the Company. Very few people ask this question but it is helpful for you to understand the overall value of the options. |
Saving for a non-necessity | The same as you would save for anything else, buget and make sure your expenses are less than your income each week. Put away a little each week for the item you want to buy, and when you have saved up enough for the item you can buy it. In the mean time whilst you are saving for it, you can shop around to see where you can buy it at the lowest price. |
Transferred Stocks in 1993, sold 2017 taxes | Assuming the stock was worth more at the time she gave it to you than when she bought it, the cost basis would be the amount that she bought it for. You would then pay tax on the increase in value from that time. Generally it's better to inherit assets than receive them as gifts, since the cost basis of inherited assets is raised to the value at the time of the death of the one leaving the inheritance. You will probably need to find some record of the original amount paid so you can determine the right cost basis. |
How is unmarketable stock valued for tax purposes? | How you are taxed will depend on what kind of stock awards they are. The value will be determined by the company that issues it, and appropriate tax forms will be sent to you to include with your taxes. The way the value is determined is an accounting question that is off-topic here, but the value will be stated on your stock award paperwork. If you are awarded the stock directly then that value will be taxed as ordinary income. If you are awarded options, then you can purchase the stock to start the clock on long-term capital gains, but you will not incur any tax liability through the initial purchase. If the company is sold privately and you have held the stock for over 1 year, then yes, it will be taxed as a long-term capital gain. If you receive/exercise the stock less than 1 year before such an acquisition, then it will be considered a short-term capital gain and will be taxed as ordinary income. |
Is CFD a viable option for long-term trading? | No, CFD is not viable as a long term trading strategy. You have a minimum margin to maintain, and you are given X days to top up your margin should you not meet the margin requirements. Failure to meet margin requirements will result in a forced sell where you are no longer able to hold onto the stock. A long term trading strategy is where you hold onto the stock through the bad times of the company and keep it long enough to see the good times. However, with CFD, you may be forced to sell before you see the good times. In addition, you incur additional lending charges (e.g. 4%-6%) for the ability to leverage. |
I have an extra 1000€ per month, what should I do with it? | 1: Low fees means: a Total Expense Ratio of less than 0,5%. One detail you may also want to pay attention to whether the fund reinvests returns (Thesaurierender Fonds) which is basically good for investing, but if it's also a foreign-based fund then taxes get complicated, see http://www.finanztip.de/indexfonds-etf/thesaurierende-fonds/ |
Is it normal for brokers to ask whether I am a beginner? | In many places there are legal requirements to do so, essentially made to prevent brokers from selling high-risk products as if they were deposits with guaranteed safety of your funds. There also may be prohibitions on offering high-risk/high-return products to beginner customers, e.g. requiring accredited investor status claiming that yes, you really know how this works and are informed of the involved risks or you're not allowed to invest in that product. Making untrue claims of being not a beginner may limit your options if your broker does cheat you in some manner, as it gives them a solid argument that you confirmed that you understand how their pump-and-dump scheme works and are yourself responsible for losing your money to them. |
What would I miss out on by self insuring my car? | You're trading a fixed liability for an unknown liability. When I graduated from college, I bought a nice used car. Two days later, a deer came out of nowhere, and I hit it going 70 mph on a highway. The damage? $4,500. If I didn't have comprehensive insurance, that would have been a real hit to me financially. For me, I'd rather just pay the modest cost for the comprehensive. |
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