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Why is being “upside down” on a mortgage so bad? | And then there is the issue of people who actually don't intend to reduce the size of their loan. They only want to pay the interest, so their debt with the bank remains constant. If you are upside down, it means you will not have the financial means to remove the debt. If, for some reason, you are no longer able to pay the bank, you might lose the house. After that you will have no house, but you still have a debt with the bank. |
What happens if one brings more than 10,000 USD with them into the US? | The $10,000 mark is not a ceiling in importing cash, but rather a point where an additional declaration needs to be made (Customs Form 4790). At 1 million, I suspect you might be in for a bit of an interview and delay. Here's an explanation of what happens when the declaration isn't made: https://www.cbp.gov/newsroom/local-media-release/failure-declare-results-seizure-24000-arrest-two |
About eToro investments | For eToro, just like any other brokerage firm, you can lose your entire capital. I suggest that you invest in one or more exchange-traded funds that track major indexes. If not, just put your money in fixed deposit accounts; gain a bit of interest and establish an emergency fund first before investing money that you feel you are able to lose. |
How can my dad (grandpa) transfer shares to my 2 year old son? | A UTMA may or may not fit your situation. The main drawbacks to a UTMA account is that it will count against your child for financial aid (it counts as the child's asset). The second thing to consider is that taxes aren't deferred like in a 529 plan. The last problem of course is that when he turns 18 he gets control of the account and can spend the money on random junk (which may or may not be important to you). A 529 plan has a few advantages over a UTMA account. The grandparents can open the account with your son as the beneficiary and the money doesn't show up on financial aid for college (under current law which could change of course). Earnings grow tax free which will net you more total growth. You can also contribute substantially more without triggering the gift tax ~$60k. Also many states provide a state tax break for contributing to the state sponsored 529 plan. The account owner would be the grandparents so junior can't spend the money on teenage junk. The big downside to the 529 is the 10% penalty if the money isn't used for higher education. The flip side is that if the money is left for 20 years you will also have additional growth from the 20 years of tax free growth which may be a wash depending on your tax bracket and the tax rates in effect over those 20 years. |
How will the fall of the UK Pound impact purchasing my first property? | Just to get the ball rolling, here's an answer: it won't affect you in the slightest. The pound happened to be tumbling anyway. (If you read "in the papers" that Brexit is "making the pound fall", that's as valuable as anything else you've ever read in the papers.) Currencies go up and down drastically all the time, and there's nothing you can do about it. We by fluke once bought a house in Australia when that currency was very low; over the next couple years the currency basically doubled (I mean per the USD) and we happened to sell it; we made a 1/2 million measured in USD. Just a fluke. I've had the opposite happen on other occasions over the decades. But... Currency changes mean absolutely nothing if you're in that country. The example from (2) was only relevant because we happened to be moving in and out of Aus. My various Australian friends didn't even notice that their dollar went from .5 to 1 in terms of USD (how could it matter to them?) All sorts of things drastically affect the general economy of a given country. (Indeed, note that a falling currency is often seen as a very good thing for a given nation's economy: conspiracy theorists in the states are forever complaining that ) Nobody has the slightest clue if "Brexit" will be good bad or indifferent for the UK. Anything could happen. It could be the beginning of an incredible period of growth for the UK (after all, why does Brussels not want your country to leave - goodwill?) and your house could triple in value in a year. Or, your house price could tumble to half in a year. Nobody has the slightest clue, whatsoever about the effects on the "economy" of a country going forward, of various inputs. |
What should I do with my $10K windfall, given these options? | I've been listening to Dave Ramsey a lot lately, and he encourages (encourage might be too light of a word for him) this priority list for budgeting: I would strongly advise you to tackle this list before you start to think about any sizable "fun" spending. If you don't have #1, set that aside first. The options you mentioned: New roof: You should ask yourself "what is the potential cost of not getting a new roof?" If you can save up for it a little at a time, while putting most of the rest of your money to paying off debt, that's what I would do. Unless, of course, there is damage or risk of damage to your house by not doing it now. Then, you need to do the same measurement (of doing the roof now) against the goal of saving three to six months of expenses. Especially in your case, with your mortgage underwater, you want to be sure you are prepared should anything happen (for example, losing a job, and potentially being forced to move for a new job). Cars/student loan: (Refer to #3 above — in other words, yes). |
Option on an option possible? (Have a LEAP, put to me?) | I understand what you're asking for (you want to write options ON call options... essentially the second derivative of the underlying security), and I've never heard of it. That's not to say it doesn't exist (I'm sure some investment banker has cooked something like this up at some point), but if it does exist, you wouldn't be able to trade it as easily as you can a put or a LEAP. I'm also not sure you'd actually want to buy such a thing - the amount of leverage would be enormous, and you'd need a massive amount of margin/collateral. Additionally, a small downward movement in the stock price could wipe out the entire value of your option. |
Investing thought experiment | The market cap always reflect the company's equity. Except that you cannot fix a stock price in a free market. A company with such profit pattern would have stock price behave like present value of a perpetuity (future income stream discounted by risk free rate) Since your assumption is unachievable, there is no point in determining the logic. |
Paid off oldest CC keep it open or close it? | Close the account. The age doesn't outweigh the fact that you have to pay for the card. It would be one thing if the credit line was a couple thousand but showing the credit bureaus that you are staying away from the $425.00 doesn't really make them think you are any more trustworthy with your available credit. Utilization matters when you are staying away from much larger chunks of your available credit (across all cards). |
Why should I trust investment banks' ratings? | In theory, GS has a Chinese Wall between the department which issued the advice and any departments which may profit from such advice. This would take away some of your distrust, except for the fact that GS did violate these rules in the past (see the answer from user10665). You're wondering about the timing, prior to the release of figures by Tesla itself. This is quite normal. Predicting the past is not that useful ;) The price range indeed is wide, but that too is a meaningful opinion. It says that GS thinks Tesla's share price strongly depends on factors which are hard to predict. In comparison, Coca Cola's targets will be in a much smaller range because its costs and sales are very stable. |
Is issuer's bank allowed to charge fee when cashing check? | Some banks charge their own customers if they make use of a teller. That is what you are doing. You are going to a bank where you are not a customer and requesting a transaction that requires a teller. If you cash the check by going though your bank, the issuer's bank only handles it as a non-teller transaction. |
Possible to purchase multiple securities on 1 transaction? | No, this is not generally possible, as each security purchase is booked as a separate order => hence separate transaction. You can do this through purchasing of a fund, i.e.: purchasing one share of a ETF will get you a relative share of the ETF holdings, but the actual holdings are not up to you then. |
Why are estimated taxes due “early” for the 2nd and 3rd quarters only? | Here's an answer copied from https://www.quora.com/Why-is-the-second-quarter-of-estimated-quarterly-taxes-only-two-months Estimated taxes used to be paid based on a calendar quarter, but in the 60's the Oct due date was moved back to Sept to pull the third quarter cash receipts into the previous federal budget year which begins on Oct 1 every year, allowing the federal government to begin the year with a current influx of cash. That left an extra month that had to be accounted for in the schedule somewhere. Since individuals and most businesses report taxes on a calendar year, the fourth quarter needed to continue to end on Dec 31 which meant the Jan 15 due date could not be changed, that left April and July 15 dues dates that could change. April 15 was already widely known as the tax deadline, so the logical choice was the second quarter which had its due date changed from July 15 to June 15. |
Are you preparing for a possible dollar (USD) collapse? (How?) | I think it's apt to remind that there's no shortcuts, if someone thinks about doing FX fx: - negative sum game (big spread or commissions) - chaos theory description is apt - hard to understand costs (options are insurance and for every trade there is equivalent option position - so unless you understand how those are priced, there's a good chance you're getting a "sh1tty deal" as that Goldman guy famously said) - averaging can help if timing is bad but you could be just getting deeper into the "deal" I just mentioned and giving a smarter counterparty your money could backfire as it's the "ammo" they can use to defend their position. This doesn't apply to your small hedge/trade? Well that's what I thought not long ago too! That's why I mentioned chaos theory. If you can find a party to hedge with that is not hedging with someone who eventually ends up hedging with JPM/Goldman/name any "0 losing days a year" "bank".. Then you may have a point. And contrary to what many may still think, all of the above applies to everything you can think of that has to do with money. All the billions with 0-losing days need to come from somewhere and it's definitely not coming just from couple FX punters. |
Executor of will | I strongly doubt that being executor will make the assets of the estate vulnerable to a suit against him personally. The estate is it's own separate legal entity with its own TIN. Only creditors against the estate itself can make claims against it and after all creditors are paid, then the balance is distributed in accordance with the terms of the will. Unless he has commingled assets and treated estate assets as his own, the legal separation should be quite strong. Whether his personal assets are at risk, remember that the opposition will likely overstate their case to try to scare him into settling. If the business was organized as an LLP or LLC, his personal assets should be pretty safe. If it was a sole proprietorship, he has occasion to worry. |
What is a “fiat” currency? Are there other types of currency? | fiat in Latin means "let it be" or "let it happen" - as in "fiat lux!" meaning "let there be light!". Thus, fiat money means money that are created by the government decree - they would be random worthless pieces of paper otherwise, so the government says "let this paper be worth $100" and it becomes $100. Non-fiat money have some value that is beyond declaration - e.g., gold coin has the value of gold that is made of. Since 1971, almost all world currencies are fiat money. |
Calculating pay off for credit card with multiple APRs | The first thing you need to do is look at your terms and conditions of your credit card, or ask your bank, how they will apply the payments. As Dilip notes in his answer, in the US, they will likely apply the minimum payment to the lower rate balance, and then must apply the rest above the minimum to the higher rate balance. In other countries, this will vary by law and custom. Do not assume it will pay off the higher balance, or proportionally, without asking. Let's take the following example. You owe $6000. $5000 is at 13.5% (normal purchase rate) and $1000 is at 22% (cash advance rate). If your bank applies payments to both balances proportionally, then a payment of $600 will reduce your purchase balance by $500 and your cash advance balance by $100. The average APR, then, is simply sum of the product of the APR times balance. So here, (.135*5000 + .225*1000)/6000 = 15%. This is called a weighted average. If the bank applies the payment differently - such as to the lower rate first, or some specified part to the lower rate and the rest to the higher rate - then this will be misleading if you enter it into a calculator, because your average APR will rise over time as you pay off the purchase balance but don't pay off the cash advance balance, or may decrease if the opposite happens. The weighted average is probably reasonably close in the circumstance that you describe, even if you have rules applying the balance differently, so long as they don't 100% pay down the lower rate - so it may be the simplest option for you in terms of rough calculations (where it's not critical to be correct, just close). One approach using the online calculators that might be better, is to treat these like two separate loans/cards. Many calculators exist for multiple balances. Then you can allocate funds differently to the two 'cards'. This would allow you to see how long you will need until you've paid off the higher balance, for example, although it probably won't perfectly match things - unless you find a site that has this specific option available you probably will have to either live with a small error in your calculations or do the math by hand. |
How to categorize credit card payments? | Using the Transfer category is the best place to put these categories, as that accurately reflects what the transaction is. If you have your credit card and bank account linked in Mint, the debit and credit to both accounts will net to $0 in the category. I would not recommend using "Hide from budget and trends" as sometimes multiple (erroneous) transactions pop up and having a category that should but, in error, does not net to $0 will raise your attention to possibly duplicate transactions. You can ask Mint to always categorize certain transactions in certain ways. On any of your payments, if you click "Edit Details" and then select the Transfer category, you can ask Mint to always make that classification: |
Assessed value of my house | It is very simple. You bought the house when prices were near their peak in 2008. Housing prices have dropped considerably since then which was the main cause of the mortgage debacle because people had houses that were worth less than their mortgages. |
How to gift money anonymously to an individual after collection thru a donation site? | You mention that "A great friend and couple's family" which makes me think this is a couple. For gift tax concerns, you can give a couple 2 x the gift tax exemption ($28,000 in 2015). Your example of $22k would fit in this amount. To give this money anonymously, I know that people have reached out to a pastor in the area who will deliver an envelope with the gift and not disclose the source. Talking to a pastor who has done this, he said the call came out of the blue and he was happy to be able to help. |
Why don't banks give access to all your transaction activity? | Although if you count only your data, it would be quite less 10 MB, multiply this by 1 million customers and you can see how quickly the data grows. Banks do retain data for longer period, as governed by country laws, typically in the range of 7 to 10 years. The online data storage cost is quite high 5 to 10 times more than offline storage. There are other aspects, Disaster recover time, the more the data the more the time. Hence after a period of time Banks move the data into Archive that are cheaper to store but are not available to online query, plus the storage is not optimized for search. Hence retrieval of this data often takes few days if the regulator demands or court or any other genuine request for data retrieval. |
Do high interest rates lead to higher bond yields or lower? | Imagine that the existing interest rate is 5%. So on a bond with face value of 100, you would be getting a $5 coupon implying a 5% yield. Now, if let's say the interest rates go up to 10%, then a new bond issued with a face value of 100 will give you a coupon of $10 implying a 10% yield. If someone in the bond market buys your bond after interest price adjustment, in order to make the 10% yield (which means that an investor typically targets at least the risk-free rate on his investments) he needs to buy your bond at $50 so that a $5 coupon can give a 10% yield. The reverse happens when interest rates go down. I hope this somewhat clears the picture. Yield = Coupon/Investment Amount Update: Since the interest rate of the bond does not change after its issuance, the arbitrage in the interest rate is reflected in the market price of the bond. This helps in bringing back the yields of old bonds in-line with the freshly issued bonds. |
New vending route business, not sure how to determine taxes | Actually, calculating taxes isn't that difficult. You will pay a percentage of your gross sales to state and local sales tax, and as a single-owner LLC your profits (after sales taxes) should pass through to your individual tax tax return (according to this IRS article. They are not cumulative since they have different bases (gross sales versus net profit). That said, when determining if your future business is profitable, you need to ask "what aspects of the business can I control"? Can you control how much each item sells for? Increasing your prices will increase your gross margins, which should be higher than your fixed and variable costs. If your margins do not exceed your costs, then you will note be profitable. Note that as a vendor you are at a slight disadvantage to a retailer, since tax has to be baked in to your prices. A retailer can advertise the pre-tax price, and pass-through sales tax at the point of sale. However, people expect to pay more at a vending machine, so the disadvantage is very small (you aren't directly competing with retailers anyways). |
What are the pros and cons of investing in a closed-end fund? | One advantage not pointed out yet is that closed-end funds typically trade on stock exchanges, whereas mutual funds do not. This makes closed-end funds more accessible to some investors. I'm a Canadian, and this particular distinction matters to me. With my regular brokerage account, I can buy U.S. closed-end funds that trade on a stock exchange, but I cannot buy U.S. mutual funds, at least not without the added difficulty of somehow opening a brokerage account outside of my country. |
What can cause rent prices to fall? | In the US, the government effectively sets a price floor for rents with a concept called "prevailing rent" for government subsidy. Even the crappiest, minimally compliant hovel is ultimately worth whatever the government will issue housing vouchers for. Rent can and does fluctuate for the higher end of the market. Basically in most places the available, cheap credit has a negative impact on rent prices, and tighter, costlier credit increases demand and rents. Local economic events have an impact too. If the company closes in a company town, people leave. |
Legitimate unclaimed property that doesn't appear in any state directory? | @ Chris: Companies like Keane, ours, and others know where to look for these funds and where to ask at the correct agencies that are holding this money that is not part of the public links that you have access to. This is how we find this information. Our types of companies spend significant time, money and resources in finding out about the money, then finding who it actually belongs to (because it does not always belong to who is mentioned on the list) and then finding the correct individual. @ jdsweet: I apologize if you think this is a marketing ploy. It is not. Our company doesn't even take phone calls from people that want us to find them money. Only if we contact someone, because at that time we're confident that the person we touch base with is due the funds. Again, I am not plugging our company, but trying to let Neil know that in some cases he is right, you don't need a third party to claim funds for you - if you can find them. In this case, he has looked and cannot find them. Keane is charging a fair amount to retrieve funds he cannot find and doesn't know about and is not charging him anything to do all the work. Again, as mentioned above, the direct answer is that we know how to access information and lists that have this money hidden from the public because the agency holding the funds doesn't want you to know about it so that they can escheat the funds. Escheating is the state's legal way to confiscate your money. See, if you don't put in a claim for the money (depending on what type it is and where it is located) the agency and state holding the funds has certain time frames for you to get the money. If you don't, again, they get to keep it and that is what they want despite what they say. That is why there is approximately $33 Billion that is known to the public and really $1 Trillion that's out there. I apologize if you think that this is a plug for my company, it's not because we're not looking for calls, we make them. I'm also not asking Neil for his business. From all accounts on my side, this seems like a fair deal. |
Ghana scam and direct deposit scam? | The scammer is definitely up to something fishy. He (it's certain that the she is a he) may deposit some money into your father's account to gain his trust. After which, he will propose to come meet your dad. That's where the scamming begins. He will come up with a story about flight, VISA issues, or a problem he has to solve before coming over. Another is that he can use your dad's empty account to receive monies he scammed off people. That way there's no direct link with him and his other victim. |
Why is the bid-ask spread considered a cost? | Your assets are marked to market. If you buy at X, and the market is bidding at 99.9% * X then you've already lost 0.1%. This is a market value oriented way of looking at costs. You could always value your assets with mark to model, and maybe you do, but no one else will. Just because you think the stock is worth 2*X doesn't mean the rest of the world agrees, evidenced by the bid. You surely won't get any margin loans based upon mark to model. Your bankers won't be convinced of the valuation of your assets based upon mark to model. By strictly a market value oriented way of valuing assets, there is a bid/ask cost. more clarification Relative to littleadv, this is actually a good exposition between the differences between cash and accrual accounting. littleadv is focusing completely on the cash cost of the asset at the time of transaction and saying that there is no bid/ask cost. Through the lens of cash accounting, that is 100% correct. However, if one uses accrual accounting marking assets to market (as we all do with marketable assets like stocks, bonds, options, etc), there may be a bid/ask cost. At the time of transaction, the bids used to trade (one's own) are exhausted. According to exchange rules that are now practically uniform: the highest bid is given priority, and if two bids are bidding the exact same highest price then the oldest bid is given priority; therefore the oldest highest bid has been exhausted and removed at trade. At the time of transaction, the value of the asset cannot be one's own bid but the highest oldest bid leftover. If that highest oldest bid is lower than the price paid (even with liquid stocks this is usually the case) then one has accrued a bid/ask cost. |
how stock market sale work? | As stock prices have declined, the net worth of people has come down. Imagine owning a million shares of a stock worth $100/share. This is worth $100,000,000. Now, if the stock is suddenly trading at $50/share then some would say you have lost $50,000,000. The value of the stock is less. The uncertainty is always there as there are differences between one day's close and another day's open possibly. The sale price is likely to be near the last trade is what is being used here. If you place a market order to sell your stock, the price may move between the time the order is placed and when it is filled. There are limit orders that could be used if you want to control the minimum price you get though you give up that the order has to be filled as otherwise people could try to sell shares for millions of dollars that wouldn't work out well. |
What things should I consider when getting a joint-mortgage? | Your lack of numbers makes the question a difficult read. What I'm hearing is "I want a house requiring a mortgage 8X my income." This alone is enough to suggest it's a bad deal. On a personal note, when my wife and I bought our house, it was 2.5X our income. 20% down, so the mortgage was exactly 2X income. And my wife was convinced we were in over our heads. The use of a partner who will take a portion of the profit is interesting, but doesn't change the fact that you are proposing to live in a house that costs far too much for you. If you are determined to buy such a house, I'd suggest you do it with the plan to rent out a room or two to roommates. If you are living in an area where the cost of buying is so high, the demand for rentals is likely high as well. Absent a plan to bring ion more income, I see no good coming from this. Heed the warnings posted in the other two answers as well. |
How to measure a currencies valuation or devaluation in relevance to itself | The measure of change of value of a currency in relation to itself is inflation (or deflation). |
Is paying off your mortage a #1 personal finance priority? | The answer depends entirely on your mortgage terms - is the interest rate low, how many years left? Questions like this are about Cost of Capital. If your mortgage has a low interest for a lot of years, you have a low cost of capital. By paying it off early, you are dumping that low cost of capital. Use the extra money to start a business, invest in something or even buy another property (rental). Whenever you have a low cost of capital, don't rush to get rid of it. Of course, if there are no other investment/business opportunities available and the extra money is going into a low return savings account, you might as well pay down your debt. Or if you lack the self discipline to use the extra money properly - buying flat screens and meals out - then yeah just pay down your debt. But if you're disciplined with the extra money, use it to get access to more capital and make that new capital work for you. |
Can vet / veterinary bills be considered deductions (tax-deductible) for Income Tax purposes [Canada]? | In the US service animals are treated like durable medical equipment from a tax POV, and some expenses can be deducted. Likewise, expenses associated with working animals are business or hobby expenses than can be deducted to a certain extent. But pets, no. Legally they are "chattels" -- property that can move. Generally speaking, you can't deduct the cost of maintaining your belongings. |
If one owns 75% of company shares, does that mean that he would have to take upon himself 75% of the company's expenses? | From your question, it seems your problem is that you have a company that wants to make a deal, but does not currently have enough money to go through with it. Therefore it needs to raise capital. Assuming that you cannot get a loan from a bank and you do not want to seek funding from other sources, the two owners must provide the funds themselves somehow. Option A: The easiest and fairest way to do this is for the two shareholders to provide 75%, and 25% of the funding as a loan to the company. They will provide this loan knowing it may not be paid back if the company goes under. Note that it would not be fair for one of the shareholders to provide more, as that shareholder would be taking all the risk, while the other still reaps the rewards (although you could add a large interest rate to account for this). Option B: But say one of the shareholders cannot provide additional funds. In that case, the company should issue new shares, and each shareholder can purchase however many of the new shares he/she wants (each shareholder is entitled to purchase at least 75% or 25% respectively, but does not have to). The result of this may be that company ownership percentages have changed after the capital raising. This is more complex as it require valuing the company accurately to be fair, and probably requires reporting to a government (depending on the jurisdiction). |
Why would someone buy a way out-of-the-money call option that's expiring soon? | I think the best answer that doesn't make the buyer look like a moron is this. Buyer had previously sold a covered call. They wanted to act on a different opportunity so they did a closing buy/write with a spread of a couple cents below asking for the stock, but it dipped a couple cents and the purchase of those options to close resolved at 4 cents due to lack of sellers. |
Can't the account information on my checks be easily used for fraud? | I was a victim of this. I'm not sure who got my routing and account number off my check, but someone subscribed to Playboy.com using my bank account information. Luckily it was only for about $30 and the bank refunded my money. However, it was a mess in that I had to open a new checking account and keep the other one open until all checks cleared. The bank was extremely helpful and monitored the account to make sure only the checks I told them about were processed. I then had to close the old account. This is why I believe checks are much less secure than credit cards or debit cards. A paper check can lay on someone's desk for anyone to pick up or write the information down off of it. I avoid checks if at all possible. For things like Craig's list, I would try to use PayPal or some other intermediate processing service. |
What is down -34% in stock terms? | The sentence is mathematically wrong and verbally unclear. Mathematically, you calculate the downwards percentage by So, it should be Verbally, the reporter should have written "The stock is down by 25%", not "down by -25%". |
Advice on what to do with my equity? | What to do with your equity? Leave it alone... |
Are there common stock price trends related to employee option plans? | Say I am an employee of Facebook and I will be able to sell stares at enough of a profit to pay of my mortgage and have enough money left to cover my living costs for many years. I also believe that there is a 95% chance that the stock price will go up in the next few years. Do I take a 5% risk, when I can transform my life without taking any risk? (The USA tax system as explained by JoeTaxpayer increases the risk.) So you have a person being very logical and selling stocks that they believe will go up in value by more than any other investment they could have. It is called risk control. (Lot of people will know the above; therefore some people will delay buying stock until Lock Up expiration day hoping the price will be lower on that day. So the price may not go down.) |
Where should a young student put their money? | It really is dependent upon your goals. What are your short term needs? Do you need a car/clothing/high cost apartment/equipment when you start your career? For those kinds of things, a savings account might be best as you will need to have quick access to cash. Many have said that people need two careers, the one they work in and being an investor. You can start on that second career now. Open up some small accounts to get the feel for investing. This can be index funds, or something more specialized. I would put money earmarked for a home purchase in funds with a lower beta (fluctuation) and some in index funds. You probably would want to get a feel for what and where you will actually be doing in your career prior to making a leap into a home purchase. So figure you have about 5 years. That gives you time to ride out the waves in the market. BTW, good job on your financial situation. You are set up to succeed. |
How can I get a mortgage I can't afford? | Save up a bigger downpayment. The lender's requirement is going to be based on how much you finance, not the price of the house. |
What size “nest egg” should my husband and I have, and by what age? | For most people, a million dollars is about right. Here's the back of the napkin math that you should consider to find your own estimate: If you take 1 and divide it by 2, that's roughly the size of the nest egg you'll need to live indefinitely. For example, if your retirement investments are earning 5% a year, and you want to live on $50,000 a year, you would need a $1,000,000 nest egg (50,000 / 0.05) Note that you don't have to make any assumptions about how long you'll live. The whole idea of a nest egg is that you live off the interest it earns each year without ever dipping into the principle. It's the gift that keeps on giving! When you die, you can pass it along to children, charities, etc. |
What does the term “match the market” mean? | From Investopedia: "Beating the market" is a difficult phrase to analyze. It can be used to refer to two different situations: 1) An investor, portfolio manager, fund or other investment specialist produces a better return than the market average. The market average can be calculated in many ways, but usually a benchmark - such as the S&P 500 or the Dow Jones Industrial Average index - is a good representation of the market average. If your returns exceed the percentage return of the chosen benchmark, you have beaten the market - congrats! (To learn more, read Benchmark Your Returns With Indexes.) 2) A company's earnings, sales or some other valuation metric is superior to that of other companies in its industry. Matching the market, I would presume will be generating returns equivalent to the index you are comparing your portfolio with. If for a sector/industry then it would be the returns generated by the sector/industry. As an index is more or less a juxtaposition of the market as a whole, people tend to use an index. |
Does this sound like a great idea regarding being a landlord and starting a real estate empire? | This is a common and good game-plan to learn valuable life skills and build a supplemental income. Eventually, it could become a primary income, and your strategic risk is overall relatively low. If you are diligent and patient, you are likely to succeed, but at a rate that is so slow that the primary beneficiaries of your efforts may be your children and their children. Which is good! It is a bad gameplan for building an "empire." Why? Because you are not the first person in your town with this idea. Probably not even the first person on the block. And among those people, some will be willing to take far more extravagant risks. Some will be better capitalized to begin with. Some will have institutional history with the market along with all the access and insider information that comes with it. As far as we know, you have none of that. Any market condition that yields a profit for you in this space, will yield a larger one for them. In a downturn, they will be able to absorb larger losses than you. So, if your approach is to build an empire, you need to take on a considerably riskier approach, engage with the market in a more direct and time-consuming way, and be prepared to deal with the consequences if those risks play out the wrong way. |
Is this trick enough to totally prevent bankrupcy in a case of a crash? | When you buy a stock, the worst case scenario is that it drops to 0. Therefore, the most you can lose when buying a stock is 100% of your investment. When you short a stock, however, there's no limit on how high the stock can go. If you short a stock at 10, and it goes up to 30, then you've lost 200% on your investment. Therefore shorting stocks is riskier than buying stocks, since you can lose more than 100% of your investment when shorting. because the price might go up, but it will never be as big of a change as a regular price drop i suppose... That is not true. Stocks can sometimes go up significantly (50-100% or more) in a very short amount of time on a positive news release (such as an earnings or a buyout announcement). A famous example occurred in 2008, when Volkswagen stock quintupled (went up 400%) in less than 2 days on some corporate news: Porsche, for some reason, wants to control Volkswagen, and by building up its stake has driven up the price. Hedge funds, figuring the share price would fall as soon as Porsche got control and stopped buying, sold a lot of VW shares short. Then last weekend, Porsche disclosed that it owned 42.6 percent of the stock and had acquired options for another 31.5 percent. It said it wanted to go to 75 percent. The result: instant short-squeeze. The German state of Lower Saxony owns a 20 percent stake in VW, which it said it would not sell. That left precious few shares available for anyone else. The shorts scrambled to cover, and the price leaped from about €200, or about $265, to above €1,000. |
I am the sole owner of an LLC. Does it make a difference if I file as an S-Corp or a sole-member LLC? | S-Corp are taxed very different. Unlike LLC where you just add the profit to your income with S-Corp you have to pay yourself a "reasonable" salary (on w-2) which of course is a lot more paperwork. I think the advantage (but don't hold me accountable for this) is if your S-Corp makes a lot more than a reasonable salary, then the rest of the money can be passed through on your personal return at a lower (corp) rate. |
How do cashier's checks work and why are they good for scams? | Ok, few things to understand first: Secondly, think about the way a scam usually flows. A person (scammer) with an actual bank account with money issues a valid cashiers check, trick someone else (victim) into receiving it (typically in exchange for a percent) and passing along a portion to another account (back to the scammer). The scammer then reports the first transaction as fraudulent and the bank takes back that transaction. Now the victim is stuck with the second transaction, and without the funds from the first. Meanwhile the scammer has both the original funds and the percentage from the second one. In a way they're attractive for scammers because they're so trusted. |
What part of buying a house would make my net worth go down? | In general, buying a house will improve your net worth over the long haul, because unlike cars, houses don't suffer as much from depreciation. The problem with real property is that markets are very cyclic and aren't very liquid assets. Farmers with thousands of acres of valuable land are often cash poor for that very reason. A lot of people here are negative about housing ownership — this is illustrative of the fact that 2010 is a year where real estate is on the down-side of the cycle. |
Why is the fractional-reserve banking not a Ponzi scheme? | No, fractional reserve banking isn't a scam. A simple exercise: replace dollars with time. You're trading some time now for time in the future, plus a bit of extra time. This is only a problem if you promise your entire life away, which we've helpfully outlawed. Once you realize that wealth is the result of human labor, and that money is simply a unit of account for it, it becomes far easier to see how simplistic models don't match reality. |
First time consultant, doubts on Taxation | I would look into the possibility that the promise "that no taxes will be withheld" is all about your status as a 'consultant'. They may be meaning you to be treated like a business they buy services from. In Canada the distinction is very watery and I presume the same in India. If you agree to become a business, then you must look into how that business income will be taxed. |
Is there anything comparable to/resembling CNN's Fear and Greed Index? | Lipper publishes data on the flow of funds in / out of stock and bond funds: http://www.lipperusfundflows.com Robert Shiller works on stock market confidence indices that are published by Yale: http://som.yale.edu/faculty-research/our-centers-initiatives/international-center-finance/data/stock-market-confidence |
Is there any way to attach a statement of explanation while submitting a tax return electronically using Free Fillable Forms? | Depending on what you need to explain, you can submit your electronic return without the supplemental information and subsequently mail a Form 8453 with the additional information. This is helpful for form 8489, for example, where you need to list every transaction reported by your stock broker on a 1099-B. See https://www.irs.gov/pub/irs-pdf/f8453.pdf for more details on this form. If the information you need to submit an attachment for doesn't follow one of the options on that form, you will likely need to file a paper return or use a paid tax preparation service/application. Limitations of FreeFile are explained here, along with a list of forms that are available: https://www.irs.gov/uac/List-of-Available-Free-File-Fillable-Forms The "Attaching Statements" and "Write-in information" sections seem like they might apply to your situation. Attaching Statements - If you need to add statements and you can't use Form 8453, U.S. Individual Income Tax Transmittal for an IRS e-file Return, to mail that information, you will not be able to use this program to efile your return Identity Protection PIN's (IP PIN) - This program only supports the entry of a Primary taxpayer's IP PIN. If the spouse or dependents have an IP PIN, you cannot use this program to efile the return. Writing In Information - Your ability to "write in" additional information to explain an entry is generally limited to the 1040 forms and some of the more frequently submitted forms. If you need to write in additional information on a form, other than the 1040 series, you may not be able to use this program to efile your tax return. E-filing Forms - To efile forms, (except Form 4868) they must be attached to a 1040 series form (1040, 1040A or 1040EZ). Form Limitations - There may be Known Limitations of forms you plan to complete. Please review them. A form limitation may keep you from completing or e-filing your return. |
Strategies for saving and investing in multiple foreign currencies | Evaluating the value of currencies is always difficult because you are usually at the mercy of a central bank that can print new currency on a whim. I am trying to diversify my currency holdings but it is difficult to open foreign bank accounts without actually being in the foreign country. Any ideas here? You don't indicate which currencies you own but I would stick with your diversified portfolio of currencies and add some physical assets as a hedge against the fiat currencies. |
How much money should I lock up in my savings account? | Lets imagine two scenarios: 1) You make 10.4k (40% of total income) yearly contributions to a savings account that earns 1% interest for 10 years. In this scenario, you put in 104k and earned 5.89k in interest, for a total of 109.9k. 2) You make the same 10.4k yearly contribution to an index fund that earns 7% on average for 10 years. In this scenario you put in the same 104k, but earned 49.7k in interest*, for a total of 153.7k. The main advantage is option 1) has more liquidity -- you can get the money out faster. Option 2) requires time to divest any stocks / bonds. So you need enough savings to get you through that divestment period. Imagine another two scenarios where you stop earning income: 1-b) You stop working and have only your 109.9k principal amount in a 1% savings account. If you withdraw 15.6k yearly for your current cost of living, you will run through your savings in 7 years. 2-b) You stop working and have only 20k (2 years of savings) in savings that earns 1% with 153.7k in stocks that earns 7%. If you withdraw your cost of living currently at 15.6k, you will run through your investments in 15 years and your savings in 2 years, for a total of 17 years. The two years of income in savings is extremely generous for how long it starts the divestment process. In summary, invest your money. It wasn't specified what currency we are talking about, but you can easily find access to an investment company no matter where you are in the world. Keep a small amount for a rainy day. |
Does reading financial statements (quarterly or annual reports) really help investing? | Wow, I cannot believe this is a question. Of course reading the 10Ks and 10Qs from the SEC are incredibly beneficial. Especially if you are a follower of the investing gurus such as Warren Buffett, Peter Lynch, Shelby Davis. Personally I only read the 10K's I copy the pertinent numbers over to my spreadsheets so I can compare multiple companies that I am invested in. I'm sure there are easier ways to obtain the data. I'm a particular user of the discounted free cash flow methodology and buying/selling in thirds. I feel like management that says what they are going to do and does it (over a period of years) is something that cannot be underestimated in investing. yes, there are slipups, but those tend to be well documented in the 10Qs. I totally disagree in the efficient market stuff. I tend to love using methodologies like Hewitt Heisermans " It's Earnings that Count" you cannot do his power-staircase without digging into the 10Qs. by using his methodology I have several 5 baggers over the last 5 years and I'm confident that I'll have more. I think it is an interesting factoid as well that the books most recommended for investing in stocks on Amazon all advocate reading and getting information from 10Ks. The other book to read is Peter Lynch's one-up-wall-street. The fact is money manager's hands are tied when it comes to investing, especially in small companies and learning over the last 6 years how to invest on my own has given me that much more of my investing money back rather than paying it to some money manager doing more trades than they should to get commision fees. |
(Arizona) Bought a car with financing, do I take it to DMV/DOT? | Based on your description of what you were given, then you should not need to contact DMV/DOT However if you are not comfortable with that answer then contact/visit the dealer, you can ask them how long it normally takes, and do you pick up the real plates at the dealer, DMV, or will they be mailed to you. Also call them if the temporary plates will run out in a few days, to make sure everything is good to go. One other note. If the dealer is in one state, and you live in another they can give you temporary plate for their state but may not be able to file for the real plates in your state. Once everything is finalized go online to DMV and make sure that the car registration is OK. A few years ago the dealer gave me real plates, they gave me a registration good for two years. But the info sent to DMV was corrupted: the VIN was in the system, but the description was wrong and the plates were listed as none. This was only noticed when I tried to re-register the car two years later. In fact according to DMV the plates on the car were listed as never issued. If I had ever been pulled over it would have taken hours to resolve. |
What is the meaning of “writing put options”? | Writing options means "selling" options and "put" options are contracts to sell a defined security (the underlying), at a specific date (expiration date) and at a specific price (strike price). So, writing put options simply mean selling to others contracts to sell. Your profit is limited to the premium but your loss may be unlimited in a falling market. |
Premium classification when selling covered calls in a traditional IRA? | If you hold stock in a traditional IRA and sell a covered call against that stock, the premium received for writing that call belongs to the IRA just as would any other gain, dividend, or interest. It is not a contribution but simply adds to the balance in the IRA. The nature of the gain (capital or ordinary) is not relevant since all parts of the IRA balance are treated the same when funds are (eventually) withdrawn. |
How can I check my credit score? | Assuming you are asking about a credit score in the United States, the following applies. To find out your FICO score, navigate to AnnualCreditReport, the official site to help consumers receive their credit report from each of the three organizations providing these scores - Equifax, Experian, and TransUnion. You are - in many states - entitled to a free copy of your credit report from each of these organizations annually. This copy of your credit report will not contain your credit score from that organization. It will, however, contain information that goes into your credit score - the lines of credits on file, any delinquencies reported, etc. If you decide you would like to pay for your credit score from each bureau, you will have the option to receive this information while getting your credit report, but you will have to pay a nominal fee for it. Remember that each of the 3 bureaus gives you a different score. Averaging your 3 scores should give you a good idea of your FICO score. Note that your report is far more important than your score - once you know that, you know if you're in a good place or not. These other questions are so close that they might even be considered duplicates, and provide other suggestions for how to check your score. As a warning, don't trust the many ads out there saying you can get your score for free. Only AnnualCreditReport is considered a safe place for entering the very personal information required to get a score. The FTC backs this up. |
What is the difference between a bad/bounced check and insufficient funds? | Insufficient funds will cause a check to bounce. If there is evidence that you "kited" the check deliberately, that's a potential fraud charge. If the vendor accepts that you were just stupid/careless, you'll probably just have to pay a penalty processing fee in addition to making good the payment. It is your responsibility to track your account balance and not write bad checks. If the timing could be bad, don't write the check yet. If you insist on paying with money you may not have, talk to your bank about setting up overdrafts to draw from another account, or automatic overdraft loans... or use a credit card rather than paying by check. |
What is the correct way to report a tender offer fee on my taxes? | Using a different cost basis than your broker's reporting is NOT a problem. You need to keep your own records to account for this difference. Among the other many legitimate reasons to adjust your cost basis, the most popular is when you have two brokerage accounts and sell an asset in one then buy in another. This is called a Wash Sale and is not a taxable event for you. However from the perspective of each broker with their limited information you are making a transaction with tax implications and their reported 1099 will show as such. Links: https://www.firstinvestors.com/docs/pdf/news/tax-qa-2012.pdf |
Why would a company sell debt in order to buy back shares and/or pay dividends? | It's a tax shelter. Foreign affiliates hold most of Microsoft's cash and investments. The cost of borrowing is much cheaper than repatriating the money and paying taxes. Those bonds are selling at rates similar to US Treasury Debt. Also, many people and organizations with lots of assets still borrow money for day to day expenses. Why? You tend to make a better return on investments which are committed for a number of years, and the timing of income from those investments may not coincide with your expenses. |
What does it mean “sell on ask” , “sell on bid” in stocks? | Bid and ask prices are the reigning highest buy price and lowest sell price in the market which doesn't mean one must only buy/sell at thise prices. That said one can buy/sell at whatever price they so wish although doing it at any other price than the bid/ask is usually harder as other market participants will gravitate to the reigning bid/ask price. So in theory you can buy at ask and sell at bid, whether or not your order will be filled is another matter altogether. |
Investing in the stock market during periods of high inflation | The relation between inflation and stock (or economic) performance is not well-understood. Decades ago, economists thought inflation corresponded with periods of high growth and good real returns, but since then we have had periods of low inflation and high growth and high inflation with low growth. It is generally understood among current economists that inflation levels (especially expected inflation) are neither indicative nor causative of real stock returns. Many things can affect inflation, and economic performance is only a minor one. Many things can cause economic performance, and inflation is only a minor one. It's not clear whether the overall relation between inflation and real stock returns is positive or negative. Notice, however, that in principle stock returns are real. That is, the money companies make is in inflated dollars so profit and dividends for a company whose prospects have not changed should go up and down at the same rate as inflation. This would mean if inflation goes up by 5% and nothing else changes, you would expect stock prices to go up by the same proportion so you wouldn't have strong feelings about inflation one way or the other. In real life stock prices will go up by either more or less than 5% but I'm not comfortable saying which, on average. Bottom line: current levels of inflation can't really be used to predict real stock returns, so you shouldn't let current inflation guide your decision about whether to buy stock. |
How can I determine which stores are regarded as supermarkets for a rewards credit card? | Contact AmEx. They are the only ones who might have a current list. |
If a stock doesn't pay dividends, then why is the stock worth anything? | Remember that long term appreciation has tax advantages over short-term dividends. If you buy shares of a company, never earn any dividends, and then sell the stock for a profit in 20 years, you've essentially deferred all of the capital gains taxes (and thus your money has compounded faster) for a 20 year period. For this reason, I tend to favor non-dividend stocks, because I want to maximize my long-term gain. Another example, in estate planning, is something called a step-up basis: |
What does it mean that stocks are “memoryless”? | @jidugger mostly got it right. It basically mean that past performance of a stock, or a basket of stocks, are not at all useful when trying to predict its future. There is no proven correlation between past and future performance. If there was such a correlation, that was "proven" or known, then investors would quickly exploit this correlation by buying or selling this stock, thus nullifying the prediction. It doesn't mean the specific individuals cannot predict the future stock market - hell, if I set up 2^100 different robots, where every robots gives a different series of answers to the 100 questions "how will stock X do Y days from now" (for 1<=Y<=100), then one of those robots would be perfectly correct. The problem is that an outside observer has no way of knowing which of the predictor robots is right. To say that stock is memoryless strikes me as not quite right -- to the extent that stocks are valued based on earnings, much of what we infer about future earnings relies on past and present earnings. To put it another way - you have $1000 now, and need to decide whether to invest in a particular stock, or a stock index. The "memoryless" property means that no matter how many earning reports you view ... by the time you see them, the stock price already accounts for them, so they're not useful to you. If the earning reports are positive, the stock is already "too high" because people bought it before you did. So on average, you can't use this information to predict the stock's future performance, and are better off investing in an index fund (unless you desire extra risk that doesn't come with more profitability). |
For young (lower-mid class) investors what percentage should be in individual stocks? | I would not advise any stock-picking or other active management (even using mutual funds that are actively managed). There is a large body of knowledge that needs learning before you even attempt that. Stay passive with index funds (either ETFs or (even better) low-cost passive mutual funds (because these prevent you from buying/selling). But I have not problem saying you can invest 100% in equity as long as your stomach can handle the price swings. If you freek out after a 25% drop that does not recover within a year, so you sell at the market bottom, then you are better off staying with a lot less risk. It is personal. There are a lot of valid reasons for young people to accept more risk - and equally valid reason why not. See list at http://www.retailinvestor.org/saving.html#norisk |
Using cash back rewards from business credit card | A C-Corp is not a pass-through entity, any applicable taxes would be paid by the Corporation, which is a separate legal entity from yourself. If you use the points to purchase something for yourself, that would constitute "income" to you, and would be taxable on your personal income tax. |
Who receives the money when one company buys another? | Monsanto is a publicly traded company that trades under the ticker MON. The stock is owned by a wide range of owner around the world. The buyout offer from Bayer is an all cash offer. Bayer will buy all shares of MON at about $128/share. So if I owned 100 shares of MON, I would receive $12,800 or so for my shares. The deal has not yet been approved by regulators, which is why the stock price is hovering around $104/share today. |
What emergencies could justify a highly liquid emergency fund? | This might vary from other answers but I generally prefer to use debt before touching an emergency fund. But one of the reasons I have an emergency fund is to that I can make sure I can cover any debt payments. Essentially, this give you leverage. You might start off with a small emergency such as needing a new refrigerator. If you pull the cash out of the fund to pay this off immediately, you've depleted your account and if something major comes along, you might be short. By using debt, you can often cover the costs with cash-flow and leave your risk buffer in place. Often, retailers will offer really sweet financing deals. 0% for 12 months or whatever. Often, though, if you don't pay it off in time, they can be costly. I'm not sure if this is legal (in the US) anymore but if it wasn't fully paid off in time, you'd be retroactively charged interest on the whole amount. But if you have an emergency fund, you pretty much guarantee that won't happen. The only time it will is if something else happens that requires the emergency fund to be cashed in. But if things are that dire, the debt is unsecured. You're credit may suffer but they can't come after your assets. It's not an either-or situation. You give yourself options by having the cash available. It allows you to take advantage of opportunities that might be too risky otherwise. Ultimately what you want to be able to weather the storm in a situation where you have, say, a mortgage on a house that is underwater, the stock market is down, and you have no income. In that situation, you don't want to liquidate your stock when it's down and you (probably) don't want to lose your home equity in a foreclosure. |
Buying insurance (extended warranty or guarantee) on everyday goods / appliances? | Generally, a polite decline. However, I have dealt with sales people who take first refusal as a "test" response, and decide to go into the details anyway. The longer they talk the more robust my responses. See this Telegraph article that discusses why their experts think it's a ripoff, and why you should check your credit cards and home insurance policies as they may already have you covered (possibly UK/Europe only). http://www.telegraph.co.uk/finance/personalfinance/2820644/Extended-warranties-In-our-view-its-a-rip-off.html On a different note, see this list of questions to ask if you are considering going with the extended warranty. The source doesn't rule for or against the idea, leaving it at caveat emptor: http://www.choice.com.au/reviews-and-tests/technology/home-entertainment/accessories/extended-warranties/page/questions%20to%20ask.aspx |
How to prevent myself from buying things I don't want | To me, your question emphasizes something I've heard many times before: personal finance is as much or more about behavior than it is about mathematics or "head knowledge". Sure, you know you shouldn't be wasting a lot of money on something you will use very infrequently, but how do you make this behavior stick? Here are a few tricks that might help: The other aspects of your question really touch more on psychology than finance. But getting yourself into a discipline habit with money will help. And realizing the full cash price of items in relation to how much your disposable income is will help you get control of your impulses, as you review your budget monthly, and keep limit yourself using the envelope system. But honestly, everybody wants stuff they don't have, it's human nature. The key is finding ways to put physical limits and guards on yourself to keep you from obeying the self-destructive impulses. |
What intrinsic, non-monetary value does gold have as a commodity? | The answer is that other than a small number of applications (the approx. 10% of gold production that goes to 'industrial uses') gold does not have intrinsic value beyond being pretty and rare (and useful for making jewelry.) There are a number of 'industrial' applications and uses for gold (see other answers for a list) but the volume consumed this way is fairly small, especially relative to the capacity to mine new gold and reclaim existing gold. If you removed investment, and jewelry usage (especially culturally driven jewelry usage) then there's no way the remaining uses for industry and dentistry could sustain the price levels we currently see for gold. Furthermore, and perhaps more importantly, the best data I can find for this shows the total number of tons consumed for industrial uses has been shrinking for several years now, and that was prior to recent price increases, so it is difficult to tie that reduced demand to increasing prices. And one might postulate in a 'collapsed society' you seem to be referring to in your question, that a lot of the recent industrial demand (e.g. the '50 cents of gold in each cellphone') could quite possibly disappear entirely. The argument many people use for gold having value is usually 'been used as money for thousands of years'. But this confuses gold having a value of its own with the reasons why something makes a useful currency. Gold has a large number of characteristics that make it an ideal currency, and of all the elements available it is perhaps the best physical element to serve as a currency. BUT just as with a dollar bill, just because it is a good currency, does NOT give it an intrinsic value. Any currency is only worth what someone will trade you for it. The value is set by the economy etc., not the medium used as a currency. So yes, people will probably always use gold as money, but that doesn't make the money worth anything, it's just a medium of exchange. Incidentally two other things should be noted. The first is that you have a problem when the medium itself used for a currency becomes worth more than the face value. Hence why we stopped using silver in coins, and there were concerns over pennies due to the price of copper. This leads to the second point, which is that currently, gold is TOO RARE to suffice as a world currency, hence why all countries went off the gold standard years ago. The size of national and global economies was growing faster than the supply of gold, and hence it was becoming impossible to have enough gold to back all the currencies (inflation concerns aside). |
How to avoid tax when taking a windfall in small chunks? | I agree with the other posters that you will need to seek the advice of a tax attorney specializing in corporate taxation. Here is an idea to investigate: Could you sell the company, and thereby turn the profits that are taxed as ordinary income into a long-term capital gain (taxed at 15%, plus state income tax, if any)? You can determine the value of a profitable business using discounted cash flow analysis, even if you expect that the revenue stream will dry up due to product obsolescence or expiry of licensing agreements. To avoid the capital gains taxes (especially if you live in a high-tax state like California), you could also transfer the stock to a Charitable Remainder Trust. The CRT then sells the shares to the third-party acquirer, invests the proceeds and pays you annual distributions (similar to an annuity). The flip side of a sale is that now the acquiring party will be stuck with the taxes payable on your company's profits (while being forced to amortize the purchase price over multiple years -- 15, if I recall correctly), which will factor into the valuation. However, it is likely that the acquirer has better ways to mitigate the tax impact (e.g. the acquirer is a company currently operating at a loss, and therefore can cancel out the tax liabilities from your company's profits). One final caveat: Don't let the tax tail wag the business dog. In other words, focus your energies on extracting the maximum value from your company, rather than trying to find convoluted tax saving strategies. You might find that making an extra dollar in profits is easier than saving fifty cents in taxes. |
Was this bill forgotten by a medical provider, and do notices need to be sent before collections? | check the DATE OF SERVICE on all your invoices carefully. It's possible you actually DID pay already. Sometimes when a medical provider gets "mostly" paid by a third party insurer, they just drop the (small) remainder, as it's more cost than it's worth if it is a trivial amount. Alternatively, they wait until you show up for another office visit, and "ding" you then! |
Taxes: Sold House this Year, Buying Next Year | To your first question: YES. Capital gains and losses on real-estate are treated differently than income. Note here for exact IRS standards. The IRS will not care about percentage change but historical (recorded) amounts. To your second question: NO Are you taxed when buying a new stock? No. But be sure to record the price paid for the house. Note here for more questions. *Always consult a CPA for tax advice on federal tax returns. |
How to pay bills for one month while waiting for new job? | What is my best course of action, trying to minimize future debt? Minimizing expenses is the best thing you can do. The first step to financial independence is making do with less. Assuming I receive this $3500, am I better off using the bulk to pay off my credit cards, or should I keep as much cash available as I can? This would depend on the interest rate that is associated with the credit cards and the $3500. If the $3500 has a higher interest rate than your credit cards, then do not use any of it to pay your credit cards. Paying back the money you borrow hurts but it's the interest rate that does you in. If the interest rate for the $3500 is lower than the credit card interest, then placing some of it on the credit cards may be a wise course of action. But this depends on how long you are out of work. If you could be out of work for an extended period of time, I would recommend holding on to all of the funds. Note on saving I know this goes against the grain, but I would actually not recommend saving several months worth of funds (maybe one month though). Most employers offer some type of retirement savings account (401(k), Thrift Savings Plan, etc.). I contribute 5% to this fund instead of putting the money in savings. This is an especially effective strategy if your employer offers matching contributions such as mine. Because the divedends for a savings account are so low, it is not a wise place to store your money in the long run. If I had placed my Thrift Savings Plan contributions in a standard savings account, I would now be $12,000 poorer. In addition to this, most long term investment accounts allow you to withdraw the money early in case of emergency, such as being without work. (I also find it too temping to have huge amounts of funds on hand). |
What expenses do most people not prepare for that turn into “emergencies” but are not covered by an Emergency Fund? | Here's a few. Is this what you're looking for? Also this should probably be a community wiki. |
Do I have to pay taxes on income from my website or profits? | Being a tax professional, my understanding is that the threshold limit is a single limit for all your source(s) of income. Now many people who already draw salary which is liable to tax, develop application for mobile and generate some income. Such income is liable to tax, if along with other income they exceed the threshold limit. Income will have surely related expenses. And the expenses which are related to earning of the income are allowed to be deducted. |
What college degree should I pursue to learn about stock and forex markets? | There are several paths of study you could undertake. If you want to learn the fundamentals of the stock market and become a financial analyst, then finance, economics, and accounting (yes, accounting) are all good to study either on your own or in an institution. Furthermore, if you want to study a specific industry, it can't hurt to know a fair amount of the science behind that particular industry. For example, if you want to understand the pharmaceutical or biotechnology industries, knowledge of clinical trials, the FDA's approval process (in the US, at least), off-label uses for drugs, genetic engineering, etc. are all good to know. You don't have to become an expert, but having a firm grasp on the science is extremely useful when evaluating a company's prospects. If you're interested in becoming an algorithmic trader or a quant, then physics, certain fields of engineering, signals processing, applied math, computer science, or econometrics will get you much farther than a standard finance or accounting degree. Most people can learn the basics of finance; not everyone can learn advanced mathematics. A lot of the above applies to learning about the forex market as well. Economics is certainly helpful, especially central bank policy, but since the forex market is so massive and liquid, many mathematical tools are necessary because algorithms play a key role as well. Per littleadv's suggestion, an MBA with a concentration in finance may be an option for someone who already has a degree. Also, an MSF (Master of Science in Finance) or a degree in financial engineering (called an MFE, or ORFE, for Operations Research and Financial Engineering) are other, potentially better options for someone pursuing a more technical career. A high-octane trading firm may not care that you've taken marketing and management classes; they want to hire someone who can understand complex algorithms and design and implement new ones quickly. Some MSF programs are pre-experience programs, which means that in exchange for taking more time to complete, they don't expect you to have significant work experience in the financial industry. An MBA might require such experience, however. |
What are the common moving averages used in a “Golden Cross” stock evaluation? | Technical analysis is insufficient. You're halfway to figuring it out if you start to question why a 50 day moving average vs 200 vs 173. Invest in companies that are attractively valued vs. their sales/growth/divends/anythingelsereal |
Why are credit cards preferred in the US? | There are two things I can think of that might be different in other countries: Until 2013, American Express, Visa and MasterCard prevented businesses from charging extra for credit card usage, and credit card surcharges still illegal in several states. Since credit card companies add a surcharge to credit card purchases, and merchants can't pass that onto credit card users, they just make everyone pay extra instead. Since everyone gets charged the credit card surcharge, you might as well use a credit card and recoup some of that via "rewards" points. Almost all credit cards here have grace periods, where you won't be charged interest if you pay back your loans in full within some period of time (at least 21 days). This makes credit cards attractive to people who don't need a loan, but like the convenience that credit cards provide (not carrying cash, extra insurance, better fraud protection). Apparently grace periods aren't required by law here, so this might be common in other countries as well. |
strategy for the out of favour mining sector | I'll take a stab at this question and offer a disclosure: I recently got in RING (5.1), NEM (16.4), ASX:RIO (46.3), and FCX (8.2). While I won't add to my positions at current prices, I may add other positions, or more to them if they fall further. This is called catching a falling dagger and it's a high risk move. Cons (let's scare everyone away) Pros The ECB didn't engage in as much QE as the market hoped and look at how it reacted, especially commodities. Consider that the ECB's actions were "tighter" than expected and the Fed plans to raise rates, or claims so. Commodities should be falling off a cliff on that news. While most American/Western attention is on the latest news or entertainment, China has been seizing commodities around the globe like crazy, and the media have failed to mention that even with its market failing, China is still seizing commodities. If China was truly panicked about its market, it would stop investing in other countries and commodities and just bail out its own country. Yet, it's not doing that. The whole "China crisis" is completely oversold in the West; China is saying one thing ("oh no"), but doing another (using its money to snap up cheap commodities). Capitalism works because hard times strengthen good companies. You know how many bailouts ExxonMobil has received compared to Goldman Sachs? You know who owns more real wealth? Oil doesn't get bailed out, banks do, and banks can't innovate to save their lives, while oil innovates. Hard times strengthen good companies. This means that this harsh bust in commodities will separate the winners from the losers and history shows the winners do very well in the long run. Related to the above point: how many bailouts from tax payers do you think mining companies will get? Zero. At least you're investing in companies that don't steal your money through government confiscation. If you're like me, you can probably find at least 9 people out of 10 who think "investing in miners is a VERY BAD idea." What do they think is a good idea? "Duh, Snapchat and Twitter, bruh!" Then there's the old saying, "Be greedy when everyone's fearful and fearful when everyone's greedy." Finally, miners own hard assets. Benjamin Graham used to point this out with the "dead company" strategy like finding a used cigarette with one more smoke. You're getting assets cheap, while other investors are overpaying for stocks, hoping that the Fed unleashes moar QE! Think strategy here: seize cheap assets, begin limiting the supply of these assets (if you're the saver and not borrowing), then watch as the price begins to rise for them because of low supply. Remember, investors are part owners in companies - take more control to limit the supply. Using Graham's analogy, stock pile those one-puff cigarettes for a day when there's a low supply of cigarettes. Many miners are in trouble now because they've borrowed too much and must sell at a low profit, or in some cases, must lose. When you own assets debt free, you can cut the supply. This will also help the Federal Reserve, who's been desperately trying to figure out how to raise inflation. The new patriotic thing to do is stimulate the economy by sending inflation up, and limiting the supply here is key. |
Paying off student loan or using that money for a downpayment on a house | Two years ago, I wrote an article titled Student Loans and Your First Mortgage in response to this exact question posed by a fellow blogger. The bottom line is that the loan payment doesn't lower your borrowing power as it fits in the slice between 28% (total housing cost) and 38% (total monthly debt burden) when applying for a loan. But, the $20K is 20% down on $100K worth of house. With median home prices in the US in the mid-high $100Ks, you're halfway there. In the end, it's not about finance, it's a question of how badly you want to buy a house. If I got along with the parents, I'd stay as long as I was welcome, and save every dollar I could. Save for retirement, save for as large a downpayment as you can, and after you buy the house, pay the student loan aggressively. I moved out the week after I graduated. |
Moving savings to Canada? | Yes, you can put assets in Canadian banks. Will it protect your wealth to a greater extent than the FDIC protection provided by the US Government? Probably not. If you do business or spend significant time in Canada, then having at least some money in Canada makes sense. Otherwise, you're trying to protect yourself against some outlying risk of a US banking collapse, while subjecting yourself to a very real currency exchange risk. |
401(k) Investment stategies | Ending up with nothing is an unlikely situation unless you invest 100% in a company stock and the company goes under. In order to give you a good answer we need to see what options your employer gives for 401k investments. The best advice would be to take a list of all options that your employer allows and talk with a financial advisor. Here are a few options that you may or may not have as an option from an employer: Definitions from wikipedia: A target-date fund – also known as a lifecycle, dynamic-risk or age-based fund – is a collective investment scheme, usually a mutual fund, designed to provide a simple investment solution through a portfolio whose asset allocation mix becomes more conservative as the target date (usually retirement) approaches. An index fund or index tracker is a collective investment scheme (usually a mutual fund or exchange-traded fund) that aims to replicate the movements of an index of a specific financial market... An exchange-traded fund (ETF) is an investment fund traded on stock exchanges, much like stocks.[1] An ETF holds assets such as stocks, commodities, or bonds, and trades close to its net asset value over the course of the trading day. Most ETFs track an index, such as a stock index or bond index. ETFs may be attractive as investments because of their low costs, tax efficiency, and stock-like features. The capital stock (or stock) of an incorporated business constitutes the equity stake of its owners. Which one can you lose everything in? You can lose everything in stocks by the company going under. In Index funds the entire market that it follows would have to collapse. The chances are slim here since the index made up of several companies. The S&P 500 is made up of 500 leading companies publicly traded in the U.S. A Pacific-Europe index such as MSCI EAFE Index is made up of 907 companies. The chances of losing everything in an ETF are also slim. The ETF that follows the S&P 500 is made up of 500 companies. An Pacific-Europe ETF such as MSCI EAFE ETF is made up of 871 companies. Target date funds are also slim to lose everything. Target date funds are made up of several companies like indexes and etfs and also mix in bonds and other investments depending on your age. What would I recommend? I would recommend the Index funds and/or ETFs that have the lowest fee that make up the following strategy for your age: Why Not Target Date Funds or Stocks? Target date funds have high fees. Later in life when you are closer to retirement you may want to add bonds to your portfolio. At that time if this is the only option to add bonds then you can change your elections. Stocks are too risky for you with your current knowledge. If your company matches by buying their stock you may want to consider reallocating that stock at certain points to your Index funds or ETFs. |
What does inflation actually mean? [duplicate] | Inflation also provides incentives for consumers to purchase now rather than later (which helps drive sales) and it provides incentive for money to be invested and put back into businesses, rather than held as cash, because you need to earn at least a little interest on your money just to break even. |
Buying a house, Bank or rent to own? | 'Rent to own' is not a precise, single agreement. It can be whatever the seller and you agree to. It's a unique seller that would agree to this. Keep in mind, most sellers are needing to get their money in full to buy their next house. You might find an investor willing to work with you, but only for an inflated price, interest rate, or both. The ideal seller would be underwater (owing more than the value of the home) but needing to move. In which case, they are hoping to find someone to buy them some time to get situated in their new house before moving forward with you and the bank to arrange a sale. At its simplest, you might pay a premium on your rent to fix the price, giving you the option to buy during a particular period at that price. It can be a much higher premium where you are renting and paying extra until you hit 20%, at which point you agree to finance the balance either with a bank loan or through the seller. Buying a home you will live in is a personal decision. With no numbers offered, it's not like we can tell you if it's a wise purchase. |
Who determines, and how, the composition of the S&P 500 index? | S & P's site has a methodology link that contains the following which may be of use: Market Capitalization. Unadjusted market capitalization of US$ 4.6 billion or more for the S&P 500, US$ 1.2 billion to US$ 5.1 billion for the S&P MidCap 400, and US$ 350 million to US$ 1.6 billion for the S&P SmallCap 600. The market cap of a potential addition to an index is looked at in the context of its short- and medium-term historical trends, as well as those of its industry. These ranges are reviewed from time to time to assure consistency with market conditions. Liquidity. Adequate liquidity and reasonable price – the ratio of annual dollar value traded to float adjusted market capitalization should be 1.00 or greater, and the company should trade a minimum of 250,000 shares in each of the six months leading up to the evaluation date. Domicile. U.S. companies. For index purposes, a U.S. company has the following characteristics: The final determination of domicile eligibility is made by the U.S. Index Committee. |
What are the alternatives to compound interest for a Muslim? | There are many Shariah compliant investments, so that could direct your resulting searches. Shariah compliance is a very strict interpretation of Islam and for investing offers strict guidelines in what to invest in and excludes investments in companies that engage in certain businesses such as gambling, tobacco, pork and trading of gold and silver on a deferred basis (and more). Many multinational financial service companies such as the Standard & Poors (S&P) offer Shariah Compliant funds and indices, as such, it makes it easier to invest in a variety of different assets through them. You can also look at their fund's constituents and invest in those assets directly. Secondly, going back to your original question about a compound interest equivalent, you can look at the products offered by Shariah Compliant banks. Now, if it is really important for you to adhere to the strictest interpretations of your faith, you should know that most Islamic Banks have interest bearing assets within them and that they disguise that fact. The global financial system is based on interest bearing instruments such as bonds, and Islamic banks are large holders and issuers of those instruments, and all of their consumer products are also based on the interest rates of them. Even convoluted alternatives such as Islamic mortgages, where they are advertised as non-interest bearing equivalents, many times are also the interest bearing version. Unfortunately, these lies are enough for the banks to continue to get business from their target audiences, but outside of Islam this is a very standard and stable business practice. The point is that you should look very carefully at the alternatives you find. |
If you buy something and sell it later on the same day, how do you calculate 'investment'? | You're confused because the source you cite leaves out one number that isn't relevant to the argument they're making: total costs. The number you're expecting, $9 x 365 or $3285 is the total cost of buying the jewelry which, when subtracted from the $3650 sales volume gives us the net profit of $365. The investment is the amount of money original put into a system our company. In this case the merchant bought his first piece of jewelry for $9, sold it for $10, took one dollar in profit and used the other 9 to reinvest by buying a new piece of jewelry. We can extend the analogy further. After 9 days of selling, the merchant will posses $18, allowing him to now buy 2 pieces of jewelry each morning and sell them for $20. Every day his costs will be $18 and he'll turn a $2 profit, all with the original investment of $9. |
Why can't you just have someone invest for you and split the profits (and losses) with him? | This means that if your capital under my management ends up turning a profit, I will keep half of those profits, but if I lose you money, I will cover half those losses. The bold part is where you lose me. This absolutely exists with the exception of the loss insurance. It just requires a lot more than the general retail consumer investor has to contribute. Nobody wants to take on the responsibility of your money then split 50% of the gross proceeds of your $10,000 (or whatever nominal amount of money you're dealing with) investment and return it all to you after a year. And NO money manager will insure that the market won't decline. Hedge funds, PE Firms, VC Firms, Investment Partnerships, etc all basically run the way you're describing (again without your loss insurance). Everyone's money is pooled and investments are made. Everyone shares the spoils and everyone shares the losses. And to top it off, the people making investment decisions have their money invested in the fund. All of them have to pay rent and accountants and other costs associated with running the fund and that will eat in to the proceeds to some degree; because returns are calculated on net proceeds. With enough money you can buy yourself in to a hedge fund, for the rest of us there are ETFs and other extremely fee-reasonable investment options. And if you don't think the performance and preservation of assets under management is not an incentive to treat the money with care you're kidding yourself (your first bullet point). I'll add that aside from skewing the manager's risk tolerance toward guaranteed returns I doubt you would fair favorably over the long term compared to simply paying even an egregious 1% expense ratio on an ETF. If you look at the S&P performance for 10 or 20 or however many years, I'd venture that a couple good years of giving up half of your gains would have you screaming for your money back. The bad years would put the money manager out of business and the good years would squander your gains. |
Using Loan to Invest - Paying Monthly Installments by Selling Originally Bought Shares | The market can stay irrational longer than you can remain solvent -John Maynard Keynes The stocks could stagnate and trade in a thin range, or decline in value. You assume that your stocks will offer you ANY positive return for every month over 24 months. Just one month of negative returns puts you underwater. Thats whats wrong with it. Even if you identified any stock that has been up every month for a consecutive 24 months in the past, there is nothing that says it will be so in the future, and a broad market selloff will effect both indexes as well as individual stocks. Literally any adverse macroeconomic event in the next two years will put you underwater on your loan, no matter how much research you do on individual stocks. |
Purpose of having good credit when you are well-off? | Your dad may have paid an "opportunity cost" for that outright purchase. If the money he saved had been invested elsewhere, he may have made more money. If he was that well off, then his interest rate should have been the lowest possible. My own father is a multi-millionaire (not myself) and he could afford to have paid for his house outright. He didn't though. To do so would have meant cashing in on several investments. I don't know his interest rate but let's say it was 2.5%. If he invests that million dollars into something he expects to get a 7% return on in the same period, then he would make more money by borrowing the money. Hence, he would be paying an opportunity cost. Assuming you need to work, some jobs will also do background or credit checks. Credit cards can be used by well off people to actually make them money by offering rewards (compared to straight cash transactions). The better your credit history, the better the cards/rewards you can get. You can build that credit history better by having these loans and making timely payments. |
Are these scenarios considered as taxable income? | For case 1, there is no tax due as you sold the book for less than your cost basis. If you had sold for more than $100, then you would have had a profit. For case 2, that depends on the value of the gift card with respect to the value of your fare. Most likely that gift card is less than the cost of the fare. And in that case it would generally be treated as a reduction in the purchase price. The same way that rebates and cash back on credit card are treated. Note if for some reason a 1099 was generated that would change the situation and you would need to consult a tax professional. Since that would indicate that the other party to the transaction had a different view of the situation. |
Help! I've cancelled their service, but this company continues to bill my credit card an annual fee. What can I do? | I'm not a lawyer, and am certainly not familiar with your jurisdiction, but the general guidelines I've seen around this kind of situation are: If all else fails, you could just cancel the card, though I'm not sure what liability you have to honour the contract. I cancelled a card once to stop being charged by a particularly annoying company and had no problems, but I'm not sure if that is a good way to deal with it in general. |
Free “Rich Dad” education, with “free gift”: Is it legitimate, or is it a sales ploy? | As with any business, there's a huge learning curve. Rich Dad gives you the fundamentals.. which are sound.. you then need to spend time getting the nitty gritty details of the business ... be it real estate, stock investing etc. Kiyosaki is a wealthy man... I've listened to some of his podcasts and he know what he's talking about.. AND.. he's been in the business for 20+ years. |
Pay off car loan entirely or leave $1 until the end of the loan period? | what you aim to do is a great idea and it will work in your favor for a number of reasons. First, paying down your loan early will save you lots in interest, no brainer. Second, keeping the account open will improve your credit score by 1) increases the number of installment trade lines you have open, 2)adds to your positive payment history and 3) varies your credit mix. If your paid your car off you will see a DROP in your credit score because now you have one less trade line. To address other issues as far as credit scoring, it does not matter(much) for your score if you have a $1000 car loan or a $100,000 car loan. what matters is whether or not you pay on time, and what your balance is compared to the original loan amount. So the quicker you pay DOWN the loans or mortgages the better. Pay them down, not off! As far how the extra payments will report, one of two things will happen. Either they will report every month paid as agreed (most likely), or they wont report anything for a few years until your next payment is due(unlikely, this wont hurt you but wont help you either). Someone posted they would lower the amount you paid every month on your report and thus lower your score. This is not true. even if they reported you paid $1/ month the scoring calculations do not care. All they care is whether or not you're on time, and in your case you would be months AHEAD of time(even though your report cant reflect this fact either) HOWEVER, if you are applying for a mortgage the lower monthly payment WOULD affect you in the sense that now you qualify for a BIGGER loan because now your debt to income ratio has improved. People will argue to just pay it off and be debt free, however being debt free does NOT help your credit. And being that you own a home and a car you see the benefits of good credit. You can have a million dollars in the bank but you will be denied a loan if you have NO or bad credit. Nothing wrong with living on cash, I've done it for years, but good luck trying to rent a car, or getting the best insurance rates, and ANYTHING in life with poor credit. Yeah it sucks but you have to play the game. I would not pay down do $1 though because like someone else said they may just close the account. Pay it down to 10 or 20 percent and you will see the most impact on your credit and invest the rest of your cash elsewhere. |
Cost basis allocation question: GM bonds conversion to stock & warrants | Because the distribution date was APR 21, 2011, THAT should be the correct date for ascertainng the stock prices of the GM stock and warrants. The subsequent distributions after April should also be allocated in accordance with their distribution dates, with tax basis being reduced from the original APR 21st date's allocations, and reallocated to those subsequent distributions, taking into account any interim sales you might have made. |
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