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Does Vanguard grant admiral shares only on a per-account basis? | Yes, each of Vanguard's mutual funds looks only at its own shares when deciding to upgrade/downgrade the shares to/from Admiral status. To the best of my knowledge, if you hold a fund in an IRA as well as a separate investment, the shares are not totaled in deciding whether or not the shares are accorded Admiral shares status; each account is considered separately. Also, for many funds, the minimum investment value is not $10K but is much larger (used to be $100K a long time ago, but recently the rules have been relaxed somewhat). |
Saving $1,000+ per month…what should I do with it? | Excellent responses so far. Because I am a math guy, I wanted to stress the power of compounding. It's great that you are thinking about saving and your future when you are so young. Definitely be displined about your saving and investing. You would be surprised how just a small amount can compound over the years. For example, if you were to start with $5000 and contribute $100 per month. Assuming that you can get 5% ROR (hard in today's world but shouldn't be down the road), your final principal after 28 years (when you are 50 years old) will be over $90,000, which of only $38,000 is what you contributed yourself. The rest is interest. You can play with the numbers here: http://www.math.com/students/calculators/source/compound.htm |
How can I spend less? | Try having money automatically deducted from your paycheck and put into a retirement account or savings account. As long as you don't have a problem with spending more than you have, the easiest way to stop spending money is to have it automatically put somewhere that you can't (or are unlikely to) touch it. |
How can I detect potential fraud in a company before investing in them? | Most of the information we get about how a company is running its business, in any market, comes from the company. If the information is related to financial statements, it is checked by an external audit, and then provided to the public through official channels. All of these controls are meant to make it very unlikely for a firm to commit fraud or to cook its books. In that sense the controls are successful, very few firms provide fraudulent information to the public compared with the thousands of companies that list in stock markets around the world. Now, there is still a handful of firms that have committed fraud, and it is probable that a few firms are committing fraud right now. But, these companies go to great lengths to keep information about their fraud hidden from both the public and the authorities. All of these factors contribute to such frauds being black swan events to the outside observer. A black swan event is an event that is highly improbable, impossible to foresee with the information available before the event (it can only be analyzed in retrospect), and it has very large impact. The classification of an event as a black swan depends on your perspective. E.g. the Enron collapse was not as unexpected to the Enron executives as it was to its investors. You cannot foresee black swan events, but there are a few strategies that allow you to insure yourself against them. One such strategy is buying out of the money puts in the stocks where you have an investment, the idea being that in the event of a crash - due to fraud or whatever other reason - the profits in your puts would offset the loses on the stock. This strategy however suffers from time and loses a little money every day that the black swan doesn't show up, thanks to theta decay. So while it is not possible to detect fraud before investing, or at least not feasible with the resources and information available to the average investor, it is possible to obtain some degree of protection against it, at a cost. Whether that cost is too high or not, is the million dollar question. |
What do I need to start trading in the NSE (National Stock Exchange)? | To start trading at a minimum you need 3 things; Bank Account: This again is not must, but most preferred to transact. Quite a few broker would insist on this. Demat Account: This is must as all shares on NSE are held electronically. The custodians are CSDL or NSDL both Government entities. These don't offer services directly to customer, but via other financial institutions like Banks and Large Brokers. Broker Account: This is required to buy or sell securities. If you are only buying in IPO, this is not required as one can directly participate in IPO and Broker is not involved. However if you want to buy and sell on NSE you would need a broker account. Quite a few financial institutes offer all 3 services or 2 services [Demat/Broker]. The fee structure and online service etc are differentiators. You can take a look at options and decide the best one to use. |
What is a Master Limited Partnership (MLP) & how is it different from plain stock? | I own a few MLPs that operate oil/gas pipelines (TSE:IPL-UN, NYSE:BPT, NYSE:APL), and I'm very happy with their performance. Because they don't pay corporate tax MLPs tend to pay higher dividends than most regular stocks. I pay H&R Block to do my taxes, and they sort out all the arcane details. |
When trading put options, is your total risk decreased if you are in a position to exercise the option? | In absolute terms the risk is about the same. If you own the stock and your put option goes in the money, then you have the option to get rid of your stock at yesterday's higher price. If you don't, you can sell the option for a higher price than you paid for it. But, as you calculated yourself, the net gain or loss (in absolute terms, not percentage terms) is the same either way. |
US Stock Market - volume based real-time alert | This would be a nice Raspberry Pi project for Mathematica, which comes bundled free on the Raspbian OS. You can program it up and leave it running. It's not expensive and doesn't use much power. A program to monitor stock prices or volume could be written as simply as :- This checks the volume of trades of Oct 2014 US crude oil futures every 30 seconds and sends an email if the volume jumps by more than 100. The financial data in this example is curated from Yahoo. If specific data is not available or not updated frequently enough, if you can find an alternative online data source it's usually possible read the data in. For example, this is apparently real-time data :- {Crude Oil, 92.79, -0.67, -0.71%} After leaving the above program running while writing this the volume of trades has risen like so :- Edit I just set this running on a Raspberry Pi. I had to use gmail for the email setup as described in this post: Configuring Mathematica to send email from a notebook. Anyway, it's working. Hope I don't get inundated with emails. ;-) |
Why do people take out life insurance on their children? Should I take out a policy on my child? | If the child can take over the life insurance when they wish to get a mortgage or have their own children, there may be a case for buying insurance for the child in the event that your child's health is not good enough for them to get cover at that time. However I don’t think this type of insurance is worth having. |
What is the difference between a bond and a debenture? | Some additional links which explain their differences. But mostly as @bstpierre says, both are very similar and in some cases the terms may be used inter changeably |
Currently sole owner of a property. My girlfriend is looking to move in with me and is offering to pay 'rent'. Am I at risk here? | If you are living together 'casually' (no formal partnership agreement) then my option would be to ask her politely to as she has offered make a contribution by buying the groceries or some such which you share. A 'voluntary contribution' not an enforceable one. Just as between flat mates where only one is the actual tenant of the flat but the tenancy allows 'sharing' . Check your tenancy allows you to share lodgings. PS An old Scots saying is "never do business with close family". I.e do not charge your wife or living in partner rent. It mixes emotional domestic life with a formal business life which can set feuds going in case of a break up or dispute. If you enter into child bearing relationship or parent hood or formal partnership or marriage then all this changes at some time in the future. |
What will happen to my restricted units? | This should all be covered in your stock grant documentation, or the employee stock program of which your grant is a part. Find those docs and it should specify how or when you can sale your shares, and how the money is paid to you. Generally, vested shares are yours until you take action. If instead you have options, then be aware these need to be exercised before they become shares. There is generally a limited time period on how long you can wait to exercise. In the US, 10 years is common. Unvested shares will almost certainly expire upon your departure of the company. Whether your Merrill Lynch account will show this, or show them as never existing, I can't say. But either way, there is nothing you can or should do. |
When is the best time to put a large amount of assets in the stock market? | The one thing we know for certain is that holding large amounts of cash isn't ideal - inflation will eat away at your wealth. It's understandable that you're hesitant to put all your wealth in common stock. The S&P 500's price/earnings is 18.7 right now - a little high by historical standards. But consider that the S&P 500 has given a CAGR of approximately 10% (not inflation-adjusted) since 1970. If you don't time the market correctly, you could miss out on considerable gains. So it's probably best to invest at least a portion of your wealth in common stocks, and just accept the risk of short-term losses. You'll likely come out ahead in the long run, compared to an investor who tries to time the market and ends up holding cash positions for too long. If you really think US stocks are overpriced, you could look at other markets, but you'll find similar P/Es in Europe and Japan. You could try an emerging market fund like VEMAX if you have the risk tolerance. Let's say you're not convinced, and don't want to invest heavily in stocks right now. In the current market, safe cash alternatives like Treasury bills offer very low yields - not enough to offset inflation tax. So I would invest in a diversified portfolio of long-term bonds, real estate, maybe precious metals, and whatever amount of stock you're comfortable with. |
Do banks give us interest even for the money that we only had briefly in our account? | As mentioned in other answers the interest you make is negligible and the calculations would depend on the bank. In saying that the general trend is calculate daily, pay monthly. A typical scenario would be that every night at midnight the interest for your account at that point in time is calculated. This occurs every midnight and at the end of the month the sum of those calculations will be added to your account. You could have had several significant transactions pass through your account in one day although if the interest is calculated at a specific point in time some transactions may not contribute to any interest. These calculations are worth thinking about, even in circumstances of negligible returns, as it could assist when considering combining credit cards with home loan offset accounts so it is not a complete waste of time to understand how interest is calculated. The more you know ;) |
5/1 ARM: Lifetime cap, First Adjustment Cap, Margin, and Annual Cap? | I hope this image is clear. A spreadsheet is how I look at these things. Unfortunately, you didn't offer the starting balance so I use $100K which makes it easy to scale. You build a simple spreadsheet and enter the "what if" scenario, this tells me that worse case, an increase of 1% on the rate each year results in a near 60% increase in payments over the 10 years. Of course, this isn't the end of the story, I'd first change the payments to reflect the 5% rate, and see how much that drives the balance down. This would reduce the principal enough that the increase would be much less. On $100K, you'd pay $536.82 based on a 5% rate, regardless of the required payment. At 7.75% the payment is $563.11, not even 5% higher. If you'd like a spreadsheet started for you, I'll put it someplace for you to grab it. |
How smart is it to really be 100% debt free? | Debt increases your exposure to risk. What happens if you lose your job, or a major expense comes up and you have to make a hard decision about skipping a loan payment? Being debt free means you aren't paying money to the bank in interest, and that's money that can go into your pocket. Debt can be a useful tool, however. It's all about what you do with the money you borrow. Will you be able to get something back that is worth more than the interest of the loan? A good example is your education. How much more money will you make with a college degree? Is it more than you will be paying in interest over the life of the loan? Then it was probably worth it. Instead of paying down your loans, can you invest that money into something with a better rate of rate of return than the interest rate of the loan? For example, why pay off your 3% student loan if you can invest in a stock with a 6% return? The money goes to better use if it is invested. (Note that most investments count as taxable income, so you have to factor taxes into your effective rate of return.) The caveat to this is that most investments have at least some risk associated with them. (Stocks don't always go up.) You have to weigh this when deciding to invest vs pay down debts. Paying down the debt is more of a "sure thing". Another thing to consider: If you have a long-term loan (several years), paying extra principal on a loan early on can turn into a huge savings over the life of the loan, due to power of compound interest. Extra payments on a mortgage or student loan can be a wise move. Just make sure you are paying down the principal, not the interest! (And check for early repayment penalties.) |
How much should I be contributing to my 401k given my employer's contribution? | For your first question, the general guidelines I've seen recommended are as follows: As to your second question, portfolio management is something you should familiarize yourself with. If you trust it to other people, don't be surprised when they make "mistakes". Remember, they get paid regardless of whether you make money. Consider how much any degree of risk will affect you. When starting out, your contributions make up most of the growth of your accounts; now is the time when you can most afford to take higher risk for higher payouts (still limiting your risk as much as possible, of course). A 10% loss on a portfolio of $50k can be replaced with a good year's contributions. Once your portfolio has grown to a much larger sum, it will be time to dial back the risk and focus on preserving your capital. When choosing investments, always treat your porfolio as a whole - including non-retirement assets (other investment accounts, savings, even your house). Don't put too many eggs from every account into the same basket, or you'll find that 30% of your porfolio is a single investment. Also consider that some investments have different tax consequences, and you can leverage the properties of each account to offset that. |
ISA trading account options for US citizens living in the UK | This sounds like a FATCA issue. I will attempt to explain, but please confirm with your own research, as I am not a FATCA expert. If a foreign institution has made a policy decision not to accept US customers because of the Foreign Financial Institution (FFI) obligations under FATCA, then that will of course exclude you even if you are resident outside the US. The US government asserts the principle of universal tax jurisdiction over its citizens. The institution may have a publicly available FATCA policy statement or otherwise be covered in a new story, so you can confirm this is what has happened. Failing that, I would follow up and ask for clarification. You may be able to find an institution that accepts US citizens as investors. This requires some research, maybe some legwork. Renunciation of your citizenship is the most certain way to circumvent this issue, if you are prepared to take such a drastic step. Such a step would require thought and planning. Note that there would be an expatriation tax ("exit tax") that deems a disposition of all your assets (mark to market for all your assets) under IRC § 877. A less direct but far less extreme measure would be to use an intermediary, either one that has access or a foreign entity (i.e. non-US entity) that can gain access. A Non-Financial Foreign Entity (NFFE) is itself subject to withholding rules of FATCA, so it must withhold payments to you and any other US persons. But the investing institutions will not become FFIs by paying an NFFE; the obligation rests on the FFI. PWC Australia has a nice little writeup that explains some of the key terms and concepts of FATCA. Of course, the simplest solution is probably to use US institutions, where possible. Non-foreign entities do not have foreign obligations under FATCA. |
Buy small-cap ETF when you already have large-cap of the same market | Yes, you should own a diverse mix of company sizes to be well diversified. While both will probably get hit in a recession, different economies suit different sized companies very differently in many cases, and this diversity positions you best to not only not miss out in cases where small companies do better out of recessions than large, but also in environments where small companies rate of growth is larger in bull markets. |
What is the meaning of “writing put options”? | Writing a put for a stock means you are selling the right to sell you stock. Simply put (er no pun intended), "writing put options" means you are selling somebody else the right (a contract) to sell YOU a specific stock at a specific price before a specific date. I imagine the word "write" to refer to the physical act of creating a contract. The specific price is called the STRIKE and the specific date is the EXPIRATION. By "writing a put", you are agreeing to purchase the stock at a particular price (the STRIKE price) before the expiration. You get paid a fee, the "premium", for agreeing to purchase the stock at the strike price if asked to. If the holder of the contract decides to make you buy the stock at the strike price, you have to do it. If the stock never dips below the strike price, then the holder of the put contract (a contract you wrote), will never exercise their right because they'd lose money. But if the stock drops to zero, you could potentially lose up to your strike price (times the number of shares at stake), if the holder of the contract decides to exercise. Therefore, "writing puts" is a LONG position, meaning you stand to gain if the stock goes up. FYI - "LONG" refers direction (UP!), not duration. |
Filling Balance sheet in ITR4 for freelancers | ITR-4 is for incorporated business. For freelancing, You can fill ITR 2 and declare the freelancing income as "income from other source". Refer to the Income Tax website for more details |
Should I deduct or capitalize the cost to replace a water heater in my rental property? (details Below) | Pub 527 my friend. It gets depreciated. Table 1-1 on page 5. |
why do I need an emergency fund if I already have investments? | You're absolutely correct. If you have maxed out your retirement investment vehicles and have some additional investments in a regular taxable account, you can certainly use that as an emergency source of funds without much downside. (You can borrow from many retirement account but there are downsides.) Sure, you risk selling at a loss when/if you need the money, but I'd rather take the risk and take advantage of the investment growth that I would miss if I kept my emergency fund in cash or money market. And you can choose how much risk you're willing to take on when you invest the money. |
Is it better to ask for a raise before a spin-off / merger or after? | Corporate restructuring makes everything a flux, so you might as well revisit some core fundamental questions. Here's how to do this professionally: Start floating your CV now. Line up interviews in competing companies. Attend to them. Score a job offer, and have it put into writing, with exact salary, which should be at least 10%++ of your current one. Take a clear empty page, and write on top: "Business value provided". Put down your major contributions, and achievements. Wherever possible, put the company's expected dollar value near to it. For bonus points, sum it up on the bottom, and minus your current salary. Difference is "Profit provided directly to the company's bottom line". Float this to your manager's desk. At this position, you have only one fundamental question to your boss: "match or pass?" :) A corporate spin-off is a good time to do this: 1, to ensure, that your position will not be made redundant; 2, if it is, you have a backup plan. If the parent company's "getting rid of you", however, there are even more fundamental questions you might want to ask yourself: is this really a profitable division, or merely a loss leader? Does this company have a future, and the adequate growing options for you, personally? To answer these questions, you must have an opportunity cost estimation; and for that, you must have second (and preferably, third) options -hence, the strategy above. To conclude, the best time to do your job research is every other month; and the best time to ask for a raise is always now :) Good luck! |
Investing: P/E Ratio basic question | Let's take a step back. My fictional company 'A' is a solid, old, established company. It's in consumer staples, so people buy the products in good times and bad. It has a dividend of $1/yr. Only knowing this, you have to decide how much you would be willing to pay for one share. You might decide that $20 is fair. Why? Because that's a 5% return on your money, 1/20 = 5%, and given the current rates, you're happy for a 5% dividend. But this company doesn't give out all its earnings as a dividend. It really earns $1.50, so the P/E you are willing to pay is 20/1.5 or 13.3. Many companies offer no dividend, but of course they still might have earnings, and the P/E is one metric that used to judge whether one wishes to buy a stock. A high P/E implies the buyers think the stock will have future growth, and they are wiling to pay more today to hold it. A low P/E might be a sign the company is solid, but not growing, if such a thing is possible. |
Have plenty of cash flow but bad credit | Set up a meeting with the bank that handles your business checking account. Go there in person and bring your business statements: profit and loss, balance sheet, and a spreadsheet showing your historical cash flow. The goal is to get your banker to understand your business and your needs and also for you to be on a first-name basis with your banker for an ongoing business relationship. Tell them you want to establish credit and you want a credit card account with $x as the limit. Your banker might be able to help push your application through even with your credit history. Even if you can't get the limit you want, you'll be on your way and can meet again with your banker in 6 or 12 months. Once your credit is re-established you'll be able to shop around and apply for other rewards cards. One day you might want a line of credit or a business loan. Establishing a relationship with your banker ahead of time will make that process easier if and when the time comes. Continue to meet with him or her at least annually, and bring updated financial statements each time. If nothing else, this process will help you analyze your business, so the process itself is useful even if nothing comes of it immediately. |
Selling To Close | At the higher level - yes. The value of an OTM (out of the money) option is pure time value. It's certainly possible that when the stock price gets close to that strike, the value of that option may very well offer you a chance to sell at a profit. Look at any OTM strike bid/ask and see if you can find the contract low for that option. Most will show that there was an opportunity to buy it lower at some point in the past. Your trade. Ask is meaningless when you own an option. A thinly traded one can be bid $0 /ask $0.50. What is the bid on yours? |
Do I even need credit cards? | People have credit cards for various reasons depending upon their personal situation and uses You don't need to have a Credit Card if you don't have a reason to. But most people do. |
How to trade large number of shares? | If you really did have a large share size, a market order would move the price more so in your desired direction. Although your cost basis would be less ideal. Just use limit orders and scale in to a position. You can also exercise puts to be short stock |
How can all these countries owe so much money? Why & where did they borrow it from? | By the phrasing of your question it seems that you are under the mistaken impression that countries are borrowing money from other countries, in which case it would make sense to question how everyone can be a borrower with no one on the other side of the equation. The short answer is that the debt is owed mostly to individuals and institutions that buy debt instruments. For example, you know those US savings bonds that parents are buying to save for their children's education? Well a bond is just a way to loan money to the Government in exchange for the original money plus some interest back later. It is as simple as that. I think because the debt and the deficit are usually discussed in the context of more complex macroeconomic concerns people often mistakenly assume that national debts are denominated in some shadow banking system that is hidden from the common person behind some red-tape covered bureaucracy. This is not the case here. Why did they get themselves into this much debt? The same reason the average person does, they are spending more than they bring in and are enabled by access to easy credit. Like many people they are also paying off one credit card using another one. |
How to keep control of shared expenses inside marriage? | Being new does not allow me yet to vote on your question, but what a good question it is. We share our opinion in separating finances in our very well going mariage. Currently I have found a sort of okay solution in two websites. These are http://www.yunoo.nl and http://www.moneytrackin.com/. You can actually tag spendings with multiple tags. I don't like the idea that the data is on a remote server, but since I have not found a proper local software solution, I just naively trust their promise that your data is save. Then again our financial situation is not that special. |
How can I investigate historical effect of Rebalancing on Return and Standard Deviation? | Doesn't "no rebalancing" mean "start with a portfolio and let it fly?" Seems like incorporation of rebalancing is more sophisticated than not. Just "buy" your portfolio at the start and see where it ends up with no buying/selling, as compared with where it ends up if you do rebalance. Or is it not that simple? |
Advantages/disadvantages of buying stocks on dips vs buying outright? | If your stock is rising and you want to buy on a dip, the best way to do this is by looking at the chart and incorporating simple Technical Analysis techniques. Firstly, an uptrend is defined as a price chart with higher highs and higher lowers. If you get a lower high or a lower low (or both), it could be the end of the uptrend - be cautious. This can be seen on the chart below with an uptrend line drawn. If you draw a trend line you can wait for the price to approach the trend line, bounce off it and start moving up again to buy your stock on a dip. If instead the price closes below the trend line, be very cautious - this could be the end of the uptrend and the start of a downtrend - no telling how low the price will go. If this is the case you can then draw a downtrend line and wait for the price to close above the downtrend line before making your purchase. |
Pros / cons of being more involved with IRA investments [duplicate] | Let’s compare your target fund, FFFFX to a well-known ETF, SPY; SPDR S&P 500 ETF. Source: Yahoo Finance The difference in performance over a longer time-frame is significant, You can and should carefully research better funds in order to improve performance. FULL DISCLOSURE: My own IRA is at Fidelity. Less than 10% of my IRA is in Fidelity mutual funds. None is in FFFFX. |
Cashing a cheque on behalf of someone else | Anyone can walk into a bank, say "Hi, I'm a messenger, I have an endorsed check and a filled out deposit slip for Joe Blow who has an account here, please deposit this check for him, as he is incapacitated. Straight deposit." They'll fiddle on their computer, to see if they can identify the deposit account definitively, and if they can, and the check looks legit, "thanks for taking care of our customer sir." Of course, getting a balance or cashback is out of the question since you are not authenticated as the customer. I have done the same with balance transfer paperwork, in that case the bank knew the customer and the balance transfer was his usual. If the friend does not have an account there, then s/he should maybe open an account at an "online bank" that allows deposit by snapping photos on a phone, or phone up a branch, describe her/his situation and see if they have any options. Alternately, s/he could get a PayPal account. Or get one of those "credit card swipe on your phone" deals like Square or PayPal Here, which have fees very close to nil, normally cards are swiped but you can hand-enter the numbers. Those are fairly easy to get even if you have troubles with creditworthiness. S/he would need to return the check to the payer and ask the payer to pay her/him one of those ways. The payer may not be able to, e.g. if they are a large corporation. A last possibility is if the check is from a large corporation with whom s/he continues to do business with. For instance, the electric company cashiers out your account after you terminate service at your old location. But then you provision service at a new location and get a new bill, you can send their check right back to them and say "Please apply this to my new account". If s/he is unable to get any of those because of more serious problems like being in the country illegally, then, lawful behavior has its privileges, sorry. There are lots of unbanked people, and they pay through the nose for banking services at those ghastly check-cashing places, at least in America. I don't have a good answer for how to get a check cashed in that situation. |
What extra information might be obtained from the next highest bids in an order book? | The Level 2 data is simply showing the depth of the market. If I am trading shares with my broker I have the option of viewing only the top 10 bid/ask prices in the depth or all of the data (which sometimes can be a very long list). With another broker I get the top ten bid and ask prices and how many orders are available for each price level, or I have the option of listing each order separately for each price level (in order of when the order was placed). I get the same kind of data if trading options. I do not know about futures because I don't trade them. Simply this data may be important to a trader because it may give an indication of whether there are more buyers or sellers in the market, which in turn may (but not always) give an indication of which way the market may be moving. As an example the price depth below shows WBC before market open with sellers outweighing the buyers in both numbers and volume. This gives an indication that prices may drop when the market opens. Of course there could be some good news coming out prior to market open or just after, causing a flood of buyers into the market and sellers to cancel their orders. This would change everything around with more buyers than sellers and indicate that prices may now be going up. The market depth is an important aspect to look at before putting an order in, as it can give an indication of which way the market is moving, especially in a very liquid security or market. |
In what cases can a business refuse to take cash? | You have to take legal tender to settle a debt. If your business model doesn't involve the customer incurring a debt that is then settled, you don't have to take cash. For example, in a restaurant where you pay after eating, you can insist on paying cash, because you're settling a debt. But in McDonald's they can refuse your cash at the counter, because you've not received your food yet and so no debt has been incurred. |
How much does a landlord pay in taxes? | how much taxes would I pay on my income from the rent they would pay me? The same as on any other income. California doesn't have any special taxes for rental/passive income. Bothe CA and the Federal tax laws do have special treatment, but it is for losses from rental. Income is considered unearned regular income and is taxed at regular brackets. Would I be able to deduct the cost of the mortgage from the rental income? The cost of mortgage, yes. I.e.: the interest you pay. Similarly you can deduct any other expense needed to maintain the property. This is assuming you're renting it out at FMV. If not, would I pay the ordinary income tax on that income? In particular, would I pay CA income tax on it, even though the property would be in WA? Yes. Don't know how WA taxes rental income, but since you are a California tax resident - you will definitely be taxed by California on this, as part of your worldwide income. |
A debt collector will not allow me to pay a debt, what steps should I take? | You say your primary goal is to clean up your credit report, and you're willing to spend some cash to do it. OK. But beware: the law in this area is a funhouse mirror, everything works upside down and backwards. To start, let's be clear: Credit reports are not extortion to force you into paying. They are a historical record of your creditworthiness, and almost impossible to fix without altering history. Paying on this debt will affirm the old data was correct, and glue it to your report. Here's how credit reporting works for R-9 (sent to collections) amounts. The data is on your credit report for 7 years. The danger is in this clock being restarted. What will not restart the clock? Ignoring the debt, talking casusally to collectors, and the debt being sold from one collector to another. What will restart the clock? Acknowledging the debt formally, court judgment, paying the debt, or paying on the debt (obviously, paying acknowledges the debt.) Crazy! You could have a debt that's over 7 years old, pay it because you're a decent person, and BOOM! Clock restarts and 7 more years of bad luck. Even worse-- if they write-off or forgive any part of the debt, that's income and you'll need to pay income tax on it. Ugh! Like I say, the only way to remove a bad mark is to alter history. Simple fact: The collector doesn't care about your bad credit mark; he wants money. And it costs a lot of money, time and/or stress for both of you to demand they research it, negotiate, play phone-tag, and ultimately go to court. So this works very well (this is just the guts, you have to add all the who, what, where, signature block, formalities etc.): 1 Company and Customer absolutely disagree as to whether Customer owes Company this debt: (explicitly named debt with numbers and amount) 2 But Company and Customer both eagerly agree that the expense, time, and stress of research, negotiation, and litigation is burdensome for both of us. We both strongly desire a quick, final and no-fault solution. Therefore: 3 Parties agree Customer shall pay Company (acceptable fraction here). Payment within 30 days. To be acknowledged in writing by Company. 4 This shall be absolute and final resolution. 5 NO-FAULT. Parties agree this settlement resolves the matter in good faith. Parties agree this settlement is done for practical reasons, this bill has not been established as a valid debt, and any difference between billed and settled amount is not a canceled nor forgiven debt. 6 Neither party nor its assigns will make any adverse statements to third parties relating to this bill or agreement. Parties agree they have a continuous duty to remove adverse statements, and agree to do so within seven days of request. 7 Parties specifically agree no adverse mark nor any mark of any kind shall be placed on Customer's credit report; and in the event such a mark appears, Parties will disavow it continuously. Parties agree that a good credit report has a monetary value and specific impacts on a customer's life. 8 Jurisdiction of law shall be where the effects are felt, and that shall be (place of service) regarding the amounts of the bill proper. Severable, inseparable, counterparts, witness, signature lines blah blah. A collector is gonna sign this because it's free money and it's not tricky. What does this do? 1, 2 and 5 alter history to make the debt never have existed in the first place. To do this, it must formally answer the question of why the heck would you pay a debt that isn't real and you don't owe: out of sheer practicality; it's cheaper than Rogaine. This is your "get out of jail free" card both with the credit bureaus and the IRS. Of course, 3 gives the creditor motivation to go along with it. 6 says they can't burn your credit. 7 says it again and they're agreeing you can sue for cash money. 8 lets you pick the court. The collector won't get hung up on any of these since he can easily remove the bad mark. (don't be mad that they won't do it "for free", that's what 3 is for.) The key to getting them to take a settlement is to be reasonable and fair. Make sure the agreement works for them too. 6 says you can't badmouth them on social media. 4 and 5 says it can't be used against them. 8 throws them a bone by letting them sue in their home court for the bill they just settled (a right they already had). If it's medical, add "HIPAA does not apply to this document" to save them a ton of paperwork. Make it easy for them. You want the collector to take it to his boss and say "this is pretty good. Do it." Don't send the money until their signed copy is in your hands. Then send promptly with an SASE for the receipt. Make it easy for them. This is on you. As far as "getting them to send you an offer", creditors are reluctant to mail things especially to people they don't think will pay, because it costs them money to write and send. So you may need to be proactive about running them down with your offer. Like I say, it's a funhouse mirror. |
Good books for learning about tax strategy/planning | Keep in mind that chasing after tax savings tends to not be a good way of saving money. What is a good strategy? Making sure that you take all the deductions you are entitled to. What is a bad strategy: You asked for a book recommendation. The problem is that I don't know of any books that cover all these topics. Also keep in mind that all books, blogs, articles, and yes answers to questions have a bias. Sometimes the bias can be ignored, other times it can't. Just keep looking for information on this site, and ask good specific questions about these topics. |
Does a SIM only cell phone contract help credit rating? | I have never seen any of my mobile phone providers report any data to any credit agency. They tend to only do that if you don't pay on time. Maybe sometimes it helps, but from my experience over the last decade - it must be some very rare times. |
Options profit calculation and cash settlement | Marketwatch reports that the 108 strike call option sells for 1.45, down 1.53 from yesterday. If we split the bid and ask you get 1.415. That is what that contract will, likely, trade at. The biggest problems with options are commissions and liquidity. I have seen a commission as high as $45 per trade. I have also seen open interest disappear overnight. Even if you obtain contracts that become worth more than you paid for them you may find that no one wants to pay you what they are worth. Track your trade over a few weeks to see how you would have done. It is my experience that the only people who make money on options are the brokers. |
Good way to record currency conversion transactions in personal accounting software? | I found an answer by Peter Selinger, in two articles, Tutorial on multiple currency accounting (June 2005, Jan 2011) and the accompanying Multiple currency accounting in GnuCash (June 2005, Feb 2007). Selinger embraces the currency neutrality I'm after. His method uses "[a]n account that is denominated as a difference of multiple currencies... known as a currency trading account." Currency trading accounts show the gain or loss based on exchange rates at any moment. Apparently GnuCash 2.3.9 added support for multi-currency accounting. I haven't tried this myself. This feature is not enabled by default, and must be turned on explicity. To do so, check "Use Trading Accounts" under File -> Properties -> Accounts. This must be done on a per-file basis. Thanks to Mike Alexander, who implemented this feature in 2007, and worked for over 3 years to convince the GnuCash developers to include it. Older versions of GnuCash, such as 1.8.11, apparently had a feature called "Currency Trading Accounts", but they behaved differently than Selinger's method. |
What can a CPA do that an EA cannot, and vice versa? | Although they may have some similar functions, CPAs and Enrolled Agents operate in two rather different areas of the accounting "space." CPAs deal with financial statements, usually of corporations. They're the people you want to go to if you are making an investment, or if you own your own business, and need statements of pretax profit and loss prepared. Although a few of them are competent in taxation, the one thing many of them are weak at is tax rules, and this is where enrolled agents come in. Enrolled agents are more concerned with personal tax liability. They can 1) calculate your income taxes, and 2) represent you in hearings with the IRS because they've taken courses with IRS agents, and are considered by them to be almost "one of us." Many enrolled agents are former IRS agents, actually. But they are less involved with corporate accounting, including things that might be of interest to stock holders. That's the CPA's province. |
First time homeowner and getting a mortgage? | Check with you local bank where you have an account. Sometimes they can offer a discount that results in a good rate. I just refinanced a month ago with Bank Of America and their rates were very competitive. What set them aside from the rest was their low closing fees. Otherwise I would shop around on bankrate.com and it will show you results of both local and online mortgage brokers. It will list the rates and expected fees. The also list an average national rate so you can compare the rate you are considering and see if there could be a better deal elsewhere. |
Sell or keep rental Property? | How is the current mortgage payment broken out? I have a mortgage on a rental property with a payment of $775, but $600 is principal. If I were at breakeven on a sale or a bit underwater, I'd be better off just holding still, the tenant paying the loan down over $7000/year. You question is a good one, but a good answer would require more details. A bank may not agree to a short sale on an investment property, especially since there's a second property to go after. I'm not making a judgement, just saying, it's not a slam-dunk to just short sell it. |
What does pink-sheet mean related to stocks? | It's an over-the-counter stock quote system. Read all about it. Or visit it. |
As an employer, how do I start a 401k or traditional IRA plan? | If you are the sole owner (or just you and your spouse) and expect to be that way for a few years, consider the benefits of an individual 401(k). The contribution limits are higher than an IRA, and there are usually no fees involved. You can google "Individual 401k" and any of the major investment firms (Fidelity, Schwab, etc) will set one up free of charge. This option gives you a lot of freedom to decide how much money to put away without any plan management fees. The IRS site has all the details in an article titled One-Participant 401(k) Plans. Once you have employees, if you want to set up a retirement plan for them, you'll need to switch to a traditional, employer-sponsored 401k, which will involve some fees on your part. I seem to recall $2k/yr in fees when I had a sponsored 401(k) for my company, and I'm sure this varies widely. If you have employees and don't feel a need to have a company-wide retirement plan, you can set up your own personal IRA and simply not offer a company plan to your employees. The IRA contribution limits are lower than an individual 401(k), but setting it up is easy and fee-free. So basically, if you want to spend $0 on plan management fees, get an individual 401(k) if you are self-employed, or an IRA for yourself if you have employees. |
How much would it cost me to buy one gold futures contract on Comex? | In order to understand how much you might gain or lose from participating in the futures markets, it is important to first understand the different ways in which the slope of the futures markets can be described. In many of the futures markets there is a possibility of somebody buying a commodity at the spot price and selling a futures contract on it. In order to do this they need to hold the commodity in storage. Most commodities cost money to hold in storage, so the futures price will tend to be above the spot price for these commodities. In the case of stock index futures, the holder receives a potential benefit from holding the stocks in an index. If the futures market is upward sloping compared to the spot price, then it can be called normal. If the futures market is usually downward sloping compared to the spot price then it can be called inverted. If the futures market is high enough above the spot price so that more of the commodity gets stored for the future, then the market can be called in contango. If the futures market is below the point where the commodity can be profitably stored for the future, and the market can be called in backwardation. In many of these cases, there is an implicit cost that the buyer of a future pays in order to hold the contract for certainly time. Your question is how much money you make if the price of gold goes up by a specific amount, or how much money you lose if the price of gold goes down by the same specific amount. The problem is, you do not say whether it is the spot price or the futures price which goes up or down. In most cases it is assumed that the change in the futures price will be similar to the change in the spot price of gold. If the spot price of gold goes up by a small amount, then the futures price of gold will go up by a small amount as well. If the futures price of gold goes up by a small amount, this will also drive the spot price of gold up. Even for these small price changes, the expected futures price change in expected spot price change will not be exactly the same. For larger price changes, there will be more of a difference between the expected spot price change in expected future price change. If the price eventually goes up, then the cost of holding the contract will be subtracted from any future gains. If the price eventually goes down, then this holding cost should be added to the losses. If you bought the contract when it was above the spot price, the price will slowly drift toward the spot price, causing you this holding cost. If the price of gold does not change any from the current spot price, then all you are left with is this holding cost. |
Can a shareholder be liable in case of bankruptcy of one of the companies he invested in? | In an open corporation scenario a stock holder may well be found liable. It's a very narrow and uncommon bunch of scenarios but it's well worth sharing. See the paragraph on open corporations in the following document: http://nationalparalegal.edu/public_documents/courseware_asp_files/businessLaw/RightsOfShareholders/LiabilityOfShareholders.asp |
Are there guidelines for whom you should trust for financial advice (online, peer, experts, only myself, etc) | Nothing beats statistics like that found on Morning Star, Yahoo or Google Finance. When you are starting out, there is no need to reinvent the wheel. Pick a couple of mutual funds with good track records and start there. Keep in mind the financial press, to some degree, has a vested interest in having their readership chase the next hot thing. So while sites like Seeking Alpha, Kiplingers, or Money do provide some good advice, there is also an element that placates their advertisers. The only peer-to-peer lending I would consider is Lending Club. However, you are probably better off in the long run investing in mutual funds. One way to get involved in individual stocks without getting burned is to participate in Dividend Reinvestment Plans (DRIPs). Companies that have them tend to be very well established, and they are structured to discourage trading. Buying is easy, dividend reinvestment is easy, dividend payouts are easy; but, starting and selling is kind of a pain. That is a good thing. |
What is the buy-hold-sell indication based on? | To dig a little deeper, a number of analysts within (and without) Reuters are polled for their views on individual stocks and markets on buy-hold-sell. The individual analysts will be a varied bunch of fundamentalists, technical, quant and a mixture of the three plus more arcane methodologies. There may be various levels of rumors that aren't strong enough to be considered insider trading, but all of these will give an analyst an impression of the stock/market. Generally I think there isn't much value there, except from the point of view if you are a contrarian trader, then this will form a part of the input to your trading methodology. |
When writing a covered call, what's the difference between a “net debit” and a “net credit”? | I am not familiar with this broker, but I believe this is what is going on: When entering combination orders (in this case the purchase of stocks and the writing of a call), it does not make sense to set a limit price on the two "legs" of the order separately. In that case it may be possible that one order gets executed, but the other not, for example. Instead you can specify the total amount you are willing to pay (net debit) or receive (net credit) per item. For this particular choice of a "buy and write" strategy, a net credit does not make sense as JoeTaxpayer has explained. Hence if you would choose this option, the order would never get executed. For some combinations of options it does make sense however. It is perhaps also good to see where the max gain numbers come from. In the first case, the gain would be maximal if the stock rises to the strike of the call or higher. In that case you would be payed out $2,50 * 100 = $250, but you have paid $1,41*100 for the combination, hence this leaves a profit of $109 (disregarding transaction fees). In the other case you would have been paid $1,41 for the position. Hence in that case the total profit would be ($1,41+$2,50)*100 = $391. But as said, such an order would not be executed. By the way, note that in your screenshot the bid is at 0, so writing a call would not earn you anything at all. |
Is it better for a public company to increase its dividends, or institute a share buyback? | In some sense, the share repurchasing program is better if the company does not foresee the same profit levels down the road. Paying a dividend for several years and then suddenly not paying or reducing a dividend is viewed as a "slap in the face" by investors. Executing a share repurchase program one year and then not the next is not viewed as negatively. From an investor's standpoint, I would say a dividend is preferred over a share repurchase program for a similar reason. Typically companies that pay a dividend have been doing so for quite some time and even increasing it over time as the company increases profits. So, it can be assumed that if a company starts paying a dividend, it will do so for the long-run. |
How are they earning money in the movie “Trading Places”? | Sell 200 at 142. What does that mean? I haven't seen the movie, so I won't try to put anything in story context. "Sell 200 at 142" means to sell 200 units (usually shares, but in this case it would likely be gallons or barrels of orange juice or pounds or tons of frozen juice). In general, this could mean that you have 200 units and want to sell what you have. Or you could borrow 200 units from someone and sell those--this is called a naked short. In this case, it seems that what they are selling is a futures contract. With a futures contract, you are promising to obtain orange juice by some future date and sell it for the agreed price. You could own an orange grove and plan to turn your oranges into juice. Or you could buy a futures contract of oranges to turn into juice. Or you could arbitrage two futures contracts such that one supplies the other, what they're doing here. In general people make profits by buying low and selling high. In this case they did so in reverse order. They took the risk of selling before they had a supply. Then they covered their position by purchasing the supply. They profited because the price at which they bought was lower than the price at which they sold. The reason why this is necessary is that before buying the oranges, the orange juice makers need to know that they can make a profit. So they sell orange juice on the futures market. Then they know how much they can afford to pay for oranges on a different market. And the growers know how much they can get for oranges, so they can pay people to water and pick them. Without the futures markets, growers and orange juice makers would have to take all the risk themselves. This way, they can share risks with each other and financiers. Combined with insurance, this allows for predictable finances. Without it, growers would have to be wealthy to afford the variation in crop yields and prices. |
How to buy stuff (stocks?) in IRA account? What else? | You can buy stocks in the IRA, similarly to your regular investment account. Generally, when you open an account with a retail provider like TDAmeritrade, all the options available for you on that account are allowable. Keep in mind that you cannot just deposit money to IRA. There's a limit on how much you can deposit a year ($5500 as of 2015, $6500 for those 50 or older), and there's also a limit on top of that - the amount you deposit into an IRA cannot be more than your total earned income (i.e. income from work). In addition, there are limits on how much of your contribution you can deduct (depending on your income and whether you/your spouse have an employer-sponsored retirement plan). |
Personal loan to a friend procedure | If this isn't a case where you would be willing to forgive the debt if they can't pay, it's a business transaction, not a friend transaction. Establish exactly what the interest rate will be, what the term of the loan is, whether periodic payments are required, how much is covered by those payments vs. being due at the end of the term as a balloon payment, whether they can make additional payments to reduce the principal early... Get it all in writing and signed by all concerned before any money changes hands. Consider having a lawyer review the language before signing. If the loan is large enough that it might incur gift taxes, then you may want to go the extra distance to make it a real, properly documented, intra-family loan. To do this you must charge (of at least pay taxes on) at least a certain minimal interest rate, and they have to make regular payments (or you can gift them the payments but you still won't up paying tax on the interest income). In this case you definitely want a lawyer to draw up the papers, I think. There are services on the web Antioch specialize in helping to set this up properly, and which offer services such as bookkeeping and monthly billing (aT extra cost) to make it less hassle for the lender. If the loan will be structured as a mortgage on the borrower's house -- making the interest deductible for the borrower in the US -- there are additional forms that need to be filled. The services can help with that too, for appropriate fees. Again, this probably wants experts writing the agreement, to make sure it's properly written for where you and the borrower live. Caveat: all the above is assuming USA. Rules may be very different elsewhere. I've done a formal intractability mortgage -- mostly to avoid gift tax -- and it wasn't too awful a hassle. Your mileage will vary. |
Multiple accounts stagnant after quitting job. | Adapted from an answer to a somewhat different question. Generally, 401k plans have larger annual expenses and provide for poorer investment choices than are available to you if you roll over your 401k investments into an IRA. So, unless you have specific reasons for wanting to continue to leave your money in the 401k plan (e.g. you have access to investments that are not available to nonparticipants and you think those investments are where you want your money to be), roll over your 401k assets into an IRA. But I don't think that is the case here. If you had a Traditional 401k, the assets will roll over into a Traditional IRA; if it was a Roth 401k, into a Roth IRA. If you had started a little earlier, you could have considered considered converting part or all of your Traditional IRA into a Roth IRA (assuming that your 2012 taxable income will be smaller this year because you have quit your job). Of course, this may still hold true in 2013 as well. As to which custodian to choose for your Rollover IRA, I recommend investing in a low-cost index mutual fund such as VFINX which tracks the S&P 500 Index. Then, do not look at how that fund is doing for the next thirty years. This will save you from the common error made by many investors when they pull out at the first downturn and thus end up buying high and selling low. Also, do not chase after exchange-traded mutual funds or ETFs (as many will likely recommend) until you have acquired more savvy or interest in investing than you are currently exhibiting. Not knowing which company stock you have, it is hard to make a recommendation about selling or holding on. But since you are glad to have quit your job, you might want to consider making a clean break and selling the shares that you own in your ex-employer's company. Keep the $35K (less the $12K that you will use to pay off the student loan) as your emergency fund. Pay off your student loan right away since you have the cash to do it. |
How to prevent myself from buying things I don't want | Since these are specific items that you don't really want to buy, it might help to figure out what you could spend that money on that you DO really want. It sounds like right now you are thinking "Wow, I can get this widget (that I don't really want) for so cheap with this discount code!" Try changing your thinking to something along the lines of "This widget is pretty cool, but I could buy this doodad that I really want instead" or "This widget is nice, but if I don't buy it, I could have a latte every other day this month." I've found this to be a very effective technique-- and I often don't end up buying the doodads or lattes either. It's just a good way to put the cost of your purchase in perspective. The other thing I do when I want something is to write it down and revisit it a week or so later. If I still want it and I still have the budget for it (and especially if I've skipped other purchases to save up for it), then I buy it. That advice doesn't sound like it will work for you though, since it sounds like you've wanted to buy these things for a long time. So... are you REALLY sure you don't want them, or do you just not want to want them? |
How can I determine if a debt consolidation offer is real or a scam? | I believe no-one who's in a legal line of business would tell you to default voluntarily on your obligations. Once you get an offer that's too good to be true, and for which you have to do something that is either illegal or very damaging to you - it is probably a scam. Also, if someone requires you to send any money without a prior written agreement - its probably a scam as well, especially in such a delicate matter as finances. Your friend now should also be worried about identity theft as he voluntary gave tons of personal information to these people. Bottom line - if it walks like a duck, talks like a duck and looks like a duck, it is probably a duck. Your friend had all the warning signs other than a huge neon light saying "Scam" pointing at these people, and he still went through it. For real debt consolidation companies, research well: online reviews, BBB ratings and reviews, time in business, etc. If you can't find any - don't deal with them. Also, if you get promises for debtors to out of the blue give up on some of their money - its a sign of a scam. Why would debtors reduce the debt by 60%? He's paying, he can pay, he is not on the way to bankruptcy (or is he?)? Why did he do it to begin with? |
Is Bitcoin a commodity or a currency [duplicate] | It has properties of both. Tax authorities will eventually give their opinion on this. Through its properties of finite quantity, fungibility, and resistance to forgery/duplication, it acts as a commodity. It can be sent directly between any two parties anywhere on Earth, without regard for the quantity transacted or physical distance, to act as a currency. By the way, establishing trust in a trust-free environment through cryptographic proof-of-work is a remarkable invention. Sending economic value, cheaply and securely, around the world in minutes, not days/weeks, is a remarkable invention. This is where the value comes from. |
Can warrants to buy stock contain conditions or stipulations other than price? | All sorts of conditions, yes. Most commonly is a limitation on the exercise date. The two more common would be American which is exercisable any time, and European which are only exercisable on their expiry date. Sometimes they may be linked to the original asset, and might only be convertible to stock if that original asset is given/sold back to the company. (Effectively perhaps making the bond convertible to stock). Lots more details on the Pedia, but in short, basically you need to read the warrant contract individually, as each will differ. |
What is market capitalization? [duplicate] | Market Capitalization is the product of the current share price (the last time someone sold a share of the stock, how much?) times the number of outstanding shares of stock, summed up over all of the stock categories. Assuming the efficient market hypothesis and a liquid market, this gives the current total value of the companies' assets (both tangible and intangible). Both the EMH and perfect liquidity may not hold at all times. Beyond those theoretical problems, in practice, someone trying to buy or sell the company at that price is going to be in for a surprise; the fact that someone wants to sell that many stocks, or buy that many stocks, will move the price of the company stock. |
Is it a bad idea to invest a student loan? | There will be many who will judge your proposal on the idea that subsidized loans should be available to those who need them, and should not be used by others who are simply trying to profit from them. Each school has a pool of money available to offer for subsidized and unsubsidized loans. If they are giving you a subsidized loan, they cannot allocate it to someone else who needs it. Once you weigh the investment risks, I agree that it is analogous to investing rather than repaying your mortgage quickly. If you understand the risks, there's no reason why you shouldn't consider other options about what to do with the money. I am more risk averse, so I happen to prefer paying down the mortgage quickly after all other investment/savings goals have been met. Where you fit on that continuum will answer the question of whether or not it is a "bad idea". |
What are the alternatives to compound interest for a Muslim? | My understanding of Muslim finance is that you may not lend money at interest, including investing in in things that pay interest. However you may still make investments: it just has to be in places where you get a share of profit, rather than a fixed rate of return. You would be better asking the Muslim community specifically for more details. The benefits of compound interest apply, more or less, to other non-fixed-interest investments. If you invest $1000 in a business and get a 10% rate of return, you have $1100 to invest in your next venture, which means it will be more profitable and so on. That's why the growth happens, not specifically because it is interest. Stocks do not pay interest, and the 'magic' applies to them too. The fact that you might lose as well as win complicates things, but doesn't change the principle. |
What are the common moving averages used in a “Golden Cross” stock evaluation? | Not sure why this hasn't received any answers yet... the link to the investopedia page you posted explains it pretty well, however when you hear about a golden cross in the media, it is most likely a reference to the 50-day SMA crossing above the 200-day SMA. In general, a golden cross consists of a short term MA that was previously below a long term MA crossing above that LT MA, however the most common reference will imply a 50/200 day cross because this is considered as a stronger signal (compared to shorter MAs). With that said, it's important to realize that the golden cross is just one of many technical analysis "signals", and the entire field of technical analysis is considered controversial, to say the least. Many studies, such as those examined in A Random Walk Down Wall Street, have found that after transactions costs are considered (e.g., the commissions you pay to your broker on every trade), "charting" is a losing proposition in the end. |
Put idle savings to use while keeping them liquid | I'm new to this, but how about putting a big part of your money into an MMA? I don't know about your country, but in Germany, some online banks easily offer as much as 2.1% pa, and you can access the money daily. If you want decent profit without risk this is a great deal, much better than most saving accounts. |
As an employee, when is it inappropriate to request to see your young/startup company's financial statements? | I think you need to realize that regardless of whether they are "shady" or not, owners/founders are by and large in it for themselves. You as an employee as just a resource - why should they divulge their finances to you? You won't offend them if you pry and ask for it, but they simply are not going to give you the straight up. They will give you a bare minimum or some song and dance that beats around the bush without actually telling you what you need to know. In regards to whether you should buy the restricted shares: why not? Startups are a gamble anyway. So simply decide how much you're willing to gamble, and spend that much buying some shares. I mean, you're already taking the gamble by accepting a lower salary in exchange for equity which, in all likelihood, will never be worth anything anyway. |
What is the best approach to save money for College for three kids? | I'm not a 'rule of thumb' guy, but here, I'd suggest that if you can set aside 10% of your income each year for college, that would be great. That turns out to be $900/mo. In 15 years, if you saw an 8% CAGR, you'd have $311K which happens to be in your range of expenses. And you'd still have time to go as the baby won't graduate for 22(?) years. (Yup, 10% is a good rule of thumb for your income and 3 kids) Now, on the other hand, I'd research what grants you'd be able to get if you came up short. If instead of saving a dime, you funded your own retirement and the spouse's IRA if she's not working, and time the mortgage to pay it off in 15 years from now, the lack of liquid funds actually runs in your favor. But, I'm not an expect on this, just second guessing my own fully funded college account for my daughter. |
Does reading financial statements (quarterly or annual reports) really help investing? | Reading financial statements is important, in the sense that it gives you a picture of whether revenues and profits are growing or shrinking, and what management thinks the future will look like. The challenge is, there are firms that make computers read filings for them and inform their trading strategy. If the computer thinks the stock price is below the growth model, it's likely to bid the stock up. And since it's automated it's moving it faster than you can open your web browser. Does this mean you shouldn't read them? In a sense, no. The only sensible trading strategy is to assume you hold things for as long as their fundamentals exceed market value. Financial statements are where you find those fundamentals. So you should read them. But your question is, is it worth it for investors? My answer is no; the market generally factors information in quickly and efficiently. You're better off sticking to passive mutual funds than trying to trade. The better reason to learn to read these filings is to get a better sense of your employer, potential employers, competitors and even suppliers. Knowing what your margins are, what your suppliers margins and acquisitions are, and what they're planning can inform your own decision making. |
What are the taxes for trading debt/equity in India? | Are these all of the taxes or is there any additional taxes over these? Turn-over tax is not for retail investors. Other taxes are paid by the broker as part of transaction and one need not worry too much about it. Is there any "Income tax" to be paid for shares bought/holding shares? No for just buying and holding. However if you buy and sell; there would be a capital gain or loss. In stocks, if you hold a security for less than 1 year and sell it; it is classified as short term capital gain and taxes at special rate of 15%. The loss can be adjusted against any other short term gain. If held for more than year it is long term capital gain. For stock market, the tax is zero, you can't adjust long term losses in stock markets. Will the money received from selling shares fall under "Taxable money for FY Income tax"? Only the gain [or loss] will be tread as income not the complete sale value. To calculate gain, one need to arrive a purchase price which is price of stock + Brokerage + STT + all other taxes. Similar the sale price will be Sales of stock - Brokerage - STT - all other taxes. The difference is the gain. Will the "Dividend/Bonus/Buy-back" money fall under taxable category? Dividend is tax free to individual as the company has already paid dividend distribution tax. Bonus is tax free event as it does not create any additional value. Buy-Back is treated as sale of shares if you have participated. Will the share-holder pay "Dividend Distribution Tax"? Paid by the company. What is "Capital Gains"? Profit or loss of buying and selling a particular security. |
Why can't online transactions be completed outside of business hours? | Generally, unless you're doing a wire transfer, bank transactions are processed in batches overnight. So the credit card company won't be able to confirm your transfer until the next business day (it may take even longer for them to actually receive the money). |
Recourse with Credit Card company after victimized by fraud? | If the business is being investigated by your state's Attorney General's office, then your first call should be to that office. They will be able to help you in a few ways, even if they can't explicitly resolve the situation, and they also would undoubtedly appreciate your information to add to their case as well. First, they may be able to tell you how other victims have had their cases resolved, particularly if any went to court on their own. While they won't be able to provide you with personal information of the other victims unless it is public knowledge (via a court case), the information about how the other victims resolved the cases may be helpful - both to show what to do, and what not to do. Second, they may be able to put you in contact with an attorney who is handling other cases like yours. That may reduce the cost of the attorney (as they'll have already done some of the work), and may mean that the attorney is willing to work with no up front fee on the assumption of winning the case. Third, if there are options for getting your money back without a court case, the AG's office may be able to help provide those as well. If the Attorney General's office is unable to help you, then your best bet is to contact an attorney on your own - look for one who specializes in consumer protection and fraud. This is the purpose attorneys exist for: pursuing your interests against another's. Let them do their job. Do make an effort to find a good, honest attorney; you may find some help on how to do this on law.se if you need it (not actual recommendations, mind you, just help with how you would go about finding one). It sounds like your claim would be above and beyond the level of a small claims court lawsuit, but verify this in your jurisdiction; if small claims court goes up to $10,000, you may be able to pursue it there on your own - but I would still get some help from an attorney, at least finding out what you would need to win. |
What is a subsidy? | A subsidy is a payment made by a group (usually the state) to individuals or corporations in order to shift the balance if the rational economic decision for the individual would be detrimental to the group as a whole otherwise. For example, if there are different quality kinds of crops that can be planted, for example a GM maize that brings in high yields but can only be processed to High Fructose Corn Syrup or a naturally bred corn that brings lower yields but tastes well enough for direct consumption, then if demand for both exceeds supply, the economic choice for the individual farmer is to plant the former. If the claims that HFCS contribute to obesity are founded, then it is in the public interest to produce less of it, and more alternative foods. Given that a market rather than a planned economy is desired, this cannot be achieved by decree, but rather money is used as an incentive. In the long term, this investment may very well pay off through reduced health care costs, so it is a rational economic decision from the state's point of view. In a world where all actors make decisions that are fully in their self interest, in principle subsidies would not be needed as consumers would demand healthy rather than cheap foods, and market mechanisms would provide these. |
Should I close unused credit cards before applying for another? | If you're looking for cause-effect, applying for another card won't matter at all if you're not paying any interest, or not looking to get another installment loan for which the rate you get depends on your credit rating. If you are looking to get another installment loan, then having more credit at your disposal might hurt a small amount. I wouldn't want to cancel your oldest card. The GEMB card looks like a good candidate if you want to cancel because you're not using it, and it's a relatively new card. |
Are Target Funds Unsafe - Post Q.E.? | It's a what-if? sort of question. What if rates stay down or trend only slightly higher, despite no QE? look at other countries response to tepid economies. My experience as professional advisor (25 yrs) tells me the future is unknowable and diversity is good. Make alternative choices- they all won't work wonderfully, but some will. |
How to reconcile final payment on installment sale for IRS form 6252? | Reading IRS Regulations section 15a.453-1(c) more closely, I see that this was a contingent payment sale with a stated maximum selling price. Therefore, at the time of filing prior years, there was no way of knowing the final contingent payment would not be reached and thus the prior years were filed correctly and should not be amended. Those regulations go on to give an example of a sale with a stated maximum selling price where the maximum was not reached due to contingency and states that in such cases: When the maximum [payment] amount is subsequently reduced, the gross profit ratio will be recomputed with respect to payments received in or after the taxable year in which an event requiring reduction occurs. However, in this case, that would result in a negative gross profit ratio on line 19 of form 6252 which Turbo Tax reports should be a non-negative number. Looking further in the regulations, I found an example which relates to bankruptcy and a resulting loss in a subsequent year: For 1992 A will report a loss of $5 million attributable to the sale, taken at the time determined to be appropriate under the rules generally applicable to worthless debts. Therefore, I used a gross profit ratio of zero on line 19 and entered a separate stock sale not reported on a 1099-B as a worthless stock on Form 8949 as a capital loss based upon the remaining basis in the stock sold in an installment sale. I also included an explanatory statement with my return to the IRS stating: In 2008, I entered into an installment sale of stock. The sale was a contingent payment sale with a stated maximum selling price. The sales price did not reach the agreed upon maximum sales price due to some contingencies not being met. According to the IRS Regulations section 15a.453-1(c) my basis in the stock remains at $500 in 2012 after the final payment. Rather than using a negative gross profit ratio on line 19 of form 6252, I'm using a zero ratio and treating the remaining basis as a schedule-D loss similar to worthless stock since the sale is now complete and my remaining basis is no longer recoverable. |
Relation between inflation rates and interest rates | Possibly but not necessarily, though that can happen if one looks at the US interest rates in the late 1970s which did end with really high rates in the early 1980s. Generally interest rates are raised when inflation picks up as a way to bring down inflation. |
Terminology: What are the labels associated with a share called? | If the first one is literally a company name, then 'company name' is fine. However, companies can issue shares more than once, and those shares might be traded separately, so you could have 'Google ordinary', 'Google preference', 'Google ordinary issue B'. Seeing the name spelled out in full like this isn't as common as just the company name, but I'd normally see it referred to as 'display name'. The second one is 'symbol', 'ticker', 'ID', and others. Globally, there are many incompatible ways of referring to a stock, depending on where it's listed (companies can have dual listings, and different exchanges have different conventions), and who's referring to it (Bloomberg and Reuters have different sets of IDs, with no predictable mapping between them). So there's no one shorthand name, and the word you use depends on the context. However, 'symbol' or 'ticker' is normally fine. |
What is the difference between a bad/bounced check and insufficient funds? | There is no difference they are both insufficient in 1 form or another.Bad slang for any check the bank won't cash, for any reason, Ie. insf. unreadable amount, acct or routing number, the acct.has been closed, or you didn't write the check(fraud). Bounced is slang for bank returned check unpaid.I wrote a bad check but it didn't bounce.The check is still insufficient but the bank didn't return it. $500.00 is the felony threshold in okla. less than $500.00 is a misdemeanor. but insf. fees ranging from ($25.00 to $50.00 vendor returned check fee + amount of check) x (bank insf fees of $25 to $50)is an effective deterent. |
How much should a new graduate with new job put towards a car? | As an absolute basic in life you always need 1 month's salary free and clear sitting in the bank. You do not have this. You don't even get to count that. It's what Napoleon would refer to as an "iron reserve": you have to have this. You actually won't even have this for some two or three months. Note that you have a staggering amount of debt. You have absolutely no assets. You own nothing. You have no savings. So at this point we can say "Could your situation be any worse?" and the answer is "It could not be any worse." On the "good things in your outlook" side you have the idea that you probably have a job (it's unfortunate how you refer to it as "will pay" when you mean "might pay") but you're in perhaps the highest-expense, most-flakey economic zone on Earth. Recall that i) every company eventually closes and ii) every job eventually ends. The next incredible problem you face is that I'm guessing you just have no clue how expensive it is to insure and run a car. Any ideas of buying anything more than a junker is a non-starter, but on top of that you're not realizing how expensive it is going to be for you to run a car. Disturbingly, you have a very poor idea of even how far it is you have to drive each day. The only realistic solution for you is to bike each day to work (buy the cheapest possible bike); become the "eccentric guy" who really focusses on health. Bike in for an hour, shower at the office or a nearby gym, enjoy your day and bike home. You'll need a backpack to carry your pack lunch, buy the cheapest backpack. Since it's LA, it may be impractical. You may literally need a car. In that case, your only solution is That's the only thing you can do. Plain lean on your parents or relatives to borrow some old car and use that. (It will still cost you an awful lot of money to do so - repairs, tires, insurance, and everything else.) A reminder, You do not have your one-month "iron reserve". You have a staggering amount of debt. You have absolutely no assets. You own nothing. You have no savings. Additionally you live with the parents; you have a dream of a job (in one the highest-priced, most flakey regions) and "job" is another word for no security - jobs evaporate all the time for many reasons. Please be careful. Regarding a car, find a way to borrow one; offer to make a repair on it, say. Don't spend one cent on anything your first six months at work, concentrate only on your job. See where you are after six months. |
Should I have more than one brokerage account? | I believe the answer here is no: SIPC protection of customers with multiple accounts is determined by "separate capacity." Each separate capacity is protected up to $500,000 for securities and cash (including a $250,000 limit for cash only). Accounts held in the same capacity are combined for purposes of the SIPC protection limits. So even having 2 individual accounts - you would only be covered for $500,000/$250,000. You can see more about the type of accounts that would give your more coverage here. Also note: If you own a stock - the record probably exist. Therefore you would not lose your ownership or shares. The SIPC is there to protect the times this does not happen. |
What emergencies could justify a highly liquid emergency fund? | If you engage in any kind of dangerous activity, the training courses will often state that an accident is not the result of a simple error. Examples of this include SCUBA and motorcycle training. Properly maintained equipment and training will mitigate many emergencies. Recently my dive buddy was 60' down, and ran out of air due to a tank O ring failure. She did not panic, and all of the dive team rallied to get her to the surface without anyone getting hurt, or even coming close to it. Financial tragedies are similar. In some cases, a single event triggers an avalanche of events that leads to tragedy. For example, hard economic times may lead to an employer doing 5% pay cuts across the board. However, they also cut bonuses and other ancillary pay items. This leads to a real cut of 20-25% of income. Leading a true cash flow emergency. As such cutbacks are needed, and this might put a strain on an already shaky relationship, this leads to that relationship ending, requiring more cash. Perhaps a car dies in this process or some household item needs repairing. Sure one can borrow money, but this tends to exasperate the avalanche rather than solve it. Having a low debt and a liquid emergency fund stops the avalanche in its tracks. In the case cited above issues would have been solved if the person lived off of 50% of their income rather than the way most people live (paycheck-to-paycheck). Also if there were savings for the car repair then that becomes a pain, but not a true stress. Think of a liquid emergency fund as "properly maintained equipment". It allows you to build a financial life on a solid foundation. In my own case, I attempted to live and invest without an emergency fund. It just did not work. I often had to liquidate investments at in opportune times, and could never really hold onto money. With the foundation of an emergency fund, one can build a prosperous life for one's self. You are welcome to try it your way, but if you fall, hopefully you will remember this answer and build your foundation first. |
What are the contents of fixed annuities? | For a variable annuity, you need to know the underlying investments and how your returns are credited to your account. For a fixed annuity, the issuer is responsible for the commitment to provide the promised rate to you. In a sense, how they invest isn't really your concern. You should be concerned about the overall health of the company, but in general, insurance companies tend to know their business when they stick to their strengths: writing insurance on groups and producing annuity contracts. I don't care for VAs or the fixed annuities you asked about, but I don't believe they resemble a ponzi scheme, either. |
How big of a mortgage can I realistically afford? | I bought a house 6 months ago for $240,000 on an $80k salary am getting by just fine and am able to save money (and I live on Long Island, an extremely expensive area to live). I would look at finding a few more interest rate quotes; for instance, Wells Fargo is offering 4.25% right now for FHA (first time home buyers) loan (which only require 3.5% down). A lower interest rate will lower your monthly payment. Make the banks compete with one another - this little bit of leg-work will save you thousands upon thousands of dollars in the long run). Also, try to negotiate to NOT paying a point down on the mortgage - most of the time they are bull, especially in this economy (banks are desperate for new loans). However, as others have said, do not assume or count on rent coming in to be able to afford your mortgage (unless you are married). What if your friend moves out and you cannot find another tenant? However, I strongly recommend you talk to a financial adviser and your bank mortgage loan officer to work out the numbers - you will be surprised what you can afford when you factor in your income tax and mortgage interest write-offs. |
Should I wait a few days to sell ESPP Stock? | It depends on how the program is run. If the company runs the program out of treasury stock (shares that are authorized, but not issued), then there aren't any shares being purchased on the open market. Because of that, the share price wouldn't be affected. If you look in your employer's annual report, you will probably find how the program is run and how many shares are issued annually under that program. By comparing that to the daily trading volume of the company's stock you can gauge whether there's any likelihood of the share price being affected by the employee purchases. That is, of course, if shares are being purchased on the open market. For example, here is Books-A-Million's program, as described in their 2011 annual report: Employee Stock Purchase Plan The Company maintains an employee stock purchase plan under which shares of the Company’s common stock are reserved for purchase by employees at 85% of the fair market value of the common stock at the lower of the market value for the Company’s stock as of the beginning of the fiscal year or the end of the fiscal year. On May 20, 2010, the stockholders of the Company approved an additional 200,000 shares available for issuance under the plan, bringing the aggregate number of shares that may be awarded to 600,000. Of the total reserved shares, 391,987, 373,432 and 289,031 shares have been purchased as of January 29, 2011, January 30, 2010 and January 31, 2009, respectively. This describes an instance of the employee purchase program being run from unissued stock, not open market purchases. From it, we can tell 18,555 shares were issued during the past fiscal year. As their average daily volume is ~40,000 shares, if the program were run from a single open market purchase, it would have potential to "move the market". One would think, though, that a company running it from open market purchases would spread the purchases over a period of time to avoid running up the price on themselves. |
What tax law loophole is Buffet referring to? | A Section 1256 contract is any: Non-equity options include debt options, commodity futures options, currency options, and broad-based stock index options. A broad-based stock index is based upon the value of a group of diversified stocks or securities (such as the Standard and Poor's 500 index). 60% of the capital gain or loss from Section 1256 Contracts is deemed to be long-term capital gain or loss and 40% is deemed to be short-term capital gain or loss. What this means is a more favorable tax treatment of 60% of your gains. http://www.tradelogsoftware.com/tax-topics/futures/ It's a really wierd rule (arbitraty 60% designation, so broad, etc), but section 1256 contracts get preferential tax treatment and that's what Buffett's talking about. |
What can I replace Microsoft Money with, now that MS has abandoned it? | Check the Financial section in this list of Open Source Software |
Why does money value normally decrease? | Your house doesn't need to multiply in order to earn a return. Your house can provide shelter. That is not money, but is an economic good and can also save you money (if you would otherwise pay rent). This is the primary form of return on the investment for many houses. It is similar for other large capital investments - like industrial robots, washing machines, or automobiles. The value of money depends on: As long as the size and velocity of the money supply changes about as much as the overall economic activity changes, everything is pretty much good. A little more and you will see the money lose value (inflation); a little less and the money will gain value (deflation). As long as the value of inflation or deflation remains very low, the specifics matter relatively little. Prices (including wages, the price of work) do a good job of adjusting when there is inflation or deflation. The main problem is that people tend to use money as a unit of account, e.g. you owe $100,000 on your mortgage, I have $500 in the bank. Changing the value of those numbers makes it really hard to plan for the future! Imagine if prices and wages fell in half: it would be twice as hard to pay off your mortgage. Or if the bank expected massive inflation in the future: they would want to charge you a lot more interest! Presently, inflation is the norm because the government entities, who help adjust how much money there will be (through monetary policy - interest rates and the like - ask about it if you're interested), will generally gradually increase the supply of money a little bit more quickly than the economy in general. They may also be worried that outright deflation over the long term will lead to people postponing purchases (to get more for their money later), harming overall economic activity, so they tend to err on the slightly positive side. The value of money, however, has not really "ordinarily decreased" until the modern era (the 1930s or so). During much of history, a relatively low fixed amount of valuable commodities (gold) served as money. When the economy grew, and the same amount of money represented more economic activity, the money became more valuable, and deflation ensued. This could have the unfortunate effect of deterring investment, because rich jerks with lots of money could see their riches increase just by holding on to those riches instead of doing anything productive with them. And changes in the supply of gold wreaked havoc with the money supply whenever there was some event like a gold rush: Because precious metals were at the base of the monetary system, rushes increased the money supply which resulted in inflation. Soaring gold output from the California and Australia gold rushes is linked with a thirty percent increase in wholesale prices between 1850 and 1855. Likewise, right at the end of the nineteenth century a surge in gold production reversed a decades-long deflationary trend and is often credited with aiding indebted farmers and helping to end the Populist Party’s strength and its call for a bimetallic (gold and silver) money standard. -- The California Gold Rush Today, there is way too little gold production to represent all the growth in world economic activity - but we don't have a gold standard anymore, so gold is valuable on its own merits, because people want to buy it using money, and its price is free to fluctuate. When it gets more valuable, and people pay more for it, mines will go through more effort to locate, extract and refine it because it will be more profitable. That's how most commodities work. For more information on these tidbits of history, some in-depth articles on: |
What one bit of financial advice do you wish you could've given yourself five years ago? | Get an advanced degree. This should increase your earning power. Also learn how to use a computer, this should also tend to increase your earning power. |
Sale of house profit gifted to child | 1) You parents will have to pay tax on the gain as it wasn't their primary home. You don’t pay Capital Gains Tax when you sell (or ‘dispose of’) your home if all of the following apply: As I look at it, it is your parents are the ones who own the property and they will have to pay on £60000. But as you say you pay part of the mortgage, I would go to a tax advisor/accountant to confirm if they will only pay on the £15000. I couldn't find any guidance on that matter on gov.uk 2) Inheritance tax will not be levied on it as it is below £325000, but tax will be levied on £325000, less £3000 annual gift allowance. Two articles for further information - GOV.UK's Tax when you sell your home Money.co.UK's Gifting money to your children: FAQs |
Getting started in stock with one special field of activity | You are always best off investing in things you understand. If you have a deep understanding of the aeronautical industry, say, you are a Vice President at Boeing and have been working at Boeing for 40 years, then that would be a reason for investing in that sector: because you may be able to better evaluate different companies in that sector. If you are a novice in the sector, or just have an amateur interest in it, then it may not be a good idea, because your knowledge may not be sufficient to give you much of an advantage. Before focusing on one investment of any type, industry sector based, or otherwise, you want to ask yourself: am I an expert in this subject? The answer to that question will have a big impact on your success. |
I earn $75K, have $30K in savings, no debt, rent from my parents who are losing their home. Should I buy a home now or save? | To be honest, if it's a home all of you share you should try and save the home for your parents. your 26, you will have plenty of time to make 30k again. Having a home headquarters will bring some security to the family. Not only that your parents are old now, it could be hard for them to get another home. They have sacrificed for you, so maybe you should sacrifice for them? Thank god i have no family. |
Why so much noise about USA's credit rating being lowered? | The credit scale is deceptive, it goes: AAA, AA, A, BBB, BBB-, BB+, BB, B, CCC, CC, C, D. In reality it should be A,B,C,D,E, F, G,H, I, etc. The current scale does not reflect with clarity the ranking of risks and ratings. AA is much worse than AAA, but the uncertainty involved can be scary. Check out these corporate and sovereign debt credit ratings. |
Why is company provided health insurance tax free, but individual health insurance is not? | All questions regarding why is activity X taxed but activity Y taxed differently boils down to: The legislature wanted to promote or discourage the activity. By making employer provided healthcare tax free to the employee, the average worker like the plan. Not only is a significant portion not coming out of my paycheck, I also don't have to pay taxes on the benefit. Some organization pushed for this and the legislature agreed. |
When is Cash Value Life Insurance a good or bad idea? | Buy term and invest the difference is certainly the standard recommendation, and for good reason. When you start looking at some sample numbers the "buy term and invest the difference" strategy starts to look very good. Here are the rates I found (27 yr old in Texas with good health, non-smoker, etc): $200k term life: $21/month $200k whole life: $177/month If you were to invest the difference in a retirement account for 40 years, assuming a 7% rate of return (many retirement planning estimates use 10%) you would have $411,859 at the end of that period. (If you use 10% that figure jumps to over $994k.) Needless to say, $400k in a retirement account is better than a $200k death benefit. Especially since you can't get the death benefit AND the cash value. Certainly one big difficulty is making sure you invest that difference. The best way to handle that is to set up a direct deposit that goes straight from your paycheck to the retirement account before it even touches your bank account. The next best thing would be an automatic transfer from your bank account. You may wonder 'What if I can no longer afford to invest that money?' First off, take a second and third look at your finances before you start eating into that. But if financial crisis comes and you truly can't afford to fund your own life insurance / retirement account then perhaps it will be a good thing you're not locked into a life insurance policy that forces you to pay those premiums. That extra freedom is another benefit of the "buy term and invest the difference" strategy. It is great that you are asking this question now while you are young. Because it is much easier to put this strategy into play now while you are young. As far as using a cash value policy to help diversify your portfolio: I am no expert in how to allocate long term investments after maxing out my IRA and 401k. (My IRA maxes out at $5k/year, another $5k for my wife's, another $16.5k for my 401k.) Before I maxed that out I would have my house paid for and kid's education saved for. And by then it would make sense to pay a financial adviser to help you manage all those investments. They would be the one to ask about using a cash value policy similar to @lux lux's description. I believe you should NEVER PUT YOUR MONEY INTO SOMETHING YOU DON'T UNDERSTAND. Cash value policies are complex and I don't fully understand them. I should add that of course my calculations are subject to the standard disclaimer that those investment returns aren't guaranteed. As with any financial decision you must be willing to accept some level of risk and the question is not whether to accept risk, but how much is acceptable. That's why I used 7% in my calculation instead of just 10%. I wanted to demonstrate that you could still beat out whole life if you wanted to reduce your risk and/or if the stock market performs poorly. |
High credit utilization, some high interest - but credit score not overly bad. How to attack debt in this situation? | The bottom line is you have an income problem. Your car payment seems very high relative to your income and your income is very low relative to your debt. Can you work extra jobs or start a small business to get that income up? In the US it would be fairly easy to work some part time jobs to get that income up about 1000 per month. With that kind of difference you could have this all knocked out (except for the car) in about a year. Then, six months later you could be done with your car. Most of the credit repair places are ripoffs in the US and I suspect it is similar around the world. |
Value investing | The June 2014 issue of Barclays Wealth's Compass magazine had a very nice succinct article on this topic: "Value investing – does a rules-based approach work?". It examines the performance of value and growth styles of investment in the MSCI World and S&P500 arenas for a few decades back, and reveals a surprisingly complicated picture, depending on sector, region and time-period. Their summary is basically: A closer look however shows that the overall success of value strategies derives mainly from the 1970s and 1980s. ... in the US, value has underperformed growth for over 25 years since peaking in July 1988. Globally, value experienced a 30% setback in the late 1990s so that there are now periods with a length of nearly 13 years over which growth has outperformed. So the answer to "does it beat the market?" is "it depends...". Update in response to comment below: the question of risk adjusted returns is interesting. To quote another couple of fragments from the piece: Since December 1974, [MSCI world] value has outperformed growth by 2.6% annually, with lower risk. This outperformance on a risk-adjusted basis is the so-called value premium that Eugene Fama and Kenneth French first identified in 1992... and That outperformance has, however, come with more risk. Historical volatility of the pure style indices has been 21-22% compared to 16% for the market. ... From a maximum drawdown perspective, the 69% drop of pure value during the financial crisis exceeded the 51% drop of the overall market. |
Why doesn't change in accounts receivable on balance sheet match cash flow statement? | QUICK ANSWER What @Mike Haskel wrote is generally correct that the indirect method for cash flow statement reporting, which most US companies use, can sometimes produce different results that don't clearly reconcile with balance sheet shifts. With regards to accounts receivables, this is especially so when there is a major increase or decrease in the company's allowances for doubtful accounts. In this case, there is more to the company's balance sheet and cash flow statements differences per its accounts receivables than its allowances for doubtful accounts seems responsible for. As explained below, the difference, $1.25bn, is likely owing more to currency shifts and how they are accounted for than to other factors. = = = = = = = = = = DIRTY DETAILS Microsoft Corp. generally sells to high-quality / high-credit buyers; mostly PC, server and other devices manufacturers and licensees. It hence made doubtful accounts provisions of $16mn for its $86,833mn (0.018%) of 2014 sales and wrote off $51mn of its carrying balance during the year. Its accounting for "Other comprehensive income" captures the primary differences of many accounts; specifically in this case, the "foreign currency translation" figure that comprises many balance sheet accounts and net out against shareholders' equity (i.e. those assets and liabilities bypass the income statement). The footnotes include this explanation: Assets and liabilities recorded in foreign currencies are translated at the exchange rate on the balance sheet date. Revenue and expenses are translated at average rates of exchange prevailing during the year. Translation adjustments resulting from this process are recorded to other comprehensive income (“OCI”) What all this means is that those two balance sheet figures are computed by translating all the accounts with foreign currency balances (in this case, accounts receivables) into the reporting currency, US dollars (USD), at the date of the balance sheets, June 30 of the years 2013 and 2014. The change in accounts receivables cash flow figure is computed by first determining the average exchange rates for all the currencies it uses to conduct business and applying them respectively to the changes in each non-USD accounts receivables during the periods. For this reason, almost all multinational companies that report using indirect cash flow statements will have discrepancies between the changes in their reported working capital changes during a period and the dates of their balance sheet and it's usually because of currency shifts during the period. |
Equity - date of offer, or date of joining? | TL;DR: The date they were granted. (Usually, this follows both an offer and acceptance.) It's not uncommon for a new vesting clock to start when there's a new round of funding coming in, because the investors want to make sure the key people are going to be engaged and incentivized going forward from that point. They don't lower their expectations for how long they want folks engaged based on the person having started earlier. Non-institutional investors may have the same concerns as institutional investors here and use the same vesting strategy to address them. Primary recognition of the benefits from having had people start earlier or be there longer (so long as it correlates with having gotten more done) is embedded in the valuation (which affects how much founders' shares are diluted in the raise). |
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