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Is there a good forum where I can discuss individual US stocks? | I've used Wikinvest before and think that's close to what you're looking for - but in Wiki-style rather than forums. Otherwise, I agree with CrimsonX that The Motley Fool is a good place to check out. |
How does giving to charity work? | If I donate $10,000 to charity then I can deduct that $10,000 from my income and not pay income taxes on it. So if I make $50,000 a year then I will only pay income taxes on $40,000 instead of $50,000 since I donated $10,000 to charity. This is what is meant when charity contributions are said to be tax deductible. Don't feel like you have to donate to charity. You owe no one anything. You do more for others by working (assuming you work in the private sector). If you know of someone personally that is in need of aid then you could give them some help directly. I find this more effective then blindly dumping money in a bureaucratic, inefficient charity. I also find there are very few people in need of charity. Personally, I think charity donations are a way for people to feel good about themselves. They rarely care if their donations are effective. |
Pros & cons of buying gold directly vs. investing in a gold ETF like GLD, IAU, SGOL? | If you want to speculate on gold price you should always buy an ETF/ETC (Exchange Traded Commodity). The reasons are simple: Easy to buy and sell (one mouse click) Cheap to buy and sell (small bank commission), compared to buy real gold (always 6 to 12% comission to the local shop when you buy and when you sell), see this one it's one cheap gold buy/sell shop I found on the internet But if you sometimes feel unsecure that you might one day loose everything due to a major economy collapse event (like an armageddon), or not to have enough money in bad periods or during retirment, and it makes you feel better to know you buried 999 Gold Sovereign in your house backyard (along with a rifle as suggested in comments), then just buy them and live an happy life (as long as you hide your gold in good ways and write a good treasury map). |
Value of credit score if you never plan to borrow again? | Only reason I can think of is that having a credit card, or several, is handy for buying stuff on-line, or not having to haul around a fat wallet full of cash. Of course for some of us, getting the cash back and 0% interest periods are nice, too, even if we don't really need the money. Same as for instance trying to get good mpg when you're driving, even if you could easily afford to fill up a Hummer. It's a game, really. |
How can I get a mortgage I can't afford? | You can ask the buyer to lower the price by the amount you are approved for and negation transferring the amount to him via a escrow.. |
Is there a limit on the dollar amount of a personal check? | Not really. A bank will honor a million dollar check if there are funds there to let it clear. |
Why does HMRC still require “payment on account” after I have moved to PAYE? | The Government self-assessment website states you can ask HMRC to reduce your payments on account if your business profits or other income goes down, and you know your tax bill is going to be lower than last year. There are two ways to do this: |
Is there an advantage to a traditional but non-deductable IRA over a taxable account? [duplicate] | The most common use of non-deductible Traditional IRA contributions these days, as JoeTaxpayer mentioned, is as an intermediate step in a "backdoor Roth IRA contribution" -- contribute to a Traditional IRA and then immediately convert it to a Roth IRA, which, if you had no previous pre-tax money in Traditional or other IRAs, is a tax-free process that achieves the same result as a regular Roth IRA contribution except that there are no income limits. (This is something you should consider since you are unable to directly contribute to a Roth IRA due to income limits.) Also, I want to note that your comparison is only true assuming you are holding tax-efficient assets, ones where you get taxed once at the end when you take it out. If you are holding tax-inefficient assets, like an interest-bearing CD or bond or a stock that regularly produces dividends, in a taxable account you would be taxed many times on that earnings, and that would be much worse than with the non-deductible Traditional IRA, where you would only be taxed once at the end when you take it out. |
What is a good rental yield? | I would just like to point out that the actual return should be compared to your down payment, not the property price. After all, you didn't pay $400K for that property, right? You probably paid only 20%, so you're collecting $20K/year on a $80K investment, which works out to 25%. Even if you're only breaking even, your equity is still growing, thanks to your tenants. If you're also living in one of the units, then you're saving rent, which frees up cash flow. Your increased savings, combined with the contributions of your tenants will put you on a very fast track. In a few years you should have enough to buy a second property. :) |
Should I use put extra money toward paying off my student loans or investing in an index fund? | Not all debt is bad. If it carries a reasonable interest rate, you don't need to clear it immediately. As for investing in an index fund, they're an affordable, easy way to spread your money over various assets. However, asset allocation is just one of many investment strategies. Ideally, you want to invest according to your goals, tax situation, and risk tolerance. You want a portfolio that dynamically allocates to various investment strategies, both beta and alpha, according to changing market conditions. Most importantly, you want systematic risk management for every aspect of your investments. |
Stocks: Where can I find a list of bankrupt/diluting stocks in the US? | The only recommendation I have is to try the stock screener from Google Finance : https://www.google.com/finance?ei=oJz9VenXD8OxmAHR263YBg#stockscreener |
What can I replace Microsoft Money with, now that MS has abandoned it? | I use http://moneydance.com/ it has Mac, Windows and Linux versions and works well for my needs. |
How could USA defaulting on its public debt influence the stock/bond market? | This is a speculative question and there's no "correct" answer, but there are definitely some highly likely outcomes. Let's assume that the United States defaults on it's debt. It can be guaranteed that it will lose its AAA rating. Although we don't know what it will drop to, we know it WILL be AA or lower. A triple-A rating implies that the issuer will never default, so it can offer lower rates since there is a guarantee of safety there.People will demand a higher yield for the lower perceived security, so treasury yield will go up. The US dollar, or at least forex rates, will almost certainly fall. Since US treasuries will no longer be a safe haven, the dollar will no longer be the safe currency it once was, and so the dollar will fall. The US stock market (and international markets) will also have a strong fall because so many institutions, financial or otherwise, invest in treasuries so when treasuries tumble and the US loses triple-A, investments will be hurt and the tendency is for investors to overreact so it is almost guaranteed that the market will drop sharply. Financial stocks and companies that invest in treasuries will be hurt the most. A notable exception is nations themselves. For example, China holds over $1 trillion in treasuries and a US default will hurt their value, but the Yuan will also appreciate with respect to the dollar. Thus, other nations will benefit and be hurt from a US default. Now many people expect a double-dip recession - worse than the 08/09 crisis - if the US defaults. I count myself a member of this crowd. Nonetheless, we cannot say with certainty whether or not there will be another recession or even a depression - we can only say that a recession is a strong possibility. So basically, let's pray that Washington gets its act together and raises the ceiling, or else we're in for bad times. And lastly, a funny quote :) I could end the deficit in 5 minutes. You just pass a law that says that anytime there is a deficit of more than 3% of GDP all sitting members of congress are ineligible for reelection. - Warren Buffett |
Why won't my retirement account let me write a “covered put”? | A "covered put" of the form of being short, and buying at the strike price if the "put ... is put" (excercise), is off the table simply because you can't do shorts in the retirement account. Even if you feel you "win" the argument that you're hedged by being short, any broker can say, "we simply forbid shorts" and that's that. A "covered put" of the form of posting the cash, and spending it to buy at the strike price if the "put ... is put" (excercise), might be forbidden by brokerages because, frankly, how do you account for the "dedicated" cash? Is it locked down like margin is, or escrow, or what? I don't know offhand how I would address that in my very own firm. Thus, any broker could say, "we forbid it" and that's that. The other answers are very interesting in conjunction with this. JoeTaxpayer says, very paraphrased, 'just cuz it's legal doesn't mean we have to offer it.' Jaydles says (again, completely paraphrasing), 'complex stuff for a safe little retirement savings account;' 'difficult to administer' (as I said, how do you account for it); and 'tradition' So maybe look at Scott, per Thorn's answer, LOL. It appears that you can shop around on this issue. |
Finding stocks following performance of certain investor, like BRK.B for Warren Buffet | Since the vast majority of fund managers/big investors run private entities, it's not possible to track their performance. It's possible to look at what they are holding (that's never real-time information) and emulate their performance. |
Are you preparing for a possible dollar (USD) collapse? (How?) | I recently finished reading a book that you may be interested in based on your question, The Ultimate Suburban Survivalist Guide. The author begins with a discussion of why he thinks the US economy and currency could collapse. It gets a little scary. Then he goes into great detail on commodities, specifically gold. The rest of the book is about what you can be doing to prepare yourself and your family to be more self sufficient. To answer your question, I do anticipate problems with US currency in the future and plan to put some money in gold if the price dips. |
CEO entitlement from share ownership? | In its basic form, a corporation is a type of 'privileged democracy'. Instead of every citizen having a vote, votes are allocated on the basis of share ownership. In the most basic form, each share you own gives you 1 vote. In most public companies, very few shareholders vote [because their vote is statistically meaningless, and they have no particular insight into what they want in their Board]. This means that often the Board is voted in by a "plurality" [ie: 10%-50%] of shareholders who are actually large institutions (like investment firms or pension funds which own many shares of the company). Now, what do shareholders actually "vote on"? You vote to elect individuals to be members of the Board of Directors ("BoD"). The BoD is basically an overarching committee that theoretically steers the company in whatever way they feel best represents the shareholders (because if they do not represent the shareholders, they will get voted out at the next shareholder meeting). The Board members are typically senior individuals with experience in either that industry or a relevant one (ie: someone who was a top lawyer may sit on the BoD and be a member of some type of 'legal issues committee'). These positions typically pay some amount of money, but often they are seen as a form of high prestige for someone nearing / after retirement. It is not typically a full time job. It will typically pay far, far less than the role of CEO at the same company. The BoD meets periodically, to discuss issues regarding the health of the company. Their responsibility is to act in the interests of the shareholders, but they themselves do not necessarily own shares in the company. Often the BoD is broken up into several committees, such as an investment committee [which reviews and approves large scale projects], a finance committee [which reviews and approves large financial decisions, such as how to get funding], an audit committee [which reviews the results of financial statements alongside the external accountants who audit them], etc. But arguably the main role of the BoD is to hire the Chief Executive Officer and possibly other high level individuals [typically referred to as the C-Suite executives, ie Chief Financial Officer, Chief Operating Officer, etc.] The CEO is the Big Cheese, who then typically has authority to rule everyone below him/her. Typically there are things that the Big Cheese cannot do without approval from the board, like start huge investment projects requiring a lot of spending. So the Shareholders own the company [and are therefore entitled to receive all the dividends from profits the company earns] and elects members of the Board of Directors, the BoD oversees the company on the Shareholders' behalf, and the CEO acts based on the wishes of the BoD which hires him/her. So how do you get to be a member of the Board, or the CEO? You become a superstar in your industry, and go through a similar process as getting any other job. You network, you make contacts, you apply, you defend yourself in interviews. The shareholders will elect a Board who acts in their interests. And the Board will hire a CEO that they feel can carry out those interests. If you hold a majority of the shares in a company, you could elect enough Board members that you could control the BoD, and you could then be guaranteed to be hired as the CEO. If you own, say, 10% of the shares you will likely be able to elect a few people to the Board, but maybe not enough to be hired by the Board as the CEO. Short of owning a huge amount of a company, therefore, share ownership will not get you any closer to being the CEO. |
When to hire an investment professional? | Don't invest in regular mutual funds. They are a rip-off. And, most investment professionals will not do much to help your financial future. Here's the advice: |
Visitor Shopping in the US: Would I get tax refund? Would I have to pay anything upon departure? | The US doesn't have a Value Added Tax, which is the one usually refundable upon departing the country... so sales taxes you pay in this country stay in this country and you don't get a refund. Just remember to treat the tax as an implied part of the price. (And be aware that state and local taxes may vary, so the total price may be higher in one place than in another. New York City adds a few percent on top of the state sales tax, for example.) If you aren't sure how much tax would be, don't be afraid to ask. |
Is it possible that for shares to be reinvested in a stock you already sold? | I believe this depends on the broker's policies. For example, here is Vanguard's policy (from https://personal.vanguard.com/us/whatweoffer/stocksbondscds/brokeragedividendprogram): Does selling shares affect a distribution? If you sell the entire position two days or more before the dividend-payable date, your distribution will be paid in cash. If, however, you sell an entire position within the two day time frame of the security's payable date, the dividend will be reinvested, resulting in additional shares. Selling these subsequent shares will require another sell order, which will incur additional commission charges. Dividends which would have been reinvested into less than one whole share will be automatically liquidated into cash. If you want to guarantee you receive no fractional shares, I'd call your broker and ask whether selling stock ABC on a particular date will result in the dividend being paid in shares. |
When does a low PE ratio not indicate a good stock? | PE can be misleading when theres a good risk the company simply goes out of business in a few years. For this reason some people use PEG, which incorporates growth into the equation. |
What is a good service that will allow me to practice options trading with a pretend-money account? | Try https://sparkprofit.com/ You practice with real market prices, and it's free. Plus you can get real money pay outs if you do well. I earned 1 cent! hahaha I gave up trying to make money from it, but you get an idea of doing trades and how impossible it is to predict what the price will be. It has some tutorials and helpful things too. |
Retirement savings vs building lucrative assets | Fahad, in finance we make a distinction between investments that tend to grow in value and assets that hold value. Investments that grow in value are generally related to investing in well-thought out businesses. Investments can be done in retirement accounts through stocks and bonds but also owning part of a business directly. Good investments make more and more money off the money you put in. Common examples of assets include gold and other non-productive property like real-estate you don't rent or cars. You can even have some assets in your retirement account as many would argue government bonds behave like assets. All of these things tend to (more or less) go up in value as the cost of everything goes up in value, but don't tend to make you any excess money in the long run. There is certainly a place for both investments and assets. Especially as a young person it is good to lean toward investments as you likely have a lot of time for the money to grow as you get older. As RonJohn suggests, in the United States this is fairly easy as retirement accounts are common there is a long history of stable financial law even in crises. Pakistan's institutions are fairly stable and improving but still assets and investments of all types can be riskier. So, I recommend taking your father's advice... partially. Having some assets are good in riskier situations, but good investments are generally the way to grow comfortably wealthy. A good mix of the two is the way to grow wealthy slowly while protecting yourself from risk. You, your father and your neighbors know you local situation better than I, who has only visited a number of Pakistan's neighboring countries, so I can't really give more detailed advice but hopefully this gets you started. |
How can I deal with a spouse who compulsively spends? | Perhaps it seems harsh, but I would get separate accounts: credit cards, savings, retirement, all the way down the line. Your only joint account should be for paying mortgage/rent and other bills. And as another poster said, delete all your saved info from browsers &c. Perhaps you even need to set up separate user ids. If this really is a case of compulsive spending, curing it is likely to be a long, hard process, if it's even possible. You need to put yourself in a position where you won't be dragged down with him. |
Where should I invest to hedge against the stock market going down? | If you believe the stock market will be down 20-30% in the next few months, sell your stock holdings, buy a protective put option for the value of the holdings that you want to keep. That would be hedging against it. Anything more is speculating that the market will fall. |
Are Exchange-Traded Funds (ETFs) less safe than regular mutual funds? | I wonder if ETF's are further removed from the actual underlying holdings or assets giving value to the fund, as compared to regular mutual funds. Not exactly removed. But slightly different. Whenever a Fund want to launch an ETF, it would buy the underlying shares; create units. Lets say it purchased 10 of A, 20 of B and 25 of C. And created 100 units for price x. As part of listing, the ETF company will keep the purchased shares of A,B,C with a custodian. Only then it is allowed to sell the 100 units into the market. Once created, units are bought or sold like regular stock. In case the demand is huge, more units are created and the underlying shares kept with custodian. So, for instance, would VTI and Total Stock Market Index Admiral Shares be equally anchored to the underlying shares of the companies within the index? Yes they are. Are they both connected? Yes to an extent. The way Vanguard is managing this is given a Index [Investment Objective]; it is further splitting the common set of assets into different class. Read more at Share Class. The Portfolio & Management gives out the assets per share class. So Vanguard Total Stock Market Index is a common pool that has VTI ETF, Admiral and Investor Share and possibly Institutional share. Is VTI more of a "derivative"? No it is not a derivative. It is a Mutual Fund. |
What do these options trading terms mean? | With stocks, you can buy or sell. If you sell first, that's called 'shorting.' As in "I think linkedin is too high, I'm going to short it." With options, the terminology is different, the normal process is to buy to open/sell to close, but if you were shorting the option itself, you would first sell to open, i.e you are selling a position to start it, effectively selling it short. Eventually, you may close it out, by buying to close. Options trading is not for the amateur. If you plan to trade, study first and be very cautious. |
Which Benjamin Graham book should I read first: Security Analysis or Intelligent Investor? | I would recommend reading Intelligent Investor first. It was written slightly more recently (1949) than Security Analysis (1934). More important is that a recently revised edition* of Intelligent Investor was published. The preface and appendix were written by Warren Buffett. Intelligent Investor is more practical as an introduction for a novice. You may decide not to read Security Analysis at all, as it seems more like an academic text or professional's guide i.e. for accounting. Benjamin Graham's Intelligent Investor remains relevant. It is used, successfully, as a guide for value investing, despite the hysteria of market sentiment and day-to-day variations, even extreme volatility. For example, I just read a nice article about applying the value investing principles extolled in Intelligent Investor a few weeks ago. It was written in the context of current markets, which is amazing, to be so applicable, despite the passage of decades. For reference, you might want to glance at this book review (published in March 2010!) of the original 1934 edition of Security Analysis. * The URL links to a one-paragraph summary by U.S. News & World Report. It does not link to a book sales website! |
Can housing prices rise faster than incomes in the long run? | When over the long term housing costs in a area rise faster than wages rise, the demographic of who lives in the area changes. The size and income parameters change. A region that was full of young singles is now populated with couples with adult children, that means that the businesses and amenities have to change. At a national level it isn't sustainable unless other items change. The portion of monthly income that can be safely allocated to housing would have to change. One adjustment could be the the lengthening of home loan periods, thus dropping the monthly payment. This has been seen with car loans, over the last few decades the length of loans has increased. In interesting related event could be the change in deduction of mortgage interest and property tax. If this was to change abruptly, there could be an abrupt change the estimated value of housing, because the calculus of affordability would change. |
Why would you ever turn down a raise in salary? | In the UK, recent changes to pension taxation mean that from April 2011, people earning between £150,000 and £180,000 total and making large pension contributions (>£50,000 or so) will pay a marginal tax rate on additional salary of >100%. This is because pension contributions normally attract tax relief at the highest marginal rate - i.e. 40% if the gross salary is above about £40,000, and 50% for salaries above £150,000. But after April 2011, the rate of relief will be tapered down for gross salaries above £150,000, reaching 20% for a gross salary of £180,000. So for example if you earn £175,000 and make a contribution of £50,000, then an additional £1,000 in salary will incur £500 of direct tax, and also lead to a 1% reduction in tax relief (from 25% to 24%), costing another £500. Once you factor in National Insurance of another 1% or so, the net effect of the pay rise is negative. |
How much is my position worth after 5-1 stock split? | The average price would be $125 which would be used to compute your basis. You paid $12,500 for the stock that is now worth $4,500 which is a loss of $8,000 overall if you sell at this point. |
Why is Insider Trading Illegal? | Secret formulas are legal, "privileged information" is not. And that may be the whole point. People are allowed to trade stocks profitably if doing so results only from their skill. A "secret formula" (for evaluating information) is part of that skill. But having "privileged information" is not considered skill. It is considered an unfair, illegal advantage. Because company officials (and others) with privileged information are 1) not permitted to trade stocks while that information is privileged and 2) are not allowed to share that information with others. Inevitably, some do one or the other, which is why they are prosecuted. "Raj" took the process to new highs (or lows). He not only "dealt" in privileged information, he PAID for it. Anything from a new car or house to $500,000 a year in cash. In essence, he had a bunch of strategically placed "spies" inside or close to corporations including one on the board of Goldman Sachs, "selling out" their companies, and thereby practicing a form of corporate "treason." |
Common Stock Options Value | Par value of common stock is essentially a historical artifact; it is a price at which the company will redeem shares directly. If common stock has any par value at all, it is always so low that no one would ever redeem, preferring to sell in the market at a better price. Par is obviously much more relevant to debt securities than equities. So you do need a strike price. ljwobker's letter is a typical one, in that companies often make the strike price for granted options a formula based on the market price of the stock at the time of the grant, say 100% of market or 110% of market. But you will obviously need to find out what strike your company is offering. |
Trading large volumes with penny profits per share | Currently my online savings account pays an interest rate of 1.25%. With 100K, I can earn about $104 per month in that account. No risk, no timing, no fuss. So in theory you can make money by small changes in the valuations of stock. However there are often better, risk free options for your money; or, there are much better options for returns with much less risk, but more than that of a bank account. |
Historical stock prices: Where to find free / low cost data for offline analysis? | I also searched for some time before discovering Market Archive, which AFAIK is the most affordable option that basically gives you a massive multi-GB dump of data. I needed sufficient data to build a model and didn't want to work through an API or have to hand-pick the securities to train from. After trying to do this on my own by scraping Yahoo and using the various known tools, I decided my time was better spent not dealing with rate-limiting issues and parsing quirks and whatnot, so I just subscribed to Market Archive (they update the data daily). |
When I ask a broker to buy stock, what does the broker do? | My answer isn't a full one, but that's because I think the answer depends on, at minimum, the country your broker is in, the type of order you place (limit, market, algo, etc.,) and the size of your order. For example, I can tell from watching live rates on regular lot limit orders I place with my UK-based broker that they hold limit orders internally until they see a crossing rate on the exchange my requested stock is trading on, then they submit a limit order to that exchange. I only get filled from that one exchange and this happens noticeably after I see my limit price print, and my fills are always better than my limit price. Whereas with my US-based broker, I can see my regular lotsize limit order in the order book (depth of book data) prior to any fills. I will routinely be notified of a fill before I see the limit price print. And my fills come from any number of US exchanges (NYSE, ARCA, BATS, etc.) even for the same stock. I should point out that the "NBBO" rule in the US, under SEC regulation NMS, probably causes more complications in handling of market and limit orders than you're likely to find in most countries. |
Potential pitfalls of this volume trading strategy | I wouldn't be turned off due to the difficult of parsing English, for a few reasons. Firstly, you don't have to perfectly parse to find meaning. You can look for keywords and write some algorithms to approximate, and of course if you get enough of a statistical advantage (and can repeat it) you can make money. Second, it probably isn't long before third-party software is made available either to do something like this or to provide a framework for it. In fact, it probably already is available somewhere. (Note the influx of Silicon Valley types to New York as more machine intelligence is applied to trading and journalism.) Thirdly, as hinted by the mention above of journalism, there's already software using numerical data to write pretty human articles. Some are pretty robotic and you can catch them (I noticed one and searched for a key phrase to discover several very much like it, each having a different fake author name). This will mean not only a continued improvement of parsing but also more push for more data to be released in machine-readable formats, such that press releases will be increasingly parsible. Finally, to vindicate your idea, the keyword approach has been done with some success. Try this link and note the additional links on the same topic. If you have the time and processing resources, you might like to try your idea by training a neural network to find correlations of keywords (and phrases -- that's important, too) with trends in the market. |
Where can I find a definition of psychological barriers with respect to marketable securities? | GuruFocus has an excellent summary of psychological barriers in the markets: http://www.gurufocus.com/news.php?id=88451 |
How long should I keep an uncleared transaction in my checkbook? | Typically I'll carry the charge for quite awhile, up to a year. If it hasn't cleared by then, I contact the institution that should have received the money to see what they want to do about it. If they tell me not to worry about it, then I change the payee to be "Overdraft Protection", and consider it as having been spent. That way I build up (slowly) a cushion in my checking account. |
Filing taxes on stocks | You need to submit an updated return. The problem is that once three years have passed you can't update the return to get any kind of refund, but if they are going after you for the sale price of the stocks, not knowing the cost, your goal is to show them there was no gain, and in fact you'd have had the loss if you were aware of the account. This is less than ten years back, so the broker should be able to give you the statements pretty easily. |
Can a company charge you for services never requested or received? | Here's another example of such a practice and the problem it caused. My brother, who lived alone, was missing from work for several days so a co-worker went to his home to search for him and called the local Sheriff's Office for assistance. The local fire department which runs the EMS ambulance was also dispatched in the event there was a medical emergency. They discovered my brother had passed away inside his home and had obviously been dead for days. As our family worked on probate matters to settle his estate following this death, it was learned that the local fire department had levied a bill against my brother's estate for $800 for responding with their ambulance to his home that day. I tried to talk to their commander about this, insisting my brother had not called them, nor had they transported him or even checked his pulse. The commander insisted theirs was common practice - that someone was always billed for their medical response. He would not withdraw his bill for "services". I hate to say, but the family paid the bill in order to prevent delay of his probate issues and from receiving monies that paid for his final expenses. |
What are the ins/outs of writing equipment purchases off as business expenses in a home based business? | First of all, Dilip's answer explains well how the business deductions generally work. For most (big) expenses you depreciate it. However, in some cases you need to capitalize it, which is another accounting method. When you capitalize your expense, it becomes part of the basis of the product you're creating. Since you're an engineer, this might be relevant for you. Talk to your tax adviser. How exactly you deduct/depreciate/capitalize things, and what expense goes which way depends greatly on the laws and jurisdictions. Even in the US, different states have different laws, and the IRS and State laws don't have to conform (unfortunately). For example, the limitations on Sec. 179 deduction in 2010-2011 were 20 times higher on Federal level than in the State of California. This could have lead to cases where you fully deducted your expense on your Federal tax return, but need to continue and depreciate it on your State return (or vice versa). Good tax adviser is crucial to avoid or manage these cases. |
Does dollar cost averaging apply when moving investments between fund families? | As mentioned by others, dollar cost averaging is just a fancy term for how many shares your individual purchases get when you are initially adding money to your investment accounts. Once the money is invested, annual or quarterly rebalancing serves the purpose of taking advantage of higher rates of growth in particular market sectors. You define the asset allocation based on your risk profile, time to retirement, etc., then you periodically sell the shares of the investments that have grown faster than the rest and buy more shares of the investments that are relatively cheaper. |
For what dates are the NYSE and U.S. stock exchanges typically closed? | All public US equity exchanges are closed on the 9 US trading holidays (see below) and open on all other days. Exchanges also close early (13:00 ET) on the Friday after Thanksgiving and on the day before Independence Day if Independence Day is being observed on a Tuesday, Wednesday, Thursday, or Friday. (Some venues have extended trading hours as a matter of course; for them an "early close" might be later than 13:00 ET.) To answer the second question, yes, if you know NASDAQ's or AMEX's holiday schedule, then you know NYSE's (modulo the timing of their early close). I'm not sure about the options exchanges; they're not regulated the same way and are a good example of exchanges with extended trading hours in the first place. The US trading holidays are as follows. Note that trading holidays are not the same as federal or bank holidays, which include Columbus Day and Veterans Day but do not include Good Friday. |
What should I do about proxy statements? | On most proxy statements (all I have ever received) you have the ability to abstain from voting. Just go down the list and check Abstain then return the form. You will effectively be forfeiting your right to vote. EDIT: According to this, after January 1, 2010 abstaining and trashing the voting materials are the same thing. Prior to January 1, 2010 your broker could vote however they wanted on your behalf if you chose not to vote yourself. The one caveat is this seems to only apply to the NYSE (unless I am reading it wrong). So not sure about stocks listed on the NASDAQ. |
value of guaranteeing a business loan | You are confining the way you and the other co-founders are paid for guaranteeing the loan to capital shares. Trying to determine payments by equity distribution is hard. It is a practice that many small companies particularly the ones in their initial stage fall into. I always advise against trying to make payments with equity, weather it is for unpaid salary or for guaranteeing a loan such as your case. Instead of thinking about a super sophisticated algorithm to distribute the new shares between the cofounders and the new investors, given a set of constraints, which will most probably fail to make the satisfactory split, you should simply view the co-founders as debt lenders for the company and the shareholders as a capital contributor. If the co-founders are treated as debt lenders, it will be much easier to determine the risk compensation for guaranteeing the loan because it is now assessed in monetary units and this compensation is equal to the risk premium you see fit "taking into consideration the probability of default ". On the other hand, capital contributors will gain capital shares as a percentage of the total value of the company after adding SBA loan. |
What typically happens to unvested stock during an acquisition? | I've been through two instances where I worked for a public company that was merged (for stock) into another company. In both cases the options I had were replaced with equivalent options in the merged company with the number of shares and strike price adjusted at the same rate as the actual stock was converted, and the vesting terms remained essentially the same. In other words, the options before and after were in essence equivalent. |
Can I cash a cashier's check at any bank? | Normally if the amount of a cashiers check is over $5,000, a bank (like Wells Fargo) may put a 10 business day hold on it to make sure the transaction is sound. |
How do brokers make money from margin accounts? | nan |
How do I protect money above the FDIC coverage limit? | Be very careful to hold on tight to your money! I agree with paying for an investment advisor, but I would say use at least two to get different viewpoints, and get credentials and references! Don't let relatives convince you to invest in their business, or help them out, or any other such nonsense. Real estate still is one of the best investments out there in my opinion. You could buy a fixer upper and rent it out? |
If a company's assets are worth more than its market cap, can one say the shares must be undervalued? | Look at Price/book value and there are more than a few stocks that may have a P/B under 1 so this does happen. There are at least a couple of other factors you aren't considering here: Current liabilities - How much money is the company losing each quarter that may cause it to sell repeatedly. If the company is burning through $100 million/quarter that asset is only going to keep the lights on for another 2.5 years so consider what assumptions you make about the company's cash flow here. The asset itself - Is the price really fixed or could it be flexible? Could the asset seen as being worth $1 billion today be worth much less in another year or two? As an example, suppose the asset was a building and then real estate values drop by 40% in that area. Now, what was worth $1 billion may now be worth only $600 million. As something of a final note, you don't state where the $100 million went that the company received as if that was burned for operations, now the company's position on the asset is $900 million as it only holds a 90% stake though I'd argue my 2 previous points are really worth noting. The Following 6 Stocks Are Trading At or Below 0.5 x Book Value–Sep 2013 has a half dozen examples of how this is possible. If the $100 million was used to pay off debt, then the company doesn't have that cash and thus its assets are reduced by the cash that is gone. Depending on what the plant is producing the value may or may not stay where it is. If you want an example to consider, how would you price automobile plants these days? If the company experiences a reduction in demand, the plant may have to be sold off at a reduced price for a cynic's view here. |
Obtaining California SOS number for out-of-state LLC | SOS stands for Secretary of State. The California Department of State handles the business entities registration, and the website is here. See "Forms" in the navigation menu on the left. Specifically, you'll be looking for LLC-5. |
Why would my job recruiter want me to form an LLC? | I don't know about the US, but in the UK this is common practice, even required in some situations, and not sketchy at all. It's perfectly legal, saves you tax, and protects you from a legal standpoint. (i.e. what if you break something and your employer wants to sue you?) This is what companies are for, they are legal entities that are separate from an individual. There is no requirement for a company to have more than one employee. |
How can rebuilding a city/large area be considered an economic boost? | Wikipedia's article on the Parable of the broken window mentions that Keynesians would argue that broken windows can be useful in depressed economies. I think Japan's economy was somewhat depressed, so if it applies anywhere, it'd apply in this scenario. |
What's a good free checking account? | Check with a small local bank or credit union, they might offer better terms. That said, my local credit union still charges $6/month for a checking account if you don't have a direct deposit into it. |
Bi-weekly payment option | Your question is unclear about whether you are moving from bi-weekly payments or to bi-weekly payments. Let's calculate each case. Bi-weekly pay means you will be paid every two weeks. The amount for each payment will be your annual salary divided by 26, possibly with a small decrease (around 0.3%) to account for the fact that years are slightly longer than 52 weeks (i.e. there are slightly more than 26 two-week periods in a year), and possibly an even smaller adjustment to take account of the fact that some years are a day longer than that. You will be paid literally every 14 days (with some adjustments if a payday falls on a holiday) If you are going to be paid twice a month, then each payment will be your annual salary divided by 24. Typically you are paid on the same days of each month - for example the 1st and the fifteenth, or the last business day before those. |
Are stock index fund likely to keep being a reliable long-term investment option? | For index funds to be a poor investment, they would have to perform worse than your alternative investments. In this case, we'll assume the alternative to be the individual stocks. Obviously, it must be possible to pick just the winning stocks and avoid the losing stocks, raising your rate of return... however, several studies have shown that individuals are horrible at picking winners. We let our emotions, are biases, and are suppositions get in the way. You could literally throw a dart, but then you either win big or lose big. Picking the fund evens that out for you, so you don't win or lose big, but just get a consistently boring (yet consistently good) return. If you have a lot of time to put into the research, and are confident in your ability to pick winning stocks, then you can do better than the index funds. Otherwise, sticking with the index fund is probably a smart choice. |
Emptying a Roth IRA account | nan |
How are stock buybacks not considered insider trading? | In fact, buybacks WERE often considered a vehicle for insider trading, especially prior to 1982. For instance, Prior to the Reagan era, executives avoided buybacks due to fears that they would be prosecuted for market manipulation. But under SEC Rule 10b-18, adopted in 1982, companies receive a “safe harbor” from market manipulation liability on stock buybacks if they adhere to four limitations: not engaging in buybacks at the beginning or end of the trading day, using a single broker for the trades, purchasing shares at the prevailing market price, and limiting the volume of buybacks to 25 percent of the average daily trading volume over the previous four weeks. |
How Warren Buffett made his money | Despite Buffett's nearly perfect consistent advice over the past few decades, they don't reflect his earliest days. His modern philosophy seemed to solidify in the 1970s. You can see that Buffett's earliest days grew faster, at 29.5 % for those partners willing to take on leverage with Buffett, than the last half century, at 19.7%. Not only is Buffett limited by size, as its quite difficult to squeeze one half trillion USD into sub-billion USD investments, but the economy thus market is far different than it was before the 1980s. He would have to acquire at least 500 billion USD companies outright, and there simply aren't that many available that satisfy all of his modern conditions. The market is much different now than it was when he first started at Graham-Newman because before the 1960s, the economy thus market would collapse and rebound about every few years. This sort of variance can actually help a value investor because a true value investor will abandon investments when valuations are high and go all in when valuations are low. The most extreme example was when he tried to as quietly as possible buy up an insurance company selling for something like a P/E of 1 during one of the collapses. These kinds of opportunities are seldom available anymore, not even during the 2009 collapse. As he became larger, those investments became off limits because it simply wasn't worth his time to find such a high returner if it's only a bare fraction of his wealth. Also, he started to deviate from Benjamin Graham's methods and started to incorporate Philip Fisher's. By the 1970s, his investment philosophy was more or less cemented. He tried to balance Graham's avarice for price with Fisher's for value. All of the commentary that special tax dodges or cheap financing are central to his returns are false. They contributed, but they are ancillary. As one can see by comparing the limited vs general partners, leverage helps enormously, but this is still a tangent. Buffett has undoubtedly built his wealth from the nature of his investments. The exact blueprint can be constructed by reading every word he has published and any quotes he has not disavowed. Simply, he buys the highest quality companies in terms of risk-adjusted growth at the best available prices. Quantitatively, it is a simple strategy to replicate. NFLX was selling very cheaply during the mid-2000s, WDC sells frequently at low valuations, up and coming retailers frequently sell at low valuations, etc. The key to Buffett's method is emotional control and removing the mental block that price equals value; price is cost, value is revenue, and that concept is the hardest for most to imbibe. Quoting from the first link: One sidelight here: it is extraordinary to me that the idea of buying dollar bills for 40 cents takes immediately to people or it doesn't take at all. It's like an inoculation. If it doesn't grab a person right away, I find that you can talk to him for years and show him records, and it doesn't make any difference. They just don't seem able to grasp the concept, simple as it is. A fellow like Rick Guerin, who had no formal education in business, understands immediately the value approach to investing and he's applying it five minutes later. I've never seen anyone who became a gradual convert over a ten-year period to this approach. It doesn't seem to be a matter of IQ or academic training. It's instant recognition, or it is nothing. and I'm convinced that there is much inefficiency in the market. These Graham-and-Doddsville investors have successfully exploited gaps between price and value. When the price of a stock can be influenced by a "herd" on Wall Street with prices set at the margin by the most emotional person, or the greediest person, or the most depressed person, it is hard to argue that the market always prices rationally. In fact, market prices are frequently nonsensical. and finally Success in investing doesn’t correlate with I.Q. once you’re above the level of 25. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing. There is almost no information on any who has helped Buffett internally or even managed Berkshire's investments aside from Louis Simpson. It is unlikely that Buffett has allowed anyone to manage much of Berkshire's investments considering the consistent stream of commentary from him claiming that he nearly does nothing except read annual reports all day to the extent that he may have neglected his family to some degree and that listening to others will more likely hurt performance than help with the most striking example being his father's recommendation that he not open a hedge fund after retiring from Graham-Newman because he believed the market was topping, and he absolutely idolized his father. |
Mortgage refinancing | First, check with your lender to see if the terms of the loan allow early payoff. If you are able to payoff early without penalty, with the numbers you are posting, I would hesitate to refinance. This is simply because if you actually do pay 5k/month on this loan you will have it paid off so quickly that refinancing will probably not save you much money. Back-of-the-napkin math at 5k/month has you paying 60k pounds a year, which will payoff in about 5 years. Even if you can afford 5k/month, I would recommend not paying extra on this debt ahead of other high-interest debt or saving in a tax-advantaged retirement account. If these other things are being taken care of, and you have liquid assets (cash) for emergencies, I would recommend paying off the mortgage without refinancing. |
What happens to my position if I hold some stocks of a company that gets acquired? | The stockholders of company A vote to approve or disapprove the buy out. That is the only control you have on the price: Vote to approve or disapprove. If the deal is approved then you get the money, or stock in B, or both, in accordance with the terms of the deal. It will arrive into your account automatically. |
Should I buy a house or am I making silly assumptions that I can afford it? | When I bought my own place, mortgage lenders worked on 3 x salary basis. Admittedly that was joint salary - eg you and spouse could sum your salaries. Relaxing this ratio is one of the reasons we are in the mess we are now. You are shrewd (my view) to realise that buying is better than renting. But you also should consider the short term likely movement in house prices. I think this could be down. If prices continue to fall, buying gets easier the longer you wait. When house prices do hit rock bottom, and you are sure they have, then you can afford to take a gamble. Lets face it, if prices are moving up, even if you lose your job and cannot pay, you can sell and you have potentially gained the increase in the period when it went up. Also remember that getting the mortgage is the easy bit. Paying in the longer term is the really hard part of the deal. |
What are a few sites that make it easy to invest in high interest rate mutual funds? | Any investment company or online brokerage makes investing in their products easy. The hard part is choosing which fund(s) will earn you 12% and up. |
Bid-Ask at market open, which comes first? [duplicate] | The options market requires much more attention to avoid the situation you're describing. An overnight $10 ask will remain on the books most likely as Good-Til-Canceled. The first to bid the low order gets it. If traders are paying attention, which they probably are then they will bid at $10. If not, they will bid immediately at $20. If they crossed the order, it would be filled at their higher than $10 bid. This is all governed by the exchange where the ask is posted, and most implement price-time priority. |
Can banks deny that you've paid your loan? | Maybe there's more to this story, because as written, your sister seems, well, a little irrational. Is it possible that the bank will try to cheat you and demand that you pay a loan again that you've already paid off? Or maybe not deliberately cheat you, but make a mistake and lose track of the fact that you paid? Sure, it's POSSIBLE. But if you're going to agonize about that, what about all the other possible ways that someone could cheat you? What if you go to a store, hand over your cash for the purchase, and then the clerk insists that you never gave him any cash? What if you buy a car and it turns out to be stolen? What if you buy insurance and when you have a claim the insurance company refuses to pay? What if someone you've never met or even heard of before suddenly claims that you are the father of her baby and demands child support? Etc etc. Realistically, banks are fanatical about record-keeping. Their business is pretty much all about record-keeping. Mistakes like this are very rare. And a big business like a bank is unlikely to blatantly cheat you. They can and do make millions of dollars legally. Why should they break the law and risk paying huge fines and going to prison for a few hundred dollars? They may give you a lousy deal, like charge you outrageous overdraft fees and pay piddling interest on your deposit, but they're not going to lie about how much you owe. They just don't. I suggest that you not live your life in fear of all the might-be's. Take reasonable steps to protect yourself and get on with it. Read contracts before you sign, even if the other person gets impatient while you sit there reading. ESPECIALLY if the other person insists that you sign without reading. When you pay off a loan, you should get a piece of paper from the bank saying the loan has been paid. Stuff this piece of paper in a filing cabinet and keep it for years and years. Get a copy of your credit report periodically and make sure that there are no errors on it, like incorrect loan balances. I check mine once every year or two. Some people advise checking it every couple of months. It all depends how nervous you are and how much time you want to spend on it. Then get on with your life. Has your sister had some bad experience with loans in the past? Or has she never borrowed money and she's just confused about how it works? That's why I wonder if there's more to the story, if there's some basis for her fears. |
United Kingdom: Where to save money for a property deposit | The chancellor announced an ISA in this week's budget intended for people saving to buy their first home. For every £200 put in the government will add £50 to the account so I would strongly encourage you to put the money into that as it is also tax free. |
How to calculate how much house I can afford? | There is no simple way to calculate how much house any given person can afford. In the answer keshlam gave, several handy rules of thumb are mentioned that are used as common screening devices to reject loans, but in every case further review is required to approve any loan. The 28% rule is the gold standard for estimating how much you can afford, but it is only an estimate; all the details (that you don't want to provide) are required to give you anything better than an estimate. In the spirit of JoeTaxpayer's answer I'm going to give you a number that you can multiply your gross income by for a good estimate, but my estimate is based on a 15 year mortgage. Assuming a 15 year mortgage with a 3% interest rate, it will cost $690.58 per $100,000 borrowed. So to take those numbers and wrap it up in a bow, you can multiply your income by 3.38 and have the amount of mortgage that most people can afford. If you have a down-payment saved add it to the number above for the total price of the home you can buy after closing costs are added in. Property taxes and insurance rates vary widely, and those are often rolled into the mortgage payment to be paid from an escrow account, banks may consider all of these factors in their calculators but they may not be transparent. If you can't afford to pay it in 15 years, you really can't afford it. Compare the same $100k loan: In 30 years at 4% you pay about $477/month with a total of about $72k in interest over the life of the loan. In 15 years at 3% you pay about $691/month but the total interest is only $24k, and you are out of the loan in half of the time. The equity earned in the first 5 years is also signficantly different with 28.5% for the 15 year loan vs. 9.5% on the 30 year loan. Without straying too far into general economics, 15 year loans would also have averted the mortgage crisis of 2008, because more people would have had enough equity that they wouldn't have walked out on their homes when there was a price correction. |
What does it mean that stocks are “memoryless”? | It reminds me of the Efficient Market Hypothesis, except that just states in its weakest form that the current market price accounts for all information embedded in previous market prices. In other words, people buying today at 42 know it was selling for 40 yesterday, and the patterns and such. To say that stock is memoryless strikes me as not quite right -- to the extent that stocks are valued based on earnings, much of what we infer about future earnings relies on past and present earnings. One obvious counterexample to this "memoryless" claim is bankruptcy. If a stock files bankruptcy, and there isn't enough money to pay senior debt, your shares are worth 0 in perpetuity. |
Why are options created? | At my soon to be legendary Stock Options Cafe, I recently wrote an article "Betting On Apple at 9 to 2." It described a trade in which a 35% move in a stock over a fixed time (2 years) would result in a 354% gain in one's bet. In this case, the options serve to create remarkable leverage for speculators. In general, option help provide liquidity and extend the nature of the risk/reward curve. There are option trades that range from conservative (e.g. a 'covered call') to wildly speculative, as the one I described above. |
Should I open a credit card when I turn 18 just to start a credit score? | Definitely not. Credit cards only exist to suck you into the soulless corporate system. What you want to remember here is that you can't trust banks, so you'll want to convert all your savings into some durable asset, say, bitcoins for example, and then hoard them like Smaug until after the Fall. |
How to safely exit a falling security? | If the stock is below its purchase price, there is no way to exit the position immediately without taking losses. Since presumably you had Good Reasons for buying that stock that haven't changed overnight, what you should probably do is just hold it and wait for the stock to come back up. Otherwise you're putting yourself into an ongoing pattern of "buy high, sell low", which is precisely what you don't want to do. If you actually agree with the market that you made a mistake and believe that the stock will not recover any part of the loss quickly (and indeed will continue going down), you could sell immediately and take your losses rather than waiting and possibly taking more losses. Of course if the stock DOES recover you've made the wrong bet. There are conditions under which the pros will use futures to buffer a swing. But that's essentially a side bet, and what it saves you has to be balanced against what it costs you and how certain you are that you NOW can predict the stock's motion. This whole thing is one of many reasons individuals are encouraged to work with index funds, and to buy-and-hold, rather than playing with individual stocks. It is essentially impossible to reliably "time the market", so all you can do is research a stock to death before making a bet on it. Much easier, and safer, to have your money riding on the market as a whole so the behavior of any one stock doesn't throw you into a panic. If you can't deal with the fact that stocks go down as well as up, you probably shouldn't be in the market. |
Can I contribute to an IRA from investment income? | Traditional IRA contributions can be made if you have compensation and the amount of the contribution is limited to the smaller of your compensation and $5500 ($6000 if age 50 or more). Note that compensation (which generally means earnings form working) is not just what appears on a W-2 form as salary or wages; it can be earnings from self-employment too, as well as commissions, alimony etc (but not earnings from property, pensions and annuities, certain types of partnership income) You must also not have attained age 70.5 in the year for which the contribution is made. Even if you don't have any compensation of your own, you can nonetheless make a Traditional IRA contribution if your spouse has compensation as long as you are filing a joint tax return with your spouse. For spouses filing a joint return, the limits are still the same $5500/$6000 for each spouse, and the sum total of Traditional IRA contributions for both spouses also must not exceed the sum total of earned income of both spouses. The age limits etc are all still applicable. Note that none of this says anything about whether the contributions are deductible. Everyone meeting the above requirements is eligible to make contributions to a Traditional IRA; whether the contributions can be deducted from current income depends on the income: those with high enough incomes cannot deduct the contribution. This is different from Roth IRAs to which people with high incomes are not permitted to make a contribution at all. Finally, the source of the cash you contribute to the IRA can be the proceeds of the stock sale if you like; you are not required to prove that the cash received from compensation is what you sent to the IRA custodian. Read Publication 590 (available on the IRS website www.irs.gov) if you need an authoritative reference. |
Options liquidity and trading positions larger than the daily volume? | One broker told me that I have to simply read the ask size and the bid size, seeing what the market makers are offering. This implies that my order would have to match that price exactly, which is unfortunate because options contract spreads can be WIDE. Also, if my planned position size is larger than the best bid/best ask, then I should break up the order, which is also unfortunate because most brokers charge a lot for options orders. |
Is 401k as good as it sounds given the way it is taxed? | Be sure to consider the difference between Roth 401K and standard 401K. The Roth 401K is taxed as income then put into your account. So the money you put into the Roth 401K is taxed as income for the current year, however, any interest you accumulate over the years is not taxed when you withdraw the money. So to break it down: You may also want to look into Self Directed 401K, which can be either standard or Roth. Check if your employer supports this type of account. But if you're self employed or 1099 it may be a good option. |
Should I switch to this high rate checking account for my emergency fund? | Check out the "rewards checking" accounts listed on this thread at fatwallet finance forums. You could easily get 3.5% - 4% right now if you are willing to do the rewards checking dance. If not, you should look into the 1-2% accounts at the top. I use Alliant CU and their website is nice (and they give you your credit score every six months). |
Paying off mortgage or invest in annuity | You can't pay your bills with equity in your house. Assuming you paid off the mortgage, where would the money come from that you plan to live off of? If that is your whole retirement savings I'd say do neither. Maybe an annuity (not variable) for SOME of the money, keep the rest invested in conservative investments some of it in cash for emergencies. |
What is a bull put spread? | Bull means the investor is betting on a rising market. Puts are a type of stock option where the seller of a put option promises to buy 100 shares of stock from the buyer of the put option at a pre-agreed price called the strike price on any day before expiration day. The buyer of the put option does not have to sell (it is optional, thats why it is called buying an option). However, the seller of the put is required to make good on their promise to the buyer. The broker can require the seller of the put option to have a deposit, called margin, to help make sure that they can make good on the promise. Profit... The buyer can profit from the put option if the stock price moves down substantially. The buyer of the put option does not need to own the stock, he can sell the option to someone else. If the buyer of the put option also owns the stock, the put option can be thought of like an insurance policy on the value of the stock. The seller of the put option profits if the stock price stays the same or rises. Basically, the seller comes out best if they can sell put options that no one ends up using by expiration day. A spread is an investment consisting of buying one option and selling another. Let's put bull and put and spread together with an example from Apple. So, if you believed Apple Inc. AAPL (currently 595.32) was going up or staying the same through JAN you could sell the 600 JAN put and buy the 550 put. If the price rises beyond 600, your profit would be the difference in price of the puts. Let's explore this a little deeper (prices from google finance 31 Oct 2012): Worst Case: AAPL drops below 550. The bull put spread investor owes (600-550)x100 shares = $5000 in JAN but received $2,035 for taking this risk. EDIT 2016: The "worst case" was the outcome in this example, the AAPL stock price on options expiry Jan 18, 2013 was about $500/share. Net profit = $2,035 - $5,000 = -$2965 = LOSS of $2965 Best Case: AAPL stays above 600 on expiration day in JAN. Net Profit = $2,035 - 0 = $2035 Break Even: If AAPL drops to 579.65, the value of the 600 JAN AAPL put sold will equal the $2,035 collected and the bull put spread investor will break even. Commissions have been ignored in this example. |
How can I diversify $7k across ETFs and stocks? | An index fund is inherently diversified across its index -- no one stock will either make or break the results. In that case it's a matter of picking the index(es) you want to put the money into. ETFs do permit smaller initial purchases, which would let you do a reasonable mix of sectors. (That seems to be the one advantage of ETFs over traditional funds...?) |
Filing 1040-NR when I have been outside the US the entire year? | Yes, you can still file a 1040nr. You are a nonresident alien and were: engaged in a trade or business in the United States Normally, assuming your withholding was correct, you would get a minimal amount back. Income earned in the US is definitely Effectively Connected Income and is taxed at the graduated rates that apply to U.S. citizens and resident aliens. However, there is a tax treaty between US and India, and it suggests that you would be taxed on the entirety of the income by India. This suggests to me that you would get everything that was withheld back. |
When does it make sense for the money paid for equity to go to the corporation? | If Jack owns all of the one million founding shares (which I assume you meant), and wants to transfer 250,000 shares to Venturo, then he is just personally selling shares to Venturo and the corporation gains nothing. If Jack does not own all of the founding shares, and the corporation had retained some, then the corporate shares could be sold to raise cash for the corporation. Usually in situations like this, the corporation will create more shares, diluting existing shareholders, and then sell the new shares on the open market to raise cash. |
Credit card expenses showing as Liabilities in QuickBooks | Is it normal in QuickBooks to have credit card expenses being shows as liabilities? Is there a way I can correct this? If they are expenses they shouldn't be negative liabilities unless you overpaid your credit card by that amount. It sounds like perhaps when you linked the account the credit/debit mapping may have been mixed up. I've not used QB Online, but it looks like you might have to un-link the account, move all the existing transactions to 'excluded' and then link the account again and flip-flop the debit/credit mapping from what it is now. Hopefully there's an easier way. This QB community thread seems to address the same issue. |
On paper I have 1 share in my company. How can I sell a smaller percentage of my company to another party? | You actually have a few options. First, you can do a share split and then sell an equal number of shares from both you and your wife to maintain parity. Second, you can have the company issue additional shares/convert shares and then have the company sell the appropriate percentage to the third party while the rest is distributed to you and your wife. Third, you can have the company issue a separate class of stock. For example there are companies that have voting stock and non-voting stock. Depending on your goal, you could just issue non-voting stock and sell that. Best bet is to contact a lawyer who specializes in this type of work and have them recommend a course of action. One caveat that has not been mentioned is that what/how you do this will also depend on the type of corporation that you have created. |
Employer skipped payments, should I allow them to defer payment until Jan 2017? | TL;DR: The difference is $230. Just for fun, and to illustrate how brackets work, let's look at the differences you could see from changing when you're paid based on the tax bracket information that Ben Miller provided. If you're paid $87,780 each year, then each year you'll pay $17,716 for a total of $35,432: $5,183 + $12,532 (25% of $50,130 (the amount over $37,650)) If you were paid nothing one year and then double salary ($175,560) the next, you'd pay $0 the first year and $42,193 the next: $18,558 + $23,634 (28% of $84,410 (the amount over $91,150)) So the maximum difference you'd see from shifting when you're paid is $6,761 total, $3,380 per year, or about 4% of your average annual salary. In your particular case, you'd either be paying $35,432 total, or $14,948 followed by $20,714 for $35,662 total, a difference of $230 total, $115 per year, less than 1% of average annual salary: $5,183 + $9,765 (25% of $39,060 (the amount $87,780 - $11,070 is over $37,650)) $18,558 + $2,156 (28% of $7,700 (the amount $87,780 + $11,070 is over $91,150)) |
Is the MBA an overrated degree/qualification? | It depends on what you want it for If it is just salary then maybe not, for instance, some MBA programs may suggest their graduates make $100,000 per year, but you work in an oil field barely finishing high school and make $300,000 a year. If you go for the MBA right now, you may miss your chance to work in the oil industry for another few years (or weeks), but at the same time, the MBA lasts forever (although, real world experience is also relevant) and it may give you a leg up when you are 50 years old in the unemployment line (or maybe not, because you are overqualified) everything in life is a cost/benefit analysis Passing the GRE lasts for five years, so keep that in mind |
Can I write off time I spent working on my business? | No, you cannot write off time, period. You should price the time spent into your product. I, occasionally, work on side projects of my own and forgo the possibility of earning direct income for that time. Income not earned is income not taxed, so there's nothing to deduct. |
Will a credit card issuer cancel an account if it never incurs interest? | I've got a card that I've had for about 25 years now. The only time they charged me interest I showed it was their goof (the automatic payment failed because of their mistake) and they haven't cancelled it. No annual fee, a bit of cash back. The only cards I've ever had an issuer close are ones I didn't use. |
Can a wealthy investor invest in or make a deal with a company before it goes public / IPO? | IPO is "Initial Public Offering". Just so you know. The valuations are done based on the company business model, intellectual property, products, market shares, revenues and profits, assets, and future projections. You know, the usual stuff. Yes, it is. And very frequently done. In fact, I can't think of any company that is now publicly traded, that didn't start this way. The first investor, the one who founds the company, is the first one who invests in it after raising the capital (even if it is from his own bank account to pay the fees for filing the incorporation papers). What is the difference between "normal" investor and "angel"? What do you refer to as "angel"? How is it abnormal to you? Any investor can play a role, depending on the stake he/she has in the company. If the stake is large enough - the role will be significant. If the stake is the majority - the investor will in fact be able major decisions regarding the company. How he bought the stocks, whether through a closed offering, initial investment or on a stock exchange - doesn't matter at all. You may have heard of the term "angels" with regards to high-tech start up companies. These are private investors (not funds) that invest their own money in start ups at very early stages. They're called "angels" because they invest at stages at which it is very hard for entrepreneurs to raise money: there's no product, no real business, usually it is a stage of just an idea or a patent with maybe initial prototype and some preliminary business analysis. These people gamble, in a sense, and each investment is very small (relatively to their wealth) - tens of thousands of dollars, sometimes a hundred or two thousands, and they make a lot of these. Some may fail and they lose the money, but those that succeed - bring very high returns. Imagine investing 10K for 5% stake at Google 15 years ago. Those people are as investors as anyone else, and yes, depending on their stake in the company, they can influence its decisions. |
Single investment across multiple accounts… good, bad, indifferent? | The other issue you could run into is that each deferred account is going to be subject to its own RMD's (Required Minimum Distributions) when you've retired or hit 70.5 years of age. Roth's don't generally care about RMD's at first, but are still subject to them once the person that created the Roth has passed. Having fewer accounts will simplify the RMD stuff, but that's really only a factor in terms of being forced to sell 'something' in each account in order to make the RMD. Other than that, it's just a matter of remembering to check each account if you come to a decision that it's time to liquidate holdings in a given security, lest you sell some but forget about the rest of it in another account. (and perhaps as Chris pointed out, maybe having to pay fee's on each account for the sale) Where this really can come into play is if you choose to load up each individual account with a given kind of investment, instead of spreading them across the accounts. In that case RMD's could force you into selling something that is currently 'down' when you want to hold onto it, because that is your only choice in order to meet RMD's for account X. So if you have multiple accounts, it's a good idea to not 'silo' particular vehicles into a single account, but spread similar ivestments across multiple accounts, so you always have the choice in each account of what to sell in order to meet an RMD. If you have fewer accounts, it's thus a lot easier to avoid the siloing effect |
Historical company performance data | I know of no free source for 10 years historical data on a large set of companies. Now, if it's just a single company or small number that interest you, contact Investor Relations at the company(ies) in question; they may be willing to send you the data for free. |
Is there any evidence that “growth”-style indexes and growth ETFs outperform their respective base indexes? | You are correct that over a short term there is no guarantee that one index will out perform another index. Every index goes through periods of feat and famine. That uis why the advice is to diversify your investments. Every index does have some small amount of management. For the parent index (the S&P 500 in this case) there is a process to divide all 500 stocks into growth and value, pure growth and pure value. This rebalancing of the 500 stocks occurs once a year. Rebalancing The S&P Style indices are rebalanced once a year in December. The December rebalancing helps set the broad universe and benchmark for active managers on an annual cycle consistent with active manager performance evaluation cycles. The rebalancing date is the third Friday of December, which coincides with the December quarterly share changes for the S&P Composite 1500. Style Scores, market-capitalization weights, growth and value midpoint averages, and the Pure Weight Factors (PWFs), where applicable across the various Style indices, are reset only once a year at the December rebalancing. Other changes to the U.S. Style indices are made on an as-needed basis, following the guidelines of the parent index. Changes in response to corporate actions and market developments can be made at any time. Constituent changes are typically announced for the parent index two-to-five days before they are scheduled to be implemented. Please refer to the S&P U.S. Indices Methodology document for information on standard index maintenance for the S&P 500, the S&P MidCap 400,the S&P SmallCap 600 and all related indices. As to which is better: 500, growth,value or growth and value? That depends on what you the investor is trying to do. |
What do brokerage firms do? | You can get direct market access (DMA) but you have to pay for data, as this is part of the exchanges data plan, and there are plenty of other fees that are passed straight down to you. Your clearing firm also has fees that are passed on to you. In general you are looking at $150 a month on the low side, in data and software fees. If you wanted pure access, NASDAQ alone charges $6,000 a month last I checked. The different routes data routes to the exchange all have different rules, and they give you rebates for some kinds of orders in some conditions. Brokers nowadays usually assume this responsibility (including collecting the rebates lol), at the very least, and charge an average price for routing your orders, a price that fits into their business plan and their target audience. Hope that helps. |
Should I take contributions out of my Roth IRA to live off of? | Take another job. From a personal finance perspective this is the wrong reason to dip into a retirement account. You will lose so much ground towards actually retiring. Sure you won't be taxed, but you will be missing so much opportunity where that money won't be working for your retirement. The off-topic answer to take to the start-ups stackexchange site is: don't quit your day job until your business plan is written out and you have an idea of where to get your startup capital. |
Buying from an aggressive salesperson | If something in any transaction in life—financial or otherwise—doesn’t make you feel comfortable and the choice is between saving money with one thing versus another, don’t sell your personal needs short. Pay more elsewhere that treats you the way you expect to be treated. In the long run the $$$ you “save” in a cheaper transaction might cost you more in the headaches and annoyance you have to swallow in dealing with this “bargain” in the future. Your question is this: “Do his sales tactics indicate other underlying problems? How can I deal effectively with those tactics?” And you state this as well: “To make a long story short, the dealer's aggressive sales tactics have made me somewhat uncomfortable.” And finally ask: “How can I deal effectively with those tactics?” Okay, first and foremost if you feel discomfort in anything in life—not just a financial situation—just walk away. You might have to say “No…” when doing this but it’s not always the case you will have to counter aggression with aggression. And specifically in the case of a purchase like this, you need to also ask yourself: “Is this discount being offered me worth the headache I am getting?” At the end of the day money is meaningless and has it’s main worth as an economic motivator/stimulator: Someone has a need and someone else has something that can solve that need. What would it take for the side of need to connect to the side of solution to that need? This is the basic concept surrounding all economics. So that said, I have personally avoided buying things for less money and paid slightly more elsewhere for a service experience that made me feel comfortable. At the end of the day, if you feel happy in the transaction it helps in the long run more than—let’s say—the $20 to $40 you “save” by buying from someone else. Also—on the side of customer service—this person’s sales techniques sound like something out of a very old fashioned sales playbook. Nowadays it’s all about relationships and service: The immediate sale is not as important for competent and reputable businesses because they know a better customer service experience will bring people back. So it doesn’t matter how long this guy has been in business: It could be that he’s been in business a long time just because he has been in business a long time. That said—and in the case of musical instruments—maybe this guy is really good at care and upkeep of instruments but has crappy sales techniques. Keep that in mind as well and just push back on their sales methods. For things like musical instruments, people might be jerks on the sales side but in the maintenance and repair side they are great. Will you need to go to them if/when your instrument needs repair? Or you don’t care? At the end of the day, go with your gut. And if your gut says, “No…” then just go somewhere else and spend your money on an item you like from a place that treats you the way you need. |
Is it smarter to buy a small amount of an ETF every 2 or 3 months, instead of monthly? | By not timing the market and being a passive investor, the best time to invest is the moment you have extra money (usually when wages are received). The market trends up. $10 fee on $2000 represents 0.5% transaction cost, which is borderline prohibitive. I would suggest running simulations, but I suspect that 1 month is the best because average historical monthly total return is more than 0.5%. |
What is the best way to help my dad consolidate his credit card debt at a lower rate? | I agree with you that you need to consolidate this debt using a loan. It may be hard to find a bank or credit organization that will give you an unsecured personal loan for that much money. I know of one, called Lending Club (Disclaimer - I'm an investor on this platform. Not trying to advertise, it's just the only place I know of off the top of my head) that facilitates loans like this, but instead of a bank financing the loan, the loan is split up accross hundreds of investors who each contribute a small amount (such as $25). They have rates anywhere between 5-30%, based on your credit profile(s), and I believe they have some loan amounts that go up to the area that you're discussing. Regarding buying the house - The best thing you can do when trying to buy a house is to save up a 20% downpayment, if at all possible. Below this amount, you may be asked to pay for 'PMI' - Private Mortgage Insurance. This is a charge that doesn't go away for quite a while (until you've paid them 20% of the appraised value of the home), where you pay a premium because you didn't have the 20% downpayment for the house. I would suggest you try to eliminate your credit card debt as soon as possible, and would recommend the same for your father. Getting your utilization down and reconsolidating the large debts with a loan will help to reduce interest charges and get you a reasonable, fixed payment. Whether you decide to pay off your own balances using your savings account is up to you; if it were me, personally, I'd do so immediately rather than trying to pay it off over time. But if you lose money to taxes by withdrawing the money from your 'tax free savings account', it may not be a beneficial situation. Treat debt, especially credit card debt, like an emergency at all times, and you'll find yourself in a better place as a result. Credit card debt and balances are and should be temporary, and their rates and fees are structured that way. If, for any reason, you expect that a credit card's balance will remain for an extended period of time, you may want to consider whether it would be advantageous for you to consolidate the debt into a loan, instead. |
Having trouble with APR calculation | I have answered your question in detail here https://stackoverflow.com/questions/12396422/apr-calculation-formula The annuity formula in FDIC document is at first finding PVIFAD present value annuity due factor and multiplying it with annuity payment and then dividing it by an interest factor of (1+i) to reduce the annuity to an ordinary annuity with end of period payments They could have simply used PVIFA and multiplying it with annuity payment to find the present value of an ordinary annuity In any case, you should not follow the directions in FDIC document to find interest rate at which the present value of annuity equals the loan amount. The method they are employing is commonly used by Finance Professors to teach their students how to find internal rate of return. The method is prone to lengthy trial and error attempts without having any way of knowing what rate to use as an initial guess to kick off the interest rate calculations So this is what I would suggest if you are not short on time and would like to get yourself familiar with numerical methods or iterative techniques to find internal rate of return There are way too many methods at disposal when it comes to finding interest rates some of which include All of the above methods use a seed value as a guess rate to start the iterative calculations and if results from successive calculations tend to converge within a certain absolute Error bound, we assume that one of the rates have been found as there may be as many rates as the order of the polynomial in this case 36 There are however some other methods that help find all rates by making use of Eigenvalues, but for this you would need a lengthy discourse of Linear Algebra One of the methods that I have come across which was published in the US in 1969 (the year I was born :) ) is called the Jenkins Traub method named after the two individuals who worked jointly on finding a solution to all roots of a polynomial discarding any previous work on the same subject I been trying to go over the Jenkins Traub algorithm but am having difficulty understanding the complex nature of the calculations required to find all roots of the polynomial In summary you would be better of reading up on this site about the Newton Raphson method to find IRR |
Highstreet bank fund, custom ETF or Nutmeg? | And it's only as cheap as 1.78% if you stay with them 10 years! They'd love that. You can kind of tell they really want to lock you in for over 4 years. I also think it's daylight robbery, but as a self execution investor I tend to have to talk myself out of that belief by default to be fair. One can wonder too, why are there even 2 fixed (percentage wise) fees? They are desperate not to have one number that is too big sounding, either the advisor fee is a rip off because they have to do all the same analysis regardless, or you could take the view that it's the only valid fee as you're paying for a slice of something, where as the other fee is what? A share of the fixed costs? Well, isn't advising as essential as anything else? I actually think Nutmeg is OK, I've not used them or dealt with them in any way but they are, to a greater or lesser degree, what I've wished for to recommend to friends who don't want to DIY, which is a cheaper next generation online investment facility, and their fees drop significantly over 100K. Going by their claimed past performance and fee structure, whilst I'd like them to be cheaper, I personally think they are not a bad choice in the market. |
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? | Edit #2 My whole answer was based on my misunderstanding that you were renting out a totally separate property to your girl friend. I finally understand now that you're renting out a room in YOUR apartment flat to your gf. So, based on my new understanding, I don't think it's necessarily a bad idea. The answer below is my answer to a different question ;) Original Answer My answer has nothing to do with business, but is totally relationship based. If you care about her in a "we might be together a long time" way, then I wouldn't do this. I don't care what arrangements you setup before hand, at some point, you're bound to feel like she owes you something at some point. Let alone the easiest of situations to imagine (she's late on the rent, she loses her job and can't pay, etc) you'll be forced to make decisions about how much your desire to love and care for her outweighs your need to pay your mortgage. You can argue how magnanimous your are all day long, but is this something you want to bring into your relationship? Now, if you don't really care to stay with her that long and you could do life with or without her, then go for it. I think the big question is, is your relationship worth £200? Edit In the interest of supporting my opinion, here are a few articles I found on the subject: Unfortunately, the way renting to friends or family often works out is far from what would be expected between people who care about one another. For the most part, friends and family members will actually make bad renters, because they’ll expect more from you than a tenant who doesn’t know you. You may get a lot of requests for maintenance and repairs, even for minor things, and you may also find that family members and friends think they should be entitled to perks because of your personal relationship with them. When they don’t get special treatment, they can get angry with you, and that hurts both your professional relationship and your personal relationship. American Apartment Owners Association "In my experience, landlords renting to relatives doesn't work out perfectly," said Ceyhun Doker, a REALTOR® associate at Keller Williams Realty in Burlingame, CA. "When you don't know each other, there are fewer problems." realator.com |
Why are some long term investors so concerned about their entry price? | If you think of it in terms of trying to get an annual return on your investment over the long haul, you can do a simple net present value analysis to decide your buy price. If you're playing conservative with the investments and taking safety over returns, you will still have some kind of expectation of that return will be. Paying slightly more will drag down your returns, perhaps less than what you want to get. If you really want to get your desired X%, then stick to your guns and don't go down the slippery slope of reaching. If 1% off isn't bad, then 2% off isn't all that bad, and maybe 3% is OK too for the right situation, etc. Gotta have rules and stick to them. You never know what opportunities will be around tomorrow. The possible drops in value should be built into your return expectations. |
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