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Should I pay half a large balance this month before I get my CC statement? | This can make a difference of a few points. When your balance is reported on a monthly basis to the bureaus that current balance is used to determine your utilization. Keeping it paid down will help in this case. If you are monitoring your credit regularly, you can see what time of the month your balance is reported and pay before then (just make sure you include enough padding to be sure your payment clears before the reporting date--normally only a business day or so, but weekends can throw it all off). |
How to represent “out of pocket” purchases in general ledger journal entry? | You're lending the money to your business by paying for it directly. The company accounts must reflect a credit (the amount you lend to it) and a debit (what it then puts that loan towards). It's fairly normal for a small(ish) owner-driven company to reflect a large loan-account for the owners. For example, if you have a room at home dedicated for the business it is impractical to pay rent directly via the company. The rental agreement is probably in your name, you pay the rent, and you reconcile it with the company later. You could even charge your company (taxable) interest on this loan. When you draw down the loan from the company you reverse this, debit your loan account and credit the company (paying off the debt). As far as tracking that expenditure, simply handle those third-party invoices in the normal way and file them for reference. |
Short or Long Term Capital Gains for Multiple Investments | The default is FIFO: first in - first out. Unless you specifically instruct the brokerage otherwise, they'll report that the lot you've sold is of Jan 5, 2011. Note, that before 2011, they didn't have to report the cost basis to the IRS, and it would be up to you to calculate the cost basis at tax time, but that has been changed in 2011 and you need to make sure you've instructed the brokerage which lot exactly you're selling. I'm assuming you're in the US, in other places laws may be different. |
Are stories of turning a few thousands into millions by trading stocks real? | I made upwards of 3M from 200K by trading stocks, which I made from a business that I invested 20K in. HOWEVER, DO NOT use trading stocks as a source of income, you're gambling with your precious cash. There are safer alternatives. |
How much money should I lock up in my savings account? | Firstly well done on building a really sold base of savings. An emergency fund needs to have two key characteristics: Be enough to get you through a typical emergency event (often seen as approx. ~6 months’ salary in your style of situation assuming you have no dependents etc) Be liquid and available to you instantly if an emergency arises Once you have decided how much you will need for 1), you then generally find the best interest available on an instant access savings account and leave it there. It's important to note that because you need it very liquid and very secure you will basically never make (nor should you expect to make) any sizeable rate of interest on your emergency fund. Once this is done, whatever left should be invested in an asset/mix of assets that best fit your risk profile - of which long term bonds are a completely legitimate option, but it's hard to say without knowing more about your long term aims/liabilities/job market etc. |
What does it mean to a life insurance policy holder to convert from a stock to mutual insurance company? | A stock insurance company is structured like a “normal” company. It has shareholders (that are the company's investors), who elect a board of directors, who select the senior executive(s), who manage the people who run the actual company. The directors (and thus the executives and employees) have a legal responsibility to manage the company in a way which is beneficial for the shareholders, since the shareholders are the ultimate owner of the company. A mutual insurance company is similar, except that the people holding policies are also the shareholders. That is, the policyholders are the ultimate owners of the company, and there generally aren't separate shareholders who are just “investing” in the company. These policyholder-shareholders elect the board of directors, who select the senior executive(s), who manage the people who run the actual company. In practice, it probably doesn't really make a whole lot of difference, since even if you're just a "customer" and not an "owner" of the company, the company is still going to want to attract customers and act in a reasonable way toward them. Also, insurance companies are generally pretty heavily regulated in terms of what they can do, because governments really like them to remain solvent. It may be comforting to know that in a mutual insurance company the higher-ups are explicitly supposed to be working in your best interest, though, rather than in the interest of some random investors. Some might object that being a shareholder may not give you a whole lot more rights than you had before. See, for example, this article from the Boston Globe, “At mutual insurance firms, big money for insiders but no say for ‘owners’ — policyholders”: It has grown into something else entirely: an opaque, poorly understood, and often immensely profitable world in which some executives and insiders operate with minimal scrutiny and, no coincidence, often reap maximum personal rewards. Policyholders, despite their status as owners, have no meaningful oversight of how mutual companies spend their money — whether to lower rates, pay dividends, or fund executive salaries and perks — and few avenues to challenge such decisions. Another reason that one might not like the conversion is the specific details of how the current investor-shareholders are being paid back for their investment in the process of the conversion to mutual ownership, and what that might do to the funds on hand that are supposed to be there to keep the firm solvent for the policyholders. From another Boston Globe article on the conversion of SBLI to a mutual company, “Insurer SBLI wants to get banks out of its business,” professor Robert Wright is cautiously optimistic but wants to ensure the prior shareholders aren't overpaid: Robert Wright, a professor in South Dakota who has studied insurance companies and owns an SBLI policy, said he would prefer the insurer to be a mutual company that doesn’t have to worry about the short-term needs of shareholders. But he wants to ensure that SBLI doesn’t overpay the banks for their shares. “It’s fine, as long as it’s a fair price,” he said. That article also gives SBLI's president's statement as to why they think it's a good thing for policyholders: If the banks remained shareholders, they would be likely to demand a greater share of the profits and eat into the dividends the insurance company currently pays to the 536,000 policyholders, about half of whom live in Massachusetts, said Jim Morgan, president of Woburn-based SBLI. “We’re trying to protect the policyholders from having the dividends diluted,” Morgan said. I'm not sure there's an obvious pros/cons list for either way, but I'd think that I'd prefer the mutual approach, just on the principle that the policyholders “ought” to be the owners, because the directors (and thus the executives and employees) are then legally required to manage the company in the best interest of the policyholders. I did cast a Yes vote in my proxy on whether SBLI ought to become a mutual company (I'm a SBLI term-life policyholder.) But policy terms aren't changing, and it'd be hard to tell for sure how it'd impact any dividends (I assume the whole-life policies must be the ones to pay dividends) or company solvency either way, since it's not like we'll get to run a scientific experiment trying it out both ways. I doubt you'd have a lot of regrets either way, whether it becomes a mutual company and you wish it hadn't or it doesn't become one and you wish it had. |
What is the meaning of public stock price data from before the official first day of trading? [duplicate] | For the case of spinoffs it reflects the market as activities as the specific steps that have to be followed take place. For example the spinoff of Leidos from SAIC in 2013. (I picked this one becasue I knew some of the details) On September 9, 2013, the Board of Directors of SAIC, Inc.(Ticker Symbol (NYSE):SAI) approved the following: The separation of its technical, engineering and enterprise information technology services business through the distribution of shares of SAIC Gemini, Inc. to stockholders. Each stockholder of record of SAIC, Inc. as of September 19, 2013 (Record Date) will receive one (1) share of SAIC Gemini, Inc. common stock for every seven (7) shares of SAIC, Inc. common stock held by such stockholder as of the Record Date. This distribution will be effective after market close on September 27, 2013 (Distribution Date). After the Distribution Date, SAIC Gemini, Inc. will be renamed Science Applications International Corporation (New SAIC). A one (1) for four (4) reverse stock split of the SAIC, Inc. common stock effective as of Distribution Date. After the Distribution Date, SAIC, Inc. will be renamed Leidos Holdings, Inc. (Leidos). Q 11: What are the different trading markets that may occur between Record Date and Distribution Date? A: Beginning two days prior to the Record Date of September 19, 2013 through the Distribution Date on September 27, 2013, there may be three different trading markets available with respect to SAIC, Inc. and the separation. Stock Ticker – SAI (Regular Way Trading with Due Bills): Shares of SAI common stock that trade on the regular-way market will trade with an entitlement to shares of the New SAIC common stock distributed on the Distribution Date. Purchasers in this market are purchasing both the shares of Leidos and New SAIC common stock. Form of Stock Ticker –SAIC (When Issued Trading): Shares of New SAIC common stock may be traded on a “when-issued” basis. These transactions are made conditionally because the security has been authorized, but not yet issued. Purchasers in this market are only purchasing the shares of New SAIC common stock distributed on the Distribution Date. Form of Stock Ticker – LDOS (Ex-Distribution Trading): Shares that trade on the ex-distribution market will trade without an entitlement to shares of New SAIC common stock distributed on the Distribution Date. Purchasers in this market are only purchasing the shares of Leidos common stock. So the stock price for New SAIC starts a few days before the record date of 19 September 2013, while LDOS (new name for the old SAIC) goes back much earlier. But the company didn't split until after the close of business on 27 September 2013. http://investors.saic.com/sites/saic.investorhq.businesswire.com/files/doc_library/file/GeneralStockholder-QuestionsandAnswers.pdf |
How to understand expenses matter relative to investment type for mutual funds? | The net return reported to you (as a percentage) by a mutual fund is the gross return minus the expense ratio. So, if the gross return is X% and the expense ratio is Y%, your account will show a return of (X-Y)%. Be aware that X could be negative too. So, with Y = 1, If X = 10 (as you might get from a stock fund if you believe historical averages will continue), then the net return is 9% and you have lost (Y/X) times 100% = 10% of the gross return. If X = 8 (as you might get from a bond fund if you believe historical averages will continue), then the net return is 7% and you have lost (Y/X) times 100% = 12.5% of the gross return. and so on and so forth. The numbers used are merely examples of the returns that have been obtained historically, though it is worth emphasizing that 10% is an average return, averaged over many decades, from investments in stocks, and to believe that one will get a 10% return year after year is to mislead oneself very badly. I think the point of the illustrations is that expense ratios are important, and should matter a lot to you, but that their impact is proportionately somewhat less if the gross return is high, but very significant if the gross return is low, as in money-market funds. In fact, some money market funds which found that X < Y have even foregone charging the expense ratio fee so as to maintain a fixed $1 per share price. Personally, I would need a lot of persuading to invest in even a stock fund with 1% expense ratio. |
Are there “buy and hold” passively managed funds? | Passive implies following an index. Your question seems to ask about a hypothetical fund that starts, say, as an S&P fund, but as the index is adjusted, the old stocks stay in the fund. Sounds simple enough, but over time, the fund's performance will diverge from the index. The slight potential gain from lack of cap gains will be offset by the fund being unable to market itself. Keep in mind, the gains distributed each year are almost exclusively long term, taxed at a favorable rate. |
Can Form 1040a, Line 10 be left blank if the broker's 1099-Div shows 0? | Capital gain distribution is not capital gain on sale of stock. If you have stock sales (Schedule D) you should be filing 1040, not 1040A. Capital gain distributions are distributions from mutual funds/ETFs that are attributed to capital gains of the funds (you may not have actually received the distribution, but you still may have gain attributed to you). It is reported on 1099-DIV, and if it is 0 - then you don't have any. If you sold a stock, your broker should have given you 1099-B (which is not the same as 1099-DIV, but may be consolidated by your broker into one large PDF and not provided separately). On 1099-B the sales proceeds are recorded, and if you purchased the stock after 2011 - the cost basis is also recorded. The difference between the proceeds and the cost basis is your gain (or loss, if it is negative). Fees are added to cost basis. |
Deductions greater than Income : Traditional IRA to Roth Conversion? | Yes. A most emphatic yes. I suggest you look at your 2014 return and project what 2015 will look like. I'd convert enough to "top off" the 15% bracket. Note, if you overshoot it, and in April 2016, see that you are say $5K into the 25% rate, you can just recharacterize the amount you went over and nail the bracket to the dollar. If you have the time and patience, you can convert into 2 different Roth accounts. One account for one asset class, say large cap stocks/funds, the other, cash/bonds. In April, keep the account that outperformed, and only recharacterize the lagger. Roth Roulette is my name for this strategy. It's risk free, and has the potential to boost the value of your conversions. Edit - To be clear, you are permitted to recharacterize (undo) any or all of the converted amount. You actually have until tax time (4/15 or so) plus the 6 month extension. You can recharacterize for any reason - A personal anecdote - I manage my mother in law's money. She is well under the 25% bracket cutoff. Each year I convert, and each April, recharacterize just enough to be at the top of the 15% bracket. Over $100K has been shifted from Traditional IRA to Roth by now. Taxed at 15% so her daughters will 'not' pay 25% when they withdraw. $10K in tax saved from uncle sam, for my effort of filling out paper twice a year for 12 years now. Well worth my effort. |
Is it normal that US Treasury bills(0.07%) yield smaller than interest rate(0.25%)? | Maybe someone will have more details, but a couple of things come to mind immediately: |
What one bit of financial advice do you wish you could've given yourself five years ago? | Now, if I wasn't concerned with the integrity of my already tainted soul I would have given myself the following advice five years ago: |
Can someone explain recent AAMRQ stock price behavior to me? | There are things that are clearly beyond me as well. Cash per share is $12.61 but the debt looks like $30 or so per share. I look at that, and the $22 negative book value and don't see where the shareholders are able to recoup anything. |
Non Resident aliens - Question of standard vs itemized | The IRS' primary reference Pub 519 Tax Guide for Aliens -- current year online (current and previous years downloadable in PDF from the Forms&Pubs section of the website) says NO: Students and business apprentices from India. A special rule applies .... You can claim the standard deduction .... Use Worksheet 5-1 to figure your standard deduction. If you are married and your spouse files a return and itemizes deductions, you cannot take the standard deduction. Note the last sentence, which is clearly an exception to the 'India rule', which is already an exception to the general rule that nonresident filers never get the standard deduction. Of course this is the IRS' interpretation of the law (which is defined to include ratified treaties); if you think they are wrong, you could claim the deduction anyway and when they assess the additional tax (and demand payment) take it to US Tax Court -- but I suspect the legal fees will cost you more than the marginal tax on $6300, even under Tax Court's simplified procedures for small cases. |
Would it make sense to buy a rental property as an LLC and not in my own name? | As far as the spam mail goes, I own a rental (in Connecticut) and live in Massachusetts, I get very little mail related to this property. I view this as a non-compelling reason. Your other reasons pick up quick in value. The protection from the rest of your assets is helpful, and the one con for most is the inability to get a loan with such a structure, but in your case, a cash purchase is mentioned. I don't know what the fees are to start an LLC, but overall, I believe the pros outweigh the cons. Yes, your Pro 4 looks good, an ongoing business with a track record will help the next purchase. |
Why does my checking/savings account offer a higher interest rate than a standalone savings account? | The key is that you need to use your debit card to earn the higher interest rate. The bank can offer a higher interest rate on accounts connected with a debit card because: They earn additional income through debit card fees charged towards account holders, among other things. They offer the higher interest rate specifically to encourage people to use their debit cards. By offering a joint checking/savings account that requires you to use your debit card, the bank is assuming that you'll keep more money in your account than you would in a standard checking-only account. Your higher balance translates into more money the bank can loan out or invest, which usually leads to higher profit for them. Businesses pay fees to the bank to accept debit cards. These fees represent another source of profit for the bank. The more you use your debit card, the more the bank earns in fees, so the bank encourages you to use your debit card more frequently through incentives like a higher interest rate or waiving fees on your account if you use your card enough. Plus, since it's likely that an individual who maintains a fairly high balance in an account linked to a debit card is going to spend more (simply because they can spend more), banks will sometimes waive fees on the consumer side for balances over a certain amount. |
Perform exercise-and-hold AND exercise-and-sell-to-cover? | Ask the folks administering your plan. They're the ones who define and implement the available choices for that specific plan. |
How would IRS treat reimbursement in a later year of moving expenses? | I believe moving reimbursement has to be counted as income no matter when you get it. I'd just put it under miscellaneous income with an explanation. |
Is this reply promising a money order and cashier check a scam? | I was a involved in this same scam from my Craigslist item. The buyer texted me & said his assistant put the wrong check in my envelope & please let him know when I got it,cash the cashiers check, keep my part for money of my item & send him back the difference. Well, the check came to me for $1,350.00 for a $100 item. I immediately suspected something here. It was for way to big to be a mistake. I called the credit union in California to ask about this cashier's check & sure enough, they said it was a fake check. This scammer's phone he texted from was from a San Antonio,TX area code, the check was mailed from Madison, WI, & the check was on a California CU. They sure cover their tracks pretty good. So C/L'ers.....BEWARE! don't take checks for more than the amount & be asked to send back the difference. You will be HAD! |
What happens to public shareholders when a public stock goes private? | I can see two possibilities. Either a deal is struck that someone (the company itself, or a large owner) buys out the remaining shares. This is the scenario @mbhunter is talking about, so I won't go too deeply into it, but it simply means that you get money in your bank account for the shares in question the same as if you were to sell them for that price (in turn possibly triggering tax effects, etc.). I imagine that this is by far the most common approach. The other possibility is that the stock is simply de-listed from a public stock exchange, and not re-listed elsewhere. In this case, you will still have the stock, and it will represent the same thing (a portion of the company), but you will lose out on most of the "market" part of "stock market". That is, the shares will still represent a monetary value, you will have the same right to a portion of the company's profits as you do now, etc., but you will not have the benefit of the market setting a price per share so current valuation will be harder. Should you wish to buy or sell stock, you will have to find someone yourself who is interested in striking a deal with you at a price point that you feel comfortable with. |
I carelessly invested in a stock on a spike near the peak price. How can I salvage my investment? | You can do several things: After the fact: If you believe the stock will go up, you can buy more stock now, it's what's called "averaging". So, you bought 100 at $10, now it's at $7. To gain money from your original investment it needs to raise to over $10. But if you really think it'll go up, you can buy and average. So you buy, say, 100 more stock at $7, now you have 200 shares at $8.50 average so you gain money on your investment when the stock goes over $8.50 instead of $10. Of course, you risk losing even more money if the stock keeps going down. Before the fact: When you buy stock, set 'triggers'. In most trading houses you can set automatic triggers to fire on conditions you set. When you buy 100 shares at $10, you can set a trigger to automatically sell the 100 shares if it drops below $9, so you limit your losses to 10% (for example). |
Optimal way to use a credit card to build better credit? | Most business credit cards do not report to the personal credit report unless the person pays the card late. Given that fact, any debt carried on these cards does not hurt the credit score if it is not reported. You can carry credit card debt on these cards without hurting your credit score. Just apply for business credit cards now to start building this segment of your credit. |
Paying off a loan with a loan to get a better interest rate | I don't know what rates are available to you now, but yes, if you can refinance your car at a better rate with no hidden fees, you might save some money in interest. However, there are a couple of watchouts: Your original loan was a 6 year loan, and you have 5 years remaining. If you refinance your car with a new 6 year loan, you will be paying on your car for 7 years total, and you will end up paying more interest even though your interest rate might have gone down. Make sure that your new loan, in addition to having a lower rate than the old loan, does not have a longer term than what you have remaining on the original loan. Make sure there aren't any hidden fees or closing costs with the new loan. If there are, you might be paying your interest savings back to the bank in fees. If your goal is to save money in interest, consider paying off your loan early. Scrape together extra money every month and send it in, making sure that it is applied to the principal of your loan. This will shorten your loan and save you money on interest, and can be much more significant than refinancing. After your loan is paid off, continue saving the amount you were spending on your car payment, so you can pay cash for your next car and save even more. |
Is Bitcoin a commodity or a currency [duplicate] | I would classify Bitcoin as a hybrid. Currency : It is accepted by e-businesses as a form of payment Commodity : Chart illustrating the volatility and speculative nature of Bitcoin |
Can you explain why it's better to invest now rather than waiting for the market to dip? | Your chance of even correctly recognizing the actual lowest point of a dip are essentially zero, so if you try to time the market, you'll most likely not get the "buy cheap" part perfectly right. And as you write yourself, while you wait for the dip, you have an ongoing opportunity cost. Cost averaging is by far the best strategy for non-professional and risk averse investors to deal with this. And yes, over the long run, it's far more important to invest at all than when you do it. |
How to convince someone they're too risk averse or conservative with investments? | Remind him that, over the long-term, investing in safe-only assets may actually be more risky than investing in stocks. Over the long-term, stocks have always outperformed almost every other asset class, and they are a rather inflation-proof investment. Dollars are not "safe"; due to inflation, currency exchange, etc., they have some volatility just like everything else. |
Pay Yourself With Credit Card Make Money With Cash Back [duplicate] | The idea is old as dirt, and some millions of people had it before you. Credit card swipes cost you between 2.4 and 4.5%, depending on the cards, the provider, and the amounts, plus potentially a fixed small amount per swipe. Of course, a 2% cash back card cost more than 2% to swipe; and a 3% cash back card cost more than 3% to swipe; those guys are not morons. |
Can a stock exchange company actually go bust? | Technically, of course. Almost any company can go bankrupt. One small note: a company goes bankrupt, not its stock. Its stock may become worthless in bankruptcy, but a stock disappearing or being delisted doesn't necessarily mean the company went bankrupt. Bankruptcy has implications for a company's debt as well, so it applies to more than just its stock. I don't know of any historical instances where this has happened, but presumably, the warning signs of bankruptcy would be evident enough that a few things could happen. Another company, e.g. another exchange, holding firm, etc. could buy out the exchange that's facing financial difficulty, and the companies traded on it would transfer to the new company that's formed. If another exchange bought out the struggling exchange, the shares of the latter could transfer to the former. This is an attractive option because exchanges possess a great deal of infrastructure already in place. Depending on the country, this could face regulatory scrutiny however. Other firms or governments could bail out the exchange if no one presented a buyout offer. The likelihood of this occurring depends on several factors, e.g. political will, the government(s) in question, etc. For a smaller exchange, the exchange could close all open positions at a set price. This is exactly what happened with the Hong Kong Mercantile Exchange (HKMex) that MSalters mentioned. When the exchange collapsed in May 2013, it closed all open positions for their price on the Thursday before the shutdown date. I don't know if a stock exchange would simply close all open positions at a set price, since equity technically exists in perpetuity regardless of the shutdown of an exchange, while many derivatives have an expiration date. Furthermore, this might not be a feasible option for a large exchange. For example, the Chicago Mercantile Exchange lists thousands of products and manages hundreds of millions of transactions, so closing all open positions could be a significant undertaking. If none of the above options were available, I presume companies listed on the exchange would actively move to other, more financially stable exchanges. These companies wouldn't simply go bankrupt. Contracts can always be listed on other exchanges as well. Considering the high level of mergers and acquisitions, both unsuccessful and successful, in the market for exchanges in recent years, I would assume that option 1 would be the most likely (see the NYSE Euronext/Deutsche Börse merger talks and the NYSE Euronext/ICE merger that's currently in progress), but for smaller exchanges, there is the recent historical precedent of the HKMex that speaks to #3. Also, the above answer really only applies to publicly traded stock exchanges, and not all stock exchanges are publicly-held entities. For example, the Shanghai Stock Exchange is a quasi-governmental organization, so I presume option 2 would apply because it already receives government backing. Its bankruptcy would mean something occurred for the government to withdraw its backing or that it became public, and a discussion of those events occurring in the future is pure speculation. |
If a stock doesn't pay dividends, then why is the stock worth anything? | It seems to me that your main question here is about why a stock is worth anything at all, why it has any intrinsic value, and that the only way you could imagine a stock having value is if it pays a dividend, as though that's what you're buying in that case. Others have answered why a company may or may not pay a dividend, but I think glossed over the central question. A stock has value because it is ownership of a piece of the company. The company itself has value, in the form of: You get the idea. A company's value is based on things it owns or things that can be monetized. By extension, a share is a piece of all that. Some of these things don't have clear cut values, and this can result in differing opinions on what a company is worth. Share price also varies for many other reasons that are covered by other answers, but there is (almost) always some intrinsic value to a stock because part of its value represents real assets. |
What to think of two at the money call options with different strike prices and premiums? | As other uses have pointed out, your example is unusual in that is does not include any time value or volatility value in the quoted premiums, the premiums you quote are only intrinsic values. For well in-the-money options, the intrinsic value will certainly be the vast majority of the premium, but not the sole component. Having said that, the answer would clearly be that the buyer should buy the $40 call at a premium of $10. The reason is that the buyer will pay less for the option and therefore risk less money, or buy more options for the same amount of money. Since the buyer is assuming that the price will rise, the return that will be realised will be the same in gross terms, but higher in relative terms for the buyer of the $40 call. For example, if the underlying price goes to $60, then the buyer of the $40 call would (potentially) double their money when the premium goes from $10 to $20, while the buyer of the $30 call would realise a (potential) 50% profit when the premium goes from $20 to $30. Considering the situation beyond your scenario, things are more difficult if the bet goes wrong. If the underlying prices expires at under $40, then the buyer of the $40 call will be better off in gross terms but may be worse off in relative terms (if it expires above $30). If the underlying price expires between $40 and $50, then the buy of the $30 will be better off in relative term, having lost a smaller percentage of their money. |
What is a good way to save money on car expenses? | Don't buy the first model year of a new model unless the fuel economy is much better in the latest model. Buying a car in later years just before the changeover will result in a slightly higher quality vehicle or in some cases dramatically higher quality. Find the best forum for your make/model/year of car. Join the forum, check the FAQ, sticky threads and post questions when you have trouble. Do NOT rely passively on the dealer or even private mechanics as they do not drive the car every day. You are in the best position to identify problems but only if you have some help. Preventive maintenance is the best if you intend to keep the car for a really long time. Forums are a really good place to find the typical problems of a particular model and potentially head them off. |
In a house with shared ownership, if one person moves out and the other assumes mortgage, how do we determine who owns what share in the end? | Market value and assessments are two different things. No matter how amical the agreement seems on buying and selling, the future could result in damaged relationships without an absolute sale. I would strongly recommend getting into an agreement to split the purchase of a house as a means to save money. If it's too late, sell immediately. |
Buying and selling the same stock | If you buy for $1 and sell $1 when the price goes to $2, you would have sold only half of your initial investment. So your investment would now be worth $2 and you sell $1 leaving $1 still in the market. This means you would have sold half your initial investment, making a profit of $0.50 on this half of your initial investment, and having to pay CGT on this amount. |
What's the best way to manage all the 401K accounts I've accumulated from my past jobs? | Open an investment account on your own and have them roll the old 401K accounts into either a ROTH or traditional IRA. Do not leave them in old 401k accounts and definitely don't roll them into your new employer's 401K. Why? Well, as great as 401K accounts are, there is one thing that employers rarely mention and the 401K companies actively try to hide: Most 401K plans are loaded with HUGE fees. You won't see them on your statements, they are often hidden very cleverly with accounting tricks. For example, in several plans I have participated in, the mutual fund symbols may LOOK like the ones you see on the stock tickers, but if you read the fine print they only "approximate" the underlying mutual fund they are named for. That is, if you multiply the number of shares by the market price you will arrive at a number higher than the one printed on your statement. The "spread" between those numbers is the fee charged by the 401K management company, and since employees don't pick that company and can't easily fire them, they aren't very competitive unless your company is really large and has a tough negotiator in HR. If you work for a small company, you are probably getting slammed by these fees. Also, they often charge fees for the "automatic rebalancing" service they offer to do annually to your account to keep your allocation in line with your current contribution allocations. I have no idea why it is legal for them not to disclose these fees on the statements, but they don't. I had to do some serious digging to find this out on my own and when I did it was downright scary. In one case they were siphoning off over 3% annually from the account using this standard practice. HOWEVER, that is not to say that you shouldn't participate in these plans, especially if there is an employer match. There are fees with any investment account and the "free money" your employer is kicking in almost always offsets these fees. My point here is just that you shouldn't keep the money in the 401K after you leave the company when you have an option to move it to an account with much cheaper fees. |
What is title insurance, and should I get title insurance for my home? | If or when you "own" your land outright you need to try and get the land patent on it. That is the supreme form of title to it. It goes back to when the land was acquired by the U.S. (from Britian, France, etc.) by treaty. Treaties trump even our Constitution. When you have a land patent.........IT'S YOURS! That link is to my site but this was so relevant that I had to include it. Hope y'all don't mind. |
Dec 31 accounting for S Corp - what to do with loss? | Conceptually, the entries are: Yes. And since you're the sole owner, your basis will equal to the equity balance on the balance sheet. Keep in mind the book and tax basis will probably be different, so you may want to keep a separate calculation to track the tax basis. There is no journal additional journal entry for this. If you're using bookkeeping software, be sure to research its book-closing/closing entries feature, as it is handled differently depending on the software. For example Quickbooks doesn't explicitly close its books, but re-computes the balance sheet dynamically depending on the selected date range. |
Are solar cell panels and wind mills worth the money? | To answer the investment aspect takes a bit of math. First, solar insolation numbers: This represents the average sun-hours per day for a given area. You can see the range from 4 to 6, or 1460 hrs to about 2190 hrs of sun per year depending on location. I believe electricity also has a range of cost, but 15 cents per KWH is a good average. So, a 1KW panel will produce as much as $328 per year of electricity in a high sun-hrs area, but only $219 in a lower sun-hrs area. If we agree to ignore the government subsidies and look for the stable price unaffected by outside influence, an installed price of even $2500 would produce a return of 13% and a reasonable full payback over an 8 year period. I call this installed price a tipping point, the price where this purchase provides a decent return. Some would accept a lower return, and therefore a higher price. As duff points out, this should be treated as the post rebate/tax credit price. Those help to push the price below this point. At the price point where the energy cost per panel is below, the government intervention may be unnecessary. The power companies may find consumer owned panels are the cheapest way to clip the peak consumption which tends to be the most expensive power demand.) One can take the insolation numbers and cost of local power to produce a grid showing the return for a 1KW panel in $$/year. (At this point the cost of money kick in. The present value of $100/yr is far higher today than if short term rates were say, 8%) Once panels drop to where they are compelling for the higher return areas, I'd expect volume to drive continued improvements in cost and better economies of scale. Initially, the need for storage isn't there, as the infrastructure is in place to drive your meter backwards if you produce more than you use. The peek sun coincides with peek demand and the electric companies are happy to have your demand go negative during those times. Update - the conversation with Duff led me to research 'demand charge' a bit more. You see, the utility company has to have equipment to generate the peak demand, usually occurring in the early afternoon, say 12N-2PM as the sun is brightest and AC use in particular, highest. I found that Austin energy has a PDF describing the fee for this. Simply put, the last kW of demand will cost you $14.03 in summer months and $12.65 in winter. This adds to $160/yr that a 1kW panel might save the owner. Even if one does capture the full power at peak every month, $100 is still non-trivial. This factor alone justifies $1000 worth of panel cost, and as Duff points out, the government may find it cheaper to use this method to clip peak demand than by funding bigger power generators. To summarize, the question isn't so much "are they worth it" as "what is a xKW panel worth?" (A function of annual savings and time value of money.) The ever decreasing installed cost for a given system makes solar an inevitable part of the future power technology. I am not a green tree hugging guy, but I do like to breathe fresh air as much as anyone. I'm happy with whatever role solar plays in cutting down pollution. |
How do I protect money above the FDIC coverage limit? | If you are concerned about FDIC coverage, then yes, you can spread your money across multiple banks. The limit is $250k, so after you invest in property, 4 banks should do it. That having been said, in my opinion, it would be a waste to keep all this money in a bank's savings account. You will slowly lose value over time due to inflation. I suggest you spend a little money on an independent fee-based investment advisor. Choose someone who will teach you about investing in mutual funds, so you can feel comfortable with it. He or she should take into account your tolerance for risk, look at your goals, and help you come up with a low cost plan for investing your money. It's certainly okay to keep the money in a bank short-term, but don't wait too long; take steps toward putting that money to work for you. |
How can a credit card company make any money off me? I have a no-fee card and pay my balance on time | Of course they make money. They double dip in a lot of instances they make 2 - 3% plus $0.30 per transaction from the merchant and then whatever interest you pay on your card. So let's just say in one day you make stops at Starbucks for a $4 Latte, then at Wendy's for lunch for about $8, then you put about $20 worth of gas in your tank, then you stop at Kroger for some $40 groceries and may you pick up some dinner for about $15. That's 5 transactions at $0.30 which is a $1.50 then at 3% starbucks is $0.12, Wendy's $0.24, gas is $0.60 then kroger $1.20 then dinner $0.45 so the total that they get is $4.11 multiply this by about a million people per day that is about $4.1 million per day that they get. That is a nice penny! just from the merchant so you are making them a lot of money by just using it. |
Can an S-Corp write off work and merchandise expenses donated to a non-profit organization? | An S-corp doesn't pay income tax -- taxation is pass-through. This being the case, there are no tax deductions it could take for charitable giving. The solution would be for you to make the contribution out of your own pocket and then personally claim the deduction on your own taxes. |
Should I consolidate loans and cards, or just cards, leaving multiple loans? | My answer is similar to Ben Miller's, but let me make some slightly different points: There is one excellent reason to get a consolidation loan: You can often get a lower interest rate. If you are presently paying 19% on a credit card and you can roll that into a personal loan at 13.89%, you'll be saving over 5%, which can add up. I would definitely not consolidate a loan at 12.99% into a loan at 13.89%. Then you're just adding 1% to your interest rate. What's the benefit in this? Another good reasons for a consolidation loan is psychological. A consolidation loan with fixed payments forces you to pay that amount every month. You say you have trouble with credit cards. It's very easy to say to yourself, "Oh, just this month I'm going to pay just the minimum so I can use my cash for this other Very Important Thing that I need to buy." And then next month you find something else that you just absolutely have to buy. And again the next month, and the next, and your determination to seriously pay down your debt keeps getting pushed off. If you have a fixed monthly payment, you can't. You're committed. Also, if you have many credit cards, juggling payments on all of them can get complex and confusing. It's easy to lose track of how much you owe and to budget for payments. At worst, when there are many bills to pay you may forget one. (Personally I now have 3 bank cards, an airline card, and 2 store cards, and managing them is getting out of hand. I have good reasons for having so many cards: the airline card and the store cards give me special discounts. But it's confusing to keep track of.) As to adding $3,000 to the consolidation loan: Very, very bad idea. You are basically saying, "I have to start seriously paying down my debt ... tomorrow. Today I need a some extra cash so I'm going to borrow just a little bit more, but I'm going to get started paying it off next month." This is a trap, and the sort of trap that leads people into spiraling debt. Start paying off debt NOW, not at some vague time in the future that never seems to come. |
In what ways is IEX different than a typical dark pool or a typical exchange? | You've said what's different in your question. There's 330 microseconds of network latency between IEX and anywhere else, so HFTs can't get information about trades in progress on IEX and use it to jump in ahead of those traders on other exchanges. All exchanges should have artificially induced latency of this kind so that if a trade is submitted simultaneously to all exchanges it reaches the furthest away one before a response can be received from the closest one, thus preventing HFT techniques. |
Can you explain why these items are considered negatives on my credit report? | Creditworthiness is proven over time. The longer your track record of making payments on time, the more probable you will stick to credit agreements in future (or so the reasoning goes). Conversely, someone who has only just started applying for credit could be someone whose finances were previously stable but have now started to get into difficulty. Obviously this is not necessarily the case but it is one possible inference. This inference is strengthened when same person applies for further credit in a short space of time. Ultimately, what is considered positive is a stable credit record over a reasonable period of time, because it indicates you stick to payment schedules and don't suddenly need credit due to money problems. Credit card accounts are considered a good indicator of credit status because they imply what kind of borrower you are. Whereas many credit arrangements present a straightforward case of arrears / no arrears (e.g. think of a mobile phone account – either you pay your bill or you don't), with credit cards there is an element of flexibility in how much you borrow, and how much of that you repay. If you run up four figure monthly balances but clear them in full each month without fail, that is a good sign. If your average balance is increasing and you are paying on time but just the minimum amount, that is a potential flag. In other words, credit cards are of particular interest because they paint a more nuanced picture. Provided you use one responsibly, getting and using a credit card may improve your status with credit reference agencies. |
In which situations is it better to consider a loan instead of paying cash? | A loan with modest interest is better than paying by cash if there are better alternatives for investment. For example, suppose you are buying a house. Consider two extremes: a) you pay the house entirely by cash, b) the entire buy is financed by the bank. Historically, real (subtracting inflation) house prices (at least in the U.S.) have not risen at all in the long run, and investing all of your own capital in this way may not be optimal. Notice that we are looking at a situation where one is buying a house and living in it in any case. Rent savings are equal in cases a) and b). If instead you were buying a house not for yourself, but as a separate investment for renting out, then you would receive rent. In the case a), the real return on your capital will be zero, whereas in case b), you can invest the cash in e.g. the stock market and get, on average, 7% (the stock market has yielded a 7% real return annually including dividends) annually minus the bank's interest rate. If the interest is lower than 7%, it may be profitable to take the loan. Of course, the final decision depends on your risk preferences. |
Does doing your “research”/“homework” on stocks make any sense? | In fact markets are not efficient and participants are not rational. That is why we have booms and busts in markets. Emotions and psychology play a role when investors and/or traders make decisions, sometimes causing them to behave in unpredictable or irrational ways. That is why stocks can be undervalued or overvalued compared to their true value. Also, different market participants may put a different true value on a stock (depending on their methods of analysis and the information they use to base their analysis on). This is why there are always many opportunities to profit (or lose your money) in liquid markets. Doing your research, homework, or analysis can be related to fundamental analysis, technical analysis, or a combination of the two. For example, you could use fundamental analysis to determine what to buy and then use technical analysis to determine when to buy. To me, doing your homework means to get yourself educated, to have a plan, to do your analysis (both FA and TA), to invest or trade according to your plan and to have a risk management strategy in place. Most people are too lazy to do their homework so will pay someone else to do it for them or they will just speculate (on the latest hot tip) and lose most of their money. |
What are the best software tools for personal finance? | http://www.Mvelopes.com Mvelopes is envelope-style budgeting in an online application. I've tried all of the other applications and I choose to pay for this one for the following reasons: |
What are the best software tools for personal finance? | KMyMoney Pros: Cons: |
Is the need to issue bonds a telltale sign that the company would have a hard time paying coupons? | People borrow money all the time to buy a house. Banks will lend money on one (up to 80%, sometimes more), because they consider it an "investment." If you own a large company and want to expand, a bank or bond issuer will first look at what you plan to do with the money, like build new factories, or whatever. Based on their experience, they may judge that you will earn enough money to pay them back. If you don't, they may "repossess" your factories and sell them to someone who can pay. As protection, you may be asked to "mortgage" your existing company to protect the lenders of the new money. If you don't pay back the money, the lenders get not only your new "factories" but also your existing company. |
Everyone got a raise to them same amount, lost my higher pay than the newer employees | This is one effect of rising minimum wages: compression of lower pay tiers. The new employees might have been offered a lower starting rate than the result of your raise, but your employer did not have that option as a matter of law. |
Why would a company with a bad balance sheet be paying dividends? | Having a debt on a balance sheet does impact the capability and willingness of the company to pay dividend. But more than this it depends on the profitability of the company. If the company is profitable, there is no reasons why it's share holders should not be rewarded. If the company does not have debt, lot of money and no profit, normally no or a symbolic dividend is paid. It is a good move by Fort. Dividend is the effective way of paying something back to the shareholders. |
Must a company have a specific number of employees to do an IPO? | While there is no legal reason to have a minimum number of employees, there can be a practical reason. They want to look like a good solid investment so that investors will give them money, which is what an IPO is, really. Hiring lots of people is part of that. Once the investors are committed, they can cut expenses by firing people again. I have no idea how common this is, but it is a possibility. However, if it were really common, investors wouldn't be fooled anymore. Also, they risk being sued for fraud over this. Even if your friend's worry is probably unfounded, you should be aware that working for a startup is always risky. They very often go bankrupt even if they try their best. They can misjudge their intended market. They can get higher expenses than expected. There can be another company with same idea being launched at the same time. Other things can go wrong. Working for a startup is a risk, but it beats being unemployed, right? |
Can the Delta be used to calculate the option premium given a certain target? | One thing I would like to clear up here is that Black Scholes is just a model that makes some assumptions about the dynamics of the underlying + a few other things and with some rather complicated math, out pops the Black Scholes formula. Black Scholes gives you the "real" price under the assumptions of the model. Your definition of what a "real" price entails will depend on what assumptions you make. With that being said, Black Scholes is popular for pricing European options because of the simplicity and speed of using an analytic formula as opposed to having a more complex model that can only be evaluated using a numerical method, as DumbCoder mentioned (should note that, for many other types of derivative contracts, e.g. American or Bermudan style exercise, the Black Scholes analytic formula is not appropriate). The other important thing to note here is that the market does not necessarily need to agree with the assumptions made in the Black Scholes model (and they most certainly do not) to use it. If you look at implied vols for a set of options which have the same expiration but differing strike prices, you may find that the implied vols for each contract differ and this information is telling you to what degree the traders in the market for those contracts disagree with the lognormal distribution assumption made by Black Scholes. Implied vol is generally the thing to look at when determining cheapness/expensiveness of an option contract. With all that being said, what I'm assuming you are interested in is either called a "delta-gamma approximation" or more generally "Greek/sensitivities based profit and loss attribution" (in case you wanted to Google some more about it). Here is an example that is relevant to your question. Let's say we had the following European call contract: Popping this in to BS formula gives you a premium of $4.01, delta of 0.3891 and gamma of 0.0217. Let's say you bought it, and the price of the stock immediately moves to 55 and nothing else changes, re-evaluating with the BS formula gives ~6.23. Whereas using a delta-gamma approximation gives: The actual math doesn't work out exactly and that is due to the fact that there are higher order Greeks than gamma but as you can see here clearly they do not have much of an impact considering a 10% move in the underlying is almost entirely explained by delta and gamma. |
How can I determine if my rate of return is “good” for the market I am in? | A good way to measure the performance of your investments is over the long term. 25-30% returns are easy to get! It's not going to be 25-30% in a single year, though. You shouldn't expect more than about 4% real (inflation-adjusted) return per year, on average, over the long term, unless you have reason to believe that you're doing a better job of predicting the market than the intellectual and investment might of Wall Street - which is possible, but hard. (Pro tip: It's actually quite easy to outdo the market at large over the short term just by getting lucky or investing in risky askets in a good year. Earning this sort of return consistently over many years, though, is stupidly hard. Usually you'll wipe out your gains several years into the process, instead.) The stock market fluctuates like crazy, which is why they tell you not to invest any money you're likely to need sooner than about 5 years out and you switch your portfolio from stocks to bonds as you approach and enter retirement. The traditional benchmark for comparison, as others have mentioned, is the rate of return (including dividends) from the Standard and Poors 500 Index. These are large stable companies which make up the core of larger United States business. (Most people supplement these with some smaller companies and overseas companies as a part of the portfolio.) |
Do I need to pay Income Tax if i am running a escrow service in India | Income Tax would only be levied on the 10% commission that you earn and not on the total amount kept in the Escrow Account. |
Will a credit card issuer cancel an account if it never incurs interest? | No, they won't cancel it because you pay your card on time. When a company offers a promotion like that they are banking on making money on average, not in every case. On average including all the benefits including transaction fees, deals for partnering with best buy, etc. Of course some people pay their credit card in full each month and never incur interest charges. However, credit card companies more than cover that with other people who aren't responsible. If it wasn't worth while they would end the card program or change it. |
When to trade in a relatively new car for maximum value | My suggestion would be to keep it. The value of a new car is that you get to drive it around when it's still new and shiny, and that you know its history. If you maintain it in good condition, both mechanically and cosmetically, then you can have both of those benefits for the life of the car. Your question merges the old car sale and new car purchase transactions together, but that's not correct. The value of your 2010 car has no relationship to the value of any new car you might buy, except incidentally through the market forces that act on each. The car dealership is likely to be skilled at making you feel like your most important criteria are satisfied, but they will try to construct the deal to maximize the money you pay them while making you feel like you're the one maximizing your value. Also note that the dealership cannot give you maximum value for your car, because it costs them money to sell it and they take all the risk. Some of the difference between typical direct-sale and trade-in prices is the commission you are paying them to both sell it for you and absorb the risks in the transaction. |
Making higher payments on primary residence mortgage or rental? | I'll assume you live in the US for the start of my answer - Do you maximize your retirement savings at work, at least getting your employer's match in full, if they do this. Do you have any other debt that's at a higher rate? Is your emergency account funded to your satisfaction? If you lost your job and tenant on the same day, how long before you were in trouble? The "pay early" question seems to hit an emotional nerve with most people. While I start with the above and then segue to "would you be happy with a long term 5% return?" there's one major point not to miss - money paid to either mortgage isn't liquid. The idea of owing out no money at all is great, but paying anything less than "paid in full" leaves you still owing that monthly payment. You can send $400K against your $500K mortgage, and still owe $3K per month until paid. And if you lose your job, you may not so easily refinance the remaining $100K to a lower payment so easily. If your goal is to continue with real estate, you don't prepay, you save cash for the next deal. Don't know if that was your intent at some point. Disclosure - my situation - Maxing out retirement accounts was my priority, then saving for college. Over the years, I had multiple refinances, each of which was a no-cost deal. The first refi saved with a lower rate. The second, was in early 2000s when back interest was so low I took a chunk of cash, paid principal down and went to a 20yr from the original 30. The kid starts college, and we target retirement in 6 years. I am paying the mortgage (now 2 years into a 10yr) to be done the month before the kid flies out. If I were younger, I'd be at the start of a new 30 yr at the recent 4.5% bottom. I think that a cost of near 3% after tax, and inflation soon to near/exceed 3% makes borrowing free, and I can invest conservatively in stocks that will have a dividend yield above this. Jane and I discussed the plan, and agree to retire mortgage free. |
How far into the future is a stock future? How do stock futures work? | Futures are an agreement to buy or sell something in the future. The futures "price" is the price at which you agree to make the trade. This price does not indicate what will happen in the future so much as it indicates the cost of buying the item today and holding it until the future date. Hence, for very liquid products such as stock index futures, the futures price is a very simple function of today's stock index value and current short-term interest rates. If the stock exchange is closed but the futures exchange is open, then using the futures price and interest rates one can back out an implied "fair value" for the index, which is in essence the market's estimate of what the stock index value would be right now if the stock market were open. Of course, as soon as the stock exchange opens, the futures price trades to within a narrow band of the actual index value, where the size of the band depends on transaction costs (bid-ask spread, commissions, etc.). |
New to investing — I have $20,000 cash saved, what should I do with it? | This advice will be too specific, but... With the non-retirement funds, start by paying off the car loan if it's more than ~3% interest rate. The remainder: looks like a good emergency fund. If you don't have one of those yet, you do now. Store it in the best interest-bearing savings account you can find (probably accessible by online banking). If you wish to grow your emergency fund beyond $14-20,000 you might also consider some bonds, to boost your returns and add a little risk (but not nearly as much risk as stocks). With the Roth IRA - first of all, toss the precious metals. Precious metals are a crisis hedge and an advanced speculative instrument, not a beginner's investment strategy for 40% of the portfolio. You're either going to use this money for retirement, or your down payment fund. If it's retirement: you're 28; even with a kid on the way, you can afford to take risks in the retirement portfolio. Put it in either a targe-date fund or a series of index funds with an asset allocation suggested by an asset-allocation-suggestion calculator. You should probably have north of 80% stocks if it's money for retirement. If you're starting a down-payment fund, or want to save for something similar, or if you want to treat the IRA money like it's a down-payment fund, either use one of these Vanguard LifeStrategy funds or something that's structured to do the same sort of thing. I'm throwing Vanguard links at you because they have the funds with the low expense ratios. You can use Vanguard at your discretion if it's all an IRA (and not a 401(k)). Feel free to use an alternative, but watch the expense ratios lest they consume up to half your returns. |
How does cash ISA & share ISA mix together | There are two different types of ISA; the "Cash ISA" for cash savings, and the "Stocks and Shares ISA" for stock market investing. You can transfer funds between these two different types of ISA. If your current cash ISA provider does not provide stocks and shares ISAs, then there may be a fee involved when transferring funds between two different providers. If I am reading your notation correctly, you have contributed the full allowance of GBP15,240 in both the current tax year and the previous tax year. Each year you can contribute GBP15,240 (currently) to your ISAs and this can be done in any combination of cash ISA and stocks and shares ISA. For example, you could put GBP5,240 into your cash ISA and GBP10,000 into your stocks and shares ISA. Regarding your questions : It is also important to understand that once you withdraw money from an ISA, it does not affect your previous contributions or allowances. For example, if you have used your full contribution allowance for the current year and chose to withdraw some funds, then you have still used your full contribution allowance and so you cannot redeposit these funds. |
Why was my Credit Limit Increase Denied? | The bottom line is that you are kind of a terrible customer for them. Granted you are far better than one that does not pay his bills, but you are (probably) in the tier right above that. Rewards cards are used to lure the unorganized into out of control interest rates and late payments. These people are Capital One's, and others, best customers. They have traded hundreds of dollars in interest payments for a couple of dollars in rewards. The CC company says: "YUMMY"! You, on the other hand, cut into their "meager" profits from fees collected from your transactions. Why should they help you make more money? Why should they further cut into your profits? Response to comment: Given your comment I think the bottom line is a matter of perspective. You seem like a logical, altruistic type person who probably seeks a win-win situation in business dealings. This differs from CC companies they operate to seek one thing: enslavement. BTW the "terrible customer" remark should be taken as a compliment. After you get past the marketing lies you begin to see what reward programs and zero percent financing is all about. How do most people end up with 21%+ interest rates? They started with a zero percent balance loan, and was late for a payment. Reward cards work a bit differently. Studies show that people tend to spend about 17% more when they use a reward card. I've caught myself ordering an extra appetizer or beer and have subsequently stopped using a reward card for things I can make a decision at the time of purchase. For people with tight budgets this leads to debt. My "meager" profits paragraph makes sense when you understand the onerous nature of CC companies. They are not interested in earning 2% on purchases (charge 3% and give back 1%) for basically free money. You rightly see this as what should be a win-win for all parties involved. Thus the meager in quotation marks. CC companies are willing to give back 1% and charge 3% if you then pay 15% or more on your balance. Some may disagree with me on the extracting nature of CC companies, but they are wrong. I like him as an actor, but I don't believe Samuel Jackson's lines. |
What are frontier markets? Is investing in them a good idea? | From Wikipedia A frontier market is a type of developing country which is more developed than the least developing countries, but too small to be generally considered an emerging market. The term is an economic term which was coined by International Finance Corporation’s Farida Khambata in 1992. The term is commonly used to describe the equity markets of the smaller and less accessible, but still "investable", countries of the developing world. The frontier, or pre-emerging equity markets are typically pursued by investors seeking high, long-run return potential as well as low correlations with other markets. Some frontier market countries were emerging markets in the past, but have regressed to frontier status. Investopedia has a good comparison on Emerging Vs Frontier While frontier market investments certainly come with some substantial risks, they also may post the kind of returns that emerging markets did during the 1990s and early 2000s. The frontier market contains anywhere from one-fifth to one-third of the world’s population and includes several exponentially growing economies. The other Question and are they a good option as well? This depends on risk appetite and your current investment profile. If you have already invested in domestic markets with a well diversified portfolio and have also invested in emerging markets, you can then think of expanding your portfolio into these. |
How does leverage work? | JoeTaxpayer's answer adequately explained leverage and some of your risks. Your risks also include: The firm's risk is that you will figure out a way to leave them with a negative account that contributes to another customer's profit and yet you disappear in a way that makes the negative account impossible to collect. Another risk is that you are not who you say you are, or that the money you invest is not yours. These are called "know your customer" risks. |
Td Ameritrade Roth IRA question | Since you're 20-30 years out of retirement, you should be 90% to 100% in stocks, and in one or two broad stock market funds likely. I'm not sure about the minimums at TD Ameritrade, but at Vanguard even $3k will get you into the basic funds. One option is the Targeted Retirement Year funds, which automatically rebalance as you get closer to retirement. They're a bit higher expense usually than a basic stock market fund, but they're often not too bad. (Look for expenses under 0.5% annually, and preferably much lower - I pay 0.05% on mine for example.) Otherwise, I'd just put everything into something simple - an S&P500 tracker for example (SPY or VOO are two examples) that has very low management fees. Then when your 401(k) gets up and running, that may have fewer options and thus you may end up in something more conservative - don't feel like you have to balance each account separately when they're just starting, think of them as one whole balancing act for the first year or two. Once they're each over $10k or so, then you can balance them individually (which you do want to do, to allow you to get better returns). |
Should you always max out contributions to your 401k? | I think better advice would be always max out your 401K at least to the level that the company provides a match. For example, my company will match 50% up to 10% of your salary. Good luck finding another investment with a guaranteed immediate 50% return. Beyond the company match, it is probably good advice to put as much in the 401K as you can afford if you aren't disciplined enough to invest that money on your own. Otherwise it depends on a number of factors as to whether it is better to invest on your own or in the company plan. |
Where can I find open source portfolio management software? | Have you looked into GnuCash? It lets you track your stock purchases, and grabs price updates. It's designed for double-entry accounting, but I think it could fit your use case. |
Tax deductions on empty property | This doesn't sound very legal to me. Real estate losses cannot generally be deducted unless you have other real estate income. So the only case when this would work is when that person has bunch of other buildings that do produce income, and he reduces that income, for tax purposes, by deducting the expenses/depreciation/taxes for the buildings that do not. However, depreciation doesn't really reduce taxes, only defers them to the sale. As mhoran_psprep said - all the rest of the expenses will be minimal. |
Algorithmic trading in linux using python | I don't think any open source trading project is going to offer trial or demo accounts. In fact, I'm not clear on what you mean by this. Are you looking for some example data sets so you can see how your algorithm would perform historically? If you contact whatever specific brokers that you'd like to interface with, they can provide things like connection tests, etc., but no one is going to let you do live trades on a trial or demo basis. For more information about setting this sort of thing up at home, here's a good link: < http://www.stat.cmu.edu/~abrock/algotrading/index.html >. It's not Python specific, but should give you a good idea of what to do. |
How can I determine if leaving a lower paying, tax advantaged, job for a higher paying one makes sense financially? | It looks like a coin toss. What you have isn't bad at all. If you have enough free time with your $50k job to do extra stuff on the side, you can use that time to build a business. You're obviously a go-getter type, so this might suit you. Which job is closer to your calling? All other things being equal, the more fulfilling job should win, no? |
Why is the breakdown of a loan repayment into principal and interest of any importance? | Yes, the distinction between how your funds are applied to principal vs interest is very important. The interest amount charged each period (probably monthly) is not just one fixed sum calculated at the origination, but rather is a dynamically calculated amount that changes each period relative to how much principal is remaining (amount you owe). The picture you posted showing principal and interest assumes the payer always paid their minimum payment and never made any extra payments of principal. Take a look at the following graph and play around with the extra payment fields. You will see some pretty drastic differences in the Total Interest Paid (green lines) when extra payments are made. http://mortgagevista.com/#m=2&a=240000&b=4.5&c=30y&e=200&f=1/2020&g=10000&h=1/2025&G&H&J&M&N&P&n&o&p&q&x |
Should I stockpile nickels? | At one point it was illegal to melt silver coins in the US, but it is legal now. I don't know that will happen with copper coins, but that's what happened with silver coins. Accumulating nickels and leaving them as-is (in their spendable state) is legal. It's also a way to take physical ownership of copper. I expect to see more sales of nickels based on weight. People are already selling high-copper-content cents on eBay, by weight. There are machines in production that sort the zinc ones from the copper ones. Gresham's Law has small business backing. ;) Copper cents are already worth twice their face value in the copper content. Nickels will get up there, too. They are awfully heavy and bulky relative to their value, though. Precious metals give you better bang for your ounce. |
What to do with an expensive, upside-down car loan? | If you can't sell it, refinance the bugger. Even if you can knock the interest rate down to 8% and take out a 3-year loan, you'll save about $100 per month. Or really kill the payment (but pay more interest) by taking out another 6-year. A 6-year at 9% on $12k is only $215/month. My credit union routinely advertises specials on car loans. It shouldn't be difficult to get out of the usurious loan you have now. As for others' advice about getting another job, having been a PhD student I hesiate to suggest that you get another one, because your job is probably your life right now. But can your wife (or even you) start a blog on a subject that interests you? A few posts a week add up over time, and pretty soon you have a real asset that can be another basket to put your eggs in. |
Stopping Payment on a Check--How Long Does it Take? | Is this a USA bank to a USA bank transaction? If so, it will clear in one to two business days. Once cleared, the landlord cannot stop pay it. He can, however, dishonestly claim it was a fraudulent check and attempt a chargeback. If you want absolute certainty the money will not be recalled, go to the landlord's bank and cash the check as a non-customer. You will have to pay a small fee, but you will walk out with cash. I suggest you take a photocopy of the check, and staple your receipt to it as evidence that the check was cashed for any impending legal proceedings. |
Historical Stock Prices of delisted company [duplicate] | You need a source of delisted historical data. Such data is typically only available from paid sources. According to my records, Lawson Software Inc listed on the NASDAQ on 7 Dec 2001 and delisted on 6 Jul 2011. Its final traded price was $11.23. It was taken over by Infor who bid $11.25 per share. Source: Symbol LWSN-201107 within Premium Data US delisted stocks historical data set available from http://www.premiumdata.net/products/premiumdata/ushistorical.php Disclosure: I am a co-owner of Norgate / Premium Data. |
I don't live in America. How can I buy IPO stock of newly listed companies in the United States? | First thing to consider is that getting your hands on an IPO is very difficult unless you have some serious clout. This might help a bit in that department (http://www.sec.gov/answers/ipoelig.htm) However, assuming you accept all that risk and requirements, YES - you can buy stocks of any kind in the US even if you are a foreigner. There are no laws prohibiting investment/buying in the US stock market. What you need is to get an online trading account from a registered brokerage house in the US. Once you are registered, you can buy whatever that is offered. |
How to maximize small business 401k contribution? | According to the 401K information from the IRS' website, it seems that you could seemingly get away with a salary as low as $53,000. It's tough, and I'd suggest speaking with an Accounting professional to get the clear answers, because as Brick's answer suggests, the IRS isn't super clear about it. An excerpt from a separate page regarding 401K contributions: The annual additions paid to a participant’s account cannot exceed the lesser of: There are separate, smaller limits for SIMPLE 401(k) plans. Example 1: Greg, 46, is employed by an employer with a 401(k) plan and he also works as an independent contractor for an unrelated business. Greg sets up a solo 401(k) plan for his independent contracting business. Greg contributes the maximum amount to his employer’s 401(k) plan for 2015, $18,000. Greg would also like to contribute the maximum amount to his solo 401(k) plan. He is not able to make further elective deferrals to his solo 401(k) plan because he has already contributed his personal maximum, $18,000. He has enough earned income from his business to contribute the overall maximum for the year, $53,000. Greg can make a nonelective contribution of $53,000 to his solo 401(k) plan. This limit is not reduced by the elective deferrals under his employer’s plan because the limit on annual additions applies to each plan separately. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-401k-and-profit-sharing-plan-contribution-limits |
What does a high operating margin but a small but positive ROE imply about a company? | The operating margin deals with the ability for a company to make a profit above the costs of running the company and generating sales. While ROE is how much money the company makes relative to the shareholders equity. I'd be willing to bet that if a company has a small ROE then it also has a quite large P/E (price to earnings) ratio. This would be caused by the company's stock being bid up in relation to its earnings and may not necessarily be a bad thing. People expect the high operating margin to help drive increased revenues in the future, and are willing to pay a higher price now for when that day comes. |
Where to deduct gambling losses? | 1: Gambling losses not in excess of gambling winnings can be deducted on Schedule A, line 28. See Pub 17 (p 201). Line 28 catches lots of deductions, and gambling losses are one of them. See Schedule A instructions. 2: If the Mississippi state tax withheld was an income tax (which I assume it was), then it goes on Schedule A, line 5a. In the unlikely event it was not a state or local tax on income, but some sort of excise on gambling, then it may be deductible on line 8 as another deductible tax. It probably is not a personal property tax, which is generally levied against the value of things like cars and other movable property but not on receipts of cash; line 7 probably is not appropriate. The most likely result, without researching Mississippi SALT, is that it was an income tax. See Sched A Instructions for more on the differences between the types of taxes paid. Just to be clear, these statements hold if you are not engaging in poker as a profession. If you are engaging in poker as a business, which can be difficult to establish in the IRS' eyes, then you would use Schedule C and also report business and travel expenses. But the IRS is aware that people want to reduce their gambling income by the cost of hotels and flights to casinos, so it's a relatively high hurdle to be considered a professional poker player. |
Is it common for a new car of about $16k to be worth only $4-6k after three years? | It isn't common to lose that much value in 3 years, but it is possible. If you don't take care of small dents, scratches, etc., you can quickly reduce the value far beyond what you might expect looking at graphs. Another big factor is the trim level of the car that you purchase. If you spend $30,000 for the highest trim level of a car, instead of $22,000 for the lowest trim level, the higher trim car could lose 50% of it's value while the lower trim car loses only 35%. There's no way to know why the OP of your linked question had such a large loss, but again, that's not the usual experience. It is definitely a good idea to consider used though. |
How much do big firms and investors affect the stock market? | It's not either or. Much of the time the value of the stock has some tangible relation to the financial prospects of the company. The value of Ford and GM stock rose when they were selling a lot of cars, and collapsed when their cars became unpopular. Other companies (Enron for example) frankly 'cook the books' to make it appear they are prospering, when they are actually drowning in debt and non-performing assets. So called "penny stocks" have both low prices and low volumes and are susceptible to "pump and dump" schemes, where a manipulator buys a bunch of the stock, touts the stock to the world, pointing to the recent increase in price. They then sell out to all the new buyers, and the price collapses. If you are going to invest in the stock market it's up to you to figure out which companies are which. |
401k compound interest vs other compound interest | A 401K (pre-tax or Roth) account or an IRA (Deductible or Roth) account is a retirement account. Which means you delay paying taxes now on your deposits, or you avoid paying taxes on your earnings later. But a retirement account doesn't perform any different than any other account year-to-year. Being a retirement account doesn't dictate a type of investment. You can invest in a certificate of deposit that is guaranteed to make x% this year; or you can invest in stocks, bonds, mutual funds that infest in stocks or bonds. Those stocks and bonds can be growth focused, or income focused; they can be from large companies or small companies; US companies or international companies. Or whatever mix you want. The graph in your question shows that if you invest early in your adulthood, and keep investing, and you make the average return you should make more money than starting later. But a couple of notes: So to your exact questions: An S&P 500 investment should perform exactly the same this year if it is in a 401K, IRA, or taxable account With a few exceptions: Yes any investment can lose money. The last 6 months have been volatile and the last month and a half especially so. A retirement account isn't any different. An investment in mutual fund X in a retirement account is just as depressed a one in the same fund but from a taxable account. |
Options for the intelligent but inexperienced | Some thoughts on your questions in order, Duration: You might want to look at the longest-dated option (often a "LEAP"), for a couple reasons. One is that transaction costs (spread plus commission, especially spread) are killer on options, so a longer option means fewer transactions, since you don't have to keep rolling the option. Two is that any fundamentals-based views on stocks might tend to require 3-5 years to (relatively) reliably work out, so if you're a fundamental investor, a 3-6 month option isn't great. Over 3-6 months, momentum, short-term news, short squeezes, etc. can often dominate fundamentals in determining the price. One exception is if you just want to hedge a short-term event, such as a pending announcement on drug approval or something, and then you would buy the shortest option that still expires after the event; but options are usually super-expensive when they span an event like this. Strike: Strike price on a long option can be thought of as a tradeoff between the max loss and minimizing "insurance costs." That is, if you buy a deeply in-the-money put or call, the time value will be minimal and thus you aren't paying so much for "insurance," but you may have 1/3 or 1/2 of the value of the underlying tied up in the option and subject to loss. If you buy a put or call "at the money," then you might have only say 10% of the value of the underlying tied up in the option and subject to loss, but almost the whole 10% may be time value (insurance cost), so you are losing 10% if the underlying stock price stays flat. I think of the deep in-the-money options as similar to buying stocks on margin (but the "implied" interest costs may be less than consumer margin borrowing rates, and for long options you can't get a margin call). The at-the-money options are more like buying insurance, and it's expensive. The commissions and spreads add significant cost, on top of the natural time value cost of the option. The annual costs would generally exceed the long-run average return on a diversified stock fund, which is daunting. Undervalued/overvalued options, pt. 1: First thing is to be sure the options prices on a given underlying make sense at all; there are things that "should" hold, for example a synthetic long or short should match up to an actual long or short. These kinds of rules can break, for example on LinkedIn (LNKD) after its IPO, when shorting was not permitted, the synthetic long was quite a bit cheaper than a real long. Usually though this happens because the arbitrage is not practical. For example on LNKD, the shares to short weren't really available, so people doing synthetic shorts with options were driving up the price of the synthetic short and down the price of the synthetic long. If you did actually want to be long the stock, then the synthetic long was a great deal. However, a riskless arbitrage (buy synthetic long, short the stock) was not possible, and that's why the prices were messed up. Another basic relationship that should hold is put-call parity: http://en.wikipedia.org/wiki/Put%E2%80%93call_parity Undervalued/overvalued options, pt. 2: Assuming the relationship to the underlying is sane (synthetic positions equivalent to actual positions) then the valuation of the option could focus on volatility. That is, the time value of the option implies the stock will move a certain amount. If the time value is high and you think the stock won't move much, you might short the option, while if the time value is low and you think the stock will move a lot, you might buy the option. You can get implied volatility from your broker perhaps, or Morningstar.com for example has a bunch of data on option prices and the implied components of the price model. I don't know how useful this really is though. The spreads on options are so wide that making money on predicting volatility better than the market is pretty darn hard. That is, the spread probably exceeds the amount of the mispricing. The price of the underlying is more important to the value of an option than the assumed volatility. How many contracts: Each contract is 100 shares, so you just match that up. If you want to hedge 100 shares, buy one contract. To get the notional value of the underlying multiply by 100. So say you buy a call for $30, and the stock is trading at $100, then you have a call on 100 shares which are currently priced at $10,000 and the option will cost $30*100=3,000. You are leveraged about 3 to 1. (This points to an issue with options for individual investors, which is that one contract is a pretty large notional value relative to most portfolios.) |
Paying Off Principal of Home vs. Investing In Mutual Fund | Excellent answers so far, so I will just add one additional consideration: liquidity. Money invested in a mutual fund (exclusive of retirement accounts with early withdrawal penalties) has a relatively high liquidity. Whereas excess equity in your home from paying down early has very low liquidity. To put it simply: If you get in a desperate situation (long term unemployment) it is better to have to cash in a mutual fund than try to sell your house on the quick and move in with your mother. Liquidity becomes less of an issue if you also manage to fund a decent sized rainy-day fund (6-9 months of living expenses). |
What kind of life insurance is cheaper? I'm not sure about term vs. whole vs. universal, etc | All life insurance is pretty much the same when it comes to cost. You can run the numbers over certain time period and the actual cost of insurance is about the same. A simplified way to explain life insurance and the differences between them below: The 3 characteristics of life insurance: There are 5 popular types of life insurance and they are: Term Whole Life Universal Life Variable Universal Life Indexed Universal Life But first, one must understand the most basic life insurance which is called Annual Renewable Term: This is a policy that covers 1 year and is renewable every year after. The cost of insurance typically increases each year as the insured ages. So for every year of coverage, your premium increases like in the simplified illustration above. This is the building block of all life insurance, term or permanent. There is no cash value; all premium goes to the cost of insurance. This is an ART that spans over a longer time period than 1 year (say 5, 10, 15, 20 or 30 years). All the cost is added together then divided by the number of years of coverage to give a level premium payment for the duration of the policy. The longest coverage offered these days is 30 years. There is no cash value; all premium goes to the cost of insurance. The premium is fixed (level) for the term specified. If the policy comes to an end and the owner wishes to renew it, it will be at higher premium. This can be seen in the simplified illustration above for a 15-year term policy. Because life insurance gets very expensive as you reach old age, life insurance companies came up with a way to make it affordable for the consumer wishing to have coverage for their entire lifespan. They allow you to have interest rate crediting on the cash value account inside the policy. To have cash value in the first place, you must pay premiums that are more than the cost of insurance. The idea is: your cash value grows over time to help pay for the cost of insurance in the later stages of the policy, where the cost of insurance is typically higher. This is illustrated above in an overly simplified way. This is a permanent life insurance policy that is designed to cover the lifespan of the insured. There is cash value that is credited on a fixed interest rate specified by the insurance company (typically 3-5%). The premium is fixed for the life of the policy. It was designed for insuring the entire lifespan of the insured. This is variation of Whole Life. There is cash value; it is credited on a fixed interest rate specified by the insurance company, but it does fluctuate year to year depending on the economy (typically 3-6%). The premium is flexible; you can increase/decrease the premium. This is basically a universal life policy, but the cash value sits in an account that is invested in the market, normally mutual funds. Your interest that is being credited (to your account with your cash value from investments) is subjected to risk in the market, rise/fall with the market depending on the portfolio of your choosing, hence the word "Variable". You take on the risk instead of the insurance company. It can be a very good product if the owner knows how to manage it (just like any other investment products). This is a hybrid of the UL and the VUL. The interest rate depends on the performance of a market index or a set of market indices. The insurance company states a maximum interest rate (or cap) you can earn up to and a guaranteed minimum floor on your cash value interest that will be credited (typically 0% floor and 12% cap). It is purely a method to credit you interest rate. It takes the market risk out of the equation but still retains some of the growth potential of the market. Term policy is designed for temporary coverage. There is no cash value accumulation. Permanent policies such as whole life, universal life, variable universal life and indexed universal life have a cash value accumulation component that was originally designed to help pay for the cost of insurance in the later stages of the policy when the insured is at an advanced age, so it can cover the entire lifespan of the insured. People do take advantage of that cash value component and its tax advantages for retirement income supplement and maximize the premium contribution. Always remember that life insurance is a life insurance product, and not an investment vehicle. There is a cost of insurance that you are paying for. But if you have life insurance needs, you might as well take advantage of the cash value accumulation, deferred tax growth, and tax-free access that these permanent policies offer. |
Should I have a higher credit limit on my credit card? | There is no "golden rule" on how high of a credit limit an individual should have. There are 22 year olds that have $100,000 credit limits and 40 year olds that have $1000. The most important thing is to not over spend and pay your balance(s) in full every month. Seeing as you are doing that now, there is no downside to getting an increase. |
What should my finances look like at 18? | To buy a house, you need: At least 2 years tax returns (shows a steady income history; even if you're making 50k right now, you probably weren't when you were 16, and you might not be when you're 20; as they say, easy come, easy go). A 20% down payment. These days, that easily means writing a $50k check. You make $50k a year, great, but try this math: how long will it take you to save 100% of your annual salary? If you're saving 15% of your income (which puts you above many Americans), it'll still take 7 years. So no house for you for 7 years. While your attitude of "I've got the money, so why not" is certainly acceptable, the reality is that you don't have a lot of financial experience yet. There could easily be lean times ahead when you aren't making much (many people since 2008 have gone 18 months or more without any income at all). Save as much money as possible. Once you get $10k in a liquid savings account, speak to a CPA or an investment advisor at your local bank to set up tax deferred accounts such as an IRA. And don't wait to start investing; starting now versus waiting until you're 25 could mean a 100% difference in your net worth at any given time (that's not just a random number, either; an additional 7 years compounding time could literally mean another doubling of your worth). |
Do “Instant Approved” credit card inquires appear on credit report? | Businesses you are already established with may do a soft pull to pre-qualify you for an offer. They store the information and if you accept, may instantly setup and account. You may also see language to the effect that they may do an inquiry (hard pull) - I guess if their data is old. When you went outside of Amazon to Chase, they did a hard pull on their side which is what you saw. |
My university has tranfered me money by mistake, and wants me to transfer it back | You have received some good answers, but since your concern is proper protocol, keep everything in writing (emails, not phone calls). Also, you'll get a quick response by contacting the University "Accounts Payable" department, confirm the situation with a summary as you posted here and ask for the ABA routing number for the transfer. The routing number, email, and you bank statement is all the records you need to cover your but. |
If throwing good money after bad is generally a bad idea, is throwing more money after good Ok? | The principle behind the advice to not throw good money after bad is better restated in economics terms: sunk costs are sunk and irrelevant to today's decisions. Money lost on a stock is sunk and should not affect our decisions today, one way or the other. Similarly, the stock going up should not affect our decisions today, one way or the other. Any advice other than this is assuming some kind of mispricing or predictability in the market. Mispricings in general cannot be reliably identified and stock returns are not normally predictable. The only valid (efficient markets) reason I know of to allow money you have lost or made on a stock to affect your decision today is the tax implications (you may want to lock in gains if your tax rate is temporarily low or vice versa). |
Are there statistics showing percentage of online brokerage customers that are actually making a profit trading forex/futures/options? | It looks like these types of companies have to disclose the health of their accounts to CFTC (Commodity Futures Trading Commission). That is the gist I get at least from this article about the traders that lost money due to the Swiss removing the franc’s cap against the euro. The article says about the U.S. retail FOREX brokerage: Most of FXCM’s retail clients lost money in 2014, according to the company’s disclosures mandated by the CFTC. The percentage of losing accounts climbed from 67 percent in the first and second quarters to 68 percent in the third quarter and 70 percent in the fourth quarter. Side note: The Swiss National Bank abandoned the cap on the currency's value against the euro in mid-January 2015. But above paragraph provides data on FXCM’s retail clients in 2014. It could consequently be concluded that, even without "freak events" (such as Switzerland removing the franc cap), it is more likely for an investor to NOT make a profit on the FOREX market. This is also in line with what "sdfasdf" and "Dario Fumagalli" say in their answers. |
Is inflation a good or bad thing? Why do governments want some inflation? | In general the consensus is that a small amount of inflation (usually 1.5-2% per year) is desirable. That is why the Federal Reserve sets its inflation target in that range. The reasons why are quite complex though. One reason is "wage stickiness" - ie., the observed phenomenon that employers don't like to cut wages. Having a small rate of inflation means that when wages are steady in nominal terms, they are actually falling in real terms. This gives employers more flexibility. |
Do Square credit card readers allow for personal use? | Yes. From their TOS: "By creating a Square Account, you confirm that you are either a legal resident of the United States, a United States citizen, or a business entity...". |
Is it true that if I work 6 months per year, it is better than to work for 1 calendar year and take a break for 1 year? | Yes, if you can split your income up over multiple years it will be to your advantage over earning it all in one year. The reasons are as you mentioned, you get to apply multiple deductions/credits/exemptions to the same income. Rather than just 1 standard deduction, you get to deduct 2 standard deductions, you can double the max saved in an IRA, you benefit more from any non-refundable credits etc. This is partly due to the fact that when you are filing your taxes in Year 1, you can't include anything from Year 2 since it hasn't happened yet. It doesn't make sense for the Government to take into account actions that may or may not happen when calculating your tax bill. There are factors where other year profit/loss can affect your tax liability, however as far as I know these are limited to businesses. Look into Loss Carry Forwarded/Back if you want to know more. Regarding the '30% simple rate', I think you are confusing something that is simple to say with something that is simple to implement. Are we going to go change the rules on people who expected their mortgage deduction to continue? There are few ways I can think of that are more sure to cause home prices to plummet than to eliminate the Mortgage Interest Deduction. What about removing Student Loan Interest? Under a 30% 'simple' rate, what tools would the government use to encourage trade in specific areas? Will state income tax deduction also be removed? This is going to punish those in a state with a high income tax more than those in states without income tax. Those are all just 'common' deductions that affect a lot of people, you could easily say 'no' to all of them and just piss off a bunch of people, but what about selling stock though? I paid $100 for the stock and I sold it for $120, do I need to pay $36 tax on that because it is a 'simple' 30% tax rate or are we allowing the cost of goods sold deduction (it's called something else I believe when talking about stocks but it's the same idea?) What about if I travel for work to tutor individuals, can I deduct my mileage expenses? Do I need to pay 30% income tax on my earnings and principal from a Roth IRA? A lot of people have contributed to a Roth with the understanding that withdrawals will be tax free, changing those rules are punishing people for using vehicles intentionally created by the government. Are we going to go around and dismantle all non-profits that subsist entirely on tax-deductible donations? Do I need to pay taxes on the employer's cost of my health insurance? What about 401k's and IRA's? Being true to a 'simple' 30% tax will eliminate all 'benefits' from every job as you would need to pay taxes on the value of the benefits. I should mention that this isn't exactly too crazy, there was a relatively recent IRS publication about businesses needing to withhold taxes from their employees for the cost of company supplied food but I don't know if it was ultimately accepted. At the end of the day, the concept of simplifying the tax law isn't without merit, but realize that the complexities of tax law are there due to the complexities of life. The vast majority of tax laws were written for a reason other than to benefit special interests, and for that reason they cannot easily be ignored. |
How does the process of “assignment” work for in-the-money Options? | I often sell covered calls, and if they are in the money, let the stock go. I am charged the same fee as if I sold online ($9, I use Schwab) which is better than buying back the option if I'm ok to sell the stock. In my case, If the option is slightly in the money, and I see the options are priced well, i.e. I'd do another covered call anyway, I sometimes buy the option and sell the one a year out. I prefer to do this in my IRA account as the trading creates no tax issue. |
How to minimise the risk of a reduction in purchase power in case of Brexit for money held in a bank account? | The mathematical answer is for you to have a diversified portfolio in your ISA. But that's easier said than done. |
How to account for startup costs for an LLC from personal money? | How do I account for this in the bookkeeping? Here is an example below: This is how you would accurately depict contributions made by an owner for a business. If you would want to remove money from your company, or pay yourself back, this would be called withdrawals. It would be the inverse of the first journal entry with cash on the credit side and withdrawals on the debited side (as it is an expense). You and your business are not the same thing. You are two different entities. This is why you are taxed as two different entities. When you (the owner) make contributions, it is considered to be the cash of the business. From here you will make these expenses against the business and not yourself. Good luck, |
Settling house with husband during divorce. Which of these two options makes the most sense? | Both seem to be reasonable. To decide you need to guess if the value of the house will go up or down between now and when you sell. If you think the value will go up - reach a calculation agreement now. If you think the value will go down - wait until the house is actually sold. So ya pays yer money, and ya takes yer chances... I think I understand the two scenarios Unless you are absolutely confident that you understand both scenarios - make sure your lawyer gets involved and explains them to you until you do understand. |
What does “no adjustments” mean? | Typically that applies if the broker Form 1099-B reports an incorrect basis to the IRS. If the Form 1099-B shows incorrect basis relative to your records, then you can use 8949, column (g) to report the correct basis. The 8949 Instructions provide a brief example. http://www.irs.gov/pub/irs-prior/i8949--2013.pdf Although you have an obligation to report all income, and hence to report the true basis, as a practical matter this information will usually be correct as presented by the broker. If you have separate information or reports relating to your investments, and you are so inclined, then you can double-check the basis information in your 1099-B. If you aren't aware of basis discrepancies, then the adjustments probably don't apply to you and your investments can stick to Schedule D. |
Can I do periodic rollovers from my low-perfoming 401k to an IRA? | My two-cents, read your plan document or Summary Plan Description. The availability of in-service withdrawals will vary by document. Moreover, many plans, especially those compliant with 404(c) of ERISA will allow for individual brokerage accounts. This is common for smaller plans. If so, you can request to direct your own investments in your own account. You will likely have to pay any associated fees. Resources: work as actuary at a TPA firm |
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