Question stringlengths 14 166 | Answer stringlengths 3 17k |
|---|---|
What is the correct term to describe (shares owned * share value)? | This is typically referred to as the "market value" of your holdings--it is the revenue you would generate if you sold your holdings at that moment (less any transaction costs, of course) |
At what percentage drop should you buy to average down | Only average down super blue chips with a long history or better still, ETFs or index type funds. I do it with income producing funds as I'm a retiree. Other people may have much shorter horizins. |
Record retention requirements for individuals in the U.S.? | Here is an IRS Publication 552 covering records retention The publication covers many areas, including proof of income, bank statements, old tax returns. There is a table that talks about how long to keep the records. In general it is 3 to 6 years. But for property it is 3 to 6 years after you dispose of the property. |
Negatives to increased credit card spending limit? [duplicate] | The one big drawback I know is when you take the mortgage credit, your credit ability is calculated, and from that sum all of your credits are subtracted, and credit limit on credit card counts as credit... I don't know if it is worldwide praxis, but at least it is the case in Poland. |
How to file income tax returns for profits from ESPP stock? | Consult a professional CA. For shares sold outside the Indian Stock Exchanges, these will be treated as normal Long Term Capital Gains if held more than one year. The rate would be 10% without Indexation and 20% with Indexation. If the stocks are held for less than 1 years, it will be short term gains and taxed according you to tax bracket. |
Personal Loan issuer online service | http://www.calcamo.net/loancalculator/simulation/fixed-rate-loan.php5 This website is a calculator only and has some extra features that take into account late payments, paying extra to reduce principal, and has the ability to export amortization table to excel that you could use to keep track of the loan. If you are looking for a web site to manage and keep track of the whole process, reminder emails, accepting credit card payments, etc.. paybaq.com may be right for you. |
Events that cause major movement in forex? | currency's central bank or treasury/finance department speeches that can announce a significant change in policy. That includes: Particularly when it is a high level figure within the department such as the President or Prime Minister making the announcement. Macroeconomic stats: GeoPolitical considerations, such as: Economic calendars, such as ForexFactory and MyFxBook track planned economic news releases. Obviously, a coup d'etat or war declaration may not be well known in advance. |
How does an index rearrange its major holdings | An index will drop a company for several reasons: A fund decides how close they want to mirror the index. Some do so exactly, others only approximate the index. |
Can individuals day-trade stocks using High-Frequency Trading (HFT)? | The answer is to your question is somewhat complicated. You will be unable to compete with the firms traditionally associated with High Frequency Trading in any of their strategies. Most of these strategies which involve marketing making, latency arbitrage, and rebate collection. The amount of engineering required to build the infrastructure required to run this at scale makes it something which can only be undertaken by a team of highly skilled engineers. Indeed, the advantage of firms competing in this space such as TradeBot, TradeWorx, and Getco comes from this infrastructure as most of the strategies that are developed are necessarily simple due to the latency requirements. Now if you expand the definition of HFT to include all computerized automated trading you most certainly can build strategies that are profitable. It is not something that you probably want to tackle on your own but I know of a couple of people that did go it alone successfully for a couple of years before joining an established firm to run a book for them. In order to be successful you will most likely need to develop a unique strategies. The good news is because that you are trying to deploy a very tiny amount of capital you can engage in trades that larger firms would not because the strategies cannot hold enough capital relative to the firms capital base. I am the co-founder of a small trading firm that successfully trades the US Equities and Equity Derivatives markets. A couple of things to note is that if you want to do this you should consider building a real business. Having some more smart brains around you will help. You don't need exchange colocation for all strategies. Many firms, including ours, colocate in a data center that simply has proximity to the exchanges data centers. You will need to keep things simple to be effective. Don't except all the group think that this is impossible. It is possible although as a single individual it will be more difficult. It will require long, long hours as you climb the algorithmic trading learning curve. Good luck. |
Is there a term for total money owed to you? | Is there a word for that $20k owed? Trade Receivables, Accounts Receivables, or just Receivables Is there a different word for that $30k "hypothetical" total? Current Assets (Includes Inventory and other short term assets) |
Is technical analysis based on some underlying factors in the market or do they work simply because other people use them? | Technical analysis is based more on psychology than anything else. As an example, if an analyst estimates or believes that a stock is undervalued, or simply wants to re-balance their portfolio, then they will buy some amount, moving the price up. Others in the market see the upwards move as the start of an upwards trend, an indication that the stock is undervalued or perhaps even that an insider is trading ahead of better than expected data from the firm. They then buy the stock creating a self-fulfilling prophecy and pulling more traders in as they see an upward trend being confirmed. This is even more pronounced in a bear market as fear is an even stronger driver. When a trader sees a stock is falling they are more likely to jump to the conclusion that it is due to expected poor performance of the firm and that the firm and the economy are both in trouble and going down than to think that it is simply a retrenching or a large investor re-balancing etc. To quote Credit Suisse [1] A chart is a mirror of the mood of the crowd and not of the fundamental factors. Thus, technical analysis is the analysis of human mass psychology. Therefore, it is also called behavioral finance. The underlying truth that makes technical analysis work is that people are predictably irrational, at least in the short run and tend to follow the same patterns of thought. references: [1] https://www.credit-suisse.com/pwp/pb/pb_research/technical_tutorial_de.pdf [2] http://www.amazon.com/The-Psychology-Technical-Analysis-Profiting/dp/1557385432 [3] CFA level 1 syllabus |
If I'm cash-flow negative, should I dollar-cost-average the money from my bonus over the entire year? | Essentially, your question is "lump sum vs DCA" and your tags reflect that. In the long run, lump sum, say a Jan 2 deposit each year, will beat DCA by about 1/2 the average annual market return. $12,000 will see a 10% return, vs, $1,000/month over the year seeing 6%. What hurts is when the market tanks in the first half of the year and you think DCA would have helped. This is a 'feeling' issue, not a math problem. But. By the time you have $100K invested, the difference of DCA vs lump sum with new money fades, as new deposits are small compared to the funds invested. By then, you need to know your target allocation and deposit to keep that allocation with new money. |
How to deduct operational loss from my personal income tax? | I'm not an accountant, and you should probably get the advice of one to be sure about what to do. However, if the business is a sole-proprietorship, you'd complete a Schedule C for the business, and you'd end up with a loss at the end. If the investment you made in the business is considered to be entirely or partially "at risk" per the IRS definition, you'd get to claim all or part of the loss as a reduction in your income. If the business was an LLC, then you're beyond my already limited knowledge. There may be some other considerations based on whether this was really a business vs a hobby, and whether or not you're going to try to continue with the business, or whether you've shut it down. I'm not sure about those parts, but they'd be worth exploring with an accountant. |
Search index futures in Yahoo Finance or Google Finance | Options - yes we can :) Options tickers on Yahoo! Finance will be displayed as per new options symbology announced by OCC. The basic parts of new option symbol are: Root symbol + Expiration Year(yy)+ Expiration Month(mm)+ Expiration Day(dd) + Call/Put Indicator (C or P) + Strike price Ex.: AAPL January 19 2013, Put 615 would be AAPL130119P00615000 http://finance.yahoo.com/q?s=AAPL130119P00615000&ql=1 Futures - yes as well (: Ex.: 6A.M12.E would be 6AM12.CME using Yahoo Finance symbology. (simple as that, try it out) Get your major futures symbols from here: http://quotes.ino.com/exchanges/exchange.html?e=CME |
Micro-investing: How to effectively invest frequent small amounts of money in equities? | (For people looking at this question many years later...) Schwab and Fidelity offer a wide selection of commission-free ETFs. You need an initial purchase amount, though, of (when last I checked at Schwab) $1,000. |
Can two or more people own 1 stock in the US? | A share of stock is an asset not much different than any other asset. If the share is being held in a joint account, it's being jointly owned. If the share is being held by a company with multiple owners then the share is owned by the various owners. If you're married and in a community property state, then it's technically owned by both parties. |
Can an IRA be taxed? | The Motley Fool article is correct that if you earn UBTI over $1000, you will need to pay the tax, even if held in an IRA. C-corps won't generate UBTI, so you're fine with those. For non-C-corps, the most common are REITs, MLPs, and BDCs. REITs These typically invest in either real estate property or mortgages. The ones that invest in mortgages are sometimes notated: mREITs, and can occasionally generate UBTI. Tip: Don't let this stop you from investing in REITs in your IRA. REITs can be a great source of income and are best held in an IRA since the income will be tax free vs. your ordinary income tax bracket if held in a taxable account. Some examples of mREITs would be NLY, CIM, AGNC. Some property REITs would be: O, SNR, OHI, EQR. https://seekingalpha.com/article/1257351-tax-bomb-mortgage-reits-triggering-ubit MLPs Master Limited Partnerships are also pass-through entities, like REITs, but have the additional complication that most issue K-1 forms at tax time. K-1s can be very complex when the MLP owns assets across state boundaries, which is why I actually PREFER to hold MLPs in my IRA (against the advice of M. Fool) since I won't have to deal with the tax complications of filing the K-1, just as long as my MLPs don't generate over $1000 of UBTI. https://seekingalpha.com/article/4057891-mlps-kminus-1s-ubti-oh BDCs Business Development Companies like REITs and MLPs are also pass-through entities in that the income they give you will be taxed at your ordinary income bracket if held in a taxable account. Examples of BDCs include: MAIN, MCC, ARCC. You'd need to consult their 10-K to determine if there is a risk of UBTI. Tip: MLPs, BDCs, and especially REITs can all be very valuable sources of income and from my experience, UBTI is rare so don't let that scare you away if you otherwise like the investment. |
person on loan with cosigner | This will probably require asking the SO to sign a quitclaim and/or to "sell" him her share of the vehicle's ownership and getting it re-titled in his own name alone, which is the question you actually asked. To cancel the cosigner arrangement, he has to pay off the loan. If he can't or doesn't want to do that in cash, he'd have to qualify for a new loan to refinasnce in his name only, or get someone else (such as yourself) to co-sign. Alternatively, he might sell the car (or something else) to pay what he still owes on it. As noted in other answers, this kind of mess is why you shouldn't get into either cosigning or joint ownership without a written agreement spelling out exactly what happens should one of the parties wish to end this arrangement. Doing business with friends is still doing business. |
How to calculate how far a shorted stock's price can rise before broker issues a margin call? | Most brokers have a margin maintenance requirement of 30%. In your example, it would depend on how much money you're borrowing from your broker on margin. Consider this: You have $250, and short AAPL at $500 on margin. This would be a common scenario (federal law requires investors to have at least 50% of their margin equity when opening a transaction). If your broker had a requirement of 30%, they would require that for your $500 position, you have at least $500 * .3 = $150 equity. Since you are currently above that number at $250, you will not be hit with a margin call. Say the price of AAPL doubles, and now your position is worth $1000. $1000 * .3 = $300, which is $50 above your initial equity. Your broker will now consider you eligible for a margin call. Most will not execute the call right away, you will often have some time to either sell/cover stock or add funds to your account. But not all brokers will warn you if you are breaking margin requirements, and sometimes margin calls can take you by surprise if you are not paying attention. Also, many will charge interest on extra margin borrowed. |
Dormant company, never paid taxes, never traded in UK - should I have notified the HMRC? | You don't have to register for corporation tax until you start doing business: After you’ve registered your company with Companies House, you’ll need to register it for Corporation Tax. You’ll need to do this within 3 months of starting to do business. Since you haven't needed to do that yet, there also shouldn't be any need to tell HMRC you've stopped trading. So it should just be a question of telling Companies House - I guess it's possible they'll first want you to provide the missing accounts. |
Are REIT worth it and is it a good option to generate passive income for a while? | There are tax strategies you could take advantage of if you own the property. Find local real estate investors that like 'buy and hold'. Additional strategy is to buy a property and sell it with owner financing (you use a Residential Mortgage Loan Officer to facilitate.) What is great is you can get a great % real return on your money without being a landlord. |
Is there a law or regulation that governs the maximum allowable interest amount that can be charged on credit cards or in agreements where credit is extended? | In the U.S., each state has its own local usury law. This website has a separate page for each state summarizing the local usury law and provides a reference to the local statute. The rules aren't simple: some set absolute limits, some appear to be pegged to something like the Prime Rate, some states don't have a general usury limit, the rules don't apply to certain loans because of the type of loan or lender, etc. There are US Federal laws dealing with usury, primarily in the context of racketeering -- the RICO Act lets the Feds go after racketeers that violate local usury laws beyond certain parameters. |
Is having a 'startup fund' a good idea? | Saving money for the future is a good thing. Whether spending those savings on a business venture makes sense, will depend on a few factors, including: (1) How much money you need that business to make [ie: will you be quitting your job and relying on the business for your sole income? Or will this just be a hobby you make some pocket change from?] (2) How much the money the business needs up front [some businesses, like simple web design consulting, might have effectively $0 in cash startup costs, where starting a franchise restaurant might cost you $500k-$1M on day 1] (3) How risky it is [the general stat is that something like 50% of all new businesses fail in their first year, and I think for restaurants that number is often given as 75%+] But if you don't have a business idea yet, and save for one in the future but never get that 'perfect idea', the good news is that you've saved a bunch of money that you can instead use for retirement, or whatever other financial goals you have. So it's not the saving for a new business that is risky, it's the spending. Part of good personal financial management is making financial goals, tracking your progress to those goals, and changing them as needed. In a simpler case, many people want to own their own home - this is a common financial goal, just like early retirement, or starting your own business, or paying for your kids' college education. All those goals are helped by saving money, so your job as someone mindful of personal finances, is to prioritize those goals in accordance to what is important for you. |
Do people tend to spend less when using cash than credit cards? | I'd like to know if there is any reliable research on the subject. Intuitively, this must be true, no? Is it? First, is it even possible to discover the correlation, if one exists? Dave Ramsey is a proponent of "Proven study that shows you will spend 10% more on a credit card than with cash." Of course, he suggests that the study came from an otherwise reliable source, Dun & Bradstreet. A fellow blogger at Get Rich Slowly researched and found - Nobody I know has been able to track down this mythical Dun and Bradstreet study. Even Dun and Bradstreet themselves have been unable to locate it. GRS reader Nicole (with the assistance of her trusty librarian Wendi) contacted the company and received this response: “After doing some research with D&B, it turns out that someone made up the statement, and also made up the part where D&B actually said that.” In other words, the most cited study is a Myth. In fact, there are studies which do conclude that card users spend more. I think that any study (on anything, not just this topic. Cigarette companies buy studies to show they don't cause cancer, Big Oil pays to disprove global warming, etc.) needs to be viewed with a critical eye. The studies I've seen nearly all contain one of 2 major flaws - My own observation - when I reviewed our budget over the course of a year, some of the largest charges include - I list the above, as these are items whose cost is pretty well fixed. We are not in the habit of "going for a drive," gas is bought when we need it. All other items I consider fixed, in that the real choice is to pay with the card or check, unlike the items some claim can be inflated. These add to about 80% of the annual card use. I don't see it possible for card use to impact these items, and therefore the "10% more" warning is overreaching. To conclude, I'll concede that even the pay-in-full group might not adhere to the food budget, and grab the $5 brownie near the checkout, or over tip on a restaurant meal. But those situations are not sufficient to assume that a responsible card user comes out behind over the year for having done so. A selection of the Studies I am referencing - |
Is this mortgage advice good, or is it hooey? | add the interest for the next 5 payments and divide that by how much you paid on the principal during that time Let's see - on a $200K 6% loan, the first 5 months is $4869. Principal reduction is $1127. I get 4.32 or 432%. But this is nonsense, you divide the interest over the mortgage balance, and get 6%. You only get those crazy numbers by dividing meaningless ratios. The fact that early on in a mortgage most of the payment goes to interest is a simple fact of the the 30 year nature of amortizing. You are in control, just add extra principal to the payment, if you wish. This idea sounds like the Money Merge Account peddled by UFirst. It's a scam if ever there was one. I wrote about it extensively on my site and have links to others as well. Once you get to this page, the first link is for a free spreadsheet to download, it beats MMA every time and shows how prepaying works, no smoke, no mirrors. The second link is a 65 page PDF that compiles nearly all my writing on this topic as I was one of the finance bloggers doing what I could to expose this scam. I admit it became a crusade, I went as far as buying key word ads on google to attract the search for "money merge account" only to help those looking to buy it find the truth. In the end, I spent a few hundred dollars but saved every visitor the $3500 loss of this program. No agent who dialoged with me in public could answer my questions in full, as they fell back on "you need to believe in it." I have no issue with faith-based religion, it actually stands to reason, but mortgages are numbers and there's order to them. If you want my $3500, you should know how your system works. Not one does, or they would know it was a scam. Nassim Taleb, author of "The Black Swan" offered up a wonderful quote, "if you see fraud, and do not say 'fraud,' you are a fraud." The site you link to isn't selling a product, but a fraudulent idea. What's most disturbing to me is that the math to disprove his assertion is not complex, not beyond grade school arithmetic. Update 2015 - The linked "rule of thumb" is still there. Still wrong of course. Another scam selling software to do this is now promoted by a spin off of UFirst, called Worth Unlimited. Same scam, new name. |
Why is the total 401(k) contribution limit (employee + employer) so high? | Because 401k's are also used by self employed. A person who has a schedule C profitable income can open a 401k and "match" in whatever ratio he wants, up to 25% of the net profits or the limits you stated. This allows self-employed to defer more income taxes to the future. Why only self-employed? Good question. Ask your congressman. My explanation would be that since they're self-employed they're in much more danger of not having income, especially later in life, if their business go south. Thus they need a bigger cushion than an average W2 employee who can just find another job. |
Can you buy out a pink sheet listed company by purchasing all of the oustanding shares? | Depends on the structure of the company and what shares are outstanding. If the pink sheet stock has no voting power then buying all that stock doesn't get you any control at all. On the other hand, if the outstanding shares only represent 20% of the company's overall shares, then buying all the shares isn't likely enough to have a controlling interest. Thus, you'll have to dig into the details. If you want an example of where I'd have my doubts, look at Nestle's stock which has the ticker of NSRGY. There can be companies that are structured with stock on multiple exchanges that can also be a challenge at times. There is also something to be said if you own enough stock in a company that this has to be disclosed to the SEC when you buy more. |
Why would a restaurant offer a very large cash discount? | Another possible reason for this is to benefit the servers. When patrons pay with a credit card, they usually tip on the credit card too. If patrons are more likely to pay with cash, then the servers will get more cash tips. Even if the restaurant is completely honest with their books, the servers may not be. Having a restaurant where tips are mostly cash might attract better servers, or perhaps enable the owner to pay servers slightly less than otherwise. |
Negatives to increased credit card spending limit? [duplicate] | The only drawback is if you spend more than you can with the new limit and end up having to pay interest if you can't pay the balance in full. Other than that, there are no drawbacks to getting a credit increase. On the flip side, it's actually good for you. It shows that the banks trust you with more credit, and it also decreases your credit utilization ratio (assuming you spend the same). |
Does borrowing from my 401(k) make sense in my specific circumstance? | The set of circumstances that 401k loans make sense, are very small. As you would expect yours is not one of them. You make 70K per year and need 6500. Interest rate is not your problem, budgeting is the problem. Pay this off in three months not the 48 you are proposing. Why is borrowing from your 401K a bad idea, especially in this case? Look, been there done that, been the over spender. The sooner that you learn how to handle your money the better. I was in my 40s when I learned, if you can do this now you can be really wealthy by the time you get to be my age. Dream a bit. How much margin would you have in your life if you were able to pay this off in 3 months? How much better would your life be? Go forth and do great things. I believe in you. |
Selling high, pay capital gains, re-purchase later | Ignoring brokerage fees and the wash-sale rule (both of which are hazardous to your health), and since the 15% LTCG tax is only on the gain, the stock would have to drop 15% of the gain in price since you originally purchased it. |
I have a horrible 401k plan, with high expenses. Should I stay with it or move my money elsewhere? | As to the rollover question. Only rollover to a ROTH if you have other funds you can use to pay the taxes you will be hit with if you do that. DO NOT pay the taxes out of the funds in the 401k. If you don't have a way to pay the taxes, then roll it to a traditional IRA. You never want to pay the government any taxes 'early' and you don't want to reduce the balance. beyond that, A lot depends on how long you figure you will be with that company. If it's only a few years, or if you and other employees can make enough of a fuss that they move the fund to someplace decent (any of the big no-load companies such as Vanguard would be a better custodian), then I'd go ahead and max it out. If you figure to be there for a long while, and it looks like someone is in bed with the custodian and there's no way it will be changed, then maybe look to max out a Roth IRA instead. |
Buying real estate with cash | I've been prompted to turn my comments into an answer - Disclosure - I am a Realtor. I work for an investor for whom an offer on a house he will buy describes him as a "cash buyer." This phrase most often means one of two things - The buyer has funds that are liquid enough to either wire the cash or produce a cashier's check in some number of days, a week or two would be common. (And not wait for another house to sell) The other point of this is that the seller is not willing to finance the property. The flip side being that the seller will take a down payment and let the buyer pay over time. I am nearly 54, and I'm open to the fact that language changes. Definition follows usage. In personal finance, we refer to a stock/bond/cash mix. Here, the word "cash" simply means money such as money market or short term T-bills. A 60/30/10 mix doesn't mean I have a briefcase of cash under my bed for that 10%. To answer the OP, I'd ask the seller does "cash" mean - Keep in mind, when a seller has a buyer who needs to sell their home first, there can be a chain going a few levels. When it's "turtles all the way down" it becomes too risky to the seller. No, you are not out of luck. I'd open a dialog with the seller or their agent if any. Sales is all about understanding what each person's goal is. |
Buying a small amount (e.g. $50) of stock via eToro “Social Trading Network” using a “CFD”? | Is eToro legitimate? If you have any doubts about eToro or other CFD providers (or even Forex providers, which are kind of similar), just type eToro scam in Google and see the results. |
Which forex brokerage should I choose if I want to fund my account with over a million dollars? | With your experience, I think you'd agree that trading over a standardized, regulated exchange is much more practical with the amount of capital you plan to trade with. That said, I'd highly advise you to consider FX futures at CME, cause spot forex at the bucket shops will give you a ton of avoidable operational risks. |
Pay index fund expense ratios with cash instead of fund balance | It seems at most a cosmetic difference - nothing keeps you from adding the 9$ cash to the fund the same day the fees are deducted from the shares. |
Are stories of turning a few thousands into millions by trading stocks real? | The short answer is yes, it is possible to do what these classes claim, however, it is highly unlikely. For every person they can show you that got rich using whatever so called method they are teaching, there are hundreds of people that didn't that they aren't telling you about. What I would recommend is invest in a well diversified portfolio. If you have a higher tolerance for risk then you can make some of that portfolio out of higher risk/reward investments. Maybe you pick the next Apple or Google or Netflix or whatever but that portion of your portfolio should be money that you can afford to lose in case you pick duds. |
Is it legal to charge interest on interest? | Yes it most cases it is legal. Plus depending on how you look at it, the last payment of 1000 can be principal paid and interest was paid in initial installments. |
Why do credit cards require a minimum annual household income? | While you're asking about a particular bank, I'll give my opinion of this in general. I think a $12,000 household income is pretty low to be given credit. The risk to the bank is certainly higher than if the income were at that $35,000 level. They can use this to differentiate what they offer for perks, and if they ever collateralize the debt of these cards, it's a clearly defined demographic. |
Why should one only contribute up to the employer's match in a 401(k)? | Early this year I wrote an article Are you 401(k)o’ed? I described the data from a 401(k) expense survey and the punchline was that the average large retirement plan (over 1000 participants) expense was 1.08%, and for smaller plans it rose to 1.24%. As I commented below, if one's goal is to make deposits with income that avoid a tax of 25%, and hope to withdraw it at retirement at 15%, it doesn't take long for a 1% fee to completely negate the benefit of pretax savings. These numbers are averages, in the same article, I mention (ok, I brag) that my company plan has an S&P fund that costs .05%. That's 1% over 20 years. The sound bite of "deposit to the match" needs to be followed by "depending on the choice of investments and their expenses" within the 401(k). Every answer here has added excellent points, fennec's last sentence shouldn't be ignored, there's a phaseout for IRA deductibility, and another for Roth eligibility. For Married filing joint, IRA deduction starts to be lost at $92K, and Roth deposit disallowed at $173K. This adds a bit to the complexity of the decision, but doesn't change the implication of the 1%+ 401(k) fees. |
Is Stock Trading legal for a student on F-1 Visa in USA? [duplicate] | It is absolutely legal. While studying on a F-1 you would typically be considered a non-resident alien for tax purposes. You can trade stocks, just like any other foreigner having an account with a US- or non-US based brokerage firm. Make sure to account for profit made on dividends/capital gain when doing your US taxes. A software package provided by your university for doing taxes might not be adequate for this. |
How are various types of income taxed differently in the USA? | Many individual states, counties, and cities have their own income taxes, payroll taxes, sales taxes, property taxes, etc., you will need to consult your state and local government websites for information about additional taxes that apply based on your locale. Wages, Salaries, Tips, Cash bonuses and other taxable employee pay, Strike benefits, Long-term disability, Earnings from self employment Earned income is subject to payroll taxes such as: Earned income is also subject to income taxes which are progressively higher depending on the amount earned minus tax credits, exemptions, and/or deductions depending on how you file. There are 7 tax rates that get progressively larger as your income rises but only applies to the income in each bracket. 10% for the first 18,650 (2017) through 39.6% for any income above 470,700. The full list of rates is in the above linked article about payroll taxes. Earned income is required for contributions to an IRA. You cannot contribute more to an IRA than you have earned in a given year. Interest, Ordinary Dividends, Short-term Capital Gains, Retirement income (pensions, distributions from tax deferred accounts, social security), Unemployment benefits, Worker's Compensation, Alimony/Child support, Income earned while in prison, Non-taxable military pay, most rental income, and S-Corp passthrough income Ordinary income is taxed the same as earned income with the exception that social security taxes do not apply. This is the "pure taxable income" referred to in the other linked question. Dividends paid by US Corporations and qualified foreign corporations to stock-holders (that are held for a certain period of time before the dividend is paid) are taxed at the Long-term Capital Gains rate explained below. Ordinary dividends like the interest earned in your bank account are included with ordinary income. Stocks, Bonds, Real estate, Carried interest -- Held for more than a year Income from assets that increase in value while being held for over a year. Long term capital gains justified by the idea that they encourage people to hold stock and make long term investments rather than buying and then quickly reselling for a short-term profit. The lower tax rates also reflect the fact that many of these assets are already taxed as they are appreciating in value. Real-estate is usually taxed through local property taxes. Equity in US corporations realized by rising stock prices and dividends that are returned to stock holders reflect earnings from a corporation that are already taxed at the 35% Corporate tax rate. Taxing Capital gains as ordinary income would be a second tax on those same profits. Another problem with Long-term capital gains tax is that a big portion of the gains for assets held for multiple decades are not real gains. Inflation increases the price of assets held for longer periods, but you are still taxed on the full gain even if it would be a loss when inflation is calculated. Capital gains are also taxed differently depending on your income level. If you are in the 10% or 15% brackets then Long-term capital gains are assessed at 0%. If you are in the 25%, 28%, 33%, or 35% brackets, they are assessed at 15%. Only those in the 39.6% bracket pay 20%. Capital assets sold at a profit held for less than a year Income from buying and selling any assets such as real-estate, stock, bonds, etc., that you hold for less than a year before selling. After adding up all gains and losses during the year, the net gain is taxed as ordinary income. Collectibles held for more than a year are not considered capital assets and are still taxed at ordinary income rates. |
How much cash on hand should one have? | There are two or three issues here. One is, how quickly can you get cash out of your investments? If you had an unexpected expense, if you suddenly needed more cash than you have on hand, how long would it take to get money out of your Scott Trade account or wherever it is? I have a TD Ameritrade account which is pretty similar, and it just takes a couple of days to get money out. I'm hard pressed to think of a time when I literally needed a bunch of cash TODAY with no advance warning. What sudden bills is one likely to have? A medical bill, perhaps. But hey, just a few weeks ago I had to go to the emergency room with a medical problem, and it's not like they demanded cash on the table before they'd help me. I just got the bill, maybe 3 weeks after the event. I've never decided to move and then actually moved 2 days later. These things take SOME planning. Etc. Second, how much risk are you willing to tolerate? If you have your money in the stock market, the market could go down just as you need the cash. That's not even a worst case scenario, extreme scenario. After all, if the economy gets bad, the stock market could go down, and the same fact could result in your employer laying you off. That said, you could reduce this risk by keeping some of your money in a low-risk investment, like some high-quality bonds. Third, you want to have cash to cover the more modest, routine expenses. Like make sure you always have enough cash on hand to pay the rent or mortgage, buy food, and so on. And fourth, you want to keep a cushion against bookkeeping mistakes. I've had twice in my life that I've overdrawn a checking account, not because I was broke, but because I messed up my records and thought I had more money in the account than I really did. It's impossible to give exact numbers without knowing a lot about your income and expenses. But for myself: I keep a cushion of $1,000 to $1,5000 in my checking account, on top of all regular bills that I know I'll have to pay in the next month, to cover modest unexpected expenses and mistakes. I pay most of my bills by credit card for convenience --and pay the balance in full when I get the bill so I don't pay interest -- so I don't need a lot of cushion. I used to keep 2 to 3 months pay in an account invested in bonds and very safe stocks, something that wouldn't lose much value even in bad times. Since my daughter started college I've run this down to less than 1 months pay, and instead of replacing that money I'm instead putting my spare money into more general stocks, which is admittedly riskier. So between the two accounts I have a little over 2 months pay, which I think is low, but as I say, I'm trying to get my kids through college so I've run down my savings some. I think if I had more than 6 months pay in easily-liquidated assets, then unless I expected to need a bunch of cash for something, buying a new house or some such, I'd be transferring that to a retirement account with tax advantages. |
How could a company survive just on operations cash flow, i.e. no earnings? | It depends on the definition of earnings. A company could have revenue that nets in excess of expenses, so from that perspective a good cash flow or EBITDA, but have debt servicing costs, taxes, depreciation, amortization, that alters that perspective. So if a company is carrying a large debt load, then the bondholders are in the position to capture any excess revenues through debt service payments and the company is in a negative equity positions (no equity or dividends payable to shareholders) and has not produced earnings. If a company has valuable preferred shares issued and outstanding, then depending on the earnings definition, there may be no earnings (for the common stock) until the preferences are satisfied by the returns. So while the venture itself (revenues minus costs) could be cash flow positive, this may not be sufficient to produce "earnings" for shareholders, whose claim on the company still entitles them to zero current liquidation value (i.e. they get nothing if the company dissolves immediately - all value goes to bondholders or preferred). It could also be that taxes are eating into revenue, or the depreciation of key assets is greater than the excess of revenues over costs (e.g. a bike rental company by the beach makes money on a weekly basis but is rusting out half its stock every 3 months and replacement costs will overwhelm the operating revenues). |
Investment strategy for retired couple | You need to have them consult with a financial adviser that has a focus on issues for seniors. This is because they are beyond the saving for retirement phase and are now in the making-their-money-last phase. They also have issues related to health insurance, IRA RMDs, long term care insurance. The adviser will need to review what they have and determine how to make sure it is what they need. It is great idea for you to go along with them so you can understand what needs to be done. You will want an adviser that charges you a fee for making the plan, not one that makes a commission based on what products you buy or invest in. |
why would closing price of a stock be different from different sources, and which would you take as the real price? | There is more than one exchange where stock can be traded. For example, there is the New York Stock Exchange and the London Stock Exchange. In fact, if you look at all the exchanges, there is essentially continuous trading 24/7 for many financial instruments (eg US government bonds). The closing price quoted in papers is usually the price at the close on the NYSE. However, options close after that and so there is after-the-close trading in many stocks with active options, so the price at the close of options trading at CBOE is often used. The "real" price is always changing. But for the purpose of discussion, using the closing price in NYSE (for NYSE listed stocks) is pretty standard and unlikely to be questioned. Likewise, using Bloomberg's price makes sense. Using some after-hours or small market quote could lead to differences with commonly accepted numbers - until tomorrow :) |
Highest market cap for a company from historical data | In common with many companies, Microsoft has been engaging in share buyback programmes, where it buys its own shares in the market and then cancels them. It's often a more tax-efficient way to distribute profits to the shareholders than paying a dividend. So there were more Microsoft shares in circulation in 1999 than there are now. See here for information. |
classify investments in to different asset types | A foreign stock mutual fund definitely belongs in stocks. It's composed of stocks. Your self occupied house is definitely real estate. You don have to keep in mind,however that selling it would create costs such as rent. I wouldn't leave it out, if doing that would cause you to buy more real estate. This would cause you to be overweighted in the real estate area. I would tend to think if a CD as cash. While it could be considered a bond, as you said the principal doesn't go down. The REIT is the toughest one. I would really like to see a graph showing how correlated it is to the real estate market. That would determine where I would put it. |
Prepaying a loan: Shouldn't the interest be recalculated like a shorter loan? | So, let's take a mortgage loan that allows prepayment without penalty. Say I have a 30 year mortgage and I have paid it for 15 years. By the 16th year almost all the interest on the 30 year loan has been paid to the bank This is incorrect thinking. On a 30 year loan, at year 15 about 2/3's of the total interest to be paid has been paid, and the principal is about 1/3 lower than the original loan amount. You may want to play with some amortization calculators that are freely available to see this in action. If you were to pay off the balance, at that point, you would avoid paying the remaining 1/3 of interest. Consider a 100K 30 year mortgage at 4.5% In month two the payment breaks down with $132 going to principal, and $374 going to interest. If, in month one, you had an extra $132 and directed it to principal, you would save $374 in interest. That is a great ROI and why it is wonderful to get out of debt as soon as possible. The trouble with this is of course, is that most people can barely afford the mortgage payment when it is new so lets look at the same situation in year 15. Here, $271 would go to principal, and $235 to interest. So you would have to come up with more money to save less interest. It is still a great ROI, but less dramatic. If you understand the "magic" of compounding interest, then you can understand loans. It is just compounding interest in reverse. It works against you. |
Why buy insurance? | You don't mention what kind of insurance you're talking about, but I'll just address one angle on the question. For some kinds of insurance, such as health insurance (in the US), auto insurance, and homeowner's insurance, you may be insuring against an event that you would not be able to pay for without the insurance. For instance, if you are at fault in a car accident and injure someone, they could sue you for $100,000. A lot of people don't have $100,000. So it's not even a matter of "I'll take the risk of having to pay it when the time comes"; if the time comes, you could lose virtually everything you own and still have to pay more from future earnings. You're not just paying $X to offset a potential loss of $Y; you're paying $X to offset a potential derailment of your entire life. It is plausible that you could assign a reasonable monetary value to that potential "cost" that would mean you actually come out ahead in the insurance equation. It is with smaller expenses (such as insuring a new cellphone against breakage) that insurance becomes harder to justify. When the potential nonfinancial "collateral damage" of a bad event are less, you must justify the insurance expenses on the financial consequences only, which, as you say, is often difficult. |
How can I buy and sell the same stock on the same day? | you need minimum of 25k otherwise youll reach a limit. you have to wait 3 days for the sale to clear unless youre on margin. dont buy anything based on idiots on twitter or the internet. however, theres some good people to follow though that know what theyre doing. dont listen to this guy saying that etrade or those platforms arent fast enough. they all offer level 2 prices so i dont know what hes talking about. successful day traders arent buying and selling a stock every single day. theres not always something to buy and sell...unless youre just gambling, and in that case just go to the casino and lose your money there. |
How are people able to spend more than what they make, without going into debt? | If you make $10 in salary, $5 in interest on savings, and $10 in dividends, your income is $25, not $10. If you have a billion dollars in well-invested assets, you can take a loan against those assets and the interest payment on the loan will be smaller than the interest you earn on the assets. That means your investment will grow faster than your debt and you have a net positive gain. It makes no sense to do this if the value of your asset is static. In that case, you would be better off just to withdraw from the asset and spend it directly, since a loan against that static asset will result in you spending your asset plus interest charges. If you have a good enough rate of return on your investment, you may actually be able to do this in perpetuity, taking out loan after loan, making the loan payments from the loan proceeds, while the value of your original asset pool continues to grow. At any given time, though, a severe downturn in the market could potentially leave you with large debts and insufficient value in your assets to back the debt. If that happens, you won't be getting another loan and the merry-go-round will stop spinning. It's a bit of a Ponzi scheme, in a way. The U.S. government has done exactly this for a long time and has gotten away with it because the dollar has been the world's reserve currency. You could always get a loan against the value of the U.S. currency in the past. Those days may be dwindling, with more countries choosing alternative currencies to conduct business with and the dollar becoming comparatively weaker into the foreseeable future. If you have savings, you can spend more than you make, which will put you into debt, then you can draw down your savings to pay that debt, and at the end of the month you will be out of debt, but have less in savings. You cannot do this forever. Eventually, you run out of savings. If you have no savings, you immediately go into debt and stay there when you spend more than you make. This is simple arithmetic. If you have no savings, but you own assets (real estate, securities, a collection of never-opened Beatles vinyl records, a bicycle), then you could spend more than you make, and be in debt, but have the potential to liquidate assets to pay off all or part of the debt. This depends on finding a buyer and negotiating a price that helps you enough to make a real difference. If you have a car, and you owe $10 on it, but you can only find a buyer willing to pay $8 for the car, that doesn't help you unless you can refinance the $2 and your new payment amount is lower than the old payment amount. But then you're still $2 in debt on the car even though you no longer possess it, and you've still increased your debt by spending more than you made. If you stay on this path, sooner or later you will not have any assets left and you will be in debt, plain and simple. As a wrinkle in the concrete example, let's say you have stock options with your employer. This is a form of a "call." You could also purchase a call through a broker in the stock market, or for a commodity in the futures market. That means you pay up front for the right to buy a specific amount of an asset at a fixed price (usually with an expiration date). You don't own the stock, you just have the right to buy it at the call price, regardless of the current market value when you buy it. In the case of employee stock options, your upfront cost is in the form of a vesting schedule. You have to remain employed for a set time before a specific number of stocks become eligible for you to purchase at your option price (the stocks "vest" on a certain date). Remain employed longer, and more stocks may vest, depending on your contract. If you quit or are terminated before that date, you forfeit your options. If you stick around through your vesting schedule, you pay real money to buy the stock at your option price. It only makes sense to do this if the market value of the stock is higher than your option price. If the current market value is lower than your option price, you're better off just buying the asset at the current market value, or waiting and hoping that the value increases before your contract expires. You could drive yourself into debt by spending more than you make, but still have a chance to eliminate your debt by exercising your call/option and then re-selling the asset if it is worth more than what you pay for it. But you may have to wait for a vesting period to elapse before you can exercise your option (depending on the nature of your contract). During this waiting period, you are in debt, and if you can't service your debt (i.e. make payments acceptable to your creditors) your things could get repossessed. Oh, don't forget that you'll also pay a brokerage fee to sell the asset after you exercise your option. Further, if you have exhausted your savings and nobody will give you a loan to exercise your stock (or futures) options, then in the end you would be even further in debt because you already paid for the call, but you are unable to capitalize it and you'll lose what you already paid. If you can get a loan to exercise your option, but you're a bad credit risk, chances are good that the lender will draft a contract requiring you to immediately pay back the loan proceeds plus a fee out of the proceeds of re-selling the stock or other asset. In fact the lender might even draft a contract assigning ownership of your options to them, and stipulating that they'll pay you what's left after they subtract their fee. Even if you can get a traditional loan, you will pay interest over time. The end result is that your debt has still cost you very real money beyond the face value of the debt. Finally, if the asset for which you have a call has decreased in value lower than the current market value, you would be better off buying it directly in the market instead of exercising your option. But you'll pay transaction fees to do that, and the entire action would be pure speculation (or "investment"), but not an immediate means to pay off your debt. Unless you have reliable insider trading information. But then you risk running afoul of the law. Frankly it might be better to get a loan to pay off your debt than to buy an "investment" hoping the value will increase, unless you could guarantee that the return on your investment would be bigger than the cumulative interest and late fees on your debt (or the risk of repossession of your belongings). Remember that nothing you owe a debt on is actually yours, not your house, not your car, not your bicycle, not your smartphone. Most of the time, your best course of action is to make minimum payments on your lowest-interest debts and make extra payments on your highest interest debt, up to the highest total payment you can tolerate (set something aside in a rainy day fund just in case). As you pay off the highest-interest debt, shift the amount you were paying on that debt to make extra payments on your next highest-interest debt until that one is paid off, and repeat on down the line until you're out of debt, then live within your means so that you don't find yourself working at McDonald's because you don't have a choice when you're in your 80's. |
Should we buy a house, or wait? | Advantages of buying: With every mortgage payment you build equity, while with rent, once you sign the check the money is gone. Eventually you will own the house and can live there for free. You can redecorate or remodel to your own liking, rather than being stuck with what the landlord decides is attractive, cost-effective, etc. Here in the U.S. there are tax breaks for homeowners. I'm not sure if that's true in U.K. Advantages of renting: If you decide to move, you may be stuck paying out a lease, but the financial penalty is small. With a house, you may find it difficult to sell. You may be stuck accepting a big loss or having to pay a mortgage on the empty house while you are also paying for your new place. When there are maintenance issues, you call the landlord and it's up to him to fix it. You don't have to come up with the money to pay for repairs. You usually have less maintenance work to do: with a house you have to mow the lawn, clear snow from the driveway, etc. With a rental, usually the landlord does that for you. (Not always, depends on type of rental, but.) You can often buy a house for less than it would cost to rent an equivalent property, but this can be misleading. When you buy, you have to pay property taxes and pay for maintenance; when you rent, these things are included in the rent. How expensive a house you can afford to buy is not a question that can be answered objectively. Banks have formulas that limit how much they will loan you, but in my experience that's always been a rather high upper bound, much more than I would actually be comfortable borrowing. The biggest issue really is, How important is it to you to have a nice house? If your life-long dream is to have a big, luxurious, expensive house, then maybe it's worth it to you to pour every spare penny you have into the mortgage. Other people might prefer to spend less on their house so that they have spare cash for a nice car, concert tickets, video games, cocaine, whatever. Bear in mind that if you get a mortgage that you can just barely afford, what do you do if something goes wrong and you can't afford it any more? What if you lose your job and have to take a lower-paying job? What if some disaster strikes and you have some other huge expense? Etc. On the flip side, the burden of a mortgage usually goes down over time. Most people find that their incomes go up over time, between inflation and growing experience. But the amount of a mortgage is fixed, or if it varies it varies with interest rates, probably bouncing up and down rather than going steadily up like inflation. So it's likely -- not at all certain, but likely -- that if you can just barely afford the payment now, that in 5 or 10 years it won't be as big a burden. |
Is it possible to make money by getting a mortgage? | the mortgage interest deduction alone couldn't make this work, but if you realize less income by living off the mortgage funds, then it could definitely reduce your taxes by much more than the cost of the mortgage interest. particularly, if you are waiting for some future cut-off date (e.g. turning 59.5 and getting access to roth funds, turning 70 and getting social security, simply doing a roth conversion with strategic recharacterization at age 40 and waiting 5 years to get the money out penalty-free, etc.). and that future date could be quite far off if you only use a small fraction of the total mortgage each year. plus, it is fairly reasonable to assume that equity market returns will outpace mortgage rates, especially if you are "rich" and don't need to worry about living on the street even if the market hits unprecedented lows. while i find most financial advisers to be incompetent (most people really...), i wouldn't write this guy off, just because he left out the specific details that made the strategy work for one particular client. |
Would I ever need credit card if my debit card is issued by MasterCard/Visa? | Car rental agencies typically accept only credit cards for the rental (you can pay at the end with debit, but the securing during the rental must be a credit card - or a high cash deposit). Hotel advance-bookings - even if many months in the future - will work fine with a credit card, but - as explained by others - on a debit card, it would directly affect your cash flow (you basically have to prepay instead of just leave the credit card number on file. The same is sometimes true for other advance booking, like cruises, tours, etc. |
When should I walk away from my mortgage? | I'm in a similar situation, but I live in a state that doesn't allow mortgagees to "walk away" without recourse. I would consider a short sale or otherwise abandoning the property if: At the end of the day, real estate is an investment, and you don't realize gains or losses until you close the position. The "ra, ra" crowd that thought that real estate was going to boom forever in 2006 was just as wrong as the "bad news bears" crowd that thinks that real estate will never recover either. Investments rise and fall. Many people who bought houses in the 1980's boom (recall the S&L crisis) were underwater for years until prices started rising in the mid-90's. You haven't lost money until you realize that loss. |
First 401K portfolio with high expense ratios - which funds to pick? (24yo) | If you're willing to do a little more work and bookkeeping than just putting money into the 401(k) I would recommend the following. I note that you said you chose some funds based on performance since the expense ratios are all high. I would recommend against chasing performance because active funds will almost always falter; honor the old saw: "past performance is no guarantee of future returns". Assuming the cash in your Ally account is an emergency fund, I would use it to pay off your credit card debt to avoid the interest payments. Use free cash flow in the coming months to bring the emergency fund balance back up to an acceptable level. If the Ally account is not an emergency fund, I would make it one! With no debt and an emergency fund for 3-12 months of living expenses (pick your risk tolerance), then you can concentrate on investing. Your 401(k) options are unfortunately pretty poor. With those choices I would invest this way: Once you fill up your choice of IRA, then you have the tougher decision of where to put any extra money you have to invest (if any). A brokerage account gives you the freedom of investment choices and the ability to easily pull out money in the case of a dire emergency. The 401(k) will give you tax benefits, but high fund expenses. The tax benefits are considerable, so if I were at a job where I plan on moving on in a few years, I'd fund the 401(k) up to the max with the knowledge that I'd roll the 401(k) into a rollover IRA in the (relatively) short term. If I saw myself staying at the employer for a long time (5+ years), I'd probably take the taxable account route since those high fund fees will add up over time. One you start building up a solid base, then I might look into having a small allocation in one of my accounts for "play money" to pick individual stocks, or start making sector bets. |
I have a loan with a 6.5% interest rate. Should I divert money into my 401(k) instead of prepaying? | Having a loan also represents risk. IMHO you should retire the loan as soon as feasible in most cases. JoeTaxpayer, as usual, raises a good point. With numbers as he is quoting, it is tolerable to have a loan around on a asset such as a home. While he did not mention it, I am sure that his rate is fixed. If the interest rate is variable: pay it off. If it is a student loan: pay it off. If you can have it retired quickly: pay it off and get the bank off your payroll. If it is consumer debt: pay it off. |
Can a wealthy investor invest in or make a deal with a company before it goes public / IPO? | Yes, it is common for investors to make equity investments in technology companies pre-IPO. There are technology incubators like Y Combinator that exist to make "angel" investments, which are early-stage equity investments in private technology companies (these investments are sometimes in notes that are convertible to equity, but are very similar to a stock investment). Wealthy individuals can also make angel investments (e.g. Peter Thiel made a $500K investment in Facebook in 2004 for 10.2% of the company). Additionally, venture capital firms exist to make equity investments in private companies. In the US, you need to be an Accredited Investor to make private equity investments (income greater than $200K or net worth greater than $1 million), but you probably need a lot more money than the minimum and connections to get in on these deals in reality. |
High-risk investing is better for the young? Why? | Would my high-risk investment choices, aside from the main question, have any bearing on the road I want to go down and test (managing mutual/hedge funds)? Absolutely! First of all, understand that hedge fund managers are managing other people's money. Those people desire a certain risk profile and expected return, so your hedge fund will need to meet those expectations. Plus, hedge fund managers don't typically get fixed fees alone - they also get a percentage of any gains the fund makes; so managers have a vested interest in making sure that hedge funds perform well. |
Large BUY LIMIT orders' effect on a stock's price | Traders sometimes look at the depth of the book (number of outstanding limit orders) to try and gauge the sentiment of the market or otherwise use this information to formulate their strategy. If there was a large outstanding buy order at $49.50, there's a decent chance this could increase the price by influencing other traders. However, a limit order at $2 is like an amazon.com price of $200,000 for a book. It's so far away from realistic that it is ignored. People would think it is an error. Submitting this type of order is perfectly legal. If the stock is extremely thinly traded, it might even be encouraged because if someone wanted to sell a bunch and did a really bad job of it, the price could conceivably fall that far and the limit order would be adding liquidity. I guess. Your example is pretty extreme. It is not uncommon for there to be limit orders on the book that are not very close to the trading price. They just sit around. The majority of trades are done by algorithmic traders and institutional traders and they don't tend to do this, but a retail investor may choose to submit an order like that, just hoping against hope. Also, buy orders are not likely to push prices down, no matter what their price is. A sell order, yes (even if it isn't executed). |
Working abroad in Australia, what is involved financially and administratively? | If you think there is no complication in your application and you can easily satisfy all criteria you can do the process yourself without using any agent and save few thousand dollars. I have done myself. Another cost Chris forgot to mention is the medical examination cost which is mandatory. If your certificates and docs are non-English translation fees are quite high as well. The immigration process is very bureaucratic and requires lot of supporting documents. As for living in Australia, Rent, Car and living expenses are high compared to US. But in Sydney and Melbourne you can rent near public transport, which isn't too bad (well not like Europe ). So having a car is not essential. Rent for a decent flat in these cities will be $300 - $350 p/w and you may have to pay 4-6 weeks as advance. You can get a lot of information from the dept. of immingration website. |
How do top investors pull out 20% ROI? | First of all, the annual returns are an average, there are probably some years where their return was several thousand percent, this can make a decade of 2% a year become an average of 20% . Second of all, accredited investors are allowed to do many things that the majority of the population cannot do. Although this is mostly tied to net worth, less than 3% of the US population is registered as accredited investors. Accredited Investors are allowed to participate in private offerings of securities that do not have to be registered with the SEC, although theoretically riskier, these can have greater returns. Indeed a lot of companies that go public these days only do so after the majority of the growth potential is done. For example, a company like Facebook in the 90s would have gone public when it was a million dollar company, instead Facebook went public when it was already a 100 billion dollar company. The people that were privileged enough to be ALLOWED to invest in Facebook while it was private, experienced 10000% returns, public stock market investors from Facebook's IPO have experienced a nearly 100% return, in comparison. Third, there are even more rules that are simply different between the "underclass" and the "upperclass". Especially when it comes to leverage, the rules on margin in the stock market and options markets are simply different between classes of investors. The more capital you have, the less you actually have to use to open a trade. Imagine a situation where a retail investor can invest in a stock by only putting down 25% of the value of the stock's shares. Someone with the net worth of an accredited investor could put down 5% of the value of the shares. So if the stock goes up, the person that already has money would earn a greater percentage than the peon thats actually investing to earn money at all. Fourth, Warren Buffett's fund and George Soros' funds aren't just in stocks. George Soros' claim to fame was taking big bets in the foreign exchange market. The leverage in that market is much greater than one can experience in the stock market. Fifth, Options. Anyone can open an options contract, but getting someone else to be on the other side of it is harder. Someone with clout can negotiate a 10 year options contract for pretty cheap and gain greatly if their stock or other asset appreciates in value much greater. There are cultural limitations that prompt some people to make a distinction between investing and gambling, but others are not bound by those limitations and can take any kind of bet they like. |
Where can I find open source portfolio management software? | I've just recently launched an open source wealth management platform - wealthbot.io ... "Webo" is mostly targeted at RIA's to help the manage multiple portfolios, etc. Take a look at the demo at demo.wealthbot.io, you'll also find links to github, etc. there. It's a rather involved project, but if you are looking for use cases of rebalancing, portfolio accounting, custodian integration, tax loss harvesting, and many other features available at some of the popular robo-advisors, you might find it interesting. |
For a car, would you pay cash, finance for 0.9% or lease for 0.9%? | If you want the new car, pay cash for it. Here's why: By paying cash for the car, you immediately save $2,500 off the price of the car. That is not insignificant, it's 8.3% off. By paying cash, you'll never be upside down on the car, and you can sell the car anytime you want. You said that all you need to do is beat the 0.9% interest rate with your investment to come out ahead. That doesn't take into account the discount you would have gotten by paying cash. $30,000 invested for 5 years at 1.6% (rough estimate) would get you $2,500 (the discount), so the rate you need to beat to come out ahead is actually 2.5%. Still doable, but it is much less of a sure thing on a 5 year investment, and much less worth the trouble. New cars are an expensive luxury. If you are wealthy enough, a new car certainly can be appropriate for you. However, if you don't like the idea of paying $30k in cash all at once, that is a strong indication that perhaps the new car is a luxury you aren't in a position to buy at this time. Borrowing the money and paying for it over time makes it psychologically easier to over spend on transportation. |
Do online repositories of publicly traded companies' financial statements exist? | You can use the Securities Exchange Commission's EDGAR search engine to search all available SEC related filings. https://www.sec.gov/edgar/searchedgar/companysearch.html Top tip: use the fast search on the right to search for the company ticker rather than by company name. |
Currently sole owner of a property. My girlfriend is looking to move in with me and is offering to pay 'rent'. Am I at risk here? | With regard to worries about ownership: I'll point you towards this - The Cohabitants Rights Bill currently in First Reading at the House of Lords. Without a date for even the second reading yet. In short the Bill is attempting to redress is the lack of rights when a non-married relationship ends when compared to married relationships; that is that one of the "cohabitants" can end up with basically nothing that they don't have their name on. So currently you're in the clear and (Part 2) Section 6.2.a says the Bill cannot be used retroactively against you if your relationship is over before it becomes law (I expect with Brexit etc, this Bill isn't a high priority - it's been a year since the first reading). Section 6.2.a: This Part does not apply to former cohabitants where the former cohabitants have ceased living together as a couple before the commencement date; However, if you're still together if/when this Bill becomes Law then basically all of (Part 1) Section 2 may be relevant as it notes the conditions you will fall into this bill: Section 2.1.a: live together as a couple and Section 2.2.d: have lived together as a couple for a continuous period of three years or more. and the "have lived together" at that point counts from the start of your cohabitation, not the start of the Bill being law: Section 2.4.a: For the purposes of subsection (2)(d), in determining the length of the continuous period during which two people have lived together as a couple - any period of the relationship that fell before the commencement date (of the Bill) is to be taken into account If you have kids at some point, you'd also fall under 2.2.a through 2.2.c too. After that, the financial parity decided upon by the court depends on a whole bunch of conditions as outlined in the Bill, but Section 8.1.b is pretty clear: Section 8.1.b: (b)the court is satisfied either— (i)that the respondent has retained a benefit; or (ii)40that the applicant has an economic disadvantage, as a result of qualifying contributions the applicant has made I'm not qualified to say whether your partner helping to pay off your mortgage in lieu of paying rent herself would count as just paying rent or giving you an economic benefit. Sections 12, 13, and 14 discuss opt-outs, also worth a read. The a major disclaimer here in that Bills at this early stage have the potential to be modified, scrapped and/or replaced making this info incorrect. As an additional read, here's an FT article from Feb 2016 discussing this lack of rights of a cohabitant which should alleviate any current concerns. |
How can I help others plan their finances, without being a “conventional” financial planner? | You know there is a small group of individuals who focus on strictly planning without implementation. They are not securities licensed (no 7,6,66,63 license) so they cannot sell or discuss securities, but they do put together financial plans to help individuals recover from debt and rework spending/saving strategies. They also usually work hand in hand with a CFP or ChFc to do the implementation process. The hard part is making money at it. Financial Planners make most of their income on high net worth clients. You would be targeting low income or troubles income clients that would have a hard time paying money for the service. I am not saying it cannot be done, you just have your work cut out for you. But it is a noble career and you would be helping idividuals have a better life. That speaks volumes! |
Explain: “3% annual cost of renting is less than the 9% annual cost of owning” | The house that sells for $200,000 might rent for a range of monthly numbers. 3% would be $6000/yr or $500/mo. This is absurdly low, and favors renting, not buying. 9% is $1500/mo in which case buying the house to live in or rent out (as a landlord) is the better choice. At this level "paying rent" should be avoided. I'm simply explaining the author's view, not advocating it. A quote from the article - annual rent / purchase price = 3% means do not buy, prices are too high annual rent / purchase price = 6% means borderline annual rent / purchase price = 9% means ok to buy, prices are reasonable Edit to respond to Chuck's comment - Mortgage rates for qualified applicants are pretty tight from low to high, the 30 year is about 4.4% and the 15, 3.45%. Of course, a number of factors might mean paying more, but this is the average rate. And it changes over time. But the rent and purchase price in a given area will be different. Very different based on location. See what you'd pay for 2000 sq feet in Manhattan vs a nice town in the Mid-West. One can imagine a 'heat' map, when an area might show an $800 rent on a house selling for $40,000 as a "4.16" (The home price divided by annual rent) and another area as a "20", where the $200K house might rent for $1667/mo. It's not homogeneous through the US. As I said, I'm not taking a position, just discussing how the author formulated his approach. The author makes some assertions that can be debatable, e.g. that low rates are a bad time to buy because they already pushed the price too high. In my opinion, the US has had the crash, but the rates are still low. Buying is a personal decision, and the own/rent ratios are only one tool to be added to a list of factors in making the decision. Of course the article, as written, does the math based on the rates at time of publication (4%/30years). And the ratio of income to mortgage one can afford is tied to the current rate. The $60K couple, at 4%, can afford just over a $260K mortgage, but at 6%, $208K, and 8%, $170K. The struggle isn't with the payment, but the downpayment. The analysis isn't too different for a purchase to invest. If the rent exceeds 1% of the home price, an investor should be able to turn a profit after expenses. |
How can I decide whether do a masters even if I have go into debt after doing it? | Strictly from an ROI perspective, this is likely very dependent on your field. Some masters degrees (quant finance, business, engineering) will be well worth the debt, since a degree from the right university will yield a respectable ROI, whereas other degrees/fields (philosophy, fine arts, etc) will be basically a waste of money. Regardless of the field you can input your information into an ROI calculator and see what you get. I typically err on the side of using the lowest average reported salary for the degree programs you're considering (self reported salary data is notoriously inflated). |
Can housing prices rise faster than incomes in the long run? | In a strictly mathematical sense, no. Or rather, it depends what 'long run' means. Say today the home average is $200K, and payment is $900/mo. The $900 today happens to be about 20% of the median US monthly income (which is approximately $54,000/yr). Housing rises 4%/yr, income 3%/yr. In 100 years (long enough?) the house costs $10M but incomes are 'only' $1.03M/yr, and the mortgage, even at the same rate is $45K/month, or, to be clear, it rose to 52% of monthly income. My observation is that, long term, the median home costs what 25% of median income will support, in terms of the mortgage after downpayment. Long term. That means that if you graph this, you'll see trends above and below the long term line. You'll see a 25 year bubble form starting in the late 80's as rates dropped from near 18% to the Sub-4% in the early 00s. But once you normalize it to percent of income to pay the loan, much of the bubble is flattened out. At 18%, $1500/mo bought you a $100K mortgage, but at 3.5%, it bought $335K. This is in absolute dollars, wages also rose during that time. I am just clarifying how rates distort the long term trends and create the short term anomalies. |
Where to Park Proceeds from House Sale for 2-5 Years? | Your objectives are contradictory and/or not possible. Eliminating the non-taxable objective: You could divide the $100K in 5 increments, making a "CD ladder" $25K in 3mo CD (or savings a/c) $25K in 6 mo CD $25K in 9mo CD $25K in 1 yr CD or similar structure (6mo also works well) Every maturing CD you are able to access cash and/or invest in another longest maturity CD, and earn a higher rate of interest. This plan also works well to plan for future interest rates hikes. If you are forced to access (sell CD's) ALL the $$$ at any time, you will only lose accrued interest, none of the principal. All FDIC guaranteed. If non-taxable is the highest priority, "invest" in a tax-free money market fund....see Vanguard Funds. You will not have FDIC guarantee. |
I have about 20 000 usd. How can invest them to do good in the world? | One of the best things you can do for this purpose, while getting a modest ROI on a passive investment, is invest in a company that profitably does whatever you want to see more of. For example, you could invest in a for-profit company that sells needed goods to low-income people at lower prices. Something like Wal-Mart, which is one of the most effective anti-poverty engines in the US. You might also say the same of something like Aldi (owner of Aldi stores and Trader Joe's), which is a discount store chain. This is true even though a company like Wal-Mart is seeking to make money first. Its customer base tends to skew heavily towards low-income consumers, and historically to rural and elderly consumers. When Wal-Mart is able to provide food, clothing, appliances and the like to poor people at a lower cost, it is making it marginally less painful to have a low income. Peter Suderman can explain why Wal-Mart is a humanitarian enterprise: Walmart’s customer base is heavily concentrated in the bottom income quintile, which spends heavily on food. The bottom income quintile spends about 25 percent of income on food compared to just 3.5 percent for the top quintile. So the benefits of Walmart’s substantially lower prices to the lowest earning cohort are huge, especially on food. As Suderman points out, this view of Wal-Mart dramatically lowering prices that low-income people pay for food was corroborated by an Obama adviser. That's just one company. You can pick the industry and company that best suits your personal preferences. Alternatively, you could invest in something like Whole Foods, a company with multiple missions to improve the planet and the community, in addition to the more typical mission of being a prosperous retail chain. Of course, as a general proposition, a less than entirely altruistic, charity-inclined investment doesn't need to be targeted at those with low incomes or at saving the planet. You could invest in almost anything you think is good (yachts, yo-yos, violins, energy production, industrial inputs, music performances) and the company will take care of making more of that good thing. You didn't say whether your goal was to help the poor, the planet, arts, sciences, knowledge, community, or whatever. What I understand you to be saying is you are willing to accept a lower ROI in exchange for some warm-fuzzies from your investment. That seems perfectly valid and reasonable to me, but it makes it much more subjective and particular to your tastes. So you'll need to pick something that's meaningful to you. If you're going to trade ROI for positive feelings, then you should pick whatever gives you your optimal blend of emotions and returns. Alternatively, you could invest in something stable and predictable to beat inflation (some sort of index or fund) and then annually use some portion of those profits to simply give to the charity of your choice. Your investment and your charity do not necessarily need to be the same vehicle. |
Tax Form 1099 and hourly worker do i file a W-2 if my employer filed the 1099 for me? | Forms 1099 and W2 are mutually exclusive. Employers file both, not the employees. 1099 is filed for contractors, W2 is filed for employees. These terms are defined in the tax code, and you may very well be employee, even though your employer pays you as a contractor and issues 1099. You may complain to the IRS if this is the case, and have them explain the difference to the employer (at the employer's expense, through fines and penalties). Employers usually do this to avoid providing benefits (and by the way also avoid paying payroll taxes). If you're working as a contractor, lets check your follow-up questions: where do i pay my taxes on my hourly that means does the IRS have a payment center for the tax i pay. If you're an independent contractor (1099), you're supposed to pay your own taxes on a quarterly basis using the form 1040-ES. Check this page for more information on your quarterly payments and follow the links. If you're a salaried employee elsewhere (i.e.: receive W2, from a different employer), then instead of doing the quarterly estimates you can adjust your salary withholding at that other place of work to cover for your additional income. To do that you submit an updated form W4 there, check with the payroll department on details. Is this a hobby tax No such thing, hobby income is taxed as ordinary income. The difference is that hobby cannot be at loss, while regular business activity can. If you're a contractor, it is likely that you're not working at loss, so it is irrelevant. what tax do i pay the city? does this require a sole proprietor license? This really depends on your local laws and the type of work you're doing and where you're doing it. Most likely, if you're working from your employer's office, you don't need any business license from the city (unless you have to be licensed to do the job). If you're working from home, you might need a license, check with the local government. These are very general answers to very general questions. You should seek a proper advice from a licensed tax adviser (EA/CPA licensed in your state) for your specific case. |
Covered call and put options as separate trades | Yes, if the call expires worthless, leaving you with stock. Then you can exercise your put when the stock goes below put strike price. |
What should I do with $4,000 cash and High Interest Debt? | Every $1,000 you use to pay off a 26% interest rate card saves you $260 / year. Every $1,000 you use to pay off a 23% interest rate card saves you $230 / year. Every $1,000 you put in a savings account earning ~0.5% interest earns you $5 / year. Having cash on hand is good in case of emergencies, but typically if your debt is on high interest credit cards, you should consider paying off as much of it as possible. In your case you may want to keep only some small amount (maybe $500, maybe $1000, maybe $100) in cash for emergencies. Paying off your high interest debt should be a top priority for you. You may want to look on this site for help with budgeting, also. Typically, being in debt to credit card companies is a sign of living beyond your means. It costs you a lot of money in the long run. |
Recent college grad. Down payment on a house or car? | I generally agree with the sentiment in many other answers that $27K is more I would personally spend on a car if I were in your position. Having said that, the following assumes you are already intent on buying that car. Even if you change your mind, I think the general ideas still apply. |
What's the process to buy an old house to tear it down and create a new one? | Thank you for your response KeithB and Ross. I was researching more about this and looks like I have to follow all these steps (please, correct me if I'm wrong): |
How to secure one's effort when working on a contract? | I don't think you need to bother with trust accounts. The point of a trust account is holding funds that aren't yours yet. You take a retainer fee that you have yet to earn. As you work, you bill your hourly rate, your client signs off and you take possession of the funds. You're going to work a project, you'll take a partial payment as a deposit and partial payment upon completion. But this is a payment to you, not money transferred to you to hold until you earn it at a later date. Your contract can specify remedies for missing a deadline, or any other thing that could happen. |
Stock market transaction cost calculation | An order is your command to the broker to, say, "sell 100 shares of AAPL". An executed order (or partially executed order) is when all (or some) of that command is successfully completed. A transaction is an actual exchange of shares for money, and there may be one or more transactions per executed order. For example, the broker might perform all of the following 5 transactions in order to do what you asked: On the other hand, if the broker cannot execute your order, then 0 transactions have taken place. The fee schedule you quote is saying that no matter how many transactions the broker has to perform in order to fill your order -- and no matter what the share prices are -- they're only going to charge you $0.005 per share ($0.50 in this example of 100 shares), subject to certain limits. However, as it says at the top of the page you linked, Our Fixed pricing for stocks, ETFs (Exchange Traded Products, or ETPs) and warrants charges a fixed amount per share or a set percent of trade value, and includes all IB commissions, exchange and most regulatory fees with the exception of the transaction fees, which are passed through on all stock sales. certain transaction fees are passed through to the client. The transaction fee you included above is the SEC fee on sales. Many (but not all) transaction fees DO depend on the prices of the shares involved; as a result they cannot be called "fixed" fees. For example, if you sell 100 shares of AAPL at $150 each, But if you sell 100 shares of AMZN at $940 each, So the broker will charge you the same $0.50 on either of those orders, but the SEC will charge you more for the expensive AMZN shares than for the cheaper AAPL shares. The reason this specific SEC fee mentions aggregate sales rather than trade value is because this particular SEC fee applies only to the seller and not to the buyer. So they could have written aggregate trade value, but they probably wanted to highlight to the reader that the fee is only charged on sells. |
How do I figure out the market value of used books? | Regarding the textbooks and technical books, it might be worth checking out sites like Chegg.com or other textbook rental websites. They might buy it from you directly versus trying to sell it on an ebay or amazon. For fiction or nonfiction, amazon and ebay can be tough, but probably worth a look. See what comparables are for your books or similar titles, and if it works, try selling a few. The big problem is that so many sellers are on Amazon these days, that major discounts are commonplace. I've bought hardback 1st editions for less than the cost of economy shipping, so the profit margin is dwindling at best if it's an unpopular or low demand book. |
Why is the price of my investment only updated once per day? | Mutual funds are only traded once per day, while other securities can be traded any time during the day. Mutual funds are actually a collection of other things that have value, such as stocks. The price of a mutual fund is calculated at the end of the day after the market closes by looking at how much the collection of things changed in value during the day. |
When is Cash Value Life Insurance a good or bad idea? | The standard answer I have heard is that if you were to purchase term life insurance and invest the difference between the cost of the policies, your investments would grow larger than the cash value of the insurance. Also when you take cash out of CVLI the insurance value drops by a like amount. So you can't have your cake and leave it to your heirs too. Either you get the cash value OR they get the insurance value. Hopefully, there could be some of both. Although I believe the philosophy of that answer I have two issues with it. First, you must be dedicated enough to invest the difference every month. I can imagine that might be tough to do consistently and if you take breaks from the investing will you still accumulate more than you would have with the insurance? Second, for the past couple of years all of my investments in mutual funds have lost value. My life insurance has continued to grow cash value over the same time period. Hmm, maybe there isn't a one size fits all solution. If you need a large amount of insurance, term life will certainly be more affordable. However, considering this as an investment I would not expect that to be a deciding factor. Good luck with your decision. It is great that at such a young age you are concerned about investments. |
Optimal down payment amount | The optimal down payment is 100%. The only way you would do anything else when you have the cash to buy it outright is to invest the remaining money to get a better return. When you compare investments, you need to take risk into account as well. When you make loan payments, you are getting a risk free return. You can't find a risk-free investment that pays as much as your car loan will be. If you think you can "game the system" by taking a 0% loan, then you will end up paying more for the car, since the financing is baked into the sales [price in those cases (there is no such thing as free money). If you pay cash, you have much more bargaining power. Buy the car outright (negotiating as hard as you can), start saving what you would have been making as a car payment as an emergency fund, and you'll be ahead of the game. For the inflation hedge - you need to find investments that act as an inflation hedge - taking a loan does not "hedge" against inflation since you'll still be paying interest regardless of the inflation rate. The fact that you'll be paying slightly less interest (in "real" terms) does not make it a hedge. To answer the actual question, if your "reinvestment rate" (the return you can get from investing the "borrowed" cash) is less than the interest rate, then the more you put down, the greater your present value (PV). If your reinvestment rate is less than the interest rate, then the less you put down the better (not including risk). When you incorporate risk, though, the additional return is probably not worth the risk. So there is no "optimal" down payment in between those mathematically - it will depend on how much liquid cash you need (knowing that every dollar that you borrow is costing you interest). |
Personal finance software for Mac that can track stocks and mutual funds? (Even manual updating of share prices will do.) | Quicken for Mac will track stocks and mutual funds and allows you to set the "home" currency. |
How can I trade in U.S stock exchange living in India by choosing the broker in U.S? | OptionsXpress includes India in the list of countries where is possible to open an international account to invest in the US Stock Market. They just merged with Charles Schwab and they have a nice online trading platform. Stocks and ETFs are little bit pricey.. Get in touch with them to get more information. |
Why would a car company lend me money at a very low interest rate? | Here I thought I would not ever answer a question on this site and boom first ten minutes. First and foremost I am in the automotive industry, specifically one of our core competencies is finance department management consulting and the sales process both for the sale of the care as well as the financial transaction. First and foremost new vehicle gross profits are nowhere near 20% for the dealership. In an entry level vehicle like say a Toyota Corolla there is only a few hundreds of dollars in markup from invoice to M.S.R.P. There is also something called holdback that dealers get for achieving certain goals such as sales volume. These are usually pretty easy to hit. As a matter of fact I have never heard of a dealer not getting the hold back on a deal. This hold back is there to cover overhead for the car, the cost of getting it ready to sell, having a lot to park it on, making it ready for delivery, offset some of the cost of sales labor etc. Most dealerships consider the holdback portion of the invoice to not be part of the deal when it comes to negotiations. Certain brands such as KIA and Chrysler have something called "Dealer Cash" these payouts are usually stair stepped according to volume and vary by dealer, location, past history, how the guys at the factory feel that day and any number of combinations. Then there is CSI or Customer Service Index payments, these payments are usually made every 1/4 are on the Parts Statement not the Sales Doc and while they effect the dealers bottom line they almost never affect the sales managers or sales persons payroll so they are not considered a part of the cost of the car. They are however extremely important to the dealer and this is why after you have your new car they want you to bring in your survey for a free oil change or something. IF you are going to give a bad survey they want to throw it away and not send it in, if you are going to give a good survey they want to make sure you fill it out correctly. This is because lets say they ask you on a scale of 1-10 how was your sales person and you put a 9 that is a failing score. Dumb I know but that is how every factory CSI score system I have seen worked. According to NADA the average New Vehicle gross profit including hold back and dealer cash is around $1000.00. No where near 20%. Dealerships would love it if they made 20% on your new F250 Supercrew Diesel at around $50,000.00. One last thing there is something on the invoice called Wholesale Finance Reserve. This is the amount of money the factory forwards to the Dealership to offset the cost of financing vehicle on the floor plan so they can have it for you to look at before you buy. This is usually equal to around 3 months of interest and while you might buy a vehicle that has been on the lot for 2 days they have plenty that have been there much longer so this equals out in a fair to middling run store. General Mangers that know what they are doing can make this really pad their net profit to statement. On to incentives, there are basically 3 kinds. Cash to customer in the form of rebates, Dealer Cash in the form of incentives to dealerships based on volume or the undesirability of a vehicle, and incentive rates or Subvented leases. The rates are pretty self explanatory as they advertised as such (example 0% for 60 Months). Subvented Leased are harder to figure out and usually not disclosed as they are hard to explain and also a source of increased profit. Subvented leases are usually powered by lower cost of money called a money factor (think of it as an interest rate) that is discounted from the lease company or a subsidized residual. Subsidized residuals are virtually verboten on domestic vehicles due to their poor resell values. A subsidized residual works like this, you buy a Toyota Camry and the ALG (automotive lease guide) says it has a residual at 36 months of 48%. Well Toyota Motor Credit says we will give you a subvented residual of 60% basically subsidizing a 2% increase in residual. Since they do not expect to be able to sell the car at auction for that amount they have to set aside the 2% as a future expense. What does this mean to you, it means a lower payment. Also a good rule of thumb if you are told a money factor by your salesperson to figure out what the interest rate is just multiply it by 2400. So if a money factor is give of .00345 you know your actual interest rate is a little bit lower than 8.28% (illustration purposes only money factors are much lower than that right now). So how does this save you money well a lease is basically calculated by multiplying the MSRP by the residual and then subtracting that amount from the "Capitalized Cost" which is the Price paid for the car - trade in + payoff + TT&L-Rebate-Down Payment. That is the depreciation. Then you divide that number by the term of the loan and you have the depreciation amount. So if you have 20K CC and 10K R your D = 10K / 36 = 277 monthly payment. For the rest of the monthly payment you add (I think been a long time since I did this with out a computer) the Residual plus the CC for $30,000 * MF of .00345 = 107 for a total payment of 404 ish. This is not completely accurate but you can use it to make sure a salesperson/finance person is not trying to do one thing and say another as so often happens on leases. 0% how the heck do they make money at that, well its simple. First in 2008 the Fed made all the "Captive" lenders into actual banks instead of whatever they were before. So now they have access to the Fed's discounting window which with todays monetary policies make it almost free money. In the past these lenders had to go through all kinds of hoops to raise funds and securitize loans even for super prime credit. Those days are essentially over. Now they get their short term money just like Bank of America does. Eventually they still bundle these loans and sell them. So in the short term YOU pay for the 0% by giving up part or all of your rebate. This is really important DO NOT GIVE up your rebate for 0% unless it makes sense to do so. When you can get the money at 2.5% and get a $7000.00 rebate (customer cash) on that F250 or 0% take the cash. First of all make the finance guy/gal show you the the difference in total cost they can do do this using the federal truth in lending disclosures on a finance contract. Secondly how long will you keep the vehicle? If you come out ahead by say $1500 by taking the lower rate but you usually trade out every three years this is not going to work. Also and this is important if you are involved in a situation with a total loss like a stolen car or even worse a bad wreck before the breakeven point you lose that price break. Finally on judging what is right for you, just know that future value of the vehicle on for resell or trade-in will take into effect all of these past rebates and value the car accordingly. So if a vehicle depreciates 20% a year for the first 3 years the starting point will essentially be $7000.00 less than you actually paid, using rough numbers. How does this help the dealers and car companies? Well while a dealer struggles to make money on new cars the factory makes all of their money on the new cars and the new car financing. While your individual loan might lose money that money is offset by the loss of rebate and I think Ford does actually pay Ford Motor Credit Company the difference in the rate. The most important thing is what happens later FMCC now has 2500 loans with people with perfect credit. They can now use those loans to budle with people with not so perfect credit that they financed at 12%-18% and buy that money with interest rates in the 2%-3% range. Well that is a hell of a lot of profit. 'How does it help the dealership, well the more super prime credit they have in their portfolio the more subprime credit the banks will buy for them. This means they have more loans originated that are more profitable for them. Say you come in for the 0% but have 590 credit score, they get FMCC to buy the deal because they have a good portfolio and you win because the dealer gets to buy the money at say 9% and sell it to you at say 12% making the spread. You win there because you actually qualified for a rate of around 18% with a subprime company like Santander or Capital One (yes that capital one) so you save a ton on your overall cost of the car. Any dealership that is half way well run makes as much or money in the finance and insurance office than the rest of the dealership. When you factor in what a good F&I Director can do to get deals done with favorable terms that really goes up. Think about that the guys sitting a desk drinking coffee making more than the service department guys all put together. Well that was long winded but there I broke down the car business for whoever read this far. |
How to mitigate the risk of Euro Stoxx 50 ETF? | While you would reduce risk by diversifying into other stock ETFs across the world, Developed Market returns (and Emerging Markets to a lesser extent) are generally highly correlated with another (correlation of ~0.85-0.90). This implies that they all go up in bull-markets and go down together in bear markets. You are better off diversifying into other asset-classes given your risk tolerance (such as government bonds, as you have mentioned). Alternatively, you can target a portfolio owning all of the assets in the universe (assuming you're trading in Frankfurt, a combination of something similar to H4ZJ and XBAG, but with higher volumes and/or lower fees)! A good starting resource would be the Bogleheads Wiki: https://www.bogleheads.org/wiki/Asset_allocation |
Is a stock's trade size history publicly available? | You can buy the data and process it on your own. http://www.nyxdata.com/Data-Products/Daily-TAQ |
What are the financial advantages of living in Switzerland? | Switzerland was once known for its high regard for private property rights. Recently it is has started to violate those rights by forcing banks to turn over the names of account holders to the US government. Not a great trend. Another aspect that makes Switzerland an attractive place for people and businesses is the Swiss governemnt's neutral policy. The Swiss government is not deploying the Swiss military around the globe to fight terrorism, to spread democracy, to advance its own power, or other such murderous government programs. The Swiss people do not have to worry about the payback that arrives because of such depraved government programs. The Swiss were traditionally extreme advocates of individual gun rights which allows the people to provide protection for themselves against others and against the government. This too is changing (read section on The Enemy Within) in a not so favorable direction. I also belive the Swiss Franc was the last major currency to sever its tie to gold. The currency use to be highly desired due to its tie to gold. I think the currency is still highly regarded but the Swiss central bank is participating in the currency war and has attempted multiple times in the past couple of years to debase its currency so it does not appreciate against the euro or dollar. |
Easiest way to diversify savings | Are there banks where you can open a bank account without being a citizen of that country without having to visit the bank in person? I've done it the other way around, opened a bank account in the UK so I have a way to store GBP. Given that Britain is still in the EU you can basically open an account anywhere. German online banks for instance allow you to administrate anything online, should there be cards issued you would need an address in the country. And for opening an account a passport is sufficient, you can identify yourself in a video chat. Now what's the downside? French banks' online services are in French, German banks' services are in German. If that doesn't put you off, I would name such banks in the comments if asked. Are there any online services for investing money that aren't tied to any particular country? Can you clarify that? You should at least be able to buy into any European or American stock through your broker. That should give you an ease of mind being FCA-regulated. However, those are usually GDRs (global depository receipts) and denominated in GBp (pence) so you'd be visually exposed to currency rates, by which I mean that if the stock goes up 1% but the GBP goes up 1% in the same period then your GDR would show a 0% profit on that day; also, and more annoyingly, dividends are distributed in the foreign currency, then exchanged by the issuer of the GDR on that day and booked into your account, so if you want to be in full control of the cashflows you should get a trading account denominated in the currency (and maybe situated in the country) you're planning to invest in. If you're really serious about it, some brokers/banks offer multi-currency trading accounts (again I will name them if asked) where you can trade a wide range of instruments natively (i.e. on the primary exchanges) and you get to manage everything in one interface. Those accounts typically include access to the foreign exchange markets so you can move cash between your accounts freely (well for a surcharge). Also, typically each subaccount is issued its own IBAN. |
What are the pros and cons of buying an item on installments with zero percent interest? | One small advantage to paying ahead is having an outstanding installment plan may preclude unlocking the phone for use on other carriers, for example during international travel. If unlocking is important, researching the particulars would be in order. I am more familiar with T-Mobile, and will use as a specific example. If I pay upfront, I can purchase the phone from Apple totally unlocked, and T-Mobile has no say in whether I use it on another carrier or not. (This actually costs a little more, because the phone from Apple doesn't come with a SIM, and T-Mobile charges for the SIM. At least as of iPhone 5s.) Looking at "Unlock your mobile wireless device, Unlock Requirements" on T-Mobile's website, at least some payment plans do not allow unlock until the phone is paid off. Obviously phones purchased for full price from T-Mobile start out paid off. |
Should I wait a few days to sell ESPP Stock? | An instant 15% profit sounds good to me, so you can't go wrong selling as soon as you are able. Here are a couple other considerations: Tax implications: When you sell the stock, you have to pay taxes on the profit (including that 15% discount). The tax rate you pay is based on how long you wait to sell it. If you wait a certain amount of time (usually 2 years, but it will depend on your specific tax codes) before you sell, you could be subject to lower tax rates on that profit. See here for a more detailed description. This might only apply if you're in the US. Since you work for the company, you may be privy to a bit more information about how the company is run and how likely it is to grow. As such, if you feel like the company is headed in the right direction, you may want to hold on the the stock for a while. I am generally wary of being significantly invested in the company you work for. If the company goes south, then the stock price will obviously drop, but you'll also be at risk to be laid off. As such you're exposed much more risk than investing in other companies. This is a good argument to sell the stock and take the 15% profit.* * - I realize your question wasn't really about whether to sell the stock, but more for when, but I felt this was relevant nonetheless. |
How much financial information should a buyer give an estate agent? | My guess is they are fishing for business for their in-house finance person. In the UK, all the estate agency chains (and many of the smaller outfits) have financial advice firms they are affiliated with, often to the extent that a desk in each branch will be for 'the finance guy' (it's usually a guy). The moment you show any sign of not quite having the finances for a place you like, they will offer you a consultation with the finance guy, who "will be able to get you a deal". On commission, of course. What you need to say with regards to financing is (delete as applicable) "I am a cash buyer" / "I have an Agreement In Principle". And that's it. They do not 'need' to know any more, and they are under obligation to pass your offer on to the vendor. |
New to investing — I have $20,000 cash saved, what should I do with it? | @mbhunter and @JoeTaxpayer have given good advice. Were I in your situation, the only thing I might do differently is put whatever amount of cash not needed for emergencies in a money market fund with check-writing privileges and/or a debit card. The rate on the account has at least some chance of preserving the value of your principal, and it will be easier to put your money into investments as soon as you're ready. This sort of account is offered by any number of brokerages and financial companies, so pick one you trust and start there. |
Where can I find announcements of official GDP figures for the US and other countries? | For press releases about economic data, the Bureau of Economic Analysis press release page is helpful. Depending on the series, you could also look at the Bureau of Labor Statistics press release page. For time series of both historical and present data, the St. Louis Federal Reserve maintains a database such data, including numerous measures of GDP, called FRED. They list nearly 15,000 series related to GDP alone. FRED is extremely useful because it allows you to make graphs that indicate areas of recession, like this: On the series' homepage, there's a bold link on the left side to download the data. If you simply need the most recent data, it's listed below the graph on that page. If you're interested in a more in-depth analysis, you can use the Bureau of Economic Analysis as well, specifically the National Income and Product Accounts, which are most of the numbers that feed into the calculation of GDP. FRED also archives some of these data. Both FRED and the BEA compile data on numerous other economic benchmarks as well. Other general sources for a wide range of announcements are the Yahoo, Bloomberg, and the Wall Street Journal economic calendars. These provide the dates of many economic announcements, e.g. existing home sales, durable orders, crude inventories, etc. Yahoo provides links to the raw data where available; Bloomberg and the WSJ provide links to their article where appropriate. This is a great way to learn about various announcements and how they affect the markets; for example, the somewhat disappointing durable orders announcement recently pushed markets down a few points. For Europe, look at Eurostat. On the left side of the page, they list links to common data, including GDP. They list the latest releases on the home page that I previously linked to. For the sake of keeping this question short, I'm lumping the rest of the world into this paragraph. Data for many other countries is maintained by their governments or central banks in a similar fashion. The World Bank's databank also has relevant data like Gross National Income (GNI), which isn't identical to GDP, but it's another (less common) macroeconomic indicator. You can also look at the economic calendar on livecharts.co.uk or xe.com, which list events for the US, Europe, Australasia, and some Latin American countries. If you're only interested in the US, the Bloomberg or Yahoo calendars may have a higher signal-to-noise ratio, but if you're interested in following how global markets like currency markets respond to new information, a global economic calendar is a must. Dailyfx.com also has a global economic calendar that, according to them, is specifically geared towards events that affect the forex market. As I said, governments and central banks compile a lot of this data, so to make searching easier, here are a few links to statistical agencies and central banks for major countries. I compiled this list a while ago on my personal machine, so although I think all the links are accurate, leave a comment if something isn't quite right. Statistics Australia / Brazil / Canada / Canada / China / Eurostat / France / Germany / IMF / Japan / Mexico / OECD / Thailand / UK / US Central banks Australia / Brazil / Canada / Chile / China / ECB / Hungary / India / Indonesia / Israel / Japan / Mexico / Norway / Russia / Sweden / Switzerland / Thailand / UK / US |
Paid credit card bill, but money didn't leave my checking account [duplicate] | You probably don't need to call the bank. Today is Sunday, so three days ago was probably Friday (or Thursday depending on how you count the days). Banks normally don't post transactions on weekends - and transactions that do happen on the weekend sometimes don't get posted until Tuesday. I would give it till Tuesday and then call them if you still don't see it show up on your account. |
Using Loan to Invest - Paying Monthly Installments with Monthly Income | I hope I'm misunderstanding your plan... you want to invest in a way that will make SO MUCH that you pay back all of the loan payments with investment gains? Like the answer I gave on the preceding question, and like @littleadv's comment/mhoran's answers... don't do this. No good will come of it. This strategy requires higher returns, but does not necessarily give you a better return. But because you asked the question again, let me specify what you're missing... I do think that learning is a good thing. It boils down to two very significant problems that you haven't addressed: (1) Where are you getting your monthly "income" from? (2) Realistic vs. Daydreaming--How big do any gains have to be and does that exist in the real world in a way that you can capture? In a nutshell, if my answer to the last question showed that it's crazy to invest and pay back out of your capital and income... since you're trying to keep your capital and only pay back with monthly gains, this one will require even higher and thus more unrealistic gains. The model you're implying: If that's what you mean with this model, (which I think you do), then here are my two very key questions again: How are you getting your monthly income? Financial investments (i.e. stocks or bonds) will have two components of value. One component of value is the stream of payments, such as a monthly dividend from stocks that pay those, or the interest payment from a bond. The other is the ability to resell a security to another investor, receiving back your capital. So... you either have to find Bonds//Dividend stocks that pay >52% returns tax-free each year, and pay this loan off with the payments. (Or higher returns to cover taxes, but these kinds of investments do not exist for you.) OR you can try to invest in something, pray that it goes up ≥4.323% per month and so that you can sell it, pay back your loan payment with the proceeds, and use the capital to buy your next investment... that will go up 4.323% per month, to turn and sell it again. The pros that do model this type of speculation go into much more depth than you are capable of. They build models that incorporate probabilities for rates of return based on historical data. They have better information, and have specialized in calculating this all out. They even have access to better investment opportunities (like pre-IPO Twitter or private notes). You just won't find the opportunities to make this happen, each month, for 24 months. (Again, you won't find them. They do not exist for you in as an investor in securities) Realistic vs. Daydreaming So... clearly I hope that by now I have convinced you that these would be the required returns. They simply aren't available to you. If they were, you would still run into obstacles with converting 'book' returns into physical money that you could repay the loans with, and then continuing that growth. And while I appreciate the notion that 'if I could just make the payments each month, I'd have $10,000 after 24 months!' I guarantee you that you'll be better off finding another way to target that same investment. Along the lines of what mhoran said, if you aim for a basic 401K or other similar investment account and target it into the S&P500, you might see returns of anywhere from -25% to +25% over the next 24 months... but if things went like they tend to average for the S&P500, it's more like ~7% annually. Check out a "savings target calculator" like this one from Bankrate.com and put in the numbers... if you can save about $390 a month you'll be at $10K in 24 months. It's not as fun as the other, but you can actually expect to achieve that. You will not find consistent >50% returns on your money annually. |
Is this mortgage advice good, or is it hooey? | That makes no sense at all. They try to compare and that's exactly the same as comparing apples versus oranges. Mortgage is long-term loan, so for the first many years the huge part of the payment will go to repaying interest, so that ratio 1 will indeed be something like 20% or more despite the fact that the interest rate on the mortgage is much lower - something around 6%. HELOC will have the interest rate of 6%, but it will have the same structure so that you have equal payments, so if you compute that ratio 1 it will be very close to that of the mortgage. The bottom line is - if HELOCs were that great noone would apply for mortgages. You should stick to making extra payments towards the principal on the mortgage. |
Book or web site resources for an absolute beginner to learn about stocks and investing? | There is only one book worth reading in my opinion: One Up on Wall Street. It's short and no other book even comes close to it for honesty, correctness and good sense. Also, it is written by the second most successful investor of all time, Peter Lynch. The Intelligent Investor has some good technical content, but the book is dated and a lot of it is irrelevant to the modern investment environment. When I was younger I used to ready books like this and when a friend of mine asked for investment advice. I said "Look at stocks with a PE ratio of 5-10". A few days later he comes back to me and says "There are none". Right. That pretty much sums up the problem with the I.I. Graham himself in interviews during the 1970s said that his book was obsolete and he no longer recommended those methods. |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.