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Insurance, healthcare provider, apparent abuse, lack of transparency | Just as with any other service provider - vote with your wallet. Do not go back to that doctor's office, and make sure they know why. It's unheard of that a service provider will not disclose the anticipated charges ahead of time. A service provider saying "we won't tell you how much we charge" is a huge red flag, and you shouldn't have been dealing with them to begin with. Now you know. how can we ever get health care costs under control if there's so little transparency? I'm assuming you're in the US. This is not going to change, since there's no profit in not screwing the customers. As long as health-care is a for-profit industry, you should expect everyone in it being busy figuring out a way for money to move from your wallet to their. That's what capitalism is about. |
Dealing with event driven market volatility | If you are worried about an increase in volatility, then go long volatility. Volatility itself can be traded. Here in the US there is an index VIX that is described as tracking volatility. What VIX actually tracks is the premium of S&P 500 options, which become more expensive when traders want to hedge against volatility. In the US you can trade VIX options or invest in VIX tracking ETFs like VXX. Apparently there are similar ETFs listed in Canada, such as HUV. Volatility itself is quite volatile so it is possible that a small volatility long position would cover the losses of a larger long position in stocks. If you do choose to invest in a volatility ETF, be aware that they experience quite a lot of decay. You will not want to hold it for very long. |
Where does the money go when I buy stocks? | The money goes to the seller. There are a lot of behind the scenes things that happen, and some transactions are very complicated with many parties involved (evidenced by all the comments on @keshlam's perfectly reasonable high-level answer), but ultimately the money goes to the seller. Sometimes the seller is the company. The billions of shares that change hands each day are moving between other individuals like you and investment funds; these transactions have no direct impact on the company's financials, in general. |
Any difference between buying a few shares of expensive stock or a bunch of cheap stock | You are correct in thinking actual number of shares do not matter, the value is the value. However there are cases where share price does play a role. Berkshire Hathaway for example has not split because Warren Buffet believes it has cut down on the liquidity of the stock, as well as attracting investors with an eye for the longer term. There have also been things written on the psychology of a share price. For example, some people are attracted to shares that split, because it reflects a company is growing. |
Is it possible to make money off of a private company? | Another way to do this is go to work for that company. Companies in this situation normally offer low pay, long hours, and stock options. Given a sufficient grant, it could be all very lucrative or worthless. Even if you have no electronics background you might be able to work in a different capacity. There were secretaries at various companies that became wealthy off of their stock options. |
Most important skills needed to select profitable stocks | You would appear to be a swing trader, like myself. I have been trading futures and futures options for 29 years, and have both made and lost a lot of money in that time. My trades last hours, to days, to at most a few weeks. From my experience, the most important skills are: 1) Money management - keeping trade size small in relation to total capital. I typically risk 2-3% of my capital on a trade, so a loss is fairly immaterial. 2) Risk management - limit your loss on every trade, either by using stop orders, options, or a combination of these 2. 3) Emotional discipline - be prepared to exit a position, or reverse from long to short, or short to long, on a moment's notice. The market doesn't care where you entered, or whether you make or lose money. Don't let your hunches or the news influence your decisions, but follow the market. 4) Methodology discipline - test your analysis / trade entry method to ensure that it is objective, and has a reasonably good probability of success, then stick with it. Variation will inevitably lead to indecision or emotional reactions. 5) Flexibility - consider trading anything which can make you a profit, but ensure that there is a lot of liquidity. I trade 30 different futures markets, as well as various option writing strategies in these markets. Feel free to reach out if you want to discuss further. I have about 500 (yes, 500) trading e-books as well, on every trading subject you can think of. |
Should I charge my children interest when they borrow money? | I think there's value in charging family members/friends interest if it will make them take the loan seriously. The problem is that if you're thinking about charging interest because the person seems to be borrowing from you too cavalierly, it may be too late to make them take it seriously. In the situation you describe, if you're concerned about the loans being paid back, I think you need to have a serious conversation with the kids and make it clear you expect them to pay the loans back on whatever schedule you agreed to. If, based on your knowledge of your kids, you think charging interest would help motivate them to do this, great. If not, charging interest is unlikely to accomplish anything that the conversation itself won't accomplish. If you haven't previously outlined a specific schedule or set of expectations for how you want to be paid back, just doing that (in writing) may be enough to make them realize it's not a joke. The conventional wisdom is that you shouldn't lend money to anyone unless you're either a) okay with never being paid back; or b) willing to pursue legal remedies to ensure you're paid back. Most people aren't willing to sue their own family members over small loans, which means in most cases it's not a good idea to loan money to family unless you're "okay with" never being repaid (whatever level of "okay with" makes sense for you). I should note that I don't have kids; my advice here is just how I would handle it if I were considering loaning money to my brother or a close friend or the like. This means I don't really know anything about "teaching the kids about the real world", but I have to say my hunch is that if your kids are 25+ and married, it's too late to radically change their views on how "the real world" works; unless they had a very sheltered early adulthood, they've been living in the real world for too long and will have their own ideas of how it works. |
How often do typical investors really lose money? | So how often do investors really lose money? The short answer is, every day. Let's first examine your assumptions: If the price of the share gets lower, the investor can just wait until it gets higher. What are the chances that it won't forever, or for years? There are many stocks whose price goes down and then down further and then to zero. The most apparent example is, of course, Enron. The stock went from about $90 per share to zero in about 18 months. For it to have been sold at $90, obviously, someone had to buy it. Almost no matter where they sold it, they lost money. If they didn't sell it, when the stock was worthless, they lost money. https://en.wikipedia.org/wiki/Enron#/media/File:EnronStockPriceAugust2000toJanuary2001.svg There are more modern examples of companies that are declining in a rapidly changing market. For example, Sears Holdings is getting beat down by Amazon and many other on-line retailers. I suspect that if you buy it today and wait for it to go higher, you will be disappointed. https://www.google.com/finance?q=NASDAQ%3ASHLD&ei=E8_fWIjWGsSGmAGx7b_IAw The more common way to lose money is to either not have a plan or not stick to the plan. Disciplined investors typically plan to buy quality stocks at a fair price and hold them long enough for increasing sales and profits to bring the stock price up. If, later, he hears a bit of bad news about his stock and decides to sell out of panic or fear and become a trader instead of keeping to the plan to remain a disciplined investor, he is likely to lose money. He will lose because no-one can predict accurately that a stock is going down and will never recover; nor can he predict accurately when a stock is going up and will never falter. The chance of bankruptcy (especially for huge companies like Apple) is really low, as I see it, but I may be wrong. Thousands of people lost billions of dollars thinking that about Enron, too. I too believe Apple is a fine stock with excellent prospects, but technology changes and markets change. Twenty or thirty years from now, it may be a different case. |
gnucash share fractions | As BrenBarn stated, tracking fractional transactions beyond 8 decimal places makes no sense in the context of standard stock and mutual fund transactions. This is because even for the most expensive equities, those fractional shares would still not be worth whole cent amounts, even for account balances in the hundreds of thousands of dollars. One important thing to remember is that when dealing with equities the total cost, number of shares, and share price are all 3 components of the same value. Thus if you take 2 of those values, you can always calculate the third: (price * shares = cost, cost / price = shares, etc). What you're seeing in your account (9 decimal places) is probably the result of dividing uneven values (such as $9.37 invested in a commodity which trades for $235.11, results in 0.03985368550891072264046616477394 shares). Most brokerages will round this value off somewhere, yours just happens to include more decimal places than your financial software allows. Since your brokerage is the one who has the definitive total for your account balance, the only real solution is to round up or down, whichever keeps your total balance in the software in line with the balance shown online. |
Does a stock really dip in price on the ex-dividend date? And why would it do this? | Suppose the price didn't drop on the ex-dividend date. Then people wanting to make a quick return on their money would buy shares the day before, collect the dividend, and then sell them on the ex-dividend date. But all those people trying to buy on the day before would push the price up, and they would push the price down trying to sell on the date. |
What kind of technical analysis and indicators available for mutual fund navs | A general mutual fund's exact holdings are not known on a day-to-day basis, and so technical tools must work with inexact data. Furthermore, the mutual fund shares' NAV depends on lots of different shares that it holds, and the results of the kinds of analyses that one can do for a single stock must be commingled to produce something analogous for the fund's NAV. In other words, there is plenty of shooting in the dark going on. That being said, there are plenty of people who claim to do such analyses and will gladly sell you their results (actually, Buy, Hold, Sell recommendations) for whole fund families (e.g. Vanguard) in the form of a monthly or weekly Newsletter delivered by US Mail (in the old days) or electronically (nowadays). Some people who subscribe to such newsletters swear by them, while others swear at them and don't renew their subscriptions; YMMV. |
New car price was negotiated as a “cash deal”. Will the price change if I finance instead? | So there are a few angles to this. The previous answers are correct in saying that cash is different than financing and, therefore, the dealer can rescind the offer. As for financing, the bank or finance company can give the dealership a "kickback" or charge a "fee" based on the customer's credit score. So everyone saying that the dealers want you to finance....well yes, so long as you have good credit. The dealership will make the most money off of someone with good credit. The bank charges a fee to the dealership for the loan to a customer with bad credit. Use that tactic with good credit...no problem. Use that tactic with bad credit.....problem. |
How do you translate a per year salary into a part-time per hour job? | Rule of thumb: Double your hourly rate to get a yearly salary (in thousands). Halve your yearly salary to get your hourly rate. (assuming a 40hr/week job). eg: $50k/year = $25/hr. |
What can I do with “stale” checks? Can I deposit/cash them? | Find smaller payments he can make. Maybe a % of each client he takes payment from. Consult with a lawyer or google buisness contract elements and find fill them out and see what he can do. If the checks are no good bouncing them isn't going to help anything. Nor is getting a judgment from a small claims court. He can still not pay(though stays on his credit for 25 years), file for bankruptcy, etc. |
How much of each stock do index funds hold? | An index fund is just copying the definition of an index. The group that defines the index determines how to weight the different parts of the index. The index fund just makes sure they invest the same way the index creator wants. Think of a non-investment scenario. A teacher can grade tests, quizzes, homework, in-class assignments, research papers. They decide how much weight to give each category and how much weight to give each part of each category. when a student wants to see how they are doing they take the information in the syllabus, and generate a few formulas in a spreadsheet to calculate their current grade. They can also calculate what they need to get on the final exam to get the grade they want. |
Does my net paycheck decrease as the year goes on due to tax brackets filling up? | No, you will (generally speaking) not see a decrease in your net earnings from crossing a tax bracket: This means that your highest marginal rate (the top bracket you fall into) only applies to the portion of your income that is in that bracket, not your total income. This helps ensure that your total tax burden does not increase measurably from crossing a tax bracket. Be aware that you can still see measurable changes in your total taxes due if increases in income make you no longer eligible for certain deductions and/or benefits that were otherwise reducing your tax burden, but this is not the same as how changes in your highest marginal rate affect your overall average tax rate. Note that when you see a rate table such as the one on efile.com's federal income tax rates page or on Wikipedia's Income tax in the United States page, the rates listed are for each segment of income, not for your overall income: In other words the 15% rate below (for 2014, filing single) only applies to the portion of your income falling between the listed numbers, not to income below it or above it: that would be calculated under the respective rates given. You can use the i1040tt tax tables to gain a sense of how this works in practice: (The linked resource is for 2014 taxes) The threshold in 2014 for the 25% rate vs 15% was $36,900. Using the linked table, if you were single and made between 36,850 and 36,900 in gross income, your tax liability before other considerations was $5,078. If you made between 36,900 and 36,950, your base tax liability was $5,088. |
Can I pay estimated taxes based on last year's taxes if I anticipate more income this year? | You're interpreting this correctly. Furthermore, if your total tax liability is less than $1000, you can not pay estimates at all, just pay at the tax day. See this safe harbor rule in the IRS publication 17: General rule. In most cases, you must pay estimated tax for 2016 if both of the following apply. You expect to owe at least $1,000 in tax for 2016, after subtracting your withholding and refundable credits. You expect your withholding plus your refundable credits to be less than the smaller of: 90% of the tax to be shown on your 2016 tax return, or 100% of the tax shown on your 2015 tax return (but see Special rules for farmers, fishermen, and higher income taxpayers , later). Your 2015 tax return must cover all 12 months. |
Townhouse or stand-alone house for a first home? | If you buy a townhouse, you often are in a condominium arrangement in the US (when you're really in a rowhouse in particular). So that's a downside right away: you have to have a HOA, or at least some sort of common agreement, though it might not have formal meetings. Everyone who owns an interest in the entire group of townhouses gets some say in landscaping and such. Beyond that though, townhouses (and similarly, condominiums) are often easier to own (as they don't have as much maintenance that you have to do), but more expensive because you pay someone to do it (the landscaping, the external repairs, etc.). You likely don't have as much control over what the external looks like (because you have to be in agreement with the other owners), but you also don't have to do the work, unless your agreement is to collectively do the mowing/landscaping, which you should know in advance. I wouldn't underestimate the value of easier, by the way; it's very valuable to not have to deal with as many repairs and to be able to go a week without thinking about mowing or watering. In that sense it can be a nice transition into ownership, getting some-but-not-all of the obligations. But if that's something you really value, doing the landscaping and mowing and whatnot, that's relevant too. You can always tell your realtor to look for townhouses where the owners do some/all of the landscaping, though that opens up a different can of worms (where you rely on others to do work that they may not do, or do well). They're also somewhat noisier; you may be sharing a wall (but not necessarily, air-gap townhouses do exist) and either way will be closer to your neighbors. Does noise bother you? Conversely, are you noisy? In a college town this is probably something to pay attention to. Price wise, of course stay well within your means; if being close to the city center is important, that may lead you to buy a townhouse in that area. If being further out isn't a problem, you'll probably have similar choices in terms of price as long as you look in cheaper areas for single family homes. |
Can capital gains be used to fund an IRA with tax advantages? | As littleadv suggested, you are mixing issues. If you have earned income and are able to deduct an IRA deposit, where those actual dollars came from is irrelevant. The fact that you are taking proceeds from one transaction to deposit to the IRA is a booking entry on your side, but the IRS doesn't care. By the way, when you get that $1000 gain, the broker doesn't withhold tax, so if you take the entire $1000 and put it in the IRA, you owe $150 on one line, but save $250 elsewhere, and are still $100 to the positive on your tax return. |
Is there a good book that talks about all the type of products to invest? | There is no magical book that talks about the thousands of investment instrument types that are available ranging from brown fields land up to CDS futures and beyond. In addition to the huge number the depth of understanding ranges from knowing that a security type exists all the way up to being able to mark the instrument to market for illiquid instances of the instrument. I have been in the industry for about six years and have a fair understanding of what I would term the basics of most security types (I cannot, for example, mark to market exotic options) but most of my knowledge has come from using these instruments on a daily basis and Investopedia. The basis of my knowledge has come from the CFA Claritas Investment certificate book when I took that exam (and CFA Level 1 but I'd recommend against reading that unless you are taking the exam) and Paul Wilmott's texts on Quantitative finance; mostly Paul Wilmott on Quantitative Finance 2nd Edition. tl;dr: you can't get a good grounding on all security types ; there are far too many. To get a good grounding in the most used takes a lot of effort, much more than a book will give you. |
Income Tax and Investments | The $50k is subject to the appropriate income taxes, which may include FICA taxes including the employer share if you are self employed. The after tax money can then be invested with the amount invested being the cost basis (I.e., if you invest $40k you will have a cost basis of $40k). In future years you will have taxes due if any of those investments pay dividends (or capital gain distributions). Once you sell you will have a capital gain or loss that you will pay taxes on (or take a deduction if a loss). Now you can improve this picture if you are able to put some of your money into a retirement account (either a tax deductible or a ROTH). With retirement accounts you do not pay tax on the capital gains or dividends. If you use a tax deferred account your tax is higher but that is because you were also investing Uncle Sam's portion of your pay check. |
Why is the breakdown of a loan repayment into principal and interest of any importance? | The breakdown between how much of your payment is going toward principal and interest is very important. The principal balance remaining on your loan is the payoff amount. Once the principal is paid off, your loan is finished. Each month, some of your payment goes to pay off the principal, and some goes to pay interest (profit for the bank). Using your example image, let's say that you've just taken out a $300k mortgage at 5% interest for 30 years. You can click here to see the amortization schedule on that loan. The monthly payment is $1610.46. On your first payment, only $360 went to pay off your principal. The rest ($1250) went to interest. That money is lost. If you were to pay off your $300k mortgage after making one payment, it would cost you $299,640, even though you had just made a payment of $1250. Interest accrues on the principal balance, so as time goes on and more of the principal has been paid, the interest payment is less, meaning that more of your monthly payment can go toward the principal. 15 years into your 30-year mortgage, your monthly payment is paying $762 of your principal, and only $849 is going toward interest. Your principal balance at that time would be about $203k. Even though you are halfway done with your mortgage in terms of time, you've only paid off about a third of your house. Toward the end of your mortgage, when your principal balance is very low, almost all of your payment goes toward principal. In the last year, only $513 of your payments goes toward interest for the whole year. You can think of your monthly loan payment as a minimum payment. If you continue to make the regular monthly payments, your mortgage will be paid off in 30 years. However, if you pay more than that, your mortgage will be paid off much sooner. The extra that you pay above your regular monthly payment all goes toward principal. Even if you have no plans to pay your mortgage ahead of schedule, there are other situations where the principal balance matters. The principal balance of your mortgage affects the amount of equity that you have in your home, which is important if you sell the house. If you decide to refinance your mortgage, the principal balance is the amount that will need to be paid off by the new loan to close the old loan. |
Best way to invest money as a 22 year old? | The classic answer is simple. Aim to build up a a financial cushion that is the equivalent of 3 times your monthly salary. This should be readily accessible and in cash, to cover any unforeseen expenses that you may incur (car needs repairing, washing machine breaks down etc). Once you have this in place its then time to think about longer term investments. Monthly 'drip feeding' into a mutual stock based investment fund is a good place to start. Pick a simple Index based or fund with a global investment bias and put in a set amount that you can regularly commit to each month. You can get way more complicated but for sheer simplicity and longer term returns, this is a simple way to build up some financial security and longer term investments. |
What are a few sites that make it easy to invest in high interest rate mutual funds? | Any investment company or online brokerage makes investing in their products easy. The hard part is choosing which fund(s) will earn you 12% and up. |
What is the purpose of property tax? | Property taxes, at least in Canada, are levied by the municipality or city in which the property is situated. For many cities, it is a significant source of income. Part of the justification from the municipal point of view is that the land is serviced, in that it generally has city services like water, sewer, garbage collection and the like. The taxes also commonly pay for city services like libraries, fire and ambulance. The tax rates vary widely across cities, so where your dream house is located may have a large impact on your overall tax bill. Property tax is more-or-less a government imposed lien on your house. You can be foreclosed on if you are unable to pay. This is a last resort of course, but can and does happen. |
College student - I'm a 'dependent' and my parents won't apply for the Parent PLUS loan or cosign a private loan | Smart parents not wanting to get stuck with a student loan or co-signing on a loan. because rent is so high Are you able to live with your parents? Is there anyway to reduce the cost of rent like renting a room? Can you move somewhere where the rent is cheaper? working 25 hours per week Working 25 hours per week and taking 6 hours is a pretty light schedule. It is not even 40 hours per week. What is stopping you from working 40 hours and paying for school from your salary? In my own life I created a pretty crappy situation for myself when I was a young man. I really wanted to go to a prestigious university, but ended up going to a community college, and then to a university that was lesser known in a less expensive area. I had to work like crazy, upwards of 50 hours per week. I also took a full load in a difficult degree program. You probably don't have to go to the extremes that I went through, but you can work more. Most adults work at their jobs well more than 40 hours per week, then come home and continue to work (on the house, raising kids, trying to start a side business, etc...). So you might as well become an adult now. There are ways to become independent from your parents for FAFSA like have a baby, get married, or join the military. I'd only recommend the last one as you will also receive the GI Bill. Another option is to try and obtain a job that offers financial aid. |
What market conditions favor small cap stocks over medium cap stocks? | Small cap companies are just smaller, so the risk for them to fail is higher but the potential for higher returns is also higher. |
Yahoo Finance shows incorrect data | Yes, I see the same problem. Google's version seems to be correct, however. |
What gives non-dividend stocks value to purchasers? [duplicate] | Yes, I agree with you. Saying that the value of the stock will grow as the company grows and acquires more assets ... I don't see why. Okay, I'm a nice guy and I want to see other people do well, but what do I care how much money they're making if they're not giving any of it to ME? Frankly I think it's like people who buy commemorative plates or beanie babies or other "collectibles" as an investment. As long as others are also buying them as an investment, and buying and reselling at a profit, the value will continue to go up. But one day people say, Wait, is this little stuffed toy really worth $10,000? and the balloon bursts. Confer Dutch tulips: http://www.damninteresting.com/the-dutch-tulip-bubble-of-1637/ As I see it, what gives a non-dividend-paying stock value is mostly the expectation that at some time in the future it will pay dividends. This is especially true of new start-up companies. As you mentioned, there's also the possibility of a takeover. It wouldn't have to be a hostile takeover, any takeover would do. At that point the buying company either buys the stock or exchanges it for shares of their own. In the first case you now have cash for your investment and in the second case you now have stock in a dividend-paying company -- or in another non-dividend-paying company and you start the cycle over. |
Should I Purchase Health Insurance Through My S-Corp | I'm not sure about reimbursement, you'll have to talk to a tax adviser (CPA/EA licensed in your State). From what I know, if you pay your own insurance premiums - they're not deductible, and I don't think reimbursements change that. But again - not sure, verify. However, since you're a salaried employee, even if your own, you can have your employer cover you by a group plan. Even if the group consists of only you. Then, you'll pay your portion as part of the pre-tax salary deduction, and it will be deductible. The employer's portion is a legitimate business expense. Thus, since both the employee and the employer portions are pre-tax - the whole cost of the insurance will be pre-tax. The catch is this: this option has to be available to all of your employees. So if you're hiring an employee a year from now to help you - that employee will be eligible to exactly the same options you have. You cannot only cover owner-employees. If you don't plan on hiring employees any time soon, this point is moot for you, but it is something to keep in mind down the road as you're building and growing your business. |
Can paying down a mortgage be considered an “investment”? | Let's start from the premise that the mortgage is something you will have anyway because you need it to live (as opposed to say getting a bigger mortgage initially in the expectation of paying it down faster than scheduled). In that case I think paying down a mortgage certainly is an investment; one with a well-defined interest rate and maturity that depends on the precise terms of the mortgage. For example I have a (UK) mortgage that's fixed for the next two years at about 5%, and allows overpayments of £500 per month, which can be withdrawn at any time. So I treat those overpayments as equivalent to savings with quite a nice interest rate, especially since mortgage interest isn't tax deductible and so I actually get the full benefit of that interest rate. |
My bank often blocks my card during purchases - what is the most reliable bank card? (UK) | Having worked in the financial industry, I can say 9:10 times a card is blocked, it is not actually the financial industry, but a credit/credit card monitoring service like "Falcon" for VISA. If you have not added travel notes or similar, they will decline large, our of country purchases as a way to protect you, from what is most likely fraud. Imagine if you were living in Sweden and making regular steady purchases, then all of a sudden, without warning your card was used in Spain. This would look suspicious on paper, even it was obvious to you. This is less to do with your financial institution, and more to do with increased fraud prevention. Call your bank. They will help you. |
Paying taxes on dividends even though your capital gains were $0? | In the US, and in most other countries, dividends are considered income when paid, and capital gains/losses are considered income/loss when realized. This is called, in accounting, "recognition". We recognize income when cash reaches our pocket, for tax purposes. So for dividends - it is when they're paid, and for gains - when you actually sell. Assuming the price of that fund never changes, you have this math do to when you sell: Of course, the capital loss/gain may change by the time you actually sell and realize it, but assuming the only price change is due to the dividends payout - it's a wash. |
Why invest in IRA while a low-cost index fund is much simpler? | Whoa. These things are on two dimensions. It's like burger and fries, you can also have chicken sandwich and fries, or burger and onion rings. You can invest in an taxable brokerage account and/or an IRA. And then, within each of those... You can buy index funds and/or anything else. All 4 combinations are possible. If someone says otherwise, take your money and run. They are a shady financial "advisor" who is ripping you off by steering you only into products where they get a commission. Those products are more expensive because the commission comes out of your end. Not to mention any names. E.J. If you want financial advice that is honest, find a financial advisor who you pay for his advice, and who doesn't sell products at all. Or, just ask here. But I would start by listening to Suze Orman, Dave Ramsey, whomever you prefer. And read John Bogle's book. They can tell you all about the difference between money market, bonds, stocks, managed mutual funds (ripoff!) and index funds. IRA accounts, Roth IRA accounts and taxable accounts are all brokerage accounts. Within them, you can buy any security you want, including index funds. The difference is taxation. Suppose you earn $1000 and choose to invest it however Later you withdraw it and it has grown to $3000. Investing in a taxable account, you pay normal income tax on the $1000. When you later withdraw the $3000, you pay a tax on $2000 of income. If you invested more than a year, it is taxed at a much lower "capital gains" tax rate. With a traditional IRA account, you pay zero taxes on the initial $1000. Later, when you take the money out, you pay normal income tax on the full $3000. If you withdrew it before age 59-1/2, you also pay a 10% penalty ($300). With a Roth IRA account, you pay normal income tax on the $1000. When you withdraw the $3000 later, you pay NOTHING in taxes. Provided you followed the rules. You can invest in almost anything inside these accounts: Money market funds. Terrible return. You won't keep up with the market. Bonds. Low return but usually quite safe. Individual stocks. Good luck. Managed mutual funds. You're paying some genius stock picker to select high performing stocks. He has a huge staff of researchers and good social connections. He also charges you 1.5% per year overhead as an "expense ratio", which is a total loss to you. The fact is, he can usually pick stocks better than a monkey throwing darts. But he's not 1.5% better! Index funds. These just shrug and buy every stock on the market. There's no huge staff or genius manager, just some intern making small adjustments every week. As such, the expense ratio is extremely small, like 0.1%. If any of these investments pay dividends, you must pay taxes on them when they're issued, if you're not in an IRA account. This problem gets fixed in ETF's. Index ETF's. These are index funds packaged to behave like stocks. Dividends increase your stock's value instead of being paid out to you, which simplifies your taxes. If you buy index funds outside of an IRA, use these. Too many other options to get into here. |
For a car, would you pay cash, finance for 0.9% or lease for 0.9%? | One part of the equation that I don't think you are considering is the loss in value of the car. What will this 30K car be worth in 84 months or even 60 months? This is dependent upon condition, but probably in the neighborhood of $8 to $10K. If one is comfortable with that level of financial loss, I doubt they are concerned with the investment value of 27K over the loan of 30K @.9%. I also think it sets a bad precedent. Many, and I used to be among them, consider a car payment a necessary evil. Once you have one, it is a difficult habit to break. Psychologically you feel richer when you drive a paid for car. Will that advantage of positive thinking lead to higher earnings? Its possible. The old testament book of proverbs gives many sound words of advice. And you probably know this but it says: "...the borrower is slave to the lender". In my own experience, I feel there is a transformation that is beyond physical to being debt free. |
How can I live outside of the rat race of American life with 300k? | the short answer: yes. The long answer depends on what you mean by modest living. As others have noted, living off a $300k principle involves risks, but the entire future has risk. By "getting out of the rat race" I hope you don't mean become a slug on the couch. Peruse mr. Money Mustache at https://www.mrmoneymustache.com/. One can live very frugally yet very well in some parts of the US. |
How do credit card payments work? What ensures the retailer charges the right amount? | When you give your credit card number and authorize a merchant to charge your credit card, the merchant then gives the information to their merchant processor which in turns bills the bank that issued the card (it's a little more complex and it all happens instantly unless the merchant is using the very old fasion imprinting gizmos). It is possible for a merchant to attempt to charge you more than you authorized but if they do they risk a fine ($25-$50 for a chargeback) from their processor, the legitimate portion of the charge as well as increasing the processing fees charged by their processor or even the possibility of loosing their merchant account entirely and being permanently blacklisted by Visa/Mastercard. In short no legitimate business is going to intentionally over charge your credit card. There really isn't significant risk in using a reputable online retailer's order forms. There is the possibility that their database could be compromised but that risk is lower than the risk of having an employee steal your credit number when you give it to them in person. Besides in the US at least the most you can legally be held liable for is $50 assuming you notice the discrepancy within 60 days of statement the charge appears on and most banks limit liability to $0. Over the years I have had a number of different credit card numbers stolen and used fraudulently and I have never had to pay any fraudulent charges. |
If something is coming into my account will it be debit or credit in my account? | The bank will make this even more confusing because they use the terms from their own perspective. From the bank's perspective (printed on your statements) credit: Money into your account (increases the bank's liabilities) debit: Money out of your account (decrease bank liabilities) From your perspective: It depends on the nature of the transfer of money, but here are the most common for a personal account. Income into your account: Credit Expenses out of your account: Debit Payment on a loan made for an asset (house/car): Credit for the loan account, debit for the equity account for the car/house/etc. Yes, it's complicated. Neither credits nor debits are always a + or -. That's why I agree with the advice of the others here that double-entry accounting is overkill for your personal finances. Note: I simplified the above examples for the purpose of clarity. Technically every transaction in double entry accounting includes both a credit and a debit (hence the "double" in the name). In fact, sometimes a transaction involves more than one credit or debit, but always at least one of each. Also, this is for EACH party. So any transaction between you and your bank involves at least FOUR debits and/or credits when all involved are considered. |
Why do governments borrow money instead of printing it? | One important answer is still missing: governments may not be able to do print money because of international agreements. This is in fact a very important reason: it applies to the entire Eurozone. (I admit that many Eurozone countries also not allowed to borrow as much as they do now, but somehow that's considered a far lesser sin). |
Is it taxable if someone return me money? | The $10,000 is not taxable to either of you, but the $500 is taxable income to you - and a deductible business expense for your friend. |
1099-B, box 5, how to figure out cost basis? | For every document that the IRS posts, there will be a correlating instructions page. This would be the instructions for the 1099-B, here. Furthermore, as you will be reporting this on Form 8949, as a substitute for previously used Schedule D; instructions are here.This article explains that the best course of action is to donate the shares as the cost basis would switch to FMV (fair market value) of the assets today. But as this did not happen, I would recommend contacting the purchasing company directly. Being a share holder, and by purchasing the shares from the source, the accounting department should still have recorded the date of purchase along with the price sold. It may take effort to prove who you are, but if their accounting records are well documented, this will not be an issue. If nothing else, claim a 100% capital gain on the entirety of the sale, and pay the tax. That is stated here. |
RSU taxation: when am I taxed, and how much? | Restricted Stock Units are different from stock options because instead of buying them at a particular strike price, you receive the actual shares of stock. They are taxed as ordinary income at the time that the restriction is lifted (you don't have to sell them to be taxed). Usually, you can choose to have a percentage of the stock withheld to cover tax withholding or pay for the withholding out of pocket (so you can retain all of your shares). |
Can used books bought off Amazon be claimed as a tax deduction in Australia? | Yes, if they meet the ATO's criteria. Books, periodicals and digital information If the item cost less than $300 you can claim an immediate deduction where it satisfies all of the following requirements: http://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Other-deductions/Books,-periodicals-and-digital-information/ Alternatively They may be a self-education expense http://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Self-education-expenses/ A Further Alternative They could fall into the tool, equipment or other asset category if they are for a professional library (this can include a home office). http://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Tools,-equipment-and-other-assets/ I understand this is an old question although given the dead link in the above answer and the new resources this answer might prove helpful for others coming across this question. |
When should I walk away from my mortgage? | The value of debt is that it allows you to profit from the return of equity beyond the amount of actual net equity you own. Of course, this only works if the cost of borrowing is less than your return on equity. Market timing matters a great deal but isn't accounted for in this view. For my answer I would like to hand-wave away market timing considerations. One plausible justification is that you could default on your current home and then immediately go buy one of equal value. If you buy a new home of a lesser value (due to lack of funds) and then prices appreciate, then you missed some opportunity cost but probably not $100k worth of it. Moving on, here are some helpful assumptions I'll make. I'll ignore performance of your portfolio after retirement and only seek to optimize F, which will be your net worth upon retirement. In either case, your current net worth is earning the R2 rate. We can convert this for both your current net worth and future savings using conversion formulas. Present to future value F = P (1+R2)^x Annual to future value F = S ( (1+R2)^x - 1 ) / R2 Adding these together is sufficient to obtain F in the case that you have no borrowing power. The case where you do not default and maintain your credit score is different due to an initial $100k penalty and the amortized value of borrowing power. In a completely theoretical sense, you get an effective (R2-R1) yield on all borrowed money. The future value will be the following: F = A1 (1+R2-R1)^x One step is missing, however, which is to convert this value (the value of having a good credit score) into present value to compare to value of your defaulting. P of borrowing power = F / (1+R2)^x = A1 { (1+R2-R1)/(1+R2) }^x Now, let's put some specific values in. Say that you can borrow $300k with your good credit history and this applies for the next 25 years, after which you retire. The borrowing rate is 7% and the time-value of money to you is 10%. I would then calculate: P of borrowing power = $58 k < $100 k This indicates that it would be more economical to default. Of course, some people might point out that it will be removed from your record after 7 years. If you plug 7 years instead of 25 years into the equation, almost no assumptions about rates will lead to the option of keeping your house being preferable. So in a nutshell, the value of your credit is probably less than $100k in a purely mathematical sense. But there are other factors too. If you don't have that borrowing ability maybe you wouldn't be able to borrow money to start the business of your dreams. If you are a rock star entrepreneur, then time-value of money to you could be 1,000% yield, sure, then maybe you could make the above numbers work (to favor keeping the house). I've also neglected ethics. As other people point out, it would be like stealing from the bank. |
How do you measure the value of gold? | There are three aspects of what to value gold over. It doesn't easily chemically react with anything, so it stays pure over a long period of time (vs, say a bar of iron or a bar of butter). So it's valuable so far as it doesn't rot. It is shiny, and there is the historical allure of having a bag of shiny, jingly gold coins. Other people will give you other items of perceived value in exchange for it. I believe it was Warren Buffett who stated his opinion on gold - paraphrased such: "You pay people to dig it out of the ground, you pay people to purify it and pour into forms, you pay people to verify the number of nine's purity in it, you pay people to build a secure building to store it in, and you pay people to stand around and guard it. Where is the value in that?" |
Selling on eBay without PayPal? | Dwolla looks to be a great option. But it requires users to have an account there (Free to sign up). And there rates are absolutely amazing. Free for transactions under $10 $0.25 to receive money on transactions over $10 |
Is it possible to borrow money to invest in a foreign country? | Most likely, this will not work they way you think. First things first, to get a loan, the bank needs to accept your collateral. Note that this is not directly related to the question what you plan to do with the loan. Example: you have a portfolio of stocks and bonds worth USD 2 million. The bank decides to give you a loan of USD 1 million against that collateral. The bank doesn't care if you will use the loan to invest in foreign RE or use it up in a casino, it has your collateral as safety. So, from the way you describe it, I take it you don't have the necessary local collateral but you wish to use your foreign investments as such. In this case it really doesn't matter where you live or where you incorporate a company, the bank will only give you the loan if it accepts the foreign collateral. From professional experience with this exact question I can tell you, there are very few banks that will lend against foreign property. And there are even less banks, if any, that will lend against foreign projects. To sum it up: Just forget banks. You might find a private lender to help you out but it will cost you dearly. The best option you have is to find a strategic partner who can cough up the money you need but since he is taking the bigger risk, he will also take the bigger profit share. |
Can I get a discount on merchandise by paying with cash instead of credit? | I bought a car a few years ago. The salesman had the order, I knew the car I wanted and we had a price agreed on. When I refused the payment plan/loan, his manager came over and did a hard sell. "99% of buyers take the financing" was the best he could do. I told him I was going to be part of the 1%. With rates so low, his 2 or 3% offer was higher than my own cost of money. He went so far as to say that I could just pay it off the first month. Last, instead of accepting a personal check and letting me pick up the car after it cleared, he insisted on a bank check to start the registration process. (This was an example of one dealer, illustrating the point.) In other cases, for a TV, a big box store (e.g. Best Buy) isn't going to deal for cash, but a small privately owned "mom and pop" shop might. The fees they are charged are pretty fixed, they don't pay a higher fee cause I get 2% cash back, vs your mastercard that might offer less. |
Short selling - lender's motivation | Oftentimes, the lender (the owner of the security) is not explicitly involved in the lending transaction. Let's say the broker is holding a long-term position of 1MM shares from Client A. It is common for Client A's agreement with Broker A to include a clause that allows the broker to lend out the 1MM shares for its own profit ("rehypothecation"). Client A may be compensated for this in some form (e.g. baked into their financing rates), but they do not receive any compensation that is directly tied to lending activities. You also have securities lending agents that lend securities for an explicit fee. For example, the borrower's broker may not have sufficient inventory, in which case they would need to find a third-party lending agent. This happens both on-demand as well as for a fixed-terms (typically a large basket of securities). SLB (securities lending and borrowing) is a business in its own right. I'm not sure I follow your follow-up question but oftentimes there is no restriction that prevents the broker from lending out shares "for a very short time". Unless there is a transaction-based fee though, the number of times you lend shares does not affect "pocketing the interest" since interest accrues as a function of time. |
How to read bond yield quotes? What do the time, coupon, price, yield, and time mean? | The 1 month and 1 year columns show the percentage change over that period. Coupon (coupon rate) is the amount of interest paid on the bond each period (as specified on the coupon itself. Price is the normalised price of the bond; the price of taking a position of $100 worth of the principal in the bond. Yield is the interest rate that you would receive by buying at that price (this is the inverse of the price). The time is the time of the quote presented. |
Non Resident Alien(Working full time on F1-OPT) new car sales tax deduction | No, if you are a nonresident alien, you cannot deduct sales tax. You can only deduct state income tax. 1040NR Schedule A (which is page 3 of 1040NR) does not contain an option for sales tax, like 1040 Schedule A does. If you are a resident alien, then you can deduct sales tax. |
Does the USA have a Gold reserve? | The United States is no longer on a gold standard, and the value of its currency is solely founded on the productivity of its economy. So I don't think there's any practical reason for the United States government to explicitly sell off a lot of gold to force the price to crash. In fact I would expect that the price of gold has very little interest for the Fed, or anyone else in a position of economic power in the government. I believe that we still have large reserves of it, but I have no idea what they are intended for, aside from being a relic of the gold standard. Best guess is that they'll be held on to just in case of an international trend back towards the gold standard, although that is unlikely on any time frame we would care about. |
Whole life insurance - capped earnings | The question that I walk away with is "What is the cost of the downside protection?" Disclaimer - I don't sell anything. I am not a fan of insurance as an investment, with rare exceptions. (I'll stop there, all else is a tangent) There's an appeal to looking at the distribution of stock returns. It looks a bit like a bell curve, with a median at 10% or so, and a standard deviation of 15 or so. This implies that there are some number of years on average that the market will be down, and others, about 2/3, up. Now, you wish to purchase a way of avoiding that negative return, and need to ask yourself what it's worth to do so. The insurance company tells you (a) 2% off the top, i.e. no dividends and (b) we will clip the high end, over 9.5%. I then am compelled to look at the numbers. Knowing that your product can't be bought and sold every year, it's appropriate to look at 10-yr rolling returns. The annual returns I see, and the return you'd have in any period. I start with 1900-2012. I see an average 9.8% with STD of 5.3%. Remember, the 10 year rolling will do a good job pushing the STD down. The return the Insurance would give you is an average 5.4%, with STD of .01. You've bought your way out of all risk, but at what cost? From 1900-2012, my dollar grows to $30080, yours, to $406. For much of the time, treasuries were higher than your return. Much higher. It's interesting to see how often the market is over 10% for the year, clip too many of those and you really lose out. From 1900-2012, I count 31 negative years (ouch) but 64 years over 9.5%. The 31 averaged -13.5%, the 64, 25.3%. The illusion of "market gains" is how this product is sold. Long term, they lag safe treasuries. |
In accounting and investment, what is the difference and relationship between balance and position | an account balance is your total in the account. The word balance means "to be equal". The use in finance stem from accounting. However you do not need to know why its called a balance to understand that a balance is equal to something. IE: your "account balance" is your total account weather its savings, electric bill, or investment portfolio. A position in your investment portfolio is what you are invested in. IE: If I went 100 shares long(I bought) Apple then I have a 100 share position in Apple. Your position is added to your account balance within your investment portfolio. |
Are Index Funds really as good as “experts” claim? | Here is my simplified take: In any given market portfolio the market index will return the average return on investment for the given market. An actively managed product may outperform the market (great!), achieve average market performance (ok - but then it is more expensive than the index product) or be worse than the market (bad). Now if we divide all market returns into two buckets: returns from active investment and returns from passive investments then these two buckets must be the same as index return are by definition the average returns. Which means that all active investments must return the average market return. This means for individual active investments there are worse than market returns and better then market returns - depending on your product. And since we can't anticipate the future and nobody would willingly take the "worse than market" investment product, the index fund comes always up on top - IF - you would like to avoid the "gamble" of underperforming the market. With all these basics out of the way: if you can replicate the index by simply buying your own stocks at low/no costs I don't see any reason for going with the index product beyond the convenience. |
Do governments support their own bonds when their value goes down? | who issued stock typically support it when the stock price go down. No, not many company do that as it is uneconomical for them to do so. Money used up in buying back equity is a wasteful use of a firm's capital, unless it is doing a buyback to return money to shareholders. Does the same thing happen with government bonds? Not necessarily again here. Bond trading is very different from equities trading. There are conditions specified in the offer document on when an issuer can recall bonds(to jack up the price of an oversold bond), even government bonds have them. The actions of the government has a bigger ripple effect as compared to a firm. The government can start buying back bonds to increase it's price, but it will stoke inflation because of the increase in the supply of money in the market, which may or mayn't be desirable. Then again people holding the bond would have to incentivized to sell the bond. Even during the Greek fiasco, the Greek government wasn't buying Greek bonds as it had no capital to buy. Printing more euros wasn't an option as no assets to back the newly printed money and the ECB would have stopped them from being accepted. And generally buying back isn't useful, because they have to return the principal(which might run into billions, invested in long term projects by the government and cannot be liquidated immediately) while servicing a bond is cheaper and investing the proceeds from the bond sale is more useful while being invested in long term projects. The government can just roll over the bonds with a new issue and refrain from returning the capital till it is in a position to do so. |
How can I determine if a debt consolidation offer is real or a scam? | I think in such situations a good rule of thumb may be - if you are asked to pay significant sums of money upfront before anything is done, stop and ask yourself, what would you do if they don't do what they promised? They know who you are, but usually most you know is a company name and phone number. Both can disappear in a minute and what are you left with? If they said they'd pay off the debt and issue the new loan - fine, let them do it and then you pay them. If they insist on having money upfront without delivering anything - unless it's a very big and known and established company you probably better off not doing it. Either it's a scam or in the minuscule chance they are legit you still risking too much - you're giving money and not getting anything in return. |
Bonus issue - Increasing share capital | Fully Paid up Partly Paid up: A company may issue stock to you which is only partly paid up, for example, a company may issue a stock of face value 10 to you and ask you to pay 5 now and other 5 will be adjusted later by some other mechanism. This stock shall be partly paid up. Usually, these stocks are issued in different circumstances, for example as part payment for debentures, preference shares or other capital structuring. On the other hand for a fully paid up share no more money needs to be paid by you or no other adjustments need to be made. So, above, the company is issuing you with stocks for which you will need to pay no further money, they are fully paid for. Authorized Capital: Authorized capital of a company is the amount of money a company can raise by selling stock (not debt, equity). This number is registered when the company is incorporated, subsequently, this number can be revised upward by applying to the registrar of companies. Now, this means that at max. the company is authorized to raise this much capital and no more. However, a company may raise less than this, which is called Issued Capital. In your case, the company is raising its authorized capital by applying to the registrar of companies, though in this case they are looking at their full authorized capital to be issued capital, it was not necessary to do so. Increase of Authorized capital: The main benefit is that the company can get more money in form of equity and utilize the same, perhaps, for expansion of business etc., that is the primary benefit. Bonus Share: Usually, companies keep some surplus as reserve, this money comes out of the profit the company makes and is essentially money of the shareholders. This reserve surplus is maintained for situations, when the money may be required for exigencies. However, this surplus grows over a few years and the company usually the company plans for an expansion of business. However, this money cannot be just taken, as it belongs to the shareholder, so shareholders are issued extra equity in proportion to their current holding and this surplus is capitalized i.e. used as part of the company's equity capital. Bonus declaration does not add t o the value of the company and the share prices fall in proportion (but not quite) to the bonus. |
Is it sensible to redirect retirement contributions from 401(k) towards becoming a landlord? | This is going to seem pretty far off the beaten path, but I hope when you finish reading it you'll see the point... Suppose someone offered you a part time job: Walk their dog once per day for at least 20 minutes, and once per week pick up the dog poo from their lawn. Your compensation is $300/month. Now suppose instead you are given two choices for a job: Your preference probably has more to do with your personality and interests than the finances involved. |
Assessing the value of an ETF | You seem to be assuming that ETFs must all work like the more traditional closed-end funds, where the market price per share tends—based on supply and demand—to significantly deviate from the underlying net asset value per share. The assumption is simplistic. What are traditionally referred to as closed-end funds (CEFs), where unit creation and redemption are very tightly controlled, have been around for a long time, and yes, they do often trade at a premium or discount to NAV because the quantity is inflexible. Yet, what is generally meant when the label "ETF" is used (despite CEFs also being both "exchange-traded" and "funds") are those securities which are not just exchange-traded, and funds, but also typically have two specific characteristics: (a) that they are based on some published index, and (b) that a mechanism exists for shares to be created or redeemed by large market participants. These characteristics facilitate efficient pricing through arbitrage. Essentially, when large market participants notice the price of an ETF diverging from the value of the shares held by the fund, new units of the ETF can get created or redeemed in bulk. The divergence quickly narrows as these participants buy or sell ETF units to capture the difference. So, the persistent premium (sometimes dear) or discount (sometimes deep) one can easily witness in the CEF universe tend not to occur with the typical ETF. Much of the time, prices for ETFs will tend to be very close to their net asset value. However, it isn't always the case, so proceed with some caution anyway. Both CEF and ETF providers generally publish information about their funds online. You will want to find out what is the underlying Net Asset Value (NAV) per share, and then you can determine if the market price trades at a premium or a discount to NAV. Assuming little difference in an ETF's price vs. its NAV, the more interesting question to ask about an ETF then becomes whether the NAV itself is a bargain, or not. That means you'll need to be more concerned with what stocks are in the index the fund tracks, and whether those stocks are a bargain, or not, at their current prices. i.e. The ETF is a basket, so look at each thing in the basket. Of course, most people buy ETFs because they don't want to do this kind of analysis and are happy with market average returns. Even so, sector-based ETFs are often used by traders to buy (or sell) entire sectors that may be undervalued (or overvalued). |
How can one protect oneself from a dividend stock with decreasing price? | A specific strategy to make money on a potentially moderately decreasing stock price on a dividend paying stock is to write covered calls. There is a category on Money.SE about covered call writing, but in summary, a covered call is a contract to sell the shares at a set price within a defined time range; you gain a premium (called the time value) which, when I've done it, can be up to an additional 1%-3% return on the position. With this strategy you're collecting dividends and come out with the best return if the stock price stays in the middle: if the price does not shoot up high enough that your option is called, you still own the stock and made extra return; if the price drops moderately, you may still be positive. |
Stock sale cost basis calculations for 2013, now that rules changed, is FIFO or another method the smartest financially? | Once again I offer some sage advice - "Don't let the tax tail wag the investing dog." Michael offers an excellent method to decide what to do. Note, he doesn't base the decision on the tax implication. If you are truly indifferent to holding the stock, taxwise, you might consider selling just the profitable shares if that's enough cash. Then sell shares at a loss each year if you have no other gains. That will let you pay the long term gain rate on the shares sold this year, but offset regular income in years to come. But. I'm hard pressed to believe you are indifferent, and I'd use Michel's approach to decide. Updated - The New Law is simply a rule requiring brokers to track basis. Your situation doesn't change at all. When you sell the shares, you need to identify which shares you want to sell. For older shares, the tracking is your responsibility, that's all. |
Why do deep in the money options trade below their intrinsic value? | You made 94$ on an investment of 554.80 *100 = 55480$ for an approx holding period of 1 year. So the % return is ~0.16%, which is not much better than the short term us treasury rate. The current 1 year treasury rate is 0.27%: http://ycharts.com/indicators/1_year_treasury_rate So yes, you have a risk free portfolio, so you make the risk free rate. Remember this is an European option, so you are stuck for 1 year. if you found the same mispricing in an American option, then you found an arbitrage. |
Meaning of “readily transferable”? | Securities or quite a few negotiable instruments can change title of ownership without any issue. Many at times the owner ship in implicit if you are holding a certain instrument. So for example in Stock its a fractional ownership in a company, this ownership transfers to the buyer from the seller without requiring any permission from the company. In case of say Loans, One cannot transfer the loan to some one else without the Banks permission. |
Construction loan for new house replacing existing mortgaged house? | So let's assume some values to better explain this. For simplicity, all of these are in thousands: So in this example, you're going to destroy $250 in value, pay off the existing $150 loan and have to invest $300 in to build the new house and this example doesn't have enough equity to cover it. You typically can't get a loan for much more than the (anticipated) property value. Basically, you need to get a construction loan to cover paying off the existing loan plus whatever you want to spend to pay for the new house minus whatever you're planning to contribute from savings. This new loan will need to be for less than the new total market value. The only way this will work out this way is if you bring significant cash to closing, or you owe less than the lot value on the current property. Note, that this is in effect a simplification. You can spend less building a house than it's worth when you're done with it, etc., but this is the basic way it would work - or NOT work in most cases. |
Should I change 401k investment options to prepare for rising interest rates? | As others have pointed out your bond funds should have short durations, preferably not more than about 2 years. If you are in a bond fund for the long haul meaning you do not have to draw on your bond fund a short time after interest rates have gone up, it is not a big issue. The fund's holdings will eventually turn over into higher interest bearing paper. If bonds do go down, you might want to add more to the fund(s) (see my comment on age-specific asset allocation below). Keep in mind that some stocks are interest sensitive, for example utility stocks which are used as an income source and their dividends compete with rates on CDs which are much safer. Right now CD rates are very low. This could change. It's possible that we may be in an unusually sensitive interest rate period that might have large effects on the stock market, yet to be determined. The reason is that rates have been so low for such a long time that folks that normally would have obtained income streams from bonds have turned to dividend bearing stocks. Some believe that recent market rises are due to such people seeking dividends to enhance cash inflows. If, and emphasis on if, this is true, we could see a sharp drop in the market as sell offs occur as those who want cash streams move from stocks to ultra safe, government insured CDs. Only time will tell if this is going to play out. If retirement for you is 15+ years in the future and the market goes down (bonds or equities), good stuff - it's a buying opportunity in whatever category has dropped. Most important is to keep an eye on your asset allocation and make sure it is appropriate to your age. You did not state the percentages in each category, so further discussion is impossible on that topic. With more than 15 years to go, I personally would be heavily weighted on the equity side, mostly mid-cap and some small equity funds or ETFs in both domestic and international markets. As you age, shuffle some equities into fixed income (bonds, CDs and the like). Work up an asset allocation plan - start thinking about it now. Don't wait. |
Are services provided to Google employees taxed as income or in any way? | Others have pointed out that many benefits offered by employers "for free" are actually taxed; the employee must pay taxes on the value of what they're receiving (usually services of some kind). This is called imputed income. Also pointed out was that healthcare is an exception; a specifically protected class of benefits that aren't taxed. But sometimes they are. Many companies now offer domestic partner health coverage as well, regardless of whether the couple is in any kind of civil union or other arrangement. The costs to the employee vary, but it's often that they simply pay double of what their individual coverage contribution would be. Independent of the employee's direct contribution for their domestic partner, they must also pay taxes on the value of the employer's cost of the coverage. This can be significant, as typically the employer is paying the lion's share of the healthcare cost. |
Should I stockpile nickels? | It seems like a lot of hassle to make a few bucks. $1,000 in nickels would weight 100kg. I'd rather put my money in ING or into a bond mutual fund like VBMFX. |
Paying off mortgage or invest in annuity | There is no formula to answer the question. You have to balance return on investment with risk. There's also the question of whether you have any children or other heirs that you would like to leave money to. The mortgage is presumably a guaranteed thing: you know exactly how much the payments will be for the rest of the loan. I think most annuities have a fixed rate of return, but they terminate when you both die. There are annuities with a variable return, but usually with a guaranteed minimum. So if you got an annuity with a fixed 3.85% return, and you lived exactly 18 more years, then (ignoring tax implications), there'd be no practical difference between the two choices. If you lived longer than 18 years, the annuity would be better. If less, paying off the mortgage would be better. Another option to consider is doing neither, but keeping the money in the 401k or some other investment. This will usually give better than 3.85% return, and the principal will be available to leave to your heirs. The big drawback to this is risk: investments in the stock market and the like usually do better than 3 or 4%, but not always, and sometimes they lose money. Earlier I said "ignoring tax implications". Of course that can be a significant factor. Mortgages get special tax treatment, so the effective interest rate on a mortgage is less than the nominal rate. 401ks also get special tax treatment. So this complicates up calculations trying to compare. I can't give definitive numbers without knowing the returns you might get on an annuity and your tax situation. |
What is considered a business expense on a business trip? | The IRS Guidance pertaining to the subject. In general the best I can say is your business expense may be deductible. But it depends on the circumstances and what it is you want to deduct. Travel Taxpayers who travel away from home on business may deduct related expenses, including the cost of reaching their destination, the cost of lodging and meals and other ordinary and necessary expenses. Taxpayers are considered “traveling away from home” if their duties require them to be away from home substantially longer than an ordinary day’s work and they need to sleep or rest to meet the demands of their work. The actual cost of meals and incidental expenses may be deducted or the taxpayer may use a standard meal allowance and reduced record keeping requirements. Regardless of the method used, meal deductions are generally limited to 50 percent as stated earlier. Only actual costs for lodging may be claimed as an expense and receipts must be kept for documentation. Expenses must be reasonable and appropriate; deductions for extravagant expenses are not allowable. More information is available in Publication 463, Travel, Entertainment, Gift, and Car Expenses. Entertainment Expenses for entertaining clients, customers or employees may be deducted if they are both ordinary and necessary and meet one of the following tests: Directly-related test: The main purpose of the entertainment activity is the conduct of business, business was actually conducted during the activity and the taxpayer had more than a general expectation of getting income or some other specific business benefit at some future time. Associated test: The entertainment was associated with the active conduct of the taxpayer’s trade or business and occurred directly before or after a substantial business discussion. Publication 463 provides more extensive explanation of these tests as well as other limitations and requirements for deducting entertainment expenses. Gifts Taxpayers may deduct some or all of the cost of gifts given in the course of their trade or business. In general, the deduction is limited to $25 for gifts given directly or indirectly to any one person during the tax year. More discussion of the rules and limitations can be found in Publication 463. If your LLC reimburses you for expenses outside of this guidance it should be treated as Income for tax purposes. Edit for Meal Expenses: Amount of standard meal allowance. The standard meal allowance is the federal M&IE rate. For travel in 2010, the rate for most small localities in the United States is $46 a day. Source IRS P463 Alternately you could reimburse at a per diem rate |
What are my options for paying off the large balance of my federal, high interest student loans? | As someone with a lot of student loan debt, I can relate - the first thing you should do is read the promissory note on your current loans - there might be information there you can use. For govt loans (stafford, etc) made after July 1, 2006 the interest rate is going to be fixed and even a federal direct consolidation is not going to lower the rates themselves. If anything, consolidation will just increase the repayment period, which means you'll end up paying more in the long run. Most private Loans usually offer variable interest rates, which today are quite low. But unless your financial situation is very comfortable and stable, consolidating out of federally guaranteed loans into private loans might not be the best path. You might lose options like deferment, forbearance, and maybe even things like a death benefit (if you die, your loans die with you). related - if you have a co-signer you don't get that death benefit! But refinancing into a variable rate private loan is going to push a lot of risk to you in terms of interest rate inflation, etc. Most financial professionals will agree that interest rates can only go up in the long run. Keep in mind, student loans are completely unsecured - meaning lenders are taking a fairly large risk in loaning money (and probably why the fed govt has to guarantee most of them). I've heard of people borrowing against their home equity to pay down student loan debt - but I can't think of a reason you'd want to substitute secured for unsecured debt and possibly lose the loan interest tax deduction. The bottom line is you're unlikely to find an alternative lending source at a lower interest rate for an unsecured student loan. Another option may be the income based repayment plan. If you qualify, it caps student loan monthly payments at 15% of your discretionary income (discretionary is your income minus whatever the poverty threshold income amount is). And if that 15% doesn't even cover the interest on the loans, the govt picks up the tab for the difference (for up to 3 years). You have to re-qualify every year by sending in all sorts of documentation, but if you somehow stay on IBR for 25 years, your loans are then forgiven. Obviously the downside here is that you are probably paying little to no principal, but if you do the math and determine that your IBR payment would be next to nothing, and your current situation is barely paying interest-only... well, maybe IBR isn't a bad thing for a couple of years (or 25 if you think you will never have a larger income). Personally, I went through all these options as well and decided that my best option was to just earn more money... a 2nd job or side project here and there helps me pay down the debt faster, and with less risk, than moving to private variable rate loans. |
In the stock market, why is the “open” price value never the same as previous day's “close”? | The simple answer: The opening price is the price of the first trade of the day and the closing price is the price of the last trade of the day. And since the stock price change from trade to trade they are usually different. |
How to transfer money to yourself internationally? | Hmmm... As far as I know wire transfers are still the best option. If you make sure your US account accepts international wires for free (like TD Bank does) you'll have eliminated most of the costs (assuming your foreign bank doesn't charge too much for wiring the funds in the first place). Also, if your able to, you could consider wiring 6 or so months at the same time. I'm not familiar with XE.com but it seems it's not set up for transferring money so much as for trading currencies. While you could probably use it to transfer funds if you'd link both your accounts it seems a rather complicated way to go about things. Paypal could be an option if they'd allow you to set up an account in each country (or if you have a relative that could help out), but it gets more expensive than wire-transfers quickly. As for getting the best exchange rate... I've given up on that a long time ago and have accepted that as the cost of living internationally :). |
Why is the breakdown of a loan repayment into principal and interest of any importance? | The other answers have touched on amortization, early payment, computation of interest, etc, which are all very important, but I think there's another way to understand the importance of knowing the P/I breakdown. The question mentions the loan payment as "cash outflow". That is true, but from an accounting perspective (disclaimer: I am not an accountant, but I know enough of the basics to be dangerous), the outflow needs to be directed to different accounts. The loan principal appears as a liability on your personal balance sheet, which you could use, for example, in determining net worth. The principal amount in your payment should be applied to reduce the liability account. The interest payment goes into the expense account. Another way to look at it is that the principal, while it does reduce your cash account, can be thought of as an internal transfer to the liability account, thus reducing the size of the liability. The interest payment cannot. Aside: From this perspective, the value of the home is an asset, and the difference between the asset account and the loan liability account is the equity in the house (as pointed out in different language by the accepted answer). Of course, precisely determining the value of an illiquid asset like a house at any given moment pretty much requires you to actually sell it, so those accounts are hard to maintain in real-time (the liability of the loan is much easier to track). |
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. |
Indian equivalent of Vanguard S&P 500 | Also, when they mean SP500 fund - it means that fund which invests in the top 500 companies in the SP Index, is my understanding correct? Yes that is right. In reality they may not be able to invest in all 500 companies in same proportion, but is reflective of the composition. I wanted to know whether India also has a company similar to Vanguard which offers low cost index funds. Almost all mutual fund companies offer a NIFTY index fund, both as mutual fund as well as ETF. You can search for index fund and see the total assets to find out which is bigger compared to others. |
Do I need a new EIN since I am hiring employees for my LLC? | I called the IRS (click here for IRS contact info) and they said I do not need to get a new EIN. I could have just filed the appropriate employer federal tax return (940/941) and then the filing requirements would have been updated. But while I was on the phone, they just updated the filing requirements for my LLC so I am all good now (I still need to file the correct form and make the correct payments, etc. but I can use this same EIN going forward). Disclaimer: Don't trust me (or this answer) for tax advice (your situation may be different). The IRS person on the phone was very helpful so I recommend calling them if you are in a similar situation. FYI, I have found calling the IRS to always be very helpful. |
Archive Financial Records by Account or by Year | The short answer is "it depends", mainly on the type of record and how old it is. Most retained records should be organized by year first, then by type. Have a look at this: http://www.bankrate.com/finance/personal-finance/how-long-to-keep-financial-records.aspx Typically, you should do the following: |
How do I factor dividends and yield into the performance of a security? | Instead of a price chart can use a performance chart, which is usually expressed as a percentage increase from the original purchase price. To factor in the dividends, you can either add in all of your dividends to the final price, or subtract the accumulated dividends from your cost basis (the initial price). |
What are the economic benefits of owning a home in the United States? | To add to what other have stated, I recently just decided to purchase a home over renting some more, and I'll throw in some of my thoughts about my decision to buy. I closed a couple of weeks ago. Note that I live in Texas, and that I'm not knowledgeable in real estate other than what I learned from my experiences in the area when I am located. It depends on the market and location. You have to compare what renting will get you for the money vs what buying will get you. For me, buying seemed like a better deal overall when just comparing monthly payments. This is including insurance and taxes. You will need to stay at a house that you buy for at least 5-7 years. You first couple years of payments will go almost entirely towards interest. It takes a while to build up equity. If you can pay more towards a mortgage, do it. You need to have money in the bank already to close. The minimum down payment (at least in my area) is 3.5% for an FHA loan. If you put 20% down, you don't need to pay mortgage insurance, which is essentially throwing money away. You will also have add in closing costs. I ended up purchasing a new construction. My monthly payment went up from $1200 to $1600 (after taxes, insurance, etc.), but the house is bigger, newer, more energy efficient, much closer to my work, in a more expensive area, and in a market that is expected to go up in value. I had all of my closing costs (except for the deposit) taken care of by the lender and builder, so all of my closing costs I paid out of pocket went to the deposit (equity, or the "bank"). If I decide to move and need to sell, then I will get a lot (losing some to selling costs and interest) of the money I have put in to the house back out of it when I do sell, and I have the option to put that money towards another house. To sum it all up, I'm not paying a difference in monthly costs because I bought a house. I had my closing costs taking care of and just had to pay the deposit, which goes to equity. I will have to do maintenance myself, but I don't mind fixing what I can fix, and I have a builder's warranties on most things in the house. To really get a good idea of whether you should rent or buy, you need to talk to a Realtor and compare actual costs. It will be more expensive in the short term, but should save you money in the long term. |
Offshore bank account with online International wire-transfer facility for Indians | Well first off, I would advice you to do this research yourself. You should not base your selection off someone's opinion such as mines. With that being said, these are some factors I suggest you consider and research before talking to an offshore bank account: Now, when opening an offshore account most offshore banks do not require you to be present at all. You can open an account simply by calling them or filling out their application online. However, be prepared to provide them with some information to verify who you are and the nature of your business such as a notarized passport along with other various forms of information that they may require. Just think of what your local bank requires is generally what they will ask as well. Here is a compiled list of offshore bank accounts to consider: These banks overall have a range between $0 - $1 million (domestic currency) minimum deposits. Most of them ranging from $1000-$5000. It all depends on the type of account, the nature of the account, and the business associated with the account. |
Strategies for paying off my Student loans | My advice is that if you've got the money now to pay off your student loans, do so. You've saved up all of that money in one year's time. If you pay it off now, you'll eliminate all of those monthly payments, you'll be done paying interest, and you should be able to save even more toward your business over the next year. Over the next year, you can get started on your business part time, while still working full time to pile up cash toward your business. Neither you nor your business will be paying interest on anything, and you'll start out in a very strong position. The interest on your student loans might be tax deductible, depending on your situation. However, this doesn't really matter a whole lot, in my opinion. You've got about $22k in debt, and the interest will cost you roughly $1k over the next year. Why pay $1k to the bank to gain maybe $250 in tax savings? Starting a business is stressful. There will be good times and bad. How long will it take you to pay off your debt at $250 a month? 5 or 6 years, probably. By eliminating the debt now, you'll be able to save up capital for your business even faster. And when you experience some slow times in your business, your monthly expenses will be less. |
Remote jobs and incidental wage costs: What do I have to consider? | An employee costs the company in four ways: Salary, taxes, benefits, and capital. Salary: The obvious one, what they pay you. Taxes: There are several taxes that an employer has to pay for the privilege of hiring someone, including social security taxes (which goes to your retirement), unemployment insurance tax (your unemployment benefits if they lay you off), and workers compensation tax (pays if you are injured on the job). (There may be other taxes that I'm not thinking of, but in any case those are the main ones.) Benefits: In the U.S. employers often pay for medical insurance, sometimes for dental, life, and disability. There's usually some sort of retirement plan. They expect to give you some number of vacation days, holidays, and sick days where they pay you even though you're not working. Companies sometimes offer other benefits, like discounts on buying company products, membership in health clubs, etc. Capital: Often the company has to provide you with some sort of equipment, like a computer; furniture, like a chair and desk; etc. As far as the company is concerned, all of the above are part of the cost of having you as an employee. If they would pay a domestic employee $60,000 in salary and $20,000 in taxes, then assuming the same benefits and capital investment, if a foreign employee would cost them $0 in taxes they should logically be willing to pay $80,000. Any big company will have accountants who figure out the total cost of a new employee in excruciating detail, and they will likely be totally rational about this. A smaller company might think, "well, taxes don't really count ..." This is irrational but people are not always rational. I don't know what benefits they are offering you, if any, and what equipment they will provide you with, if any. I also don't know what taxes, if any, a U.S. company has to pay when hiring a remote employee in a foreign country. If anybody on here knows the answer to that, please chime in. Balanced against that, the company likely sees disadvantages to hiring a foreign remote employee, too. Communication will be more difficult, which may result in inefficiency. My previous employer used some contractors in India and while there were certainly advantages, the language and time zone issues caused difficulties. There are almost certainly some international bureaucratic inconveniences they will have to deal with. Etc. So while you should certainly calculate what it would cost them to have a domestic employee doing the same job, that's not necessarily the end of the story. And ultimately it all comes down to negotiations. Even if the company knows that by the time they add in taxes and benefits and whatever, a domestic employee will cost them $100,000 a year, if they are absolutely convinced that they should be able to hire an Austrian for $60,000 a year, that might be the best offer you will get. You can point out the cost savings, and maybe they will concede the point and maybe not. |
What taxes are involved for LLC in Georgia? | Your best course of action is to gather your paperwork, ask around your personal network for a recommendation for a good CPA, and pay that person to do your taxes (business and personal). Read through the completed package and have them walk you through every item you do not understand. I would continue doing this until you feel confident that you can file for yourself. Even then, the first couple of times I did my own, I'd pay them to review my work. Assuming you find a CPA with reasonable fees, they will likely point out tax inefficiencies in the way you do your business which will more than pay for their fees. It can be like a point of honor for CPAs to ensure that their customers get their money's worth in this way. (Not saying all CPAs work this way, but to me, this would be a criteria for one that I would recommend.) |
Generally Accepted Accounting Principles question | You recognize expense when you sell the hot dog. When you pay for the buns you have inventory, which is an asset. When you sell the hot dog - you have cost of goods sold, which is the expense. Expense principle says that you recognize expense when you use the product. You use the buns when you actually sell the hot dog, not before. The matching principle is also honored because you recognize expense of the buns at the time of recognizing revenue of the hot dog. |
How long do credit cards keep working after you disappear? | Generally speaking the bank accounts and credit card accounts remain open. Banks and the credit card companies don't monitor public records on a daily basis. Instead, whoever is handling your estate will need to obtain copies of your death certificate and they will then search your paper records to identify all accounts (reason to get your act together - there are books on the subject). The executor will work with the banks and card companies to make sure all your charges and payments clear (common to have them open for months or even a year) and to make close or transfer autopays. They will make sure to notify the credit agencies to flag your accounts so no new accounts can be created. MANY copies of the death certicates are needed. |
What tax laws apply to Meetup group income? | In the United States tax law, a group of people who are neither an individual nor an incorporated entity is called "partnership". Here's the IRS page on partnerships. Income derived by such a "meetup.com" group is essentially a partnership income with the group members being the partners. However, as you can see from the questions in the comments, the situation can become significantly more complex if this partnership is not managed properly. |
What happens if a bank no longer use an intermediary bank? | If your counterparty sent money to a correspondent account at another bank, then it is completely up to the other bank what to do with the money. If the wire transfer completed, then the account is not closed. If I were your business partner, I would immediately contact the bank to which the transfer was made and explain the situation and hopefully they will transfer the money back. Whenever a wire transfer is made, the recipients name, address, and account number are included. If that name, address and account do not belong to you, then you have a problem because you have no legal right to the money in a court of law. For this reason, you should be avoid any situation where you are wiring money to anyone except the intended recipient. |
New company doesn't allow 401k deposits for 6 months, what to do with money I used to deposit? | Short answer is fund a Roth. If you are under 50 then you can put in $5500 or $6500 if you are older. Great to have money in two buckets one pre tax and one post tax. Plus you can be aggressive putting money in it because you can always take money you put in the Roth out of the Roth with no tax or penalty. Taxes are historically low so it makes a lot of sense to diversify your retirement. |
Is Real Estate ever a BAD investment? If so, when? | There's an aspect to real estate that's under-discussed. When you take all factors into account, it just about keeps up with inflation over the long term. Three factors: Now - when you normalize all of this, calculating the "hours worked" needed to pay for the median home, you find a nearly flat line at just over 40 or so hours of pay per month. |
Is there any reason not to put a 35% down payment on a car? | If you know that you have a reasonable credit history, and you know that your FICO score is in the 690-neighborhood, and the dealer tells you that you have no credit history, then you also know one of two things: Either way, you should walk away from the deal. If the dealer is willing to lie to you about your credit score, the dealer is also willing to give you a bad deal in other respects. Consider buying a cheaper used car that has been checked out by a mechanic of your choice. If possible, pay cash; if not, borrow as small an amount as possible from a credit union, bank, or even a very low-interest rate credit card. (Credit cards force you to pay off the loan quickly, and do not tie up your car title. I still have not managed to get my credit union loan off of my car title, ten years after I paid it off.) |
Where can I find accurate historical distribution data for mutual funds? | If you want to go far upstream, you can get mutual fund NAV and dividend data from the Nasdaq Mutual Fund Quotation Service (MFQS). This isn't for end-users but rather is offered as a part of the regulatory framework. Not surprisingly, there is a fee for data access. From Nasdaq's MFQS specifications page: To promote market transparency, Nasdaq operates the Mutual Fund Quotation Service (MFQS). MFQS is designed to facilitate the collection and dissemination of daily price, dividends and capital distributions data for mutual funds, money market funds, unit investment trusts (UITs), annuities and structured products. |
What one bit of financial advice do you wish you could've given yourself five years ago? | I was offered a student credit card and refused it. If I'd taken it and used it sparingly, paying off the balance on time in full every month, I'd have built up a better credit rating in the time period. |
Are leverage/ko products the only reasonable way to trade stocks? | There's no free lunch. Here are some positions that should be economically equivalent (same risk and reward) in a theoretically-pure universe with no regulations or transaction costs: You're proposing to buy the call. If you look at the equivalent, stock plus protective put, you can quickly see the "catch"; the protective put is expensive. That same expense is embedded in the call option. See put-call parity on Wikipedia for more: http://en.wikipedia.org/wiki/Put%E2%80%93call_parity You could easily pay 10% a year or more for the protection, which could easily eat up most of your returns, if you consider that average returns on a stock index might be about 10% (nominal, not real). Another way to look at it is that buying the long call and selling a put, which is a synthetic long position in the stock, would give you the put premium. So by not selling the put, you should be worse off than owning the stock - worse than the synthetic long - by about the value of the put premium. Or yet another way to look at it is that you're repeatedly paying time value on the long call option as you roll it. In practical world instead of theory world, I think you'd probably get a noticeable hit to returns just from bid-ask and commissions, even without the cost of the protection. Options cost more. Digressing a bit, some practical complications of equivalency between different combinations of options and underlying are: Anyway, roughly speaking, any position without the "downside risk" is going to have an annual loss built in due to the cost of the protection. Occasionally the options market can do something weird due to supply/demand or liquidity issues but mostly the parity relationships hold, or hold closely enough that you can't profit once expenses are considered. Update: one note, I'm talking about "vanilla" options as traded in the US here, I guess there are some somewhat different products elsewhere; I'm not sure exactly which derivatives you mean. All derivatives have a cost though or nobody would take the other side of the trade. |
Should I make additional payments on a FHA loan, or save up for a refinance? | You would have to do the specific math with your specific situation to be certain, but - generally speaking it would be smarter to use extra money to pay down the principle faster on the original loan. Your ability to refinance in the future at a more favorable rate is an unknowable uncertainty, subject to a number of conditions (only some of which you can control). But what is almost always a complete certainty is that paying off a debt is, on net, better than putting the same money into a low-yield savings account. |
What's the best application, software or tool that can be used to track time? | A free solution that I've been using is Task Coach. It has tasks, subtasks, categories, and all the stuff you would expect from a time tracking program. It also counts each distinct period spent on a task as a separate "effort" that you can add comments, for example to remind you what that chunk of time was spent on. |
Smart to buy a house in college? | If you don't plan to stay in it, it is never good money to try to buy a house in a bad neighborhood. The question you want to be asking is probably "Is it smart to buy this piece of real estate," not "is it smart to buy a house in college." In this case, it's probably not smart because you won't actually have revenue from the property (you'll break even compared to renting), you may face some expensive repairs (water heater or other appliances going out, etc.), and you may find that your startup costs in things like lawn mowers, etc. is not worth the hassle (or cost of lawn service if you have someone else do it.) On top of that, can you get a loan with your proven income and assets? Don't forget to factor the cost of selling the house again into it -- and how long can you leave it on the market after you move out if it doesn't sell without going bankrupt yourself? In my opinion, it'd be a giant albatross around your neck. |
Building financial independence | While I can appreciate you're coming from a strongly held philosophy, I disagree strongly with it. I do not have any 401k or IRA I don't like that you need to rely on government and keep the money there forever. A 401k and an IRA allows you to work within the IRS rules to allow your gains to grow tax free. Additionally, traditional 401ks and IRAs allow you to deduct income from your taxes, meaning you pay less taxes. Missing out on these benefits because the rules that established them were created by the IRS is very very misguided. Do you refuse to drive a car because you philosophically disagree with speed limits? I am planning on spending 20k on a new car (paying cash) Paying cash for a new car when you can very likely finance it for under 2% means you are loosing the opportunity to invest that money which can conservatively expect 4% returns annually if invested. Additionally, using dealership financing can often be additional leverage to negotiate a lower purchase price. If for some reason, you have bad credit or are unable to secure a loan for under 4%, paying cash might be reasonable. The best thing you have going for you is your low monthly expenses. That is commendable. If early retirement is your goal, you should consider housing expenses as a part of your overall plan, but I would strongly suggest you start investing that money in stocks instead of a single house, especially when you can rent for such a low rate. A 3 fund portfolio is a classic and simple way to get a diverse portfolio that should see returns in good years and stability in bad years. You can read more about them here: http://www.bogleheads.org/wiki/Three-fund_portfolio You should never invest in individual stocks. People make lots of money to professionally guess what stocks will do better than others, and they are still very often wrong. You should purchase what are sometimes called "stocks" but are really very large funds that contain an assortment of stocks blended together. You should also purchase "bonds", which again are not individual bonds, but a blend of the entire bond market. If you want to be very aggressive in your portfolio, go with 100-80% Stocks, the remainder in Bonds. If you are nearing retirement, you should be the inverse, 100-80% bonds, the remainder stocks. The rule of thumb is that you need 25 times your yearly expenses (including taxes, but minus pension or social security income) invested before you can retire. Since you'll be retiring before age 65, you wont be getting social security, and will need to provide your own health insurance. |
Should I participate in a 401k if there is no company match? | Another consideration that is not in the hard numbers. Many people, myself included, find it hard to have the discipline to save for something that is so far off. The 401K plan at work has the benefit of pulling the money out before you see it, so you learn to live on what is left more easily. Also, depending on the type of 401K it attaches penalties to using the money early disincentive you to pull it out for minor emergencies. |
How many days does Bank of America need to clear a bill pay check | We have a local bank that changed to a bill pay service. The money is held as "processing" when the check is supposed to be cut and shows as cleared on the date the check is supposed to be received. Because our business checking is with the same bank, we discovered recently that the although the check shows cleared from our account, the recipient has not received the paper check yet - and may not for 2-3 days. We discovered this because the payroll checks we write this way (to ourselves) never arrive on the due date but clear the business account. It appears to be a new way for banks to ride the "float" and draw interest on the money. It happens with every check processed through the bill pay system and not with electronic transfers. |
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