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Multiple hard inquiry for a single loan from car dealer? | (I'm a bit surprised that nobody talked about the impact of multiple inquiries on a loan, since OP is concerned with credit building. Probably an answer as opposed to a comment is justified.) Yes. In fact when you shop for auto loan you are expected to have your credit score/report be pulled by different banks, credit unions, and/or the financing arm of the car manufacturer or the dealership, so that you can hopefully get the best rate possible. This is especially true if the dealer is requesting quotes on rates on your behalf, as they would probably use a batch process to send out applications to multiple financial institutions all at once. Yes, and a bit unusual - CALVERT TOYO (your dealer) pulled your report twice on the same day. Presumably they are not getting any new information on the second pull. Maybe a fat finger? Regardless, you should not worry about this too much (to be explained below). I would say "don't bother". The idea behind hard inquiries lowering credit score is that lenders see the number of hard inquiries as your desire for credit. Too high a number is often viewed as either "desperate for credit" or "unable to qualify for credit". But as explained above, it is very common for a person to request quotes for multiple financial institutions and thus to have multiple hard inquiries in a short period of time when shopping for loans. To account for that, the credit bureau's model would usually combine hard inquiries for a same type of loan (auto, mortgage, etc.) within 30 days. Hence a person sending quote request to 3 banks won't be rated higher for credit than if he were to request quotes from 5 banks. Therefore in your case your credit profile is not going to be different if you had been pulled just once. my credit score goes down for 15 points I'm assuming you are talking about the credit score provided by Credit Karma. The score CK provided is FAKO. The score lenders care about is FICO. They are well correlated but still different. Google these two terms and you should be able to figure out the difference quickly. You can also refer to my answer to a different question here: Equifax credit score discrepancy in 1 month, why? |
What is the equation for an inflation adjusted annuity held in perpetuity? | EDIT: After reading one of the comments on the original question, I realized that there is a much more intuitive way to think about this. If you look at it as a standard PV calculation and hold each of the cashflows constant. Really what's happening is that because of inflation the discount rate isn't the full value of the interest rate. Really the discount rate is only the portion of the interest rate above the inflation rate. Hence in the standard perpetuity PV equation PV = A / r r becomes the interest rate less the inflation rate which gives you PV = A / (i - g). That seems like a much better way to get to the answer than all the machinations I was originally trying. Original Answer: I think I finally figured this out. The general term for this type of system in which the payments increase over time is a gradient series annuity. In this specific example since the payment is increasing by a percentage each period (not a constant rate) this would be considered a geometric gradient series. According to this link the formula for the present value of a geometric gradient series of payments is: Where P is the present value of this series of cashflows. A_1 is the initial payment for period 1 (i.e. the amount you want to withdraw adjusted for inflation). g is the gradient or growth rate of the periodic payment (in this case this is the inflation rate) i is the interest rate n is the number of payments This is almost exactly what I was looking for in my original question. The only problem is this is for a fixed amount of time (i.e. n periods). In order to figure out the formula for a perpetuity we need to find the limit of the right side of this equation as the number of periods (n) approaches infinity. Luckily in this equation n is already well isolated to a single term: (1 + g)^n/(1 + i)^-n}. And since we know that the interest rate, i, has to be greater than the inflation rate, g, the limit of that factor is 0. So after replacing that term with 0 our equation simplifies to the following: Note: I don't do this stuff for a living and honestly don't have a fantastic finance IQ. It's been a while since I've done any calculus or even this much algebra so I may have made an error in the math. |
Best way for for soon to turn 18 to learn about money? | Do you have a smart phone? Check out the Clark Howard Podcast. I listen every day. Of course you can listen from your computer but its far easier to consume from a pod catcher |
Personal Loan: How to define loan purpose | I would imagine that it goes beyond purpose and also addresses the demographic as a poor credit risk. Those seeking a post secondary education are a poor credit risk. They are at the beginning of their careers so tend to have low income, a short credit history, and a very short time of managing money on their own. Also many don't know how to work. This later fact, to me, is a great predictor of financial success. Reading into the financial data surrounding student loans, it pretty easy to see that this demographic makes poor money decisions. I live near a state university. A large percentage of students drive late model luxury cars, frequent expensive bars and restaurants, and wear pretty nice clothes. They also graduate with, on average 60K in student loans. Keep in mind a 4 year degree could be had for about 30K and could be paid for working a part time job. And that, to me, is the wisdom in bank's decision. Sure they will loan you all the money you want with a government guarantee. However, once that disappears they will not you money for unnecessary purposes. |
How to exercise options when you they're worth more money than you have? [duplicate] | The fact that the option is deep in the money will be reflected in the market price of the option so you can just sell it at a profit. If there's a (n almost) guaranteed profit to be had, however, you can always find someone who will lend you the money to cover the exercise... they'll charge you interest, however! |
Other than being able to borrow to invest, how is a margin trading account different from a cash account? | Two more esoteric differences, related to the same cause... When you have an outstanding debit balance in a margin the broker may lend out your securities to short sellers. (They may well be able to lend them out even if there's no debit balance -- check your account agreement and relevant regulations). You'll never know this (there's no indication in your account of it) unless you ask, and maybe not even then. If the securities pay out dividends while lent out, you don't get the dividends (directly). The dividends go to the person who bought them from the short-seller. The short-seller has to pay the dividend amount to his broker who pays them to your broker who pays them to you. If the dividends that were paid out by the security were qualified dividends (15% max rate) the qualified-ness goes to the person who bought the security from the short-seller. What you received weren't dividends at all, but a payment-in-lieu of dividends and qualified dividend treatment isn't available for them. Some (many? all?) brokers will pay you a gross-up payment to compensate you for the extra tax you had to pay due to your qualified dividends on that security not actually being qualified. A similar thing happens if there's a shareholder vote. If the stock was lent out on the record date to establish voting eligibility, the person eligible to vote is the person who bought them from the short-seller, not you. So if for some reason you really want/need to vote in a shareholder vote, call your broker and ask them to journal the shares in question over to the cash side of your account before the record date for determining voting eligibility. |
Buy home and leverage roommates, or split rent? | ...instead of all of us draining our money into a landlord... Instead, you are suggesting that still everyone (except you) will drain their money into a landlord, just that now the landlord is you. I guess what that really means is that you will need to have landlord tenant agreements between you and your roommates. When things break or need replacing you'll have to foot the bill and as your tenants, your "roomies" might not be too forgiving when things need fixing. When the fridge breaks down, you'll have to buy a new one immediately. Yard work is your sole responsibility, unless you offer discounted rent or other perks. What about service bills: energy, water, sewage, internet, television, etc? |
What assets would be valuable in a post-apocalyptic scenario? | This is a long term investment but can be very useful during tough times. Be prepared not only to take but to give as well. Moreover: |
Search index futures in Yahoo Finance or Google Finance | Neither site offers index futures or options pricing. Your best best is likely to get the quote from a broker who supports trading those vehicles. Free sites usually limit themselves to stocks and sometimes to options chains -- the exception is Reuters where just about any security for which you have the reuters formatted trading symbol can be quoted. |
Historical stock prices: Where to find free / low cost data for offline analysis? | I also prefer to crunch the numbers myself. Here are some resources: |
Investing in income stocks for dividends - worth it? | After looking at your profile, I see your age...28. Still a baby. At your age, and given your profession, there really is no need to build investment income. You are still working and should be working for many years. If I was you, I'd be looking to do a few different things: Eliminating debt reduces risk, and also reduces the need for future income. Saving for, and purchasing a home essentially freezes rent increases. If home prices double in your area, in theory, so should rent prices. If you own a home you might see some increases in taxes and insurance rates, but they are minor in comparison. This also reduces the need for future income. Owning real estate is a great way to build residual income, however, there is a lot of risk and even if you employ a management company there is a lot more hands on work and risk. Easier then that you can build an after tax investment portfolio. You can start off with mutual funds for diversification purposes and only after you have built a sizable portfolio should (if ever) make the transition to individual stocks. Some people might suggest DRIPs, but given the rate at which you are investing I would suggest the pain of such accounts is more hassle then it is worth. |
How to find the smallest transaction fees and commissions available and reduce trading overhead? | The lowest cost way to trade on an exchange is to trade directly on the exchange. I can't speak to the LSE, but in the US, there is a mandated firewall between the individual and the exchange, the broker; therefore, in the US, one would have to start a business and become a broker. If that process is too costly, the broker or trade platform that permits individuals to trade with the lowest commissions is the next lowest. |
Why do stock brokers charge fees | Retail brokers and are generally not members of exchanges and would generally not be members of exchanges unless they are directly routing orders to those exchanges. Most retail brokers charging $7 are considered discount brokers and such brokers route order to Market Makers (who are members of the exchanges). All brokers and market makers must be members of FINRA and must pay FINRA registration and licensing fees. Discount brokers also have operational costs which include the cost of their facilities, technology, clearing fees, regulation and human capital. Market makers will have the same costs but the cost of technology is probably much higher. Discount brokers will also have market data fees which they will have to pay to the exchanges for the right to show customer real time quotes. Some of their fees can be offset through payment for order flow (POF) where market makers pay routing brokers a small fee for sending orders to them for execution. The practice of POF has actually allowed retail brokers to keep their costs lower but to to shrinking margins and spread market makers POF has significantly declined over the years. Markets makers generally do not pass along Exchange access fees which are capped at $.003 (not .0035) to routing brokers. Also note that The SEC and FINRA charges transactions fees. SEC fee for sales are generally passed along to customers and noted on trade confirms. FINRA TAF is born by the market makers and often subtracted from POF paid to routing firms. Other (full service brokers) charging higher commissions are charging for the added value of their brokers providing advice and expertise in helping investors with investment strategies. They will generally also have the same fees associated with membership of all the exchanges as they are also market makers subject to some of the list of cost mentioned above. One point of note is that Market Making technology is quite sophisticates and very expensive. It has driven most of wholesale market makers of the 90s into consolidation. Retail routing firm's save a significant amount of money for not having to operate such a system (as well as worry about the regulatory headaches associated with running such a system). This allows them to provide much lower commissions that the (full service) or bulge bracket brokers. |
How to explain an income discrepancy to the IRS? | The IRS doesn't tax "increased wealth" They tax Revenue -- income. If this money or property came to you as a gift, you would owe no tax on it but the giver probably would owe gift tax. If it came to you as a loan, you would owe no tax on it but the lender would owe tax on any interest you pay (and must charge at least minimal interest, though they could give that to you as a gift and possibly not have it be taxable). But if came as payment for goods or services or investment or anything of that sort, and you aren't demonstrably tax-exempt, it is income and you are responsible for declaring it as such and paying tax on it. |
Computer vendor not honoring warranty. What's the next step? | You're probably best off going to a different store to fix the computer. Right now you don't have "damages." You could sue him but, there's no thing to sue for. If you sue for your original costs, you'd have to return the computer and probably only receive a portion of your original costs, less court filing fees. If you have someone else fix your computer you can sue him for the cost to fix your computer. You'll take him to small claims court, win or lose you probably won't get anything from him. If you win, you'll have a piece of paper (judgement) that says, "Yep, that guy owes you money" if you lose you won't even have that. You could report him to the BBB or some other business agency but that doesn't help you fix the computer. |
What ways are there for us to earn a little extra side money? | You or your girlfriend might also consider one of the myriad home "franchises" available (Pampered Chef, Thirty-One, etc). The real question, in my mind, though, is how much do you need to add to your monthly income? Is it $50, or $500? Might moving to a smaller apartment/house work? |
Why is economic growth so important? | nan |
US ISA equivalent for tax exempt investment & savings | As far as I know, there is no direct equivalent. An IRA is subject to many rules. Not only are there early withdrawal penalties, but the ability to deduct contributions to an IRA phases out with one's income level. Qualified withdrawals from an IRA won't have penalties, but they will be taxed as income. Contributions to a Roth IRA can be made post-tax and the resulting gains will be tax free, but they cannot be withdrawn early. Another tax-deductable investment is a 529 plan. These can be withdrawn from at any time, but there is a penalty if the money is not used for educational purposes. A 401K or similar employer-sponsored fund is made with pre-tax dollars unless it is designated as a Roth 401K. These plans also require money to be withdrawn specifically for retirement, with a 10% penalty for early withdrawal. Qualifying withdrawals from a regular retirement plan are taxed as income, those from a Roth plan are not (as with an IRA). Money can be made harder to get at by investing in all of the types of funds you can invest in using an IRA through the same brokers under a different type of account, but the contribution will be made with post-tax, non-deductable dollars and the gains will be taxed. |
How to choose a good 401(k) investment option? | The vanguard funds are all low fee your employer has done a good job selecting their provider for 401(k). I would do a roth if you can afford it as taxes are at a historical low. Just pick the year you want to get your money if you will need your money in 2040 pick Vanguard Target Retirement 2040 Fund. Its that simple. This is not a "thing" ( low-risk, and a decent return ). Risk and reward are correlated. Get the vanguard and every year it rebalances so that you take less risk every year. Lastly listen to the Clark Howard podcast if you are having trouble making decisions or contact their 45 hour a week free advice email/phone help. |
How to help a financially self destructive person? | I am no expert by any means in divorce situations, but it seems like you probably have more than enough evidence (if you can back up everything you outlined here) that the living conditions an her place are not suitable for kids. This ought to be enough for you to gain sole custody of the kids. Maybe you didn't want to keep their mother in the equation for their benefit, but right now it's not to their benefit for her to be in the equation. The honest truth is that you're not in a position to help her being divorced. You can't force her to do anything as things stand now. But if you take legal actions to gain sole custody you might be able to lay down some conditions under which she could regain partial custody of the kids. This might be the "scare" approach you're looking for if she cares about her children. |
Investing small amounts at regular intervals while minimizing fees? | I think your best bet would be commission-free ETFs, which have no minimum and many have a share price under $100. Most online brokerages have these now, e.g. Vanguard, Fidelity, etc. Just have to watch out for any non-trading fees brokerages may charge with a low balance. |
How to get a credit card as a minor? | In general, minors cannot enter into legally binding contracts -- which is what credit accounts are -- so an individually held card is probably not an option for you right now. You will not be approved for a credit card because you are minor. The only option credit card wise for you is for your parents to add you on as an authorized user onto their accounts. The upside is that you and your parents can work out a monthly payment for the amount you spend on your equipment, the downside is that if your parents don't pay their credit card bill, your credit score/report can be negatively affected. (This also depends on the bank, however, all the banks I bank with report monthly payment activities on authorized users' credit reports as well. There might be a bank that doesn't.) In terms of credit cards, there is nothing you can do. What you could do as the comments have suggested is either save up money for the equipment you want, or buy something cheaper. |
What is a maximum amount that I can wire transfer out of US? | The limit, if any, would be established by your financial institutions. You would need to contact both your sending and receiving bank to ascertain any limitation they impose on wire transfers. Generally, taxes aren't imposed on transference of funds between accounts you own, but I'm not familiar with tax in Thailand and I could be wrong on that half of the question. |
How does the spread on an orderbook affect shorting? | It this a real situation or is it a made up example? Because for a stock that has a last traded priced of $5 or $6 and volume traded over $4M (i.e. it seems to be quite liquid), it is hardly likely that the difference from bid to ask would be as large as $1 (maybe for a stock that has volume of 4 to 5 thousand, but not for one having volume of 4 to 5 million). In regards to your question, if you were short selling the order would go in exactly the same as if you were selling a stock you owned. So your order would be on the ask side and would need to be matched up with a price on the bid side for there to be a trade. |
What options do I have at 26 years old, with 1.2 million USD? | You need the services of a hard-nosed financial planner. A good one will defend your interests against the legions of creeps trying to separate you from your money. How can you tell whether such a person is working in your best interest? Here are some ways. You'll be able to tell pretty quickly whether the planner lets you get through the same story you told us. The ability to listen carefully without interrupting is a good way to tell whether the planner is going to honor your needs. You're looking for a human service professional, not an investment or business guru. There are planners who specialize in helping people navigate big changes in their financial situation. Some of the best of those planners are women. (Many of their customers are people whose spouses recently died. But they also serve people in your situation. Ask if they work with other people like you.) Of course, you need to take the planner's advice, especially about spending and saving levels. |
Stock spread: wide vs. narrow? | The point is that the bid and ask prices dictate what you can buy and sell at (at market, at least), and the difference between the two, or spread, contributes implicitly to your gains or losses. For example, say your $1 stock actually had a bid of $0.90 and an ask of $1.10; i.e. say that $1 was the last price. You would have to buy the stock at the ask price of $1.10, but now you can only sell that stock at the bid price of $0.90. Thus, you would need to make at least that $0.20 spread before you can make a profit. |
What is a “retail revolving account,” and does it improve my credit score? | To add to what others have said, INSTALLMENT CREDIT is a stronger factor when building credit. An installment credit is essentially a loan with a fixed repay amount such as a student loan and a car loan. Banks (when it comes to buying your first home) want to see that you are financially able to repay a big debt (car loan). But be careful, if you cannot pay cash, you cannot afford it. My rule of thumb is that when I'm charging something to my CC, I MUST pay it off when it posts to my account. I just became debt free (paid off about 15k in CC and student loan debt in 18 months) and I love it. |
How to keep control of shared expenses inside marriage? | JoeTaxpayer's answer mentions using a third "house" account. In my comment on his answer, I mentioned that you could simply use a bookkeeping account to track this instead of the overhead of an extra real bank account. Here's the detail of what I think will work for you. If you use a tool like gnucash (probably also possible in quicken, or if you use paper tracking, etc), create an account called "Shared Expenses". Create two sub accounts under that called "his" and "hers". (I'm assuming you'll have your other accounts tracked in the software as well.) I haven't fully tested this approach, so you may have to tweak it a little bit to get exactly what you want. When she pays the rent, record two transactions: When you pay the electric bill, record two transactions: Then you can see at a glance whether the balances on "his" and "hers" match. |
Does the Black-Scholes Model apply to American Style options? | Black-Scholes is "close enough" for American options since there aren't usually reasons to exercise early, so the ability to do so doesn't matter. Which is good since it's tough to model mathematically, I've read. Early exercise would usually be caused by a weird mispricing for some technical / market-action reason where the theoretical option valuations are messed up. If you sell a call that's far in the money and don't get any time value (after the spread), for example, you probably sold the call to an arbitrageur who's just going to exercise it. But unusual stuff like this doesn't change the big picture much. |
Buying insurance (extended warranty or guarantee) on everyday goods / appliances? | One important issue that has yet to be covered is the cost (to you) in terms of paperwork, lost time, and phone calls that you have to make to claim the insurance. Such insurance claims often are very low priority on their customer service queues (for obvious reasons, since they have already made the sale). Therefore, you might have to spend up to a few hours of your time calling or writing emails to claim the warranty, which may often not be much ( Therefore, many people end up not claiming the warranty during the hassle. Much like non-scam mail-in rebates, more often than not you would either forget to or decide it is not worth your time to claim the warranty. Before buying such policies, other than the obvious cost-benefit calculations, you should also take this additional factor into account. Therefore, many people end up not claiming the warranty during the hassle. Much like non-scam mail-in rebates, more often than not you would either forget to or decide it is not worth your time to claim the warranty. Before buying such policies, other than the obvious cost-benefit calculations, you should also take this additional factor into account. |
Is there a benefit, long term, to life insurance for a youngish, debt, and dependent free person? | There is no benefit in life insurance as such (ie, death insurance.) There is a great deal of value in other types though: total and permanent disability insurance, trauma insurance (a lump sum for a major medical event), and income protection insurance (cover against a temporary but disabling medical condition). If you don't have that, you should get it right now. This is about the most important insurance you can carry. Being unable to work for the rest of your life has a far larger impact than having, say, your car stolen. ... If, later on, you acquire dependents, and you feel you ought to have life insurance, then you will have a relationship with a life insurance company, and maybe they will let you upgrade from income/TPD to income/TPD/life without too much fuss or requalification. Some do; whether yours would I don't know. But at least you have a toe in the door with them, in a way that is infinitely more immediately useful than getting life insurance that you don't actually need. |
What should one look for when opening a business bank account? | From my experience, I opened a business account to handle my LLC which owns a rental property. The account process and features were similar to shopping for a personal checking account. There would be fees for falling below a minimum balance, and for wanting a paper statement. In my case, keeping $2000 avoids the fee, and I pull the statements online and save the PDFs. Once open for a certain amount of time, you might be able to get credit extended based on the money that flows through that account. The online access is similar to my personal checking, as is the sending of payments electronically. |
Including the region where you live in your investment portfolio? | Diversification is a risk-mitigation strategy. When you invest in equities, you generally get a higher rate of return than a fixed income investment. But you have risks... a single company's market value can decline for all sorts of reasons, including factors outside of the control of management. Diversification lets you spread risk and concentrate on sectors that you feel offer the best value. Investing outside of your currency zone allows you to diversify more, but also introduces currency risks, which require a whole other level of understanding. Today, investing in emerging markets is very popular for US investors because these economies are booming and US monetary policy has been weakening the dollar for some time. A major bank failure in China or a flip to a strong dollar policy could literally implode those investments overnight. At the end of the day, invest in what you understand. Know the factors that can lower your investment value. |
How much financial information should a buyer give an estate agent? | My guess is they are fishing for business for their in-house finance person. In the UK, all the estate agency chains (and many of the smaller outfits) have financial advice firms they are affiliated with, often to the extent that a desk in each branch will be for 'the finance guy' (it's usually a guy). The moment you show any sign of not quite having the finances for a place you like, they will offer you a consultation with the finance guy, who "will be able to get you a deal". On commission, of course. What you need to say with regards to financing is (delete as applicable) "I am a cash buyer" / "I have an Agreement In Principle". And that's it. They do not 'need' to know any more, and they are under obligation to pass your offer on to the vendor. |
What is the process of getting your first share? | I actually use a service called etorro, there are social trading and normal trading. It allows me to put money into the service, follow other people or just pick my own shares to buy and sell with a load other features. It does cost a small amount to extract money but the app is really good, the website is well designed and I've made a bit of money being 23, and in the It industry with no financial training ever it seems like a good way to start. |
Trading: who takes the money from CAC 40 Or DAX | I am guessing that when you say "FRENCH40" and "GERMAN30" you are referring to the main French and German stock market indices. The main French index is the CAC-40 with its 40 constituent companies. The main German index is the DAX, which has 30 constituents. The US30 is presumably the Dow Jones Index which also has 30 constituents. These are stock market indices that are used to measure the value of a basket of shares (the index constituents). As the value of the constituents change, so does the value of the index. There are various financial instruments that allow investors to profit from movements in these indices. It is those people who invest in these instruments that profit from price movements. The constituent companies receive no direct benefit or profit from investor trading in these instruments, nor does the government. |
What are some signs that the stock market might crash? | There are some economic signs as there are in all economic and business cycles, such as interest rates rising. However, a more effective way is to actually look at price action itself. The definition of an uptrend is higher highs followed by higher lows. The definition of a downtrend is lower lows followed by lower highs. So if you are looking to invest for the long term you can look at the weekly or even the monthly chart of the market say over the past 10, 15 or 20 years. Using these definitions on say the S&P500 if the price continues to make higher highs and higher lows then stay in the market. If the price makes a lower high than the previous high, then this is a warning sign that the trend may be about to end. The trend has not broken yet but it is a warning sign that it could be ending soon. If the price makes a higher low next followed by a higher high, then the trend continues and you just need to keep an eye on things. If, however, the price makes a lower low after the lower high this is a signal that the uptrend is over and you should get out of the market. If the price makes a lower low directly after a higher high, then be cautious and wait for confirmation that the uptrend is over. If you then get a lower high this is confirmation that the uptrend is over, you would then sell if prices drop below the previous low. If you invest in individual shares then you should keep an eye on the charts for the index and individual shares as well. The index chart will give you an indication if the uptrend is over for the whole market, then you can be more cautious in regards to the individual shares. You can then plan exit points on each individual share if their trends are broken too. If you have stop losses employed and the trend reverses on the index, this would be a good time to tighten your stop losses on individual shares. You can then buy back into the market when you determine that the downtrend is broken and prices start to show higher highs and higher lows again. Will there be occasions when the uptrend reverses and then after a short period starts trending up again, yes there might be, but the worse that will happen is that you pay a bit of extra brokerage to get out and then back into the market, and you might have to pay some capital gains tax on any profits made. But remember no one ever went broke making a profit. The most important thing to remember when investing is to conserve and protect your capital. I would rather pay some extra brokerage and some capital gains tax than see my portfolio drop by 50% or more, then take 5 years or more to recover. And remember, paying tax is a good thing, it means you made money. If you don't want to pay any tax it means you will never make any profits, because if you make profits you will have to pay tax one day. |
Ideas for patenting/selling a trading strategy | If you have a great technical trading system that gets you winning trading 80-85% of the time in backtesting, the question should be why are you not trading it? To get a better idea of how good your trading system is you should work out your expectancy per trade. This will tell you how much you should make on average for every trade you take. Expectancy not only considers your win rate but also you win size to loss size ratio. For example if you are getting winning trades 80% of the time but your average win size is $100, and your 20% of losses average $500, then you will still be losing money. You should be aiming for an average win size of at least 2.5 to 3 times you average loss size. This will provide you a profitable trading system even if your win rate is 50%. If your trading system is really that good and provides a win size of at least 2.5 times your loss size then you should be actively trading it. Also, if you put your trading system out there in the public domain together with your trading results you will actually find that, quite opposite to what the consensus above is, your results from your trading plan should actually improve further. The more people acting on the outcome of a signal in the same direction the higher the probability that the movement in the desired direction will actually occur. If you are looking to make money from your trading ideas, no one will pay anything unless you have real results to back it up. So if you are so confident about your system you should start trading it with real money. Of course you should start off small and build it up over time as your results eventuate as per your simulations. |
Is there any truth to the saying '99% of the world's millionaires have become rich by doing real estate'? | I can name far more non-real estate millionaires than those who are. That statistic isn't only not valid, it's not even close. Update: The correct quote is "90% of all Millionaires become so through owning Real Estate" and it's attributed to Andrew Carnegie. Given that he was born in 1835, I can imagine that his statement was true at he time, but not today. |
How do you determine the dividend payout date for Mutual Funds? | Determine which fund company issues the fund. In this case, a search reveals the fund name to be Vanguard Dividend Growth Fund from Vanguard Funds. Locate information for the fund on the fund company's web site. Here is the overview page for VDIGX. In the fund information, look for information about distributions. In the case of VDIGX, the fourth tab to the right of "Overview" is "Distributions". See here. At the top: Distributions for this fund are scheduled Semi-Annually The actual distribution history should give you some clues as to when. Failing that, ask your broker or the fund company directly. On "distribution" vs. "dividend": When a mutual fund spins off periodic cash, it is generally not called a "dividend", but rather a "distribution". The terminology is different because a distribution can be made up of more than one kind of payout. Dividends are just one kind. Capital gains, interest, and return of capital are other kinds of cash that can be distributed. While cash is cash, the nature of each varies for tax purposes and so they are classified differently. |
Where does the stock go in a collapse? | Just before a crash or at the start of the crash most of the smart money would have gotten out, the remaining technical traders would be out by the time the market has dropped 10 to 15%, and some of them would be shorting their positions by now. Most long-term buy and hold investors would stick to their guns and stay in for the long haul. Some will start to get nervous and have sleepless nights when the markets have fallen 30%+ and look to get out as well. Others stay in until they cannot stand it anymore. And some will stick it out throughout the downturn. So who are the buyers at this stage? Some are the so called bargain hunters that buy when the market has fallen over 30% (only to sell again when it falls another 20%), or maybe buy more (because they think they are dollar cost averaging and will make a packet when the price goes back up - if and when it does). Some are those with stops covering their short positions, whilst others may be fund managers and individuals looking to rebalance their portfolios. What you have to remember during both an uptrend and a downtrend the price does not move straight up or straight down. If we take the downtrend for instance, it will have lower lows and lower highs (that is the definition of a downtrend). See the chart below of the S&P 500 during the GFC falls. As you can see just before it really started falling in Jan 08 there was ample opportunity for the smart money and the technical traders to get out of the market as the price drops below the 200 MA and it fails to make a higher peak. As the price falls from Jan 08 to Mar 08 you suddenly start getting some movement upwards. This is the bargain hunters who come into the market thinking the price is a bargain compared to 3 months ago, so they start buying and pushing the price up somewhat for a couple of months before it starts falling again. The reason it falls again is because the people who wanted to sell at the start of the year missed the boat, so are taking the opportunity to sell now that the prices have increased a bit. So you get this battle between the buyers (bulls) and seller (bears), and of course the bears are winning during this downtrend. That is why you see more sharper falls between Aug to Oct 08, and it continues until the lows of Mar 09. In short it has got to do with the phycology of the markets and how people's emotions can make them buy and/or sell at the wrong times. |
Is there such a thing as “stock insurance”? | First off, the jargon you are looking for is a hedge. A hedge is "an investment position intended to offset potential losses/gains that may be incurred by a companion investment" (http://en.wikipedia.org/wiki/Hedge_(finance)) The other answers which point out that put options are frequently used as a hedge are correct. However there are other hedging instruments used by financial professionals to mitigate risk. For example, suppose you would really prefer that Foo Corporation not go bankrupt -- perhaps because they own you money (because you're a bondholder) or perhaps because you own them (because you're a stockholder), or maybe you have some other reason for wanting Foo Corp to do well. To mitigate the risk of loss due to bankruptcy of Foo Corp you can buy a Credit Default Swap (http://en.wikipedia.org/wiki/Credit_default_swap). A CDS is essentially a bet that pays off if Foo Corp goes bankrupt, just as insurance on your house is a bet that pays off if your house burns down. Finally, don't ever forget that all insurance is not just a bet that the bad thing you're insuring against is going to happen, it is also a bet that the insurer is going to pay you if that happens. If the insurer goes bankrupt at the same time as the thing you are insuring goes bad, you're potentially in big trouble. |
Equity or alternative compensation in an LLC? | I'm not sure 1099-MISC is what you should expect. Equity means ownership, and in LLC context it means membership. As an LLC member, you'll get distributions and should receive a K-1 form for tax treatment, not 1099 or W2. If the CEO is talking about 1099 it means he's going to hire you as a contractor which contradicts the statement about equity allocation. That's an entirely different situation. 1) Specifically, would the 1099-MISC form be used in this case? 1099-MISC is used to describe various payments. Depending on which box is filled, the tax treatment may be as of employment income (subject to SE taxes) or passive income (royalties, rents, etc - subject to various limitations in the tax code). 3) If this is the only logical method of compensation (receiving a % of real estate sales), how would it be taxed? That would probably be a commission and taxed as employment income. I suggest to get a professional tax adviser consultation on this issue, with specific details, numbers, and kinds of deals involved. You can get gain or lose a lot of money just because you're characterized as a contractor and not LLC member or employee (each has its own benefits and disadvantages, and you have to consider them all). 4) Are there any advantages/disadvantages to acquiring and selling properties through the company as opposed to receiving a % of sales? Yes. There are advantages and there are disadvantages. For example, if you're using a corporation, you can get salary, if you're a contractor you cannot. There are a lot of issues hidden in this distinction (which I've just discussed with KeithS in this argument). |
Prices go up and salary doesn't: where goes delta? | Salaries normally shouldn't fluctuate with inflation and deflation... Inflation prevents consumers from spending (prices get too high), ultimately taking money out of circulation. This causes the market to go in to deflation (or at least deflate back to normal). That's when people begin to spend again, and start the cycle all over again. Now... Imagine if salaries increased with inflation... Inflation would never end. Everyone could keep affording the high prices. A Starbucks coffee would eventually cost $150, but the "middle-class" would all be millionaires. Your "small-change" would consist of a wad of useless bills, and the government would have to continually print out more money just to keep up. NOTE: This is not a direct answer to "where goes delta?", but would more be directed to the part "Prices go up and salary doesn't". |
Understanding SEC Filings | There are a whole host of types of filings. Some of them are only relevant to companies that are publicly traded, and other types are general to just registered corps in general. ... and many more: http://reportstream.io/explore/has-form Overall, reading SEC filings is hard, and for some, the explanations of those filings is worth paying for. Source: I am currently trying to build a product that solves this problem. |
How do I invest in emerging markets | Morningstar is often considered a trusted industry standard when it comes to rating mutual funds and ETFs. They offer the same data-centric information for other investments as well, such as individual stocks and bonds. You can consult Morningstar directly if you like, but any established broker will usually provide you with Morningstar's ratings for the products it is trying to sell to you. Vanguard offers a few Emerging Markets stock and bond funds, some actively managed, some index funds. Other investment management companies (Fidelity, Schwab, etc.) presumably do as well. You could start by looking in Morningstar (or on the individual companies' websites) to find what the similarities and differences are among these funds. That can help answer some important questions: I personally just shove a certain percentage of my portfolio into non-US stocks and bonds, and of that allocation a certain fraction goes into "established" economies and a certain fraction into "emerging" ones. I do all this with just a few basic index funds, because the indices make sense (to me) and index funds cost very little. |
Why does it look like my 401k loan default was not paid by my 401k account balance? | There are multiple reasons why this may have happened: 1.) I couldn't tell in your question whether or not you had already paid off the loan before requesting the rollover. But if the loan was defaulted - then the $9k left in your account is not distributable, but is there to pay back the remaining balance on your loan. The $9k will be treated as income, and will be taxed - you will receive a 1099-R detailing the taxes you'll owe. I don't know why this wasn't done when they did your rollover distribution. Typically it all happens at the same time - but it can vary depending on the administrator. 2.) Do you get some type of safe harbor discretionary match, or profit sharing contribution? If so - perhaps this contribution was made after your account was liquidated. So now there is residual money in your account and it is treated as a new distribution, which incurs a new $60 distribution fee. 3.) Stock - if some of your investments were in stock - these take a few extra days to liquidate. Typically a TPA/Recordkeeper would wait until ALL of the funds are liquidated before issuing the rollover. But some companies may be shady and do it separately - incurring an additional $60 distribution fee. If this was the case - I would go to your former employer's HR and tell them whats happening and to start looking for a new 401(k) administrator! I hope this helps :-) Good luck! |
What is meant by “priced in”? | Anyone who wants to can use any method they want. Ultimately, the price of the stock will settle on the valuation that people tend to agree on. If you think the priced in numbers are too low, buy the stock as that would mean that its price will go up as the future earnings materialize. If you think it's too high, short the stock, as its price will go down as future earnings fail to materialize. The current price represents the price at which just as much pressure pushes the price up as down. That means people agree it's reasonably approximating the expected future value. Imagine if I needed money now and sold at auction whatever salary I make in 2019. How much will I make in 2019? I might be disabled. I might be a high earner. Who knows? But if I auction off those earnings, whatever price it sells for represents everyone's best estimate of that value. But each participant in the auction can estimate that value however they want. If you want to know what something is worth, you see what you can sell it for. |
What exactly is a “bad,” “standard,” or “good” annual raise? If I am told a hard percentage and don't get it, should I look elsewhere? | You are not actually entitled to any raise at all, unless you had something contractually (legally binding) which made that so. I'm answering this from the UK, but it has been common practice for people over the last 10 years or so to receive no yearly raise, in some sectors. This is what I would consider a bad raise - if wages are not kept in line with inflation, you are effectively earning less every year. In this regard I would not work for any employer who did not offer an annual raise that was at the very least covering the rate of inflation (these rates are easy to find in your country by Googling it). In terms of a standard raise, I would argue there is no such thing. This depends on the industry/sector you work in, your employers opinion of your performance (note I've used the word opinion because sometimes you may think the effort you put in is different to what they think - be prepared to give evidence of what you've achieved for them, with things to back it up). A good raise is anything which is way above a standard raise. Since there is no concise definiton of a standard raise, this is also hard to quantify. As others have mentioned do not stay in a role where you are not being given a raise that covers inflation, because it means every year you have less purchasing power, which is akin to your salary going down. It's very easy to justify to an employer you're leaving - and indeed one you're going to - why you're making the move under these conditions. |
What is a good asset allocation for a 25 year old? | Those are all predictions. To the core. With anything, I'd consider the source carefully before taking any kind of advice. If it's from a financial magazine, who advertises with them? What are they selling? How well do they recognize which side of the bread is buttered? That, and I'd get a lot of advice, see how it matches with your goals, and choose. All of that being said, you do have time to recover should you blow it. |
Saving $1,000+ per month…what should I do with it? | Since you already have an emergency fund in place, focus your extra funds on paying off debts like student loans. While some have advised you to play the stock market, not one person has mentioned the word "risk". You are gambling ("investing") your money in the hopes your money will grow. Your student loan is real liability. The longer you keep the loan, the more interest you will pay. You can pay off your student loan in 21 months if you pay $1,100 each month. After the 21 months, you can almost fully fund a 401(k) each year. That will be amazing at your age. Our company gives us the Vanguard Retirement Fund with a low expense ratio of 0.19%. It is passive automated investing where you don't have to think about it. Just add money and just let it ride. |
Why Google Finance puts to two decimal places for the trading volumes? | Many brokerages offer automatic dividend reinvestment. It is very infrequent that these dividends are exactly a whole share. So, if you have signed up for automatic dividend reinvestment, many brokerages will reinvest your dividends and assign to you a fractional share. I can't speak for how these shares work with regards to voting, but I can say that the value of these fractional holdings does change with stock price as if one genuinely could hold a fraction of a share. |
Price difference among shares in Hong Kong and Shang Hai | These markets are independent, just like any other stock market. For example, there are stocks on the Milan stock exchange that are also on the New York stock exchange and have different historical prices. Remember, this is all about offer and demand. The Hong Kong stock exchange has the Hong Kong Dollar as its currency, which is anchored to the USD. Also, there is more trade going on, on the Hong Kong stock exchange. As for the answer, I don't know whether these stocks are exactly the same. I guess they should be, but maybe somebody else could answer that. |
At what point should I go into credit card debt? | Credit cards are a reasonable if relatively expensive tool to gain liquidity. If you have $50k in liquid cash, you don't have a liquidity problem for credit to help you solve. You have 100 months of expenses in cash. I suppose you could see a balance as a motivational tool, but it's all stick and no carrot. Take the next part half seriously in the spirit of "what if" talking therapy: If you feel you need to be motivated to get back to work by the true risk of running out of cash, and take such advice from strangers on the internet, the traditional midlife crisis purchase is a sports car. At least have some fun in a (depreciating but resellable) asset instead of paying a financier's bonus in evaporated interest! If there is a luxury car tariff in your country, you may even be able to exploit a personal exemption if you drove in from the U.S. I suppose this advice could possibly get you booted from the family house as it'll probably come across as a seriously "ugly American" move though... |
Forgot to renew Fictitious Name application within the county. What is the penalty for late filing? | I checked this myself and there is no monetary penalty for late filing. However, since I am late I have to do all publication over again which costs me extra $50. |
How to calculate my estimated taxes. 1099 MISC + Self Employment | One way to do these sorts of calculations is to use the spreadsheet version of IRS form 1040 available here. This is provided by a private individual and is not an official IRS tool, but in practice it is usually accurate enough for these purposes. You may have to spend some time figuring out where to enter the info. However, if you enter your self-employment income on Schedule C, this spreadsheet will calculate the self-employment tax as well as the income tax. An advantage is that it is the full 1040, so you can also select the standard deduction and the number of exemptions you are entitled to, enter ordinary W-2 income, even capital gains, etc. Of course you can also make use of other tax software to do this, but in my experience the "Excel 1040" is more convenient, as most websites and tax-prep software tend to be structured in a linear fashion and are more cumbersome to update in an ad-hoc way for purposes like tax estimation. You can do whatever works for you, but I would recommend taking a look at the Excel 1040. It is a surprisingly useful tool. |
Why is it important to research a stock before buying it? | The following is only an overview and does not contain all of the in-depth reasons why you should look more deeply. When you look at a stock's financials in depth you are looking for warning signs. These may warn of many things but one important thing to look for is ratio and growth rate manipulation. Using several different accounting methods it is possible to make a final report reflect a PE ratio (or any other ratio) that is inconsistent with the realities of the company's position. Earnings manipulation (in the way that Enron in particular manipulated them) is more widespread than you might think as "earnings smoothing" is a common way of keeping earnings in line (or smooth) in a recession or a boom. The reason that PE ratio looks so good could well be because professional investors have avoided the stock as there appear to be "interesting" (but legal) accounting decisions that are of concern. Another issue that you don't consider is growth. earnings may look good in the current reporting period but may have been stagnant or falling when considered over multiple periods. The low price may indicate falling revenues, earnings and market share that you would not be aware of when taking only your criteria into account. Understanding a firm will also give you an insight into how future news might affect the company. If the company has a lot of debt and market interest rates rise or fall how will that effect their debt, if another company brings out a competing product next week how will it effect the company? How will it effect their bottom line? How much do they rely on a single product line? How likely is it that their flagship product will become obsolete? How would that effect the company? Looking deeply into a company's financial statements will allow you to see any issues in their accounting practices and give you a feel for how they are preforming over time, it will also let you look into their cost of capital and investment decisions. Looking deeply into their products, company structure and how news will effect them will give you an understanding of potential issues that could threaten your investment before they occur. When looking for value you shouldn't just look at part of the value of the company; you wouldn't just look at sales of a single T-shirt range at Wallmart when deciding whether to invest in them. It is exactly the same argument for why you should look at the whole of the company's state when choosing to invest rather than a few small metrics. |
In the stock market, why is the “open” price value never the same as previous day's “close”? | Besides overnight news events and auction mechanisms there is a more fundamental reason the price of a stock is always moving. Theoretically the stock price will move slightly even in the unlikely scenario that absolutely nothing of interest happens during the entire night. Let me go into that in some more detail: Stock valuation using Discounted Cash FLow One of the fundamental reasons that stock value is constantly changing is because underneath every stock there is a company that expects to make some kind of profit or loss in the future. We have to go into the fundamentals of stock value to understand why this is important: One popular way to determine the value of a stock is by looking into the future and summing up all the earnings (or cashflows) it has yet to produce. You have to reduce each amount by a certain factor that gets larger for payments that are farther into the future. Think of it this way: a dollar in hand now is better than a dollar that you get tomorrow. This method of valuation is called Discounted Cash Flow (abbr. DCF; see the wikipedia article on DCF) Time's effect on stock value Now take the Close price C, and the open price O. Let's assume that since there has been no news, the expectations for future earnings are the same for C and O. Remember that the discounting factor for these earnings is dependent on the time until the cashflow occurs? For O, this time is slightly shorter than for C, and therefore the value will be slightly higher (or lower, when the company is expected to incur losses). So now you can see that even without all the external forces that continuously push and pull on the stock price, a stock still changes in value over time. Hope this helps. |
Do I have to pay a capital gains tax if I rebuy the same stock within 30 days? | Yes. Wash rules are only for losses. |
Online resource to get expense ratios for mutual funds, index funds & ETFs? | If you want the answer from the horse's mouth, go to the website of the ETF or mutual find, and the expense ratio will be listed there, both on the "Important Information" part of the front page, as well as in the .pdf file that you click on to download the Prospectus. Oh wait, you don't want to go the fund's website at all, just to a query site where you type in something like VFINX. hit SEARCH, and out pops the expense ratio for the Vanguard S&P 500 Index Fund? Well, have you considered MorningStar? |
Definition of “U.S. source” for US non-resident alien capital gains tax | The examples you provide in the question are completely irrelevant. It doesn't matter where the brokerage is or where is the company you own stocks in. For a fairly standard case of an non-resident alien international student living full time in the US - your capital gains are US sourced. Let me quote the following text a couple of paragraphs down the line you quoted on the same page: Gain or loss from the sale or exchange of personal property generally has its source in the United States if the alien has a tax home in the United States. The key factor in determining if an individual is a U.S. resident for purposes of the sourcing of capital gains is whether the alien's "tax home" has shifted to the United States. If an alien does not have a tax home in the United States, then the alien’s U.S. source capital gains would be treated as foreign-source and thus nontaxable. In general, under the "tax home" rules, a person who is away (or who intends to be away) from his tax home for longer than 1 year has shifted tax homes to his new location upon his arrival in that new location. See Chapter 1 of Publication 463, Travel, Entertainment, Gift, and Car Expenses I'll assume you've read this and just want an explanation on what it means. What it means is that if you move to the US for a significant period of time (expected length of 1 year or more), your tax home is assumed to have shifted to the US and the capital gains are sourced to the US from the start of your move. For example: you are a foreign diplomat, and your 4-year assignment started in May. Year-end - you're not US tax resident (diplomats exempt), but you've stayed in the US for more than 183 days, and since your assignment is longer than 1 year - your tax home is now in the US. You'll pay the 30% flat tax. Another example: You're a foreign airline pilot, coming to the US every other day flying the airline aircraft. You end up staying in the US 184 days, but your tax home hasn't shifted, nor you're a US tax resident - you don't pay the flat tax. Keep in mind, that tax treaties may alter the situation since in many cases they also cover the capital gains situation for non-residents. |
Do developed country equities have a higher return than emerging market equities, when measured in the latter currency? | Do developing country equities have a higher return and/or lower risk than emerging market equities? Generally in finance you get payed more for taking risk. Riskier stocks over the long run return more than less risky bonds, for instance. Developing market equity is expected to give less return over the long run as it is generally less risky than emerging market equity. One way to see that is the amount you pay for one rupee/lira/dollar/euro worth of company earnings is fewer rupees/lira and more dollars/euros. when measured in the emerging market's currency? This makes this question interesting. Risky emerging currencies like the rupee tend to devalue over time against less risky currencies euro/dollars/yen like where most international investment ends up, but the results are rather wild. Think how badly Brazil has done recently and how relatively well the rupee has been doing. This adds to the returns (roughly based on interest rates) of foreign stocks from the point of view of a emerging market investor on average but has really wild variations. Do you have data for this over a long timeframe (decades), ideally for multiple countries? Not really, unfortunately. Good data for emerging markets is a fairly new phenomenon and even where it does exist decades ago it would have been very hard to invest like we can now so it likely is not comparable. Does foreign equity pay more or less when measured in rupees (or other emerging market currency)? Probably less on average (theoretically and empirically) all things included though the evidence is not strong, but there is a massive amount of risk in a portfolio that is 85% in a single emerging market currency. Think about if you were a Brazilian and needed to retire now and 85% of your portfolio was in the Real. International goods like gas would be really expensive and your local currency portfolio would seem paltry right now. If you want to bet on emerging markets in the long run I would suggest that you at least spread the risk over many emerging markets and add a good chunk developed to the mix. As for investing goals, it's just to maximize my return in INR, or maximize my risk-adjusted return. That is up to you, but the goal I generally recommend is making sure you are comfortable in retirement. This usually involves looking for returns are high in the long run, but not having a ton of risk in a single currency or a single market. There are reasons to believe a little bias toward your homeland is good as fees tend to be lower on local investments and local investments tend to track closer to your retirement costs, but too much can be very dangerous even for countries with stronger currencies, say Greece. |
Who sets the price and provides the quoted price values for stocks? | The "price" is the price of the last transaction that actually took place. According to Motley Fool wiki: A stock price is determined by what was last paid for it. During market hours (usually weekdays from 9:30AM-4:00PM eastern), a heavily traded issue will see its price change several times per second. A stock's price is, for many purposes, considered unchanged outside of market hours. Roughly speaking, a transaction is executed when an offer to buy matches an offer to sell. These offers are listed in the Order Book for a stock (Example: GOOG at Yahoo Finance). This is actively updated during trading hours. This lists all the currently active buy ("bid") and sell ("ask") orders for a stock, and looks like this: You'll notice that the stock price (again, the last sale price) will (usually*) be between the highest bid and the lowest ask price. * Exception: When all the buy or sell prices have moved down or up, but no trades have executed yet. |
Self Assessment UK - Goods and services for your own use | The problem with your profession is that it is hard to distinguish those activities as 'services rendered' or just a 'pastime hobby'. If you believe that both of those activities constitutes a 'service rendered in a professional capacity', then you should include it into the 'Goods and services for your own use' field. However, should you believe that those services rendered was not in a professional capacity and it was in a personal one (i.e. helping out), you need not include it in the field. In addition, should you feel that the pro-bono services rendered overlaps with your professional freelance work in any way, you might want to consider the service rendered to your dad and yourself as a 'professional service' and include it in Goods and services for your own use. Such examples include (but not limited to): It might be wise to call up the HMRC to clarify on your particular situation. But what I know is, this box was created to ensure that such services rendered should be considered a profit (i.e. an advantage, adds value) and not a loss (or no value). |
If there's no volume discount, does buying in bulk still make sense? | I agree with Rich Seller. Avoiding a trip to the store is a benefit. Not only do you save the time and hassle, but there's real money saved if a car trip is avoided: I maintain a spreadsheet for all of my car expenses – depreciation, maintenance, insurance, license & registration, gas, etc. Combined with starting & ending odometer readings for the year, I can see exactly what it costs me to drive one kilometre. Granted, some costs are fixed simply by virtue of having the car, but gasoline is a variable cost avoided when a trip is avoided. |
Why would people sell a stock below the current price? | The person may just want to get out of that position in order to buy a different stock, he or she feels may go up faster. There is really a lot of reasons. |
Can I cash a cashier's check at any bank? | Normally if the amount of a cashiers check is over $5,000, a bank (like Wells Fargo) may put a 10 business day hold on it to make sure the transaction is sound. |
Why is Dell currently trading above the buyout price? | Dividends would be a possible factor you are ignoring. If Dell has another quarter or two to pay out dividends that could account for some of the difference there. I don't think there is a confirmed date of when the deal is done yet other than around the end of Dell's second quarter which was in the LA Times link you cited. There is also the potential for the terms of the deal to be revised that is another possibility here. Have you examined other deals where a public company went private to see how the stock performed in the last few months before the deal closed? |
What factors make someone buy or sell a stock? | Stock price is determined by the buyers and sellers, correct? Correct! "Everything is worth what its purchaser will pay for it"-Publius Syrus What causes people to buy or sell? Is it news? earnings? stock analysis and techniques? All of these things influence investors' perception of how much a stock is worth. If AMZN makes a lot of money one quarter, then the price might go up. But maybe public perception of AMZN changes because of a large scandal. This could cause the share price to decline even with the favorable earnings report. Why do these 'good' or 'bad' news make people want to buy/sell a stock? People invest to make money. If it looks like a company is going to take a turn for the worst, people will sell. If it looks like the company has a bright, cash-laden future in front of them, people will buy. News is one of the many factors people use to determine how well a company will do. Theoretically could a bunch of people short AMZN and drive down the price regardless of how well it is doing? Say investors wanted to boycott AMZN in order to drive down the cost and get some cheap shares. This is pretty silly, but say for the sake of the argument that everyone who owned AMZN decided to sell their shares and no other investor was willing to buy the shares for less than $0.01, then AMZN shares would be "worth" $0.01 in that aspect. That is extremely unlikely to happen, though, for two reasons: |
UK Online Stock Tradiing for Beginner and Small Amounts? | Try something like this: http://www.halifax.co.uk/sharedealing/our-accounts/fantasy-trader/ Virtual or fantasy trading is a great way to immerse yourself in that world and not lose your money whilst you make basic mistakes. Once real money is involved, there are some online platforms that are cheaper for lower amount investing than others. This article is a good, recent starting point for you: http://www.thisismoney.co.uk/money/diyinvesting/article-1718291/Pick-best-cheapest-investment-Isa-platform.html Best of luck in the investment casino! (And only risk money you can afford to lose - as with any form of investment, gambling, etc) |
How do you declare revenues from YouTube earnings in the USA if you are a minor? | If you receive a 1099-MISC from YouTube, that tells you what they stated to the IRS and leads into most tax preparation software guided interviews or wizards as a topic for you to enter. Whether or not you have a 1099-MISC, this discussion from the IRS is pertinent to your question. You could probably elect to report the income as a royalty on your copyrighted work of art on Schedule E, but see this note: "In most cases you report royalties in Part I of Schedule E (Form 1040). However, if you ... are in business as a self-employed writer, inventor, artist, etc., report your income and expenses on Schedule C or Schedule C-EZ (Form 1040)." Whether reporting on Schedule E or C is more correct or better for your specific circumstances is beyond the advice you should take from strangers on the internet based on a general question - however, know that there are potentially several paths for you. Note that this is revenue from a business, so if you paid for equipment or services that are 100% dedicated to your YouTubing (PC, webcam, upgraded broadband, video editing software, vehicle miles to a shoot, props, etc.) then these are a combination of depreciable capital investments and expenses you can report against the income, reducing the taxes you may owe. If the equipment/services are used for business and personal use, there are further guidelines from the IRS as to estimating the split. These apply whether you report on Sch. E, Sch. C, or Sch C-EZ. Quote: "Self-Employment Income It is a common misconception that if a taxpayer does not receive a Form 1099-MISC or if the income is under $600 per payer, the income is not taxable. There is no minimum amount that a taxpayer may exclude from gross income. All income earned through the taxpayer’s business, as an independent contractor or from informal side jobs is self-employment income, which is fully taxable and must be reported on Form 1040. Use Form 1040, Schedule C, Profit or Loss from Business, or Form 1040, Schedule C-EZ, Net Profit from Business (Sole Proprietorship) to report income and expenses. Taxpayers will also need to prepare Form 1040 Schedule SE for self-employment taxes if the net profit exceeds $400 for a year. Do not report this income on Form 1040 Line 21 as Other Income. Independent contractors must report all income as taxable, even if it is less than $600. Even if the client does not issue a Form 1099-MISC, the income, whatever the amount, is still reportable by the taxpayer. Fees received for babysitting, housecleaning and lawn cutting are all examples of taxable income, even if each client paid less than $600 for the year. Someone who repairs computers in his or her spare time needs to report all monies earned as self-employment income even if no one person paid more than $600 for repairs." |
Why invest in becoming a landlord? | Let me add a few thoughts that have not been mentioned so far in the other answers. Note that for the decision of buying vs. renting a home i.e. for personal use, not for renting out there's a rule of thumb that if the price for buying is more than 20 year's (cold) rents it is considered rather expensive. I don't know how localized this rule of thumb is, but I know it for Germany which is apparently the OP's country, too. There are obviously differences between buying a house/flat for yourself and in order to rent it out. As others have said, maintenance is a major factor for house owners - and here a lot depends on how much of that you do yourself (i.e. do you have the possibility to trade working hours for costs - which is closely related to financial risk exposure, e.g. increasing income by cutting costs as you do maintenance work yourself if you loose your day-time job?). This plays a crucial role for landlords I know (they're all small-scale landlords, and most of them do put in substantial work themselves): I know quite a number of people who rent out flats in the house where they actually live. Some of the houses were built with flats and the owner lives in one of the flats, another rather typical setup is that people built their house in the way that a smaller flat can easily be separated and let once the kids moved out (note also that the legal situation for the landlord is easier in that special case). I also know someone who owns a house several 100 km away from where they live and they say they intentionally ask a rent somewhat below the market price for that (nice) kind of flat so that they have lots of applicants at the same time and tenants don't move out as finding a new tenant is lots of work and costly because of the distance. My personal conclusion from those points is that as an investment (i.e. not for immediate or future personal use) I'd say that the exact circumstances are very important: if you are (stably) based in a region where the buying-to-rental-price ratio is favorable, you have the necessary time and are able to do maintenance work yourself and there is a chance to buy a suitable house closeby then why not. If this is not the case, some other form of investing in real estate may be better. On the other hand, investing in further real estate closeby where you live in your own house means increased lump risk - you miss diversification into regions where the value of real estate may develop very differently. There is one important psychological point that may play a role with the observed relation between being rich and being landlord. First of all, remember that the median wealth (without pensions) for Germany is about 51 k€, and someone owning a morgage-free 150 k€ flat and nothing else is somewhere in the 7th decile of wealth. To put it the other way round: the question whether to invest 150 k€ into becoming a landlord is of practical relevance only for rich (in terms of wealth) people. Also, asking this question is typically only relevant for people who already own the home they live in as buying for personal use will typically have a better return than buying in order to rent. But already people who buy for personal use are on average wealthier (or at least on the track to become more wealthy in case of fresh home owners) than people who rent. This is attributed to personal characteristics and the fact that the downpayment of the mortgage enforces saving behaviour (which is typically kept up once the house is paid, and is anyways found to be more pronounced than for non-house-owners). In contrast, many people who decide never to buy a home fall short of their initial savings/investment plans (e.g. putting the 150 k€ into an ETF for the next 21 years) and in the end spend considerably more money - and this group of people rarely invests into directly becoming a landlord. Assuming that you can read German, here's a relevant newspaper article and a related press release. |
I paid a contractor to make roof repairs to a house in my LLC. How can I deduct this cost? | This new roof should go on the 2016 LLC business return, but you probably won't be able to expense the entire roof as a repair. A new roof is most likely a capital improvement, which means that it would need to be depreciated over many years instead of expensed all in 2016. The depreciation period for a residential rental property is 27.5 years. Please consider seeking a CPA or Enrolled Agent for the preparation of your LLC business return. See also: IRS Tangible Property Regulations FAQ list When you made the loan to the LLC (by paying the contractor and making a contract with the LLC), did you state an interest rate? If not, you and your brother should correct the contract so that an interest rate is stated, then follow it. The LLC needs to pay you interest until the loan is paid off. You need to report the interest income on your personal return, and the LLC needs to report the interest expense in its business return. |
Company is late in paying my corporate credit card statement - will it hurt my credit? | According to an article on Bankrate.com from 2011, yes, it can hurt your credit: With individual liability accounts, the employee holds all responsibility for the charges, even if the company pays the issuer directly. Joint liability means the company and employee share the responsibility for payments, says Mahendra Gupta, author of the RPMG survey. In both cases, if the card isn't paid and the account becomes delinquent, it will pop up on the employee's credit report and dent his or her credit score, says Barry Paperno, consumer affairs manager at myFICO.com. It doesn't matter if the company was supposed to make the payment; the repercussions fall on the employee. "It will impact your score no differently than if you were late on one of your own accounts," Paperno says. Usually, with corporate credit cards, the employee is liable along with the employer for charges on the card. The intent is to provide the employee with an incentive not to misuse the card. However, this can be a problem if your company is late in paying bills. In the distant past, I had a corporate credit card. I was not supposed to have to pay the bill, but I did receive a bill in the mail every month. And occasionally, the payment was late. In my case, these late payments never showed up on my credit report. I can't remember now whether or not this card was reported on my credit report at all. And I remember being told when I got the card that I was jointly responsible for the card with the company. However, your experience may be different. Do the on-time payments show up on your credit report? If so, that may be an indication that a late payment might appear. |
I bought a new car for a month and wanted to return it | My assumption here is that you paid nearly 32K, but also financed about 2500 in taxes/fees. At 13.5% the numbers come out pretty close. Close enough for discussion. On the positive side, you see the foolishness of your decision however you probably signed a paper that stated the true cost of the car loan. The truth in lending documents clearly state, in bold numbers, that you would pay nearly 15K in interest. If you pay the loan back early, or make larger principle payments that number can be greatly reduced. On top of the interest charge you will also suffer depreciation of the car. If someone offered you 31K for the car, you be pretty lucky to get it. If you keep it for 4 years you will probably lose about 40% of the value, about 13K. This is why it is foolish for most people to purchase a new vehicle. Not many have enough wealth to absorb a loss of this size. In the book A Millionaire Next Door the author debunks the assumption that most millionaires drive new cars. They tend to drive cars that are pretty standard and a couple of years old. They pay cash for their cars. The bottom line is you singed documents indicating that you knew exactly what you were getting into. Failing any other circumstances the car is yours. Talking to a lawyer would probably confirm this. You can attempt to sell it and minimize your losses, or you can pay off the loan early so you are not suffering from finance charges. |
Started new job. Rollover previous employer 401k to new 401k, IRA or Roth IRA? | You can't roll it over to a Roth IRA without tax penalties. The best thing to do is roll it to an IRA that isn't tied to work at all. Second best is to roll it into your new employer's 401k. The reason that an IRA makes sense is that it gives you the same tax savings as a 401k, but it allows you to remain in control of the money regardless of your employment status. |
Why do stock prices of retailers not surge during the holidays? | Excellent question for a six year old! Actually, a good question for a 20 year old! One explanation is a bit more complicated. Your son thinks that after the Christmas season the company is worth more. For example, they might have turned $10 million of goods into $20 million of cash, which increases their assets by $10 million and is surely a good thing. However, that's not the whole picture: Before the Christmas season, we have a company with $10 million of goods and the Christmas season just ahead, while afterwards we have a company with $20 million cash and nine months of slow sales ahead. Let's say your son gets $10 pocket money every Sunday at 11am. Five minutes to 11 he has one dollar in his pocket. Five minutes past 11 he has 11 dollars in his pocket. Is he richer now? Not really, because every minute he gets a bit closer to his pocket money, and five past eleven he is again almost a week away from the next pocket money On the other hand... on Monday, he loses his wallet with $10 inside - he is now $10 poorer. Or his neighbour unexpectedly offers him to wash his car for $10 and he does it - he is now $10 richer. So if the company got robbed in August with all stock gone, no insurance, but time to buy new stock for the season, they lose $10 million, the company is worth $10 million less, and the share price drops. If they get robbed just before Christmas sales start, they don't make the $20 million sales, so they are $10 million poorer, but they are $20 million behind where they should be - the company is worth $20 millions less, and the share price drops twice as much. On the other hand, if there is a totally unexpected craze for a new toy going on from April to June (and then it drops down), and they make $10 million unexpectedly, they are worth $10 million more. Expected $10 million profit = no increase in share price. Unexpected $10 million profit - increase in share price. Now the second, totally different explanation. The share price is not based on the value of the company, but on what people are willing to pay. Say it's November and I own 100 shares worth $10. If everyone knew they are worth $20 in January, I would hold on to my shares and not sell them for $10! It would be very hard to convince me to sell them for $19! If you could predict that the shares will be worth $20 in January, then they would be worth $20 now. The shareprice will not go up or down if something good or bad happens that everyone expects. It only goes up or down if something happens unexpectedly. |
Is my stock gone forever from a reverse split / bought by another company? | GT BIOPHARMA, INC. ANNOUNCES REVERSE STOCK SPILT AS PART OF OXIS-GEORGETOWN PLANNED MERGER LOS ANGELES, CA / ACCESSWIRE / August 21, 2017 / GT Biopharma Inc. (formerly known as Oxis International, Inc.) announced today a 1-for-300 reverse stock split. Shareholders of GT Biopharma Inc. (OTCQB: OXIS and Euronext Paris: OXI.PA) will be issued 1 share of common stock for every 300 shares common stock that they owned. If you owned fewer than 300 shares, they cashed you out. |
How do I log a Canadian NR4 form to my income taxes | Income code 09 is dividends, so yes - it is the same as line 1 of the US form 1099-DIV. 1a or 1b however depends on whether the requirements for qualified dividends are met. If they're met - its 1b, if not - 1a. These are treated and taxed differently. See here on what are the qualification requirements. Note that Canada has a tax treaty with the US making Canadian corporations "qualified foreign corporations". |
Paid cash for a car, but dealer wants to change price | As others have said, if the dealer accepted payment and signed over ownership of the vehicle, that's a completed transaction. While there may or may not be a "cooling-off period" in your local laws, those protect the purchaser, not (as far as I know) the seller. The auto dealer could have avoided this by selling for a fixed price. Instead, they chose to negotiate every sale. Having done so, it's entirely their responsibility to check that they are happy with their final agreement. Failing to do so is going to cost someone their commission on the sale, but that's not the buyer's responsibility. They certainly wouldn't let you off the hook if the final price was higher than you had previously agreed to. He who lives by the fine print shall die by the fine print. This is one of the reasons there is huge turnover in auto sales staff; few of them are really good at the job. If you want to be kind to the guy you could give him the chance to sell you something else. Or perhaps even offer him a $100 tip. But assuming the description is correct, and assuming local law doesn't say otherwise (if in any doubt, ask a lawyer!!!), I don't think you have any remaining obligation toward them On the other hand, depending on how they react to this statement, you might want to avoid their service department, just in case someone is unreasonably stupid and tries to make up the difference that was. |
Self-employed individual 401k self, match, and profit sharing contribution limits? | I can only address this part of it: For instance with a 10k net income, 9293 is the limit for 401k from employee. How is this calculated? I believe this limit is total for all sources too, which I'm confused about. How it's calculated is that when you are self-employed you also pay the employer portion of the FICA taxes. This comes off above the line and is not considered income. The 401k contribution limit takes this into account. |
Basic questions about investing in stocks | For point two.. The norm for buying stock is to just register online with a major broker: Fidelity, Schwab,TD Ameritrade...etc, send them money to fund your purchase, make the stock purchase in your account, and then have a little faith. You could probably get them to physically transfer the stock certificates from them to you, but it is not the norm at all. I would plan on a fee being involved also. The 10$ is for one trade... regardless of if you buy one share or many. So you wouldn't buy 1 share of a five dollar stock as your cost would be absurd. You might buy a hundred shares. |
How risky is it to keep my emergency fund in stocks? | There's something very important no one else has mentioned... times when the stock market falls dramatically are often the times when you're most likely to lose your job, and when it's hardest to get loans. So if you ever do need your emergency fund, it will more than likely be related to a dip in the stock market. |
Does a stay at home mom need term life insurance? | The way to think about this is: what would happen to the family if stay-at-home Mom were to die. You obviously can't do anything about the loss, grief and trauma, but think about the financial implications. Assuming that Dad continues to work, and that the child is young, you are going to have to find someone to take care of him/her. If you have relatives willing to step in, that may be fine. but if not you will have to pay for daycare - an expense you don't now have. That's going to get less as the child goes to school, but not go away until he/she is old enough to look after themselves. Bringing up a child, as well as working a full time job, is pretty demanding. You may find that you don't have as much time for cleaning the house, cooking or other chores. Having a sum of money which can be used to hire help or pay for a few meals out can be very useful in these cases. Here is an article which places a value on the work done by a stay-at-home Mom. You might not need to pay for all of those services, but it gives you an idea of what the extra expenses might be. Think about what extra money you might need to spend, and arrange for life insurance to cover it. |
Is there an online cost-basis calculator that automatically accounts for dividend re-investments and splits? | Google Finance portfolios take into account splits and cash deposits/withdrawals. |
Is the “Bank on Yourself” a legitimate investment strategy, or a scam? | Technically, this doesn't seem like a scam, but I don't think the system is beneficial. They use a lot of half-truths to convince you that their product is right for you. Some of the arguments presented and my thoughts. Don't buy term and invest the rest because you can't predict how much you'll earn from the "rest" Also Don't invest in a 401k because you can't predict how much you'll earn They are correct that you won't know exactly how much you'll have due to stock market, but that doesn't mean the stock market is a bad place to put your money. Investing in a 401k is risky because of the harsh 401k withdrawal rules Yes, 401ks have withdrawal rules (can't typically start before 59.5, must start by 70.5) but those rules don't hamper my investing style in any way. Most Term Life Insurance policies don't pay out They are correct again, but their conclusions are wrong. Yes, most people don't die while you have a term insurance policy which is why Term life insurance is relatively cheap. But they aren't arguing you don't need insurance, just that you need their insurance which is "better" You need the Guaranteed growth they offer The chart used to illustrate their guaranteed growth includes non-guaranteed dividends. They invest $10,000 per year for 36 years and end up with $1,000,000. That's a 5% return! I use 10% for my estimate of stock market performance, but let's say it's only 8%. The same $10,000 per year results in over $2 Million dollars. Using 10.5% (average return of the S&P 500 over it's lifetime) the result is a staggering $3.7 MILLION. So if I'm looking at $3.7M vs. $1M, It costs me $2.7 Million dollars to give me the same coverage as my term life policy. That's one expensive Term Life Insurance policy. My personal favorite: Blindly following the advice of Wall Street and financial “gurus” such as Dave Ramsey and Suze Orman got you where you are. Are you happy with the state of your finances? Do you still believe their fairytale, “Buy Term (insurance) and Invest the Difference”? Yes, I sure do believe that fairytale and I'm prospering quite well thank you. :) While I don't think this is a scam, it's outrageously expensive and not a good financial choice. |
Does owning BP ADR from US stock market required to pay custody fees | Rules appear to be changing (21NOV2014) Aviva Plc. AV on NYSE pass thru fee is 0.02 cents per ADR but that equals 11% deduction from ADR dividend. For utility or insurance stock that is significant ongoing fee. Registrar in US is Citibank, could be specific to them. This is the first for me except some modest fees on indonesian ADR. Information very difficult to find. Buy and hold OZ investor. |
Is unrealized gain part of asset? | Stocks, as an asset, represent the sum of the current market value of all of your holdings. If your portfolio is showing unrealized gains and losses, then that net amount is inherently reflected in the current market value of your holdings. That's not to say cost basis is not important. Any closed trades, realized gains or losses, will of course have an impact on your taxable income. So, it couldn't hurt to keep track of your cost basis from a tax standpoint, but understand that the term "asset" refers to the current market values and does not consider base amounts. Taxes do. Perhaps consider making separate cells for cost basis, but also bear in mind that most if not all of the major online discount brokers will provide transferring of cost basis information electronically to the major online tax service providers. |
Family suggests my first real estate. Advice? | You say My work is steady; even if I lost my job it'd be easy to get another. Location has been static for a few years now, but I'm not sure that'll extrapolate to the future; I'm lazy, so I don't want to move, but for a significantly better job opportunity I wouldn't mind. The general rule of thumb is that you'll come out ahead if you buy a house (with a mortgage) and live there for five years. What you lose in interest, you make up in rent. And living there for five years, you make back your closing costs in equity. If you're there less than five years though, you don't make back the closing costs. You'd have been better off renting. Historically (up to about twenty years ago), your mortgage payment and rent payment for the same basic property would be about the same. I.e. if your current landlord sold you what you are renting, your mortgage payment would be roughly the same as your rent. Maybe a little lower or a little higher but about the same. More recently, it hasn't been strange to see a divergence in those. Now it is not uncommon for a mortgage payment to be 50% higher than rent on the same property. This has some consequences. First, your $1000 rent probably won't stretch as far as a $1000 mortgage payment. So you'll be buying something that you'd only pay $650 or $700 rent. Second, if you move and can't sell immediately, you'll get less in rent than you'd pay in mortgage. Rather than contributing to your income, the property will require subsidy just to maintain the mortgage. And in the early years of the mortgage, this means that you're paying all of the principal (equity) and some of the interest. Buying a duplex makes this worse. You have your side and their side. You can substitute your $1000 rent for half of the mortgage payment. Meanwhile, they are paying $700 in rent. You have to subsidize the mortgage by $300. Plus, you are talking about hiring a property management company to do things like lawn maintenance. There goes another $100 a month. So you are subsidizing the mortgage by $400. I don't know real estate prices in Utah, but a quick search finds a median house price over $200,000. So it seems unlikely that you are buying new construction with new appliances. More likely you are buying an existing duplex with existing appliances. What happens when they fail? The renter doesn't pay for that. The property management company doesn't pay for that (although they'll likely arrange for it to happen). You pay for it. Also, it often takes a bit of time to clean up the apartment after one tenant leaves before the new tenant starts paying rent. That's a dead weight loss. If this happens during a local recession, you could be carrying the mortgage on a property with no offsetting rental income for months. There are some countervailing forces. For example, if house prices in your area are increasing, the rent will increase with them (not necessarily at the same pace). But your mortgage payment stays the same. So eventually the rent may catch up with the mortgage payment. If you wait long enough in a strong enough market, the rent on the other half of the duplex may cover the entire mortgage payment. If you currently have an urban apartment within walking distance of work and switch to a suburban apartment with a commute, you have a better chance of finding a duplex where the entire mortgage payment is only the $1000 that you pay in rent. Your half of the duplex won't be as nice as your apartment is, and you'll have a half hour or hour long commute every morning (and the same to get home in the evening). But on strictly fiscal terms you'll be doing about as well. Plus you have the income from the other half. So even if your mortgage payment is more than your rent payment, you can still break even if the rent covers it. Consider a $1400 mortgage and $400 in rent from the other half (after property management fees). So long as nothing goes wrong, you break even. Perhaps the agreement is that your parents take care of things going wrong (broken appliances, troublesome tenants, time between tenants). Or perhaps you drain your emergency fund and adjust your 401(k) payment down to the minimum when that happens. Once your emergency fund is replenished, restore the 401(k). If you're willing to live in what's essentially a $500 apartment, you can do better this way. Of course, you can also do better by living in a $500 apartment and banking the other $500 that you spend on rent. Plus you now have the expenses of a commute and five hours less free time a week. You describe yourself as essentially living paycheck to paycheck. You have adequate savings but no building excess. Whatever you get paid, you immediately turn around and spend. Your parents may view you as profligate. Your apartment is nicer than their early apartments were. You go out more often. You're not putting anything aside for later (except retirement). It didn't use to be at all strange for people to move out of the city because they needed more space. For the same rent they were paying in the city, they could buy a house in the suburbs. Then they'd build up equity. So long as they stayed in roughly the same work location, they didn't need to move until they were ready to upgrade their house. The duplex plan leads to one of two things. Either you sell the duplex and use the equity to buy a nicer regular house, or you move out of the duplex and rent your half. Now you have a rental property providing income. And if you saved enough for a down payment, you can still buy a regular house. From your parents' perspective, encouraging you to buy a duplex may be the equivalent of asking you to cut back on spending. Rather than reducing your 401(k) deposits, they may be envisioning you trading in your car for a cheaper one and trading in your nice but expensive apartment for something more reasonable in a cheaper neighborhood. Rather than working with a property management company, you'll be out doing yardwork rather than cavorting with your friends. And maybe the new place would have more space to share when you meet someone--you aren't going to provide many grandkids alone. If you get a mortgage on a duplex, you are responsible for paying the mortgage. You are responsible even if something happens to the house. For example, if a fire burns it down or a tornado takes it away. Or you just find that the house isn't solid enough to support that party where all of your friends are jumping up and down to the latest pop sensation. So beyond losing whatever you invest in the property, you may also lose what you borrowed. Now consider what happens if you invest the same amount of money in General Motors as in the house. Let's call that $10,000 and give the house a value of $200,000. With General Motors, even if they go bankrupt tomorrow, you're only out $10,000. With the house, you're out $200,000. Admittedly it's much hard to lose the entire $200,000 value of the house. But even if the house loses $80,000 in value, you are still $70,000 in the hole. You don't need a disaster for the house to lose $80,000 in value. That's pretty much what happened in the 2006-2010 period. People were losing all of what they invested in houses plus having to declare bankruptcy to get out of the excess debt. Of course, if they had been able to hold on until 2015 markets mostly recovered. But if you lost your job in 2008, they wouldn't let you not make mortgage payments until you got a new one in 2012. When you declare bankruptcy, you don't just lose the house. You also lose all your emergency savings and may lose some of your belongings. There are some pretty prosaic disasters too. For example, you and your tenant both go away for a weekend. It rains heavily and your roof starts to leak due to weak maintenance (so not covered by insurance). The house floods, destroying all the electronics and damaging various other things. Bad enough if it's just you, but you're also responsible for the tenant's belongings. They sue you for $20,000 and they move out. So no rent and big expenses. To get the house livable again is going to take $160,000. Plus you have a $190,000 mortgage on a property that is only worth about $40,000. That's at the extreme end. |
How to calculate cash loss over time? | It helps to put the numbers in terms of an asset. Say a bottle of wine costs 10 dollars, but the price rises to 20 dollars a year later. The price has risen 100%, and your dollars have lost value. Whereas your ten used to be worth 100% of the price of bottle of wine, they now are worth 50% of the risen price of a bottle of wine so they've lost around 50% of their value. Divide the old price by the new inflated price to measure proportionally how much the old price is of the new price. 10 divided by 20 is 1/2 or .50 or 50%. You can then subtract the old price from the new in proportional terms to find how much value you've lost. 1 minus 1/2 or 1.00 minus .50 or 100% minus 50%. |
Potential pitfalls of this volume trading strategy | First challenge: Creating a system which can understand written English well enough to read the news. Nothing short of IBM's Watson has proven very good at extracting meaning from unstructured text. Second challenge: By the time it reaches "the news", the big actors already know and have responded. Third challenge: It's not uncommon for a stock to drop on good news, or rise on bad, because the price had previously adjusted to an expectation of even better/worse news and is now correcting itself. Basic principle: It it was simple and obvious, everyone would already be doing it. |
Which is the most liquid market for trading? | Depends on how you measure liquidity. There's papers out there that approach this very question. Measured in order book spreads for a consolidated $100m trade, I'd say the second biggest market is FX swaps, followed or par'd by the money market (government bonds). If you disallow OTC venues, it's most definitely exchange listed government bonds. If, however, you happen to think in terms of sheer volume per time, the most liquid market phase could be considered the NYSE closing auction, as you can move billions in a matter of minutes, or expressed in speed terms: several m$/s (million dollars per second). You should pick a definition and we can provide you with a more accurate list of candidates and actual data. |
Paying for things on credit and immediately paying them off: any help for credit rating? | One of the factors of a credit score is the "length of time revolving accounts have been established". Having a credit card with any line of credit will help in this regard. The account will age regardless of your use or utilization. If you are having issues with credit limits and no credit history, you may have trouble getting financing for the purchase. You should be sure you're approved for financing, and not just that the financing option is "available" (potentially with the caveat of "for well qualified borrowers"). Generally, if you've gotten approved for financing, that will come in the form of another credit card account (many contracting and plumbing companies will do this in hopes you will use the card for future purchases) or a bank loan account (more common for auto and home loans). With the credit card account, you might be able to perform a balance transfer, but there are usually fees associated with that. For bank loan accounts, you probably can't pay that off with a credit card. You'll need to transfer money to the account via ACH or send in a check. In short: I wouldn't bet on paying with your current credit card to get any benefit. IANAL. Utilizing promotional offers, whether interest-free for __ months, no balance transfer fees, or whatever, and passing your debt around is not illegal, not fraudulent, and in many cases advised (this is a link), though that is more for people to distribute utilization across multiple cards, and to minimize interest accrued. Many people, myself included, use a credit card for purchasing EVERYTHING, then pay it off in full every month (or sometimes immediately) to reap the benefit of cash back rewards and other cardholder benefits. I've also made a major payment (tuition, actually) on a Discover card, and opened up a new Visa card with 18-months of no interest and no balance transfer fees to let the bill sit for 12 months while I finished school and got a job. |
(Theoretical) Paying credit cards with other credit cards | Three things prevent you from doing this: Credit cards generally don't accept other credit cards as payment. You could do this with a cash advance or balance transfer, but Cash advances and balance transfers usually have fees associated with them, negating any reward you might earn. Your card might have a no-fee balance transfer promotion going, but Cash advances and balance transfers generally aren't eligible for rewards. |
What laws/regulations are there regardings gifts in the form of large sums of money? | This depends on the country(ies) involved. US citizen/resident giving gifts is required to pay a gift tax. The recipient of the gift, however, pays nothing. The value of the gift at the time of the gift-giving is used to determine the tax, and an exclusion of $14000 per person per year (as of 2013) is available to allow smaller gifts to be given without too much of a red tape. There's also a lifetime exemption which is shared between the gift tax and the estate tax. This exemption is $5.25M in 2013. The reason the gift tax exists in the US is because the US tax code is very aggressive. This is basically double taxation, similarly to estate tax. Gifts/estates are after-tax money, i.e.: income tax has been paid on them, yet the government taxes them again. Why? The excuse is to disallow shifting of income: if one person has high income tax brackets, he may give some of his income-producing property to another person with lesser brackets who would then pay less income taxes (for example, parents would transfer property to children). Similarly capital gains could be shifted. Generation-skipping tax is yet another complication to disallow people use gifts to avoid estate taxes: a grandparent would gift stuff to grandchildren, thus skipping a level of estate taxes (the parents in between). In other countries the tax codes may be less aggressive, and not tax gifts/inheritance as this money has been taxed before. This is a more fair situation, IMHO, yet it means that wealth moves from generation to generation without the "general public" benefiting from it. So if you're a US person and considering giving or receiving a gift - you need to consult with a tax adviser about the consequences. Similarly with other countries, if you are subject to their tax laws. |
Why would you not want to rollover a previous employer's 401(k) when changing jobs? | I've changed jobs several times and I chose to rollover my 401k from the previous employer into an IRA instead of the new employer's 401k plan. The biggest reason not to rollover the 401k into the new employer's 401k plan was due to the limited investments offered by 401k plans. I found it better to roll the 401k into an IRA where I can invest in any stock or fund. |
A University student wondering if investing in stocks is a good idea? | You can start investing with any amount. You can use the ShareBuilder account to purchase "partial" stocks through their automatic investment plan. Usually brokers don't sell parts of stock, and ShareBuilder is the only one allowing it IMHO using its own tricks. What they do basically is buy a stock and then divide it internally among several investors who bought it, while each of the investors doesn't really own it directly. That's perfect for investing small amounts and making first steps in investing. |
Paying extra on a mortgage. How much can I save? [duplicate] | How much can I save? Depends on inflation and what other investment opportunities you have. It could end up costing you millions. Can I pay $12,000 extra once a year or $1000 every month - which option is better? It depends on how risk adverse you are. The first option does sound better, but for a 30 year mortgage, is it that significant? How much of your time is it going to cost you to do it every month? What is keeping you from doing it every day? How much is your time worth to you. Giving the bank its money sooner is always better than giving it it's money from a saving interest perspective. When is the best time to pay? See above. |
Do developed country equities have a higher return than emerging market equities, when measured in the latter currency? | First of all, the answer to your question depends on your starting dates and ending dates. So developed markets returns are higher over one period, and emerging markets returns over other periods. So far, there does not appear to be a systematic tilt in favor of one or the other. The reasons are as you said. Emerging markets tend to have higher returns in nominal terms, but developed markets currency movements (sometimes) cancel this out. So watch out for periods of strong and weak developed markets (e.g. U.S) currencies. In "strong" currency periods (such as those of the past five years or so), you want U.S. market exposure, and in "weak" currency periods, the larger nominal local returns will be fully reflected in dollar terms as well. |
Is it ok to have multiple life time free credit cards? | The following is based on my Experian credit scoring feedback and experience here in the UK over many years. (And for further information I currently hold a credit score of 999, the highest possible, with 6 credit cards.) Now I'm assuming that while there may be some differences in particulars in your case due to the difference in locality nevertheless the below should hopefully provide some broad guidelines and reasonable conclusion in your situation: Having a large number of active credit accounts may be seen as a negative. However having a large number of settled accounts should on the contrary have a positive effect on your score. As you keep your accounts mostly settled, I think having another card will not be to your detriment and should in time be beneficial. A large total credit balance outstanding may count against you. (But see the next point.) Having your total outstanding debt on all credit accounts be a smaller proportion of your total available credit, counts in your favour. This means having more cards for the same amount of credit in use, is net-net in your favour. It also has the effect of making even larger outstanding credit balances (as in point 2) to be a lower percentage of your total available credit, and consequently will indicate lower risk to lenders. It appears from my experience the higher the highest credit limit on a single card you are issued (and are managing responsibly e.g. either paid off or used responsibly) the better. Needless to say, any late payments count against you. The best thing to do then is to set up a direct debit for the minimum amount to be paid like clockwork every month. Lenders really like consistent payers. :) New credit accounts initially will count against you for a while. But as the accounts age and are managed responsibly or settled they will eventually count in your favour and increase your score. Making many credit applications in a short space of time may count against you as you may be seen to be credit reliant. Conclusion: On balance I would say get the other card. Your credit score might be slightly lower for a couple of months but eventually it will be to your benefit as per the above. Having another card also means more flexibility and more more options if you do end up with a credit balance that you want to finance and pay off over a period as cheaply as possible. In the UK the credit card companies are falling over themselves trying to offer one "interest free" or 0% "balance transfer" offers. Of course they're not truly 0% since you typically have to pay a "transfer fee" of a couple of percent. Still, this can be quite cheap credit, much much cheaper than the headline APR rates actually associated with the cards. The catch is that any additional spending on such cards are paid off first (and attract interest at the normal rate until paid off). Usually also if you miss a payment the interest rate reverts to the normal rate. But these pitfalls are easily avoided (pay by direct debit and don't use card you've got a special deal on for day to day expenses.) So, having more cards available is then very useful because you then have choice. You can roll expensive debts to the cheapest lender at your disposal for as long as they'll offer, and then simply not use that card for any purchases (while paying off the balance as cheaply as possible), meanwhile using another card for day to day expenses. |
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