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How can people have such high credit card debts? | I had $70K in credit card at one point. Limited income, starting a business - it's the only credit available. (yes, all paid off now). |
What's the fuss about identity theft? | The problem is that the reason you find out may be that you are at the car dealer, picked out a car, and getting ready to sign the loan papers with your supposedly good credit, and you are denied for late payment on loans you didn't know you have. Or debt collectors start hounding you. Or you credit card interest rates go up. Or you are charged more for your insurance because you are seen as a bad credit risk. Or you can't rent an apartment. The list is almost endless. It can takes many months and hours spent on the phone to fix these things. |
How can I calculate interest portion of income when selling a stock? | Their interest expense was $17M. Where you see $5.14/sh in Key Statistics, any daily interest received is more than canceled out by the expense paid at the same time. I understand your concern, but this company is not "sitting on cash" as are Apple, Google, etc. Short term rates are well below 1%, 1yr tbill looks like about .2%. So strictly speaking, each share might have 1 cent interest you need to concern yourself with. Disclaimer to other readers - This has nothing to do with taxes. OP is asking about a specific part of the company cash flow. His worst case is $1 per 100 shares. |
Are binary options really part of trading? | If I really understood it, you bet that a quote/currency/stock market/anything will rise or fall within a period of time. So, what is the relationship with trading ? I see no trading at all since I don't buy or sell quotes. You are not betting as in "betting on the outcome of an horse race" where the money of the participants is redistributed to the winners of the bet. You are betting on the price movement of a security. To do that you have to buy/sell the option that will give you the profit or the loss. In your case, you would be buying or selling an option, which is a financial contract. That's trading. Then, since anyone should have the same technic (call when a currency rises and put when it falls)[...] How can you know what will be the future rate of exchange of currencies? It's not because the price went up for the last minutes/hours/days/months/years that it will continue like that. Because of that everyone won't have the same strategy. Also, not everyone is using currencies to speculate, there are firms with real needs that affect the market too, like importers and exporters, they will use financial products to protect themselves from Forex rates, not to make profits from them. [...] how the brokers (websites) can make money ? The broker (or bank) will either: I'm really afraid to bet because I think that they can bankrupt at any time! Are my fears correct ? There is always a probability that a company can go bankrupt. But that's can be very low probability. Brokers are usually not taking risks and are just being intermediaries in financial transactions (but sometime their computer systems have troubles.....), thanks to that, they are not likely to go bankrupt you after you buy your option. Also, they are regulated to insure that they are solid. Last thing, if you fear losing money, don't trade. If you do trade, only play with money you can afford to lose as you are likely to lose some (maybe all) money in the process. |
Would it make sense to buy a rental property as an LLC and not in my own name? | You need to first visit the website of whatever state you're looking to rent the property in and you're going to want to form the LLC in that particular state. Find the Department of Licensing link and inquire about forming a standard LLC to register as the owner of the property and you should easily see how much it costs. If the LLC has no income history, it would be difficult for the bank to allow this without requiring you to personally guarantee the loan. The obvious benefit of protecting yourself with the LLC is that you protect any other personal assets you have in your name. Your liability would stop at the loan. The LLC would file its own taxes and be able to record the income against the losses (i.e. interest payments and other operating expenses.). This is can be beneficial depening on your current tax situation. I would definitely recommend the use of a tax accountant at that point. You need to be sure you can really afford this property in the worst case scenario and think about market leasing assumption, property taxes, maintenance and management (especially if you've moved to another state.) |
Is a real estate attorney needed for builder deposit contract? | You need to let a lawyer look at it. Concerns you have include: |
Investment for beginners in the United Kingdom | Before jumping into stock trading, do try Mutual Funds and Index funds, That should give you some good overview of the equity markets. Further, do read up on building a balanced portfolio to suit your need and risk apetite. This would help you decide on Govt. bonds and other debt instruments. |
Is it OK to use a credit card on zero-interest to pay some other credit cards with higher-interest? | I've done exactly what you are describing and it was a great move for me. A few years back I had two credit cards. One had a $6000 balance and a fairly high interest rate that I was making steady payments to (including interest). The other was actually tied to a HELOC (home equity line of credit) whose interest rate was fixed to "prime", which was very low at the time, I think my effective rate on the card was around 3%. So, I pulled out one of the "cash advance checks" from the HELOC account and paid off the $6000 balance. Then I started making my monthly payments against the balance on the HELOC, and paid it off a bit more quickly and with less overall money spent because I was paying way less interest. Another, similar, tactic is to find a card that doesn't charge fees for balance transfers and that has a 0% interest rate for the first 12 months on transferred balances. I am pretty sure they are out there. Open an account on that card, transfer the balance to it, and pay it down within 12 months. And, try not to use the card for anything else if you can help it. |
Buying insurance (extended warranty or guarantee) on everyday goods / appliances? | Generally, a polite decline. However, I have dealt with sales people who take first refusal as a "test" response, and decide to go into the details anyway. The longer they talk the more robust my responses. See this Telegraph article that discusses why their experts think it's a ripoff, and why you should check your credit cards and home insurance policies as they may already have you covered (possibly UK/Europe only). http://www.telegraph.co.uk/finance/personalfinance/2820644/Extended-warranties-In-our-view-its-a-rip-off.html On a different note, see this list of questions to ask if you are considering going with the extended warranty. The source doesn't rule for or against the idea, leaving it at caveat emptor: http://www.choice.com.au/reviews-and-tests/technology/home-entertainment/accessories/extended-warranties/page/questions%20to%20ask.aspx |
What's the difference between Market Cap and NAV? | I think the key concept here is future value. The NAV is essentially a book-keeping exercise- you add up all the assets and remove all the liabilities. For a public company this is spelled out in the balance sheet, and is generally listed at the bottom. I pulled a recent one from Cisco Systems (because I used to work there and know the numbers ;-) and you can see it here: roughly $56 billion... https://finance.yahoo.com/q/bs?s=CSCO+Balance+Sheet&annual Another way to think about it: In theory (and we know about this, right?) the NAV is what you would get if you liquidated the company instantaneously. A definition I like to use for market cap is "the current assets, plus the perceived present value of all future earnings for the company"... so let's dissect that a little. The term "present value" is really important, because a million dollars today is worth more than a million dollars next year. A company expected to make a lot of money soon will be worth more (i.e. a higher market cap) than a company expected to make the same amount of money, but later. The "all future earnings" part is exactly what it sounds like. So again, following our cisco example, the current market cap is ~142 billion, which means that "the market" thinks they will earn about $85 billion over the life of the company (in present day dollars). |
Could the loan officer deny me even if I have the money as a first time home buyer? | I've been a mortgage broker for almost 20 years. I get people loans all of the time thru FHA and Conventional (Fannie Mae) with just one year work history; however, as a student, you must submit your school transcripts and your major needs to be in line with your current job. I'm closing a guy next week that has only been in his job for 8 months but he just graduated with his Masters in Biology. He's currently a wild life manager and the underwriter signed off on it easily. |
Can capital expenses for volunteer purposes be deducted from income? | I would suggest to buy your own printer, and calculate the cost for a page including the wear to the printer. Then either deduce these printing expenses, or ask the charity to reimburse you. This is not much different than when you would go to a copyshop, those easily charge 10-30c per page, with your own printer you can probably get it around 5-10c per page, including paper, toner, drum, and amortization. The advantage is that when you do use the printer for other purposes, you wont get into any problems with who owns the printer or deductions. |
Would it make sense to take a loan from a relative to pay off student loans? | The interest that you are proposing to pay your MIL is actually quite low compared to even extremely conservative investing which easily earns 7% or more with quantifiable low risk. You claim that it would be no risk, but what would happen if you lost your job? The risk she faces is more or less exactly what a bank would experience while giving the loan, or in other words it is pretty much whatever your credit score says. Even worse, she does not have a large pool of investments to distribute this risk like a bank would. Making loans this large in a family situation is a recipe for disaster. Taking a huge risk with the relationship your wife has with her mother over three points of interest is exceptionally unwise. Are these private or federal student loans? Federal student loan debt is some of the safest to carry due to its income based repayment plans and eventual loan forgiveness after 25 years. Have you investigated income based repayment options? |
Paid cash for a car, but dealer wants to change price | I'm sorry to hear you've made a mistake. Having read the contract of sale we signed, I do not see any remedy to your current situation. However, I'm interested in making sure I do not take advantage of you. As such, I'll return the vehicle, you can return my money plus the bank fees I paid for the cashiers check, tax, title, and registration, and I will look at buying a vehicle from another dealership. This seems to be the most fair resolution. If I were to pay for your mistake at a price I did not agree to, it would not be fair to me. If you were to allow this vehicle to go to me at the price we agreed to, it wouldn't be fair to you. If I were to return the car and begin negotiations again, or find a different car in your lot, it would be difficult for us to know that you were not going to make a similar mistake again. At this point I consider the sale final, but if you'd prefer to have the vehicle back as-is, returning to us the money we gave you as well as the additional costs incurred by the sale, then we will do so in order to set things right. Chances are good you will see them back down. Perhaps they will just cut the additional payment in half, and say, "Well, it's our mistake, so we will eat half the cost," or similar, but this is merely another way to get you to pay more money. Stand firm. "I appreciate the thought, but I cannot accept that offer. When will you have payment ready so we can return the car?" If you are firm that the only two solutions is to keep the car, or return it for a full refund plus associated costs, I'd guess they'd rather you keep the car - trust me, they still made a profit - but if they decide to have it returned, do so and make sure they pay you in full plus other costs. Bring all your receipts, etc and don't hand over the keys until you have the check in hand. Then go, gladly, to another dealership that doesn't abuse its customers so badly. If you do end up keeping the car, don't plan on going back to that dealership. Use another dealership for warranty work, and find a good mechanic for non-warranty work. Note that this solution isn't legally required in most jurisdictions. Read your contract and all documentation they provided at the time of sale to be sure, but it's unlikely that you are legally required to make another payment for a vehicle after the sale is finalized. Even if they haven't cashed the check, the sale has already been finalized. What this solution does, though, is put you back in the driver's seat in negotiating. Right now they are treating it as though you owe them something, and thus you might feel an obligation toward them. Re-asserting your relationship with them as a customer rather than a debtor is very important regardless of how you proceed. You aren't legally culpable, and so making sure they understand you aren't will ultimately help you. Further, dealerships operate on negotiation. The primary power the customer has in the dealership is the power to walk away from a deal. They've set the situation up as though you no longer have the power to walk away. They didn't threaten with re-possession because they can't - the sale is final. They presented as a one-path situation - you pay. Period. You do have many options, though, and they are very familiar with the "walk away" option. Present that as your chosen option - either they stick with the original deal, or you walk away - and they will have to look at getting another car off the lot (which is often more important than making a profit for a dealership) or selling a slightly used car. If they've correctly pushed the title transfer through (or you, if that's your task in your state) then your brief ownership will show up on carfax and similar reports, and instantly reduces the car's worth. Having the title transfer immediately back to the dealership doesn't look good to future buyers. So the dealership doesn't want the car back. They are just trying to extract more money, and probably illegally, depending on the laws in your jurisdiction. Reassert your position as customer, and decide now that you'll be fine if you have to return it and walk away. Then when you communicate that to them, chances are good they'll simply cave and let the sale stand as-is. |
Calculating return on a series of stock positions with multiple uneven transactions | Generally if you are using FIFO (first in, first out) accounting, you will need to match the transactions based on the number of shares. In your example, at the beginning of day 6, you had two lots of shares, 100 @ 50 and 10 @ 52. On that day you sold 50 shares, and using FIFO, you sold 50 shares of the first lot. This leaves you with 50 @ 50 and 10 @ 52, and a taxable capital gain on the 50 shares you sold. Note that commissions incurred buying the shares increase your basis, and commissions incurred selling the shares decrease your proceeds. So if you spent $10 per trade, your basis on the 100 @ 50 lot was $5010, and the proceeds on your 50 @ 60 sale were $2990. In this example you sold half of the lot, so your basis for the sale was half of $5010 or $2505, so your capital gain is $2990 - 2505 = $485. The sales you describe are also "wash sales", in that you sold stock and bought back an equivalent stock within 30 days. Generally this is only relevant if one of the sales was at a loss but you will need to account for this in your code. You can look up the definition of wash sale, it starts to get complex. If you are writing code to handle this in any generic situation you will also have to handle stock splits, spin-offs, mergers, etc. which change the number of shares you own and their cost basis. I have implemented this myself and I have written about 25-30 custom routines, one for each kind of transaction that I've encountered. The structure of these deals is limited only by the imagination of investment bankers so I think it is impossible to write a single generic algorithm that handles them all, instead I have a framework that I update each quarter as new transactions occur. |
Tax on Stocks or ETF's | I think the answer you are looking for is: You are not taxed on the original basis (purchase cost) of your investment. If you pay $30 a share, and sell at $35, the $5 per share gain is taxable at time of sale. But the $30 basis cost doesn't enter into tax calculations at all. (So it's important to keep good records on your investments and how much you paid for them at purchase.) |
Zero volatility stocks in intraday trading in India | you need to use easy programming language to imply onto a scan where you enter Scan all stocks display if volume < (less than) 100 |
Should Emergency Funds be Used for Infrequent, but Likely, Expenses? | I don't think there is a definite single answer for this. I think it largely depends on where you are on your financial journey. In the ideal world you'd have everything in bucket 2 built into your budget and be putting a little bit aside every paycheck to cover each of those things when they do come up but that takes a fair bit of discipline to do and experience (and data) to estimate reasonably. When you are just starting out in actually setting and keeping a budget or digging yourself out of CC debt/living paycheck to paycheck the odds are you aren't going to have the experience or disciple necessary to actually budget for those things in bucket 2 and even if you did the better option might well be to pay off that high interest debt you already have rather than saving up for an eventual expense. How ever as you start to improve your situation and pay off that debt, develop the disciple to set and follow a budget that is when you should start adding more of those things into your budget. How you track them doesn't really matter. A separate account at your bank. A total for a category in your budgeting software. An XLS file or even paper (ick). Ultimately it isn't about how you plan for and track things but more about actually doing that. So my question to the OP is where are you? If you already have a budget and do a good job of following it but don't have those items in it then consider that the next step in your financial journey. |
Is expense to freelancers tax deductible? | If it's a legitimate cost of doing business, it's as deductible as any other cost of doing business. (Reminder: be careful about the distinctions between employee and contractor; the IRS gets annoyed if you don't handle this correctly.) |
Does it make sense to buy a house in my situation? | I think your best course of action depends on the likely outcome of the divorce proceedings. The alimony/child support payments are controlled externally. I don't like to plan around things that I have no control over. In your shoes, I would probably avoid buying until things are settled down. |
Please explain the relationship between dividend amount, stock price, and option value? | The exchanges artificially push the price of the stock down on the ex-div date. Often the impact of paying the dividend is absorbed by the ebb and flow of trading in the stock later in the day by the market. I think this was noticable with Nokia because the company is in poor shape and the stock has plunged recently. Dividends are a great way for companies to return value to shareholders. The trend for many companies, particularly growth stocks is to reinvest profits to grow the company. Former growth stocks like Microsoft like to just sit on billions of dollars and do nothing with it. |
Why can I refinance my recent car loan at a lower rate than I had received originally? | The simple answer might just be that the increased credit score you mentioned was enough to suddenly make you eligible for this lenders better rate, so maybe that's why you weren't able to get that low a rate before. Another option I can think of is that this particular bank offers these loans as a "teaser rate" to hopefully get more of your business later on. It's not exactly a loss leader I would think, given the non-existing deposit rates they're probably still able to make money on the spread but they might be able to undercut other banks enough to get their hooks into you. Figuratively speaking, of course. Of course in order to evaluate if it's worth switching to this deal, you'll also have to look at prepayment penalties and fees on your current loan. These extra costs might be enough to make the switch uneconomic. |
What is quotational loss in stock market? | Been a long while since I've read it but if I remember correctly with quotational loss Graham refers to an unjustified decline in stock price because of Mr. Market's fear and loathing where the business prospects of the company are actually still sound. This is opposed to "actual" loss of capital which he would consider to be a company going bankrupt or just more generally turning out to have way worse business prospects than expected with the justified decline in stock price that entails. |
Why do Americans have to file taxes, even if their only source of income is from a regular job? | you either tell your financial department about them (e.g. I used to get a student's tax discount), or you file them separately. But you don't have to file anything by default. That is a comment connected to the question. In the united states you can almost achieve this. 90% of the numbers on my tax form are automated. The W-2s are sent to the IRS, the 1099-s for my non retirement accounts are also sent. The two biggest items that take time are charities, and the educational benefits. Nobody has to claim every deduction they are entitled to. They must claim all the income, and decide to take the standard deduction. It would probably take less than an hour to finish the families taxes: both federal and state. |
Dividends - Why the push to reinvest? | Good question, here are some possible answers: Its a Good Idea There is probably some validity to the statictics and having money invested, generally speaking, has proven far more valuable than having it sit in a savings account. It tends to reinforce strength Suppose you own two stocks, one that is a great performer, and one that isn't. Generally speaking the high performer will pay out more, and if you reinvest more into that stock, you will be wealthier if you contributed equally to both stocks. You might forget People tend to forget to do things that are not in the forefront, and reinvestment is one of those things that slip people's mind. One of the wealth building tools that people universally recommend is automation. Reinvesting is a way to automate one aspect of one's financial life. You might spend it on something else If you put the dividends into your checking account, there is a non-zero chance that it might get put towards something else. Better to have it out of sight and mind and invested. They make money Generally speaking, the more money you have in a brokerage account, the more the brokerage makes. So it is good for them, as well as yourself. While there is some attraction to being able to see a balance that is the result of dividend investments, its just far better to have them be poured right back into whatever investment seem appropriate. |
Why do stocks tend to trade at high volumes at the end of (or start) the trading day? | Is it possible that mutual funds account for a significant portion of this volume. Investors may decide to buy or sell anytime within a 24 hour period, but the transaction only happened at the close of the market. Therefore at 3:59 pm the mutual fund knows if they will be buying or selling stocks that day. As nws pointed out the non-market hours are longer and therefore accumulate more news event. Some financial news is specifically given during the time the market is closed. Therefore the reaction to that news has to either be in the morning when the market opens or in the late afternoon if they are trying to anticipate the news. Also in the US market the early morning trader may be reacting to European market activities. |
Why does selling and then rebuying stock not lead to free money? | The main thing you're missing is that while you bear all the costs of manipulating the market, you have no special ability to capture the profits yourself. You make money by buying low and selling high. But if you want to push the price up, you have to keep buying even though the price is getting high. So you are buying high. This gives everyone, including you, the opportunity to sell high and make money. But you will have no special ability to capture that -- others will see the price going up and will start selling within a tiny fraction of a second. You will have to keep buying all the shares they keep selling at the artificially inflated price. So as you keep trying to buy more and more to push the price up enough to make money, everyone else is selling their shares to you. You have to buy more and more shares at an inflated price as everyone else is selling while you are still buying. When you switch to selling, the price will drop instantly, since there's nobody to buy from you at the inflated price. The opportunity you created has already been taken -- by the very people you were trading with. Billions have been lost by people who thought this strategy would work. |
What prevents interest rates from rising? | There do not appear to be any specific legal measures to prevent bankruptcies. In fact, they seems to be part of the means for which rates are raised, for the consequent aim of lowering inflation. See: The Budgetary Implications of Higher Federal Reserve Board Interest Rates by Dean Baker, Center for Economic and Policy Research. The Federal Reserve Board (Fed) is widely expected to start raising interest rates some time in 2015. The purpose of higher interest rates is to slow the economy and prevent inflation. This is done by reducing the rate of job creation and thereby reducing the ability of workers to achieve wage gains. |
Why is the highest quintile the only quintile whose wealth exceeds its income? | In a business environment, this phenomenon could be easily explained by 'operational leverage'. Operational leverage is the principle that increasing revenues by a small amount can have a disproportionately large impact on net income. Consider this example: you run a business that rents out a factory and produces goods to sell to consumers. The rent costs you $10k / month, and all of your other costs depend on how many goods you produce. Assume each good gives you $10 in profit, after factoring your variable costs. If you sell 1,000 units, you break-even, because your variable profit will pay for your rent. If you sell 1,100 units, you make $1,000 net profit. If you sell 1,200 units, you double your overall profit, making $2,000 for the month. Operational leverage is the principle that adding incremental revenue will have a greater impact than the revenue already received, because your fixed costs are already 'paid for'. Similarly in personal finance, consider these scenarios: You have $1,000 in monthly expenses, and make $1,000 - your monthly savings (and therefore your wealth) will be zero. You have $1,000 in monthly expenses, and make $1,100 - your monthly savings will be $100 per month. You have $1,000 in monthly expenses, and make $1,200 - increasing your income by ~10% has allowed your monthly savings double, at $200 per month. You have $1,000 in monthly expenses, and make $2,000 - your monthly savings are 5 times higher, when your income only increased by ~80%. Now in the real world, when someone makes more money, they will increase their expenses. This is because spending money can increase one's quality of life. So the incline does not happen quite so quickly - as pointed out by @Pete & @quid, there comes a point where increased spending provides someone with less increase in quality of life - at that point, savings really would quickly ramp up as income increases incrementally. But assuming you live the same making $2,000 / month as $1,000 / month, you can save, every month, a full month's worth of living expenses. This doesn't even factor in the impact of earning investment income on those savings. As to why the wealth exceeds income at that specific point, I couldn't say, but what I've outlined above should show how it is quite reasonable that the data is as-reported. |
Should I pay off my 50K of student loans as quickly as possible, or steadily? Why? | I recently paid-off $40k in student loan debt. One of the motivations for me to accelerate my payments was that over time, as my income increased, the amount of student loan interest I could write-off on taxes started to phase-out. |
Trading : how to deal with crashes (small or big) | caveat: remember that complex derivatives can be very bad for your wealth (even if you FULLY understand them). |
What should I be aware of as a young investor? | Risk and return always go hand by hand.* Risk is a measure of expected return volatility. The best investment at this stage is a good, easy to understand but thorough book on finance. *Applies to efficient markets only. |
How safe is a checking account? | If the checking account is in a FDIC insured bank or a NCUA insured Credit Union then you don't have to worry about what happens if the bank goes out of business. In the past the government has made sure that any disruption was minimal. The fraud issue can cause a bigger problem. If they get a hold of your debit card, they can drain your account. Yes the bank gives you fraud protection so that the most you can lose is $50 or $500; many even make your liability $0 if you report it in a timely manor. But there generally is a delay in getting the money put back in your account. One way to minimize the problem is to open a savings account,it also has the FDIC and NCUA coverage . The account may even earn a little interest. If you don't allow the bank to automatically provide an overdraft transfer from savings to checking account, then the most they can temporarily steal is your checking account balance. Getting a credit card can provide additional protection. It also limits your total losses if there is fraud. The bill is only paid once a month so if they steal the card or the number, they won't be able to drain the money in the bank account. The credit card, if used wisely can also start to build a positive credit file so that in a few years you can get a loan for a car or a place to live. Of course if they steal your entire wallet with both the credit and the debit card... |
Can I get my property taxes lowered? | You most definitely can appeal the county's appraisal of your property. How to do so, and your odds of success will vary widely by your location, but I have successfully appealed the valuation on one of my rental properties. I asked my realtor to provide me with recent sales of comparable homes in the neighborhood & provided them along with my appeal as evidence of what I felt a reasonable valuation should be. One of three things will happen: 1) Your appeal will be accepted, 2) It will be denied, or 3) you will be asked to come in & plea your case in front of the county assessor. In my case, the county accepted my appeal without needing to testify. Look around your county assessor's website ... you will probably be able to find the form necessary for filing an appeal. If not, give them a call & they'll tell you the procedure. The county generally uses a simplistic statistical model to do their valuations. Little to no human time is spent reviewing your home's value, so it's quite possible for their valuation to be unreasonable. An appeal can take a bit of time & paperwork, but can definitely be worth the effort if the county's valuation is way off. Hope this helps! @mhoran_psprep Your point is well taken that in practice the relationship between sales prices & tax assessments is a bit more tenuous. The waters get muddy when property values have a large swing (like the past 5 years). When tax assessor's started seeing large drops in property values during the recession (and consequent drops in their budgets), I'm sure there was considerable pressure to prevent wholesale decreases in tax valuations. It's politically easier to "prop-up" falling valuations than to raise tax rates. However, the fact remains that the models that assessors use in determining property values are based on sales history - thus, I believe (and have found) that recent sales can be a persuasive piece of evidence in a property tax assessment appeal. |
Trader Fostering Program on Futures Day Trading | a) Contracts are for future delivery of said underlying. So if you are trading CL (crude oil) futures and don't sell before delivery date, you will be contacted about where you want the oil to be delivered (a warehouse presumably). 1 contract is the equivalent of 1000 barrels. b) 600 contracts depends entirely on what you are trading and how you are trading. If you are trading ES (S&P 500 e-Mini), you can do the 600 contracts in less than a second. c) No fees does not make particular sense. It's entirely possible that you are not trading anything, it's just a fake platform so they can judge your performance. d) The catch typically is that when it's time to pay you, they will avoid you or worst case, disappear. e) Trading is a full-time job, especially for the first 4-5 years when you're only learning the basics. Remember, in futures trading you are trading against all the other professionals who do only this 24/7 for decades. If you are only risking your time with the reward being learning and possibly money, it seems like a good deal. There's typically a catch with these things - like you would have to pay for your data which is very expensive or withdrawing funds is possible only months later. |
At what point should I begin paying off student loans? | If you have sufficient money to support yourself until you have a career, then paying off your student loan principal on unsubsidized, federal loans, is probably your best bet. This is because interest accumulates before you're actually required to pay. If they are private, make the payment on the highest interest rate loans. |
Put on a put option | If you look at it from the hedging perspective, if you're unsure you're going to need to hedge but want to lock in an option premium price if you do need to do so, I could see this making sense. |
How can I help my friend change his saving habits? | If he's not used to cooking, recipes might not be enough. Maybe he needs cooking lessons. I used to think if you could read, you could cook -- but I grew up "helping" my mom in the kitchen and in the process learning what all the instructions in cookbooks meant. But it also might just be force of habit, in which case about all you could do would be to go over and cook for (or with) him. Maybe if you helped him get into a good habit, he would be more likely to continue with it. Otherwise, I don't see that there's much of anything you can do. If he isn't motivated to change his habits to save for his trip, you can't make him be. |
Can a Company which is listed at OTC and TSX considered to be serious? | The assumption that companies listed OTC are not serious is far from the truth. Many companies on the OTC are just starting off there because they don't meet the requirements to be listed on the NASDAQ or NYSE. Major stock exchanges like the NASDAQ and the NYSE only want the best companies to trade on their exchanges.The NASDAQ, for example, has three sets of listing requirements. A company must meet at least one of the three requirement sets, as well as the main rules for all companies. These include: Now don't assume that the OTC doesn't have rules either, as this is far from the truth as well. While there are no minimum level of revenue, profits or assets required to get listed on the OTC there are requirements for audited financial statements and ongoing filing and reporting to the SEC and NASD. Additionally there are several different levels of the OTC, including the OTCQX, the OTCCB and the OTC Pink, each with their own set of requirements. For more information about what it takes to be listed on OTC look here: http://www.otcmarkets.com/learn/otc-trading A company deciding to trade on the OTC is making the decision to take their company public, and they are investing to make it happen. Currently the fees to get listed on the OTC range from $30,000 to $150,000 depending on the firm you decide to go with and the services they offer as part as their package. Now, I know I wouldn't consider $30K (or more) to not be serious money! When I looked into the process of getting a company listed on the TSX the requirements seemed a lot more relaxed than those of the major U.S. markets as well, consisting of an application, records submission and then a decision made by a TSX committee about whether you get listed. More information about the TSX here: http://apps.tmx.com/en/listings/listing_with_us/process/index.html I think the way that the OTC markets have gotten such a bad reputation is from these "Get Rich on Penny Stock" companies that you see pumping up OTC company stocks and getting massive amounts of people to buy without doing their due diligence and investigating the company and reading its prospectus. Then when they loose a bunch of money on an ill-informed investment decision they blame it on the company being an OTC stock. Whether you decide to trade the OTC market or not, I wouldn't make a decision based on how many exchanges the company is listed on, but rather based on the research you do into the company. |
Do capital gains get factored into AGI? | I believe that capital gains do affect AGI, but if she sells $40k of stock, then the AGI doesn't go up by $40k, it only goes up by the gains (gross proceeds of the sale minus cost basis). So if she paid $30k for that stock, then the AGI goes up by $10k not $40k. |
What's wrong with this margin calculation? | As the referenced document says, there are 3 formulas, and you need to use the formula which results the greatest margin requirement. In your case, you need to use the 10% formula: |
For very high-net worth individuals, does it make sense to not have insurance? | I think that insurance is one of the best things ever created for this reasons: |
Does cash back apply to online payments with credit card | Retail purchases are purchases made at retail, i.e.: as a consumer/individual customer. That would include any "standard" individual expenditure, but may exclude wholesale sales or purchases from merchants who identify themselves as service providers to businesses. Specifics of these limitations really depend on your card issuer, and you should inquire with the customer service at what are their specific eligibility requirements. As an example, here in the US many cards give high cash-back for gasoline purchases, but only at "retail" locations. That excludes wholesale/club sellers like Costco, for example. |
Personal credit card for business expenses | Early on, one might not be able to get credit for their business. For convenience, and the card perks, it makes sense to use the personal card. But for sake of a clean paper trail, I'd choose 1 card and use it exclusively, 100% for the business. Not one card here, one card there. |
What is the Blue Line in these stock Charts? | My guess is that both the blue and pinkish lines are hand drawn by someone. The blue line indicates 'higher lows' while the pinkish line represents 'higher highs'. Together they form a trading channel in which you can expect future prices to be (unless there is some unanticipated event that occurs). Edit: since the price broke out above the trading channel at the start of the year (and is verified by the increase in volume at that time) something must have occurred to increase the value of the stock. Edit2: this news likely explains the breakout in price. Edit3: this chart shows that the stock price is now 'seeking equilibrium'. The price will, likely, be volatile over the next few days or weeks. |
Is it wise to switch investment strategy frequently? | I understand you're trying to ask a narrow question, but you're basically asking whether you should time the market. You can find tons of books saying you shouldn't try it, and tons more confirming that you can. Both will have data and anecdotes to back them up. So I'll give you my own opinion. Market timing, especially in a macro sense, is a zero-sum game. Your first thought should be: I'm smarter than the average person; the average person is an idiot. However, remember that a whole lot of the money in the market is not controlled by idiots. You really need to ask yourself if you can compete with people who get paid to spend 12 hours a day trying to beat the market. Stick with a mid-range strategy for now. Your convictions aren't and shouldn't be strong enough at the moment to do otherwise. But, if you can't resist, I say go ahead and do what you feel. Regardless of what you do, your returns over the next 3 years won't be life changing. In the meantime, learn as much as you can about investing, and keep a journal of your investment activity to keep yourself honest. |
Maintaining “Woman Owned Business” while taking on investor | In addition to finding another woman investor, you have an equitable option that is not unreasonable: ask your partner to buy out 3% worth of shares from you (which then gives her 54%, allowing you to then sell 5% to an investor and have it not dilute her below 51%: .54 * .95 = .513). That keeps you whole but also keeps your woman-owned-business status. |
Tax on insurance payment due to car deemed as total loss? | DJClayworth's response is generally correct. You wouldn't have to pay taxes on insurance benefits, since those are in fact bringing you whole to what you've lost. However, in some cases you do need to consider taxes. Specifically, if the insurance payout is higher than your cost basis in the lost property. While you may think that this never happens (why would the insurance company pay more than what it cost you?), it in fact quite frequently does. Specific example would be a car used in your business. If you used your car as part of your business and deducted car depreciation on your tax return - your cost basis was reduced by the depreciation. Getting a full car cost payout form insurance would in fact constitute taxable income to you for the difference between your cost basis (adjusted for the depreciation) and the payout. Another example would be collectibles. Say you bought a car 20 years ago at $5000, you maintained it well during the years (assume you spend another $5000 on repairs), and it is now insured at FMV of $50000. But, alas, it got destroyed by a mountain lion who climbed over the fence and pushed it over a cliff. You got a $50000 payout from your insurance company (because you insured it for full FMV coverage, as a collectible should be insured), of which $40000 will be taxable to you. There may be more specific cases where insurance payouts are (partially) taxable. However, as a general rule, they're not, as long as they're at or below your cost basis level. |
Why would I pick a specific ETF over an equivalent Mutual Fund? | In the case of VFIAX versus VOO, if you're a buy-and-hold investor, you're probably better off with the mutual fund because you can buy fractional shares. However, in general the expense ratio for ETFs will be lower than equivalent mutual funds (even passive index funds). They are the same in this case because the mutual fund is Admiral Class, which has a $10,000 minimum investment that not all people may be able to meet. Additionally, ETFs are useful when you don't have an account with the mutual fund company (i.e. Vanguard), and buying the mutual fund would incur heavy transaction fees. |
Do governments support their own bonds when their value goes down? | Without getting to hung-up on terminology here, the management of a company will often attempt to keep stock prices high because of a number of reasons: Ideally companies keep prices up through performance. In some cases, you'll see companies do other things spending cash and/or issuing bonds to continue to pay dividends (e.g. IBM), or spending cash and/or issuing bonds to pay for stock buybacks (e.g. IBM). These methods can work for a time but are not sustainable and will often be seen as acts of desperation. Companies that have a solid plan for growth will typically not do much of anything to directly change stock prices. Bonds are a bit different because they have a fairly straight-forward valuation model based on the fact that they pay out a fixed amount per month. The two main reason prices in bonds go down are: The key here is that bonds pay out the same thing per month regardless of their price or the price of other bonds available. Most stocks do not pay any dividend and for much of those that do, the main factor as to whether you make or lose money on them is the stock price. The price of bonds does matter to governments, however. Let's say a country successfully issued some 10 year bonds last year at the price of 1000. They pay 1% per month (to keep the math simple.) Every month, they pay out $10 per bond. Then some (stupid) politicians start threatening to default on bond payments. The bond market freaks and people start trying to unload these bonds as fast as they can. The going price drops to $500. Next month, the payments are the same. The coupon rate on the bonds has not changed at all. I'm oversimplifying here but this is the core of how bond prices work. You might be tempted to think that doesn't matter to the country but it does. Now, this same country wants to issue some more bonds. It wants to get that 1% rate again but it can't. Why would anyone pay $1000 for a 1% (per month) bond when they can get the exact same bond with (basically) the same risks for $500? Instead they have to offer a 2% (per month) rate in order to match the market price. A government (or company) could in fact put money into the bond market to bolster the price of it's bonds (i.e. keep the rates down.) The problem is that if you are issuing bonds, it's generally (caveats apply) because you need cash that you don't have so what money are you going to use to buy these bonds? Or in other words, it doesn't make sense to issue bonds and then simply plow the cash gained from that issuance back into the same bonds you are issuing. The options here are a bit more limited. I have to mention though that the US government (via a quasi-governmental entity) did actually buy it's own bonds. This policy of Quantitative Easing (QE) was done for more complicated reasons than simply keeping the price of bonds up. |
Is it common in the US not to pay medical bills? | Is it common in the US not to pay medical bills? Or do I misunderstood what had been said? I would feel comfortable saying that most people who face medical bills don't pay them. They are unable. If they were able, they would have gotten medical insurance. In America, something like 55% of individuals do not have even $500 of savings, so when a big medical bill rolls in especially on top of lost work hours, they don't have a lot of options. Hospitals charge reasonable prices to insurance companies and Medicare. These fees are negotiated in advance and reflect the hospital's actual costs. This is called "usual, reasonable and customary". Hospitals charge a wildly inflated, criminally outrageous "cash price" to the uninsured. For instance back when Medicare paid about $175 for an ambulance ride, a friend was billed $1100 for the exact same thing. The hospital aims to scare the living daylights out of the patient (caring nothing about what that does to their health!) Perfect world, the patient pays them the $1100 instead of paying their rent. If the patient puts up a fight, they hope to haggle them down to something like $400, remember it really costs $175. This tactic is a huge profit-center for hospitals, even the "charity" hospitals, and they feel justified because so many uninsured don't pay at all (the hospital considers them "deadbeats".) Well, patients don't pay because cash prices are unreachable, so they just give up. Anyway, your friends are correct, don't even think of paying those cash billing amounts. Research and find out what Medicare pays, offer 60% of that, and haggle it to 100%. And sleep well knowing you paid what is fair. Not all services are as overpriced as my example, but most are at least 50% too high. The hospital does send you all the bills as a formality, even while they submit them to your insurance company. And then the insurance company usually pays them, so it is correct to "not pay that bill". A lot of medical offices will check with your insurance company even before you leave the office, and ask you to immediately pay anything the insurance won't cover. For instance they often have "co-pays" where you pay $20 and they pay the rest. To be clear: if your insurance company negotiates a rate with the hospital, say $185 for the ambulance ride, that is your price, which you are entitled to as a member of that insurance system. A lot of people get their livelihood from the inefficiency in medical insurance and billing. Their political power is why it's so hard for America to install a simpler system (or even replace Obamacare in an ideal political environment). It is also a big part of why America spends 18% of GDP on healthcare instead of 7-11% like our European peers who do not have to account for every gauze or rebill multiple insurers. Sorting out "who pays" would be expensive even if everyone did pay. |
Why do only motor insurers employ “No Claims Discounts”? | Discounting premiums based on some past history is not unique to auto policies. Other insurers will discount premiums based on past claims history they just don't shout about it as a marketing means to attract customers. Life insurance is underwritten based on your health history; if you want to consider your "preferred" underwriting status based on your clear health history a "discount based on your healthy habits" you're free to do so. All sorts of lines of insurance use all sorts of things to determine an underwriting classes. The fact that auto insurers trumpet specific discounts does not mean the same net effect is not available on other lines of coverage. Most states require auto rates and discounts to be filed and approved with some state regulator, some regulatory bodies even require that certain discounts exist. You could likely negotiate with your business insurance underwriters about a better rate and if the underwriters saw fit they could give you a discount. Auto insurers can offer discounts but are generally beholden to whatever rate sheet is on file with the applicable regulatory body. For the person who downvoted, here's a link to a spreadsheet outlining one of the CA department of insurance allowable rating factor sheets related to auto insurance. |
How should I handle student loans when leaving University and trying to buy a house? | One way to reduce the monthly payment due each month is to do everything to eliminate one of the loans. Make the minimum payment to the others, but put everything into eliminating one of the loans. Of course this assumes that you have separate loans for each year of school. Make sure that in trying to get aggressive on the loan repayment that you don't neglect the saving for a down payment. Each dollar you can put down will save you money on the mortgage. It might also allow you to reduce the mortgage insurance payments. If you pay one student loan back aggressively but can't eliminate it you might be worse off because you spent your savings but it didn't help you qualify for the mortgage. One way to maximize the impact is to not make the extra payments until you are ready to apply for the mortgage. Ask the lender if you qualify with all the student loans, or if you need to eliminate one. If you don't need to eliminate a loan, then apply the extra funds to a larger down payment or pay points to reduce the interest rate. |
MasterCard won't disclose who leaked my credit card details | I found a german article describing the legal situation in Germany. To summarize As outlined by the many possible reasons in the other answer, it is unclear from the information I have, whether condition 1 holds. Also condition 2 may not hold since the credit card was frozen. I suppose this makes a good argument to MasterCard and my bank, but I also suspect they will not care unless it comes with a attorney letterhead. |
US citizen transferring money to Indian fiance to buy property | A. Kindly avoid taking dollars in form of cash to india unless and until it is an emergency. Once the dollar value is in excess of $10,000, you need to declare the same with Indian customs at the destination. Even though it is not a cumbersome procedure, why unnecessarily undergo all sort of documentation and most importantly at all security checks, you will be asked questions on dollars and you need to keep answering. Finally safety issue is always there during the journey. B.There is no Tax on the amount you declare. You can bring in any amount. All you need is to declare the same. C. It is always better to do a wire transfer. D. Any transfer in excess of $14,000 from US, will atract gift tax as per IRS guidelines. You need to declare the same while filing your Income Tax in US and pay the gift tax accordingly. E. Once your fiance receives the money , any amount in excess of Rs 50,000 would be treated as individual income and he has to show the same under Income from other sources while filing the taxes. Taxes will be as per the slab he falls under. F.Only for blood relatives , this limit of 50,000 does not apply. G. Reg the Loan option, suggest do not opt for the same. Incase you want to go ahead, then pl ensure that you fully comply with IRS rules on Loans made to a foreign person from a US citizen or resident. The person lending the money must report the interest payment as income on his or her yearly tax return provided the loan has interest element. No deduction is allowed if the proceeds are used for personal or non-business purposes.In the case of no-interest loans, most people believe there is no taxable income because no interest is paid. The IRS views this seriously and the tax rules are astonishingly complex when it comes to no-interest loans. Even though no interest is paid to the lender, the IRS will treat the transaction as if the borrower paid interest at the applicable federal rate to the lender and the lender subsequently gifted the interest back to the borrower.The lender is taxed on the imaginary interest income and, depending on the amount, may also be liable for gift tax on the imaginary payment made back to the borrower. Hope the above claryfies your query. Since this involves taxation suggest you take an opinion from a Tax attorney and also ask your fiance to consult a Charted Accountant on the same. Regards |
Rate of change of beta | This is (almost) a question in financial engineering. First I will note that a discussion of "the greeks" is well presented at https://en.wikipedia.org/wiki/Greeks_(finance) These measures are first, second and higher order derivatives (or rate of change comparisons) for information that is generally instantaneous. (Bear with me.) For example the most popular, Delta, compares prices of an option or other derived asset to the underlying asset price. The reason we are able to do all this cool analysis is because the the value of the underlying and derived assets have a direct, instantaneous relationship on each other. Because beta is calculated over a large period of time, and because each time slice covered contributes equally to the aggregate, then the "difference in Beta" would really just be showing two pieces of information: Summarizing those two pieces of information into "delta beta" would not be useful to me. For further discussion, please see http://www.gummy-stuff.org/beta.htm specifically look at the huge difference in calculation of GE's beta using end-of-month returns versus calculation using day-before-end-of-month returns. |
Stock exchanges using open outcry | As Chris pointed out in his comment, smaller stock exchanges may use open outcry. There are several exchanges that use open outcry/floor trading in the US, however, although they aren't necessarily stock exchanges. Having visited the three Chicago exchanges I mentioned, I can personally vouch for their continued use of a trading floor, although its use is declining in all three. |
Should I use a credit repair agency? | Here's what my wife and I did. First, we stopped using credit cards and got rid of all other expenses that we absolutely didn't need. A few examples: cable TV, home phone, high end internet - all shut off. We changed our cell phone plan to a cheap one and stopped going out to restaurants or bars. We also got rid of the cars that had payments on them and replaced them with ones we paid cash for. Probably the most painful thing for me was selling a 2 year old 'vette and replacing it with a 5 year old random 4 door. Some people might tell you don't do this because older cars need repairs. Fact is, nearly all cars are going to need repairs. It's just a matter of whether you are also making payments on it when they need them and if you can discipline yourself enough to save up a bit to cover those. After doing all this the only payments we had to make were for the house (plus electric/gas/water) and the debt we had accumulated. I'd say that if you have the option to move back into your parent's house then do it. Yes, it will suck for a while but you'll be able to pay everything off so much faster. Just make sure to help around the house. Ignore the guys saying that this tanks your score and will make getting a house difficult. Although they are right that it will drop your score the fact is that you aren't in any position to make large purchases anyway and won't be for quite some time, so it really doesn't matter. Your number one goal is to dig yourself out of this hole, not engage in activity that will keep you in it. Next, if you are only working part time then you need to do one of two things. Either get a full time job or go find a second part time one. The preference is obviously on the first, which you should be able to do in your spare time. If, for some reason, you don't have the tech skills necessary to do this then go find any part time job you can. It took us about 3 years to finally pay everything (except the house) off - we owed a lot. During that time everything we bought was paid for in cash with the vast majority of our money going to pay off those accounts. Once the final account was paid off, I did go ahead and get a credit card. I made very minor purchases on it - mostly just gas - and paid it off a few days before it was due each month. Every 4 months they increased my limit. After around 18 months of using that one card my credit score was back in the 700+ range and with no debt other than the mortgage. *note: I echo what others have said about "Credit Repair" companies. Anything they can do, you can too. It's a matter of cutting costs, living within your means and paying the bills. If the interest rates are killing you, then try to get a consolidation loan. If you can't do that then negotiate settlements with them, just get everything in writing prior to making a payment on it if you go this route. BTW, make sure you actually can't pay them before attempting to settle. |
Should I charge my children interest when they borrow money? | Because this is Money.SE and you're connecting it to offspring, I'd think about a discussion with them to get their agreements. From my perspective, anything (my wife and) I have will go to offspring in the end. As such, everything borrowed and not repaid simply reduces the estate by that much. Among multiple offspring, such reductions should be against the borrower rather than spreading it out. That should be accounted for in whatever will is created. This would be the discussion point. It might also be discussed how or even if any interest should accrue for unpaid amounts. If, for example, a 1% APR is agreed upon for unpaid loans, then the final principle+interest amount is taken off of the borrower's inheritance. Existing outstanding loans might (or might not!) be useful examples for sample calculations if desired or needed. (If nothing else, they might serve as reminders that loans were not forgotten.) By having such a discussion, you can show that you are trying to plan for a fair distribution of your estate, perhaps thereby sidestepping any concern about charging interest to offspring for repaid loans. At the same time, you're handing over some financial responsibility, giving them a power of personal choice, which seems to be a part of what you're concerned about. Once such a discussion is started, it's possible that any question of interest will resolve itself naturally. The discussion almost necessarily must include all offspring at once. One will find it harder to negotiate from a standpoint of pure self-interest without objection from another. Think beforehand about what will be said and about what responses might come. Think things through as much as you can. |
Recommendation for learning fundamental analysis? | Below is just a little information on this topic from my small unique book "The small stock trader": The most significant non-company-specific factor affecting stock price is the market sentiment, while the most significant company-specific factor is the earning power of the company. Perhaps it would be safe to say that technical analysis is more related to psychology/emotions, while fundamental analysis is more related to reason – that is why it is said that fundamental analysis tells you what to trade and technical analysis tells you when to trade. Thus, many stock traders use technical analysis as a timing tool for their entry and exit points. Technical analysis is more suitable for short-term trading and works best with large caps, for stock prices of large caps are more correlated with the general market, while small caps are more affected by company-specific news and speculation…: Perhaps small stock traders should not waste a lot of time on fundamental analysis; avoid overanalyzing the financial position, market position, and management of the focus companies. It is difficult to make wise trading decisions based only on fundamental analysis (company-specific news accounts for only about 25 percent of stock price fluctuations). There are only a few important figures and ratios to look at, such as: perhaps also: Furthermore, single ratios and figures do not tell much, so it is wise to use a few ratios and figures in combination. You should look at their trends and also compare them with the company’s main competitors and the industry average. Preferably, you want to see trend improvements in these above-mentioned figures and ratios, or at least some stability when the times are tough. Despite all the exotic names found in technical analysis, simply put, it is the study of supply and demand for the stock, in order to predict and follow the trend. Many stock traders claim stock price just represents the current supply and demand for that stock and moves to the greater side of the forces of supply and demand. If you focus on a few simple small caps, perhaps you should just use the basic principles of technical analysis, such as: I have no doubt that there are different ways to make money in the stock market. Some may succeed purely on the basis of technical analysis, some purely due to fundamental analysis, and others from a combination of these two like most of the great stock traders have done (Jesse Livermore, Bernard Baruch, Gerald Loeb, Nicolas Darvas, William O’Neil, and Steven Cohen). It is just a matter of finding out what best fits your personality. I hope the above little information from my small unique book was a little helpful! Mika (author of "The small stock trader") |
Pros, cons, and taxation of Per Diem compensation? | Beware if injured on the job they will not add per diem to your wages meaning you make less and your wc benefits will be less !! |
Home Renovations are expensive.. Should I only pay cash for them? | I agree with MrChrister about first considering how necessary the renovations are (is it a nice-to-have, or a need-to-have?), as well as the importance of consulting a Realtor, if you are selling your home, as they will advise you wisely. For instance, they might advise you to replace the linoleum with a neutral beige ceramic tile, as you would be assured a better resale value on your dollar spent, than if you were to replace the old linoleum with new linoleum (or laminate). There are many types of renovations that simply don't pay off, and others that do provide good return-on-investment (like intelligent kitchen and bathroom updates). I found this ROI grid at lendingmax.ca (which is pretty consistent with what I remember reading in the Toronto Star this spring): Top 10 Renovations ~ Average return on investment Painting and interior decorating = 73% Kitchen renovations = 72% Bathroom renovations = 68% Exterior painting = 65% Flooring upgrades = 62% Window/door replacement = 57% Family room addition = 51% Fireplace addition = 50% Basement renovation = 49% Furnace/heating updating = 48% If you are selling your home, and your Realtor has suggested improvements, they are probably necessary, and not doing them might serve as an impediment to quickly selling your home - so factor in the (potential) costs of carrying your home for additional weeks/months, or worse, overlapping mortage costs, if it takes your home longer to sell, and you end up owning two homes simultaneously for a bit. As far as your question (should you pay cash for renos or take out a loan), one factor to consider if you live in Canada is the Home Renovation Tax Credit, which applies to renos that take place until Feb 1, 2010, and can deduct up to $1,350. So if you have to do a reno and yours qualifies for this tax credit, and you won't have the cash before that deadline, factor in the cost of borrowing vs. the $1,350. Good luck! |
Receive money from US Client to Myself in India by selling services | You can receive funds from US Client as an individual. There is no legal requirement for you to have a company. If the transactions are large say more than 20 lacs in a year, its advisable to open a Private Ltd. Although its simple opening & Registering a company [A CA or a Laywer would get one at a nominal price of Rs 5000] you can do yourself. Whatever be the case, its advisable to have seperate accounts for this business / professional service transactions. Maintain proper records of the funds received. There are certain benefits you can claim, a CA can help you. Paying taxes in Advance is your responsibility and hence make sure you keep paying every quarter as advance tax. Related questions Indian citizen working from India as freelancer for U.S.-based company. How to report the income & pay tax in India? Freelancer in India working for Swiss Company Freelancing to UK company from India How do I account for money paid to colleagues out of my professional income? |
Filing Form 7004 if an LLC's only members are husband and wife | Since you both are members of the LLC - it is not a single-member LLC, thus you have to file the tax return on behalf of the LLC (I'm guessing you didn't elect corporate treatment, so you would be filing 1065, which is the default). You need to file form 4868 on behalf of yourselves as individuals, and form 7004 on behalf of the LLC as the partnership. Since the LLC is disregarded (unless you explicitly chose it not to be, which seems not to be the case) the taxes will in fact flow to your individual return(s), but the LLC will have to file the informational return on form 1065 and distribute K-1 forms to each of you. So you wouldn't pay additional estimated taxes with the extension, as you don't pay any taxes with the form 1065 itself. If you need a help understanding all that and filling the forms - do talk to a professional (EA or CPA licensed in your state). Also, reconsider not sending any payment. I suggest sending $1 with the extension form even if you expect a refund. |
Good/Bad idea to have an ETF that encompasses another | You are overthinking it. Yes there is overlap between them, and you want to understand how much overlap there is so you don't end up with a concentration in one area when you were trying to avoid it. Pick two, put your money in those two; and then put your new money into those two until you want to expand into other funds. The advantage of having the money in an IRA held by a single fund family, is that moving some or all of the money from one Mutual fund/ETF to another is painless. The fact it is a retirement account means that selling a fund to move the money doesn't trigger taxes. The fact that you have about $10,000 for the IRA means that hopefully you have decades left before you need the money and that this $10,00 is just the start. You are not committed to these investment choices. With periodic re-balancing the allocations you make now will be adjusted over the decades. One potential issue. You said: "I'm saving right not but haven't actually opened the account." I take it to mean that you have money in a Roth TRA account but it isn't invested into a stock fund, or that you have the money ready to go in a regular bank account and will be making a 2015 contribution into the actual IRA before tax day this year, and the 2016 contribution either at the same time or soon after. If it is the second case make sure you get the money for 2015 into the IRA before the deadline. |
Why are auto leases stubbornly strict about visa status and how to work around that? | Uh, you want to lease a car through a dealer? That is the worst possible way to obtain a car. Dealers love leases because it allows them to sell a car for an unnegotiated price and to hide additional fees. It's the most profitable kind of sale for them. The best option would be to buy a used car off of Craigslist or eBay, then sell it again the same way when you leave. If you sell the car for what you paid, then you get the car for a year for free. If you are determined to go through with the expensive, risky and annoying plan of leasing a car, then you should use a leasing agent. I recommend reading some car buying guides before going out into the wilderness with the tigers and bears. Comment on Leasing Tricks Don't get tricked by the "interest rate" game. The whole interest thing is just a distraction to trick you into think you are getting some kind of reasonable deal. The leasing company makes most of their money from fees. For example, if you get into an accident it is a big payday for them. The average person thinks they will never get into an accident, but the reality is that most people get into an accident sooner or later. They also collect big penalties for "maintenance failures". Forget to change the oil? BOOM! money. Forget to comply with manufacture recall? BOOM! more money. Forget to do the annual service? BOOM! more money. Scratch the car? BOOM! more money. The original car mats are missing? BOOM! you just paid $400 for a set of mats that cost the leasing company $25 bucks. The leasing company is counting on the fact that 99% of people will not maintain the car correctly or will damage it in some way. They also usually have all kinds of other bogus fees, so-called "walk-away fees", "disposition fees", "initiation fees". Whatever they think they can get away with. The whole system is calculated to screw you. |
What is considered high or low when talking about volume? | Volume is really only valuable when compared to some other volume, either from a historical value, or from some other stock. The article you linked to doesn't provide specific numbers for you to evaluate whether volume is high or low. Many people simply look at the charts and use a gut feel for whether a day's volume is "high" or "low" in their estimation. Typically, if a day's volume is not significantly taller than the usual volume, you wouldn't call it high. The same goes for low volume. If you want a more quantitative approach, a simple approach would be to use the normal distribution statistics: Calculate the mean volume and the standard deviation. Anything outside of 1.5 to 2.0 standard deviations (either high or low) could be significant in your analysis. You'll need to pick your own numbers (1.5 or 2.0 are just numbers I pulled out of thin air.) It's hard to read anything specific into volume, since for every seller, there's a buyer, and each has their reasons for doing so. The article you link to has some good examples of using volume as a basis for strengthening conclusions drawn using other factors. |
What exactly is a “derivative”? | A derivative in finance is simply any asset whose value is based on the value of another asset or based on the value of a group of assets. A derivative contract is a type of contract (usually a 'standardized contract') with specific payout instruction based on the price changes of a different asset. The basic idea is that it becomes easier to make a claim to an asset or property (and profit from this claim), without needing to physically transfer it (or even the title to said asset), and use much less capital to do so (reduce risk). They become problematic when multiple people may have claims to the real asset, or when the value of the derivatives changes very quickly or are hard to calculate. There are also liquidity problems the further you get from the real asset. This is not a problem for all kinds of derivatives contracts. And you must recognize that derivatives are used colloquially in a way that has nothing to do with reality to cause fear in people/investors that are not financially savvy. Many derivatives also have dubious or no economic purposes such that regulators don't allow them to be traded since they can't see how it is different from gambling. This is seen in financial markets that are less liberalized or cultures with puritanical backgrounds. Typically the trick is to convince regulators that the derivative or financial product helps with reducing risk and hedging and it will get approved. I've mentioned some terminology, but this depends specifically on what kind of derivatives contract you become interested in. Swaps, Credit Default Swaps, Futures, Options, Options on Futures, Leveraged Exchange Traded Funds, Inverse Leveraged Exchange Traded Funds, warrants, and more all have their own terminology. How to trade them in a simulation? It all depends on which financial product you really become interested in. |
Should I consider my investment in a total stock market fund “diverse”? | You are diversified within a particular type of security. Notably the stock market. A truly diversified portfolio not only has multiple types of holdings within a single type of security (what your broad market fund does) but between different types. You have partially succeeded in doing this with the international fund - that way your risk is spread between domestic and international stocks. But there are other holdings. Cash, bonds, commodities, real estate, etc. There are broad index funds/ETFs for those as well, which may reduce your risk when the stock market as a whole tanks - which it does on occasion. |
How much more than my mortgage should I charge for rent? | The rent will be determined by: the rent being charged on similar houses near you. Your mortgage and other costs (very unfortunately!) have no bearing, at all, on the price you will get. |
Are stocks suitable for mid term money storage? | You have several options depending on your tolerance for risk. Certainly open an investment account with your bank or through any of the popular discount brokerage services. Then take however much money you're willing to invest and start earning some returns! You can split up the money into various investments, too. A typical default strategy is to take any money you won't need for the long term and put it in an Index Fund like the S&P 500 (or a European equivalent). Yes, it could go down, especially in the short term, but you can sell shares at any time so you're only 2-3 days away at any time from liquidity. Historically this money will generate a positive return in the long run. For smaller time frames, a short-term bond fund often gives a slightly better return than a money market account and some people (like me!) use short-term bond funds as if it were a money market account. There is a very low but real risk of having the fund lose value. So you could take a certain percentage of your money and keep it "close" in a bond fund. Likewise, you can sell shares at any time, win or lose and have the cash available within a couple days. |
Basic mutual fund investment questions | You asked 3 questions here. It's best to keep them separate as these are pretty distinct, different answers, and each might already have a good detailed answer and so might be subject to "closed as duplicate of..." That said, I'll address the JAGLX question (1). It's not an apples to apples comparison. This is a Life Sciences fund, i.e. a very specialized fund, investing in one narrow sector of the market. If you study market returns over time, it's easy to find sectors that have had a decade or even two that have beat the S&P by a wide margin. The 5 year comparison makes this pretty clear. For sake of comparison, Apple had twice the return of JAGLX during the past 5 years. The advisor charging 2% who was heavy in Apple might look brilliant, but the returns are not positively correlated to the expense involved. A 10 or 20 year lookback will always uncover funds or individual stocks that beat the indexes, but the law of averages suggests that the next 10 or 20 years will still appear random. |
why do I need an emergency fund if I already have investments? | My take on this is that this reduces your liquidity risk. Stocks, bonds and many other investment vehicles on secondary markets you may think of are highly liquid but they still require that markets are open and then an additional 3-5 business days to settle the transaction and for funds to make their way to your bank account. If you require funds immediately because of an emergency, this 3-5 business days (which gets longer as week-ends and holidays are in the way) can cause a lot of discomfort which may be worth a small loss in potential ROI. Think of your car breaking down or a water pipe exploding in your home and having to wait for the stock sale to process before you can make the payment. Admittedly, you have other options such as margin loans and credit cards that can help absorb the shock in such cases but they may not be sufficient or cause you to pay interest or fees if left unpaid. |
why is the money withdrawn from traditional IRA taxed at the ordinary income tax rate? | This is actually (to me) an interesting point to note. While the answer is "that's what Congress wrote," there are implications to note. First, for many, the goal of tax deferral is to shift 25% or 28% income to 15% income at retirement. With long term gains at 15%, simply investing long term post tax can accomplish a similar goal, where all gain is taxed at 15%. Looking at this from another angle, an IRA (or 401(k) for that matter) effectively turns long term gains into ordinary income. It's a good observation, and shouldn't be ignored. |
Homeowners: How can you protect yourself from a financial worst-case scenario? | If you have doubts about the long term prospects at your employer or jobs in your area, you may want to keep the option of moving to find a new job open while you save up for a larger down payment on a house. While there are insurance products out there that claim to cover your mortgage, they often have loopholes which make them difficult to collect on. Insurance companies are in business to make money and premiums are high when it's likely that people will try to collect. Splitting those premiums into your mortgage and your own self-insured unemployment fund (i.e. an emergency fund in a money market bank account) will usually be a better deal. As always, make sure you have term life insurance for a family and long term disability insurance just in case something really bad happens in the near term. Buying a home is a better financial decision when you know you'll be in an area for at least 5 years. Saving until you have 20% down on place that you can afford to pay off in 15 years (even if you take a 30 year loan) will be a lot cheaper and less stressful. |
Estimated Tax on Unplanned Capital Gains | In general, you are expected to pay all the money you owe in taxes by the end of the tax year, or you may have to pay a penalty. But you don't have to pay a penalty if: The amount you owe (i.e. total tax due minus what you paid in withholding and estimated taxes) is less than $1000. You paid at least 90% of your total tax bill. You paid at least 100% of last year's tax bill. https://www.irs.gov/taxtopics/tc306.html I think point #3 may work for you here. Suppose that last year your total tax liability was, say, $5,000. This year your tax on your regular income would be $5,500, but you have this additional capital gain that brings your total tax to $6,500. If your withholding was $5,000 -- the amount you owed last year -- than you'll owe the difference, $1,500, but you won't have to pay any penalties. If you normally get a refund every year, even a small one, then you should be fine. I'd check the numbers to be sure, of course. If you normally have to pay something every April 15, or if your income and therefore your withholding went down this year for whatever reason, then you should make an estimated payment. The IRS has a page explaining the rules in more detail: https://www.irs.gov/help-resources/tools-faqs/faqs-for-individuals/frequently-asked-tax-questions-answers/estimated-tax/large-gains-lump-sum-distributions-etc/large-gains-lump-sum-distributions-etc |
Merchant dispute with airline over missed flight, and which credit cards offer protection? | EDIT To answer what I think you question is: I do not know of anything other than trip cancellation insurance. And you must be very careful that the policy you purchase for your trip covers the circumstance you described. Essentially, you opted not to take the flight. Not all trip cancellation policies will cover that. How to Find Trip Cancellation Insurance Getting Your Money Back Now This is an Act of God in the insurance world. You cannot reasonably expect the airline to know the future weather pattern anymore than you could, and therefore, since the plane did fly, you owe them the money based on the ticket you bought. You didn't just buy a ticket, there is a contract with rules about refunds and transferring and such. It is a bummer situation, and I understand you point of view, but this isn't the airline's fault. If anybody is to blame for you missing your flight, and therefore not getting a refund, it is your employer. Their requirements for you be in one city and then another are the cause. While your employer cannot predict the weather, they are ultimately the ones who could give you the okay to be late. If you absolutely cannot be late, and it was critical that you drive out and miss your flight, then your company gets to pay for the flight AND the car. That is the cost of doing business for them. This is also why, when flying for business, that you pay the higher price and get the refundable / transferable ticket. They cost more, but situations like these illustrate they are worth it for the company. |
A guy scammed me, but he gave me a bank account number & routing number. Can I use that to take out what he owes me? | What legal way can I take what I am owed from this guy? The legal ways are for this guy to transfer you the money or give you instructions that will allow you to get the money. Alternatively you would need to file a civil suite to recover the funds. What illegal way do people use this info if they had it? I don't want to get in trouble, but I'm just curious because you always hear how easy it is. There are quite a few illegal ways. I don't think this is the right forum to discuss this. |
What one bit of financial advice do you wish you could've given yourself five years ago? | Maybe not exactly 5 years ago, but the big thing I wish I understood starting out my career was retirement accounts and how they worked. |
Why call option price increases with higher volatility | Understanding the BS equation is not needed. What is needed is an understanding of the bell curve. You seem to understand volatility. 68% of the time an event will fall inside one standard deviation. 16% of the time it will be higher, 16%, lower. Now, if my $100 stock has a STD of $10, there's a 16% chance it will trade above $110. But if the STD is $5, the chance is 2.3% per the chart below. The higher volatility makes the option more valuable as there's a highr chance of it being 'in the money.' My answer is an over simplification, per your request. |
I have $12k in a Chase checking account, but want to start earning interest/saving/investing/etc to make more money. What should I do? | These are the basics in order: Max your employer contributions to your 401k if available Pay off any loans Contribute to an IRA Perhaps max out your 401k Look into other investment options (refinance your mortgage, buy stocks) Those are the typical rules, special situations may need specials actions... |
What's the catch with biweekly mortgage payments? | Pete and Noah addressed the math, showing how this is, in effect, converting a 30yr to a ~23yr mortgage, at a cost, plus payment about 8% higher (1 extra payment per year). No magic there. The real issue, as I see it, is whether this is the best use of the money. Keep in mind, once you pay extra principal, which in effect is exactly what this is, it's not easy to get it back. As long as you have any mortgage at all, you have the need for liquidity, enough to pay your mortgage, tax, utilities, etc, if you find yourself between jobs or to get through any short term crisis. I've seen people choose the "sure thing" prepayment VS the "risky" 401(k) deposit. Ignoring a match is passing up a 50% or 100% return in most cases. Too good to pass up. 2 points to add - I avoided the further tangent of the tax benefit of IRA/401(k) deposits. It's too long a discussion, today's rate for the money saved, vs the rate on withdrawal. Worth considering, but not part of my answer. The other discussion I avoid is Nicholas' thoughts on the long term market return of 10% vs today's ~4% mortgage rate. This has been debated elsewhere and morphs into a "pre-pay vs invest" question. |
Does the uptick rule apply to all stocks/ETFs and other securities, or only specific ones? | The uptick rule is gone, but it was weakly reintroduced in 2010, applied to all publicly traded equities: Under the terms of the rule, a circuit breaker would be triggered if a stock falls by 10% or more in a single day. At that point, short selling would only be allowed if the price is above the current national best bid, a restriction that would apply for the rest of the day and the whole of the following day. Derivatives are not yet restricted in such ways because of their spontaneous nature, requiring a short to increase supply; however, this latest rule widens options spreads during collapses because the exemption for hedging is now gone, and what's more a tool used by options market makers, shorting the underlying to offset positive delta, now has to go to the back of the selling line during a panic. Bonds are not restricted because for one there isn't much interest in shorting because bonds usually don't have enough variance to exceed the cost of borrowing, and many do not trade frequently enough because even the cost to trade bonds is expensive, so arranging a short in its entirety will be expensive. The preferred method to short a bond is with swaps, swaptions, etc. |
Why are stop order called “stop” when it is in fact a “start” condition? | Historically they were conceived as a way to cut losses when the market turned against you. You would tell your broker something like "buy me 100 shares of Anaconda and stop me if it goes below $110" You can read references to this in old books like Reminiscences of a Stock Operator, the ABC of Options pricing, or the Day Trader's Bible. |
What does it mean for a company to have its market cap larger than the market size? | First read mhoran's answer, Then this - If the company sold nothing but refrigerators, and had 40% market share, that's $4M/yr in sales. If they have a 30% profit margin, $1.2M in profit each year. A P/E of 10 would give a stock value totaling $12M, more than the market size. The numbers are related, of course, but one isn't the maximum of the other. |
Digital money pots? | I guess it depends on your bank. My bank (Rabobank) recently did introduce this feature. You don't get a card per category, though. Instead you set up rules to match each expenditure to one of the existing pots. |
Why is the bid-ask spread considered a cost? | As an aside, on most securities with a spread of the minimum tick, there would be no bid ask spread if so-called "locked markets", where the price of the best bid on one exchange is equal to the price of the best ask on another, were permitted. It is currently forbidden for a security to have posted orders having the same price for both bid and ask even though they're on different exchanges. Option spreads would narrow as well as a result. |
Optimal term/number of months for car finance or lease? | If you have the money to pay cash for the car. Then 0 months will save you the most money. There are of course several caveats. The money for the car has to be in a relatively liquid form. Selling stocks which would trigger taxes may make the pay cash option non-optimal. Paying cash for the car shouldn't leave you car rich but cash poor. Taking all your savings to pay cash would not be a good idea. Note: paying cash doesn't involve taking a wheelbarrow full of bills to the dealer; You can use a a check. If cash is not an option then the longest time period balanced by the rates available is best. If the bank says x percent for 12-23 months, y percent for 24-47 months, Z percent for 48 to... It may be best to take the 47 month loan, because it keeps the middle rate for a long time. You want to lock in the lowest rate you can, for the longest period they allow. The longer period keeps the required minimum monthly payment as low as possible. The lower rate saves you on interest. Remember you generally can pay the loan off sooner by making extra or larger payments. Leasing. Never lease unless you are writing off the monthly lease payment as a business expense. If the choice is monthly lease payments or depreciation for tax purposes the lease can make the most sense. If business taxes aren't involved then leasing only means that you have a complex deal where you finance the most expensive part of the ownership period, you have to watch the mileage for several years, and you may have to pay a large amount at the end of the period for damages and excess miles. Plus many times you don't end up with the car at the end of the lease. In the United States one way to get a good deal if you have to get a loan: take the rebate from the dealer; and the loan from a bank/credit Union. The interest rate at banking institution is a better range of rates and length. Plus you get the dealer cash. Many times the dealer will only give you the 0% interest rate if you pay in 12 months and skip the rebate; where the interest paid to the bank will be less than the rebate. |
The best credit card for people who pay their balance off every month | BillShrink.com lets you compare credit cards based on all your specifics (miles vs. cash, where you shop the most, etc) and tells you what the best card is for your specific habits. MOD EDIT Looks like billshrink.com is shut down. From their site: Dear BillShrink customer, As you may have heard, BillShrink.com was shut down on July 31, 2013. While we’re sad to say goodbye, we hope we’ve been able to help you be better informed and save some money along the way! The good news is that much of the innovative award-winning BillShrink technology will still be available via our StatementRewards platform (made available to customers by our partnering financial institutions). Moreover, we expect to re-launch a new money-saving service in the future. To see more of what we’re up to, visit Truaxis.com. We have deleted your personal information as of July 31. We will retain your email address only to announce a preview of the new tool. If you do not want us to retain your email address, you can opt out in the form below. This opt out feature will be available until September 31, 2013. If you have already opted out previously, you do not need to opt out again. If you have any further questions, contact us at info@billshrink.com. Thanks, The BillShrink/Truaxis Team |
How do I build wealth? | As others have stated, CEO's often make more than 200K, and when they do, they're compensated with stock options and other lucrative bonuses and deals that allow them to build wealth above and beyond the face value of their salary. However, remember that having wealth makes it easier to build further wealth. As Victor pointed out, having wealth allows you to increase your wealth in different kinds of investments. Also, it gives you access to more human capital, e.g. wealth management services at firms like Northern Trust, a greater ability to diversify into investments like hedge funds, more abilities to invest abroad through foreign trusts, etc. Also, you have to realize that wealthier people often pay a lower percentage in taxes than people who earn a salary. In the US, long-term capital gains are taxed at a much lower rate than income, so wealthy individuals who earn much of their money from long-term investments won't pay nearly as high a rate. In my case, my current salary places me at the top of the 25% tax bracket (in the US), but if I earned all of my income through long-term capital gains instead of salary, I would only pay around 15-20% in taxes. Plus, I could afford numerous tax accounting firms to help me find ways to pay fewer taxes. It's not altruism that causes CEOs like Steve Jobs and Mark Zuckerberg to take a $1 salary. This isn't directly related to CEOs, and I'm not leveling accusations of corruption against high net worth individuals, but I remember spending a few months in a small town in a country known for its corruption. The mayor had recently purchased a home worth the equivalent of several million dollars, on his annual civil servant salary of approximately $20K. One of the students asked him how he managed to afford such a sizable property, and he replied "I live very frugally." This is probably a relatively rare case (I'm sure it depends on the country), but nevertheless, it illustrates another way that some people build wealth. |
If stock price drops by the amount of dividend paid, what is the use of a dividend | You buy stocks for dividends over the long term. If a share of stock pays $1.00 in dividends every quarter, that's four dollars a year. If you bought it for $40, it pays out $4 in a year, and it's still worth roughly $40 at the end of the year, you're $4 richer. People will often invest large amounts of money in stable stocks not planning to sell it, but only collect the dividends which are either re-invested or pulled out as income. |
Transfer from credit to debit | As revised, the answer is still that you're asking the wrong question. If your father wants to make money available on your debit card, all he has to do is deposit the money into your checking account. Where he gets that money from -- as an AmEx casH advance, by selling your bicycle for you, or simply out of one of his own bank accounts -- is irrelevant. |
Tenant wants to pay rent with EFT | Other options would be to use paypal, your tenant would only need your e-mail address. Most banks have a similar system to do a person-to-person transfers. My bank uses an e-mail address and only the last 4 digits of the account number. |
Finding a good small business CPA? | Consult your local Small Business Administration office - they may have resources that can help you find what you're looking for. |
New to investing — I have $20,000 cash saved, what should I do with it? | My advice to you is not to take any advice from anyone when it comes to investing, especially when you don't know much about what you are investing in. mbhunter is correct, take your time to learn about what you want to invest in. If your goal at the moment is short term don't invest in stocks unless you really know what you are doing. Put your money where you can get the highest interest rate, continue saving and do a lot of research on the house you wish to buy. Even if you are not ready to buy a house yet, start looking so that by the time you are ready to buy, you know how much the house is really worth. Before buying our house we spent about 7 months looking and researching and looked at more than 100 houses. |
Need a formula to determine monthly payments received at time t if I'm reinvesting my returns | With 10% return over three years, depositing $900 each month, in three years $34,039.30. Re. downvote. I guess this is too brief and without explanation, but I was rushing. If you want further explanation of how this is calculated check the link already posted by JoeTaxpayer, and have a look at the formula for continuously compounded return. Also, try out the numbers in the simplified example below yourself. E.g. Addendum mhoran_psprep has pointed out that I didn't read the OP's post closely enough. With rolling investments the total return will be: Where n is the month number i.e. 36, 37, etc. |
What is the preferred way to finance home improvements when preparing to sell your house? | You should look into a home equity line of credit: A home equity line of credit (often called HELOC and pronounced HEE-lock) is a loan in which the lender agrees to lend a maximum amount within an agreed period (called a term), where the collateral is the borrower's equity in his/her house. Because a home often is a consumer's most valuable asset, many homeowners use home equity credit lines only for major items, such as education, home improvements, or medical bills, and choose not to use them for day-to-day expenses. |
At what point do index funds become unreliable? | private investors that don't have the time or expertise for active investment. This may be known as every private investor. An index fund ensures average returns. The bulk of active trading is done by private institutions with bucketloads of experts studying the markets and AI scraping every bit of data it can get (from the news, stock market, the weather reports, etc...). Because of that, to get above average returns an average percent of the time, singular private investors have to drastically beat the average large team of individuals/software. Now that index ETF are becoming so fashionable, could there be a tipping point at which the market signals that active investors send become so diluted that this "index ETF parasitism" collapses? How would this look like and would it affect only those who invest in index ETF or would it affect the stock market more generally? To make this question perhaps more on-topic: Is the fact (or presumption) that index ETF rely indirectly on active investment decisions by other market participants, as explained above, a known source of concern for personal investment? This is a well-covered topic. Some people think this will be an issue. Others point out that it is a hard issue to bootstrap. I gravitate to this view. A small active market can support a large number of passive investors. If the number of active investors ever got too low, the gains & likelihood of gains that could be made from being an active investor would rise and generate more active investors. Private investing makes sense in a few cases. One example is ethics. Some people may not want to be invested, even indirectly, in certain companies. |
Can you short a stock before the ex-div. date to make a profit? | When you short a stock and the stock goes ex-div. you have to pay out an amount equal to the dividend. So in your example, GG would short the stock at $10.00, buy back at $9.00 and be charged $1.00 for the dividend. Net effect $0.00. |
How do I get the latest or even realtime information of institutions stock buy/sell action? | Of course not, this is confidential information in the same way that I cannot phone up your bank and ask to see a list of the transactions that you have made. Any bank has to be extremely careful about protecting the private transactions of it's customers and would be subject to heavy fines if it revealed this information without the customer's consent. |
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