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Why is the buy price different from the sell price of a stock? [duplicate] | When there is a difference between the two ... no trading occurs. Let's look at an example: Investor A, B, C, and D all buy/sell shares of company X. Investor A wants to sell 10 shares at $20 a share (Ask price $20 x10). Investor B wants to buy 15 shares at $10 a share (Bid price $10 x15). Since the bid price and ask price are different, no sale is made. Next Investor C comes along and wants to sell 5 shares at $14 (Ask price $14 x5). Still no sale. Investor D comes along and wants to buy 5 shares for $14 each. So a sale is finally made. At this point, the stock quote moves to $14. The ask price is $20 x10 and the bid price is $10 x15. No further trading will occur until another investor is willing to buy at $20 or sell at $10. Another discussion of this topic is shown on this post. |
Why is routing number called ABA/ABN number? | With number of Banks increasing every country at some point in time adopted an Identification code. In US these are called ABA number because they are allocated by American Bankers Association, in UK Sort Codes ... like wise for other countries. See list here http://en.wikipedia.org/wiki/Bank_code In some countries the numbers are given by Central Bank. To enable internationl payments, the SWIFT body apart from message formats, allocated a SWIFT BIC [Bank identification Code] so that Banks can be globally identified. Currently IBAN being adopted in Europe & Australia to identify an Account [at a Bank] Uniquely across globe. In essence these number help uniquely identify a Location/Bank/Branch. The clearing house route the payments or collection instruments to the correct Bank on the basis of this number. |
Why could rental costs for apartments/houses rise while buying prices can go up and down? | They are two different animals. When you rent you are purchasing a service. The landlord, as your service provider, has to make a profit, pay employees to do maintenance, and buy materials. The price of these things will increase with inflation, and that rolls into your rent price. Taxes also are passed to the tenant, and those tend to only go upward. Market forces of supply/demand will drive fluctuation of prices as well, as other posts have described. When you buy, you are purchasing just the asset - the home. This price will also be driven by supply/demand in the market, but don't try to compare it to buying a service. Cheers! |
How much power does a CEO have over a public company? | If Steve Jobs [Tim Cook] were to decide to try to kill Apple, does he have the power to do so? Yes. But he would be held accountable. In addition to the other answers, the CEO is a fiduciary of the corporation. That means his/her actions must be in good faith and look out for the well-being of the company. Otherwise, he could be sued and held liable for civil damages and even criminally prosecuted for malfeasance. |
Rental Application Fees | Slightly abbreviated version of the guidance from NOLO.com California state law limits credit check or application screening fees landlords can charge prospective tenants and specifies what landlords must do when accepting these types of fees. (Cal. Civ. Code § 1950.6.) Here are key provisions: I am not a lawyer, but it would seem you have two options if you catch a landlord violating these rules. An idea to avoid the whole problem in the first place: Get a copy of your credit report yourself and take a copy with you to meet the landlord. If they want an application fee, ask why they need it making it clear you know the above law. If they say for a credit report offer to give them a copy in lieu of the fee. |
How does a bank make money on an interest free secured loan? | Generally speaking, an interest-free loan will be tied to a specific purchase, and the lender will be paid something by the vendor. The only other likely scenario is an introductory offer to try to win longer-term more profitable business, such as an initial interest-free period on a credit card. Banks couldn't make money if all their loans were interest-free, unless they were getting paid by the vendors of whatever was being purchased with the money that was lent. |
How to rebalance a portfolio without moving money into losing investments | Also, almost by definition rebalancing involves making more trades than you would have otherwise; wouldn't the additional trading fees you incurred in doing so reduce the benefits of this strategy? You forgot to mention taxes. Rebalancing does or rather can incur costs. One way to minimize the costs is to use the parts of the portfolio that have essentially zero cost of moving. These generally are the funds in your retirement accounts. In the United States they can be in IRAs or 401Ks; they can be regular or Roth. Selling winners withing the structure of the plan doesn't trigger capital gains taxes, and many have funds within them that have zero loads. Another way to reduce trading fees is to only rebalance once a year or once every two years; or by setting a limit on how far out of balance. For example don't rebalance at 61/39 to get back to 60/40 even if it has been two years. Given that the ratio of investments is often rather arbitrary to begin with, how do I know whether I'm selling high and buying low or just obstinately sticking with a losing asset ratio? The ratio used in an example or in an article may be arbitrary, but your desired ratio isn't arbitrary. You selected the ratio of your investments based on several criteria: your age, your time horizon, your goals for the money, how comfortable you are with risk. As these change during your investing career those ratios would also morph. But they aren't arbitrary. These decisions to rebalance are separate from the ones to sell a particular investment. You could sell Computer Company X because of how it is performing, and buy stock in Technology Company Y because you think it has a better chance of growing. That transaction would not be a re-balancing. Selling part of your stock in Domestic Company A to buy stock in international Company B would be part of a re-balancing. |
Does the profit of a company directly affect its stock or indirectly by causing people to buy or sell? | Yes, the price of a stock is what investors think the value of a stock is, which is not tied to profits or dividends by any rigid formula. But to say that therefore the price could be high even though the company is doing very poorly is hypothetically true, but unlikely in practice. Consider any other product. There is no fixed formula for the value of a used car, either. If everyone agreed that a rusting, 20-year old car that doesn't run is worth $100,000, then that's what it would sell for. But that's a pretty big "if" at the beginning of that sentence. If the car had been used in some hit TV show 20 years ago, or if it was owned by a celebrity, or some such special case, maybe a rusting old car really would sell for $100,000. Likewise, a stock might have a price higher than what one would predict from its dividends if some rich person wanted to buy that company because the brand name brings back nostalgic memories from his youth and so he drives the price up, etc. But the normal case is that, in the long term, the price of a stock tends to settle on a value proportional to the dividends that it pays. Or rather, and this is a big caveat, the dividends that investors expect it to pay in the future. And then adjusted for all sorts of other factors and special situations, like the value of the company if it was to be liquidated, etc. |
How to trade “exotic” currencies? | Keep in mind that not every currency is "tradeable", i.e.: convertible. In fact, neither the Brazilian nor the Thai currencies are fully convertible, and the trading with them may be limited. There are 17 fully convertible currencies currently in the word, you can find the list here. |
401k with paltry match or SPY ETF? | Answers: 1. Is this a good idea? Is it really risky? What are the pros and cons? Yes, it is a bad idea. I think, with all the talk about employer matches and tax rates at retirement vs. now, that you miss the forest for the trees. It's the taxes on those retirement investments over the course of 40 years that really matter. Example: Imagine $833 per month ($10k per year) invested in XYZ fund, for 40 years (when you retire). The fund happens to make 10% per year over that time, and you're taxed at 28%. How much would you have at retirement? 2. Is it a bad idea to hold both long term savings and retirement in the same investment vehicle, especially one pegged to the US stock market? Yes. Keep your retirement separate, and untouchable. It's supposed to be there for when you're old and unable to work. Co-mingling it with other funds will induce you to spend it ("I really need it for that house! I can always pay more into it later!"). It also can create a false sense of security ("look at how much I've got! I got that new car covered..."). So, send 10% into whatever retirement account you've got, and forget about it. Save for other goals separately. 3. Is buying SPY a "set it and forget it" sort of deal, or would I need to rebalance, selling some of SPY and reinvesting in a safer vehicle like bonds over time? For a retirement account, yes, you would. That's the advantage of target date retirement funds like the one in your 401k. They handle that, and you don't have to worry about it. Think about it: do you know how to "age" your account, and what to age it into, and by how much every year? No offense, but your next question is what an ETF is! 4. I don't know ANYTHING about ETFs. Things to consider/know/read? Start here: http://www.investopedia.com/terms/e/etf.asp 5. My company plan is "retirement goal" focused, which, according to Fidelity, means that the asset allocation becomes more conservative over time and switches to an "income fund" after the retirement target date (2050). Would I need to rebalance over time if holding SPY? Answered in #3. 6. I'm pretty sure that contributing pretax to 401k is a good idea because I won't be in the 28% tax bracket when I retire. How are the benefits of investing in SPY outweigh paying taxes up front, or do they not? Partially answered in #1. Note that it's that 4 decades of tax-free growth that's the big dog for winning your retirement. Company matches (if you get one) are just a bonus, and the fact that contributions are tax free is a cherry on top. 7. Please comment on anything else you think I am missing I think what you're missing is that winning at personal finance is easy, and winning at personal finance is hard |
How do I explain why debt on debt is bad to my brother? | How about doing some calculations and show him how much he is paying for things he is buying on credit.Mix in some big and small purchases to show how silly it is on both. Some examples: What really made the debt issue hit home for me (no pun intended) was when I bought my first house and read the truth in lending disclosure statements to find that a $70K house (those were the days) was going to cost me over $200K by the time I had paid off a 30 year note. |
How might trading volume affect future share price? | You can't tell for sure. If there was such a technique then everyone would use it and the price would instantly change to reflect the future price value. However, trade volume does say something. If you have a lemonade stand and offer a large glass of ice cold lemonade for 1c on a hot summer day I'm pretty sure you'll have high trading volume. If you offer it for $5000 the trading volume is going to be around zero. Since the supply of lemonade is presumably limited at some point dropping the price further isn't going to increase the number of transactions. Trade volumes reflect to some degree the difference of valuations between buyers and sellers and the supply and demand. It's another piece of information that you can try looking at and interpreting. If you can be more successful at this than the majority of others on the market (not very likely) you may get a small edge. I'm willing to bet that high frequency trading algorithms factor volume into their trading decisions among multiple other factors. |
Is it okay to be married, 30 years old and have no retirement? | First, I would recommend getting rid of this ridiculous debt, or remember this day and this answer, "you will be living this way for many years to come and maybe worse, no/not enough retirement". Hold off on any retirement savings right now so that the money can be used to crush this debt. Without knowing all of your specifics (health insurance deductions, etc.) and without any retirement contribution, given $190,000 you should probably be taking home around $12,000 per month total. Assuming a $2,000 mortgage payment (30 year term), that is $10,000 left per month. If you were serious about paying this off, you could easily live off of $3,000 per month (probably less) and have $7,000 left to throw at the student loan debt. This assumes that you haven't financed automobiles, especially expensive ones or have other significant debt payments. That's around 3 years until the entire $300,000 is paid! I have personally used and endorse the snowball method (pay off smallest to largest regardless of interest rate), though I did adjust it slightly to pay off some debts first that had a very high monthly payment so that I would then have this large payment to throw at the next debt. After the debt is gone, you now have the extra $7,000 per month (probably more if you get raises, bonuses etc.) to enjoy and start saving for retirement and kid's college. You may have 20-25 years to save for retirement; at $4,000 per month that's $1 million in just savings, not including the growth (with moderate growth this could easily double or more). You'll also have about 14 years to save for college for this one kid; at $1,500 per month that's $250,000 (not including investment growth). This is probably overkill for one kid, so adjust accordingly. Then there's at least $1,500 per month left to pay off the mortgage in less than half the time of the original term! So in this scenario, conservatively you might have: Obviously I don't know your financials or circumstances, so build a good budget and play with the numbers. If you sacrifice for a short time you'll be way better off, trust me from experience. As a side note: Assuming the loan debt is 50/50 you and your husband, you made a good investment and he made a poor one. Unless he is a public defender or charity attorney, why is he making $60,000 when you are both attorneys and both have huge student loan debt? If it were me, I would consider a job change. At least until the debt was cleaned up. If he can make $100,000 to $130,000 or more, then your debt may be gone in under 2 years! Then he can go back to the charity gig. |
Why is tax being paid on my salary multiple times? | Businesses do not pay income tax on money that they pay out as salary to their employees. Businesses generally only pay income tax on profit. Profit is the money that comes in (revenue) minus the business expenses. Payroll to the employees is a deductible business expense. |
If a stock doesn't pay dividends, then why is the stock worth anything? | The answer is Discounted Cash Flows. Companies that don't pay dividends are, ostensibly reinvesting their cash at returns higher than shareholders could obtain elsewhere. They are reinvesting in productive capacity with the aim of using this greater productive capacity to generate even more cash in the future. This isn't just true for companies, but for almost any cash-generating project. With a project you can purchase some type of productive assets, you may perform some kind of transformation on the good (or not), with the intent of selling a product, service, or in fact the productive mechanism you have built, this productive mechanism is typically called a "company". What is the value of such a productive mechanism? Yes, it's capacity to continue producing cash into the future. Under literally any scenario, discounted cash flow is how cash flows at distinct intervals are valued. A company that does not pay dividends now is capable of paying them in the future. Berkshire Hathaway does not pay a dividend currently, but it's cash flows have been reinvested over the years such that it's current cash paying capacity has multiplied many thousands of times over the decades. This is why companies that have never paid dividends trade at higher prices. Microsoft did not pay dividends for many years because the cash was better used developing the company to pay cash flows to investors in later years. A companies value is the sum of it's risk adjusted cash flows in the future, even when it has never paid shareholders a dime. If you had a piece of paper that obligated an entity (such as the government) to absolutely pay you $1,000 20 years from now, this $1,000 cash flows present value could be estimated using Discounted Cash Flow. It might be around $400, for example. But let's say you want to trade this promise to pay before the 20 years is up. Would it be worth anything? Of course it would. It would in fact typically go up in value (barring heavy inflation) until it was worth very close to $1,000 moments before it's value is redeemed. Imagine that this "promise to pay" is much like a non-dividend paying stock. Throughout its life it has never paid anyone anything, but over the years it's value goes up. It is because the discounted cash flow of the $1,000 payout can be estimated at almost anytime prior to it's payout. |
Investing in low cost index fund — does the timing matter? | A much less verbose answer is. Don't worry about buying low. You have a whole lifetime to dollar cost average your retirement dollars. |
Other than being able to borrow to invest, how is a margin trading account different from a cash account? | With margin accounts you will be able to use the proceeds from a closed trade INSTANTLY. Without margin accounts this is the time you close the trade + 3 business days for clearing. In practice this means 4-5 days if there is a weekend or holiday involved between those 3 business days. This ties up your capital for an unfavorable amount of time, where as a margin account lets you continue to use the capital over and over again for more opportunities. You CANNOT sell to open a position in cash accounts. This means no short selling. This means no covered calls or spreads and MANY other strategies. These are the real differences you'll notice in a margin account vs a cash account. Then there are the myriad of regulations that dictate how much cash you should keep in your account for any margin position. |
Calculating the cost of waiting longer for money | This looks correct to me, for simple interest. If you are dealing with compound interest, the formula would be: So, A = 500000(1+0.036/365)^(30), or 501,481.57, or an interest of 1481.57, assuming the 3.6% is the annual nominal interest rate and it is compounded daily. Note that you are ignoring the depreciation and also ignoring the percentage of customers who will forfeit their debt in the 30 - 60 day period. |
Is it better to miss the dividend and buy the undervalued stock? | I guess the answer lies in your tax jurisdiction (different countries tax capital gains and income differently) and your particular tax situation. If the price of the stock goes up or down between when you buy and sell then this counts for tax purposes as a capital gain or loss. If you receive a dividend then this counts as income. So, for instance, if you pay tax on income but not on capital gains (or perhaps at a lower rate on capital gains) then it would pay you to sell immediately before the stock goes ex-dividend and buy back immediately after thereby making a capital gain instead of receiving income. |
Opportunity to buy Illinois bonds that can never default? | If Illinois cannot go bankruptcy This is missing a few, very important words, "...under current law." The United States changed the law so as to allow Puerto Rico to go into a form of bankruptcy. So you cannot rely on a lack of legal support for bankruptcy to protect any bond investments you might make in Illinois. It is entirely possible for the federal government to add a law enabling a state to discharge its debts through a bankruptcy process. That's why the bonds have been downgraded. They are still fine now, but that could change at any time. I don't want to dive too deep into the politics on this stack, but I could quite easily see a bargain between US President Donald Trump and Democrats in Congress where he agreed to special privileges for pension debts owed to former employees in exchange for full discharge of all other debts. That would lead to a complete loss of value for the bonds that you are considering. There still seem to be other options now, but they seem to be getting closer and closer to that. |
Why would a company care about the price of its own shares in the stock market? | The main reason is that a public company is owned by its share holders, and share holders would care about the price of the stock they are owning, therefore the company would also care, because if the price go down too much, share holders become angry and may vote to oust the company's management. |
Why is mortgage interest deductible in the USA for a house you live in? | It's a scam pushed through to benefit the banking system. Tax payments become income for the banks. Any alleged benefits for property holders are ultimately reduced by increased property prices, capital gains tax and estate taxes |
How to invest in the Russian oil market? | The Russian ETFs may be broad, but a quick glance at ERUS and RBL's sector breakdown shows they're 45% and 47% energy sector, and their top holding is Gazprom comprising 9% and 14% of each ETF respectively, with plenty more oil and gas companies in their top 10 too. A harder question would be how to invest in Russia and avoid oil I think (and even then, the economy is thoroughly bound up in it). To rework a meme... In Soviet Russia, oil invest YOU! |
How do I add my income to my personal finance balance? | I don't think you need double-entry bookkeeping. To quote Robert Kiyosaki (roughly): Income is when money enters you pocket, and expenses are when money leaves your pocket. Income is an addition; expenses are subtractions. But if you want double-entry accounting, I'm not qualified to answer that. :) |
How do I go about finding an honest & ethical financial advisor? | Large and well-known companies are typically a good starting point. That doesn't mean that they are the best or even above average good, but at least they don't cheat you and run with your money. A core point is someone you pay, not the company whose investment he sell you. Although the latter seems cheaper on first glance, it isn't - if you pay him, his interest is to do good work for you; if they pay him, his interest is to sell you the product with the highest payment for him. That does not imply that they are all that way; it's just a risk. There are many good advisers that live from commissions, and still don't recommend you bad investments. Depending on the amounts, you could also read up a bit and open an account with a online investment company. It is discussable, but I think the cost for an adviser only starts to become worth it if you are deep into 5 digits of money. |
Formula that predicts whether one is better off investing or paying down debt | Old question I know, but I have some thoughts to share. Your title and question say two different things. "Better off" should mean maximizing your ex-ante utility. Most of your question seems to describe maximizing your expected return, as do the simulation exercises here. Those are two different things because risk is implicitly ignored by what you call "the pure mathematical answer." The expected return on your investments needs to exceed the cost of your debt because interest you pay is risk-free while your investments are risky. To solve this problem, consider the portfolio problem where paying down debt is the risk-free asset and consider the set of optimal solutions. You will get a capital allocation line between the solution where you put everything into paying down debt and the optimal/tangent portfolio from the set of risky assets. In order to determine where on that line someone is, you must know their utility function and risk parameters. You also must know the parameters of the investable universe, which we don't. |
What is the options industry changing about option symbols in February, 2010? | The change is generally known as the Options Symbology Initiative (or "OSI") and there is a highly comprehensive guide to what occurred here. The basic gist of what occurred was a shift FROM: A coded system in which a shorter (3 to 5 letter symbol) could be used, but the symbols required a data source to determine what they meant. MSQ AD used to be a MSFT Jan 20 option, but you had to look up MSQ in a table to know that. TO: A system in which much longer symbols are needed, but they contain all the information required to identify a unique option: DELL 4.000 C 5/16/2010 isn't easy to type, but once you know how to read it, it's easy to see that it's an option on DELL, expiring on May 16th 2010, is a call (rather than a put,) and has a strike price of 4. As to why they did it, there are a number of benefits, but most important reason is this one: they were running out of symbols. The number of permutations of 3-5 letter symbols had been exceeded by the number of options that had been listed, resulting in the need to "recycle" symbols. This meant that a current option symbol would be the same as an old one, in some cases on a different stock, which was wreaking havoc on historical data. |
Why are options created? | The main reason is that you move from the linear payoff structure to a non-linear one. This is called convexity in finance. With options you can design a payoff structure in almost any way to want it to be. For example you can say that you only want the upside but not the downside, so you buy a call option. It is obvious that this comes at a price, the option premium. Or equivalently you buy the underlying and for risk management reasons buy a put option on top of it as an insurance. The price of the put could be seen as the insurance premium. You can of course combine options in more complicated ways so that you e.g. profit as long as the underlying moves strongly enough in either direction. This is called a straddle. |
Free service for automatic email stock alert when target price is met? | Hey guys, I found this website, it seems to do it for free, and they have many options. If let me know if you find something better than this. http://members.zignals.com/main/ |
Why liquidity implies tight spread and low slippage | Consider the case where a stock has low volume. If the stock normally has a few hundred shares trade each minute and you want to buy 10,000 shares then chances are you'll move the market by driving up the price to find enough sellers so that you can get all those shares. Similarly, if you sell way more than the typical volume, this can be an issue. |
Credit cards: How is a cash advance different from a purchase? Why are the fees so high? | Think about the credit card business model... they have two revenue generators: interest and fees from borrowers and commissions and fees to merchants. The key to a successful credit card is to both sign up lots of borrowers AND lots of merchants. Credit card fortunes have improved dramatically since the 1990's when formerly off-limits merchants like grocery stores began to accept cards. So when a credit card lets you just pull cash out of any ATM, there are a few costs they need to account for when pricing the cost for such a service: Credit card banks have managed to make cash advances both a profit center and a self-serving perk. Knowing that you can always draw upon your credit line for an emergency when cash is necessary makes you less likely to actually carry cash and more likely to just rely on your credit card. |
Is there a benefit, long term, to life insurance for a youngish, debt, and dependent free person? | Careful with saying "no need". Look careful at the cost of life insurance. That cost depends obviously on the amount, but also on the age when you start paying into the insurance. If you take out a $100,000 insurance at 20, and someone else takes it out at 30, and a third person at 50, they will pay hugely different amounts when you reach the same age. You will pay less when you are 50 then the person taking out insurance at 30 when they reach the age of 50, and less again than the person who just started with their life insurance. And as mhoran said, once you have insurance you can keep it even if you get an illness that would make you uninsurable. |
What is the p/e ratio? | The PE ratio stands for the Price-Earnings ratio. The price-earnings ratio is a straightforward formula: Share Price divided by earnings per share. Earnings per share is calculated by dividing the pre-tax profit for the company by the number of shares in issue. The PE ratio is seen by some as a measure of future growth of a company. As a general rule, the higher the PE, the faster the market believes a company will grow. This question is answered on our DividendMax website: http://www.dividendmax.co.uk/help/investor-glossary/what-is-the-pe-ratio Cheers |
Why buy bonds in a no-arbitrage market? | Bonds can increase in price, if the demand is high and offer solid yield if the demand is low. For instance, Russian bond prices a year ago contracted big in price (ie: fell), but were paying 18% and made a solid buy. Now that the demand has risen, the price is up with the yield for those early investors the same, though newer investors are receiving less yield (about 9ish percent) and paying higher prices. I've rarely seen banks pay more variable interest than short term treasuries and the same holds true for long term CDs and long term treasuries. This isn't to say it's impossible, just rare. Also variable is different than a set term; if you buy a 10 year treasury at 18%, that means you get 18% for 10 years, even if interest rates fall four years later. Think about the people buying 30 year US treasuries during 1980-1985. Yowza. So if you have a very large amount of money you will store it in bonds as its much less likely that the US treasury will go bankrupt than your bank. Less likely? I don't know about your bank, but my bank doesn't owe $19 trillion. |
What is value investing? What are the key principles of value investing? | Value investing is an investment approach that relies on buying securities below their intrinsic values. There are two main concepts; one is the Intrinsic Value and the other is Margin of Safety. Intrinsic value is the value of the underlying business - if we are talking about stocks - that can be calculated through carefully analyzing the business looking at all aspects of it. If there is an intrinsic value exists for a company then there is a price tag we can put on its shares as well. Value investing is looking to buy shares well below its intrinsic value. It is important to know that there is no correct intrinsic value exists for a company and two people can come up with different figures, if they were presented the same data. Calculating the intrinsic value for a business is the hardest part of value investing. Margin of Safety is the difference between the buying price of a stock and its intrinsic value. Value investors are insisting on buying stocks well below their intrinsic value, where the margin of safety is 20%-30% or even more. This concepts is protecting them from poor decisions and market downturns. It is also providing a room for error, when calculating the intrinsic value. The approach was introduced by Benjamin Graham and David Dodd in a book called Security Analysis in 1934. Other famous investor using this approach is Warren Buffet Books to read: I would start to read the first two book first. |
Filing taxes on stocks | Generally stock trades will require an additional Capital Gains and Losses form included with a 1040, known as Schedule D (summary) and Schedule D-1 (itemized). That year I believe the maximum declarable Capital loss was $3000--the rest could carry over to future years. The purchase date/year only matters insofar as to rank the lot as short term or long term(a position held 365 days or longer), short term typically but depends on actual asset taxed then at 25%, long term 15%. The year a position was closed(eg. sold) tells you which year's filing it belongs in. The tiny $16.08 interest earned probably goes into Schedule B, typically a short form. The IRS actually has a hotline 800-829-1040 (Individuals) for quick questions such as advising which previous-year filing forms they'd expect from you. Be sure to explain the custodial situation and that it all recently came to your awareness etc. Disclaimer: I am no specialist. You'd need to verify everything I wrote; it was just from personal experience with the IRS and taxes. |
Which shareholders cause news-driven whole market stock swings? | The people who cause this sort of sell-off immediately are mostly speculators, short-term day-traders and the like. They realize that, because of the lowered potential for earnings in the future, the companies in question won't be worth as much in the future. They will sell shares at the elevated price, including sometimes shares that they borrow for the explicit purpose of selling (short selling), until the share price is more reasonable. Now, the other question is why the companies in question won't sell for as much in the future: Even if every other company in the world looks less attractive all at once (global economic catastrophe etc) people have other options. They could just put the money in the bank, or in corporate bonds, or in mortgage bonds, or Treasury bonds, or some other low-risk instrument, or something crazy like gold. If the expected return on a stock doesn't justify the price, you're unlikely to find someone paying that price. So you don't actually need to have a huge sell-off to lower the price. You just need a sell-off that's big enough that you run out of people willing to pay elevated prices. |
What are the disadvantages to borrowing money for energy conservation measures / solar panels? | Depending on the details of your solar panel setup, the monthly savings may change depending on changes in the law or utility company policy. This could change how long it will take for the solar panels to "pay for themselves". So your bullet point about the "payback period"/"break even point" is not fixed at the moment you buy the solar panels; it depends on costs you will incur over many years, and those costs could turn out to be different from what you originally thought. At least in the US, home solar installations typically work by selling excess power back to the power company. The power company can change the amount that it pays you for that power. There is also typically a minimum charge for being connected to the grid, and the power company can raise that charge. (This article mentions one such possible change.) The power companies want to keep making money, and as more people start adding solar panels, the power companies may change their rate structure to make that less financially feasible. You can avoid many of these issues if your solar panels are not connected to the public electricity grid, and you, for instance, store power with your own battery. However (at least in the US) this is very uncommon because it is more complex and expensive. |
using credit card and paying back quickly | I can't speak for every credit card, but I know two of mine don't have overage fees. The transaction either goes through, or gets denied. Check your card agreement and look for the fee section. One other thing to consider, sometimes when you make an online payment to a credit card, you will notice that the "Available Balance" number on the account will increase right away even if the payment is not reflected on your "Current Balance". If this is the case, and you are positive that your payment will be successfully posted to the account, I say go for it. |
How can I find/compare custodians for my HSA in the United States? | In general, things to look for are: Things to look out for: I'd recommend two places: I'd recommend reading up on HSA's in this related question here. |
Did basically all mutual funds have a significant crash in 2008? | I will solely address your fear because from what I read you fear investing in something that could possibly go down in the future. This is almost identical to market timing, so let's use the SPY as an example. Look at the SPY on Yahoo Finance, specifically in 2011. The market experienced a little bit of a pull back during the year, and some "analysts" claimed that it would fall below 600 (read this). In fact, a co-worker of mine said that he feared buying the S&P 500 in 2011 (as well as in 2010), so he bought gold (compare the two from 2011 to now - to put it bluntly he experienced 50% less gain than I did). Did the S&P 500 ever fall below 600 in that timeframe, or according to the linked analyst (there were plenty of similar predictions then)? No. If you avoid doing something because you're afraid it could drop, technically, you should be just as afraid of it rising (Fear of Losing Everything, FOLE, vs. Fear of Missing Out, FOMO - both are real). That's not to say invest out of fear, but that fear cuts both ways, and generally, we only look at it from one side. Retirement investing should be a boring, automated process where, ideally, we don't try and time the market (though some will try, and like in 2011, fail). If you can't help your fear, you can always approach retirement investing with automated re-balancing where you hold some money in "less risky" forms and others in "higher risk" forms and automate a rebalance every month or quarter. |
Choosing the “right” NAPFA advisor, and whether fees are fair, etc.? | The nature of this question (finding a financial adviser) can make it a conundrum. Those who have little financial experience are often in the greatest need of a financial adviser and at the same time are the least qualified to select one. I'm not putting you or anyone in particular in this category. And of course it's a sliding scale: In general the more capable you are of running your own finances the more prepared you are to answer this question. With that said, I would recommend backing up half a step. Consider advisers other than strictly fee-only advisers. Perhaps you have already considered this decision. But perhaps others reading this have not. My (Ameriprise) adviser charges a monthly (~$50) fee, but also gets percentage-based portions of certain investments. Based on a $150/hr rate that amounts to four hours per year. Does he spend four hours per year on my account? Well so far he does (~2 yrs). But that is determined primarily by how much interaction I choose to have with him. (I suppose I could spend more time asking him questions and less time on this forum. :P) I have never fully understood the gravitation towards fee-based advisers on principle. I guess the theory is they are not making biased decisions about your investments because they don't have as much of a stake in how well your investments to do. I don't necessarily see that as an advantage. It seems they would have less of an incentive to ensure the growth of your investments. Although if you're nearing retirement then growth isn't your biggest concern. Perhaps a fee-based adviser makes more sense in that scenario. Whatever pay structure your adviser uses, it would seem to make sense to consider a successful adviser with a good client base. This implies that the adviser knows what he/she is doing. (But it could also just be a sign that they are good at marketing themselves.) If your adviser has a good base of wealthy clients then choosing a strictly-fee based adviser would mitigate the risk of your adviser having less incentive to consider your portfolio vs that of more wealthy clients. To more directly answer your question I suggest asking several of your adviser candidates for advice on choosing an adviser. I suspect you will get some good advice as well as good insight on the integrity and honesty of the adviser. |
Ordering from Canada, charged in CAD or USD? | Typically, businesses always charge their 'home' currency, so if the shop is in Canada, you will pay Canadian Dollars. Normally you don't have any choices either. Your credit card company will convert it to your currency, using the current international currency exchange rate (pretty good), plus a potential fee between 0 and 5% - depending on your credit card (not so good). If it is a significant amount, or you plan to do that more than once, and if you have multiple credit cards, check first to see which one has the lowest international fee; 0% is not uncommon, but neither is 3 or 4%. If it's a 10$ thingy, it's probably not worth the time; but 4% of 1000 is already 40$... As of right now, the currency exchange rate is 1.33, so you would pay ~75 USD; plus the potential fee, 0$ - 4$. Understand that this exchange rate is floating continuously; it probably won't change much, but it will change. |
Why don't people generally save more of their income? | This question is likely to be voted closed as opinion-based. That said - In general people have become accustomed to instant gratification. They also have the media showing them luxury and are enticed every day to buy things they don't need. In the US, the savings rate is awfully low, but it's not just the lower 50%, it's 75% of people who aren't saving what they should. see http://web.stanford.edu/group/scspi/_media/working_papers/pfeffer-danziger-schoeni_wealth-levels.pdf for an interesting article on the topic of accumulated wealth. |
Why there's always a very huge volume of trades for AAPL every day before market close? | A huge amount of money in all financial markets is from institutional investors, such as mutual funds, government pension plans, sovereign wealth funds, etc. For various reasons these funds do all of their trading at the end of the day. They care primarily that their end-of-day balances are in line with their targets and are easy to audit and far less about "timing the market" for the best possible trades. So, if you're looking at a stock that is owned by many institutional investors -- such as a stock (like AAPL) that makes up a significant portion of an index that many funds track -- there will be a huge amount of activity at this time relative to stocks that are less popular among institutions. Even just in its introduction this paper (PDF) gives a fair overview of other reasons why there's a lot of trading at end-of-day in general. (In fact, because of all this closing activity and the reliance on end-of-day prices as signposts for financial calculations, the end-of-day has for decades been the single most fraud-ridden time of the trading day. Electronic trading has done away with a lot of the straight-up thievery that floor traders and brokers used to get away with at the expense of the public, but it still exists. See, for example, any explanation of the term banging the close, or the penalties against 6 banks just last month for manipulating the FX market at the close.) |
In a competitive market, why is movie theater popcorn expensive? | A better question would be to ask "Why don't movie theaters charge to use the bathroom?", or "Why don't movie theaters charge for parking?". In America, either government regulation or the mall itself forbids charging for parking, or limits the amount that can be charged for parking. This tends to be more true in suburban areas where land is cheap, but less true downtown in cities. The nearest theater to me is in a mall that is also on a metro line. Those who arrive by metro to see the movie are effectively subsidizing those who arrive via automobile and park. I don't know of any place in America that charges to use the bathroom, but the practice is still common in Europe. I saw the second The Matrix film in Brussels, and had to pay to pee. I'm not sure why this isn't the case in the U.S. Maybe there are widespread regulations against this. Or maybe it's a cultural thing, that we would be so offended by this that we would never go back to the theater. |
When will the U.K. convert to the Euro as an official currency? | In many countries in Europe the prices shot through the roof, so it is not all positive. Also the switching country gives out lot of monetary control that is not welcomed by many. I think that UK is not going to change to euro for a long long time. |
Employee stock option plan with undefined vesting? | An option without the vesting period and the price at which one can exercise the option is of not much value. If vesting is determined by board, then at any given point in time they can change the vesting period to say 3, 5, 10 years any number. The other aspect is at what price you are allowed to exercise the option, ie if the stock is of value 10, you may be given an option to buy this at 10, 20 or 100. This has to be stated upfront for you to know the real value. On listing if the value is say 80, then if you have the option to exercise at 10, or 20 you would make money, else at 100 you loose money and hence choose not to exercise the option. However your having stuck around the company for "x" years in anticipation of making money would go waste. Without a vesting period or the price to exercise the option, they are pretty much meaningless and would depend on the goodwill of the founders |
Scam or Real: A woman from Facebook apparently needs my bank account to send money | Yes, it is a scam. Think about it: Why would a stranger offer to give you money? Why would she need you to pay her own employees? She wouldn't. It is a scam. You have more to lose than just the $25 that is in the account. Just as has happened to your dad before, you will be receiving money that is not real, but paying real money out somewhere else. One more thing: If your dad has fallen for these scams so many times that he can't get a bank account anymore, why are you still taking financial advice from him? |
Tips for insurance coverage for one-man-teams | Like most forms of insurance, health insurance is regulated at the state level. So what is available to you will depend greatly upon which state you live in. You can probably find a list of insurance companies from your state's official website. Many states now provide "insurance of last resort" for individuals who can't get insurance through private insurance companies. You can try looking into professional and trade associations. Some offer group insurance plans comparable with COBRA coverage, meaning you'd get a group discount and benefits but without the benefit of an employer paying 30-80% of your premiums. As a software developer you may qualify for membership in the IEEE or ACM, which both offer several forms of insurance to members. The ASP also offers insurance, though they don't provide much information about it on the public portions of their website. These organization offer other benefits besides insurance so you may want to take that in to consideration. The National Federation of Independent Business also offers insurance to members. You may find other associations in your specific area. Credit Unions, Coops and the local chamber of commerce are all possible avenues of finding lower cost insurance options. If you are religious there are even some faith based non-insurance organizations that provide medical cost sharing services. They depend upon the generosity and sense of fairness and obligation of their members to share the burden of medical expenses so their definitely not for everyone. |
Why does the calculation for percentage profit vary based on whether a position is short vs. long? | The problem with rate of return calculation on short positions is, that the commonly used approach assumes an initial investment creating a cash outflow. If we want to apply this approach to short selling, we should look at the trade from another perspective. We buy money and pay for this money with stock. Our investment to buy 50$ in your example is 1 share. When closing the short position, we effectively sell back our money (50$) and receive 2 shares. Our profit on this position is obviously 1 share. Setting this in relation to our investment of 1 share yields a performance of 100% in reality, we do not sell back the entire cash but only the amount needed to get back our investment of 1 share. This is actually comparable to a purchase of stock which we only partially close to get back our invested cash amount and keep the remaining shares as our profit |
How to increase my credit score | You need to get yourself a credit card, and use it regularly and also repay on time. This will help increase your credit score. Hope you have a regular job which is bringing in money every month, but having just this isnt enough, get a credit card. |
Why invest for the long-term rather than buy and sell for quick, big gains? | Another benefit of holding shares longer was just pointed out in another question: donating appreciated shares to a nonprofit may avoid the capital gains tax on those shares, which is a bigger savings the more those shares have gone up since purchase. |
Using simple moving average in Equity | A shorter term MA would be used for short term changes in price whilst a long term MA would be used for longer term movements in price. A 200 day SMA is widely used to determine the trend of the stock, simply a cross above the 200 day SMA would mean the stock may be entering an uptrend and a cross below that the price may be entering a downtrend. If the price is continuosly going above and below in a short period of time it is usually range trading. Then there are EMAs (Expodential Moving Averages) and WMAs (weighted moving averages) which give more emphasis to the latest price data than the earlier price data in the period chosen compared to a SMA. MAs can be used in many different ways, too many to list all here. The best way to learn about them is to read some TA books and articles about them, then choose a couple of strategies where you can use them in combination with a couple of other indicators that are complimentary with each other. |
Why invest in becoming a landlord? | why does it make sense financially to buy property and become a landlord? Because then your investment generates cash instead of just sitting idle. All taxes, fees and repairs aside it would take almost 21 years before I start making profits. No - your profit will be the rents that you collect (minus expenses). You still have an asset that is worth roughly what you paid for it (and might go up in value), so you don't need to recoup the entire cost of the property before making a profit. Compared to investing the same 150k in an ETF portfolio with conservative 4% in annual returns I would have made around 140k € after taxes in the same 21 years i.e. almost doubled the money. If you charge 600 € / month (and never miss a month of rental income), after 21 years you have made 151k € in rents plus you still have a property. That property is most likely going to be worth more than you paid for it, so you should have at least 300k € in assets. Having said all that, it does NOT always make sense to invest in rental property. Being a landlord can be a hard job, and there are many risks involved that are different that risks in financial investments. |
What should I do with the change in my change-jar? | I don't like paying the percentage on the supermarket coin counters, and don't feel like buying a coin counter so I have my own solution. I keep higher value coins for vending machines, parking meters etc, and lower value coins I put in charity boxes. |
Are cashiers required to check a credit card for a signature in the U.S.? | It depends on the business. Some ask for ID and check against the signature (rare); some ask for ID but barely glance at it; some check just that it's signed (also rare); some ask for me to input my ZIP code on the card reader (KMart); and some don't do anything (most common). What they do doesn't seem connected to whether I put the card in the reader myself, or hand it to the cashier for them to scan. It does seem silly to check IDs, etc., as there are places such as gas stations where I never even see an employee, and can spend just as much there as at WalMart, KMart, or the grocery store, all places that tend to do more checking. |
Should I pay off my 50K of student loans as quickly as possible, or steadily? Why? | The definitive answer is: It Depends. What are your goals? First and foremost, you need to have at least 3 months expenses in cash or equivalent. (i.e. an investment that you can withdraw from quickly, and without penalty). The good news is that you don't have to come up with it instantly. Set a time frame - one year - for creating this safety net, and pay towards that goal. This is the single most important piece of financial advice you will receive. Now determine what you need to do. For example, you may need a car. Compare interest rates on your student loan and the car loan. Put your cash towards whichever is higher. If you don't need a car or other big ticket item, then you may consider sticking your surplus into the student loans. 50k at $1650 a month will be paid down in about 3 years, which might be a bit long to live the monastic lifestyle. I'd look at paying down the smallest loan first (assuming relatively similar rates), and freeing up that payment for yourself. So if you can pay off 1650 a month, and free up $100 of that in six months, then you can reward yourself with half that surplus, and apply the other half to the next loan. (This is different than some would suggest because you're talking about entering severe spartan mode, which is not sustainable.) Remember that life happens. You'll meet someone. You'll have an accident, your brother will get sick and you'll give him some money to help out. You've got to be prepared for these events, and for these reasons, I don't recommend living that close to the edge. Remember, you're not in default, and you do have the option of continuing to pay the minimum for a long time. |
Perform exercise-and-hold AND exercise-and-sell-to-cover? | The simplest thing to do here is to speak to your employer about what is allowed. This should be spelt out in your company's "Stock Options Plan" documentation. In particular, this document will include details of the vesting schedule. For example, the schedule may only allow you to exercise 25% in the first year, 25% in the second year, and the remainder in the third year. Technically I can see no reason to prevent you from the mix-and-match approach you are suggesting. However, this may not be the case according to the schedule specification. |
Advice for college student: Should I hire a financial adviser or just invest in index funds? | Though @mehassee mentioned it in a comment, I would like to emphasize the point that the financial planner (CFP) you talked to said that he was a fiduciary. A fiduciary has an obligation to act in your best interests. According to uslegal.com, "When one person does agree to act for another in a fiduciary relationship, the law forbids the fiduciary from acting in any manner adverse or contrary to the interests of the client, or from acting for his own benefit in relation to the subject matter". So, any of these Stack Exchange community members may or may not have your best interest at heart, but the financial advisor you talked to is obligated to. You have to decide for yourself, is it worth 1% of your investment to have someone legally obligated to have your best financial interest in mind, versus, for example, someone who might steer you to an overpriced insurance product in the guise of an investment, just so they can make a buck off of you? Or versus wandering the internet trying to make sense of conflicting advice? In my opinion, a fiduciary (registered CFP) is probably the best person to answer your questions. |
What are the reasons to get more than one credit card? | Many reasons mentioned already. The reason why I have multiple is missing: I have a personal card for my private use and a company card for company use. |
Has anyone compared an in-person Tax Advisor to software like Turbo Tax? | It depends on the person. i will take turbo tax over any mediocre or poor accountant ANY DAY. You get consistent, accurate tax preparation with the software (desktop - not the online version) I was in a housing rental partnership with my brothers and one of them insisted on using his accountant... what a mistake. I have been using turbo tax for 10+ years and have always been happy. It handles my non trivial situation with ease: I am happy with it but have to admit I don't have a good accountant to compare it to. I see no reason to go to an accountant except for planning purposes. Just for tax prep it is more than worth it and more than you will need. |
Tax question about selling a car | I don't think there's much you can do. Losses from the sale of personal-use automobiles (used for pleasure, commuting, etc) are not deductible as capital losses. See IRS Tax Topic 409, end of the first paragraph. The expenses you incurred in owning and operating the car (insurance, fuel, maintenance, service plans, etc) are not deductible either. If you used it partly for business, then some of your expenses might be deductible; see IRS Tax Topic 510. This includes depreciation (decline in value), but only according to a standard schedule; you don't generally just get to deduct the difference between your buying and selling price. Also, you'd need to have records to verify your business use. But anyway, these deductions would apply (or not) regardless of whether you sell the car. You don't get your sales tax refunded when you resell the vehicle. That's why it's a sales tax, not a value-added tax. Note, however, that if you do sell it, the sales tax on this new transaction will be the buyer's responsibility, not yours. You do have the option on your federal income tax return to deduct the state sales tax you paid when you bought the car; in fact, you can deduct all the sales taxes you paid in that year. (If you have already filed your taxes for that year, you can go back and amend them.) However, this takes the place of your state income tax deduction for the year; you can't deduct both. See Tax Topic 503. So this is only useful if your sales taxes for that year exceeded the state income tax you paid in that year. Also, note that state taxes are not deductible on your state income tax return. Again, this deduction applies whether you sell the car or not. |
How to calculate tax amounts withheld on mixed pre-tax and Roth 401(k) contributions, and match? | Your 401k IRA will now have three different sub-accounts, the one holding your Traditional (pre-tax) 401k contributions, the one holding your Roth 401k contributions, and the one holding the employer match contributions (which, as has been pointed out to you, cannot be considered to be Roth 401k contributions). That is, it is not true that So my next month's check shows $500+$500 going to the regular 401k, and $82+$82 going to the Roth 401k. Your next month's paystub will show $500 going into the regular 401k, $100 going into the Roth 401k, and if employer matching contributions are listed on the paystub, it will still show $600 going into the employer match. If you have chosen to invest your 401k in mutual funds (or stocks), shares are purchased when the 401k administrator receives the money and are also segregated in the three subaccounts. If you are paid monthly, then you will know on a month-by-month basis how many shares you hold in the three separate subaccounts, and there is no end-of-year modification of how many shares were purchased with Roth 401k contributions versus how many were purchased with pretax contributions or with employer matching funds as you seem to think. |
Why have U.S. bank interest rates been so low for the past few years? | There's two competing forces at work, and they are at work worldwide. Banks can get money from several sources: Through inter-bank borrowing and from raising capital. Capital can come from from selling assets, stock offerings, deposits, etc. The money the banks get from depositors is capital. In the United States, the Federal Reserve regulates the amount of capital that banks must maintain. If there was no requirement for capital then there would be zero demand for capital at an interest rate above the inter-bank offering rate. As capital requirements have risen, banks are allowed to make less loans given a certain amount of capital. That has caused an increased demand for capital from depositors. As described in this Federal Reserve ruling, effective January 1st, 2014 the Federal Reserve is again raising capital requirements. As you can see here money can be borrowed, in the United States, at .0825% (100 - 99.9175). Currently interest rates paid to borrowers are quite high compared to prevailing inter-bank rates. They could see more upward pressure given the fact that banks will be forced to maintain an increased amount of capital for a given amount of loans. |
If banks offer a fixed rate lower than the variable rate, is that an indication interest rates may head down? | Usually that is the case that when fixed rates are lower than the variable rates, it is an indication that the banks feel the next movement in rates could be down. You also need to look at the fixed rates for different periods, for example 1 year fixed compared to 3 year fixed and 5 year fixed rates. If you find the 3 and 5 year fixed rates are higher than the 1 year fixed rates this could be an indication that the banks feel rates will fall in the short term but the falls won't last long and will continue to rise after a year or so. If the 3 year fixed rates are also low in comparison, then the banks may feel that the economy is heading for a longer term down trend. The banks won't want to lose out, so will change their fixed rates on their perception of where they feel the economy is headed. Since your post in May 2011, the standard variable rate has since dropped twice (in November and December) to be at 7.30%. You will also find that fixed rates have also been dropped further by the banks, indicating additional future cuts in the variable rates. Regards, Victor |
Retirement Savings vs. Student Loan payments | You can play with the numbers all you like (and that's good), however, here is a different way to look at it. The debt you have is risk. It limits your choices and eats your cash flow. Without the debt, you can invest at a much greater rate. It frees up you cash flow for all the things you might want to do, or decide in the future you might want to do. Right now is the easiest time for you to focus on debt repayment. It sounds like you are not married and have no children. It is much easier now to cut back your lifestyle and concentrate on paying off this $50k of student debt. This will get harder as your responsibility increases. Build up a small amount of cash for emergencies and put the rest at the debt. You can keep contributing to your 401k to the match if you want. This will give you 2 benefits: Patience. When you actually DO start investing, you will have a new appreciation for the money you are using. If you sacrifice to pay off $50k now, you wont look at money the same for the rest of your life. Drive. If you see the debt as a barrier to achieving your goals, you will work harder to get out of debt. These are all things I would tell my 23 year-old self if i could go back in time. Good luck! |
Friend was brainwashed by MLM-/ponzi investment scam. What can I do? | I don't want to repeat things that have already been said as I agree with most of them. There's just one little thing I'd like to add: If things go the way we're all expecting, this guy will eventually be in desperate need of a friend as he is extremely likely to lose most of his friends sooner or later. Perhaps all you can do is signal that you will not support him now (for obvious reasons), but that you'll be there for him when he may need you in the future... |
How do I hedge stock options like market makers do? | Let's consider that transaction cost is 0(zero) for calculation. In the scenario you have stated, maximum profit that could be made is 55$, however risk is unlimited. Hedging can also be used to limit your losses, let's consider this scenario. Stock ABC trading @ 100$, I'll buy the stock ABC @ 100$ and buy a put option of ABC @ strike price 90$ for a premium of 5$ with an expiration date of 1 month. Possible outcomes I end up in a loss in 3 out of 4 scenarios, however my loss is limited to 15$, whereas profit is unlimited. |
What's a reliable way for a non-permanent resident alien in the USA to get an auto loan? | You have figured out most of the answers for yourself and there is not much more that can be said. From a lender's viewpoint, non-immigrant students applying for car loans are not very good risks because they are going to graduate in a short time (maybe less than the loan duration which is typically three years or more) and thus may well be leaving the country before the loan is fully paid off. In your case, the issue is exacerbated by the fact that your OPT status is due to expire in about one year's time. So the issue is not whether you are a citizen, but whether the lender can be reasonably sure that you will be gainfully employed and able to make the loan payments until the loan is fully paid off. Yes, lenders care about work history and credt scores but they also care (perhaps even care more) about the prospects for steady employment and ability to make the payments until the loan is paid off. Yes, you plan on applying for a H1-B visa but that is still in the future and whether the visa status will be adjusted is still a matter with uncertain outcome. Also, these are not matters that can be explained easily in an on-line application, or in a paper application submitted by mail to a distant bank whose name you obtained from some list of "lenders who have a reliable track record of extending auto loans to non-permanent residents." For this reason, I suggested in a comment that you consider applying at a credit union, especially if there is an Employees' Credit Union for those working for your employer. If you go this route, go talk to a loan officer in person rather than trying to do this on the phone. Similarly, a local bank,and especially one where you currently have an account (hopefully in good standing), is more likely to be willing to work with you. Failing all this, there is always the auto dealer's own loan offers of financing. Finally, one possibility that you might want to consider is whether a one-year lease might work for you instead of an outright purchase, and you can buy a car after your visa issue has been settled. |
Fractional Reserve Banking and Insolvency | Your question points out how most fractional reserve banks are only a couple of defaults away from insolvency. The problem arises because of the terms around the depositors' money. When a customer deposits money into a bank they are loaning their money to the bank (and the bank takes ownership of the money). Deposit and savings account are considered "on-demand" accounts where the customer is told they can retrieve their money at any time. This is a strange type of loan, is it not? No other loan works this way. There are always terms around loans - how often the borrower will make payments, when will the borrower pay back the loan, what is the total time frame of the loan, etc.. The bank runs into problems because the time frame on the money they borrowed (i.e. deposits) does not match the time frame on the money they are lending. |
If I helped my friend to file taxes; can I represent her on a phone call with FTB? | In order for you to be able to talk to the FTB on someone's behalf, that someone has to submit form 3520. Note that since you're not a professional, this form must be paper-filed (CRTP, EA, CPA or attorneys can have this filed on-line). Once the form is accepted by the FTB, you can contact the FTB on behalf of your friend. Pay attention: you're going to represent the partnership, not the individual. |
Will I get a tax form for sale of direct purchased stock (US)? | I think I found the answer, at least in my specific case. From the heading "Questar/Dominion Resources Merger" in this linked website: Q: When will I receive tax forms showing the stock and dividend payments? A: You can expect a Form 1099-B in early February 2017 showing the amount associated with payment of your shares. You also will receive a Form 1099-DIV by Jan. 31, 2017, with your 2016 dividends earned. |
Why use ROI if I can use effective compount interest? | Yes though I'd likely put a caveat on that. If you take short-term investments and extrapolate the results to get an annual result this can be misleading. For example, if a stock goes up 10% in a month, assuming this will continue for the next 11 months may not be a great idea. Thus, beware of how much data do you have in making these calculations. When looking at long-term investments, the compound annual growth rate can be quite useful for comparison. |
15 year mortgage vs 30 year paid off in 15 | Why would anyone ever get a 15 year instead of just paying off a 30 year in 15 years? Because the rate is not the same. Never that I've seen in my 30 years of following rates. I've seen the rate difference range from .25% to .75%. (In March '15, the average rate in my area is 30yr 3.75% / 15yr 3.00%) For a $150K loan, this puts the 15yr payment at $1036, with the 30 (at higher rate) paid in 15 years at $1091. This $55 difference can be considered a flexibility premium," as it offers the option to pay the actual $695 in any period the money is needed elsewhere. If the rate were the same, I'd grab the 30, and since I can't say "invest the difference," I'd say to pay at a pace to go 15, unless you had a cash flow situation. A spouse out of work. An emergency that you funded with a high interest rate loan, etc. The advice to have an emergency fund is great until for whatever reason, there's just not enough. On a personal note, I did go with the 15 year mortgage for our last refinance. I was nearing 50 at the time, and it seemed prudent to aim for a mortgage free retirement. |
Good book-keeping software? | I like Quicken for personal use, and they have a small business edition if you don't want to move into QuickBooks. |
Formula for recalculation of a bad loan, i.e. where payments were missed? | There's not quite enough to answer the question in full. For the two years of non-payment, were there any penalties, or just accrued interest? If no penalties, this is a 3 step time-value-of-money calculation. First, take the terms of the loan and figure out the balance after 5 years. Second, for two years, increase the balance by the monthly interest rate. Last, calculate a new payment with a 13 year duration. Excel or any business calculator can handle this. |
Stopping Payment on a Check--How Long Does it Take? | Is this a USA bank to a USA bank transaction? If so, it will clear in one to two business days. Once cleared, the landlord cannot stop pay it. He can, however, dishonestly claim it was a fraudulent check and attempt a chargeback. If you want absolute certainty the money will not be recalled, go to the landlord's bank and cash the check as a non-customer. You will have to pay a small fee, but you will walk out with cash. I suggest you take a photocopy of the check, and staple your receipt to it as evidence that the check was cashed for any impending legal proceedings. |
Was this a good deal on a mortgage? | Some part of the payment is probably also going for tax escrow, insurance payments, probably PMI if you aren't putting at least 20% down. Get a complete breakdown of the costs. Remember to budget for upkeep. And please see past discussion of why buying a home at this point in your career/life may be very, very premature. |
Why is OkPay not allowed in the United States? | Here's the real reason OKPay (actually the banks they interface with) won't accept US Citizens. The Foreign Account Tax Compliance Act Congress passed the Foreign Account Tax Compliance Act (FATCA) in 2010 without much fanfare. One reason the act was so quiet was its four-year long ramp up; FATCA did not really take effect until 2014. Never before had a single national government attempted, and so far succeeded in, forcing compliance standards on banks across the world. FATCA requires any non-U.S. bank to report accounts held by American citizens worth over $50,000 or else be subject to 30% withholding penalties and possible exclusion from U.S. markets. By mid-2015, more than 100,000 foreign entities had agreed to share financial information with the IRS. Even Russia and China agreed to FATCA. The only major global economy to fight the Feds is Canada; however it was private citizens, not the Canadian government, who filed suit to block FATCA under the International Governmental Agreement clause making it illegal to turn over private bank account information. Read more: The Tax Implications of Opening a Foreign Bank Account | Investopedia http://www.investopedia.com/articles/personal-finance/102915/tax-implications-opening-foreign-bank-account.asp#ixzz4TzEck9Yo Follow us: Investopedia on Facebook |
Once stock prices are down, where to look for good stock market deals? | Keep in mind, that bargain hunting will fail you from time to time. I know a lot of guys who bought Nortel at $10, planning to hold it until the inevitable recovery. |
Employer skipped payments, should I allow them to defer payment until Jan 2017? | First, let's look at the tax brackets for single taxpayers in 2016: The cutoff between the 25% and 28% tax bracket is $91,150. You said that your gross is $87,780. This will be reduced by deductions and exemptions (at least $10,350). Your rental income will increase your income, but it is offset in part by your rental business expenses. For this year, you will almost certainly be in the 25% bracket, whether or not you receive your backpay this year. Next year, if you receive your backpay then and your salary is $11k higher, I'm guessing you'll be close to the edge. It is important to remember that the tax brackets are marginal. This means that when you move up to the next tax bracket, it is only the amount of income that puts you over the top that is taxed at the higher rate. (You can see this in the chart above.) So if, for example, your taxable income ends up being $91,160, you'll be in the 28% tax bracket, but only $10 of your income will be taxed at 28%. The rest will be taxed at 25% or lower. As a result, this probably isn't worth worrying about too much. A bit more explanation, requested by the OP: Here is how to understand the numbers in the tax bracket chart. Let's take a look at the second line, $9,276-$37,650. The tax rate is explained as "$927.50 plus 15% of the amount over $9,275." The first $9,275 of your taxable income is taxed at a 10% rate. So if your total taxable income falls between $9,276 and $37,650, the first $9,275 is taxed at 10% (a tax of $927.50) and the amount over $9,275 is taxed at 15%. On each line of the chart, the amount of tax from all the previous brackets is carried down, so you don't have to calculate it. When I said that you have at least $10,350 in deductions and exemptions, I got that number from the standard deduction and the personal exemption amount. For 2016, the standard deduction for single taxpayers is $6,300. (If you itemize your deductions, you might be able to deduct more.) Personal exemptions for 2016 are at $4,050 per person. That means you get to reduce your taxable income by $4,050 for each person in your household. Since you are single with no dependents, your standard deduction plus the personal exemption for yourself will result in a reduction of at least $10,350 on your taxable income. |
If I want to take cash from Portugal to the USA, should I exchange my money before leaving or after arriving? | I would just rely on the salary from my job in the US. If you don't have a job in the US, you're very unlikely to get a visa to move there and look for work, and so the question of how to take money there (except for a holiday) doesn't arise. (Unless you have dual Portuguese/American citizenship.) |
Fringe Benefits (Lodging) for single member S-Corp | If you use "a room or other separately identifiable space" within your apartment exclusively for your business, then you might be able to recoup a fraction of your rent for that. Check the rules for home office at the IRS and adopt a consistent and well-documented approach. (I would pay your full rent out of your personal account, and then do an "expense report" for the portion that's legitimately business related, but that's not a unique approach.) Other than that, I agree with the answer by litteadv - You cannot reduce your tax by the full amount of your rent just by having the S Corp pay, and trying to do so is probably playing with fire. Generally speaking, don't comingle business and personal expenses like that. |
Are there online brokers in the UK which don't require margin account? | Disclosure: I am working for an aggregation startup business called Brokerchooser, that is matching the needs of clients to the right online broker. FxPro and similar brokers are rather CFD/FX brokers. If you want to trade stocks you have to find a broker who is registered member of an exchange like LSE. Long list: http://www.londonstockexchange.com/exchange/traders-and-brokers/membership/member-firm-directory/member-firm-directory-search.html From the brokers we have tested at Brokerchooser.com I would suggest: |
Is foreign stock considered more risky than local stock and why? | It is very important to note the strength and reputation of the country's regulatory agency. You cannot assume the standards of say the SEC (US Securities and Exchange Commission) apply in other countries (even well-developed ones). These regulations force companies to disclose certain information to inform and protect investors. The standards for such practices vary internationally. |
I have around 60K $. Thinking about investing in Oil, how to proceed? | Royalty trusts track oil prices (they're a pure play on ownership of a portfolio of mineral rights and do not otherwise have the operations that the oil companies themselves have). Many publicly traded ones listed at the embedded wikipedia link. Oil tankers are having a bang up business right now as described in the article, but that's because of the low prices and flood of product from the middle east. The article notes that inventories are near capacity, so terminals and pipelines may be in for a few good years, though these do not directly track oil price. However, as a way to bet on oil or oil services, many terminals and pipelines are organized as publicly traded master limited partnerships or MLPs, often spun out of a major oil company for tax reasons, allowing fine-grained investment in specific assets. |
Is there any reason not to put a 35% down payment on a car? | I suggest you buy a more reasonably priced car and keep saving to have the full amount for the car you really want in the future. If you can avoid getting loans it helps a lot in you financial situation. |
What happens when the bid and ask are the same? | Rule 610 (Google for it) stands that if Bid and Ask are the same, the market is considered Locked, and the exchange must stop all trading. So the same person can't quote the same bid and ask price. However, HFTs have found ways to circumvent this limitation when exchanges created special order types for them, e.g. Spam-and-Cancel |
What is a subsidy? | Subsidy usually means gratuitous financial support. For example, if for whatever reason you live much below the living average paying utility services in full might be too expensive - you'll be out of money before you even think of buying food and basic clothes. Yet it's clear that once can't live in a city without utility services. So the government might have a program for subsidizing utility services for people with very low income - a person brings in proof of low income and once it is low enough government will step in and pay that person utility services in full or in part depending on actual income he proves. The same can be organized for anything government or some organization wishes to support for whatever reason. The key idea is someone gives you free money for spending on some specific purpose. |
What would be the signs of a bubble in silver? | The problem with commodities is that they don't produce income. With a stock or bond, even if you never sold it to anyone or it wasn't publicly traded, you know you can collect the money the company makes or collect interest. That's a quantifiable income from the security. By computing the present value of that income (cf. http://blog.ometer.com/2007/08/26/money-math/) you can have at least a rough sense of the value of the stock or bond investment. Commodities, on the other hand, eat income (insurance and storage). Their value comes from their practical uses e.g. in manufacturing (which eventually results in income for someone); and from psychological factors. The psychological factors are inherently unpredictable. Demand due to practical uses should keep up with inflation, since in principle the prices on whatever products you make from the commodity would keep up with inflation. But even here there's a danger, because it may be that over time some popular uses for a given commodity become obsolete. For example this commodity used to be a bigger deal than now, I guess: http://en.wikipedia.org/wiki/Frankincense. The reverse is also possible, that new uses for a commodity drive up demand and prices. To the extent that metals such as silver and gold bounce around wildly (much more so than inflation), I find it hard to believe the bouncing is mostly due to changes in uses of the metals. It seems far more likely that it's due to psychological factors and momentum traders. To me this makes metals a speculative investment, and identifying a bubble in metals is even harder than identifying one in income-producing assets that can more easily be valued. To identify a bubble you have to figure out what will go on in the minds of a horde of other people, and when. It seems safest for individual investors to just assume commodities are always in a bubble and stay away. The one arguable reason to own commodities is to treat them as a random bouncing number, which may enhance returns (as long as you rebalance) even if on average commodities don't make money over inflation. This is what people are saying when they suggest owning a small slice of commodities as part of an asset allocation. If you do this you have to be careful not to expect to make money on the commodities themselves, i.e. they are just something to sell some of (rebalance out of) whenever they've happened to go up a lot. |
Expense ratio of an ETF included in the price or calculated separately | The expense ratio reduces the return of the ETF; your scenario of paying 100.0015 is that of a load. Most (all?) ETFs can be bought without paying a load (sales charge as a percent of amount invested), and some ETFs can be bought without paying a brokerage fee (fixed or variable charge for a buy transaction just like buying any other stock through the brokerage) because the brokerage has waived it. Your broker might charge fees for both buying and selling shares in an ETF, but in any case, this is quite separate from the expense ratio. |
Why are estimated taxes due “early” for the 2nd and 3rd quarters only? | There are too many nuances to the question asked to explore fully but here are a few points to keep in mind. If you are a cash-basis taxpayer (most individuals are), then you are not required to pay taxes on the money that has been billed but not received as yet. If you operate on an accrual basis, then the income accrues to you the day you perform the service and not on the day you bill the client. You can make four equal payments of estimated tax on the due dates, and if these (together with any income tax withholding from wage-paying jobs) are at least 90% of your tax liability for that year, then you owe no penalties for underpayment of tax regardless of how your income varied over the year. If your income does vary considerably over the year (even for people who only have wages but who invest in mutual funds, the income can vary quite a bit since mutual funds typically declare dividends and capital gains in December), then you can pay different amounts in each quarterly installment of estimated tax. This is called the annualization method (a part of Form 2210 that is best avoided unless you really need to use it). Your annualized income for the payment due on June 15 is 2.4 = 12/5 times your taxable income through May 31. Thus, on Form 2210, you are allowed to assume that your average monthly taxable income through May 31 will continue for the rest of the year. You then compute the tax due on that annualized income and you are supposed to have paid at least 45% of that amount by June 15. Similarly for September 15 for which you look at income through August 31, you use a multiplier of 1.5 = 12/8 and need to pay 67.5% of the tax on the annualized income, and so on. If you miscalculate these numbers and pay too little tax in any installment, then you owe penalties for that quarter. Most people find that guesstimating the tax due for the entire year and paying it in equal installments is simpler than keeping track of nuances of the annualized method. Even simpler is to pay 100% of last year's tax in four equal installments (110% for high earners) and then no penalty is due at all. If your business is really taking off and your income is going to be substantially higher in one year, then this 100%/110% of last year's tax deal could allow you to postpone a significant chunk of your tax bill till April 15. |
Selling mutual fund and buying equivalent ETF: Can I 1031 exchange? | You cannot do a 1031 exchange with stocks, bonds, mutual funds, or ETFs. There really isn't much difference between an ETF and its equivalent index mutual fund. Both will have minimal capital gains distributions. I would not recommend selling an index mutual fund and taking a short-term capital gain just to buy the equivalent ETF. |
Why are stocks having less institutional investors a “good thing”? | Institutional investors are the "elephant" in the room. When they "sneeze," everyone else "catches cold." They're fine, if they're buying after YOU do. They're not bad, if you want to buy after they sell en masse. But when you read about moves of 10 percent, 15 percent or more in a single day, it's because a bunch of institutional investors all decided to do the same thing on the same day. That's more volatility than most people can stomach. Fewer institutional investors in a stock mean fewer chances of those things happening. |
How do I get bill collectors who call about people I know to stop calling me? | http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre27.pdf if you are in the US Look at section 805 and 805 about how they may contact you and what they are and aren't allowed to do. You can simply send a Certified Mail, Return Receipt (CMRR) letter explaining you have no part of it, and that they are not allowed to contact you by any means other than in writing from this point forward. Then you can either put return to sender on the letters (it costs them money) or open them and delete anything you don't need. |
What are “upstream investments” and “downstream investments” in this context? | Upstream is into businesses that supply the original business; downstream is into businesses that make use of the original product. So in that description, what they are saying is that the original business received products from plantations and sent products to manufacturing. This is also called vertical integration. Meaning that they are diversifying along their supply chain so that they control more of it. This is in contrast with horizontal integration, where they move into new products that either compete with the existing products or which are entirely separate. In general, the upside of vertical integration is that a company is less reliant on suppliers (and intermediate consumers) and has more control over its supply chain. The downside is that they have less opportunity to partner with other companies in the same supply chain, as they compete with them. Some companies are better at managing to do both. For example, Amazon.com has integrated fulfillment and sales. But partners can still do their own fulfillment and/or sales, choosing how much to send out to Amazon. If you are investing in individual stocks, integrated companies can be problematic in that they cut across diversification areas. So they can be harder to balance with other stocks. You can either buy plantations, transport, and manufacturing together or not buy at all. If your investment strategy says to increase plantations and reduce manufacturing, this can be difficult to implement with an integrated company. Of course, everyone else has the same problem, which can lead to integrated companies being undervalued. So they may be an opportunity as a value stock. |
How to find a public company's balance sheet and income statement? | The websites of the most publicly traded companies publish their quarterly and annual financials. Check the investor relations sections out at the ones you want to look at. |
Can I use same stock broker to buy stocks from different stock markets? | Most stock brokers are "full service" brokers. That is to say that you can so the same broker to buy different types of stocks, bonds, options, etc. in different markets. Some brokers are very specialized and won't allow you to do that. But those are probably brokers you don't want to use. |
What should I consider when I try to invest my money today for a larger immediate income stream that will secure my retirement? | Lets assume you put the max of 5000 per year in a Roth IRA. You have your home and all other debt paid off, and your investment earns 10%, a few points below the market average. You will have $822,470 at 65, 1005K at 67 that you can draw on tax free. It is a fairly tidy sum and should keep you from working as the greeter in WalMart. This kind of return should be expected from most mutual funds, and you could invest some time in reading about how to pick good returning funds. An index fund, which shadows a market index, should have that kind of return. And yes that is 10% per year. In investing it is about momentum. I too write software for a living, and would suggest you should be able to contribute about double that amount and still be comfortable. That would set you up for a pretty comfortable post-work life style. You understand the value of building passive income. Traditionally that is accomplished through dividends of reliable companies, but are now accomplished a variety of ways. Keep in mind the way you are asking this question opens you to many scams. |
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