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Does borrowing from my 401(k) make sense in my specific circumstance? | You're getting great wisdom and options. Establishing your actionable path will require the details that only you know, such as how much is actually in each paycheck (and how much tax is withheld), how much do you spend each month (and yearly expenses too), how much spending can you actually cut or replace, how comfortable are you with considering (or not considering) unexpected/emergency spending. You mentioned you were cash-poor, but only you know what your current account balances are, which will affect your actions and priorities. Btw, interestingly, your "increase 401k contributions by 2% each year" will need to end before hitting the $18K contribution limit. I took some time and added the details you posted into a cash-flow program to see your scenario over the next few years. There isn't a "401k loan" activity in this program yet, so I build the scenario from other simple activities. You seem financially minded enough to continue modeling on your own. I'm posting the more difficult one for you (borrow from 401k), but you'll have to input your actual balances, paycheck and spending. My spending assumptions must be low, and I entered $70K as "take-home," so the model looks like you've got lots of cash. If you choose to play with it, then consider modeling some other scenarios from the advice in the other posts. Here's the "Borrow $6500 from 401k" scenario model at Whatll.Be: https://whatll.be/d1x1ndp26i/2 To me, it's all about trying the scenarios and see which one seems to work with all of the details. The trick is knowing what scenarios to try, and how to model them. Full disclosure: I needed to do similar planning, so I wrote Whatll.Be and I now share it with other people. It's in beta, so I'm testing it with scenarios like yours. (Notice most of the extra activity occurs on 2018-Jan-01) |
Will I have to pay taxes for Australia if I have an Australian bank account? | After reviewing the tax treaty between New Zealand and Australia, I think the issue is whether or not you have an interest in a "permanent establishment" in Australia where you do business. The bank is not relevant as it is merely the vehicle by which you collect payment and would only come into the picture if you had an income bearing account (which you have indicated you do not). Even if you work out of the offices of the Australian company, you do not have a financial interest in their offices and as such, would pay taxes on the income in New Zealand (see documentation below). https://www.ato.gov.au/business/international-tax-for-business/foreign-residents-doing-business-in-australia/tax-on-income-and-capital-gains/#permanentestablishment |
What effect would currency devaluation have on my investments? | First, a clarification. No assets are immune to inflation, apart from inflation-indexed securities like TIPS or inflation-indexed gilts (well, if held to maturity, these are at least close). Inflation causes a decline in the future purchasing power of a given dollar1 amount, and it certainly doesn't just affect government bonds, either. Regardless of whether you hold equity, bonds, derivatives, etc., the real value of those assets is declining because of inflation, all else being equal. For example, if I invest $100 in an asset that pays a 10% rate of return over the next year, and I sell my entire position at the end of the year, I have $110 in nominal terms. Inflation affects the real value of this asset regardless of its asset class because those $110 aren't worth as much in a year as they are today, assuming inflation is positive. An easy way to incorporate inflation into your calculations of rate of return is to simply subtract the rate of inflation from your rate of return. Using the previous example with inflation of 3%, you could estimate that although the nominal value of your investment at the end of one year is $110, the real value is $100*(1 + 10% - 3%) = $107. In other words, you only gained $7 of purchasing power, even though you gained $10 in nominal terms. This back-of-the-envelope calculation works for securities that don't pay fixed returns as well. Consider an example retirement portfolio. Say I make a one-time investment of $50,000 today in a portfolio that pays, on average, 8% annually. I plan to retire in 30 years, without making any further contributions (yes, this is an over-simplified example). I calculate that my portfolio will have a value of 50000 * (1 + 0.08)^30, or $503,132. That looks like a nice amount, but how much is it really worth? I don't care how many dollars I have; I care about what I can buy with those dollars. If I use the same rough estimate of the effect of inflation and use a 8% - 3% = 5% rate of return instead, I get an estimate of what I'll have at retirement, in today's dollars. That allows me to make an easy comparison to my current standard of living, and see if my portfolio is up to scratch. Repeating the calculation with 5% instead of 8% yields 50000 * (1 + 0.05)^30, or $21,6097. As you can see, the amount is significantly different. If I'm accustomed to living off $50,000 a year now, my calculation that doesn't take inflation into account tells me that I'll have over 10 years of living expenses at retirement. The new calculation tells me I'll only have a little over 4 years. Now that I've clarified the basics of inflation, I'll respond to the rest of the answer. I want to know if I need to be making sure my investments span multiple currencies to protect against a single country's currency failing. As others have pointed out, currency doesn't inflate; prices denominated in that currency inflate. Also, a currency failing is significantly different from a prices denominated in a currency inflating. If you're worried about prices inflating and decreasing the purchasing power of your dollars (which usually occurs in modern economies) then it's a good idea to look for investments and asset allocations that, over time, have outpaced the rate of inflation and that even with the effects of inflation, still give you a high enough rate of return to meet your investment goals in real, inflation-adjusted terms. If you have legitimate reason to worry about your currency failing, perhaps because your country doesn't maintain stable monetary or fiscal policies, there are a few things you can do. First, define what you mean by "failing." Do you mean ceasing to exist, or simply falling in unit purchasing power because of inflation? If it's the latter, see the previous paragraph. If the former, investing in other currencies abroad may be a good idea. Questions about currencies actually failing are quite general, however, and (in my opinion) require significant economic analysis before deciding on a course of action/hedging. I would ask the same question about my home's value against an inflated currency as well. Would it keep the same real value. Your home may or may not keep the same real value over time. In some time periods, average home prices have risen at rates significantly higher than the rate of inflation, in which case on paper, their real value has increased. However, if you need to make substantial investments in your home to keep its price rising at the same rate as inflation, you may actually be losing money because your total investment is higher than what you paid for the house initially. Of course, if you own your home and don't have plans to move, you may not be concerned if its value isn't keeping up with inflation at all times. You're deriving additional satisfaction/utility from it, mainly because it's a place for you to live, and you spend money maintaining it in order to maintain your physical standard of living, not just its price at some future sale date. 1) I use dollars as an example. This applies to all currencies. |
Taking partial capital loss purely for tax purposes | Note that the rules around wash sales vary depending on where you live. For the U.S., the wash sale rules say that you cannot buy a substantially identical stock or security within 30 days (before or after) your sale. So, you could sell your stock today to lock in the capital losses. However, you would then have to wait at least 30 days before purchasing it back. If you bought it back within 30 days, you would disqualify the capital loss event. The risk, of course, is that the stock's price goes up substantially while you are waiting for the wash sale period. It's up to you to determine if the risk outweighs the benefit of locking in your capital losses. Note that this applies regardless of whether you sell SOME or ALL of the stock. Or indeed, if we are talking about securities other than stocks. |
Why can't house prices be out of tune with salaries | I'd suggest changing the subject when your friends talk about real estate to save your sanity and friendship. There's a difference between "belief" and "knowledge". Arguing with a believer isn't a very productive course of action, and will ultimately poison the friendship. Reality is a harsh mistress. |
Want to buy above market price? | Yes, you can do this buy placing a conditional order to buy at market if the price moves to 106 or above. Once the price hits 106 your market order will hit the market and you will purchase the stock at 106 or above. You can also place a tack profit order at 107 linked to your initial conditional buy order, so that once you buy order is executed and you buy at 106, a take profit order will be executed only if the price reaches 107 or above. If the price never reaches 106, neither your market buy order or take profit order will hit the market and you won't buy or sell anything. |
Pros & cons of investing in gold vs. platinum? | Platinum use is pretty heavily overweight in industrial areas; according to the linked Wikipedia article, 239 tonnes of platinum was sold in 2006, of which 130 tonnes went to vehicles emissions control devices and another 13.3 tonnes to electronics. Gold sees substantial use as an investment as well as to hedge against economical decline and inflation, with comparatively little industrial ("real world", as some put it) use. That is their principal difference from an investment point of view. According to Wikipedia's article on platinum, ... during periods of economic uncertainty, the price of platinum tends to decrease due to reduced industrial demand, falling below the price of gold. Gold prices are more stable in slow economic times, as gold is considered a safe haven and gold demand is not driven by industrial uses. If your investment scenario is a tanking world economy, for reason of its large industrial usage, I for one would not count on platinum to not fall in price. Of course gold may fall in price as well, but since it is not primarily an industrial use commodity, I would personally expect gold to do better in such a scenario. |
If I short-sell a dividend-paying stock, do I have to pay the dividend? | You could hold a long position in some company XXXX and then short your own shares (assuming your broker will let you do that). The dividend that would have gone to you would then go to whoever is holding the shares you short sold. You just don't get a dividend. If you're going to short in a smart way... do it on a stock you otherwise believe in, but use it to minimize the pull-backs on the way up. |
Where do I invest my Roth IRA besides stock market and mutual funds? | Nowhere. To back up a bit, mutual funds are the stock market (and the bond market). That is, when you invest in a mutual fund, your money is ultimately buying stocks on the open market. Some of it might be buying bonds. The exact mix of stocks and bonds depends on the mutual fund. But a mutual fund is just a basket of stocks and/or bonds (and/or other, more exotic investments). At 25, you probably should just be investing your Roth IRA in index stock mutual funds and index bond mutual funds. You probably shouldn't even be doing peer-to-peer lending (unless you're willing to think of any losses as the cost of a hobby); the higher interest rate you're getting is a reflection of the risk that your borrowers will default. I'm not even sure if peer-to-peer lending is allowed in Roth IRA's. Investing in just stocks, bonds, and cast is boring, but these are easy investments to understand. The harder the investment is to understand, the easier it is for it to be a scam (or just a bad investment). There's not necessarily anything wrong with boring. |
Is there a benefit, long term, to life insurance for a youngish, debt, and dependent free person? | As Mhoran stated, no dependents, no need. Even with dependants, insurance is to cover those who would otherwise have a hardship. Once the kids are off to college and house paid for, the need drops dramatically. There are some rather complex uses for insurance when estates are large but potentially illiquid. Clearly this doesn't apply to you. |
Is it accurate to say that if I was to trade something, my probability of success can't be worse than random? | In theory, in a perfect world, what you state is almost true. Apart from transaction fees, if you assume that the market is perfectly efficient (ie: public information is immediately reflected in a perfect reflection of future share value, in all share prices when the information becomes available), then in theory any transaction you would choose to take is opposed by a reasonable person who is not taking advantage of you, just moving their position around. This would make any and all transactions completely reasonable from a cost-benefit perspective. ie: if the future value of all dividends to be paid by Apple [ie: the value of holding a share in Apple] exactly matches Apple's share price of $1,000, then buying a share for $1,000 is an even trade. Selling a share for $1,000 is also an even trade. Now in a perfectly efficient market, which we have assumed, then there is no edge to valuing a company using your own methods. If you take Apple's financial statements / press releases / reported information, and if you apply modern financial theory to evaluate the future dividends from Apple, you should get the same $1,000 share price that the market has already arrived at. So in this example, why wouldn't you just throw darts at a printout of the S&P 500 and invest in whatever it lands on? Because, even if the 'perfectly efficient market' agrees on the true value of something, different investments have different characteristics. As an example, consider a simple comparison of corporate bonds: Corporations make bond offerings to the public, allowing individual investors to effectively lend money to the corporation, for a future benefit. For simplicity, assume a bond with a 'face value' (the amount to be repaid to the investor on maturity) of $1,000 has these 3 defining characteristics: (1) The price [What the investor pays to acquire it]; (2) Interest payments [how much, if any, the corporation will pay to the investor before maturity, and when those payments will be made]; and (3) a bond rating [which is a third party assessment of how risky the bond is, based on the 'health' of the corporation]. Now if the bond rating agency is perfect in its risk assessment, and if the price of all bond's is fair, then why does it matter who you loan your money to? It matters because different people want different things out of their investments. If you are waiting to make a down payment on a house next year, then you don't want risk - you want to be certain that you will get your cash back, even if it means lower returns. So, even though a high-risk bond may be perfectly priced, it should only be bought by someone willing to bear that risk. If you are retired, and you need your bonds to pay you interest regularly as your sole source of income, then of course a zero-coupon bond [one that pays no interest] is not helpful to you. If you are young, and have a long time to invest, then you may want risk, because you have time to overcome losses and you want to get the most return possible. In addition, taxes are not universal between all investors. Some people benefit from things that would be tax-heavy to their neighbors. For example in Canada, there is a 'dividend tax credit' which reduces the taxes owing on dividends received by a corporation. This credit exists to prevent 'double-taxation', because otherwise the corporation would pay its ~30% of tax, and then a wealthy investor would pay another ~45% of tax. Due to the mechanics of how the credit is calculated, however, someone who makes less money, gets an even lower tax bill than they normally would. This means that someone making under the top tax bracket in Canada, has a tax benefit by receiving dividends. This means that while 2 stocks may be both fairly priced, if one pays dividends and the other doesn't [ie: if the other company instead reinvests more heavily in future projects, creating even more value for shareholders down the road], then someone in the bottom tax brackets may want the dividend paying stock more than the other. In conclusion: Picking investments yourself does require some knowledge to prevent yourself from making a 'bad buy'; this is because the market is not perfectly efficient. As well, specific market mechanics make some trades more costly than they should be in theory; consider for example transaction fees and tax mechanics. Finally, even if you assume that all of the above is irrelevant as a theoretical idea, different investors still have different needs. Just because $1,000,000 is the 'fair' price for a factory in your home town, doesn't mean you might as well convert your retirement savings to buy it as your sole asset. |
What are the consequences of being classified as a day trader, in Australia? | In Australia the ATO can determine if you are considered a shareholder or a share trader. The ATO defines a shareholder as: A shareholder is a person who holds shares for the purpose of earning income from dividends and similar receipts. Whilst they define a share trader as: A share trader is a person who carries out business activities for the purpose of earning income from buying and selling shares. To find out the differences between them you can refer to the following link describing The difference between a share trader and a shareholder. The ATO also describes: To be classed as a share trader, you may be asked to provide evidence that demonstrates you are carrying on a business of share trading, for example: the purchase of shares on a regular basis through a regular or routine method a trading plan use of share trading techniques in managing your share acquisitions, such as decisions based on thorough analysis of relevant market information a contingency plan in the event of a major shift in the market. Losses incurred in the business of share trading are treated the same as any other losses from business. If your activities change from investor to trader, your investment changes from a CGT (capital gains tax) asset to trading stock. This can trigger CGT event for any investments you currently hold as they change from CGT assets to trading stock. Once you have changed over to a trader you will not be entitled to the 50% CGT discount for stocks held over 12 months. You will, however, be able to count any paper losses at the end of Financial Year to reduce your other income. |
To pay off a student loan, should I save up a lump sum payoff payment or pay extra each month? | Just one more thing to consider: a friend of mine had some student loan debt left over from graduate school. Years later, through his employer, he was able to apply for and receive a grant that paid off the remainder of his student loan. It was literally free money, and a significant amount, too. The windfall was a little bittersweet for him because he had been making extra payments over the years. The cap on the grant was something like $50k and he wasn't able to use all of it because he had been aggressive in paying it down. (Still, free money is free money.) Sure, this is a unique situation, but grants happen. |
How can rebuilding a city/large area be considered an economic boost? | Wikipedia's article on the Parable of the broken window mentions that Keynesians would argue that broken windows can be useful in depressed economies. I think Japan's economy was somewhat depressed, so if it applies anywhere, it'd apply in this scenario. |
Why would you elect to apply a refund to next year's tax bill? | There actually are legitimate reasons, but they don't apply to most people. Here are a few that I know of: You're self-employed and have to pay quarterly estimated taxes. Rather than wait for the refund when you already have to pay 1/4 of next year's taxes at the same time, you just have the IRS apply to refund forward. (so you're not out the money you owe while waiting for your refund). You're filing an amended or late return, and so you're already into the next year, and have a similar situation as #1, where your next year's taxes have already come due. You're planning on declaring bankruptcy, and you're under the Tenth Circuit, those credits might be safe from creditors For almost any other situation, you're better off taking the money, and using it to pay down debt, or put it somewhere to make interest (although, at the current rates, that might not be very much). |
How can banks afford to offer credit card rewards? | The banks don't have to pay for credit card rewards. The merchants end up footing the bill. The merchants that accept credit cards pay from 2-4% in fees on the credit card purchase. Those fees go to support the rewards programs. The merchants also take on most of the risk during a credit card transaction (although the credit card companies would have you believe otherwise). If a thief uses a stolen card to purchase a camera from Mike's Camera Shop for instance, any funds the merchant received will be taken away from the merchant. In addition, the merchant will be hit with a chargeback fee (usually around $20-$60). Finally, since the card was stolen, the merchant will never get their merchandise returned, so Mike's Camera is out the camera as well. No camera, no funds, and a $60 fee to boot. The credit card issuers make $60 on the chargeback fees and have no liability. |
Does high inflation help or hurt companies with huge cash reserves? | Inflation will damage the value of those cash reserves. This will harm the company's value. (Other factors may or may not be harmed. or helped.) Borrowing costs may be related to inflation, but they're not directly tied. Inflation happens, in fact, when it's easy to borrow money and more money gets created than new economic activity. (Also, if a competitor really needs to raise money, they can also issue new equity. It's not all borrowing.) |
Is investing into real estate a good move for a risk-averse person at the moment | Real estate is never a low-risk investment. I'd keep your money in the bank, and make sure that you don't have more in any one bank than is guaranteed in the event of bank failure. If your bank account is in Greece, Italy, Spain, Portugal or Ireland, I'd consider moving it to Eurozone country that's in better shape, as there's just a slight possibility of one or more of those countries exiting the Eurozone in a disorderly fashion and forcibly converting bank accounts to a new and weak currency. |
How to protect yourself from fraud when selling on eBay UK | Just ship using a reputable courier (definitely not Yodel or Hermes!) that requires and obtains a surname and signature which you can view on their website (Citylink, Parcel Force to name a couple). Then remember to submit the tracking details when you mark the item as shipped on eBay. If the buyer is still brazen enough to claim the item never arrived, Paypal (in my experience) don't even entertain their claim. If however they claim the item arrived damaged/not as described, it could be trickier to defend. I'd recommend thoroughly documenting your item with photographs and recording the serial number, just in case you need to provide the details to Paypal. Again, in my experience, this has been enough to protect me from any fraudulent claims. To answer your second question, I don't believe eBay permits you to specify 'No Paypal', but if they did then yes, bank transfer is 100% safe (short of someone using stolen money to pay for the item, in which case you'd be guilty of money laundering thanks to the UK's wonderful laws on such things...) |
Returning to the UK after working in Switzerland, What to do with my Swiss Francs? | If you "have no immediate plans for the money and will probably not return to Switzerland for a long time or at all" then it might be best just to exchange the money so then you can use/invest it in the UK. Maybe keep a bill or two for memory-sake - I do that whenever I travel to a foreign country. |
Additional credit card with different limit on same account? | Generally not. Since authorized user cards are the same account and the difference between the two (the original and the AU card) are minimal. Note, there's nothing technically stopping banks from offering this as a feature, two cards do have identifiers that indicate they're separate cards, but the banks concern for your needs stops at how much they can bleed from you, and "helping you control your spending" is not part of that. |
Dry cleaners lost $160 pants, what should I do? | You are looking to be made whole, so the requests need to be reasonable. You need to be clear that you want: You aren't going to 'punish' the dry cleaner or anything else. You don't want coupons or free service for future work, you want your pants or cash. If you send a letter, send it certified with a return receipt. You want to be able to show a judge you made efforts outside of the court that you attempted to reconcile the issue. Sending it certified is also a good way to indicate to the dry cleaner that you aren't going to just go away. Be clear, firm and very polite. You cannot blame or criticize the cleaner, simply state "On YY/YY/YYYY date I didn't get my pants back; I want my pants or I want money by XX/XX/XXXX date." If you want to picket, contact local law enforcement and find out the rules before picketing. You can probably picket from a sidewalk, but that doesn't mean the dry cleaner won't approach you and get in your personal space. If you hand out flyers, stick strictly to provable facts lest you be sued for defamation. It is smarter to hand out a fact sheet or speak from a rehearsed script so that you don't say something that would be actionable. Make sure you pick the busiest day of the week for a dry cleaner. (Weekends?) I don't think this is criminal, but you can sue. Like others said, if you have the cleaning ticket (and the ticket doesn't absolve the dry cleaner of responsibility) you will probably get a judgement. Be careful what you ask for, make sure you cover all of your costs (the pants, filing fees, time off of work, and collection efforts.) Itemize all your requested costs and make sure they are reasonable. You only want to be made whole, and that only means $160 or pants (plus fees) Just because you won in small claims doesn't mean you can collect easily. Figure in your cost for collecting when you sue. You might have to hire somebody to collect on your judgement. If you hire somebody they will want a cut, so you might want to figure that out for your small claims. I am guessing this is a local business, so it should be pretty easy to collect. (Unless they go out of business, in which case you will get nothing.) |
Capital Gains and Tax Brackets | It will definitely be added to your AGI, but not necessarily bump your ordinary income tax bracket. You will have to use the Capital Gains Computation worksheet (that uses the general Tax Computation Worksheet) to figure out your tax liability. You might also be subject to the AMT. See the instructions to form 1040, line 44 (page 38) and line 45. |
Effect of country default on house prices? | It could be a a way to preserve the value of your money, but depends upon various factors. If a country defaults, and it leads to hyper-inflation, by definition that means that money loses its purchasing power. In even simpler terms, it cannot buy as much tomorrow as I could today. Therefore people can be incented to either hoard physical goods, or other non-perishable items. Real-estate may well be such an item. If you are resident in the country, you have to live somewhere. It is possible that a landlord might try to raise rent beyond what your job is willing to pay. Of course, in a house, you might have a similar situation with utilities like electricity... Assuming some kind of re-stabilization of the economy and currency, even with several more zeros on the end, it is conceivable that the house would subsequently sell for an appropriately inflation adjusted amount, as other in-demand physical goods may. Lots of variables. Good Luck. |
Online service that computes implied volatility | remember that IV is literally the volatility that would be present to equate to the latest price of a particular option contract, assuming the Black-Scholes-Merton model. Yahoo's free finance service lists the IV for all the options that it tracks. |
Can you explain the mechanism of money inflation? | Your question asks about the mechanism of money inflation - not price inflation. Money inflation occurs when new money is introduced into an economy. The value of money is subject to supply and demand like other items in the economy. The effects of new money can be difficult to predict. One of the results of additional money can be rising prices. These rising prices can be concentrated in one particular area - stocks, homes, food - or they can be spread out over many items. This is true regardless of the form of money being inflated - gold, silver, or paper money. There were times in history when large discoveries of gold and silver were found that caused prices to rise as a result. Of course, the large discoveries of gold and silver pale in comparison to the gigantic discoveries by central banks of new fiat currency. |
What happens to an ETF if one of the companies in the ETF gets aquired? | There are a number of ways this can result. In a broad ETF, such as SPY, the S&P 500 spider, the S&P index will have 500 stocks no matter what, so a buyout would simply result in a re-shuffling of the index makeup. No buyout will happen so quickly that there's no time to choose the next stock to join the index. In your case, if the fund manager (per the terms of the prospectus) wishes to simply reallocate the index to remove the taken-over stock that's probably how he handle it. Unless of course, the prospectus dictates otherwise. In which case, a cash dividend is a possible alternative. |
Is there any sort of tax write off for unfulfilled pay checks? | If you don't receive a W2, there are 2 scenarios you should consider: If you have reason to believe that scenario 1 is accurate, then you could file your taxes based on the last valid paycheck you received. If you have reason to believe that scenario 2 is accurate, then you need to do some extra math, but fortunately it is straight forward. Simply treat your final paychecks as if the gross amount of your check was equal to the sum of your taxes paid, and the net amount of the check is $0. This way your income will increase by the proper amount, and you will still receive credit for the taxes paid. This should work out cleanly for federal and state taxes, but will likely result in an overpayment of FICA taxes. You can use form 843 to receive a refund of excess FICA taxes. As a side note, I'd recommend spot checking the YTD numbers on your last paychecks against previous paystubs to make sure there wasn't any fuzzy math going on when they realized they were going out of business. |
Is Cost of Living overstated? | I do not believe there is a strong correlation between CPI (Consumer Price Index) and housing value appreciation. Take, for example, New York City which has the highest CPI in the US. A great deal of the CPI number is skewed by Manhattan. One can live in Brooklyn or Queens and avoid some of NYC's high CPI. I would say that housing appreciation occurs because of the human activity in the area. That same human activity is what drives the CPI. There are other contributing factors, like limits on economies of scale. You simply cannot set down a Super Walmart in much of NYC, so goods are distributed over a larger number of stores. (Sure, NYC is a port city, but the goods are distributed within the city by trucks.) The San Francisco Bay Area is another high CPI area in the US. Here, as well, it is the location that draws people. While NYC is mostly about economic activity, the SF Bay Area is a mix of the draw of a great location and the economic activity that occurs due to the large number of people living there. I know of a house in Oakland that sold for approximately $350k, in 2004/05. It was located not too far from the "Killing Fields," as they were known locally. It was not the worst neighborhood in Oakland, but it was not very far from it. This was for a shabby, single-story unit which I believe had 5 (maybe 6) rooms. That is a lot of money for a house that required a lot of attention and was in a bad neighborhood. I have no idea how the housing market is after the housing bubble, but the higher value areas had the most room to fall and many of them fell hard. Ultimately, it is supply and demand that determines the CPI and housing values. This supply and demand is determined by the human activity in the area and some practical considerations regarding the area. A final note: If we are talking about a primary residence, it should not necessarily be looked at as an investment. First and foremost, it is a necessity. Second, if you need to hire people for the maintenance and/or upgrades, that will eat into your gains. Contractors are not cheap, especially where they are in high demand. Finally, the tax incentive is actually not that great. Sure, you take what you can get, but its impact is relatively marginal. |
Are there good investment options to pay off student loans? | What you're getting at is the same as investing with leverage. Usually this comes in the form in a margin account, which an investor uses to borrow money at a low interest rate, invest the money, and (hopefully!) beat the interest rate. is this approach unwise? That completely depends on how your investments perform and how high your loan's interest rate is. The higher your loan's interest rate, the more risky your investments will have to be in order to beat the interest rate. If you can get a return which beats the interest rates of your loan then congratulations! You have come out ahead and made a profit. If you can keep it up you should make the minimum payment on your loan to maximize the amount of capital you can invest. If not, then it would be better to just use your extra cash to pay down the loan. [are] there really are investments (aside from stocks and such) that I can try to use to my advantage? With interest rates as low as they are right now (at least in the US) you'll probably be hard-pressed to find a savings account or CD that will return a higher interest rate than your loan's. If you're nervous about the risk associated with investing in stocks and bonds (as is healthy!), then know that they come in a wide spectrum of risk. It's up to you to evaluate how much risk you're willing to take on to achieve a higher return. |
Federal taxes for nonresident alien whose only income in 2016 was a 2015 state tax return | I believe you have to file a tax return, because state tax refund is considered income effectively connected with US trade or business, and the 1040NR instructions section "Who Must File" includes people who were engaged in trade or business in the US and had a gross income. You won't end up having to pay any taxes as the income is less than your personal exemption of $4050. |
What exactly is a “bad,” “standard,” or “good” annual raise? If I am told a hard percentage and don't get it, should I look elsewhere? | TLDR: You will probably need to move to a different employer to get the raise you want/need/deserve. Some employers, in the US, punish longevity through a number of practices. My wife worked as a nurse for about 20 years. During that time she had many employers, leveraging raises with job changes. She quit nursing about 6 years ago and was being paid $38/hour at the time. She had a friend that worked in the same system for 18 years. They had the same position in the same hospital that friend's current rate of pay: $26/hour. You probably don't want to be that person. Given your Stack Overflow participation, I would assume you are some type of web developer. I would recommend updating your resume, and moving for a 20% increase or more. You'll get it as it is a great time to be a web developer. Spending on IT tends to go in cycles, and right now budgets are very healthy for hiring new talent. While your current company might not have enough money in the budget to give you a raise, they would not hesitate hiring someone with your skills at 95K if they had an opening. Its common, but frustrating to all that are involved except the bean counters that looks at people like us as commodities. Think about this: both sides of the table agree that you deserve a 5K raise. But lets say next year only 3k is in the budget. So you are out the 5k you should have been given this year, plus the 2k that you won't get, plus whatever raise was fair for you next year. That is a lot of money! Time to go! Don't bother on holding onto any illusions of a counter offer by your current employer. There will be too much resentment. Shake the dust off your feet and move on. Edit: Some naysayers will cite short work histories as problems for future employment. It could happen in a small number of shops, but short work histories are common in technology that recruiters rarely bat an eye. If they do, as with any objection, it is up to you to sell yourself. In Cracking the Code Interview the author cites that no one is really expecting you to stay beyond 5 years. Something like this would work just fine: "I left Acme because there were indications of poor financial health. Given the hot market at the time I was able to find a new position without the worry of pending layoffs." If you are a contractor six month assignments are the norm. Also many technology resumes have overlapping assignments. Its what happens when someone is in demand. |
Is it worth working at home to earn money? Can I earn more money working at home? | I don't mean to be rude, but if you have to ask if you can earn a living from home, the answer is 'probably not.' Most people are more financially productive at a traditional workplace, otherwise more people would quit the jobs they hate and work at home or develop their hobbies into businesses. Making a living from home requires being a self-starter and finding clients/customers who accept such arrangements. First, be assured no one earns a living stuffing envelopes, being a mystery online shopper, or selling low to moderate quantities of stuff to their circle of friends. A few earn a living flipping houses, cars, or shares, or stuff on eBay, but with considerable risk, capital, effort, luck, contacts, and experience/skill. A few more find success by inventing something or developing a business. Once again, not as easy as it sounds. You can look for professional work freelancing, or find grunt work on something like vWorker. But these are easily as competitive as the job market, perhaps moreso. In the case of vWorker you are competing against people in southern asia who almost surely can beat you on price. |
Is it wise for an independent contractor to avoid corporation tax by planning to only break even each year? | First, point: The CRA wants you to start a business with a "Reasonable expectation of profit". They typically expect to see a profit within 5 years, so you may be inviting unwanted questions from future auditors by using a breakeven strategy. Second point: If the goal is to pay as little tax as possible, you may want to consider having the corporation pay you as little as possible. Corporate income taxes are much lower than personal income taxes, according to these two CRA links: How it works is that your company pays you little as an outright salary and offers you perks like a leased company car, expense account for lunch and entertainment, a mobile phone, computer, etc. The company owns all of this stuff and lets you use it as part of the job. The company pays for all this stuff with corporate pre-tax dollars as opposed to you paying for it with personal after-tax dollars. There are specifics on meals & entertainment which modify this slightly (you can claim 50%) but you get the idea. The actual rate difference will depend on your province of residence and your corporate income level. There is also a requirement for "Reasonable Expenses", such that the expenses have to be in line with what you are doing. If you need to travel to a conference each year, that would be a reasonable expense. Adding your family and making it a vacation for everyone would not. You can claim such expenses as a sole proprietor or a corporation. The sole-proprietorship option puts any after-expense profits into your pocket as taxable income, where the corporate structure allows the corporation to hold funds and limit the amount paid out to you. I've seen this strategy successfully done first-hand, but have not done it myself. I am not a lawyer or accountant, consult these professionals about this tax strategy before taking any action. |
How do I track investment performance in Quicken across rollovers? | Hmm, this site says If you use Quicken, you enter a new transaction of type "Corporate Acquisition (stock for stock)." You put investor shares as the "Company acquired", Admiral shares as the "Acquiring company", and the conversion ratio 0.7997754 as the "New shares issued per held share" number. Seems crazy, but maybe that's the way. Edit: This sucks. In the comments, you can see that people have to manually correct the share price for every transaction because of rounding problems. |
How to calculate the closing price percentage change for a stock? | The previous day's close on Thursday 10th October was 5,000.00 The close on Friday 11th October is 5,025.92 So the gain on Friday was 25.92 (5025.92 - 5000) or 0.52% (25.92/5000 x 100%). No mystery! |
What is the best, low risk investment I can make now? | First of all, bear in mind that there's no such thing as a risk-free investment. If you keep your money in the bank, you'll struggle to get a return that keeps up with inflation. The same is true for other "safe" investments like government bonds. Gold and silver are essentially completely speculative investments; over the years their price tends to vary quite wildly, so unless you really understand how those markets work you should steer well clear. They're certainly not low risk. Repeatedly buying a property to sell in a couple of years time is almost certainly a bad idea; you'll end up paying substantial transaction fees each time that would wipe out a lot of the possible profit, and of course there's always the risk that prices would go down not up. Buying a property to keep - and preferably live in - might be a decent option once you have a good deposit saved up. It's very hard to say where prices will go in future, on the one hand London prices are very high by historical standards, but on the other hand supply is likely to remain severely constrained for years to come. I tend to think of a house as something that I need one of for the rest of my life, and so in one sense not owning a house to live in is a gamble that house prices and rents won't go up substantially. If you own a house, you're insulated from changes in rent etc and even if prices crash at least you still have somewhere to live. However that argument only works really well if you expect to keep living in the same area under most circumstances - house prices might crash in your area but not elsewhere. |
Do I just let an options conversion/reversal trade go to expiration? | To Chris' comment, find out if the assignment commission is the same as the commission for an executed trade. If that does affect the profit, just let it expire. I've had spreads (buy a call, sell a higher strike call, same dates) so deep in the money, I just made sense to let both exercise at expiration. Don't panic if all legs ofthe trade don't show until Sunday or even Monday morning. |
Is a car loan bad debt? | What's missing in your question, so Kate couldn't address, is the rest of your financial picture. If you have a fully funded emergency account, are saving for retirement, and have saved up the $15K for the car, buy in cash. If you tell me that if the day after you buy the car in cash, your furnace/AC system dies, that you'd need to pay for it with an $8K charge to a credit card, that's another story. You see, there's more than one rate at play. You get close to zero on you savings today. You have a 1.5% loan rate available. But what is your marginal cost of borrowing? The next $10K, $20K? If it's 18% on a credit card, I personally would find value in borrowing at sub-2.5% and not depleting my savings. On the other side, the saving side, does your company offer a 401(k) with company match? I find too many people obsessing over their 6% debt, while ignoring a 100% match of 4-6% of their gross income. For what it's worth, trying to place labels on debt is a bit pointless. Any use of debt should be discussed 100% based on the finances of the borrower. |
Using credit cards online: is it safe? | You're right that someone who, say, photographed the front of your card at the store could use it to make some online purchases. Schemes like Visa's 3-D Secure provide additional online security by having you enter your password on the issuer's website, but they aren't common yet in the US. But as littleadv says, you as the cardholder generally aren't liable for fraud (except $50 in some cases). Just be sure to check your statement monthly and notify the issuer of any fraud within 60 days. To issuers, fraud losses are fairly predictable, and the cost is acceptable. |
Can saving/investing 15% of your income starting age 25, likely make you a millionaire? | Other people have already demonstrated the effect of compound interest to the question. I'd like to add a totally different perspective. Note that the article says if you can follow this simple recipe throughout your working career, you will almost certainly beat out most professional investors [...] you'll likely accumulate enough savings to retire comfortably. (the latter point may be the more practical mark than the somewhat arbitrary million (rupees? dollars?) My point here is that the group of people who do put away a substantial fraction of their (lower) early wages and keep them invested for decades show (at least) two traits that will make a very substantial difference to the average (western) person. They may be correlated, though: people who are not tempted or able to resist the temptation to spend (almost) their whole income may be more likely to not touch their savings or investments. (In my country, people like to see themselves as "world champions in savings", but if you talk to people you find that many people talk about saving for the next holidays [as opposed to saving for retirement].) Also, if you get going this way long before you are able to retire you reach a relative level of independence that can give you a much better position in wage negotiations as you do not need to take the first badly paid job that comes along in order to survive but can afford to wait and look and negotiate for a better job. Psychologically, it also seems to be easier to consistently keep the increase in your spending below the increase of your income than to reduce spending once you overspent. There are studies around that find homeowners on average substantially more wealthy than people who keep living in rental appartments (I'm mostly talking Germany, were renting is normal and does not imply poverty - but similar findings have also been described for the US) even though someone who'd take the additional money the homeowner put into their home over the rent and invested in other ways would have yielded more value than the home. The difference is largely attributed to the fact that buying and downpaying a home enforces low spending and saving, and it is found that after some decades of downpayment homeowners often go on to spend less than their socio-economic peers who rent. The group that is described in this question is one that does not even need the mental help of enforcing the savings. In addition, if this is not about the fixed million but about reaching a level of wealth that allows you to retire: people who have practised moderate spending habits as adults for decades are typically also much better able to get along with less in retirement than others who did went with a high consumption lifestyle instead (e.g. the homeowners again). My estimate is that these effects compound in a way that is much more important than the "usual" compounding effect of interest - and even more if you look at interest vs. inflation, i.e. the buying power of your investment for everyday life. Note that they also cause the group in question to be more resilient in case of a market crash than the average person with about no savings (note that market crashes lead to increased risk of job loss). Slightly off topic: I do not know enough how difficult saving 50 USD out of 50 USD in Pakistan is - and thus cannot comment whether the savings effort called for in the paper is equivalent/higher/lower than what you achieve. I find that trying to keep to student life (i.e. spending that is within the means of a student) for the first professional years can help kick-starting a nest egg (European experience - again, not sure whether applicable in Pakistan). |
Is there any online personal finance software without online banking? | MoneyStrands is a site very similar to Mint, but does not force you to link bank accounts. You can create manual accounts and use all features of the site without linking to banks. |
Why would a company issue a scrip dividend and how will this issue affect me? | Am I correct in understanding that a Scrip Dividend involves the issue of new shares instead of the purchase of existing shares? Yes. Instead of paying a cash dividend to shareholders, the company grants existing shareholders new shares at a previously determined price. This allows shareholders who join the program to obtain new shares without incurring transaction costs that would normally occur if they purchased these shares in the market. Does this mean that if I don't join this program, my existing shares will be diluted every time a Scrip Dividend is paid? Yes, because the number of shares has increased, so the relative percentage of shares in the company you hold will decrease if you opt-out of the program. The price of the existing shares will adjust so that the value of the company is essentially unchanged (similar to a stock split), but the number of outstanding shares has increased, so the relative weight of your shares declines if you opt out of the program. What is the benefit to the company of issuing Scrip Dividends? Companies may do this to conserve their cash reserves. Also, by issuing a scrip dividend, corporations could avoid the Advanced Corporation Tax (ACT) that they would normally pre-pay on their distributions. Since the abolition of the ACT in 1999, preserving cash reserves is the primary reason for a company to issue scrip dividends, as far as I know. Whether or not scrip dividends are actually a beneficial strategy for a company is debatable (this looks like a neat study, even though I've only skimmed it). The issue may be beneficial to you, however, because you might receive a tax benefit. You can sell the scrip dividend in the market; the capital gain from this sale may fall below the annual tax-free allowance for capital gains, in which case you don't pay any capital gains tax on that amount. For a cash dividend, however, there isn't a minimum taxable amount, so you would owe dividend tax on the entire dividend (and may therefore pay more taxes on a cash dividend). |
Sole proprietorship or LLC? | The primary advantage is protection of your personal assets. If your LLC gets sued, they can't take your house/car/dog/wife. There aren't really any financial incentives to be an LLC; because of the pass-thru taxing structure, you wind up paying the same in taxes either way. "The cost" will depend on where you're located, and usually involves a few factors -- Expect to pay $300-500 to start it, depending on your state and who you register with (technically, you can usually register for free at the secretary of state, but wouldn't you rather pay an expert?), and "State Franchise Tax", which will can be a minimum of up to $1000/year depending on the state, plus even more if your LLC earns more than $xxx,000. EDIT -- As an aside, I'll mention that I'm based in California, and our state franchise tax starts at $800/yr. I'm all-web-based, so I've been investigating incorporating in Nevada or Delaware instead (no franchise tax, lower filing fees), but from what I've found, it's hardly worth the trouble. In addition to having to pay a Registered Agent (someone to act as my permanent mailing address in that state for ~$100/yr), apparently California likes to search for people just like me, and charge them $800 anyway. You can fight that, of course, and claim that your business really is done in Nevada, but do you really want to? |
Calculating Future and Present value into mortgage comparisons | Using the fact that you'd save $160/mo by spending $7000, I'd look at it this way - If I were to lend you the $7000 at 12%/yr, $160 would pay it off in 58 months. At 18%/yr, 72 months or just 6 years. You can run spreadsheets to get breakeven scenarios, and mhoran is on track with his answer, but breakeven is just one point to consider. Beyond that date, it's free money. My approach is to look at it with a question - "How much interest could I afford to pay to make that monthly savings worthwhile?" |
Estate taxes and the top 1 percent by net worth | There are two key reasons: Consider a family of four, two kids and two adults, that has a net worth of $20 million. Each of these four people live in a top 1% household. But any of those four people can die, and their estate will not pay any estate tax. Both kids and one spouse can die, and still no estate tax will be paid. Only when the last spouse dies would there be any estate tax. Also, consider a person who dies but whose assets do not flow into their estate. For example, their assets could be held in an inter-vivos trust. People with higher net worths are much more likely to use trusts to avoid or minimize estate taxes. |
What is Systematic about Systematic Investment Plan (SIP) and who invented it? | Personally, I think you are approaching this from the wrong angle. You're somewhat correct in assuming that what you're reading is usually some kind of marketing material. Systematic Investment Plan (SIP) is not a universal piece of jargon in the financial world. Dollar cost averaging is a pretty universal piece of jargon in the financial world and is a common topic taught in finance classes in the US. On average, verified by many studies, individuals will generate better investment returns when they proactively avoid timing the market or attempting to pick specific winners. Say you decide to invest in a mutual fund, dollar cost averaging means you invest the same dollar amount in consistent intervals rather than buying a number of shares or buying sporadically when you feel the market is low. As an example I'll compare investing $50 per week on Wednesdays, versus 1 share per week on Wednesdays, or the full $850 on the first Wednesday. I'll use the Vanguard Large cap fund as an example (VLCAX). I realize this is not really an apples to apples comparison as the invested amounts are different, I just wanted to show how your rate of return can change depending on how your money goes in to the market even if the difference is subtle. By investing a common dollar amount rather than a common share amount you ultimately maintain a lower average share price while the share price climbs. It also keeps your investment easy to budget. Vanguard published an excellent paper discussing dollar cost averaging versus lump sum investing which concluded that you should invest as soon as you have funds, rather than parsing out a lump sum in to smaller periodic investments, which is illustrated in the third column above; and obviously worked out well as the market has been increasing. Ultimately, all of these companies are vying to customers so they all have marketing teams trying to figure out how to make their services sound interesting and unique. If they all called dollar cost averaging, "dollar cost averaging" none of them would appear to be unique. So they devise neat acronyms but it's all pretty much the same idea. Trickle your money in to your investments as the money becomes available to you. |
What is the proper way to report additional income for taxes (specifically, Android development)? | You would report it as business income on Schedule C. You may be able to take deductions against that income as well (home office, your computer, an android device, any advertising or promotional expenses, etc.) but you'll want to consult an accountant about that. Generally you can only take those kinds of deductions if you use the space or equipment exclusively for business use (not likely if it's just a hobby). The IRS is pretty picky about that stuff. |
Should you keep your stocks if you are too late to sell? | The stock price is not only based on the general market trend and the stock's current profitability and prospects, but is also based on prediction of how the stock's prospects might change in the future. In almost every case, there are professional investors analysing the stock's future prospects and considering whether it's over or under values for its current price. However even professionals can be totally wrong. If you feel like you have a good grasp on whether the stock will have improving or declining prospects over time, then you might be (if you're right) equipped to make a sensible decision on whether to hold the stock or not. If you don't think you have a good understanding about the stock, then an understanding of the general market direction might at least make stock in general worth holding. Otherwise, you are simply taking a punt. If you know of another stock that has better prospects, then ask yourself why you would hold onto the stock that you think will perform worse. But also bear in mind that (in my understanding) research has shown that, on average, people who try to pick stocks rarely do better than a random selection, and more stock trades means more brokerage (which thanks to brokerage losses would mean you will end up doing worse than average unless you really do know better than the market). |
Why can low volume move a stock price drastically? | In a sense, yes. There's a view in Yahoo Finance that looks like this For this particular stock, a market order for 3000 shares (not even $4000, this is a reasonably small figure) will move the stock past $1.34, more than a 3% move. Say, on the Ask side there are 100,000 shares, all with $10 ask. It would take a lot of orders to purchase all these shares, so for a while, the price may stay right at $10, or a bit lower if there are those willing to sell lower. But, say that side showed $10 1000, $10.25 500, $10.50 1000. Now, the volume is so low that if I decided I wanted shares at any price, my order, a market order will actually drive the market price right up to $10.50 if I buy 2500 shares "market". You see, however, even though I'm a small trader, I drove the price up. But now that the price is $10.50 when I go to sell all 2500 at $10.50, there are no bids to pay that much, so the price the next trade will occur at isn't known yet. There may be bids at $10, with asking (me) at $10.50. No trades will happen until a seller takes the $10 bid or other buyers and sellers come in. |
How do you find reasonably priced, quality, long lasting clothing? | The idea that you should buy quality, long lasting clothes shouldn't go unchallenged. It's just not true for everybody. If you have a job or a lifestyle that makes it so your clothes are going to get worn out fast regardless of quality, buying expensive clothes doesn't make sense. With that said: look for heavier-feeling fabrics, avoid colors that will fade (or worse: bleed into your other clothes in the wash). Check the laundry instructions so you can see whether they're on the delicate end of the spectrum. Re: how to extend the life: avoid bleach. Even color safe bleach contains peroxide which can break down fabrics faster. |
Why do employers require you to spread your 401(k) contributions throughout the year to get the maximum match? | If one makes say, $10K/mo, and the company will match the first 5% dollar for dollar, a 10%/mo deposit of $1K/mo will see a $500/mo match. If the employee manages to request 90% get put into the 401(k), after 2 months, he's done. If the company wished, they could continue the $500/mo match, I agree. They typically don't and in fact, the 'true up' you mention isn't even required, one is fortunate to get it. Many companies that match are going the other way, matching only after the year is over. Why? Why does any company do anything? To save money. I used to make an attempt to divide my deposit over the year to max out the 401(k) in December and get the match real time, not a true up. |
Why is it possible to just take out a ton of credit cards, max them out and default in 7 years? | I should apply for everything I can on the same day, get approved for as many as I can First it may not sound as easy. You may hardly get 2-3 cards and not dozens. Even if you submit the applications the same day; If you still plan this and somehow get too many cards, and draw huge debt, then the Banks can take this seriously and file court case. If Banks are able to establish the intent; this can get constituted as fraud and liable for criminal proceedings. So in short if someone has the money and don't want to pay; the court can attach the wage or other assets and make the person pay. If the intent was fraud one can even be sent to jail. |
Will I have to pay taxes for Australia if I have an Australian bank account? | Because you actually reside in New Zealand, your income taxes will be paid in New Zealand. However, as a non-resident of Australia you will have tax withholding on all of the interest you earn in an Australian bank account. Obviously, because that tax is paid to Australia, that will not be counted against your New Zealand income taxes due to the taxation agreement between those countries. You should still discuss this with an accountant in New Zealand and consider acting as a sole trader. Since you are doing freelance work, that seems like the most logical setup anyway. |
Are banks really making less profit when interest rates are low? | Banks make less profit when "long" rates are low compared to "short" rates. Banks lend for long term purposes like five year business loans or 30 year mortgages. They get their funds from (mostly) "short term" deposits, which can be emptied in days. Banks make money on the difference between 5 and 30 year rates, and short term rates. It is the difference, and not the absolute level of rates, that determines their profitability. A bank that pays 1% on CDs, and lends at 3% will make money. During the 1970s, short rates kept rising,and banks were stuck with 30 year loans at 7% from the early part of the decade, when short rates rose to double digits around 1980, and they lost money. |
What to bear in mind when considering a rental home as an investment? | Here would be the big two you don't mention: Time - How much of your own time are you prepared to commit to this? Are you going to find tenants, handle calls if something breaks down, and other possible miscellaneous issues that may arise with the property? Are you prepared to spend money on possible renovations and other maintenance on the property that may occur from time to time? Financial costs - You don't mention anything about insurance or taxes, as in property taxes since most municipalities need funds that would come from the owner of the home, that would be a couple of other costs to note in having real estate holdings as if something big happens are you expecting a government bailout automatically? If you chose to use a property management company for dealing with most issues then be aware of how much cash flow could be impacted here. Are you prepared to have an account to properly do the books for your company that will hold the property or would you be doing this as an individual without any corporate structure? Do you have lease agreements printed up or would you need someone to provide these for you? |
How are the best way to make and save money at 22 years old | Make sure you have a budget, there is a pretty cool budget tracker that you can download here (it works in excel and is easy to use). The important thing is to not only make a budget but also keep in touch and track your budget, some free ebooks and other investment ebooks too. Just start with the budget tracker: http://www.futureassist.com.au/young-to-mid-life Focus on paying off debt first Next look at ETF's (Exchange Traded Funds) as a possible investment option - this is an Australian Government Website but ETF's all work in the same way: https://www.moneysmart.gov.au/investing/managed-funds/exchange-traded-funds-etfs |
Can I buy only 4 shares of a company? | Take a look at FolioFN - they let you buy small numbers of shares and fractional shares too. There is an annual fee on the order of US$100/year. You can trade with no fees at two "windows" per day, or at any time for a $15 fee. You are better off leaving the stock in broker's name, especially if you live overseas. Otherwise you will receive your dividends in the form of cheques that might be expensive to try to cash. There is also usually a fee charged by the broker to obtain share certificates instead of shares in your account. |
Cash flow implications of converting primary mortgaged residence to rental | You are assuming 100% occupancy and 100% rent collection. This is unrealistic. You could get lucky and find that long term tenant with great credit that always pays their bills... but in reality that person usually buys a home they do not rent long term. So you will need to be prepared for periods of no renters and periods of non payment. The expenses here I would expect could wipe out more than you can make in "profit" based on your numbers. Have you checked to find out what the insurance on a rental property is? I am guessing it will go up probably 200-500 a year possibly more depending on coverage. You will need a different type of insurance for rental property. Have you checked with your mortgage provider to make sure that you can convert to a rental property? Some mortgages (mine is one) restrict the use of the home from being a rental property. You may be required to refinance your home which could cost you more, in addition if you are under water it will be hard to find a new financier willing to write that mortgage with anything like reasonable terms. You are correct you would be taking on a new expense in rental. It is non deductible, and the IRS knows this well. As Littleadv's answer stated you can deduct some expenses from your rental property. I am not sure that you will have a net wash or loss when you add those expenses. If you do then you have a problem since you have a business losing money. This does not even address the headaches that come with being a landlord. By my quick calculations if you want to break even your rental property should be about 2175/Month. This accounts for 80% occupancy and 80% rental payment. If you get better than that you should make a bit of a profit... dont worry im sure the house will find a way to reclaim it. |
Should I buy stocks of my current employer because of its high dividend yield? | Generally, it is considered a bad idea to put significant parts of your money in your own employer's stock, no matter how great the company looks right now. The reason is the old 'don't put all your eggs in one basket'. If there is ever a serious issue with your company, and you lose your job because they go down the drain, you don't only lose your job, but also your savings (and potentially 401k if you have their stock there too). So you end unemployed and without all your savings. Of course, this is a generic tip, and depending on the situation, it might be ok to ignore it, that's your decision. Just remember to have an eye on it, so you can get out while they are still floating - typically employees are not the first to know when it goes downhill, and when you see it in the papers, it's too late. Typically, you get a more secure and independent return-on-invest by buying into a well-managed mixed portfolio |
How do I deal with a mistaken attempt to collect a debt from me that is owed by someone else? | It may be a scam. But it also may be a company trying to find a person with the same or similar name. They may have followed a trail to her old address, and still not have the correct person. They bought number of old debts at a large discount, and are trying to track down any money they can find. It is best to ignore it, especially if they know it isn't their debt. If they start providing more proof then get interested. If they keep contacting them tell them there is no business relationship and they should stop. |
How prudent would it be to invest (stocks/equity) in businesses that are based on Cash transactions? | Every listed company needs to maintain book of accounts, when you are investing in companies you would have to look at what is stated in the books and along with other info decide to invest in it. |
Table of how many years it takes to make a specified return on the stock market? | Well depends but "on average" the stock market has historically returned somewhere around 10% per year. Note, this can vary wildly from year to year see http://en.wikipedia.org/wiki/S%26P_500#Market_statistics So it would be roughly 2.8 years to get your 30% if you happen to get the average market return for those 3 years, but the chances of that happening exactly are slim to none. You could end up with +50% or -30% over that ~3 year period of time - so the calculation doesn't do you that much good for that short period of time, but if you are talking a span of 30 years then you could plan using that as a very rough ballpark. Good rule of thumb is you shouldn't put any money in the stock market you think you will need anytime in the next 5 years. Formula to figure out total gain would be Principal x (1+ rate of return) ^ years |
Is it bad etiquette to use a credit or debit card to pay for single figure amounts at the POS | Etiquette or not, it is hurting the seller. The transaction fees have usually minimums, so if the actual transaction is below the minimum - they'll pay larger fee on the transaction (relatively). As an example, assume minimum fee for a debit card swipe is 20 cents, or 2% of the transaction. For a transaction of $10 and above, the fee will be 2% of the transaction. But for $1.67, the fee becomes 12% of the transaction. 6 times more expensive for the seller. Basically, the sale was most likely at a loss for them (they usually have very low margins, especially for a "dollar" store). So take that into account as well. |
Why does Yahoo Finance's data for a Vanguard fund's dividend per share not match the info from Vanguard? | http://finance.yahoo.com/q/hp?s=EDV+Historical+Prices shows this which matches Vanguard: Mar 24, 2014 0.769 Dividend Your download link doesn't specify dates which makes me wonder if it is a cumulative distribution or something else as one can wonder how did you ensure that the URL is specifying to list only the most recent distribution and not something else. For example, try this URL which specifies date information in the a,b,c,d,e,f parameters: http://real-chart.finance.yahoo.com/table.csv?s=EDV&a=00&b=29&c=2014&d=05&e=16&f=2014&g=v&ignore=.csv |
Why can't the government simply payoff everyone's mortgage to resolve the housing crisis? | Just looking at the practicality: Because the total value of outstanding mortgages in the US is about $10 trillion, and the government can't afford it without printing enough money to cause hyperinflation. The cost of saving the banks was actually much less than the "hundreds of billions of dollars" that is quoted, because most of it was loans that have been or will be repaid, not cash payments. |
Why is tax loss harvesting helpful for passive investing? | The harvested losses are capital losses. See this IRS page: Generally, realized capital losses are first offset against realized capital gains. Any excess losses can be deducted against ordinary income up to $3,000 ($1,500 if married filing separately) on line 13 of Form 1040. Losses in excess of this limit can be carried forward to later years to reduce capital gains or ordinary income until the balance of these losses is used up. This means that your harvested losses can be used to offset ordinary income --- up to $3000 in a single year, and with extra losses carried forward to future years. It is pretty close to a free lunch, provided that you have some losses somewhere in your portfolio. This free lunch is available to anyone, but for a human, it can be quite a chore to decide when to sell what, keep track of the losses, and avoid the wash sale rules. The advantage of robo-advisors is that they eat that kind of bookkeeping for breakfast, so they can take advantage of tax loss harvesting opportunities that would be too cumbersome for a human to bother with. |
How can I pay for school to finish my degree when I can't get a student loan and have bad credit? | When considering such a major life decision, with such high potential costs and high potential rewards, I encourage you to consider multiple different potential options. Even if loans were available, they might not be the best option. Less debt and an engineering degree is better than more debt and an engineering degree, both of which are likely better than your current debt and no engineering degree. I encourage you to consider: revisit your aid (which is not just loans), cut expenses, consider alternative aid sources, use your engineering student status to get a better paying job (including more profitable summer employment), check for methods to cut down the cost of your degree, and double-check your plans to make sure you have a long-term plan that makes sense. The first issue, raised in the comments, is whether or not you are getting appropriate financial aid. This does not just mean loans, it includes grants and other forms of assistance. You should be getting in-state tuition, and by searching the tuition of UNC I believe you are. But for future readers, you should make sure you are getting in-state rates, and it not there are options to return to a state where you would get in-state tuition rates, or look into the possibility of pausing your study for one year until you meet in-state funding requirements. You should also ensure your FAFSA information is correct, including your income, family situation (whether or not you are an independent study, as it sounds like you probably are), etc. This effects how many grants you get, and if you are independent this changes maximum federal loan amounts (see website for details). While you don't say what your pay is, the fact that you are working two jobs and having trouble making ends-meet suggests either that you have a spending issue, or that your jobs pay sucks, and possibly both. I've been in both situations, and there are methods for dealing with both. If your spending is not very carefully controlled, that's a big issue. I won't try to rehash all the personal finance advice about this, but I will just warn that when you are desperate and you know there isn't enough money even if you spend perfectly, there is a strong tendency to just give up and not even try because what's the point? Learned helplessness is hell, but it can be overcome with effort and tightly holding on to any glimmer of hope you find to do better each day. If you are in a field like engineering or computing (and some other fields, though I am less personally familiar with the current employment climate in those), there are usually companies who want to hire you as a paid intern or part-time employee in the hopes of getting you when you graduate. Those last two semesters of undergrad are a technicality to employers, they know it doesn't really change your skill set much. Many companies are actually more interesting in hiring someone on who hasn't finished the degree yet than getting someone recently post-degree, because they can get you cheaper and learn if this is a good match before they have to take the big risk of full-time hiring. You need to use this system to your advantage. Its hard when you feel destitute, but talk with career councilors in your school, your department advisor, and/or main administrative staff in your main academic department. Make sure you are on the right mailing lists to see the job offers (many schools require you to subscribe to one because at a school like UNC it easily gets way too much traffic each day). You need field-relevant experience, not just to finish the degree, but to be able to really open up your job opportunities and earning potential. Do not be shy about directly calling/emailing a contact who reaches out to your school looking for "recent graduates", and especially any mention of flexibility on early start for those who are almost finished. You can say you are in your final year (you are), and even ask if they are open to working around a light school schedule while you finish up. Most can end up to be "no", but it doesn't matter - the recruiting contacts want to hire people, so just reaching out early means you can follow up later once you get your degree and finances sorted out and you will have an even easier time getting that opportunity. In technology and engineering, the importance of summer internships cannot be understated, especially as you are now technically at the end of your degree. In engineering and tech fields, internships pay - often very well. Don't worry about it being the job of your dreams. Depending on your set of skills, apply to insurance companies, IT departments in hospitals and banks (even if you thought your coding skills in engineering were minimal), and of course any paying position that might be more directly in your field of interest. Consider ones outside your immediate area or even the more national internships from the bigger name companies, where possible. It is not at all uncommon for tech and engineering internships for undergraduate students to pay $15-$25+ per hour, even where most non-degree jobs might only pay $8 (and I've seen as high as $40 per hour+ in the high cost of living markets, depending on your skill set). I know many people who were paid more as a student intern than they were previously paid as a full-time professional employee. Many schools - including UNC - charge different tuition for distance learning and satellite campuses, and often also offer University-approved online classes. While this is not always a possibility for every student, you should consider the options. It could be that one of the final classes you need towards your degree can be taken at one of these other options, with reduced tuition. This is not always possible with all courses, but is certainly true if you have any of those general education requirements to knock out. Also consider if any of those final requirements have test-out options, such as CLEP test alternatives. Again, not always available, but sometimes you can get class credit for a general education class for Finally, make sure you aren't paying unnecessarily for text books, once you do get the money for tuition. You can sometimes get hand-me-down copies, rent ebooks or physical books from online companies, creative searches for PDF copies, get your book from off-campus local stores, etc. It isn't tuition, but money is money. Attend Part-Time While Working Look into the option of being a half-time student, which is usually 6-8 credit hours, if you can't afford full-time tuition. There is generally a greatly reduced rate, you still qualify for aid programs, and you are still working towards the degree - so you still get access to student resources like internships and job listings that may not be publicly posted. Inquire About Scholarships and School Emergency Assistance While this varies hugely by institution, make sure you check into scholarships you can apply to (even if they are just a few hundred bucks, it helps a lot) in your school (I don't believe the big online searches help, ask the school - but YMMV). Also inquire about any sort of possible help the school provides to students who've had life emergencies, such as your medical issues. Many have programs that are not advertised, designed to help students finish their degree and recover from personal hard times. It's worth the inquiry if you are willing to ask. Any little bit of assistance can help. Don't be afraid to talk with an institution's mental health councilors either, who can help you deal with the psychological difficulty of your situation as well as often being able to connect you to other potential support resources. The pressure can take its tole, and you'll have better long-term opportunities if you build up your support network and options. Student Loan Forbearance While In School If you are trying to save up every last dollar for tuition to finish the degree, but you have to pay loans now, call up the provider to ask about temporary delays on your student loan payments. Many have time-limited hardship allowances, and between the medical bills, low income, and returning to school, they may be willing to give you a few months break until you get back to school and the in-school provisions kick in. Skip a Semester If Necessary To Save Money If you can only raise enough for one semester, then need to skip a semester to build up more funds, that happens, it's OK. Be strategic, and check on loan forbearance. Usually being out for one semester is allowed by student loan companies before you owe them payment, and if you re-enroll you don't have to start making payments yet. Double-check on Credit Expiration and Degree Requirements Make sure you talk to someone who knows what they are talking about, especially in terms of credit expiration. Policies vary, and sometimes an advisor is able to put in a special request to waive you through some of these issues. Academia is heavily, heavily reliant on developing a good relationship and clear communication with an advisor who is willing to work with you to achieve your goals. Written policies are sometimes very firm, and sometimes all you have to do is ask the right person and poof, suddenly the rules change. It's a weird system, but don't be afraid to explain your situation and ask what can be done. Don't assume a written policy is 100% ironclad - sometimes it is, but it often isn't. Inquire About Other Government and Community-based Assistance Being destitute is awful, and having to ask for help can feel terrible in it's own way, but doing what you have to do to have a better future can mean pushing through and being willing to ask for help. This can mean asking parents and close family if they can contribute to help you finish your degree, but this also means checking with your local community programs to see if you qualify for anything. Many communities have food pantries and related programs that will help you even if you don't qualify for something like SNAP (aka food stamps), because they know times can get hard for anyone and they want you to spend what little money you have on building a better life. Your university may even run a food pantry for students in need - use it. Get what assistance you can, minimize spending in any way you can manage, put all the money towards doing what you need to do to get to a better place. It's even nicely reciprocal - once you work through your hard times and get things on track, you can return the favor and help give back to programs like the ones that helped you. Make Sure Your Long-Term Goal Makes Sense Finally, this is all predicated on pulling out all the stops to finish your degree. But this assumes that this is a good plan. Not all degrees are helpful for all people in all areas of the country. Do your own research to make sure you aren't throwing good money after bad, and are pursuing a goal that will make sense for you and what you want. The cost of a degree keeps going up, but it remains true that many sets of skills and degree-holding candidates are in demand and can command high salaries that blow away the cost of college in comparison. If you actually have a good chance of going from struggling to make $8/hour to making $50k-90k a year, based on your developed skills, experience, and professional network, then reasonable student loan debt is a worthy investment. If, on the other hand, you wrack up tens of thousands of more dollars in debt just to say you did and still have to work the same kinds of jobs, that's not really much of an investment at all. Good luck on your journey, and best wishes towards better days - regardless of what path you choose. Finally, make sure you aren't paying unnecessarily for text books, once you do get the money for tuition. You can sometimes get hand-me-down copies, rent ebooks or physical books from online companies, creative searches for PDF copies, get your book from off-campus local stores, etc. It isn't tuition, but money is money. Look into the option of being a half-time student, which is usually 6-8 credit hours, if you can't afford full-time tuition. There is generally a greatly reduced rate, you still qualify for aid programs, and you are still working towards the degree - so you still get access to student resources like internships and job listings that may not be publicly posted. While this varies hugely by institution, make sure you check into scholarships you can apply to (even if they are just a few hundred bucks, it helps a lot) in your school (I don't believe the big online searches help, ask the school - but YMMV). Also inquire about any sort of possible help the school provides to students who've had life emergencies, such as your medical issues. Many have programs that are not advertised, designed to help students finish their degree and recover from personal hard times. It's worth the inquiry if you are willing to ask. Any little bit of assistance can help. Don't be afraid to talk with an institution's mental health councilors either, who can help you deal with the psychological difficulty of your situation as well as often being able to connect you to other potential support resources. The pressure can take its tole, and you'll have better long-term opportunities if you build up your support network and options. If you are trying to save up every last dollar for tuition to finish the degree, but you have to pay loans now, call up the provider to ask about temporary delays on your student loan payments. Many have time-limited hardship allowances, and between the medical bills, low income, and returning to school, they may be willing to give you a few months break until you get back to school and the in-school provisions kick in. If you can only raise enough for one semester, then need to skip a semester to build up more funds, that happens, it's OK. Be strategic, and check on loan forbearance. Usually being out for one semester is allowed by student loan companies before you owe them payment, and if you re-enroll you don't have to start making payments yet. Make sure you talk to someone who knows what they are talking about, especially in terms of credit expiration. Policies vary, and sometimes an advisor is able to put in a special request to waive you through some of these issues. Academia is heavily, heavily reliant on developing a good relationship and clear communication with an advisor who is willing to work with you to achieve your goals. Written policies are sometimes very firm, and sometimes all you have to do is ask the right person and poof, suddenly the rules change. It's a weird system, but don't be afraid to explain your situation and ask what can be done. Don't assume a written policy is 100% ironclad - sometimes it is, but it often isn't. Being destitute is awful, and having to ask for help can feel terrible in it's own way, but doing what you have to do to have a better future can mean pushing through and being willing to ask for help. This can mean asking parents and close family if they can contribute to help you finish your degree, but this also means checking with your local community programs to see if you qualify for anything. Many communities have food pantries and related programs that will help you even if you don't qualify for something like SNAP (aka food stamps), because they know times can get hard for anyone and they want you to spend what little money you have on building a better life. Your university may even run a food pantry for students in need - use it. Get what assistance you can, minimize spending in any way you can manage, put all the money towards doing what you need to do to get to a better place. It's even nicely reciprocal - once you work through your hard times and get things on track, you can return the favor and help give back to programs like the ones that helped you. Finally, this is all predicated on pulling out all the stops to finish your degree. But this assumes that this is a good plan. Not all degrees are helpful for all people in all areas of the country. Do your own research to make sure you aren't throwing good money after bad, and are pursuing a goal that will make sense for you and what you want. The cost of a degree keeps going up, but it remains true that many sets of skills and degree-holding candidates are in demand and can command high salaries that blow away the cost of college in comparison. If you actually have a good chance of going from struggling to make $8/hour to making $50k-90k a year, based on your developed skills, experience, and professional network, then reasonable student loan debt is a worthy investment. If, on the other hand, you wrack up tens of thousands of more dollars in debt just to say you did and still have to work the same kinds of jobs, that's not really much of an investment at all. Good luck on your journey, and best wishes towards better days - regardless of what path you choose. |
Why are American-style options worth more than European-style options? | An option gives you an option. That is, you aren't buying any security - you are simply buying an option to buy a security. The sole value of what you buy is the option to buy something. An American option offers more flexibility - i.e. it offers you more options on buying the stock. Since you have more options, the cost of the option is higher. Of course, a good example makes sense why this is the case. Consider the VIX. Options on the VIX are European style. Sometimes the VIX spikes like crazy - tripling in value in days. It usually comes back down pretty quick though - within a couple of weeks. So far out options on the VIX aren't worth just a whole lot more, because the VIX will probably be back to normal. However, if the person could have excercised them right when it got to the top, they would have made a fortune many times what their option was worth. Since they are Euroopean style, though, they would have to wait till their option was redeemable, right when the VIX would be about back to normal. In this case, an American style option would be far more valuable - especially for something that is difficult to predict, like the VIX. |
Switch from DINK to SIWK: How do people afford kids? | What makes it hard is that you're making this decision now, when you've already made decisions over the years going in a different route. I've noticed this recently w/some of my friends, that decisions, even small ones, over the years now come back to bite them b/c they didn't have a long term view. Now in early 30's they are constrained by choices throughout their 20's. Unfortunately, most people aren't equipped to make good decisions earlier, which hurts them later. So making such a change in lifestyle becomes harder. So while it can be done, it's going to take some hard decisions. Just remember, children are a great reward, and a great sacrifice. |
Saving for retirement without employer sponsored plan | Variable Annuities would be one option though there are SEC warnings about them, for an option that is tax-deferred and intended to be used for long-term investing such as retirement. There is a bit of a cost to gain the tax-deferral which may not always make them worthwhile. |
Best return on investment for new home purchase | I encourage you to think of this home purchase decision as a chance to buy into a community that you want your children to grow up in. Try to find a place where you will be happy for the next 20 years, not just the next 2 or 7 years. In your situation, option 1 seems like a bad idea. It will create an obstacle to having children, instead of establishing a place for them to grow up in. Option 2 is close to "buying a house on a layaway plan". It offers the most financial flexibility. It also could result in the best long-term outcome, because you will buy in an established area, and you will know exactly what quality house you will have. But you and your fiancé need to ask yourselves some hard questions: Are you willing to put up with the mess and hassles of remodelling? Are you good at designing such projects? Can you afford to pay for the projects as they occur? Or if you need to finance them, can you get a HELOC to cover them? Especially if you and your fiancé do much of the work yourselves, break down the projects into small enough pieces that you can quickly finish off whatever you are working on at the time, and be happy living in the resulting space. You do not want to be nagging your husband about an unfinished project "forever" -- or silently resenting that a project never got wrapped up. I posted some suggestions for incrementally finishing a basement on the Home Improvement Stack Exchange. If you are up to the job of option 2, it is less risky than option 3. Option 3 has several risks: You don't know what sort of people will live in the neighborhood 5 - 20 years from now. Will the homes be owner-occupied? Or rentals? Will your neighbors care about raising children well? Or will lots of kids grow up in broken homes? Will the schools be good? Disappointing? Or dangerous? Whereas in an established neighborhood, you can see what the neighborhood is currently like, and how it has been changing. Unless you custom-build (or remodel), you don't control the quality of the construction. Some neighborhoods built by Pulte in the last 10 years were riddled with construction defects. You will be paying up-front for features you don't need yet. You might never need some of them. And some of them might interfere with what you realize later on might be better. In stable markets, new homes (especially ones with lots of "upgrades") often decline in value during the first few years. This is because part of the value is in the "newness" and being "up-to-date" with the latest fads. This part of the value wears off over time. Are the homes "at the edge of town" already within reasonable walking distance of parks, schools, church, grocery stores, et cetera? Might the commute from the "edge of town" to work get worse over the next 5 - 20 years? |
What is “financial literacy” and how does one become “financially literate”? | Wikipedia has a nice definition of financial literacy (emphasis below is mine): [...] refers to an individual's ability to make informed judgments and effective decisions about the use and management of their money. Raising interest in personal finance is now a focus of state-run programs in countries including Australia, Japan, the United States and the UK. [...] As for how you can become financially literate, here are some suggestions: Learn about how basic financial products works: bank accounts, mortgages, credit cards, investment accounts, insurance (home, car, life, disability, medical.) Free printed & online materials should be available from your existing financial service providers to help you with your existing products. In particular, learn about the fees, interest, or other charges you may incur with these products. Becoming fee-aware is a step towards financial literacy, since financially literate people compare costs. Seek out additional information on each type of product from unbiased sources (i.e. sources not trying to sell you something.) Get out of debt and stay out of debt. This may take a while. Focus on your highest-interest loans first. Learn the difference between good debt and bad debt. Learn about compound interest. Once you understand compound interest, you'll understand why being in debt is bad for your financial well-being. If you aren't already saving money for retirement, start now. Investigate whether your employer offers an advantageous matched 401(k) plan (or group RRSP/DC plan for Canadians) or a pension plan. If your employer offers a good plan, sign up. If you get to choose your own investments, keep it simple and favor low-cost balanced index funds until you understand the different types of investments. Read the material provided by the plan sponsor, try online tools provided, and seek out additional information from unbiased sources. If your employer doesn't offer an advantageous retirement plan, open an individual retirement account or IRA (or personal RRSP for Canadians.) If your employer does offer a plan, you can set one of these up to save even more. You could start with access to a family of low-cost mutual funds (examples: Vanguard for Americans, or TD eFunds for Canadians) or earn advanced credit by learning about discount brokers and self-directed accounts. Understand how income taxes and other taxes work. If you have an accountant prepare your taxes, ask questions. If you prepare your taxes yourself, understand what you're doing and don't file blind. Seek help if necessary. There are many good books on how income tax works. Software packages that help you self-file often have online help worth reading – read it. Learn about life insurance, medical insurance, disability insurance, wills, living wills & powers of attorney, and estate planning. Death and illness can derail your family's finances. Learn how these things can help. Seek out and read key books on personal finance topics. e.g. Your Money Or Your Life, Why Smart People Make Big Money Mistakes, The Four Pillars of Investing, The Random Walk Guide to Investing, and many more. Seek out and read good personal finance blogs. There's a wealth of information available for free on the Internet, but do check facts and assumptions. Here are some suggested blogs for American readers and some suggested blogs for Canadian readers. Subscribe to a personal finance periodical and read it. Good ones to start with are Kiplinger's Personal Finance Magazine in the U.S. and MoneySense Magazine in Canada. The business section in your local newspaper may sometimes have personal finance articles worth reading, too. Shameless plug: Ask more questions on this site. The Personal Finance & Money Stack Exchange is here to help you learn about money & finance, so you can make better financial decisions. We're all here to learn and help others learn about money. Keep learning! |
What's the difference between Term and Whole Life insurance? | Whole life is life insurance that lasts your whole life. Seriously. Since the insurance company must make a profit, and since they know they will always pay out on a whole life policy, whole life tends to be very expensive, and has lower "death" benefits than a term policy. Some of these policies are "paid-up" policies, meaning that they are structured so that you don't have to pay premiums forever. But what it amounts to is that the insurance company invests your premiums, and then pays you a smaller "dividend," much like banks do with savings accounts. Unless you are especially risk-averse, it is almost always a better decision to get an inexpensive term policy, and invest the money you save yourself, rather than letting the insurance company invest it for you and reap most of the benefits. If you are doing things properly, you won't need life insurance your whole life, as retirement investments will eventually replace your working income. |
Roth vs. Whole Insurance vs. Cash | Week after week, I make remarks regarding expenses within retirement accounts. A 401(k) with a 1% or greater fee is criminal, in my opinion. Whole life insurance usually starts with fees north of 2%, and I've seen as high as 3.5% per year. Compare that to my own 401(k) with charges .02% for its S&P fund. When pressed to say something nice about whole life insurance, I offer "whole life has sent tens of thousands of children to college, the children of the people selling it." A good friend would never suggest whole life, a great friend will physically restrain you from buying such a product. |
Does an owner of a bond etf get an income even if he sells before the day of distribution? | There are two 'dates' relevant to your question: Ex-Dividend and Record. To find out these dates for a specific security visit Dividend.Com. You have to purchase the security prior to the Ex-Dividend date, hold it at least until the Record Date. After the Record Date you can sell the security and still receive the dividend for that quarter. ---- edit - - - - I was wrong. If you sell the security after the Ex-div date but before the date of record you still get the dividend. http://www.investopedia.com/articles/02/110802.asp |
What happens if a purchase is $0.02 in Canada? | As someone who works for a company that deploys POS systems in Canada, I can tell you that your best bet would be to have a configuration option that lets the client decide what to do. If they have a business practice that would allow for a sale total to be $0.01 or $0.02, they should first evaluate their business practice. If you're building a POS system to deploy in Canada, I'm sure you have access to resources (potential clients) who would already know how they would want to handle this. Ask them. |
When's the best time to sell the stock of a company that is being acquired/sold? | Here is one "other consideration": don't, don't, don't sell based on insider information. Insider trading can land you in jail. And it's not restricted to top executives. Even overhearing a discussion about the current status of the acquisition talks can mean that you have insider information that you legally cannot act on in many jurisdictions. If you are just a regular employee, the SEC will likely not subject your dealings to special scrutiny, especially since lots of your colleagues will likely trade your company's shares at this point in time. And if you definitely hold insider info (for example, if you are intimately involved with the acquisition talks), you will likely have had a very serious warning about insider trading and know what you can and what you cannot do. Nevertheless, it's better to be careful here. |
Can you beat the market by investing in double long ETFs? [duplicate] | If the index goes up every single day during your investment, you would indeed be better off with 2x ETFs, assuming no tracking errors. However, this is basically never the case. Indexes fluctuate up and down. And the problem is, with these sorts of ETFs, you double your win on the upside but your downside is more than double. If an index goes up 10% one day and down 10% the next, you lose 1% of the value of your investment (1.1 * 0.9). If you are using 2x ETFs, you lose 4% of the value of your investment (1.2 * 0.8), not 2%. If you are using 3x ETFs, you lose 9% of the value of your investment (1.3 * 0.7), not 3%. So, if the index will continue to rise during your holding period, yes, you are better off with these 2x or 3x ETFs. If the index falls on some days, but rises most other days, the added downside is all but certain to make you lose money even though the stock trends upward. That's why these ETFs are designed for single-day bets. Over the long-term, the volatility of the stock market, combined with your exponentially increased downside, guarantees you will lose money. |
Buying a mortgaged house | Go on a website that has real estate listings. Find similar homes in the same neighborhood and list out the prices. Once you have prices, pick out two with different prices and call the realtor of the more expensive listing. Tell that realtor about the other listing and ask why their listing is more expensive. Compare their answer to the home that you are considering buying. For example, they may say that their house has a newly remodeled kitchen. Does the house you are considering have a newly remodeled kitchen? If so, then use the higher priced listing and throw out the cheaper one. If not, use the cheap listing and throw out the expensive one. Or they might say that the expensive house is in a better location than the cheaper house. Further away from traffic. Easier to get to the highway or public transportation. If so, ask how the location compares to the house you are actually considering. The realtor will tell you if the listings are comparable. When I talk about "similar homes," I mean homes that are similar in square footage, number of bedrooms, and number of bathrooms. Generally real estate sites will allow you to search by all of these as well as location. After all this, the potential seller may still turn you down. If he really wanted to sell, he'd have suggested a price. He may just be seeing if you're willing to overpay. If so, he could turn down an otherwise reasonable offer. How much he is willing to take is up to him. Note that this would all be easier if you just bought a house the normal way. Then the realtors would do the comparables portion of the work. You might be able to find a realtor or appraiser who would do the work for a set fee. Perhaps your bank would help you with that, as they have to appraise the property to offer a mortgage. You asked if you can buy out a mortgaged house with a mortgage. Yes, you can. That's a pretty normal occurrence. Normally the realtors would make all the necessary arrangements. I'm guessing that a title transfer company could handle that. |
Why is auto insurance ridiculously overpriced for those who drive few miles? | Insurance rates are about assessing risk. If the insurer has no way to reliably and easily assess usage, they will not reduce the premiums. Many companies are providing tracking devices that connect to the OBD-II port. This not only tracks actual miles driven, but can typically track aggressive driving, time of day, length of trips, and other information. Unless you are using this kind of device to give the insurer actionable feedback on your driving habits, do not expect any discounts for mileage or usage. |
How expensive is it to keep minimal cash at a brokerage? | Losses at a brokerage firm due to fraud are insured up to $500,000 per account for securities by the SIPC (Securities Investors' Protection Corporation), which is the stock market version of the FDIC (that insures deposits). The protection amount for cash is $250,000. That's small comfort to "big" players in MF Global. But it does protect "small" investors like you. |
Is a robo-adviser worth the risk? | If you are looking for an advisor to just build a portfolio and then manage it, a robo-advisor can be beneficial (especially if the alternative is doing it your self, assuming that you are not well versed in the markets). The primary risk with one is that it does not build a portfolio that accurately represents your needs and risk tolerance. Some firms base the number of questions they ask you on sign up based not on what is needed to get a good profile, but on how many before people decide that it is too much hassle and bail. That usually results in poorer profiles. Also a live advisor may be better at really getting at your risk tolerance. Many of day our risk tolerance is one thing but in reality we are not so risk tolerant. Once the profile is built. The algorithms maintain your portfolio on a day by day basis. If rebalancing opportunities occur they take advantage of it. The primary benefit of a robo-advisor is lower fees or smaller minimum account balances. The downside is the lack of human interaction and financial advise outside of putting together a portfolio. |
Gold futures' margin | The initial and overnight margin requirements are set by the exchanges (who calculate them using the Standard Portfolio of Analysis of Risk, or 'SPAN' system), and positions are market to market according to these at the end of the trading session. To find these margin requirements you will need to consult the website of the exchange on which the contract you are trading is issued (i.e. if you're trading on the London Metal Exchange it's no good looking at the Chicago Mercantile Exchange's margin requirements as a previous answer suggests!). However, for positions entered and exited within the same day, the daytrade margin rate will apply. This is set by your broker rather than the exchange, and can be as little as 10% of the exchange requirement. You can find a useful comparison of different margin types and requirements in the article I have published here: Understanding Margin for Futures Trading. |
Definition of equity | I was wondering why equity is reflecting ownership of the issuing entity? That is the definition of equity in this regard. My understanding is that for a stock/equity, its issuing entity is a company/firm that sells the stock/equity, while its receiving entity is an investor that buys the stock/equity Correct. equity reflects ownership of the receiving entity i.e. investor Incorrect. Equity reflects ownership by the receiving entity of the issuing entity. That is, when you buy stock in a company (taking an equity stake in the company) you buy a piece of the company. It would be rather odd for the company to own a piece of you when you buy their stock. |
Td Ameritrade Roth IRA question | Since you're 20-30 years out of retirement, you should be 90% to 100% in stocks, and in one or two broad stock market funds likely. I'm not sure about the minimums at TD Ameritrade, but at Vanguard even $3k will get you into the basic funds. One option is the Targeted Retirement Year funds, which automatically rebalance as you get closer to retirement. They're a bit higher expense usually than a basic stock market fund, but they're often not too bad. (Look for expenses under 0.5% annually, and preferably much lower - I pay 0.05% on mine for example.) Otherwise, I'd just put everything into something simple - an S&P500 tracker for example (SPY or VOO are two examples) that has very low management fees. Then when your 401(k) gets up and running, that may have fewer options and thus you may end up in something more conservative - don't feel like you have to balance each account separately when they're just starting, think of them as one whole balancing act for the first year or two. Once they're each over $10k or so, then you can balance them individually (which you do want to do, to allow you to get better returns). |
Is Bitcoin a commodity or a currency [duplicate] | Its neither. Its a scam. there's no value underlying it, and it has proven to be the most speculative and untrustworthy investment there is. The scam works like a pyramid scam, so the more people come later on the more people who came in earlier on gain, so that is why you see so much hype around it encouraged and fueled by those early adopters who'll cash out at your expense. Imagine people who jumped on the bandwagon when each coin was worth a mere fraction of a dollar - they want you to "invest" at the current price of hundreds of dollars per unit so that they could cash out. You'd be better off with tulips, really. (And don't be discouraged by the downvotes on this answer, of course those scamers will try to shut me down. That will just prove the point.) |
Where can I lookup accurate current exchange rates for consumers? | What you see on XE, is the rate at which it is being traded in the market. What you receive from a broker is the rate minus a fee, for the service being provided. You can check what rates are available for visa and mastercard on the following websites. Visa rates Mastercard rates I want to shop in the currency that will be cheapest in CAD at any given time. This is a mirage and isn't going to help much. The prices you pay might be reflecting the exchange rates, difference in the product quality and other factors too. Rates are fixed for a day, so any FX movement you see in the market willn't be reflected in what you pay. |
I'm currently unemployed and have been offered a contract position. Do I need to incorporate myself? How do I do it? | Do you need to incorporate? This depends on whether the company prefers you to be incorporated. If you are going through a recruiting company, some of them are willing to deal with non-incorporated people (Sole Proprietor) and withhold taxes from your cheques for you. If you do want to incorporate, you can do it yourself, go through a paralegal, or you can even do it online. I did mine in Ontario for about $300 (no name search - i just have a numbered corporation like 123456 Ontario Inc.) through www.oncorp.com - there are other sites that do it as well. Things to consider - if you're contracting through a corporation you most likely need to: Talk to an accountant about these for clarification - most of them will give you an initial consultation for free. Generally speaking, accountant fees for corporate filing taxes averages about $1000-2000 a year. |
Are AAA private-sector corporate bonds safer than government bonds? | If you are afraid of your government defaulting, then you also have reason to fear that your country's so-called "AAA" corporate bonds might not be a safe investment. When governments default, they often do things like: In these scenarios, it is not predictable whether government bonds will suffer more or less than any particular corporate bonds. You might want to diversify into precious metals, foreign currencies, and/or foreign securities. For the most security, you might want to choose investment vehicles that your government would have a hard time confiscating. Of course, you will face currency fluctuation risks if you do so. |
How to avoid getting back into debt? | Spend less than you earn. If you have no job (source of income), then you can not possibly stay out of debt as you have to spend money to live and study. |
Convention for adding ishares (ETFs) into personal accounts | What account you put it in depends on why you have those different accounts. First, if you have them due to regulatory requirements, then you of course must follow said regulations. I doubt that's the case here. Otherwise, you might be splitting based on how they trade (ETFs trade as stocks) or you could be splitting based on how you build a portfolio out of them. When you build a non-speculative stock portfolio, you typically want to limit your holdings in a single stock to a fairly small portion of your portfolio (say, 3%) to limit your exposure to bad stuff happening to a single company. That doesn't apply nearly a much to mutual funds, especially index funds. ETFs are much more like mutual funds here. You can also, of course, create an ETF account and put them there. You also say you have a market index account, what is that used for? |
In Canada, how bad must your credit be for a denial of a Secured Credit Card? | Although now there are "welcome" banking packages when I landed in 2008 I couldn't find any and Vancity gave me a secured visa nonetheless. Let me emphasize: I didn't have a credit history, score at all. I doubt this changed much. The bank has zero risk. |
15 year mortgage vs 30 year paid off in 15 | Why won't anyone just answer the original question? The question was not about opportunity cost or flexibility or family expenses. There are no right answers to any of those things and they all depend on individual circumstances. I believe the answer to the question of whether paying off a 30-year mortgage in 15 years would cost the same amount as a 15-year mortgage of the same interest rate is yes but ONLY if you pay it off on the exact same schedule as your supposed 15-year. In reality, the answer is NO for two reasons: the amortization schedule; and the fact that the 30-year will always have a higher interest rate than the 15-year. The way mortgages are amortized, the interest is paid first, essentially. For most people the majority of the monthly payment is interest for the first half of the loan's life. This is good for most people because, in reality, most mortgages only last a couple years after which people refinance or move and for those first couple years the majority of one's housing costs (interest) are tax deductible. It is arguable whether perpetuating this for one's entire life is wise... but that's the reality of most mortgages. So, unless you pay off your 30-year on the exact same amortization schedule of your theoretical 15-year, you will pay more in interest. A common strategy people pursue is paying an extra monthly payment (or more) each year. By the time you get around to chipping away at your principal in that way, you will already have paid a lot more interest than you would have on a 15-year. And, really, if you can afford to substantially pay down principal in the first year or two of your mortgage, you probably should've borrowed less money to begin with. In theory, IF the rates were the same (they're not) and IF you paid the 30 off every month in the EXACT same way as you would've paid a 15 (you won't) you will pay the same amount in the end. You have to decide if the flexibility is worth more to you than the cost savings. For example: a 300k mortgage at 3.5% will have a monthly payment of ~$2150 for a 15-year and ~$1350 for a 30-year, both will start with ~$875/month of that being in interest (gradually declining with time). What I think most people undervalue is the freedom and peace of mind that comes with a paid off or nearly paid off home... and 15 years is a lot more tangible than 30, plus a lot cheaper over all. If you can afford a 15-year mortgage without putting too much stress on your budget, it is definitely the better option for financial security. And be careful of the index fund opportunity cost advice. On average it may be a good idea when you look at the very long run, historically, but a lot of people get less than average returns depending on when they buy and what the market does in the short run. There is no certainty around what returns you will get from the stock market, but if you have a 30-year mortgage there is a lot of certainty around what you will owe every month for the next 30-years. Different mixes of investments make sense for different people, and most people would be wise to get some exposure to the stock market for its returns and liquidity. However, if someone's goal is borrowing more money for their house in order to invest more money in the stock market for their retirement, they would actually be better served in achieving security and independence 15 years sooner. |
What are the top “market conditions” to follow? | The very term 'market conditions' is subjective and needs context. There are 'market conditions' that favor buying (such as post crash) or market conditions that favor selling (such as the peak of a bubble). Problem with mutual funds is you can't really pick these points yourself; because you're effectively outsourcing that to a firm. If you're tight on time and are looking for weekly update on the economy a good solution is to identify a reputable economist (with a solid track record) and simply follow their commentary via blog or newsletter. |
What happens to my savings if my country defaults or restructures its debt? | I am going to add in an opinion here from the Wall Street Journal that I read this morning in What's at Stake in the Greek Vote, in light of current events and elections in Greece. The article claims that if the election results make it sound like a break from the Euro is imminent then ... we will see a full-fledged bank run. Greek banks would collapse ... The market exchange-rate would likely be two or three drachmas to the euro, which would double or triple the Greek price of imported goods within a few days. Prices of assets, including real-estate assets, would crumble. Those who moved their deposits abroad would be able to buy these assets cheaply, leading to a significant, regressive redistribution of Greek wealth. In short, you'd lose two-thirds of your savings unless you were storing them somewhere safe from the conversion. The article also predicts difficulty importing goods (other nations will demand to be paid in euro, not drachma) leading to disruption of trade and various supply shortages. I will note that the predictions here seem to be in opposition to some other advice here which suggests that real estate will be an effective hedge. |
Can you explain “time value of money” and “compound interest” and provide examples of each? | A real simple definition or analogy of present Value would be the "Principal" or "Loan Amount" being lent and the future value as being returning the Principal along with cost of borrowing The (1+i)^n is the interest you earn on present value The (i+i)^-n is the interest you pay on future value The first one is the FVIF or future value of a $1 The second one is the PVIF or present value of a $1 Both these interest factors assume interest is paid annually, if the interest payment is made more often within the payment year then interest factors look this way m is the frequency of interest payment, the higher this frequency the more of interest you pay or earn and you pay or earn the most interest when compounding occurs on each small fraction of time This entails here e is the Euler's e Thus the interest factors turn to this The preceeding examples only considered a single repayment at future date. Now if you were obliged to make periodic loan repayments say in amount of $1 for n number of periods. Then the present value of all such periodic payment is the "Principal" or amount you borrowed. This is the sum of discounted periodic payments as if we replace 1/1+i with x then this turns out to be geometric series of the form This simplifies to replacing (1/1+i) for x we get which is the present value of periodic payment in amount of $1 The future value of periodic payments in amount of $1 can be arrived at multiplying the PVIFA by (1+i)^n giving Once again the interest is compounded per annum and for intra-year compounding you would have to at first find the annual effective yield AEY to use as the effect rate is the PVIFA and FVIFA calculation for continuous compounding All the calculation discussed thus far did not take inflation into consideration, if we were to adjust the amounts for a growth of g% then the present value of a $1 would be as follow Once again you would have to use AEY if compounding frequency of interest is intra-year Now assume that each loan repayment increases or decreases by an extra amount Q per period. To find the present value of series of payments P that increase or decrease per period by an amount Q we would do the following calculations Here and All of these calculations have been available in tadXL add-in for finance and incrementally being offered as JavaScript financial functions library tadJS. Please note that the tad series of the financial functions library for various environments such as Excel, JavaScript, PHP, Ruby, Microsoft.net and others are property of the author writing this post. All of these libraries except one for Excel are available for FREE for public use. And the future value of such payments with increments may be found by multiplying the PV by (1+i)^n as follows Here |
How Do Scammers / Money Launderers Profit From Loans To Victims | What was the true reason they wanted to use my accounts for? We wouldn't know the true reason. The scammer can do multiple things. What exactly he would do in your case ... I am very eager to know what a person was up to who would give to me so much information about themselves. I know some of you will jump on the chance to yell "it was not their true address", but.... it is where they wanted me to send the cards to. And I was to give proof of my identification ie; a copy of my drivers license, my articles of incorporation and the real estate development project prospectus. Also they were only willing to work with certain banks ie; Citibank, Bank of America etc. I can not understand what they were doing wanting such access to accounts that had no money in them save the amount I used to open them with. It looks more like they would open accounts under your name, but they would be controlling the accounts. i.e. what goes in and out. i.e. they would be able to deposit and withdraw from a new account they set-up. They would want to use this account for illegal activities, so that if caught, the account opening paper trail leads to you. Even if they gave you an address, it could be rental. Like they have copies of your Company registration and ID proofs, they can use these to get another rental property ... and then send letters to some and ask them to met there. |
Dec 31 accounting for S Corp - what to do with loss? | Conceptually, the entries are: Yes. And since you're the sole owner, your basis will equal to the equity balance on the balance sheet. Keep in mind the book and tax basis will probably be different, so you may want to keep a separate calculation to track the tax basis. There is no journal additional journal entry for this. If you're using bookkeeping software, be sure to research its book-closing/closing entries feature, as it is handled differently depending on the software. For example Quickbooks doesn't explicitly close its books, but re-computes the balance sheet dynamically depending on the selected date range. |
Clarification on student expenses - To file the tax for the next year | Assuming here that you're talking about deducting your tuition as a below the line deduction as a business expense or similar, then it depends. Per 1.162-5, if the education: Then it qualifies as a legitimate business expense and is deductible. If not - if you're going to school for a different career, such as someone employed as a waiter but going to school to get a degree in nursing, or someone employed as a teacher getting a law degree - then it's not; you'd have to qualify under one of the other (simpler, but lesser) credits. Read more on this topic at Tax topic 513. Note that the other most commonly applicable deduction - the above the line Tuition and Fees deduction - expired in 2016 and is not applicable (yet?) in 2017, and further would not require most of what you describe as it only counts tuition and fees paid directly to the institution and required as a condition of attendance, so books, parking, etc. don't count. |
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