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Which Roth IRA is the best for a 21 year old who has about $1500? | You are young, and therefore have a very long time horizon for investing. Absolutely nothing you do should involve paying any attention to your investments more than once a year (if that). First off, you can only deposit money in an IRA (of whatever kind) if you have taxable income. If you don't, you can still invest, just without the tax benefits of a Roth. My suggestion would be to open an account with a discount brokerage (Schwab, Fidelity, eTrade, etc). The advantage of a brokerage IRA is that you can invest in whatever you want within the account. Then, either buy an S&P 500 or total market index fund within the account, or buy an index-based ETF (like a mutual fund, but trades like a stock). The latter might be better, since many mutual funds have minimum limits, which ETFs do not. Set the account up to reinvest the dividends automatically--S&P 500 yields will far outstrip current savings account yields--and sit back and do nothing for the next 40 or 50 years. Well, except for continuing to make annual contributions to the account, which you should continue to invest in pretty much the same thing until you have enough money (and experience and knowledge) to diversify into bond funds/international funds/individual stocks, etc. Disclaimer: I am not a financial planner. I just manage my own money, and this strategy has mostly kept me from stressing too badly over the last few years of market turmoil. |
Loan to son - how to get it back | As per JohnFx's comment above, consider whether it's worth more to you to just write this off. If not, if you feel that your son will be able to consider this without taking it personally, or you're willing to risk that relationship, then talk to him about it. Lay out the reasons why you need the money. If there are other children, it might be a simple matter of fairness to them. Based on your idea of deducting the money from his inheritance, I assume that the value you're docking from his inheritance will go somewhere else. Offer alternatives. You say that you can't take any money from him now, but letting him know that he can pay you in the future in lieu of loss of inheritance might be worthwhile. Be prepared with an idea of what to suggest if he says he can pay you some amount of money. Figure out what might be an acceptable payment plan and how to handle it if, at some point, he can't make payments for a time. This is a potentially ugly situation, and I can't guarantee that it will turn out better, but the more you prepare for the questions he's going to ask, the better off you're going to be. |
Is there a general guideline for what percentage of a portfolio should be in gold? | Gold's valuation is so stratospheric right now that I wonder if negative numbers (as in, you should short it) are acceptable in the short run. In the long run I'd say the answer is zero. The problem with gold is that its only major fundamental value is for making jewelry and the vast majority is just being hoarded in ways that can only be justified by the Greater Fool Theory. In the long run gold shouldn't return more than inflation because a pile of gold creates no new wealth like the capital that stocks are a claim on and doesn't allow others to create new wealth like money lent via bonds. It's also not an important and increasingly scarce resource for wealth creation in the global economy like oil and other more useful commodities are. I've halfway-thought about taking a short position in gold, though I haven't taken any position, short or long, in gold for the following reasons: Straight up short-selling of a gold ETF is too risky for me, given its potential for unlimited losses. Some other short strategy like an inverse ETF or put options is also risky, though less so, and ties up a lot of capital. While I strongly believe such an investment would be profitable, I think the things that will likely rise when the flight-to-safety is over and gold comes back to Earth (mainly stocks, especially in the more beaten-down sectors of the economy) will be equally profitable with less risk than taking one of these positions in gold. |
What happens to my savings if my country defaults or restructures its debt? | The danger to your savings depends on how much sovereign debt your bank is holding. If the government defaults then the bank - if it is holding a lot of sovereign debt - could be short funds and not able to meet its obligations. I believe default is the best option for the Euro long term but it will be painful in the short term. Yes, historically governments have shut down banks to prevent people from withdrawing their money in times of crisis. See Argentina circa 2001 or US during Great Depression. The government prevented people from withdrawing their money and people could do nothing while their money rapidly lost value. (See the emergency banking act where Title I, Section 4 authorizes the US president:"To make it illegal for a bank to do business during a national emergency (per section 2) without the approval of the President." FDR declared a banking holiday four days before the act was approved by Congress. This documentary on the crisis in Argentina follows a woman as she tries to withdraw her savings from her bank but the government has prevented her from withdrawing her money.) If the printing press is chosen to avoid default then this will allow banks and governments to meet their obligations. This, however, comes at the cost of a seriously debased euro (i.e. higher prices). The euro could then soon become a hot potato as everyone tries to get rid of them before the ECB prints more. The US dollar could meet the same fate. What can you do to avert these risks? Yes, you could exchange into another currency. Unfortunately the printing presses of most of the major central banks today are in overdrive. This may preserve your savings temporarily. I would purchase some gold or silver coins and keep them in your possession. This isolates you from the banking system and gold and silver have value anywhere you go. The coins are also portable in case things really start to get interesting. Attempt to purchase the coins with cash so there is no record of the purchase. This may not be possible. |
1.4 million cash. What do I do? | First--congratulations! I certainly wish I could create something worth buying for $1.4 million. In addition to what @duffbeer703 recommended, consider putting some of the money in Treasury Inflation-Protected Securities (TIPS). I second the advice on staying away from annuities as well. @littleadv is right about certified financial planners. A good one will put those funds in a mix of investments that minimize your potential tax exposure. They will also look at whether you're properly insured. Research what is FDIC-insured (and what isn't) here. Since you're still making a six-figure income in your salaried job, be sure not to neglect things like contributing to your 401(k)--especially if it's a matching one. At your salary level, I think you're still eligible to contribute to a Roth IRA (taxable income goes in, so withdrawals are tax-free). A good adviser will know which options are best. |
How to chose index funds, mutual funds from a plethora of options (TD Ameritrade) | I agree with others here that suggest that you should be taking higher risk since it is repaid with higher returns. You have 40 years or so to go before you might switch to safer but lower return funds. I suggest that you look at the Morningstar rating for the funds you are considering: http://www.morningstar.com/ A fund rated five stars means that the fund performs in the top 20% compared to all similar funds. I prefer five star funds. Next, check the management fees. Here is an example from one of the funds you mentioned; https://www.google.com/finance?cid=466533039917726 Next, I suggest you compare how each fund has performed compared to a benchmark. Here are some common indices: Compare an equity fund to, for example, the S&P 500. Has your fund beat or closely matched the S&P for 1, 5 and 10 years? If not, you may as well buy an index fund, such as SPY. |
Buying a small amount (e.g. $50) of stock via eToro “Social Trading Network” using a “CFD”? | As Waldfee says, CFDs are a derivative (of the underlying stock in this case). If you are from the USA then they are prohibited in the USA as has also been mentioned. They are not prohibited, however, in many other countries including Australia. We can buy or short sell (on a limited number of securities) CFDs on Australian securities, USA securities and securities from many other countries, on FX, and different commodities. The reason you are paying much less than the actial stock price is worth is because you are buying on margin. When you go long you pay interest on overnight positions, and when you go short you recieve interest on overnight positions (that is if you hold the position open overnight). Most CFDs are over the counter, however in Australia (don't know about other countries) we also have exchange traded CFDs called ASX CFDs. I have tried both ASX CFDs and over the counter CFDs and prefer the over the counter CFDs because the broker provides a market which closely but not exactly follows the underlying prices. Wlth the exchange traded CFDs there was low liquidity due to being quite new so there was the potential to be gapped quite considerably. This might improve as the market grows. All in all, once you understand how they work and what is involved in trading them, they are much easier than options or futers. However, if you are going to trade anything first get yourself educated, have a trading plan and risk management strategy, and paper trade before putting real money on the table. And remember, if you are in the USA, you are actually prohibited from trading CFDs. Regarding the price of AAPL at $50, the price should be the same as that of the underlying stock, it is just that your initial outlay will be less than buying the stock directly because you are buying on margin. Your initial outlay may be as little as 5% or lower, depending on the underlying stock. |
How can I improve my credit score if I am not paying bills or rent? | Any kind of credit contract such as a mobile phone contract (could be SIM only or with a handset) would also help increase your number of accounts and demonstrate a track record of responsible management and repayments. If you have a Pay As You Go phone at present consider a SIM only contract with the same network, and if your parents currently pay for your phone consider if it would be worth switching it into your own name. Also make sure that you are registered on the Electoral Role at your permanent address and have at least a minimum payment direct debit set up on your credit card (even though you state you intend to repay in full) to make sure you don't forget a payment as this will disproportionately affect your score when combined with young age and few other accounts. Lastly ensure that you have a decent amount of "head room" on your rolling credit accounts like credit cards and aren't using more than 80% of the credit available to you through your monthly spending, if necessary by asking for an increased limit from your company (and then not using it). |
Are there any banks with a command-line style user interface? | At one point you could log into your HSBC account from the command line, but gosh, I've never heard of a bank that has a command line interface! |
What prevents investors from buying high yield stocks and selling them as soon as their dividend is paid out? | You have to be the owner of record before the ex-dividend date, which is not the same day as the date the dividend is paid. This also implies that if you sell on or after the ex-dividend date, you'll still get the dividend, even if you no longer own the stock. Keep in mind, also, that the quoted price of the stock (and on any open orders that are not specifically marked as "do not reduce") on its ex-dividend date is dropped by the amount of the dividend, first thing in the morning before trading starts. If you happen to be the first order of the day, before market forces cause the price to move, you'll end up with zero gain, since the dividend is built into the price, and you got the same value out of it -- the dividend in cash, and the remaining value in stock. As pointed out in the comments (Thanks @Brick), you'll still get a market price for your trade, but the price reduction will have had some impact on the first trade of the day. Source: NYSE Rule 118.30 Also, remember that the dividend yield is expressed in annualized terms. So a 3% yield can only be fully realized by receiving all of the dividend payments made by the company for the year. You can, of course, forget about individual companies and just look for dividends to create your own effective yield over time. But, see the final point... Finally, if you keep buying and selling just to play games with the dividends, you're going to pay far more in transaction fees than you will earn in dividends. And, depending on your individual circumstances, you may end up paying more in capital gains taxes. |
Suitable Vanguard funds for a short-term goal (1-2 years) | If you are younger, and you not under undue pressure to buy a home at any particular time, investing in the market is a reasonable way to prepare. Your risk tolerance should be high. Understand that this means you may buy in 3-4 years instead of 1-2 if the market takes a down turn. It took ~3-4 years for the S&P 500 to recover from the 2008 crash. I doubt anything that severe is in the making, but there is always an element of risk involved in investing. If you and your family will be busting at the seams of your current rental in a year, then maybe the bond fund advice others have provided is a better option. If you are willing to be flexible, a more aggressive strategy might be appropriate. Likely, you want something along the lines of the Vanguard S&P 500 mutual fund - something that is diversified (a large number of stocks), in relatively safe companies (in this case the 500 companies that Standard and Poor's think are most likely to repay corporate bonds), and 'indexed' vice 'actively managed' (indexed funds have lower fees because they are using 'rules' to pick the stocks rather than paying a person to evaluate them.) It's going to depend on you and your situation - and regardless of what you choose consistency will be key: put your investment on automatic so it happens every month without your input. |
What are the pitfalls of loaning money to friends or family? Is there a right way to do it? | I recently lent some money to my sister. While I generally agree with Phillip that lending to family and friends should be avoided, I felt I needed to make an exception. She really needed the cash, and my husband and I agreed that we would be ok without it. Here are some guidelines I used that may be helpful to others: In the end, I think lending to family and friends should be avoided, and certainly should not be done lightly, but by communicating clearly and directly, and keeping careful records, I think you can help someone out and still avoid the lingering awkwardness at future Thanksgivings when one person is convinced that the other owes one more payment, and the other swears it was paid in full. |
What if you get pre-approved for a mortgage but don't find a house in the pre-approval timeframe? | As mentioned before - you're over-thinking the hard-pull issue. But do try to make the preapproval as close to the actual bidding as possible - because it costs money. At least from my experience, you'll get charged the application fee for preapproval, while "pre-qualification" is usually free. If you're seriously shopping, I find it hard to believe that you can't find a house within 3 months. If you're already in the process and your offer has been accepted and you opened the escrow - I believe the preapproval will be extended if it expires before closing. I've just had a similar case from the other side, as a buyer, and the seller had a short-sale approval that expired before closing. It was extended to make the deal happen, and that's when the bank is actually loosing money. So don't worry about that. If you haven't even started the process and the preapproval expired, you might have to start it all over again from scratch, including all the fees. The credit score is a minor issue (unless you do it every 2-3 months). |
What is the term for the quantity (high price minus low price) for a stock? | Just guessing here… How about Daily Median price? StockCharts provides a similar value they call VWAP. Which stands for Volume-Weighted Average Price. I believe it is a better 'average' for the day (click on link). |
How can I detect potential fraud in a company before investing in them? | Most of the information we get about how a company is running its business, in any market, comes from the company. If the information is related to financial statements, it is checked by an external audit, and then provided to the public through official channels. All of these controls are meant to make it very unlikely for a firm to commit fraud or to cook its books. In that sense the controls are successful, very few firms provide fraudulent information to the public compared with the thousands of companies that list in stock markets around the world. Now, there is still a handful of firms that have committed fraud, and it is probable that a few firms are committing fraud right now. But, these companies go to great lengths to keep information about their fraud hidden from both the public and the authorities. All of these factors contribute to such frauds being black swan events to the outside observer. A black swan event is an event that is highly improbable, impossible to foresee with the information available before the event (it can only be analyzed in retrospect), and it has very large impact. The classification of an event as a black swan depends on your perspective. E.g. the Enron collapse was not as unexpected to the Enron executives as it was to its investors. You cannot foresee black swan events, but there are a few strategies that allow you to insure yourself against them. One such strategy is buying out of the money puts in the stocks where you have an investment, the idea being that in the event of a crash - due to fraud or whatever other reason - the profits in your puts would offset the loses on the stock. This strategy however suffers from time and loses a little money every day that the black swan doesn't show up, thanks to theta decay. So while it is not possible to detect fraud before investing, or at least not feasible with the resources and information available to the average investor, it is possible to obtain some degree of protection against it, at a cost. Whether that cost is too high or not, is the million dollar question. |
Is there any flaw in this investment scheme? | You didn't win in case B. Borrowing shares and then selling them is known as "selling short". You received $2000 when you sold short 100 shares at $20. You spent $1000 to buy them back at $10, so you come out $1000 ahead on that deal. But at the same time, the 100 shares you already owned have declined in value from $20 to $10, so you are down $1000 on that deal. So you've simply broken even, and you are still out the interest and transaction fees. In effect, a short sale allows you to sell shares you don't own. But if you do already own them, then the effect is the same as if you just sold your own shares. This makes it easier to see that this is just a complicated and expensive way of accomplishing nothing at all. |
Why do employer contributions count against HSA limits? | It's going to be quite a challenge to give a definitive answer to any "Why" question about law, and especially so for a question about tax law. One would need to try to dig up statements made by the legislators (and/or their aides) crafting and debating the law. As it is, tax law is already inconsistent in many ways. (Why are there people who can't contribute to a Roth IRA directly but can contribute to a Traditional and then immediately convert it to Roth? Why are maximum limits for 401(k) plans and IRAs separate rather than being one combined "retirement" savings maximum?) In the absence of some specific legislative statements saying that it was set up this way for some specific purpose, one must assume that it was written with the some goals as all tax law: As a compromise between various ideas, trying to accomplish some specific purpose. Feel free to add in some level of inefficiency and it being hard to completely understand the entirely of the tax law, which leads to things perhaps not being as "tidy" as one might hope for. But there's no reason to think that the people crafting the tax advantages for HSA plans had any reason to use 401(k) plans as a template, or wanted them to accomplish the same goals. |
Saving for a non-necessity | Total income - mandatory spending (ie bills) = discretionary income. Make a budget and calculate how much discretionary income you have each pay period. Save some fraction of your discretionary income towards this purchase. Pull the trigger when you have enough saved. By thinking this way, you ensure that the PS is robbing from movies, dining out, booze, etc instead of taking from rent money or the electric bill. Do not use debt to make this purchase. It would be wise to put off this purchase until you have a solid emergency cash reserve that can sustain you if life throws you a curve ball. You should also make sure to eliminate any bad debt, like credit card debt, before splurging on a new gaming console. |
Is there a difference between buying few shares of an expensive stock vs many shares of an inexpensive one? | One difference is the bid/ask spread will cost you more in a lower cost stock than a higher cost one. Say you have two highly liquid stocks with tiny spreads: If you wanted to buy say $2,000 of stock: Now imagine these are almost identical ETFs tracking the S&P 500 index and extrapolate this to a trade of $2,000,000 and you can see there's some cost savings in the higher priced stock. As a practical example, recently a popular S&P 500 ETF (Vanguard's VOO) did a reverse split to help investors minimize this oft-missed cost. |
Is threatening to close the account a good way to negotiate with the bank? | To avoid going on and on in the comments I'm going to add this point that seems to be missing from the other answers. "Banks often offer me deals while negotiating to open an account (since they are under high pressure to open an account)" Would these happen to be the regionally advertised account opening deals like a $200 new checking account bonus if you deposit at least $x and leave it for at least 90 days? This kind of deal is not unique to you. This is not offered to you because of your unique negotiating ability. You need to understand the authority of the person you're dealing with. Products are designed in the corporate arm of the bank. Once a product is ready, it's rolled out to branches to be sold; sometimes with some fancy sign-up bonus. A checking account is a product, just like an iPhone. Apple took the headphone jack out of the iPhone 7, no amount of negotiating with the Genius at the Apple store will put it back for you. Vote with your wallet, show the bank you're unhappy by leaving. |
How to avoid getting back into debt? | First, you've learned a very good lesson that quite a few people miss out on: notice how easy it is to get out of debt when you get a windfall of money? The trouble is that if a person doesn't have the behavior to maintain their position, they will end up in the same place. Many lottery winners end up being poor in the long run because their behavior is the problem, not their finances. If you feel that you're going to end up in debt again, this means simply that somewhere in your finances, your expenses exceed your income. Simply put, there's only two fundamental things that can be done: You can do one or the other, or both. Over budgeting, I prefer automation - automate your bills and spending by setting up a bill and spending account and when the money's gone, it's gone (you can tell yourself at that point, "I have to find another source of income before I spend more"). This not only helps you show where your money is going now, it also puts a constraint on your spending, which sounds like most of the problem currently. Many of my friends and I make our saved/invested money VERY HARD to access, so that we can't get it immediately (like putting it in an account that will require three or four days to get to). The purpose of this is to shape your behavior into actions of either increasing your income, decreasing your spending, or both. |
How to prevent myself from buying things I don't want | I believe that your dilemma comes from not having clearly defined consequences of buying it. On one side you want it and you can afford it, but on the other side there is nothing solid. Just some vague dislike of spending money and guilt of buying something "useless". You're basically guilt tripping yourself into not buying it, and guilt tripping is always bad. What you need is clear-cut consequence. Something like "I can buy X but then I won't get Y and Z". And for that you need a clearly laid out budget, just to know how much you can spend. Money that go into things that are absolutely required, money that go into various saving plans, etc - and after that you're left with some clear amount that should be spent on making yourself happier. Making yourself happier is not something you should feel guilty about, it's actually one of purposes of life. Making yourself happy is only bad if it's hurting other areas of your life (and even that is relative, because there is always some extent of degradation you're willing to accept or you have already accepted). There is absolutely no point in saving every single penny you can, because that will make you live long and unhappy life and die without enjoying your riches. |
Does buying and selling a stock OR holding onto it make a company look better? | Not sure I fully understand your question but my take on it is this: There a lot of people out there that admire companies and own the stock just because they like the company. For example, I know some kids who own Disney stock. They only have a share or two but they keep it because they want to say "I own a part of Disney." Realistically speaking, if they hold or sell the stock it is so minuscule to have any realizable affect on the overall value of the stock which does not really make the company look better from an investor perspective. However, if a company has people that just want to own the stock just like your uncle are indeed "better" because they must have provided a product or service that is valued intrinsically. |
Is Bitcoin a commodity or a currency [duplicate] | I would classify Bitcoin as a hybrid. Currency : It is accepted by e-businesses as a form of payment Commodity : Chart illustrating the volatility and speculative nature of Bitcoin |
About to start being an Independent Contractor - Any advice on estimating taxes? | It's likely you don't have to make estimated tax payments if this is your first year of contracting (extra income), and your existing salary is already having taxes withheld. If you look at the 1040-ES: General Rule In most cases, you must pay estimated tax for 2014 if both of the following apply. This is easier to understand if you look at the worksheet. Look at line 14b/14c and the associated instructions. 14b is your required annual payment based on last year's tax. 14c is the lesser of that number and 14a, so 14b is your "worst case". 14c is the amount of tax you need to prepay (withholding counts as prepayment). I'm going to apply this to your situation based on my understanding, because it's not easy to parse: |
Difference between Hedge Fund and Private Equity? | Private Equity is simply some type of an investment company, which is owned in a way not accessible to the public. ie: Warren Buffet runs Berkshire Hatheway, which is an investment company which itself is traded on the New York Stock Exchange. This means that anyone can buy shares in the company, and own a small fraction of it. If Warren Buffet owned all the shares of Berkshire Hatheway, it would be a Private Equity company. Note that 'Equity' refers to the ownership of the company itself; a private investment company may simply buy Bonds (which are a form of Debt), in which case, they would not be technically considered a 'Private Equity' company. A Hedge Fund is a very broad term which I don't believe has significant meaning. Technically, it means something along the lines of an investment fund (either public or private) which attempts to hedge the risks of its portfolio, by carefully considering what type of investments it purchased. This refers back to the meaning of 'hedge', ie: 'hedging your bets'. In my opinion, 'Hedge Fund' is not meaningfully different from 'investment fund' or other similar terms. It is just the most popular way to refer to this type of industry at the present time. You can see the trend of using the term 'investment fund' vs 'hedge fund' using this link: https://trends.google.com/trends/explore?date=all&q=hedge%20fund,investment%20fund Note that the high-point of the use of 'hedge fund' occurred on October 2008, right at the peak of the global financial crisis. The term evokes a certain image of 'high finance' / 'wall-street types' that may exploit various situations (such as tax legislation, or 'secret information') for their own gain. Without a clear definition, however, it is a term without much meaning. If you do a similar comparison between 'hedge fund' and 'private equity', you can see that the two correlate very closely; I believe the term 'private equity' is similarly misused to generally refer to 'investment bankers'. However in that case, 'private equity' has a more clear definition on its own merits. |
Is buying a lottery ticket considered an investment? | Something that is missing from the discussion is the actual market for the lottery ticket -- if a market existed for the tickets themselves, that would make this far more obvious, but since there isn't one; buying a single ticket gives different Expected Values, but since the ticket has a defined 'game' instance, a single ticket is a gamble. Playing the lottery in the long run could be part of a high risk investment portfolio. [edited for clarity] |
Income At the Sell or Reception? | It looks like fair-market value when you receive your virtual currency is counted as income. And you're also subject to self-employment tax on that income. Here's an FAQ from the IRS: Q-8: Does a taxpayer who “mines” virtual currency (for example, uses computer resources to validate Bitcoin transactions and maintain the public Bitcoin transaction ledger) realize gross income upon receipt of the virtual currency resulting from those activities? A-8: Yes, when a taxpayer successfully “mines” virtual currency, the fair market value of the virtual currency as of the date of receipt is includible in gross income. See Publication 525, Taxable and Nontaxable Income, for more information on taxable income.Q-9: Is an individual who “mines” virtual currency as a trade or business subject to self-employment tax on the income derived from those activities? A-9: If a taxpayer’s “mining” of virtual currency constitutes a trade or business, and the “mining” activity is not undertaken by the taxpayer as an employee, the net earnings from self-employment (generally, gross income derived from carrying on a trade or business less allowable deductions) resulting from those activities constitute selfemployment income and are subject to the self-employment tax. See Chapter 10 of Publication 334, Tax Guide for Small Business, for more information on selfemployment tax and Publication 535, Business Expenses, for more information on determining whether expenses are from a business activity carried on to make a profit. You'd of course be able to offset that income with the expense of mining the virtual currency, depreciation of dedicated mining equipment, electricity, not sure what else. Edit: Here's a good resource on filing taxes with Bitcoin: Filling in the 1040 Income from Bitcoins and all crypto-currencies is declared as either capital gains income or ordinary income, for example from mining. Income Ordinary income will be declared on either your 1040 (line 21 - Other Income) for an individual, or within your Schedule C, if you are self-employed or have sole-proprietor business. Capital Gains Capital gains income, or losses, are declared on Schedule D. Since there are no reported 1099 forms from Bitcoin exchanges, you will need to include your totals with Box C checked for short-term gains, and with Box F checked for long-term gains. Interesting notes from that article, your first example could actually be trickier than expected if you started mining before there was a Monero to USD exchange. Also, there can also be capital gains implications from using your virtual currency to buy goods, which sounds like a pain to keep track of. |
Buying back a covered Call | Your three options are: Options 2 and 3 are obviously identical (other than transaction costs), so if you want to keep the stock, go for option 1, otherwise, go for option 3 since you have the same effect as option 2 with no transaction costs. The loss will likely also offset some of the other short term gains you mentioned. |
Should I buy a house because Mortgage rates are low | As of now in 2016, is is safe to assume that mortgage rates would/should not get back to 10%? What would the rates be in future is speculation. It depends on quite a few things, overall economy, demand / supply, liquidity in market etc ... Chances are less that rates would show a dramatic rise in near future. Does this mean that one should always buy a house ONLy when mortgage rates are low? Is it worth the wait IF the rates are high right now? Nope. House purchase decision are not solely based on interest rates. There are quite a few other aspects to consider, the housing industry, your need, etc. Although interest rate do form one of the aspect to consider specially affordability of the EMI. Is refinancing an option on the table, if I made a deal at a bad time when rates are high? This depends on the terms of current mortgage. Most would allow refinance, there may be penal charges breaking the current mortgage. Note refinance does not always mean that you would get a better rate. Many mortgages these days are on variable interest rates, this means that they can go down or go up. How can people afford 10% mortgage? Well if you buy a small cheaper [Less expensive] house you can afford a higher interest rate. |
Vanguard Mutual Funds — Diversification vs Share Class | If I were in your shoes I'd probably take the Vanguard Total Market fund with Admiral shares, then worry about further diversification when there is more in the account. Many times when you "diversify" in to multiple funds you end up with a lot of specific security overlap. A lot of the big S&P 500 constituents will be in all of them, etc. So while the 10 or so basis points difference in expense ratio doesn't seem like enough of a reason NOT to spread in to multiple funds, once you split up the money between Large, Mid, Small cap funds and Growth, Value, Dividend funds you'll probably have a collection of holdings that looks substantially similar to a total market fund anyway. Unless you're looking for international or some specific industry segment exposure and all of the money is going to equities anyway, an inexpensive total market fund makes a lot of sense. |
Should I Pay Off my Student Loan Debts First or Invest in an Index Fund? | A major thing to consider when deciding whether to invest or pay off debt is cash flow. Specifically, how each choice affects your cash flow, and how your cash flow is affected by various events. Simply enough, your cash flow is the amount of money that passes through your finances during a given period (often a month or a year). Some of this is necessary payments, like staying current on loans, rent, etc., while other parts are not necessary, such as eating out. For example, you currently have $5,500 debt at 3% and another $2,500 at 5%. This means that every month, your cashflow effect of these loans is ($5,500 * 3% / 12) + ($2,500 * 5% / 12) = $24 interest (before any applicable tax effects), plus any required payments toward the principal which you don't state. To have the $8,000 paid off in 30 years, you'd be paying another $33 toward the principal, for a total of about $60 per month before tax effects in your case. If you take the full $7,000 you have available and use it to pay off the debt starting with the higher-interest loan, then your situation changes such that you now: Assuming that the repayment timeline remains the same, the cashflow effect of the above becomes $1,000 * 3% / 12 = $2.50/month interest plus $2.78/month toward the principal, again before tax effects. In one fell swoop, you just reduced your monthly payment from $60 to $5.25. Per year, this means $720 to $63, so on the $7,000 "invested" in repayment you get $657 in return every year for a 9.4% annual return on investment. It will take you about 11 years to use only this money to save another $7,000, as opposed to the 30 years original repayment schedule. If the extra payment goes toward knocking time off the existing repayment schedule but keeping the amount paid toward the principal per month the same, you are now paying $33 toward the principal plus $2.50 interest against the $1,000 loan, which means by paying $35.50/month you will be debt free in 30 months: two and a half years, instead of 30 years, an effective 92% reduction in repayment time. You immediately have another about $25/month in your budget, and in two and a half years you will have $60 per month that you wouldn't have if you stuck with the original repayment schedule. If instead the total amount paid remains the same, you are then paying about $57.50/month toward the principal and will be debt free in less than a year and a half. Not too shabby, if you ask me. Also, don't forget that this is a known, guaranteed return in that you know what you would be paying in interest if you didn't do this, and you know what you will be paying in interest if you do this. Even if the interest rate is variable, you can calculate this to a reasonable degree of certainty. The difference between those two is your return on investment. Compare this to the fact that while an investment in the S&P might have similar returns over long periods of time, the stock market is much more volatile in the shorter term (as the past two decades have so eloquently demonstrated). It doesn't do you much good if an investment returns 10% per year over 30 years, if when you need the money it's down 30% because you bought at a local peak and have held the investment for only a year. Also consider if you go back to school, are you going to feel better about a $5.25/month payment or a $60/month payment? (Even if the payments on old debt are deferred while you are studying, you will still have to pay the money, and it will likely be accruing interest in the meantime.) Now, I really don't advocate emptying your savings account entirely the way I did in the example above. Stuff happens all the time, and some stuff that happens costs money. Instead, you should be keeping some of that money easily available in a liquid, non-volatile form (which basically means a savings account without withdrawal penalties or a money market fund, not the stock market). How much depends on your necessary expenses; a buffer of three months' worth of expenses is an often recommended starting point for an emergency fund. The above should however help you evaluate how much to keep, how much to invest and how much to use to pay off loans early, respectively. |
Can signing up at optoutprescreen.com improve my credit score? | Unsolicited credit checks like that don't affect your credit score. Those checks only count if they result from you applying for credit somewhere. So No. |
Legal requirements to sell design content, artwork and also freelance in India? | There is no requirement to open a company. You can work as freelancer. You need to report income and file returns. If your income is more than exempt limit, pay taxes. Apply for a PAN number if you don't have one yet. |
How can I borrow in order to improve a home I just bought? | Be careful that pride is not getting in the way of making a good decision. As it stands now what difference does it make to have 200K worth of debt and a 200K house or 225K of debt and a 250K house? Sure you would have a 25K higher net worth, but is that really important? Some may even argue that such an increase is not real as equity in primary residence might not be a good indication of wealth. While there is nothing wrong with sitting down with a banker, most are likely to see your scheme as dubious. Home improvements rarely have a 100% ROI and almost never have a 200% ROI, I'd say you'd be pretty lucky to get a 65% ROI. That is not to say they will deny you. The banks are in the business of lending money, and have the goal of taking as much of your hard earned paycheck as possible. They are always looking to "sheer the sheep". Why not take a more systematic approach to improving your home? Save up and pay cash as these don't seem to cause significant discomfort. With that size budget and some elbow grease you can probably get these all done in three years. So in three years you'll have about 192K in debt and a home worth 250K or more. |
Would I ever need credit card if my debit card is issued by MasterCard/Visa? | You ask about the difference between credit and debit, but that may be because you're missing something important. Regardless of credit/debit, there is value in carrying two different cards associated with two different accounts. The reason is simply that because of loss, fraud, or your own mismanagement, or even the bank's technical error, any card can become unusable for some period of time. Exactly how long depends what happened, but just sending you a new card can easily take more than one business day, which might well be longer than you'd like to go without access to any funds. In that situation you would be glad of a credit card, and you would equally be glad of a second debit card on a separate account. So if your question is "I have one bank account with one debit card, and the only options I'm willing to contemplate are (a) do nothing or (b) take a credit card as well", then the answer is yes, take a credit card as well, regardless of the pros or cons of credit vs debit. Even if you only use the credit card in the event that you drop your debit card down a drain. So what you can now consider is the pros and cons of a credit card vs managing an additional bank account -- unless you seriously hate one or more of the cons of credit cards, the credit card is likely to win. My bank has given me a debit card on a cash savings account, which is a little scary, but would cover most emergencies if I didn't have a credit card too. Of course the interest rate is rubbish and I sometimes empty my savings account into a better investment, so I don't use it as backup, but I could. Your final question "can a merchant know if I give him number of debit or credit card" is already asked: Can merchants tell the difference between a credit card and embossed debit card? Yes they can, and yes there are a few things you can't (or might prefer not to) do with debit. The same could even be said of Visa vs. Mastercard, leading to the conclusion that if you have a Visa debit you should look for a Mastercard credit. But that seems to be less of an issue as time goes on and almost everywhere in Europe apparently takes both or neither. If you travel a lot outside the EU then you might want to be loaded down with every card under the sun, and three different kinds of cash, but you'd already know that without asking ;-) |
Is it adventageous to expedite my wedding before the new year for tax savings? | Yes on taxes. It depends on the other point. As you already see from Ben's comment, if you're both very Western in your culture, you may want to consider Ben's advice because while you will save money, it may not be considered a healthy way to start a relationship. Western culture tends to see marriage as more of a "do it for love" whereas other cultures may view marriage more pragmatically and take economics and finance as a major consideration. For instance, a friend of mine married his spouse and it was 100% pragmatic - considering taxes and laws, driving most of his family insane because "it doesn't sound very loving" (these were the exact words). Unfortunately, this created tension later on because family on both sides kept telling both of them that the other didn't love the partner and they used how their marriage started as proof. As surprising as it is to me (non-Western), many Americans are horrified at people marrying at the JOP or other pragmatic ways, even if it saves them thousands. Answering questions about relationships is very difficult because often the issue is less about money and more about culture. If you're both from pragmatic cultures where economics and finance weigh strongly and you don't see possible issues with family (and really be honest on this point), then consider the financial advantages. |
Should I file a change of address with the IRS? | The most important thing to do when moving is to change your address with the post office. This will forward most mail for a year, and even automatically send change of address notices to many businesses that send mail to you. If you do this, and the IRS needs to send you something over the next year, you'll get it. The IRS does have a procedure for changing your address, and you would want to do this if you are expecting something from the IRS and are unable to do a change of address with the post office for some reason. But if you do forward your mail and you aren't expecting a refund check, I don't think it is necessary. The IRS will get your new address when you file your return next year. |
Where can I find the current price to rent ratio of the locality of my interest? | Chris, this is an arbitrage question with a twist: you cannot treat the location you want to live objectively. For example, why not SoCal instead of Texas? Yes, SoCal's expensive but what if you account for the weather? This question is very interesting for me personally: something I am going to focus on myself, soon, as well. To the question at hand: it's very hard to get a close estimate of the price from a single source, say, a website. The cost of a house is always negotiable and there's no sticker price, and there begins your problems. However, there are some publicly available information which websites aggregate, see: http://www.city-data.com/ Also, some heuristics might help: Rent is at-least as expensive as the monthly mortgage, (property) taxes, HOA fees, etc. Smart people have told me this, and this also makes sense to me as the landlord is in this business to make some money after all. However, there are also other hidden costs of home ownership that I am not aware of in details (and which I craftily sidestepped in my "etc" above) that could put a rental to be "cheaper". One example that comes to mind is you as a tenant get to complain if the washer-dryer misbehaves and demand the landlord get you a new one (see how you wouldn't make a sound were you to own it however) Such a website to gauge rentals: http://www.rentometer.com/ Houses cost more where the median income is more. Again, you cannot be objective about this because smart people like to live around smart people (and pay for the privilege). Turn again to http://www.city-data.com/ to get this information Better weather is more expensive than not so good weather. In the article you linked, notice the ratio of homes in California. Yes, I know of people who sold off their family ranches in Vancouver and Seattle to buy homes in Orange Country. In short, there is a lot of information you would have to gather from multiple sources, and even then never be sure that you did your best! This also includes arbitrage, as you would like to "come out ahead" and while you are doing your research (and paying your rent), you want to invest your "savings" in instruments where you earn more than what you would have saved in a mortgage, etc. I would very much like to be refuted on every point and my answer be edited and "made better" as I need the same answers as you do :-D Feel free to comment, edit your question etc and I will act on feedback and help both of us (and future readers) out! |
When to register for a bank account for a C-Corp with no official money | Technically, it's only when you need to pass money through. However consider that the length the account has been open builds history with the financial institution, so I'd open ASAP. Longer history with the bank can help with getting approved for things like business credit lines, business cards, and other perks, though if you're not making money with that business, seek out a bank that does not charge money to have a business account open with them. |
Resources to begin trading from home? | So you're 23 with no higher graduation, certificates etc which would allow you to study / training but with a high passion for logical thinking and math? Im 31 now, i was in a similar position back then when i was 23. The very best thoughts i want to throw you over: FORGET IT (AT LEAS THIS WAY) - You need cash equity (not borrowed) to even get a foot in the door (read on why) . The fact that you even consider to trade with a few hundred dollar shows how desperate you're, it would very likely result in loss, resignation and mental pain. Let me get you a reality check: If you think you can quadruple your money within months with ease and no risk your wrong - this mindset is gambling - don't end up as gambler. To make 24K a year or 2K a month (taxes are not included) would mean 10% a month on a 20K account which would be almost impossible on a long run (show me a hedge-fund with that performance) - What do you do on draw down months - 3 months no profit would mean you're 8K behind - you wont make a living wit ha 20K account in a western civilization and normal lifestyle. Big question, how do you want to trade? Everything newsfeed / latency based is very hard to compete in. So called technical systems drawing lines, fancy indicators etc are bogus in my opinion (read taleb black swan). Trading/speculation based on fundamentals is a different animal - It to be able to do that you would need to understand the market you trade and what influences it, takes lot time, brainpower , tools ready (ugh, hard to write the picture on my mind). Im 31 years into trading now, seen so many faces come and most of them go in that time , to me it sounds like you quietly hope for a lotto ticket. To speak about hardware, ie the tools you need depends on your trading style (again a hint that a lot more study is needed. If you're really hooked, readreadread and get in touch with people - always question yourself. |
Feasibility of using long term pattern on short term investments | When structures recur at different scales, they're called "fractals", and there is something called the "fractal markets hypothesis" which attempts to analyse stock market movements as fractals and in terms of (related) chaos theory. Whether you can profit from it I have no idea. If it was easy, everyone would be doing it. Many of the non-academic pages linked in the search results (previous link) remind me of technical analysis/chartist stuff (which - to me - always seems to be a lot better at explaining things after the event than actually predicting things). |
What is a decent rate of return for investing in the markets? | If someone is guaranteeing X%, then clearly you can borrow money for less than X% (otherwise his claim wouldn't be remotely impressive). So why not do that if his 4% is guaranteed? :) Anyway, my answer would be that beating the market as a whole is a "decent" rate of return. I've always used the S&P 500 as a benchmark but you can use other indices or funds. |
Tax exemption on personal loan interest component in India | Am I eligible for the tax exemption if yes then under which section. Generally Personal loans are not eligible for tax exemption. Only housing loans from qualified institutions are eligible for tax deduction. As per the income tax act; The house should be in your name. The home loans taken from recognised institutions are fully qualified under section 24B and 80C. This means you can claim Interest exemption under 24B and Principal repayment under 80C. The Act also specifies that loan can be taken from friends/relatives for construction of property and will be eligible for Interest exemption under 24B only. The principal will not be eligible for exemption under 80C. Read the FAQ from Income Tax India. There has to be certificate showing how much interest was paid on the said loan. Further there should be records/receipts on how the money was spent. There is difference of opinion amongst CA. It is best you take a professional advise. |
Is This Money Laundering? | This is price-setting algorithms running amok. From the page you link, follow the '2 new from $49,991.11' link and you will see that (at the time of writing), there are two vendors offering this item for $49991.11 (plus $16.37 shipping) and $49999.99. These are clearly not 'real' prices and yet they are suspiciously close to each other. This blog post examines this phenomenon in some detail. Basically, at most one of these vendors actually has this item in stock, but to drive traffic and sales they both offer it for sale anyway. If someone actually ordered it from the one who doesn't have it, they would have to buy it first - from someone else offering it for sale... who is setting their prices based on wider market pricing. You can say how a crazy price spiral might develop. |
In today's low interest environment, is it generally more economical to buy or lease a new car in the US? | There are two reasons leases are generally a worse deal than buying. First, inherent in the lease is the concept of trading in the car at the end of the lease term. As we all know, cars depreciate the most in the first year or two. By repeatedly leasing cars on short time frames, you own the vehicles during those most expensive years. Of course there's nothing stopping you from doing the same thing when buying (be it via cash or loan), but leasing builds in a schedule and encourages you to stick to it. Second, it is easier for the dealer salesperson to hide things from the consumer in a lease contract. Most salespeople will try to get a car purchaser to focus on the monthly payment, or they'll four-box the purchaser, but even then there's only 4 numbers, and most consumers have a rough idea what they are and what they mean. But in a lease the numbers in question are renamed and obscured. "Price" becomes "capitalized cost". "Interest rate" becomes "money factor" and is divided by 2400, making it look really small and not easily translatable without a calculator or pencil and paper. "Down payment" becomes a capitalized cost reduction. There's a new concept "residual value." Neither of those reasons change when interest rate is lower. |
How do I calculate ownership percentage for shared home ownership? | Accounting for this properly is not a trivial matter, and you would be wise to pay a little extra to talk with a lawyer and/or CPA to ensure the precise wording. How best to structure such an arrangement will depend upon your particular jurisdiction, as this is not a federal matter - you need someone licensed to advise in your particular state at least. The law of real estate co-ownership (as defined on a deed) is not sufficient for the task you are asking of it - you need something more sophisticated. Family Partnership (we'll call it FP) is created (LLC, LLP, whatever). We'll say April + A-Husband gets 50%, and Sister gets 50% equity (how you should handle ownership with your husband is outside the scope of this answer, but you should probably talk it over with a lawyer and this will depend on your state!). A loan is taken out to buy the property, in this case with all partners personally guaranteeing the loan equally, but the loan is really being taken out by FP. The mortgage should probably show 100% ownership by FP, not by any of you individually - you will only be guaranteeing the loan, and your ownership is purely through the partnership. You and your husband put $20,000 into the partnership. The FP now lists a $20,000 liability to you, and a $20,000 asset in cash. FP buys the $320,000 house (increase assets) with a $300,000 mortgage (liability) and $20,000 cash (decrease assets). Equity in the partnership is $0 right now. The ownership at present is clear. You own 50% of $0, and your sister owns 50% of $0. Where'd your money go?! Simple - it's a liability of the partnership, so you and your husband are together owed $20,000 by the partnership before any equity exists. Everything balances nicely at this point. Note that you should account for paying closing costs the same as you considered the down payment - that money should be paid back to you before any is doled out as investment profit! Now, how do you handle mortgage payments? This actually isn't as hard as it sounds, thanks to the nature of a partnership and proper business accounting. With a good foundation the rest of the building proceeds quite cleanly. On month 1 your sister pays $1400 into the partnership, while you pay $645 into the partnership. FP will record an increase in assets (cash) of $1800, an increase in liability to your sister of $1400, and an increase in liability to you of $645. FP will then record a decrease in cash assets of $1800 to pay the mortgage, with a matching increase in cost account for the mortgage. No net change in equity, but your individual contributions are still preserved. Let's say that now after only 1 month you decide to sell the property - someone makes an offer you just can't refuse of $350,000 dollars (we'll pretend all the closing costs disappeared in buying and selling, but it should be clear how to account for those as I mention earlier). Now what happens? FP gets an increase in cash assets of $350,000, decreases the house asset ($320,000 - original purchase price), and pays off the mortgage - for simplicity let's pretend it's still $300,000 somehow. Now there's $50,000 in cash left in the partnership - who's money is it? By accounting for the house this way, the answer is easily determined. First all investments are paid back - so you get back $20,000 for the down payment, $645 for your mortgage payments so far, and your sister gets back $1400 for her mortgage payment. There is now $27,995 left, and by being equal partners you get to split it - 13,977 to you and your husband and the same amount to your sister (I'm keeping the extra dollar for my advice to talk to a lawyer/CPA). What About Getting To Live There? The fact is that your sister is getting a little something extra out of the deal - she get's the live there! How do you account for that? Well, you might just be calling it a gift. The problem is you aren't in any way, shape, or form putting that in writing, assigning it a value, nothing. Also, what do you do if you want to sell/cash out or at least get rid of the mortgage, as it will be showing up as a debt on your credit report and will effect your ability to secure financing of your own in the future if you decide to buy a house for your husband and yourself? Now this is the kind of stuff where families get in trouble. You are mixing personal lives and business arrangements, and some things are not written down (like the right to occupy the property) and this can really get messy. Would evicting your sister to sell the house before you all go bankrupt on a bad deal make future family gatherings tense? I'm betting it might. There should be a carefully worded lease probably from the partnership to your sister. That would help protect you from extra court costs in trying to determine who has the rights to occupy the property, especially if it's also written up as part of the partnership agreement...but now you are building the potential for eviction proceedings against your sister right into an investment deal? Ugh, what a potential nightmare! And done right, there should probably be some dollar value assigned to the right to live there and use the property. Unless you just want to really gift that to your sister, but this can be a kind of invisible and poorly quantified gift - and those don't usually work very well psychologically. And it also means she's going to be getting an awfully larger benefit from this "investment" than you and your husband - do you think that might cause animosity over dozens and dozens of writing out the check to pay for the property while not realizing any direct benefit while you pay to keep up your own living circumstances too? In short, you need a legal structure that can properly account for the fact that you are starting out in-equal contributors to your scheme, and ongoing contributions will be different over time too. What if she falls on hard times and you make a few of the mortgage payments? What if she wants to redo the bathroom and insists on paying for the whole thing herself or with her own loan, etc? With a properly documented partnership - or equivalent such business entity - these questions are easily resolved. They can be equitably handled by a court in event of family squabble, divorce, death, bankruptcy, emergency liquidation, early sale, refinance - you name it. No percentage of simple co-ownership recorded on a deed can do any of this for you. No math can provide you the proper protection that a properly organized business entity can. I would thus strongly advise you, your husband, and your sister to spend the comparatively tiny amount of extra money to get advice from a real estate/investment lawyer/CPA to get you set up right. Keep all receipts and you can pay a book keeper or the accountant to do end of the year taxes, and answer questions that will come up like how to properly account for things like depreciation on taxes. Your intuition that you should make sure things are formally written up in times when everyone is on good terms is extremely wise, so please follow it up with in-person paid consultation from an expert. And no matter what, this deal as presently structured has a really large built-in potential for heartache as you have three partners AND one of the partners is also renting the property partially from themselves while putting no money down? This has a great potential to be a train wreck, so please do look into what would happen if these went wrong into some more detail and write up in advance - in a legally binding way - what all parties rights and responsibilities are. |
I don't understand all this techincal jargon | Note: While I think the above is a reasonable interpretation, I'm not about to take legal responsibility for it since I'm not a lawyer, if you need serious advice get a professional opinion through appropriate channels. |
Will a credit card company close my account if I stop using it? | Assuming the question is "will they close it for inactivity (alone)".. the answer is "Nope" ... unequivocally. Update: < My answer is geared to credit Cards issues by companies that deal in credit, not merchandise (i.e. store cards, retailer cards, etc). Retailers (like Amazon, etc), want to sell goods and are in the credit card business to generate sales. Banks and credit companies (about whom I am referring) make their money primarily on interest and secondarily on service charges (either point of use charged to the vendor that accepts payment, or fees charged to the user).> The only major issuer I will say that it might be possible is Discover, because I never kept a Discover card. I also don't keep department store cards, which might possibly do this; but I do doubt it in either of those cases too. My answer is based on Having 2 AMEX cards (Optima and Blue) and multiple other Visa/MC's that I NEVER use... and most of these I have not for over 10+ years. Since I am also presuming that you are also not talking about an account that charges a yearly or other maintenance fee.. Why would they keep the account open with the overhead (statements and other mailings,etc)? Because you MIGHT use it. You MIGHT not be able to pay it off each month. Because you MIGHT end up paying thousands in interest over many years. The pennies they pay for maintaining your account and sending you new cards with chip technology, etc.. are all worth the gamble of getting recouped from you! This is why sales people waste their time with lots of people who will not buy their product, even though it costs them time and money to prospect.. because they MIGHT buy. Naturally, there are a multitude of reasons for canceling a card; but inactivity is not one. I have no less than 10+ "inactive" cards, one that has a balance, and two I use "infrequently". I really would not mind if they closed all those accounts.. but they won't ;) So enjoy your AMEX knowing that your Visa will be there when you need/want it.. The bank that issues your Visa is banking on it! (presuming you don't foul up financially) Cheers! |
Retirement Options for Income | If you withdraw all (or most) of your pension 25% is tax free but the rest is treated as income upon which you will pay income tax at the usual UK rates. Withdrawing a lump sum to buy property is therefore unlikely to be 10% per annum as you'll spend years making up lost ground on the initial capital investment. If your pension is a self invested personal pension (a SIPP) you could buy property within the pension wrapper itself which would avoid the income tax hit. if you don't have a SIPP you may be able to convert your pension to a SIPP but you would be wise to seek professional advice about that. The UK government is also introducing an additional 3% stamp duty on properties which are not your first home so this may further impact your returns. This would apply whether you withdraw your pension as cash or buy the property within a SIPP. One other alternative to an annuity in the UK is called drawdown where you keep the money invested in your pension as it is now and withdraw an annual income. This means your tax bill is reduced as you get to use your annual allowance each year and will also pay less higher rate tax. The government provides more details on its website. |
Is Peter Lynch talking about the Dividend Adjusted PEG Ratio in this quote? | Essentially, yes, Peter Lynch is talking about the PEG Ratio. The Price/Earnings to Growth (PEG) Ratio is where you take the p/e ratio and then divide that by the growth rate (which should include any dividends). A lower number indicates that the stock is undervalued, and could be a good buy. Lynch's metric is the inverse of that: Growth rate divided by the p/e ratio. It is the same idea, but in this case, a higher number indicates a good value for buying. In either case, the idea behind this ratio is that a fairly priced stock will have the p/e ratio equal the growth rate. When your growth rate is larger than your p/e ratio, you are theoretically looking at an undervalued stock. |
What is the difference between a bond and a debenture? | Investopedia has definitions for both: Debenture: A type of debt instrument that is not secured by physical asset or collateral. Bond: A debt investment in which an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period of time at a fixed interest rate. Wikipedia's entry for debenture says: In some countries [debenture] is used interchangeably with bond, loan stock or note. Seems to me that there's not much difference. |
Can dues and subscriptions expenses be deducted 100% to calculate taxable income in an LLC company? | IRS Publication 529 is the go-to document. Without being a tax professional, I'd say if the dues and subscriptions help you in the running of your business, then they're deductible. You're on your own if you take my advice (or don't). ;) |
What is the effect of dividends on the futures price of an index | A futures contract is based upon a particular delivery date. In the case of a stock index futures contract is a cash settled futures contract based upon the stock index value at a particular point in time (i.e. this is when the final settlement is determined). In your example, the S&P 500 (SPX) is a price return index - that is, it is not affected by dividends and therefore dividends are not incorporated into the index value. Dividends will affect the price of the constituent stocks (not necessarily by the same amount as the dividend) so they do have influence on the stock index value. Since the dividends are known ahead of time (or at least can be estimated), this has already been factored into the futures price by the market. In terms of the impact of a dividend by AAPL, AAPL is approximaetely 3.6% of the index. Apple pays out dividends 4 times a year (currently paying out $0.52 dividends). Assuming the market is otherwise steady and AAPL drops by $0.52 due to the dividend and Apple is priced at around $105, this would result in a drop in the index of 0.0178% or around 0.35 points. Interesting fact: There are some futures contracts that are based upon Total Return indexes, such as the German DAX and the above logic would need to be reversed. |
Is house swapping possible? | You would have to find someone in the other state who wanted to swap. This is conceivable but difficult if you want the houses to be the same value. How do you find the one person who lives in the right place now and wants to move to the right area? The normal way this situation is handled is to simply put your house on the market. At the same time, you find a new house in the new location. You arrange for a new mortgage for the new house and make purchase contingent on selling the old house. Your buyer pays off your mortgage and gives you a bit left over that you use as a downpayment on the new house. Note that you take a loss on closing costs when you do this. This is why if you are in the position where you move frequently, you may be better off renting. Sometimes an employer will help with this, paying for a long term hotel or short term rental. This can give you more room to sell and buy the houses. If you have to move right now, immediately, not in a few months when your housing situation is fixed, consider double renting. You rent out your mortgaged house to someone and pay rent on a new place. You may put some of your stuff in storage until you get into your permanent place. The downside is that it can be harder to sell a house with a tenant until you are close to the end of the lease. And of course, you are probably not in the best position to get or pay good rent. Your situation restricts your options. You might get stuck in this situation for a year so as to get the time that you need to line up a buyer. Of course, you may get lucky and find someone who wants your old house as an investment property. Such a person won't be bothered by a tenant. But they usually want a good price. After all, they want to make money off it. There are those operations that advertise that they buy ugly houses. They want a good deal. You'll probably take a bath. But they can buy quickly, so you can move on quickly. No waiting until they find a buyer. And I'm not saying that you can't do a swap like you want. I'm just saying that you may find it difficult to find a swapping partner. Perhaps an investment person would be up for it. They take your house in trade for their house, letting you stay in their house until they can fix up your old house and either rent it or sell it. The problem is that it may be hard to find such an investor who can handle a house where you are and has a house where you need to be. I don't have a good suggestion for finding a swapping partner other than calling a lot of realtors and asking for suggestions. Maybe a bit of online checking for properties where the owner's business is managing the sale. |
What is title insurance, and should I get title insurance for my home? | If or when you "own" your land outright you need to try and get the land patent on it. That is the supreme form of title to it. It goes back to when the land was acquired by the U.S. (from Britian, France, etc.) by treaty. Treaties trump even our Constitution. When you have a land patent.........IT'S YOURS! That link is to my site but this was so relevant that I had to include it. Hope y'all don't mind. |
Is the writer of a call ever required to surrender dividends to the call option buyer? | The dividend goes to he who owns the stock when it goes ex-div. A buyer (the call buyer who exercises) will not exercise unless the stock plus dividend are in the money. Otherwise they'd be buying the stock at a premium. I like the scenario your friend doesn't. If I can find a high dividend stock and sell the call for a decent price, I may get a great return on a stock that's gone down 5% over a year's time. If it goes up and called away, that's fine too, it means a profit. |
How to save money for future expenses | First, talk to your husband about this. You really need to persuade him that you need to be saving, and get him to agree on how and how much. Second, if you husband is not good at saving, work on getting something set aside automatically - ideally deducted from a paycheck or transferred to a savings account automatically. If he is the kind of person who might dip into that account, try to make it a place he can't withdraw from Third, get some advice, possibly training, on budgeting. Buy a book, take a video course: even start by watching some TV shows on getting out of debt. |
Why I can't view my debit card pre-authorized amounts? | No money is stolen. They don't show you the hold for whatever reason (not so good a bank?), but the money is still yours. You just cannot use it, but it is still on your account. These holds usually go away after a week. In certain cases (like a security deposit) it may take up to 30 days. You can request from the merchant to cancel the hold if it is no longer necessary. They'll have to be proactive on that, and some merchants wouldn't want the hassle. It is however a known issue. When I was working in the banking industry, we would routinely receive these hold cancellation requests from merchants (hotels and car rentals). |
Are traders 100% responsible for a stock's price changes? | Traders = every market participant. Not some shadow figure that excludes you just because you passively drop cash into a 401k Vanguard fund every paycheck. So yes, if everyone stopped trading then the price won't move. Trades are 100% responsible for the prices you see on charts and tickers. A stock won't be worth "$100" if nobody ever traded $100 for it. It only has that price now or in the past because somebody placed an order for it at $100 and somebody else filled that order at $100 |
Stock valuation - Volkswagen | The prices dropped because the scandal could mean: This some people estimated that the company could lose money, or have smaller profit. Thus each share was worth less money going forward. The mechanism is that in order to sell their shares the current share owners had to settle for lower prices. |
How can I buy these ETFs? | ETFs trade on specific exchanges. If your broker deals with those exchanges, you should have access to the ETF. If your broker does not deal with that exchange, then you will not have access through that broker. This is different than, say, mutual funds, which don't trade on the exchanges are proprietary to certain brokerages or financial institutions. |
I don't live in America. How can I buy IPO stock of newly listed companies in the United States? | First thing to consider is that getting your hands on an IPO is very difficult unless you have some serious clout. This might help a bit in that department (http://www.sec.gov/answers/ipoelig.htm) However, assuming you accept all that risk and requirements, YES - you can buy stocks of any kind in the US even if you are a foreigner. There are no laws prohibiting investment/buying in the US stock market. What you need is to get an online trading account from a registered brokerage house in the US. Once you are registered, you can buy whatever that is offered. |
How should one refuse to father in law (Chinese) when he wants to borrow money? | In these situations, one solution is to use the "I was just about to ask you the same thing..." response. This is kind of a famous way to deal with people asking you for money, whether it's someone asking to borrow "$10 at lunch time" or "$3000 for a car" or the like. So: Person X asks you for money, say $2000. Your reply: Ah, that's bad luck, I was just about to ask you the same thing... Follow this immediately - just keep talking - by launching in to a really incredibly detailed discussion of why you need to borrow money (pick a slightly larger amount, slet's ay $3500). Just "keep talking" and don't let the other person get a word in. Go in to great detail about just what you need the $3500 for and why. It's a good trick. |
Is it smart to only invest in mid- and small-cap stock equity funds in my 401(k)? | Your initial premise (mid-cap and small-cap company stocks have outperformed the market) is partially correct - they have, over many 40 yr periods, provided higher returns than large caps (or bond funds). The important thing to consider here is that risk adjusted, the returns from a diversified portfolio are far more robust - with proper asset allocation you and expect high returns and reduce your risk simultaneously. Imagine this scenario - you decide to stick to small / mid caps for 10 - 15 yrs and move into a more diversified portfolio then. Had you made that decision during a sustained period of poor small cap performance (late 80s or the 40's) you would have lost a boatload of return, as those were periods were small / mids underperformed the market as a whole, and large caps in particular. As an example, from 1946 to 1958 large caps outperformed small every single year. If 2016 were to be the first year of a similar trend, you've done yourself a major disservice. Since the dot com crash small /mids have outperformed for sure, pretty much every year - but that doesn't mean that they will continue to do so. The reason asset allocation exists is precisely this - over a 40 yr period, no single asset class outperforms a diversified portfolio. If you attempt to time the market, even if you do so with a multi-decade time horizon in mind, there a good chance that you will do more poorly. |
How do wire transfers get settled? | Wire transfers normally run through either the Fedwire system or the Clearing House Interbank Payments System (CHIPS). The process generally works like this: You approach a bank or other financial institution and ask to transfer money. You give the bank a certain code, either an international bank account number or one of several other standards, which informs the bank where to send the money. The bank sends a message through a system like Fedwire to the receiving bank, along with settlement instructions. This is where the process can get a bit tricky. For the wire transfer to work, the banks must have reciprocal accounts with each other, or the sending bank must send the money to a bank that does have such an account with the receiver. If the sending bank sends the money to a third-party bank, the transaction is settled between them, and the money is then sent to the receiving bank from the third-party bank. This last transaction may be a wire transfer, ACH transfer, etc. The Federal Reserve fits into this because many banks hold accounts for this purpose with the Federal Reserve. This allows them to use the Fed as the third-party bank referred to above. Interestingly enough, this is one of the significant ways in which the Fed makes a profit, because it, along with every other bank and routing agent in the process, collects a miniscule fee on this process. You'll often find sources that state that Fedwire is only for transferring large transactions; while this is technically correct, it's important to understand that financial institutions don't settle every wire transfer or payment immediately. Although the orders are put in immediately, the financial institutions settle their transactions in bulk at the end of the business day, and even then they normally only settle the difference. So, if Chase owes Bank of America $1M, and Bank of America owes Chase $750K, they don't send these as two transactions; Chase simply credits BAC $250K. You didn't specifically ask about ACH transfers, which as littleadv pointed out, are different from wire transfers, but since ACH transfers can often form a part of the whole process, I'll explain that process too. ACH is a payment processing system that works through the Federal Reserve system, among others. The Federal Reserve (through the Fedline and FedACH systems) is by far the largest payment processor. The physical cash itself isn't transferred; in simple terms, the money is transferred through the ACH system between the accounts each bank maintains at the Federal Reserve. Here is a simple example of how the process works (I'm summarizing the example from Wikipedia). Let's say that Bob has an account with Chase and wants to get his paycheck from his employer, Stack Exchange, directly deposited into this account. Assume that Stack Exchange uses Bank of America as their bank. Bob, the receiver, fills out a direct deposit authorization form and gives it to his employer, called the originator. Once the originator has the authorization, they create an entry with an Originating Depository Financial Institution, which acts as a middleman between a payment processor (like the Federal Reserve) and the originator. The ODFI ensures that the transaction complies with the relevant regulations. In this example, Bank of America is the ODFI. Bank of America (the ODFI) converts the transaction request into an ACH entry and submits it, through an ACH operator, to the Receiving Depository Financial Institution (RDFI), which in this case is Chase bank. Chase credits (deposits) the paycheck in Bob's account. The Federal Reserve fits into all of this in several ways. Through systems like Fedline and FedACH, the Fed acts as an ACH operator, and the banks themselves also maintain accounts at the Federal Reserve, so it's the institution that actually performs the settling of accounts between banks. |
Does the low CAD positively or negatively impact Canadian Investors? | If you buy US stocks when the CAD is high and sell them when the CAD is lower you will make a currency gain on top of any profit or loss from the stock investments. If you buy US stocks when the CAD is low and sell when the CAD is higher any profits from gains from the stock investment will be reduced and any losses will be increased. If you are just starting out you may be better off investing in your own country to avoid any currency risk adding to your stock market risk. |
Ghana scam and direct deposit scam? | It's a scam. Here's someone who paid "Josie" 2000 pounds and lost it all Here's a Google search result list of how this softcore porn actor, Josie Ann Miller, is being used as the face and name of scams |
Why is Insider Trading Illegal? | Illusions of transparency. Mitigation of risk. Emotion. The system. Short answer per sdg's post - it's the law. Long answer which I wont get into - it's a philosophical stance. It makes people feel better. It encourages a sense of "the system really does work." |
If I have some old gold jewellery, is it worth it to sell it for its melt value? | Get your jewelery appraised. (Don't let whoever does the appraisal be the same person whom you would sell it to.) Logically jewelery must be worthy more than the raw gold that makes it up because somebody took the time to design patterns and do specialty craft to the metal. |
Why do credit cards have minimum limits? | I believe it's just to limit the less well-off from acquiring one. If your credit history and income do not support a $15,000 credit limit, then don't even think about applying for an Altitude Black card. If they do, then don't bother with a student card. It's primarily about market segmentation by wealth or income. |
What is the rough estimate of salary value for a taxpayer to pay AMT? | Turbox Tax states the following: "For 2015, the AMT exemption amounts are $53,600 for individual taxpayers, $83,400 for married taxpayers filing jointly and surviving spouses, and $41,700 for married persons filing separately. This is the amount you're allowed to deduct from your taxable income before applying the AMT." |
How many stocks will I own in n years if I reinvest my dividends? | This answer contains three assumptions: New Share Price: Old Share Price * 1.0125 Quarterly Dividend: (New Share Price*0.01) * # of Shares in Previous Quarter Number of Shares: Shares from Previous Quarter + Quarterly Dividend/New Share Price For example, starting from right after Quarter One: New share price: $20 * 1.0125 = 20.25 1000 shares @ $20.25 a share yields $20.25 * 0.01 * 1000 = $202.5 dividend New shares: $202.5/20.25 = 10 shares Quarter Two: New share price: $20.503 1010 shares @ 20.503 yields $20.503*0.01*1010 = $207.082 dividend New shares: $207.082/20.503 = 10.1 shares Repeat over many cycles: 8 Quarters (2 years): 1061.52 shares @ $21.548 a share 20 Quarters (5 years): 1196.15 shares @ $25.012 a share 40 Quarters (10 years): 1459.53 shares @ $32.066 a share Graphically this looks like this: It's late enough someone may want to check my math ;). But I'd also assert that a 5% growth rate and a 4% dividend rate is pretty optimistic. |
Why would a company sell debt in order to buy back shares and/or pay dividends? | When I play Railroad Tycoon III, I often send my company deep into debt to get cash on hand to buy back shares, effectively increasing my ownership of the company as an absolute percentage. Then I issue massive dividends until my company goes bankrupt, and start a new company. It's a way to shuttle money borrowed against a company's assets into my personal bank account at no risk to me. In the MSFT case, maybe they think there will be inflation and this is a hedge against holding so many dollars in cash already. If they can borrow a couple billion in 2010 dollars and pay it back in 2015 dollars, they're probably going to end up ahead if all they do is buy back shares. Paying dividends with the money seems stupid vs. buying back shares - they're just driving up income taxes for investors. |
Options vs Stocks which is more profitable | First, to mention one thing - better analysis calls for analyzing a range of outcomes, not just one; assigning a probability on each, and comparing the expected values. Then moderating the choice based on risk tolerance. But now, just look at the outcome or scenario of 3% and time frame of 2 days. Let's assume your investable capital is exactly $1000 (multiply everything by 5 for $5,000, etc.). A. Buy stock: the value goes to 103; your investment goes to $1030; net return is $30, minus let's say $20 commission (you should compare these between brokers; I use one that charges 9.99 plus a trivial government fee). B. Buy an call option at 100 for $0.40 per share, with an expiration 30 days away (December 23). This is a more complicated. To evaluate this, you need to estimate the movement of the value of a 100 call, $0 in and out of the money, 30 days remaining, to the value of a 100 call, $3 in the money, 28 days remaining. That movement will vary based on the volatility of the underlying stock, an advanced topic; but there are techniques to estimate that, which become simple to use after you get the hang of it. At any rate, let's say that the expected movement of the option price in this scenario is from $0.40 to $3.20. Since you bought 2500 share options for $1000, the gain would be 2500 times 2.8 = 7000. C. Buy an call option at 102 for $0.125 per share, with an expiration 30 days away (December 23). To evaluate this, you need to estimate the movement of the value of a 102 call, $2 out of the money, 30 days remaining, to the value of a 102 call, $1 in the money, 28 days remaining. That movement will vary based on the volatility of the underlying stock, an advanced topic; but there are techniques to estimate that, which become simple to use after you get the hang of it. At any rate, let's say that the expected movement of the option price in this scenario is from $0.125 to $ 1.50. Since you bought 8000 share options for $1000, the gain would be 8000 times 1.375 = 11000. D. Same thing but starting with a 98 call. E. Same thing but starting with a 101 call expiring 60 days out. F., ... Etc. - other option choices. Again, getting the numbers right for the above is an advanced topic, one reason why brokerages warn you that options are risky (if you do your math wrong, you can lose. Even doing that math right, with a bad outcome, loses). Anyway you need to "score" as many options as needed to find the optimal point. But back to the first paragraph, you should then run the whole analysis on a 2% gain. Or 5%. Or 5% in 4 days instead of 2 days. Do as many as are fruitful. Assess likelihoods. Then pull the trigger and buy it. Try these techniques in simulation before diving in! Please! One last point, you don't HAVE to understand how to evaluate projected option price movements if you have software that does that for you. I'll punt on that process, except to mention it. Get the general idea? Edit P.S. I forgot to mention that brokers need love for handling Options too. Check those commission rates in your analysis as well. |
Why would a company like Apple be buying back its own shares? | A Breakdown of Stock Buy Backs has this bottom line on it: Are share buybacks good or bad? As is so often the case in finance, the question may not have a definitive answer. If a stock is undervalued and a buyback truly represents the best possible investment for a company, the buyback - and its effects - can be viewed as a positive sign for shareholders. Watch out, however, if a company is merely using buybacks to prop up ratios, provide short-term relief to an ailing stock price or to get out from under excessive dilution. Read more: http://www.investopedia.com/articles/02/041702.asp#ixzz3ZHdOf2dJ What is the reason that a company like AAPL is buying back its own shares? Offsetting dilution would be my main thought here as many employees may exercise options putting more stock out there that the company buys back stock to balance things. Does it have too much cash and it doesn't know what to do with it? No as it could do dividends if it wanted to give it back to investors. So it is returning the cash back to investors? Not quite. While some investors may get cash from Apple, I'd suspect most shareholders aren't likely to see cash unless they are selling their shares so I wouldn't say yes to this without qualification. At the same time, the treasury shares Apple has can be used to give options to employees or be used in acquisitions for a couple of other purposes. |
Do shares purchased on FTSE AIM move with company to other markets? | Any shares you buy when a company is listed on one market will remain yours if the company moves to another market. Markets and exchanges like AIM are just venues for dealing in shares - indeed you can deal in those shares anywhere else that will allow you as well as on the AIM. The benefit of being listed in a market is that trade in the shares will be more "liquid" - there's more likely to be people who want to buy and sell them at any given time. The bigger concern would be what happens if the company does badly and drops out of the AIM entirely. You'd still be able to sell your shares to any willing buyer, but finding that buyer might get harder. |
How much of my capital should I spend on subscribing to a stock research company? | To complement farnsy's answer, I want to warn people against market prediction scams. If they give uniformly distributed buy/sell predictions to 256 people, one of them will get eight correct predictions in a row. They are trading a few cents of Amazon server time for 3% of your capital. |
Why do people buy new cars they can not afford? | Many reasons So in general you are paying more for peace of mind when you buy a new car. You expect everything to be working and if not you can take it back to the dealer to have them fix it for free. |
My friend wants to put my name down for a house he's buying. What risks would I be taking? | What are the risks, if any The risks are exemplified by the outcomes presented on this website, including: There's a chance you will end up paying large mortgage payments on a house occupied by an ex-friend and paying large amounts of money to lawyers to try and get things straightened out. You could come out of it a lot poorer and with your credit rating wrecked. |
Are there any disadvantages to DHA Investment Properties? | A quick online search for "disadvantages of defence housing australia investment properties" turns up a several articles that list a few possible disadvantages. I can't vouch for these personally because I'm not familiar with the Australian rental market, but they may all be things to keep in mind. I quote verbatim where indicated. |
Why don't more people run up their credit cards and skip the country? | Even if you could get it with no major hassle, $100,000 is just not that much money. In a cheap third world country, as an expat you're looking at spending about $800-$2000/month, plus unexpected expenses. Locals live on less, but very few of us would be happy with the lifestyle of a Honduran or Thai farmer. Your 100k will last 4-10 years. This is hardly a great deal considering you're cutting off ties back home and almost becoming a fugitive. With USD going down the drain (e.g. in Thailand it went down 25% in 3 years), this period would probably be even shorter. Of course, you could work in the new country, but if you do then you don't need 100k to start with. The initial amount may improve your security, but from that standpoint being able to go back and work in your home country is worth more. |
Conservative ways to save for retirement? | A 401(k) is just a container. Like real-world containers (those that are usually made out of metal), you can put (almost) anything you want in it. Signing up for your employer's match is a great thing to do. Getting into the habit of saving a significant portion of your take-home pay early in your career is even better; doing so will put you lightyears ahead of lots of people by the time you approach retirement age. Even if you love your job, that will give you options you otherwise wouldn't have. There is no real reason why you can't start out by putting your retirement money in a short-term money-market fund within that 401(k). By doing so you will only earn a pittance, probably not even enough to keep up with inflation in today's economic environment, but at this point in your (savings and investment) career, that doesn't really matter much. What really matters is getting into the habit of setting that money aside every single time you get paid and not thinking much of it. And that's a lot easier if you start out early, especially at a time when you likely have received a significant net pay increase (salaried job vs college student). I know, everyone says to get the best return you can. But if you are just starting out, and feel the need to be conservative, then don't be afraid to at least start out that way. You can always rebalance into investment classes that have the potential for higher return -- and correspondingly higher volatility -- in a few years. In the meantime, you will have built a pretty nice capital that you can move into the stock market eventually. The exact rate of return you get in the first decade matters a lot less than how much money you set aside regularly and that you keep contributing. See for example Your Investment Plan Means Nothing If You Don’t Do This by Matt Becker (no affiliation), which illustrates how it takes 14 years for saving 5% at a consistent 10% return to beat saving 10% at a consistent 0% return. So look through what's being offered in terms of low-risk investments within that 401(k). Go ahead and pick a money-market fund or a bond fund if you want to start out easy. If it gets you into the habit of saving and sticking with it, then the overall return will beat the daylights out of the return you would get from a good stock market fund if you stop contributing after a year or two. Especially (but not only) if you do pick an interest-bearing investment, do make sure to pick one that has as low fees as you can possibly find for what you want, because otherwise the fees are going to eat a lot into your potential returns, benefiting the bank or investment house rather than yourself. Just keep an open mind, and very strongly consider shifting at least some of your investments into the stock market as you grow more comfortable over the next several years. You can always keep a portion of your money in various interest-bearing investments to act as a cushion in case the market slumps. |
Should I sell my rental property or keep it if it has mold growth problems? | I'm going to assume that you will spend the money to fix the mold problem correctly. Using your numbers, after that is done, the home is worth perhaps $280k. To evaluate whether or not to sell, the amount you have spent on the house is irrelevant. The only thing you need to ask yourself is this: Would I spend $280k to buy this house today? You might, if you were happy with the rental income that you were getting. If the house is fully rented, it earns you $24k/year, which is an 8.6% return if you had purchased the house today at $280k. Of course, you will have vacancies, taxes, and other expenses bringing that return number down. Figure out what that is, and see if you are happy with the return based on those numbers. If you decide it would be a bad investment for you at $280k, then sell the house. By the way, this question works for any investment, not just real estate. When deciding whether or not to sell stock, the same thing applies. It is irrelevant what your cost basis is. You only need to ask yourself if the stock would be a good buy for you at the current price. |
How to negotiate when you have something to give back? | I don't think that there is a generic answer that will apply to this question across all goods. The answer depends on how the related businesses work, how much insight you have into the true value of the goods, and probably other things. Your car example is a good one that shows multiple options - There are dealers who will buy as a single transaction, sell as a single transaction, or do a simultaneous sell with trade-in. I had a hot tub once, on the other hand, where I could find people who would do a trade-in, but there was no dealer who would just buy my used tub. There's not much parallel between the car and the tub because the options available are very different. To the extent that there is a generic answer, I generally agree with the point in @keshlam's answer about trying to avoid entrapment, but I take a slightly different view. If you want to get your best deal, you need to have an idea going into the process of what you want in net and keep focused on meeting your goal. If for some reason, it's convenient for the dealer to "move money around" between the new car and the trade-in, I'm ok with that as long as I'm getting what I want out of the deal. If possible, I prefer to deal with both transactions at once because it's simpler. At the same time, I'm willing to remove the trade-in from the deal if I'm not getting what I want. (Threatening to do so can also give you some information about where the dealer really puts the value between the new car and trade-in since, if you threaten to pull the trade-in, the price on the car will probably change in response.) |
Why does FlagStar Bank harass you about payments within grace period? | One option is to try to get a month ahead on your mortgage payments. Rather than using the current month's rent to pay the current month's mortgage payments, try to use the previous month's rent to pay the current month's mortgage payments. This should allow you to pay on time rather than late but not unacceptably late. |
Why should I choose a business checking account instead of a personal account? | Some benefits of having a business checking account (versus a personal checking account) are: The first 3 should be pretty easy to determine if they are important to you. #4 is a little more abstract, though I see you have an LLC taxed as a sole proprietorship, and so I'm guessing protecting your personal assets may have been one of the driving reasons you formed the LLC in the first place. If so, "following through" with the business account is advised. |
What is a stock split (reverse split)? | It was actually a reverse split meaning that every 10 shares you had became 1 share and the price should be 10x higher. - Citigroup in reverse split The chart just accounts for the split. The big dip is Googles way of showing from what price it split from. If you remember before the split the stock was trading around $4-$5 after the reverse split the stock became 10x higher. Just to clear it up a 1:2(1 for 2) split would mean you get 1 share for every 2 shares you have. This is known as a reverse split. A 2:1(2 for 1) split means you get 2 shares for every 1 share you have. The first number represents the amount of shares you will receive and the second number represents how many shares you will be giving up. |
What are “trailing 12-month total returns”? | Total Return is the percent change in value (including andy dividends) of an instrument. The "trailing 12-month" means that your starting point is the value 12 months ago. So the formula is: where V is the value of the instrument on the reference date, V0 is the value of the instrument 12 months prior to the reference date, and D is the amount of dividends paid between the two dates. |
Why are big companies like Apple or Google not included in the Dow Jones Industrial Average (DJIA) index? | The Dow Jones Industrial Average (DJIA) is a Price-weighted index. That means that the index is calculated by adding up the prices of the constituent stocks and dividing by a constant, the "Dow divisor". (The value of the Dow divisor is adjusted from time to time to maintain continuity when there are splits or changes in the roster.) This has the curious effect of giving a member of the index influence proportional to its share price. That is, if a stock costing $100 per share goes up by 1%, that will change the index by 10 times as much as if a stock costing $10 per share goes up by the same 1%. Now look at the price of Google. It's currently trading at just a whisker under $700 per share. Most of the other stocks in the index trade somewhere between $30 and $150, so if Google were included in the index it would contribute between 5 and 20 times the weight of any other stock in the index. That means that relatively small blips in Google's price would completely dominate the index on any given day. Until June of 2014, Apple was in the same boat, with its stock trading at about $700 per share. At that time, Apple split its stock 7:1, and after that its stock price was a little under $100 per share. So, post-split Apple might be a candidate to be included in the Dow the next time they change up the components of the index. Since the Dow is fixed at 30 stocks, and since they try to keep a balance between different sectors, this probably wouldn't happen until they drop another technology company from the lineup for some reason. (Correction: Apple is in the DJIA and has been for a little over a year now. Mea culpa.) The Dow's price-weighting is unusual as stock indices go. Most indices are weighted by market capitalization. That means the influence of a single company is proportional to its total value. This causes large companies like Apple to have a lot of influence on those indices, but since market capitalization isn't as arbitrary as stock price, most people see that as ok. Also, notice that I said "company" and not "stock". When a company has multiple classes of share (as Google does), market-cap-weighted indices include all of the share classes, while the Dow has no provision for such situations, which is another, albeit less important, reason why Google isn't in the Dow. (Keep this in mind the next time someone offers you a bar bet on how many stocks are in the S&P 500. The answer is (currently) 505!) Finally, you might be wondering why the Dow uses such an odd weighting in its calculations. The answer is that the Dow averages go back to 1896, when Charles Dow used to calculate the averages by hand. If your only tools are a pencil and paper, then a price-weighted index with only 30 stocks in it is a lot easier to calculate than a market-cap-weighted index with hundreds of constituents. About the Dow Jones Averages. Dow constituents and prices Apple's stock price chart. The split in 2014 is marked. (Note that prices before the split are retroactively adjusted to show a continuous curve.) |
What are the pros and cons of buying a house just to rent it out? | I would suggest the use of a management company to handle a rental property. They will take care of things like collecting rent, coordinating repairs and all the little things that come up when dealing with a renters. They typically charge a percentage of the rent or a flat fee, so make sure you include that in your rent calculation. You take a little bit of a financial hit, but save a lot of head aches - especially if you decide to acquire multiple properties in the future. |
What is the fastest way to retire, using passive income on real estate | Rule of thumb: To retire with a yearly income of $X, you need to save $(20*X) -- in other words, the safe assumption is that you'll average 4% returns on your stabilized savings/investments. In the case of retiring with a $50k passive pretax income, that means you need savings of $1M by the time you retire. If you want the $50,000 to be real post-tax spendable dollars, and your savings aren't in something like a Roth 401k or Roth IRA, increase that proportionately to account for taxes. How you get there depends on what you start with, how much you put into it every year, how you invest it and how many years you have before your retirement date. Passive investment alone will not do it unless you start with a lot of money; passive ongoing investment may depending on how much you can make yourself save when. To find out whether any specific plan will do what you need, you have to work with real numbers. |
How do I report book royalties for tax purposes? | (Insert the usual disclaimer that I'm not any sort of tax professional; I'm just a random guy on the Internet who occasionally looks through IRS instructions for fun. Then again, what you're doing here is asking random people on the Internet for help, so here goes.) The gigantic book of "How to File Your Income Taxes" from the IRS is called Publication 17. That's generally where I start to figure out where to report what. The section on Royalties has this to say: Royalties from copyrights, patents, and oil, gas, and mineral properties are taxable as ordinary income. In most cases, you report royalties in Part I of Schedule E (Form 1040). However, if you hold an operating oil, gas, or mineral interest or are in business as a self-employed writer, inventor, artist, etc., report your income and expenses on Schedule C or Schedule C-EZ (Form 1040). It sounds like you are receiving royalties from a copyright, and not as a self-employed writer. That means that you would report the income on Schedule E, Part I. I've not used Schedule E before, but looking at the instructions for it, you enter this as "Royalty Property". For royalty property, enter code “6” on line 1b and leave lines 1a and 2 blank for that property. So, in Line 1b, part A, enter code 6. (It looks like you'll only use section A here as you only have one royalty property.) Then in column A, Line 4, enter the royalties you have received. The instructions confirm that this should be the amount that you received listed on the 1099-MISC. Report on line 4 royalties from oil, gas, or mineral properties (not including operating interests); copyrights; and patents. Use a separate column (A, B, or C) for each royalty property. If you received $10 or more in royalties during 2016, the payer should send you a Form 1099-MISC or similar statement by January 31, 2017, showing the amount you received. Report this amount on line 4. I don't think that there's any relevant Expenses deductions you could take on the subsequent lines (though like I said, I've not used this form before), but if you had some specific expenses involved in producing this income it might be worth looking into further. On Line 21 you'd subtract the 0 expenses (or subtract any expenses you do manage to list) and put the total. It looks like there are more totals to accumulate on lines 23 and 24, which presumably would be equally easy as you only have the one property. Put the total again on line 26, which says to enter it on the main Form 1040 on line 17 and it thus gets included in your income. |
Do options always expire on third Friday of every month | Prior to 2005, the only SPY options that existed were the monthly ones that expire on the third Friday of every month. But in 2005, the Chicago Board Options Exchange introduced SPY weekly options that expire every Friday (except that there is no weekly option that expires on the same day as a monthly option). These weekly options only exist for 8 days - they start trading on a Thursday and expire 8 days later on Friday. The SPY options that expire on Friday October 31 are weekly options, and they started trading on Thursday October 23. Sources: Investopedia |
What should I do with my paper financial documents? | Here's my approach: As for Google Docs, I think that its safe enough for most people. If you in a profession that was subject to heavy regulatory scrutiny, of if you are cheating on your taxes, I would probably not use a cloud provider. Many providers will provide documents to government agencies without a subpoena or notice to you. |
Stock market order execution | When you are placing an order with an online broker you should already know what exchange or exchanges that stock trades on. For example if you look up under Yahoo Finance: Notice how News Corp is traded both on the ASX and the Nasdaq. The difference is the shares traded on the ASX have the extension .AX, that is how you know the difference between them. When you are putting orders in with your online broker you will need to select the exchange you wish your order to go to (if your broker allows trading on multiple exchanges). So you should always know which exchange your order goes to. |
Why is there such disparity of max contribution limits between 401K accounts and regular IRA accounts? | The 401k was not written with the specific intent of enabling retirement savings. Why do tax advantages favor employees of large employers... It seems that large businesses have been more effective at influencing legislators despite that there are more people are employed by small than large businesses. |
Do you know of any online monetary systems? | I recently came across bitcoin, it is what I was really looking for at the time. |
Help required on estimating SSA benefit amounts | There has been an abundance of articles in recent years which make it fairly clear that many participants in the Social Security system-- especially those who have started contributing recently, and going forward from that-- will experience negative rates of return. In other words, they will put in more than they will get out. Some examples of such articles: Time Magazine: But it is now official: Social Security is a lousy investment for the average worker. People retiring today will be among the first generation of workers to pay more in Social Security taxes than they receive in benefits over the course of their lives, according to a new analysis by the Associated Press. That AP piece, referenced by Time: People retiring today are part of the first generation of workers who have paid more in Social Security taxes during their careers than they will receive in benefits after they retire. It's a historic shift that will only get worse for future retirees, according to an analysis by The Associated Press. A piece which appeared in DailyFinance (includes a helpful graphic summary): 10 Myths About Social Security: Myth 4: Social Security Is a Good Deal for Today’s WorkersEven if there were no reduction in benefits or increase in taxes—an impossibility given Social Security’s looming financing shortfalls—Social Security is an extremely bad investment for most young workers. In fact, according to a study by the nonpartisan Tax Foundation, most young workers will actually receive a negative return on their Social Security taxes— they will get less in benefits than they paid in taxes. Some studies indicate that a 30- year-old two-earner couple with average income will lose as much as $173,500. That actual loss does not even consider the opportunity cost, what workers might have earned if they had been able to invest their taxes in real assets that yield a positive return. In fact, a study by financial analyst William Shipman demonstrates that, if a 25-year-old worker were able to privately invest the money he or she currently pays in Social Security taxes, the worker would receive retirement benefits three to six times higher than under Social Security. Has that answered your question? |
Strategic countermeasures to overcome crisis in Russia | You could of course request payment in EUR or USD, maybe keep a PayPal account and just leave the funds in PayPal unless you need to withdraw the money in local currency? Either currency would be fine because the problem you are trying to overcome is the instability in the ruble. EUR and USD both accomplish that. If you can get local clients to pay in EUR or USD (again, PayPal seems like an easy way to accomplish that) you avoid the ruble, but at the risk that your services become more expensive to local clients because they have to convert a weaker currency to a stronger one. You should also solicit some international clients! You are obviously perfectly fluent in English and that's a significant advantage. And they'll be happy to pay in dollars and euros. |
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