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Investing in dividend-yielding stocks with money borrowed from margin account? | Is it safe to invest in a portfolio of dividend stocks yielding 7-9% with the money borrowed at 3-4% from one of these brokerages? Yes and no. It depends on your risk profile! Any investment has its risks of losing your capital, but not investing is a guaranteed risk, as you will be guaranteed to fall behind the rate of inflation. Regarding investing on margin, this can increase your gains but can also increase your loses. Regarding the stock market - when investing in stocks you should not only look at the dividend rate but also the capital gain or loss potential. Remember in regards to investing on margin, if the share price drop too much you can get a margin call no matter how much dividend you are getting. It is no use gaining 9% in dividend yield per year if you are losing 15% or more in capital each year. Also, what is the risk of the dividend rate being cut back or dividends not being paid at all in the future? These are some of the risks you should consider before investing and derive a risk management plan as part of your investment plan before you invest. No investment is totally safe or risk free, but it is less risky than not investing at all, as long as you understand the risks involved and have a risk management plan in place as part of your overall investment plan. |
Car Insurance - Black box has broken and insurance company wants me to pay? | First read the fine print. If you have to pay it, pay it and switch company. If you don't have to pay it and there is no proof that you abused the component beyond normal usage, you don't have to sue them, just return the invoice with legal (not so layman) text like "I hereby reject paying invoice number xxxx dated xxx because the black box was used under normal conditions and it stopped working". In this case you wait for them and answer every other letter with the same text until the decide to either sue you, or drop the whole thing. If you choose this path, remember to save all invoice, copies of your rejections, all written/email/phone calls, picutres of the broken item, serial nubmers, contract etc. If they sue you and they loose (can't prove the item was destroied by you), they have to pay you up to one hour of legal advice cost and drop the invoice, if you loose, you do the same (100 pounds) plus the invoice amount according to Swedish law, don't know about your country. Before you follow any advice here, consult your local consumer protection agency, they usually comes up with smart options, they know a bad company with history and give you the right advice. |
At tax time, what is the proper way to report cryptocurrency earnings and fiat income when you've started with “nothing”? | In 2014 the IRS announced that it published guidance in Notice 2014-21. In that notice, the answer to the first question describes the general tax treatment of virtual currency: For federal tax purposes, virtual currency is treated as property. General tax principles applicable to property transactions apply to transactions using virtual currency. As it's property like any other, capital gains if and when you sell are taxed. As with any capital gains, you're taxed on the "profit" you made, that is the "proceeds" (how much you got when you sold) minus your "basis" (how much you paid to get the property that you sold). Until you sell, it's just an asset (like a house, or a share of stock, or a rare collectible card) that doesn't require any reporting. If your initial cryptocurrency acquisition was through mining, then this section of that Notice applies: 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. That is to say, when it was mined the market value of the amount generated should have been included in income (probably on either Line 21 Other Income, or on Schedule C if it's from your own business). At that point, the market value would also qualify as your basis. Though I doubt there'd be a whole lot of enforcement action for not amending your 2011 return to include $0.75. (Technically if you find a dollar bill on the street it should be included in income, but usually the government cares about bigger fish than that.) It sounds like your basis is close enough to zero that it's not worth trying to calculate a more accurate value. Since your basis couldn't be less than zero, there's no way that using zero as your basis would cause you to pay less tax than you ought, so the government won't have any objections to it. One thing to be careful of is to document that your holdings qualify for long-term capital gains treatment (held longer than a year) if applicable. Also, as you're trading in multiple cryptocurrencies, each transaction may count as a "sale" of one kind followed by a "purchase" of the other kind, much like if you traded your Apple stock for Google stock. It's possible that "1031 like kind exchange" rules apply, and in June 2016 the American Institute of CPAs sent a letter asking about it (among other things), but as far as I know there's been no official IRS guidance on the matter. There are also some related questions here; see "Do altcoin trades count as like-kind exchanges?" and "Assuming 1031 Doesn't Apply To Cryptocurrency Trading". But if in fact those exchange rules do not apply and it is just considered a sale followed by a purchase, then you would need to report each exchange as a sale with that asset's basis (probably $0 for the initial one), and proceeds of the fair market value at the time, and then that same value would be the basis of the new asset you're purchasing. Using a $0 basis is how I treat my bitcoin sales, though I haven't dealt with other cryptocurrencies. As long as all the USD income is being reported when you get USD, I find it unlikely you'll run into a lot of trouble, even if you technically were supposed to report the individual transactions when they happened. Though, I'm not in charge of IRS enforcement, and I'm not aware of any high-profile cases, so it's hard to know anything for sure. Obviously, if there's a lot of money involved, you may want to involve a professional rather than random strangers on the Internet. You could also try contacting the IRS directly, as believe-it-or-not, their job is in fact helping you to comply with the tax laws correctly. Also, there are phone numbers at the end of Notice 2014-21 of people which might be able to provide further guidance, including this statement: The principal author of this notice is Keith A. Aqui of the Office of Associate Chief Counsel (Income Tax & Accounting). For further information about income tax issues addressed in this notice, please contact Mr. Aqui at (202) 317-4718 |
Variable Annuity inside a Roth IRA? What is this and how can I switch it to something else? | This answer is provided mostly to answer your question "what is it?" A variable annuity is a contract between you and an insurance company. The insurance company takes a bunch of money up front as a lump sum, and will pay you some money yearly - like earning interest. (In this case, they will probably be paying you the money into the account itself). How much they return is, as the name suggests, variable. It can be anything, depending on what the contract says. Mostly, there will be some formula based on the stock market - frequently, the performance of the Standard & Poors 500 Index. There will typically be some minimum returns and maximum returns - if the stock market tanks, your annuity will not lose a ton of value, but if the stock market goes up a lot in one year (as it frequently does), you will not gain a lot of value either. If you are going to be in the market for a long amount of time (decades, e.g. "a few years out of college" and then a little), it makes a lot more sense to invest in the stock market directly. This is essentially what the insurance company is going to do, except you can cut out the middleman. You can get a lot more money that way. You are essentially paying the insurance company to take on some stock market risk for you - you are buying some safety. Buying safety like this is expensive. Variable annuities are the right investment for a few people in a few circumstances - mostly, if you're near retirement, it's one way to have an option for a "safe" investment, for a portion (but not all) of your portfolio. Maybe. Depending on the specifics, a lot. If you are under, like, 50 or so? Almost certainly a terrible investment which will gradually waste your money (by not growing it as fast as it deserves to be grown). Since you want to transfer it to Vanguard, you can probably call Vanguard, ask to open a Roth IRA, and request assistance rolling it over from the place it is held now. There should be no legal restrictions or tax consequences from transferring the money from one Roth IRA account to another. |
Quandl financial data : unexpected dividend | For MCD, the 47¢ is a regular dividend on preferred stock (see SEC filing here). Common stock holders are not eligible for this amount, so you need to exclude this amount. For KMB, there was a spin-off of Halyard Health. From their IR page on the spin-off: Kimberly-Clark will distribute one share of Halyard common stock for every eight shares of Kimberly-Clark common stock you own as of the close of business on the record date. The deal closed on 2014-11-03. At the time HYH was worth $37.97 per share, so with a 1:8 ratio this is worth about $4.75. Assuming you were able to sell your HYH shares at this price, the "dividend" in the data is something you want to keep. With all the different types of corporate actions, this data is extremely hard to keep clean. It looks like the Quandl source is lacking here, so you may need to consider looking at other vendors. |
Can saving/investing 15% of your income starting age 25, likely make you a millionaire? | It depends on how much you save, how much your savings earns each year. You can model it with a very simple spreadsheet: Formula view: You can change this simple model with any other assumptions you wish to make and model. This spreadsheet presumes that you only make $50,000/year, never get a raise, that your savings earns 6% per year and that the market never has a crash like 2008. The article never states the assumptions that the author has made, and therefore we can't honestly determine how truthful the author is. I recommend the book Engineering Your Retirement as it has more detailed models and goes into more details about what you should expect. I wrote a slightly more detailed post that showed a spreadsheet that is basically what I use at home to track my retirement savings. |
Possible to purchase multiple securities on 1 transaction? | No, this is not generally possible, as each security purchase is booked as a separate order => hence separate transaction. You can do this through purchasing of a fund, i.e.: purchasing one share of a ETF will get you a relative share of the ETF holdings, but the actual holdings are not up to you then. |
Put idle savings to use while keeping them liquid | I'd have a look at Capital One's Online account too, they've got 1.35% interest rate with 10% bonus if you have over $15k deposited. It is still low like all interest rates, but at least it is on top (or at least close)! |
How can I increase my hourly pay as a software developer? | Start by going to Salary.com and figuring out what the range is for your location (could be quite wide). Then also look at job postings in your area and see if any of them mention remuneration (gov't jobs tend to do this). If possible go and ask other people in your field what they think the expected range of salary should be. Take all that data and create a range for your position. Then try and place yourself in that range based on your experience and skill set. Be honest. Compare that with your own pay. If your figures indicate you should be making significantly more, schedule a meeting with your boss (or wait for a yearly review if it's relatively soon) and lay out your findings. They can say: Be ready for curve balls like benefits, work environment and other "intangibles". If they say no and you still think your compensation is unfair, it's time to polish up your CV. The easiest way to get a job is to already have one. |
Is 0% credit card utilization worse than 1-20% credit card utilization for any reason other than pure statistics? | Credit Scores / Rates are based on sometimes simple and sometimes quite complex Statistical Models (Generalised Linear Models, Neural Networks, Regression and Classification Trees, Mixture Models, etc).This depends on whether it is something more general like FICO or what large banks develop in-house. In any case, there are many legislation-dependent factors (Qualitative such as education, occupation security, sex, etc, payment history; or Quantitative such as age, liquidity and leverage ratios, etc). Now, most model that are used today are propriety and closely held trade secrets. The most important reason for this is actually because of the databases that feed the models. More better quality data is what makes the real difference ... although at the cutting-edge, the mathematicians/statisticians/computer scientists that design the algorithms will make a huge difference. Now, back to the main thing: The Credit Score/Rate is meant to be used only as an indicator for representing the Probability of Default ("How likely you are to default on your obligation towards me?" is what it means and that is largely based upon "Has company/he/she honoured his financial obligations?") of a certain consumer. In more sophisticated models, they may also use your industry sector or occupational and financial security to predict the future behaviour. However, this "Credit Score" has meaning only in relation to a "Credit Limit" ("Can you pay back my $X?"). The credit limit on the other hand is defined by your income level, debt/asset, etc). As a credit risk analyst, whether we are dealing with large corporate loans, mortgages, personal loans, etc), the principles are the same: One thing to consider is that factors considered in determining a credit score usually do not have a simple linear relationship. Consumer Profile types such as utilisation rate are a lot more about EFFECT than CAUSE: The most important thing is to honour your obligations, whether you pay before or after you spend makes little difference, so long as you pay in full and prior to maturity, your rate/score will improve with time. Financial Institutions have many ways to make money of everyone. Some, such as interest rates and fees are directly charged to you and some are charged to your goods-and-services providers. That has no bearing on your score. Sometimes it even makes sense to take on customers with rock-bottom ratings, lend them lots of money, and charge them to dirt. As you may well know, the recent financial crisis - with ongoing after-shocks and tremors - was the result of such practices. |
Pros and cons of bond ETF versus traditional bond mutual fund? | Bond ETFs are just another way to buy a bond mutual fund. An ETF lets you trade mutual fund shares the way you trade stocks, in small share-size increments. The content of this answer applies equally to both stock and bond funds. If you are intending to buy and hold these securities, your main concerns should be purchase fees and expense ratios. Different brokerages will charge you different amounts to purchase these securities. Some brokerages have their own mutual funds for which they charge no trading fees, but they charge trading fees for ETFs. Brokerage A will let you buy Brokerage A's mutual funds for no trading fee but will charge a fee if you purchase Brokerage B's mutual fund in your Brokerage A account. Some brokerages have multiple classes of the same mutual fund. For example, Vanguard for many of its mutual funds has an Investor class (minimum $3,000 initial investment), Admiral class (minimum $10,000 initial investment), and an ETF (share price as initial investment). Investor class has the highest expense ratio (ER). Admiral class and the ETF generally have much lower ER, usually the same number. For example, Vanguard's Total Bond Market Index mutual fund has Investor class (symbol VBMFX) with 0.16% ER, Admiral (symbol VBTLX) with 0.06% ER, and ETF (symbol BND) with 0.06% ER (same as Admiral). See Vanguard ETF/mutual fund comparison page. Note that you can initially buy Investor class shares with Vanguard and Vanguard will automatically convert them to the lower-ER Admiral class shares when your investment has grown to the Admiral threshold. Choosing your broker and your funds may end up being more important than choosing the form of mutual fund versus ETF. Some brokers charge very high purchase/redemption fees for mutual funds. Many brokers have no ETFs that they will trade for free. Between funds, index funds are passively managed and are just designed to track a certain index; they have lower ERs. Actively managed funds are run by managers who try to beat the market; they have higher ERs and tend to actually fall below the performance of index funds, a double whammy. See also Vanguard's explanation of mutual funds vs. ETFs at Vanguard. See also Investopedia's explanation of mutual funds vs. ETFs in general. |
How does the value of an asset (valued in two different currencies) change when the exchange rate changes? | It depends on the asset and the magnitude of the exchange rate change relative to the inflation rate. If it is a production asset, the prices can be expected to change relative to the changes in exchange rate regardless of magnitude, ceteris paribus. If it is a consumption asset, the prices of those assets will change with the net of the exchange rate change and inflation rate, but it can be a slow process since all of the possessions of the country becoming relatively poorer cannot immediately be shipped out and the need to exchange wants for goods will be resisted as long as possible. |
How does the US Estate Tax affect an Australian with investments domiciled in the US? | I don't think the location of the funds is any of your concern. You're buying a CDI, which is: Australian financial instruments The US has no jurisdiction over you, being you an Australian, so unless you own a US-based asset (i.e.: a real-estate in the US, or a US brokerage account), US tax laws shouldn't matter to you. |
What are some good ways to control costs for groceries? | For a while I tried shopping multiple grocery stores, checking fliers each week from three different stores and then making the trip to all three stores to save ten cents on each item. After a couple months, I decided it just wasn't worth it. So, I picked my favorite store. I shop once a week, after reviewing the flier and making a list. I clip coupons and try to only buy what's on my list. (I confess that coupons sometimes get me to buy a brand or item I wouldn't have otherwise... it's my weakness!) The biggest place that we save money though, is by paying attention to meat prices. I know that chicken and pork go on sale for $1.99/lb every 4 to 6 weeks at my grocery store. When it does, I buy a enough to last until the next sale, and freeze it in single-meal portions. Steak and fish are special treats, but on the rare occasion that they're less than $4/lb, I'll buy those. We also try to limit our meat consumption to every-other-day. It's not worth it for me to obsess over the price of ketchup that I buy twice a year, but on expensive items like meat, and items we use daily, I become familiar with their regular prices and sale prices, and buy extra when it's on sale. If, like me, you don't have room in your brain to keep track of the prices of everything, stick with the things you spend the most on, either because they're expensive, or you buy a lot. |
Effective returns on investment in housing vs other financial instruments | The assumption that house value appreciates 5% per year is unrealistic. Over the very long term, real house prices has stayed approximately constant. A house that is 10 years old today is 11 years old a year after, so this phenomenon of real house prices staying constant applies only to the market as a whole and not to an individual house, unless the individual house is maintained well. One house is an extremely poorly diversified investment. What if the house you buy turns out to have a mold problem? You can lose your investment almost overnight. In contrast to this, it is extremely unlikely that the same could happen on a well-diversified stock portfolio (although it can happen on an individual stock). Thus, if non-leveraged stock portfolio has a nominal return of 8% over the long term, I would demand higher return, say 10%, from a non-leveraged investment to an individual house because of the greater risks. If you have the ability to diversify your real estate investments, a portfolio of diversified real estate investments is safer than a diversified stock portfolio, so I would demand a nominal return of 6% over the long term from such a diversified portfolio. To decide if it's better to buy a house or to live in rental property, you need to gather all of the costs of both options (including the opportunity cost of the capital which you could otherwise invest elsewhere). The real return of buying a house instead of renting it comes from the fact that you do not need to pay rent, not from the fact that house prices tend to appreciate (which they won't do more than inflation over a very long term). For my case, I live in Finland in a special case of near-rental property where you pay 15% of the building cost when moving in (and get the 15% payment back when moving out) and then pay a monthly rent that is lower than the market rent. The property is subsidized by government-provided loans. I have calculated that for my case, living in this property makes more sense than purchasing a market-priced house, but your situation may be different. |
Where do I invest my Roth IRA besides stock market and mutual funds? | You're technically 'allowed' to do other investments with your Roth, but you get taken to the cleaners by the financial 'services' community who wants to take a slice. Non-securities investments from a Roth typically require a 'custodian' or other intermediary to handle your investment, e.g. buying silver coins and paying someone else to hold them. Buy these with cash and hold them yourself, assuming you trust yourself more than some stranger. |
Optimal Asset Allocation | When you have multiple assets available and a risk-free asset (cash or borrowing) you will always end up blending them if you have a reasonable objective function. However, you seem to have constrained yourself to 100% investment. Combine that with the fact that you are considering only two assets and you can easily have a solution where only one asset is desired in the portfolio. The fact that you describe the US fund as "dominating" the forign fund indicates that this may be the case for you. Ordinarily diversification benefits the overall portfolio even if one asset "dominates" another but it may not in your special case. Notice that these funds are both already highly diversified, so all you are getting is cross-border diversification by getting more than one. That may be why you are getting the solution you are. I've seen a lot of suggested allocations that have weights similar to what you are using. Finding an optimal portfolio given a vector of expected returns and a covariance matrix is very easy, with some reliable results. Fancy models get pretty much the same kinds of answers as simple ones. However, getting a good covariance matrix is hard and getting a good expected return vector is all but impossible. Unfortunately portfolio results are very sensitive to these inputs. For that reason, most of us use portfolio theory to guide our intuition, but seldom do the math for our own portfolio. In any model you use, your weak link is the expected return and covariance. More sophisticated models don't usually help produce a more reasonable result. For that reason, your original strategy (80-20) sounds pretty good to me. Not sure why you are not diversifying outside of equities, but I suppose you have your reasons. |
What's “wrong” with taking money from your own business? | It's wrong in several situations: One, the business owner counts this as a business expense, which it is not, and therefore reduces the company's profit and taxes. That would be tax avoidance and probably criminal. Two, someone who is not the sole owner counts this as a business expense, which it is not, reduces the company's profit and when profits are shared, the company pays out less money to the other owners. That's probably fraud. Third, if the owner or owners of a limited liability company draw out lots of money from the company with the intent that the company should go bankrupt with tons of debt that the owners are not going to pay, while keeping the money they siphoned off for themselves. That would probably bankruptcy fraud. Apart from being wrong, there is the obvious risk that you lose control over your company's and your own expenses, and might be in for a nasty surprise if the company has to pay out money and there's nothing left. That would be ordinary stupidity. If you have to tell your employees that you can't pay their salaries but offer them to admire your brand new Ferrari, that's something I'd consider deeply unethical. |
Is it possible to make money by getting a mortgage? | This answer is based on Australian tax, which is significantly different. I only offer it in case others want to compare situations. In Australia, a popular tax reduction technique is "Negative Gearing". Borrow from a bank, buy an investment property. If the income frome the new property is not enough to cover interest payments (plus maintenance etc) then the excess each year is a capital loss - which you claim each year, as an offset to your income (ie. pay less tax). By the time you reach retirement, the idea is to have paid off the mortgage. You then live off the revenue stream in retirement, or sell the property for a (taxed) lump sum. |
How to incentivize a real-estate broker to find me a cheap house | Shop lots of houses. Find at least three you want and start by offering a low price and working your way up. Your risk is that houses you would have liked get bought by someone else while you are negotiating, that is how you discover how much you actually have to pay to get a house. Brokers only get paid if a deal closes. That is their incentive to get you a better price. If they know you will buy a different house unless the one they are selling gets your business, then they will work to make that happen. |
Can I calculate stock value with Williams%R if I know the last set? | William %R is a momentum indicator used for measuring overbought and oversold levels, it is not used to predict the price of a stock. In fact, William %R, like all momentum indicators, is a lagging indicator - meaning the indicator level changes as the price of the stock changes. It ranges from 0 to -100. Usually when a reading is less than -80 the stock can be considered to be oversold, and when the reading is above -20 the stock can be considered overbought. When viewed together with the price chart, this can help provide a trader with entry and exit points into and out of a trade. |
Possible to use balance transfers to avoid interest with major credit cards? | In theory, yes. In practice: So it can be gamed, but the odds are not on your side :) |
If a country can just print money, is global debt between countries real? | The debt is absolutely real. China loans money to US via buying the US treasury bonds. The bond is essentially a promise to pay back the money with interest, just like a loan. As you point out, the US can print money. If this were to happen, then the USD that the owner of a treasury bond receives when the bond matures are worth less that than the USD used to purchase the bonds. There are lots of reasons why the US doesn't want to print lots of money, so the purchaser of the bond is probably confident it won't happen. If for some reason they think it is possible, then they will want to cover that risk by only purchasing bonds that have a higher interest rate. The higher interest offsets the risk of the USD being worth less. Of course, there are lots more details, e.g., the bonds themselves are bought and sold before maturity, but this is the basic idea. |
Are tax deductions voluntary? | I did a little research and found this article from 2006 by a Villanova law professor, titled "No Thanks, Uncle Sam, You Can Keep Your Tax Break". The final paragraph of the article says: Under these circumstances, it is reasonable to conclude that a taxpayer is not required to claim a allowable deduction unless a statutory provision so requires, or a binding judicial precedent so specifies. It would be unwise, of course, to forego a deduction that the IRS considers mandatory such as those claimed by self-employed individuals with respect to their self-employment, whether for purposes of the self-employment tax or the earned income tax credit. Until the statute is changed or some other binding authority is issued, there is no reason taxpayers who wish to forego deductions, such as the dependency exemption deduction, should hesitate in doing so. (The self-employment tax issues in the quote cited by CQM are explicitly discussed in the article as one of a few special kinds of deduction which are mandatory.) This is not a binding statement: it's not law or even official IRS policy. You could never use it as a defense in the event that this professor turned out to be wrong and the IRS decided to go after you anyway. However, it is a clear statement from a credible, qualified source. |
What are the downsides that prevent more people from working in high-income countries, and then retiring in low-income (and cost of living) ones? | I know folks who considered retiring to another country. Their conclusion was that while base cost of living was lower, the cost of the things that they enjoy doing -- not to mention the cost of spending time with friends they didn't want to give up -- would be sufficiently higher to erase most of the advantages. Those of us who grew up in or close to cities feel much the same way about moving out to less-populated and less-expensive parts of our own country. Basically, when cost of living is high it tends to be because there are more people who want to live there and are competing for resources (and driving prices up). Low cost of living is generally tied to less-desired locations, for the same reasons. IF you can find a location that appeals to you, and if you can get the resources there which your preferred lifestyle requires, this may make sense. For a while there were a number of professional writers moving from the US to Ireland, in part because the Irish tax structure heavily favored writers and other creative artists. (Katherine Kurtz spent several years living in a renovated Irish castle.) I'm not sure how many have stayed there after the novelty wore off. |
I'm upside down on my car loan and need a different car, what can I do? | Before buying a new car, determine whether you really need one! If there's an automotive discussion, you should ask there FIRST to get opinions on how much all-wheel-drive helps. You may not want to change cars at all. Remember, most of us in the Northeast are NOT driving all-wheel-drive vehicles, and all cars have all-wheel brakes. All-wheel drive is better at getting you moving from a stop if one of the drive wheels would otherwise be slipping. It makes less difference during actual driving. Traction control braking is much more important -- and much more common, hence much cheaper. And probably already present in your Camry. And good tires make a huge difference. (Top-of-the-line all-season tires are adequate, but many folks do switch to snow tires during the winter and switch back again in summer.) Tires -- even if you get a second set of rims to put them on -- are a heck of a lot cheaper than changing cars. Beyond everything else, driving in winter conditions is a matter of careful practice. Most of the time, simply avoiding making sudden starts/stops/turns and not driving like you're in a video arcade ("gotta pass three more or I lose my game!") will do the job. You'll learn the feel of how the car responds. Some basic instruction in how to handle a skid will prepare you for the relatively rare times when that happens. (Some folks actively learn by practicing skids in a nice open parking lot if they can find one; I never have but it makes some sense.) If in doubt about the driving conditions, wait until the roads have been plowed and salted. Remember, teenagers learn to do this, and they're certifiably non compos mentis; if they can do it, you can do it. Before buying a new car, determine whether you really need one! |
How long should I keep my bills? | I'd imagine you want to keep the utility bills around to dispute any historical billing errors or anomalies for perhaps 6 months to a year. Beyond that, you always have the financial records of making the payments -- namely, your bank statements. So what benefit is there in keeping the paper receipts for utility payments around for longer than that? I say shred them, with extreme prejudice -- while wearing black Chuck Norris style. |
Formula to determine readiness to retire based on age, networth and annual expense | The standard interpretation of "can I afford to retire" is "can I live on just the income from my savings, never touching the principal." To estimate that, you need to make reasonable guesses about the return you expect, the rate of inflation, your real costs -- remember to allow for medical emergencies, major house repairs, and the like when determining you average needs, not to mention taxes if this isn't all tax-sheltered! -- and then build in a safety factor. You said liquid assets, and that's correct; you don't want to be forced into a reverse mortgage by anything short of a disaster. An old rule of thumb was that -- properly invested -- you could expect about 4% real return after subtracting inflation. That may or may not still be correct, but it makes an easy starting point. If we take your number of $50k/year (today's dollars) and assume you've included all the tax and contingency amounts, that means your nest egg needs to be 50k/.04, or $1,250,000. (I'm figuring I need at least $1.8M liquid assets to retire.) The $1.5M you gave would, under this set of assumptions, allow drawing up to $60k/year, which gives you some hope that your holdings would mot just maintain themselves but grow, giving you additional buffer against emergencies later. Having said that: some folks have suggested that, given what the market is currently doing, it might be wiser to assume smaller average returns. Or you may make different assumptions about inflation, or want a larger emergency buffer. That's all judgement calls, based on your best guesses about the economy in general and your investments in particular. A good financial advisor (not a broker) will have access to better tools for exploring this, using techniques like monte-carlo simulation to try to estimate both best and worst cases, and can thus give you a somewhat more reliable answer than this rule-of-thumb approach. But that's still probabilities, not promises. Another way to test it: Find out how much an insurance company would want as the price of an open-ended inflation-adjusted $50k-a-year annuity. Making these estimates is their business; if they can't make a good guess, nobody can. Admittedly they're also factoring the odds of your dying early into the mix, but on the other hand they're also planning on making a profit from the deal, so their number might be a reasonable one for "self-insuring" too. Or might not. Or you might decide that it's worth buying an annuity for part or all of this, paying them to absorb the risk. In the end, "ya pays yer money and takes yer cherce." |
mortgage vs car loan vs invest extra cash? | First off, the "mortgage interest is tax deductible" argument is a red herring. What "tax deductible" sounds like it means is "if I pay $100 on X, I can pay $100 less on my taxes". If that were true, you're still not saving any money overall, so it doesn't help you any in the immediate term, and it's actually a bad idea long-term because that mortgage interest compounds, but you don't pay compound interest on taxes. But that's not what it actually means. What it actually means is that you can deduct some percentage of that $100, (usually not all of it,) from your gross income, (not from the final amount of tax you pay,) which reduces your top-line "income subject to taxation." Unless you're just barely over the line of a tax bracket, spending money on something "tax deductible" is rarely a net gain. Having gotten that out of the way, pay down the mortgage first. It's a very simple matter of numbers: Anything you pay on a long-term debt is money you would have paid anyway, but it eliminates interest on that payment (and all compoundings thereof) from the equation for the entire duration of the loan. So--ignoring for the moment the possibility of extreme situations like default and bank failure--you can consider it to be essentially a guaranteed, risk-free investment that will pay you dividends equal to the rate of interest on the loan, for the entire duration of the loan. The mortgage is 3.9%, presumably for 30 years. The car loan is 1.9% for a lot less than that. Not sure how long; let's just pull a number out of a hat and say "5 years." If you were given the option to invest at a guaranteed 3.9% for 30 years, or a guaranteed 1.9% for 5 years, which would you choose? It's a no-brainer when you look at it that way. |
What would happen if the Euro currency went bust? | Krugman (Nobel prize in Economy) has just said: Greek euro exit, very possibly next month. Huge withdrawals from Spanish and Italian banks, as depositors try to move their money to Germany. 3a. Maybe, just possibly, de facto controls, with banks forbidden to transfer deposits out of country and limits on cash withdrawals. 3b. Alternatively, or maybe in tandem, huge draws on ECB credit to keep the banks from collapsing. 4a. Germany has a choice. Accept huge indirect public claims on Italy and Spain, plus a drastic revision of strategy — basically, to give Spain in particular any hope you need both guarantees on its debt to hold borrowing costs down and a higher eurozone inflation target to make relative price adjustment possible; or: 4b. End of the euro. And we’re talking about months, not years, for this to play out. http://krugman.blogs.nytimes.com/2012/05/13/eurodammerung-2/ |
How did I end up with a fraction of a share? | It's not that uncommon but it doesn't usually come from standard purchases. Investopedia explains: Definition of 'Fractional Share' A share of equity that is less than one full share. Fractional shares usually come about from stock splits, dividend reinvestment plans (DRIPs) and similar corporate actions. Normally, fractional shares cannot be acquired from the market. However, there is at least one investment firm that markets itself as offering fractional shares. Fractional investing makes more sense, since an investor's perspective is to invest a certain number of dollars into equity, not to buy a certain number of shares that closely mirror the dollar commitment. |
List of Investments from safest to riskiest? | I think your premise is slightly flawed. Every investment can add or reduce risk, depending on how it's used. If your ordering above is intended to represent the probability you will lose your principal, then it's roughly right, with caveats. If you buy a long-term government bond and interest rates increase while you're holding it, its value will decrease on the secondary markets. If you need/want to sell it before maturity, you may not recover your principal, and if you hold it, you will probably be subject to erosion of value due to inflation (inflation and interest rates are correlated). Over the short-term, the stock market can be very volatile, and you can suffer large paper losses. But over the long-term (decades), the stock market has beaten inflation. But this is true in aggregate, so, if you want to decrease equity risk, you need to invest in a very diversified portfolio (index mutual funds) and hold the portfolio for a long time. With a strategy like this, the stock market is not that risky over time. Derivatives, if used for their original purpose, can actually reduce volatility (and therefore risk) by reducing both the upside and downside of your other investments. For example, if you sell covered calls on your equity investments, you get an income stream as long as the underlying equities have a value that stays below the strike price. The cost to you is that you are forced to sell the equity at the strike price if its value increases above that. The person on the other side of that transaction loses the price of the call if the equity price doesn't go up, but gets a benefit if it does. In the commodity markets, Southwest Airlines used derivatives (options to buy at a fixed price in the future) on fuel to hedge against increases in fuel prices for years. This way, they added predictability to their cost structure and were able to beat the competition when fuel prices rose. Even had fuel prices dropped to zero, their exposure was limited to the pre-negotiated price of the fuel, which they'd already planned for. On the other hand, if you start doing things like selling uncovered calls, you expose yourself to potentially infinite losses, since there are no caps on how high the price of a stock can go. So it's not possible to say that derivatives as a class of investment are risky per se, because they can be used to reduce risk. I would take hedge funds, as a class, out of your list. You can't generally invest in those unless you have quite a lot of money, and they use strategies that vary widely, many of which are quite risky. |
Why is day trading considered riskier than long-term trading? | It's important to distinguish between speculation and investing. Buying something because you hope to make money on market fluctuations is speculation. Buying something and expecting to make money because your money is providing actual economic value is investing. If Person A buys 100 shares of a stock with the intent of selling them in a few hours, and Person B buys 100 shares of the same stock with the intent of holding on to it for a year, then obviously at that point they both have the same risk. The difference comes over the course of the year. First, Person B is going to be making money from the economic value the company provides over the whole year, while the only way Person A can make money is from market fluctuation (the economic value the company provides over the course of an hour is unlikely to be significant). Person B is exposed to the risk of buying the stock, but that's counterbalanced by the profit from holding the stock for a year, while Person A just has the risk. Second, if Person A is buying a new stock every hour, then they're going to have thousands of transactions. So even though Person B assumed just as much risk as Person A for that one transaction, Person A has more total risk. |
Will a credit card issuer cancel an account if it never incurs interest? | I've got a card that I've had for about 25 years now. The only time they charged me interest I showed it was their goof (the automatic payment failed because of their mistake) and they haven't cancelled it. No annual fee, a bit of cash back. The only cards I've ever had an issuer close are ones I didn't use. |
Can the risk of investing in an asset be different for different investors? | The risk of the particular share moving up or down is same for both. however in terms of mitigating the risk, Investor A is conservative on upside, ie will exit if he gets 10%, while is ready to take unlimited downside ... his belief is that things will not go worse .. While Investor B is wants to make at least 10% less than peak value and in general is less risk averse as he will sell his position the moment the price hits 10% less than max [peak value] So it more like how do you mitigate a risk, as to which one is wise depends on your belief and the loss appetite |
How to determine contractor hourly rate and employee salary equivalents? | Here are a few points to consider: Taxes: As a consultant, you will be responsible for the employer portion of the Social Security and Medicare taxes, and you might have to pay for state unemployment insurance and state disability insurance, as well. Office expenses: As a consultant, you may be required to buy your own laptop, pay for your own software licenses and buy other office-related supplies. For higher-end services, you may be setting up a complete office and even hire your own secretary and other support staff. Benefits: As a consultant, you will be responsible for your own health insurance, retirement plan and other benefits that an employer would ordinarily provide. Education: Your employer will likely pay for books and magazine subscriptions and send you to seminars, in order to keep your skills current; your client won't. Liability: Consultants face certain liabilities that employees don't, and have to factor the cost of insuring against those risks into their rate. Let's say you're a software developer, and your faulty code causes a nuclear plant's reactor core to overheat and melt down. As an employee, you'll get fired. As a consultant, you will get sued. Even consultants in low-risk fields can easily shell out thousands of dollars per year for a basic general liability policy. Sales & marketing: Don't forget that when your contract ends, you will have expenses associated with finding your next client, including the opportunity cost of not getting paid for your services during that time. All these factors contribute to your overhead, which you have to roll into your consulting rate. You should also add a margin of profit -- after all, as you're in business for yourself, you should be compensated for taking this entrepreneurial risk. If you're looking for a quick over-the-thumb rule, you can figure that your equivalent consulting rate should be about twice what you would be paid hourly as an employee. Assuming you work 2,000 hours a year, if you would receive a $100,000 salary, your hourly rate should be $100. Of course, this is only a very rough guideline. Ultimately, your rate will mostly be influenced by how established you are and how much your services are in demand. |
Does it make sense to buy an index ETF (e.g. S&P 500) when the index is at an all-time high? | Being long the S&P Index ETF you can expect to make money. The index itself will never "crash" because the individual stocks in it are simply removed when they begin performing badly. This is not to say that the S&P Index won't lose 80% of its value in an instant (or over a few trading sessions if circuit breakers are considered), but even in the 2008 correction, the S&P still traded far above book value. With this in mind, you have to realize, that despite common sentiment, the indexes are hardly representative of "the market". They are just a derivative, and as you might be aware, derivatives can enable financial tricks far removed from reality. Regarding index funds, if a small group of people decide that 401k's are performing badly, then they will simply rebalance the components of the indexes with companies that are doing well. The headline will be "S&P makes ANOTHER record high today" So although panic selling can disrupt the order book, especially during periods of illiquidity, with the current structure "the stock market" being based off of three composite indexes, can never crash, because there will always exist a company that is not exposed to broad market fluctuations and will be performing better by fundamentals and share price. Similarly, you collect dividends from the index ETFs. You can also sell covered calls on your holdings. The CBOE has a chart through the 2008 crisis showing your theoretical profit and loss if you sold calls 2 standard deviations out of the money, at every monthly interval. If you are going to be holding an index ETF for a long time, then you shouldn't be concerned about its share price at all, since the returns would be pretty abysmal either way, but it should suffice for hedging inflation. |
Why is the total 401(k) contribution limit (employee + employer) so high? | Because 401k's are also used by self employed. A person who has a schedule C profitable income can open a 401k and "match" in whatever ratio he wants, up to 25% of the net profits or the limits you stated. This allows self-employed to defer more income taxes to the future. Why only self-employed? Good question. Ask your congressman. My explanation would be that since they're self-employed they're in much more danger of not having income, especially later in life, if their business go south. Thus they need a bigger cushion than an average W2 employee who can just find another job. |
What is the best and most optimal way to use margin | This essentially depends on how you prefer to measure your performance. I will just give a few simple examples to start. Let me know if you're looking for something more. If you just want to achieve maximum $ return, then you should always use maximum margin, so long as your expected return (%) is higher than your cost to borrow. For example, suppose you can use margin to double your investment, and the cost to borrow is 7%. If you're investing in some security that expects to return 10%, then your annual return on an account opened with $100 is: (2 * $100 * 10% - $100 * 7%) / $100 = 13% So, you see the expected return, amount of leverage, and cost to borrow will all factor in to your return. Suppose you want to also account for the additional risk you're incurring. Then you could use the Sharpe Ratio. For example, suppose the same security has volatility of 20%, and the risk free rate is 5%. Then the Sharpe Ratio without leverage is: (10% - 5%) / 20% = 0.25 The Sharpe Ratio using maximum margin is then: (13% - 5%) / (2 * 20%) = 0.2, where the 13% comes from the above formula. So on a risk-adjusted basis, it's better not to utilize margin in this particular example. |
Can I take money from my employee stock and put it towards another stock? | The question is for your HR department, or administrator of the plan. How long must you hold the employee shares before you are permitted to sell? Loyalty to your company is one thing, but after a time, you will be too heavily invested in one company, and you need to diversify out. One can cite any number they wish, 5%, 10%. All I know is that when Enron blew up, it only added insult to injury that not only did these people lose their job, they lost a huge chunk of their savings as well. |
Can extra mortgage payments be made to lower the monthly payment amount? | That's tricky. Typically you lock in the minimum monthly payment when you close the loan. You can pay more but not less. Options: |
Pay team mates out of revenues on my name | Note: This is not professional tax advice. If you think you need professional tax advice, find a licensed professional in your local area. What are the expected earnings/year? US$100? US$1,000? US$100,000? I would say if this is for US$1,000 or less that registering an EIN, and consulting a CPA to file a Partnership Tax return is not going to be a profitable exercise.... all the earnings, perhaps more, will go to paying someone to do (or help do) the tax filings. The simplest taxes are for a business that you completely own. Corporations and Partnerships involve additional forms and get more and more and complex, and even more so when it involves foreign participation. Partnerships are often not formal partnerships but can be more easily thought of as independent businesses that each participants owns, that are simply doing some business with each other. Schedule C is the IRS form you fill out for any businesses that you own. On schedule C you would list the income from advertising. Also on schedule C there is a place for all of the business expenses, such as ads that you buy, a server that you rent, supplies, employees, and independent contractors. Amounts paid to an independent contractor certainly need not be based on hours, but could be a fixed fee, or based on profit earned. Finally, if you pay anyone in the USA over a certain amount, you have to tell the IRS about that with a Form 1099 at the beginning of the next year, so they can fill out their taxes. BUT.... according to an article in International Tax Blog you might not have to file Form 1099 with the IRS for foreign contractors if they are not US persons (not a US citizen or a resident visa holder). |
Is it a good practice to keep salary account and savings account separate? | I can't immediately think of a reason to keep your paycheck and spending account separate, unless it be because you want to keep your savings in a money market or savings account and you deposit your paycheck into a checking account. However, I do have one reason from my experience to keep the bulk of your savings away from accounts that you transfer stuff out of. I used to keep all my cash savings in an account from which I transferred money into my brokerage account (my paycheck was also deposited there). A couple of years back a state that I haven't lived in since I was a child took $40,000 out of my account. The broker mistakenly told the state I lived there and the state made some mistakes about how much tax I would owe. Without either one telling me, the state helped themselves to my checking account to cover the bill. When I called, both acknowledged that they were wrong, but it still took a long time (many months) and lots of letters and threats (I was close to paying a lawyer) before they returned my money. It was worse because this was my savings for a down payment on a home and having it taken and not returned affected my ability to buy the house I wanted. If I hadn't had my money in that account, they would have tried to garnish my wages, and would have immediately stopped their attempt once they found out they were in the wrong. Now I keep cash savings in an account that I never pay taxes out of and do not use to transfer money directly to any broker or anyone who might give my account number to an inept government. |
How prudent would it be to invest (stocks/equity) in businesses that are based on Cash transactions? | If they're hiding their profits from the government, what makes you think they wouldn't hide their profits from their shareholders? |
Stock market vs. baseball card trading analogy | The Bobs tend to show up at the top of bubbles, then disappear soon after. For example, your next door neighbor who talks about Oracle in 1999, even though he doesn't know what Oracle does for a living. I don't think the Bobs' assets represent a large chunk of the market's value. A better analogy would be a spectrum of characters, each with different time horizons. Everyone from the high-frequency trader to the investor who buys and holds until death. |
I started some small businesses but need help figuring out taxes. Should I hire a CPA? | The only professional designations for people allowed to provide tax advice are Attorney, EA or CPA. Attorney and CPA must be licensed in the State they practice in, EA's are licensed by the Federal government. Tax preparers are not allowed to provide any tax advice, unless they hold any of these designations. They are only allowed to prepare your tax forms for you. So no, tax preparer is not a solution. Yes, you need to talk to a tax adviser (EA/CPA licensed in your State, you probably don't need a tax attorney). You should do that before you start earning money - so that you can plan properly and understand what expenses you can incur and how they're handled with regards to your future income tax payments. You might also want to consider a bookkeeping service (many EA/CPA offices offer the bookkeeping as well). But that you can also do yourself, not all that complicated if you don't have tons of transactions and accounts. |
Finding a good small business CPA? | Check your local better business bureau. They can tell you who is in business, who's bonded, and who has had a lot of complaints levied against them for shoddy practices. |
Yahoo Finance - Data inconsistencies between historic and current data | You might have better luck using Quandl as a source. They have free databases, you just need to register to access them. They also have good api's, easier to use than the yahoo api's Their WIKI database of stock prices is curated and things like this are fixed (www.quandl.com/WIKI ), but I'm not sure that covers the London stock exchange. They do, however, have other databases that cover the London stock exchange. |
Helping girlfriend accelerate credit score improvement | In the short term what does it matter if she has poor credit? Just let it ride and focus on the important things. In the long term the most important part is "completing the divorce". That is separating all parts of her financial life from her ex-husband. This might mean she takes possession of the house and has him off the loan, or she gets off the loan and this may mean forcing a sale. If there are children or alimony involved she needs to build her income to the point that paying child support or alimony does not impact her budget. If she is on the receiving end, then she should budget so those items are bonus money and not counted on. She is flat broke and does not need to worry about borrowing money at this juncture. In this case a low credit score is a blessing. |
What actions should I be taking to establish good credit scores for my children? | When I was in high school, my mom got me a joint credit account with both of our names on it for exactly this reason. Well, that, and to have in case I found myself in some sort emergency, but it was mostly to build credit history. That account is still on my credit report (it's my oldest by a few years), and looking at the age of it, I was 17 at the time we opened it (and I think my younger sister got one around the same time). In my case, I now have an "excellent" credit score and my weakest area is the age of my accounts, so having that old account definitely helps me. I don't think I've really taken advantage of it, and I'm not sure if I'd really be worse off if my mom hadn't done that, but it certainly hasn't hurt. And I plan on buying a house in the next year or so, so having anything to bump up the credit score seems like a good thing. |
Will I, as a CS student, be allowed to take loans for paying the fees of Ivy Leagues? | I would be surprised if a bank cared about an undergraduate major. Usually, such things are only important if it is a professional degree, like a law degree or medical degree. The big issue is that if you are not a US citizen, a US bank would be unlikely to make an unsecured loan because you could just return to your country and renege on the loan and they would have no way to collect. Therefore, a bank in your own country might be more logical. If you get accepted by a top Ivy school, they all have financial policies that will allow you to attend regardless of how rich or poor you are, so if you are applying to a top school (Harvard, Princeton, MIT, Stanford, Yale) and get accepted, they will fully finance your attendance. The only exception is if (A) they find out you lied about something, or (B) your parents/family are wealthy and they refuse to pay anything. As long as neither of these two things is true, all of the schools listed GUARANTEE they will provide sufficient financial aid. Princeton even has a no-loan policy, which means not only will they fund your attendance, they will do so without you having to take on any loans. |
Quarterly dividends to monthly dividends | Technically you should take the quarterly dividend yield as a fraction, add one, take the cube root, and subtract one (and then multiple by the stock price, if you want a dollar amount per share rather than a rate). This is to account for the fact that you could have re-invested the monthly dividends and earned dividends on that reinvestment. However, the difference between this and just dividing by three is going to be negligible over the range of dividend rates that are realistically paid out by ordinary stocks. |
Why does a stock price drop as soon an I purchase several thousand shares at market price? | Unless you are buying millions of dollars worth of a stock at a time, your transaction is a drop in the bucket, unlikely to have any noticable effect on the stock price. As Ian says, it's more likely that you are just remembering the times when the price dropped after you bought. If you keep careful track, I suspect you will find that the price goes up more often than it goes down, or at least, that the stocks you buy go up as often as the average stock on the market goes up. If you actually kept records and found that's not true, the most likely explanation is bad luck. Or that someone has placed a voodoo curse on you. I suppose one could imagine other scenarios. Like, if you regularly buy stock based on recommendations by well-known market pundits, you could expect to see a temporary increase in price as thousands or millions of people who hear this recommendation rush to buy, and then a few days or weeks later people move on to the next recommendation, the market setttles down, and the price reverts to a more normal level. In that case, if you're on the tail end of the buying rush, you could end up paying a premium. I'm just speculating here, I haven't done a study to find if this actually happens, but it sounds plausible to me. |
Can I sell my home with owner financing when I still have an FHA loan? (and should I?) | You have to pay off the balance on the loan first. Also, FHA loans are not supposed to be used for rental properties. I don't know how you living there for a number of years changes things or how often is that rule enforced but you might need to refinance even if you rent it out. |
Investment property refinance following a low appraisal? | If I was you I would not borrow from my 401K and shred the credit card offer. Both are very risky ventures, and you are already in a situation that is risky. Doing either will increase your risk significantly. I'd also consider selling the rental house. You seem to be cutting very close on the numbers if you can't raise 17K in cash to refi the house. What happens if you need a roof on the rental, and an HVAC in your current home? My assumption is that you will not sell the home, okay I get it. I would recommend either giving your tenant a better deal then the have now, or something very similar. Having a good tenant is an asset. |
When's the best time to sell the stock of a company that is being acquired/sold? | This is but one opinion. Seek others before your act. "When someone puts a million dollars in your hand, close your hand." A 50% gain in two weeks is huge. |
What traditionally happens to bonds when the stock market crashes? | It depends. Very generally when yields go up stocks go down and when yields go down stocks go up (as has been happening lately). If we look at the yield of the 10 year bond it reflects future expectations for interest rates. If the rate today is very low but expectations are that the short term rates will go up that would be reflected in a higher yield simply because no one would buy the longer term bond if they could simply wait out and get a better return on shoter term investments. If expectations are that the rate is going down you get what's called an inverted yield curve. The inverted yield curve is usually a sign of economic trouble ahead. Yields are also influenced by inflation expectations as @rhaskett is alluding in his answer. So. If the stock market crashes because the economy is doing poorly and if interest rates are relatively high then people would expect the rates to go down and therefore bonds will go up! However, if there's rampant inflation and the rates are going up we can expect stocks and bonds to move in opposite directions. Another interpretation of that is that one would expect stock prices to track inflation pretty well because company revenue is going to go up with inflation. If we're just talking about a bump in the road correction in a healthy economy I wouldn't expect that to have much of an immediate effect though bonds might go down a little bit in the short term but possibly even more in the long term as interest rates eventually head higher. Another scenario is a very low interest rate environment (as today) with a stock market crash and not a lot of room for yields to go further down. Both stocks and bonds are influenced by current interest rates, interest rate expectations, current inflation, inflation expectations and stock price expectation. Add noise and stir. |
Are limit orders safe? | Limit orders are generally safer than market orders. Market orders take whatever most-favorable price is being offered. This can be especially dangerous in highly volatile stocks which have a significant spread between the bid and ask. That being said, you want to be very careful that you enter the price you intend into a limit order. It is better to be a bit slower at entering your orders than it is to make a terrible mistake like the one you mention in your question. |
How to buy stock on the Toronto Stock Exchange? | While most all Canadian brokers allow us access to all the US stocks, the reverse is not true. But some US brokers DO allow trading on foreign exchanges. (e.g. Interactive Brokers at which I have an account). You have to look and be prepared to switch brokers. Americans cannot use Canadian brokers (and vice versa). Trading of shares happens where-ever two people get together - hence the pink sheets. These work well for Americans who want to buy-sell foreign stocks using USD without the hassle of FX conversions. You get the same economic exposure as if the actual stock were bought. But the exchanges are barely policed, and liquidity can dry up, and FX moves are not necessarily arbitraged away by 'the market'. You don't have the same safety as ADRs because there is no bank holding any stash of 'actual' stocks to backstop those traded on the pink sheets. |
help with how a loan repayment is calculated | It appears the interest is not compounded daily. Each period of interest has the loan amount calculated on the "capital" remaining on the start of period, for each day in the period. The Excel finance functions don't handle irregular periods that well, but I can reconstruct the interest calculations: |
Buying my first car out of college | Generally speaking, buying a fancy new car out of college is dumb. Buying a 3 year old flashy car with a 60 month loan is going to eat up your income, and when the thing starts breaking down, you'll get sick of buying $900 mufflers and $1,000 taillights pretty quickly. Buy a car that nobody wants for cheap and save up some money. Then buy yourself your dream car. Edit based on question update. You're posting to a Q&A site about money, and you're asking if spending over $30k (don't forget taxes) on a luxury car when you're making $60k is a good idea. You have car fever, and you're trying to sell this transaction as a good deal from a financial POV. At the end of the day, there is no scenario where buying an expensive car is a good financial transaction. For example, since you're planning on driving too many miles for a lease to make sense, the certified pre-owned warranty is a non-factor, because you'll have no warranty when the car breaks down in 4 years. The only reason CPO programs exist is to boost residual values to make leases more attractive -- luxury car makers are in the car leasing (as opposed to selling) business. |
International (ex-US) ETFs with low exposure to financial sector? | If you are looking for a European financials ETF to short, you could take a look at the iShares EURO STOXX Banks, which is traded on a a few German stock exchanges (Frankfurt etc.): iShares Euro Stoxx Banks Website You find its current holdings here: holdings. |
Does a US LLC owned by a non-resident alien have to pay US taxes if it operates exclusively online? | As you said, in the US LLC is (usually, unless you elect otherwise) not a separate tax entity. As such, the question "Does a US LLC owned by a non-resident alien have to pay US taxes" has no meaning. A US LLC, regardless of who owns it, doesn't pay US income taxes. States are different. Some States do tax LLCs (for example, California), so if you intend to operate in such a State - you need to verify that the extra tax the LLC would pay on top of your personal tax is worth it for you. As I mentioned in the comment, you need to check your decision making very carefully. LLC you create in the US may or may not be recognized as a separate legal/tax entity in your home country. So while you neither gain nor lose anything in the US (since the LLC is transparent tax wise), you may get hit by extra taxes at home if they see the LLC as a non-transparent corporate entity. Also, keep in mind that the liability protection by the LLC usually doesn't cover your own misdeeds. So if you sell products of your own work, the LLC may end up being completely worthless and will only add complexity to your business. I suggest you check all these with a reputable attorney. Not one whose business is to set up LLCs, these are going to tell you anything you want to hear as long as you hire them to do their thing. Talk to one who will not benefit from your decision either way and can provide an unbiased advice. |
Why does FlagStar Bank harass you about payments within grace period? | They call you because that is their business rules. They want their money, so their system calls you starting on the 5th. Now you have to decide what you should do to stop this. The most obvious is to move the payment date to before the 5th. Yes that does put you at risk if the tenant is late. But since it is only one of the 4 properties you own, it shouldn't be that big of a risk. |
My university has tranfered me money by mistake, and wants me to transfer it back | Confirming whether the payment was an error The simplest method is to confirm manually with the University whether the payment was a mistake and satisfy that between yourselves. If you're concerned it's fraudulant, I recommend calling the University finance office on a phone number you find on their website, or call one of the people you know. Reversing the payment To formally reverse the payment, I'd check your Product Disclosure Statement on your account with the bank. There's almost always a fee involved where a payment is reversed. It's probably easiest to just issue the payment back to the university to an agreed BSB/Account Number. |
Are there any banks with a command-line style user interface? | I think I get your question, but your wording is throwing a lot of us off. If what you want is a clean, effective and efficient interface over port 80, then USAA.com has done some great usability work. Additionally, they have really done some pioneering work with web services and mobile applications. On top of that, they have excellent document archiving. I can navigate their site more quickly than any of the other I've used. |
I spend too much money. How can I get on the path to a frugal lifestyle? | Use software that calculates your net worth and track it over time. I track my personal finances in Mint, and I love checking my net worth every week. It's turned into a kind of competition with myself... It's like keeping track of how fast you run a 5k, or how many pounds of weight you've lost. It helps you determine if you are making progress, and if you, it's positive reinforcement that you are doing the right things. |
Books, Videos, Tutorials to learn about different investment options in the financial domain | Just by chance I recently encountered this link - Do It Yourself MFE, which describes an attempt to self-educate to the level of Master of Financial Engineering. It lists books, online courses, etc. which I think may be interesting for you too. |
What do I need as documentation in order to pay taxes in the Netherlands? | The Dutch tax office is pretty decent, although slightly overburdened. Don't expect a lot of help, but they're not generally known for making a lot of problems. Digital copies are fine, for instance. They will send you your first VAT notice. You probably would have known if your company would have been incorporated, so I'll assume you're just trading as a natural person. That means you still have to file VAT returns, but the business income is just filed annually as "other income". For the VAT part, you'll need to invoice your customers. Keep a copy of those invoices for your own bookkeeping, and keep track of the matching customer payments. Together these form the chief evidence of your VAT obligation. You also have a VAT deduction from your purchases (it's a Value-Added Tax, after all). Again, keep receipts. The usual VAT period is 3 months, so you'd pay VAT 4 times a year. But if you would pay less than 1883 euro, you might not need to pay at all and just need to file annually The income part is easy with the receipts you had for VAT purposes anyway. Dutch Tax Office, VAT, in English |
I can make a budget, but how can I get myself to consistently follow my budget? | Do a monthly budget, unique to each month, before the month begins, spend all of your money on paper. Use envelopes to help you keep track of how much you have left for things you buy throughout the month. Have separate envelopes for things like groceries, restaurants, clothing, entertainment. Put the amount of money for each category in cash in the envelope. Only spend the money out of the correct envelope and don't mix and mingle between envelopes. Pay in cash, with real money. Don't use credit or debit cards, it's proven you spend more when you are not paying with cash. |
Can the risk of investing in an asset be different for different investors? | Capping the upside while playing with unlimited downside is a less disciplined investment strategy vis-a-vis a stop-loss driven strategy. Whether it is less risky or high risky also depends on the fluctuations of the stock and not just long-term movements. For example, your stop losses might get triggered because of a momentary sharp decline in stock price due to a large volume transaction (esp more so in small-cap stocks). Although, the stock price might recover from the sudden price drop pretty soon causing a seemingly preventable loss. That being said, playing with stop losses is always considered a safer strategy. It may not increase your profits but can certainly cap your losses. |
Outstanding car bill, and I am primary but have not driven it for 2 years | What can you do? Pay the loan or face the debt collectors. The finance company don't care who now keeps the car, or who drives it. There's money outstanding on the loan, and your signature on the loan form. That's why co-signing a loan for someone else so often ends in tears. |
How does UpWork allow US companies to make payments outside of the US? | Permanent employees are the distinct opposite of contractors. Upwork can easily have business entities (limited liability company equivalents) in multiple countries, and it can make payments between them. Or they can merely use existing payment infrastructure (paypal, amazon) to accomplish the same thing. Their corporate structure is a red herring and most likely unrelated to what they've accomplished. |
Why invest for the long-term rather than buy and sell for quick, big gains? | There are people (well, companies) who make money doing roughly what you describe, but not exactly. They're called "market makers". Their value for X% is somewhere on the scale of 1% (that is to say: a scale at which almost everything is "volatile"), but they use leverage, shorting and hedging to complicate things to the point where it's nothing like a simple as making a 1% profit every time they trade. Their actions tend to reduce volatility and increase liquidity. The reason you can't do this is that you don't have enough capital to do what market makers do, and you don't receive any advantages that the exchange might offer to official market makers in return for them contracting to always make both buy bids and sell offers (at different prices, hence the "bid-offer spread"). They have to be able to cover large short-term losses on individual stocks, but when the stock doesn't move too much they do make profits from the spread. The reason you can't just buy a lot of volatile stocks "assuming I don't make too many poor choices", is that the reason the stocks are volatile is that nobody knows which ones are the good choices and which ones are the poor choices. So if you buy volatile stocks then you will buy a bunch of losers, so what's your strategy for ensuring there aren't "too many"? Supposing that you're going to hold 10 stocks, with 10% of your money in each, what do you do the first time all 10 of them fall the day after you bought them? Or maybe not all 10, but suppose 75% of your holdings give no impression that they're going to hit your target any time soon. Do you just sit tight and stop trading until one of them hits your X% target (in which case you start to look a little bit more like a long-term investor after all), or are you tempted to change your strategy as the months and years roll by? If you will eventually sell things at a loss to make cash available for new trades, then you cannot assess your strategy "as if" you always make an X% gain, since that isn't true. If you don't ever sell at a loss, then you'll inevitably sometimes have no cash to trade with through picking losers. The big practical question then is when that state of affairs persists, for how long, and whether it's in force when you want to spend the money on something other than investing. So sure, if you used a short-term time machine to know in advance which volatile stocks are the good ones today, then it would be more profitable to day-trade those than it would be to invest for the long term. Investing on the assumption that you'll only pick short-term winners is basically the same as assuming you have that time machine ;-) There are various strategies for analysing the market and trying to find ways to more modestly do what market makers do, which is to take profit from the inherent volatility of the market. The simple strategy you describe isn't complete and cannot be assessed since you don't say how to decide what to buy, but the selling strategy "sell as soon as I've made X% but not otherwise" can certainly be improved. If you're keen you can test a give strategy for yourself using historical share price data (or current share price data: run an imaginary account and see how you're doing in 12 months). When using historical data you have to be realistic about how you'd choose what stocks to buy each day, or else you're just cheating at solitaire. When using current data you have to beware that there might not be a major market slump in the next 12 months, in which case you won't know how your strategy performs under conditions that it inevitably will meet eventually if you run it for real. You also have to be sure in either case to factor in the transaction costs you'd be paying, and the fact that you're buying at the offer price and selling at the bid price, you can't trade at the headline mid-market price. Finally, you have to consider that to do pure technical analysis as an individual, you are in effect competing against a bank that's camped on top of the exchange to get fastest possible access to trade, it has a supercomputer and a team of whizz-kids, and it's trying to find and extract the same opportunities you are. This is not to say the plucky underdog can't do well, but there are systematic reasons not to just assume you will. So folks investing for their retirement generally prefer a low-risk strategy that plays the averages and settles for taking long-term trends. |
Ways to save for child's college education where one need not commit to set contributions? [duplicate] | In my opinion, whichever plan or commodity system you use is just supplemental to a very simple thing: go to your bank's online account, set up a regular transfer (monthly in my case, maybe weekly for you depending on when you get your salary in your country/state) to a savings' account in your kid's name with a decent rate, and just watch it grow. Then adjust to salary fluctuations if needed. Also, prefer a tax-free savings account. Been working fine for me for my oldest who's now 4 yo. Started by saving only a little each month and increased as our financial pressure eased up a bit. For his sister, I already set up a similar thing and I will "equalize" both accounts with additional payments over time (Hmm, actually, maybe that's not fair and they just need to be "equalized" in that they both have the same amount for a given age... but that's another question). Another option, which I set up for my oldest but not for his sister was a child trust fund with an initial payment. We moved countries and I don't find a plan that I find similarly attractive here, and the other one is locked until 18 yo. But, as with all portfolios, it comes with a risk. Note that I don't live in the U.S. in the land of crazy college fees. Though I've studied myself in countries where fees were already a drag (and I'm being polite) for various fields (IT and music studies, anyone?), I have to say when I see fees for the big league universities and colleges in the U.S. I am kind of shocked. Doable, but good luck with that and with your loans. |
How to calculate ownership for property with a partner | I can't quite follow your question, so I'm proceeding under the following assumptions: - You paid £31,000 - Your partner paid £4,242 - You have at least one mortgage, which you both pay equally. If the relationship terminates, sell the property. You are reimbursed £31,000 and your partner is reimbursed £4,242. Any remaining proceeds from the sale are split 50-50. If the result is a net loss (i.e. you are underwater on your mortgage), you split the debt 50-50. If you are not both paying the same toward the mortgage, I'd split the profit or loss according to how much you each pay toward the mortgage. Of course, this is not the only possible way you can split things up. You can use pretty much any way you both think is fair. For example, maybe you should get more benefits from a profit because you contributed more up-front. The key thing, though, is that you must both agree in writing, in advance. This is reasonable; this is what I did, for example. Note that if the relationship ends, one or the other of you may wish to keep the property. I'd suggest including a clause in your written agreement simply disallowing this; specify criteria to force a sale. But I know lots of people are happy to allow this. They treat that situation as a forced sale from both people to one person. For example, if your partner chooses to stay in the house, he or she must buy the property from you at prevailing market rates. |
Double-entry bookkeeping: How to account for non-monetary taxable benefits received from employer? | I can say that I got X dollars from an account like "Income:Benefits"... but where do I credit that money to? "Expenses:Groceries" Yes doesn't feel right, since I never actually spent that money on food, You did, didn't you? You got food. I'm guessing there's an established convention for this already? Doubt it. Established conventions in accounting are for businesses, and more specifically - public companies. So you can find a GAAP, or IFRS guidelines on how to book benefits (hint: salary expense), but it is not something you may find useful in your own household accounting. Do what is most convenient for you. Since it is a double-booking system - you need to have an account on the other side. Expenses:Groceries doesn't feel right? Add Expenses:Groceries:Benefits or Expenses:Benefits or whatever. When you do your expense and cash-flow reports - you can exclude both the income and the expense benefits accounts if you track them separately, so that they don't affect your tracking of the "real" expenses. |
How can Schwab afford to refund all my ATM fees? | Schwab is a highly diversified operation and has a multitude of revenue streams. Schwab obviously thinks it can make more off you than you will cost in ATM fees and it's probably safe to assume most Schwab clients use more services than the ATM card. It's not worthwhile to discuss the accounting of ATM/Debit/Credit card fee norms because for a diversified operation it's about the total relationship, not whether each customer engagement is specifically profitable. People who get Schwab accounts soley for the ATM fee refunds are in the minority. In 2016 10-k filing Schwab posted $1.8B in net earnings, 10 million client accounts with a total of $2.78T in client assets. A couple grand in ATM fees over several years is a rounding error. "ATM" doesn't even appear in the 2016 10-K. |
I spend too much money. How can I get on the path to a frugal lifestyle? | I agree with the first poster- the first step is to measure your spending and put it down into raw numbers. Once you have the raw numbers, you will feel a natural inclination to improve on those numbers. Set yourself a daily target for cash / incidental expenses. It doesnt have to be a crazy target - just something you can achieve easily. Mark a 'tick' mark next to every day on the calendar that you meet that target (or spend less than the target). Gradually the momentum from the past few 'ticks' will automatically compel you to want to tick off the next day. At the end of each week, lower the target a little. You'll find that when you start measuring your expenditure, you become more aware of how you might be wasting money. All too often we just go out and buy stuff we don't need without really thinking about it. |
Covered call and put options as separate trades | Yes, if the call expires worthless, leaving you with stock. Then you can exercise your put when the stock goes below put strike price. |
What can I take from learning that a company's directors are buying or selling shares? | A pattern of high level people buying or selling is a sign, positive or negative. An individual, not so much. He can be selling to diversify, trying to keep his investments from being all in the company. He can be selling to pay his large bills. Same reasons any of us might be selling an investment to have cash to use. |
Paying Off Principal of Home vs. Investing In Mutual Fund | Excellent answers so far, so I will just add one additional consideration: liquidity. Money invested in a mutual fund (exclusive of retirement accounts with early withdrawal penalties) has a relatively high liquidity. Whereas excess equity in your home from paying down early has very low liquidity. To put it simply: If you get in a desperate situation (long term unemployment) it is better to have to cash in a mutual fund than try to sell your house on the quick and move in with your mother. Liquidity becomes less of an issue if you also manage to fund a decent sized rainy-day fund (6-9 months of living expenses). |
The doctor didn't charge the health insurance in time, am I liable? | I work for a health billing company. It is completely the provider's responsibility to bill your health insurance in a timely manner if they have your health insurance information on file (it sounds like they did). If you can gather a copy of your EOB (Explanation of Benefits) from your health insurance, it will likely say something to the extent of: "claim was submitted after the timely filing limit, therefore no payment was made. The patient is not liable for the remaining balance." Don't let the hospital/physician bully you into paying for something they should have submitted to the insurance in the first place. |
How does AMT/state taxes work for stock options in California? | Does this technically mean that she has to pay AMT on $400,000? Yes. Well, not exactly 400,000. She paid $1 per share, so 390,000. And if so, is %28 the AMT for this sum? (0.28 * $400,000 = $112,000)? Or does she have to include her salary on top of that before calculating AMT? (Suppose in the fake example that her salary is $100,000 after 401k). All her income is included in calculating the AMT, minus the AMT exemption amount. The difference between the regular calculated tax and the calculated AMT is then added to the regular tax. Note that some deductions allowed for the regular calculation are not allowed for the AMT calculation. How does California state tax come into play for this? California has its own AMT rules, and in California any stock option exercise is subject to AMT, unless you sell the stock in the same year. Here's a nice and easy to understand write up on the issue from the FTB. When would she have to pay the taxes for this huge AMT? Tax is due when income is received (i.e.: when you exercise the options). However, most people don't actually pay the tax then, but rather discover the huge tax liability when they prepare to submit their tax return on April 15th. To avoid that, I'd suggest trying to estimate the tax and adjust your withholding using form W4 so that by the end of the year you have enough withheld. Suppose in the worst case, the company goes completely under. Does she get her massive amounts of tax back? Or if it's tax credit, where can I find more info on this? That would be capital loss, and only up to $3K a year of capital loss can be deducted from the general income. So it will continue offsetting other capital gains or being deducted $3K a year until it all clears out. Is there any way to avoid this tax? (Can she file an 83b election?) You asked and answered. Yes, filing 83(b) election is the way to go to avoid this situation. This should be done within 30 days of the grant, and submitted to the IRS, and a copy attached to the tax return of the grant year. However, if you're considering exercise - that ship has likely sailed a long time ago. Any advice for Little Susie on how she can even afford to pay that much tax on something she can't even sell anytime soon? Don't exercise the options? Should she take out a loan? (e.g. I've heard that in the extreme case, you can find angel investors who are willing to pay all your taxes/strike price, but want 50% of your equity? I've also heard that you can sell your illiquid shares on SecondMarket?) Is she likely to get audited by IRS for pulling something like this? You can take a loan secured by shares you own, there's nothing illegal in it. If you transfer your shares - the IRS only cares about the taxes being paid, however that may be illegal depending on the terms and the conditions of the grant. You'll need to talk to a lawyer about your situation. I suggest talking to a licensed tax adviser (EA/CPA licensed in your State) about the specifics concerning your situation. |
Which is the better strategy for buying stocks monthly? | To optimize your return on investment, you need to buy low and sell high. If you knew that one stock had hit rock bottom, and the others had not, buying the low stock would be the best. However, unless you can predict the future, you don't know if any individual stock has hit the bottom, or if it will continue to drop. If you decide to spend the same amount of money each month on stock purchases, then when the price is low, you will automatically buy more shares, and when the price is high, you will buy fewer shares. This strategy is sometimes called dollar cost averaging. It eliminates the need to predict the future to optimize your buying. All that having been said, I agree with @Powers that at the investment amount that you are talking about and the per transaction fee you listed, a monthly investment in several stocks will cause you to lose quite a bit to transaction fees. It sounds like you need a different strategy. |
What is the Difference between Life Insurance and ULIP? | ULIP insurance plan ULIP is Unit Linked Insurance Plan. The premium you pay, a small part goes towards covering life insurance. The Balance is invested into Stock Markets. Most ULIP would give you an option to choose from Debt Funds [100% safe buy low returns 5-7%] or Equity [High Risks, Returns can be around 15%]. Or a mix of both. ULIP are not a good way to save money. There are quite a few hidden fees that actually reduce the return. So notionally even if returns shown are great, in effect it is quite less. For example the premium you pay in first year, say Rs 10,000/- Rs 2,500/- goes towards commission. And say Rs 100 goes towards insurance. Balance Rs 7,400/- units are purchased in your account. Even if these grow by 20%, you are still in loss. Ofcousre, the commissions go down year after year and stop at 5%. Then there is fund management fees that you don't get to see. There is maintenance fee that is deduced from your balance. Thus the entire method of charging is not transparent. Life insurance from LIC There are broadly 2 types of Life Insurance plans Money Back / Endowment Plan. The concept here is again same, you pay a premium and part of it goes toward Insurance. The balance LIC invests in safe bonds. Every year a bonus is declared; generally less than Bank rate. At the end of the plan you get more than what you paid in premium. However if you had kept the same in Bank FD, you would have got more money back. So if you die, your nominee would get Insurance plus bonus. If you survive you get all the accumulated bonus. Pure Term Plan. Here the premium is quite less for the sum insured. Here if you die, your nominee would get insurance. If you survive you don't get anything. |
Where can I find a good online fundamental data provider for Hong Kong stocks? | Check out WorldCap.org. They provide fundamental data for Hong Kong stocks in combination with an iPad app. Disclosure: I am affiliated with WorldCap. |
As a Canadian, what should I invest in if I'm betting that the Canadian real estate will crash? | If you believe you can time the crash, then We all know what comes after a crash… just as we know what comes after the doom, we just don’t know when…. |
How is income tax calculated in relation to selling used items? | If the items you sold are items you previously bought for a higher price, the money you get selling them is not income, as you are taking a loss. However, you cannot deduct such losses. If you sell anything for more than what you paid for, the difference is a gain and is taxable. See this IRS web site for the explanation: https://www.irs.gov/businesses/small-businesses-self-employed/tax-tips-for-online-auction-sellers |
What's the difference, if any, between stock appreciation and compound interest? | If you mean, If I invest, say, $1000 in a stock that is growing at 5% per year, versus investing $1000 in an account that pays compound interest of 5% per year, how does the amount I have after 5 years compare? Then the answer is, They would be exactly the same. As Kent Anderson says, "compound interest" simply means that as you accumulate interest, that for the next interest cycle, the amount that they pay interest on is based on the previous cycle balance PLUS the interest. For example, suppose you invest $1000 at 5% interest compounded annually. After one year you get 5% of $1000, or $50. You now have $1050. At the end of the second year, you get 5% of $1050 -- not 5% of the original $1000 -- or $52.50, so you now have $1102.50. Etc. Stocks tend to grow in the same way. But here's the big difference: If you get an interest-bearing account, the bank or investment company guarantees the interest rate. Unless they go bankrupt, you WILL get that percentage interest. But there is absolutely no guarantee when you buy stock. It may go up 5% this year, up 4% next year, and down 3% the year after. The company makes no promises about how much growth the stock will show. It may show a loss. It all depends on how well the company does. |
How can I determine if a FHA loan refinance offer is from a reputable lender | Start with the list of mortgage companies approved to work in your area. There are 80 within 10 miles of my house, and more than 100 in my county. Pick ones you know because they are established businesses in your area, region, or even nationally. A good place to start might be with your current lender. The risk you seem to be worried about is a scam or a trick. In the recent past the scams were ones where the home owner didn't understand teaser rates, and the risk of interest only and pick-your-payment loans. The simpler the bells and whistles, the less likely you are to be embarking on a risky transaction. It can't hurt to ask an organization like the BBB or neighbors, but realize that many people loved their exotic mortgage until the moment it blew up in their face. So for 5 years your neighbor would have raved about their new mortgage until they discovered how underwater they were. Regarding how smoothy the transaction is accomplished, is hard to predict. There is great variation in the quality of the loan officers, so a great company can have rookie employees. Unless you can get a recommendation for a specific employee it is hard know if your loan officer is going to give great service. When getting a mortgage for a purchase, the biggest risk is getting a mortgage that results in a payment you can't afford. This is less of a risk with a refinance because you already have a mortgage and monthly payment. But keep in mind some of the monthly savings is due to stretching out the payments for another 30 years. Know what you are trying to do with the refinance because the streamlined ones cant be used for cash out. |
why do I need an emergency fund if I already have investments? | Let me first start by defining an emergency fund. This is money which is: Because emergency's usually need to be deal with ASAP, boiler breaks, gears box in a car. Generally you need these to be solved as soon as possible, because ou depend on these things working and you can't budget for this type of expenditure using just your monthly salary. This is a personal opinion but I prefer investment types that don't have another fee on access. I really don't like having another fee on top on money that I need right now. Investment Options: Market based investments should be seen as long term investments, therefore they do not really satisfy requirement one, they can also have broker fees, therefore you might pay a small extra charge for taking money out, and so do not satisfy requirement two. Investment Options for Emergency Funds You want to get the best return on your money even if it's your emergency fund. So use regular saving accounts, but from you emergency fund or use tax effective savings accounts, like a cash ISA if based in the UK. Don't think of an emergency money as just sitting there, you have options just makes sure the options fit the requirements. UPDATE Given feedback I appreciate there are levels of emergency fund, the above details things which might be about 1-2 month salary in cost, car repairs, leaks, boiler repairs. Now I have another fund which is in P2P funds which is higher risk than a deposit account but then gives me a better return and is less subject to market fluctuations and it would be the place I go to for loss of job level emergencies say 6 months of salary, this takes a bit longer to access but given I have the above emergency fund I have given myself time to get the money from the P2P account. |
What does it mean for a normal citizen like me when my country's dollar value goes down? | Essentially imported goods from the country (in this case the US) that is improving against your local currency will become more expensive. For the most part, that is the only practical effect on you on an individual financial level. |
Using GnuCash for accurate cost basis calculation for foreign investments (CAD primary currency) | You would need to use Trading Accounts. You can enable this, File->Properties->Account settings tab, and check Use Trading Accounts. For more details see the following site: http://wiki.gnucash.org/wiki/Trading_Accounts |
Investment strategy for 401k when rolling over soon | You will be rolling over the proceeds, since you can only deposit cash into an IRA. However, this should probably not affect your considerations much since the pre-rollover sale is non-taxable within the 401k and the period of roll-over itself (when the cash is uninvested) is relatively short. So, whatever investments you choose in your 401k, you'll just sell them and then buy them (or similar investments) back after the rollover to the IRA. If you're worrying about a flash crash right on the day when you want to cash out - that can definitely happen, but it is not really something you can prepare for. You can consider moving to money market several weeks before the potential date of your withdrawal, if you think it will make you feel safer, otherwise I don't think it really matters. |
Military Separation | Welcome to Money.SE, and thank you for your service. In general, buying a house is wise if (a) the overall cost of ownership is less than the ongoing cost to rent in the area, and (b) you plan to stay in that area for some time, usually 7+ years. The VA loan is a unique opportunity and I'd recommend you make the most of it. In my area, I've seen bank owned properties that had an "owner occupied" restriction. 3 family homes that were beautiful, and when the numbers were scrubbed, the owner would see enough rent on two units to pay the mortgage, taxes, and still have money for maintenance. Each situation is unique, but some "too good to be true" deals are still out there. |
Why do 10 year-old luxury cars lose so much value? | Few people actually buy BMW's. Most are leased, because if you're the type of person who wants to drive a BMW, you're going want a new one regularly. Here's the lifecycle of a BMW or other luxury car: By the time you hit ten years, you have a rapidly depreciating asset because the average Joe doesn't really want an old BMW and hassles that come with it or any luxury car. That said, there are great bargains in this space. I used to buy 5-6 year old Cadillacs when they weren't cool for like $7-9k, and resell them a year later for about $1,500 less that I bought them for. (lower TCO than a Civic) You need to have patience though, because maintenance is always an expensive pain in the rear with luxury cars. |
How do credit union loans and dividends vs interest work? | A credit Union makes loans exactly the same ways a bank does. A portion of the money deposited in checking, savings, money market, Certificate of Deposit, or IRA is then used to make loans for cars, boats, school, mortgages, 2nd mortgages, lines of credit... The government dictates the percentage of each type of deposit that must be held in reserve for non-loan transactions. The Credit Union members are the share holders of the "company". There are no investors in the "company" because the goal is not to make money. In general the entire package is better because there is no pressure to increase profits. Fees are generally lower because they are there to discourage bad behavior, not as a way to make a profit off of the bad behavior. Dividends/interest are treated the same way as bank interest. The IRS forms are the same, and it is reported the same way. Some of bizarre rules they have to follow: maximum number of transactions between accounts, membership rules, are there because banks want to make it harder to be a member of a credit union. |
Is there any way to buy a new car directly from Toyota without going through a dealership? | No you can't buy direct from Toyota. Largely because of many states' laws (assuming you're in the US) requiring a dealer relationship for car purchasing, read about Tesla's struggles with direct to customer sales. Secondly because Toyota corporate simply isn't set up to sell a car directly to a customer. I know there are services that help people through the buying process. If you're finding Toyota dealerships to be this difficult you may consider just buying something from someone who wants to sell to you. If the buying process is this difficult imagine the service relationship. Edit: Additionally, it's important to remember when financing a car that there are essentially two transactions taking place. First you're negotiating the price of the car. Then you negotiate the price of the money (the interest rate). The money does not need to come from the dealership, you can secure your financing rate from a separate bank or local credit union. You should definitely pursue alternate financing if they're quoting you 7.99% with a FICO of 710. But don't tell the dealership you've already got your financing lined up until you're happy with the price of the car. |
Strategies for putting away money for a child's future (college, etc.)? | Saving for college you have a couple of options. 529 plans are probably the best bet for most people wanting to save for their kids college education. You can put a lot of money away ~$300k and you may get a state tax deduction. The downside is if you're kid doesn't go to college you may end up eating the 10% penalty. State specific prepaid tuition plans. The upside is you know roughly the return you are going to get on your money. The downside is your kid has to go to a state school in the state you prepaid or there are likely withdrawal penalties. For the most part these really aren't that great of a deal any more. ESAs are also an option but they only allow you to contribute $2k/year, but you have more investment options than with the 529 plans. Traditional and ROTH IRA accounts can also be used to pay for higher education. I wouldn't recommend this route in general but if you maxed out your 401k and weren't using your IRA contribution limits you could put extra money here and get more or really different flexibility than you can with a 529 account. I doubt IRA's will ever be asked for on a FAFSA which might be helpful. Another option is to save the money in a regular brokerage account. You would have more flexibility, but lower returns after taxes. One advantage to this route is if you think your kid might be borderline for financial aid a year or two before he starts college you could move this money into another investment that doesn't matter for financial aid purposes. A few words of caution, make sure you save for retirement before saving for your kids college. He can always get loans to pay for school but no one is going to give you a loan to pay for your retirement. Also be cautious with the amount of money you give your adult child, studies have shown that the more money that parents give their adult children the less successful they are compared to their peers. |
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