Question stringlengths 14 166 | Answer stringlengths 3 17k |
|---|---|
Can I claim GST/HST Input Tax Credits (ITCs) on Uber, taxi, or limousine fares? | The Canada Revenue Agency describes in detail here what information businesses must generally include on their invoices so that GST/HST registrants can claim Input Tax Credits (ITCs) for the expenses. Quote: Sales invoices for GST/HST registrants You have to give customers who are GST/HST registrants specific information on the invoices, receipts, contracts, or other business papers that you use when you provide taxable goods and services. This information lets them support their claims for input tax credits (ITCs) or rebates for the GST/HST you charged. [...] The page quoted continues with a table describing what, specifically, needs to be on a sales invoice based on the total amount of the invoice; the requirements differ for: total sale under $30, total sale between $30 to $149.99, and total sale $150 or more. For the total sale under $30 category, the only things a sales invoice must contain to support an ITC claim are (1) the provider's business name, (2) the invoice date, and (3) the total amount paid/payable. i.e. When the total sale is under $30, there is no requirement for any GST/HST amount to be indicated separately, nor for a business number to be present on the invoice. Hence, IMHO (and I am neither an accountant nor a lawyer), if your Uber rides are for $30 or less, then you shouldn't expect a GST/HST number anyway, and a simple invoice as described should be enough for you to claim your ITCs. Whether or not the provider is registered in fact for GST/HST is beside the point. For amounts over $30, you need a bit more. While the page above specifies that the provider's business number should be included beginning with the next level of total sales, there are exceptions to those rules described at another page mentioned, Exceptions to invoice requirements, that specifically apply to the taxi/limousine case. Quote: Exceptions to invoice requirements GST/HST registrants are required to keep the necessary documentation to support their claim for ITCs and rebates. In certain circumstances the documentation requirements have been reduced. [...] For taxi or limousine fares your books and records must show: So at a minimum, for fare in excess of $30 total, you should ask the driver to note either (a) the amount of GST/HST charged, or (b) a statement that the fare includes GST/HST. The driver's business number need not be specified. Consequently, if your receipt for a ride in excess of $30 does not contain any such additional information with respect to GST/HST, then I would expect the receipt does not satisfy the CRA's requirements for supporting your ITC claim. i.e. Keep your individual rides under $30 each, or else get a better receipt from the driver when it is above that amount. p.s. It should go without saying, but your rides, of course, must be considered reasonable business expenses in order to qualify for GST/HST ITCs for your business. Receipts for rides of a personal nature are not eligible, so be sure to maintain proper records as to the business purpose and destination for each ride receipt so claimed. |
I spend too much money. How can I get on the path to a frugal lifestyle? | Track your expenses. Find out where your money is going, and target areas where you can reduce expenses. Some examples: I was spending a lot on food, buying too much packaged food, and eating out too much. So I started cooking from scratch more and eating out less. Now, even though I buy expensive organic produce, imported cheese, and grass-fed beef, I'm spending half of what I used to spend on food. It could be better. I could cut back on meat and eat out even less. I'm working on it. I was buying a ton of books and random impulsive crap off of Amazon. So I no longer let myself buy things right away. I put stuff on my wish list if I want it, and every couple of months I go on there and buy myself a couple of things off my wishlist. I usually end up realizing that some of the stuff on there isn't something I want that badly after all, so I just delete it from my wishlist. I replaced my 11-year-old Jeep SUV with an 11-year-old Saturn sedan that gets twice the gas mileage. That saves me almost $200/month in gasoline costs alone. I had cable internet through Comcast, even though I don't have a TV. So I went from a $70/month cable bill to a $35/month DSL bill, which cut my internet costs in half. I have an iPhone and my bill for that is $85/month. That's insane, with how little I talk on the phone and send text messages. Once it goes out of contract, I plan to replace it with a cheap phone, possibly a pre-paid. That should cut my phone expenses in half, or even less. I'll keep my iPhone, and just use it when wifi is available (which is almost everywhere these days). |
Why do banks require small businesses to open a business bank account instead of a cheaper personal one? | You could, but the bank won't let you... If you're a sole proprietor - then you could probably open a personal account and just use it, and never tell them that is actually a business. However, depending on your volume of operations, they may switch you on their own to business account by the pattern of your transactions. For corporations, you cannot use a personal account since the corporation is a separate legal entity that owns the funds. Also, you're generally required to separate corporate and personal funds to keep the limited liability protection (which is why you have the corporation to begin with). Generally, business accounts have much higher volumes and much more transactions than personal accounts, and it costs more for the banks to run them. In the US, some banks offer free, or very low-cost, business accounts for small businesses that don't need too many transactions. I'm sure if you shop around, you'll find those in Canada as well. |
How is your credit score related to credit utilization? | Curious, why are you interested in building/improving your credit score? Is it better to use your card and pay off the bill completely every month? Yes. How is credit utiltization calculated? Is it average utilization over the month, or total amount owed/credit_limit per month? It depends on how often your bank reports your balances to the reporting agencies. It can be daily, when your statement cycle closes, or some other interval. How does credit utilization affect your score? Closest to zero without actually being zero is best. This translates to making some charges, even $1 so your statement shows a balance each statement that you pay off. This shows as active use. If you pay off your balance before the statement closes, then it can sometimes be reported as inactive/unused. Is too much a bad thing? Yes. Is too little a bad thing? Depends. Being debt free has its advantages... but if your goal is to raise your credit score, then having a low utilization rate is a good metric. Less than 7% utilization seems to be the optimal level. "Last year we started using a number, not as a recommendation, but as a fact that most of the people with really high FICO scores have credit utilization rates that are 7 percent or lower," Watts said. Read more: http://www.bankrate.com/finance/credit-cards/how-to-bump-up-your-credit-score.aspx Remember that on-time payment is the most important factor. Second is how much you owe. Third is length of credit history. Maintain these factors in good standing and you will improve your score: http://www.myfico.com/CreditEducation/WhatsInYourScore.aspx |
Can I rollover an “individual retirement annuity” to an IRA? | Annuities, like life insurance, are sold rather than bought. Once upon a time, IRAs inherited from a non-spouse required the beneficiary to (a) take all the money out within 5 years, or (b) choose to receive the value of the IRA at the time of the IRA owner's death in equal installments over the expected lifetime of the beneficiary. If the latter option was chosen, the IRA custodian issued the fixed-term annuity in return for the IRA assets. If the IRA was invested in (say) 15000 shares of IBM stock, that stock would then belong to the IRA custodian who was obligated to pay $x per year to the beneficiary for the next 23 years (say). There was no investment any more that could be transferred to another broker, or be sold and the proceeds invested in Facebook stock (say). Nor was the custodian under any obligation to do anything except pay $x per year to the beneficiary for the 23 years. Financial planners loved to get at this money under the old IRA rules by suggesting that if all the IRA money were taken out and invested in stocks or mutual funds through their company, the company would pay a guaranteed $y per year, would pay more than $y in each year that the investments did well, would continue payment until the beneficiary died (or till the death of the beneficiary or beneficiary's spouse - whoever died later), and would return the entire sum invested (less payouts already made, of course) in case of premature death. $y typically would be a little larger than $x too, because it factored in some earnings of the investment over the years. So what was not to like? Of course, the commissions earned by the planner and the lousy mutual funds and the huge surrender charges were always glossed over. |
How does conversion of Secured Convertible Notes work? | Let's assume that the bonds have a par value of $1,000. If conversion happens, then one bond would be converted into 500 shares. The price in the market is unimportant. Regardless of the share price in the market, the income per share would be increased by the absence of $70 in interest expense. It would be decreased by the lost tax deduction. It would be further diluted by the increase in 500 shares. Likewise, the debt would be extinguished and the equity section increased. Whether it increased or decreased on a per share basis would depend upon the average amount paid in per share in the currently existing structure, adjusted for changes in retained earnings since the initial offering and for any treasury shares. There would be a loss in value, generally, if it is trading far from $2.00 because it would be valued based on the market price. Had the bond not converted, it would trade in the market as a pure bond if the stock price is far below the strike price and as an ordinary pure bond plus a premium if near enough to the strike price in a manner that depends upon the time remaining under the conversion privilege. I cannot think of a general case where someone would want to convert below strike and indeed, barring a very strange tax, inheritance or legal situation (such as a weird divorce), I cannot think of a case where it would make sense. It often does not make sense to convert far from maturity either as the option premium only vanishes well above $2. The primary case for conversion would be where the after-tax dividend is greater than the after-tax interest payment. |
Can I invest in the USA or EU from an Asian 3rd-world country, over the Internet? | Absolutely. It does highly depend on your country, as US brokerages are stricter with or even closed to residents of countries that produce drugs, launder money, finance terror, have traditional difficulty with the US, etc. It also depends on your country's laws. Some countries have currency controls, restrictions on buying foreign/US securities, etc. That said, some brokerages have offices world-wide, so there might be one near you. If your legal situation as described above is fortunate, some brokers will simply allow you to setup online using a procedure not too different from US residents: provide identification, sign tons of documents. You'll have to have a method to deliver your documentation in the ways you'd expect: mail, fax, email. E*Trade is the best starter broker, right now, imo. Just see how far you can go in the sign-up process. |
Are my parents ripping me off with this deal that doesn't allow me to build my equity in my home? | Actually if you look at a loan for $115,000 over 30 years at current interest rates you would have a payment of about $500 a month. I would argue your $500 monthly payments are building equity the same way a loan repayment schedule would. Is your agreement in writing? If it is, there's nothing you can do unless they agree. If it's not then write up a contract for a $115k loan that you will pay back over 30 years at $500 a month with the amortization table. That will show how much equity you're building over time. (It's not much the first 10 years!) Note that some states require real estate contract to be in writing or else they are voidable by either party. Whatever you do, get something in writing or you'll probably either end up in court or feeling bitter for the next few decades. |
In a house with shared ownership, if one person moves out and the other assumes mortgage, how do we determine who owns what share in the end? | Market value and assessments are two different things. No matter how amical the agreement seems on buying and selling, the future could result in damaged relationships without an absolute sale. I would strongly recommend getting into an agreement to split the purchase of a house as a means to save money. If it's too late, sell immediately. |
A merchant requests that checks be made out to “Cash”. Should I be suspicious? | There are benefits associated with a cash only business (the link states a few). However checks made out to "cash" don't reap those benefits listed. For anyone on SE to say your barber hides revenue from the IRS would just be speculation. With that said there are a great number of disadvantages for a cash only business. And from my experience, a business that goes out of their way to take cash only can be a little suspicious. Luckily you are not committing any crimes or fraud by paying her cash. |
Why would a bank need to accept deposits from private clients if it can just borrow from the Federal Reserve? | Central Banks are essentially a cartel, designed to let banks in general borrow money from depositors at relatively low interest rates. They do this in two ways: By reassuring depositors that momentary cash flow problems at banks will not result in banks failing, they lower the interest rates that depositors demand. And by imposing strict regulations on banks that are borrowing from depositors at high interest rates. (People who move money to the banks offering the highest interest rates are especially likely to participate in bank runs.) Borrowing "too much" from the Central Bank is considered to be a sign of a bank that is too weak to attract deposits from depositors at "reasonable" interest rates. If a bank borrows "too much" (as a percentage of the bank's assets) from the Central Bank, the bank regulators will subject the bank to heavy scrutiny. If the bank fails to find ways to reduce its borrowing from the Central Bank, the bank regulators are likely to steal the bank from its shareholders, and sell the bank to a "stronger" bank that pays lower interest rates. |
Typical discount for cash purchase on $1+ million homes? | First, I assume you understand that 'Cash Offer' doesn't mean you really show up with cash (in a duffel bag...), but is an expression that designates that you don't need a mortgage approval, but have the money in your accounts. The advantages for the seller are With both cases depending on the seller's situation, there can't be a generic answer, and the 'discount' will be all over the place between zero and several percent. |
My wife and I are selling a house worth $230k-$260k. Its a rental. Should we use an agent, limited service listing agent, or FSBO? | The answers you'll receive are going to be largely subjective. I can't tell you which option would be best for you, but there are plenty of things to consider. Do you know how to sell a home? If your market is hot enough, FSBO may make sense as you won't need the marketing power and expertise of an agent. In very hot markets, you'll end up with potential bidding wars if you price your house correctly. But that's where things start getting tricky. Do you know what your house is realistically worth in your market, or are you making assumptions based on Zillow (or similar)? Do you know what paper work is needed to complete a FSBO sale? Are you any good at negotiating? There are certainly plenty of resources out there for FSBO sellers to learn how to do it, but it can be overwhelming. FSBO isn't really fee free. If the buyer has an agent, they'll want a percentage (3%) for setting up their part of the sale. Without experience in negotiation, you may be leaving a decent amount of money on the table. Also, in negotiations, an experienced agent may nickel & dime you with contingencies all the way up until closing. Then there's anything you might need to pay for marketing materials and time off from work (if needed) to have the house shown. However, if you're in a market where people are literally walking up to your door to ask if you'd consider selling and for how much (which just happened to a friend of mine), then it might actually be a pretty painless process. Traditional agents charge a fee, but that fee goes towards marketing and their experience in sales and negotiations. They do the work of getting your property in front of the right people and setting up house showings. The work is done on your behalf, and you won't need to alter your personal work schedule anywhere near as much as you would with FSBO. They only get paid if the house sells. Limited service agents are a bit of an unknown to me, but it's more than likely the buyer will have an agent, so assume the higher fee. It also appears that the LSA gets paid at least $500 no matter what happens, so they're certainly not putting in any extra effort to help get your house sold. It appears that you're simply paying to get on their list of homes and get some marketing from them, but that's about it. I'd imagine you could get the same exposure as a well educated FSBO seller. |
Borrowing 100k and paying it to someone then declaring bankruptcy | This is called a fraudulent conveyance because its purpose is to prevent a creditor from getting repaid. It is subject to claw back under US law, which is a fancy way of saying that your friend will have to pay the bank back. Most jurisdictions have similar laws. It is probably a crime as well, but that varies by jurisdiction. |
Questioning my Realtor | even though they're only asking for 1/2 the money and have excellent credit that the mortgage company may not lend it to them if I'm over priced Yes. If the house's value, as determined by the appraisal, is less than the sale price, the bank will not finance the loan. Appraisals and the appraisal process have become much tighter since the Frannie and Freddie debacle. This fact is true regardless of amounts or credit history. Though this is happens somewhat rarely; typically if a seller and buyer agree to a price, this price is a reasonable value -- after all, that is nearly the definition of "market value". So, yes, it is true (and always true, for any financed purchase), but that shouldn't really affect your decision. If you try to sell for more than the appraisal, you will just lower the price to the appraised amount. |
Why is tax loss harvesting helpful for passive investing? | I wrote a detailed article on Tax Loss Harvesting to show the impact on returns. For my example, I showed a person in the 15% bracket. In years with no loss, they trade to capture gains at 0% long term rate, thus bumping their basis up. In years with losses, they tax harvest for a 15% effective 'rebate' on that loss. I showed how for the lost decade 2000-2009, a buy and hold would have returned -1% CAGR, but the tax loss harvester would have gained 1% (just 1% for the decade, not CAGR), ending the decade with no loss. As one's portfolio grows, the math changes. You can only take $3000 capital loss against ordinary income, and my example relies on the difference between taking a gain for free but using a loss to offset income. Note, the higher earner would take gains at 15%, but losses at 25%, but only for the relatively small portfolio. The benefit for them is to use loss harvesting to offset gains, less so for ordinary income. As the other answer state, Wealthfront can aid you to do this with no math on your part. |
Gigantic point amount on rewards card - what are potential consequences? | First IANAL! This is going to depend on the kind of points. If it's an internal point system that the business is doing on their own, then they may very well, give you that many "extra" points. They may really not care. Specially if the cost of the points is low enough. Remember that steak dinner that you paid $60 for only really cost them $2 and that they use $60 worth of points on it. If the point system is tied to a bank or credit card, then it's far more likely that the "just use them" is not the proper answer. The company doing the reimbursing is giving the location $60 and using your points. The points have a much higher value. With that said, your responsibility is to notify, and follow their rules. So notify them in writing, and use the rewards card as you normally would. If your being honest, then the worst that happens is that your point balance is a little negative (because you spent 100 points but really only had 98 after adjustment). Most likely, if your being honest, they will just eat the few points over that you went on accident. If you get an answer in writing to just keep the points, then I guess you know where your daughter's wedding reception will be. Let's hope it's a classy place. Of course, as a 'good' person (or maybe a 'stupid' person), I should call them, (wait 30 minutes in the queue), and then try to explain the issue to the service desk. I actually did that, and the guy thought I am nuts to even call, and told me to 'just use them they are yours now'. I don't feel like calling again and again until I get someone that believes it, just to return them their points. You will want to do this in writing. Email will work, but you really want a paper trail, either way. I could just toss the card and forget about it. However, I had quite some points on it that really belong to me, so that feels like I pay for their fault. There is no need to do this. It's like a bank error. Talk to them and they will give you an answer. In the mean time, do your best to only use the points you actually have. Use them and play stupid. It's not my duty to check their math, right? Probably nobody will ever care (let's keep religious considerations out here). What would be the consequences if they do realize their error some day in the far future? (I understand this borders on a legal question). Nope, don't do this. If you play dumb and spend 5000 points when you know you only have around 100, best case scenario you end up with -4900 points (effectively canceling the benefit of the card). You may also be banned form the program, the location, the network, etc. Worst case scenario they want the monetary value of the points and sue you for it, and the legal fees. It may even be considered fraud. TL;DR Use your card, but be honest, and handle the mistake in writing. |
Negative properties of continuously compounded returns | You cannot use continuous compounding for returns less than or equal to 100% because a natural logarithm can only be taken for a positive amount. This answer includes the accurate way to ascertain r, for which many people use an approximation. For example, using -20% monthly return for 12 months:- -0.2 -0.223144 0.0687195 Checking: 0.0687195 True Now trying -100% monthly return:- -1. Indeterminate Why? Because a natural logarithm can only be taken for a positive amount. So the latter calculation can not be done using (logarithmic) continuous compounding. Of course, the calculation can still be done using regular compounding. For -100% the results go to zero in the first month, but -150% produces a more interesting result: -1.5 -11920.9 |
Allocating IRA money, clarification needed | There was a time that a rule of thumb stated your stock allocation should be 100-your age. That rule suggests that you are at 65%stock/35% bond/cash. If you are comfortable having this money 100% invested, the best advice would be dollar cost averaging, anything more specific would suggest market timing. |
For very high-net worth individuals, does it make sense to not have insurance? | Simply put, it makes sense from the moment you can afford the loss without negative consequences. For example, if your car costs $20000 and you happen to have another $20000 laying around, you can choose not to insure your car against damage. In the worst case, you can simply buy a new one. However, not insuring your car has a hidden cost: you can't long-term invest that money anymore. If your insurance costs $500 a year, and you can invest those $20000 with a return on investment of more than 2.5%, it still makes sense to invest that money while having your car insured. |
PayPal wants me to “add a bank account”, another funding source. Credit card isn't working. Why? | Visit paypalblows.org to find out more reasons. PayPal wants your bank account info on file before they allow you to take payment. So setup a bank account strictly for this service, and if they give you trouble or suspend your account, simply never use them again and tell others of your experience. I think the only reason why PayPal wants a bank account is so they can dip into it and take chargeback money. |
How do you save money on clothes and shoes for your family? | I look ahead for sizes. I was at the thrift store and saw a good condition, good brand winter coat that will likely fit my daughter next year, so I bought it. I also bought a snowsuit my baby can wear when he's 6 months (~5 months pregnant now). When it starts getting cold next fall, I'll be set, rather than wasting time and money running around town trying to find winter gear. This applies for any regular stores you visit (Costco, thrift stores, kids resale stores, etc): look for clearance/discounted kids clothes in the next few sizes up, even off-season. This works especially well for basics you need lots of (PJs, socks, etc) and more expensive things where you don't want to be desperate when shopping for them. You're always "buying low." |
Are bond ETF capital gains taxed similar to stock or stock funds if held for more than 1 year? | Yes, that's correct. |
How does giving to charity work? | If I donate $10,000 to charity then I can deduct that $10,000 from my income and not pay income taxes on it. So if I make $50,000 a year then I will only pay income taxes on $40,000 instead of $50,000 since I donated $10,000 to charity. This is what is meant when charity contributions are said to be tax deductible. Don't feel like you have to donate to charity. You owe no one anything. You do more for others by working (assuming you work in the private sector). If you know of someone personally that is in need of aid then you could give them some help directly. I find this more effective then blindly dumping money in a bureaucratic, inefficient charity. I also find there are very few people in need of charity. Personally, I think charity donations are a way for people to feel good about themselves. They rarely care if their donations are effective. |
Is it true that the price of diamonds is based on a monopoly? | De Beers is the company most cited as the near monopoly. They used to own a massive chunk of the diamond supply and intentionally restricted that supply to increase the price. In recent decades, new sources of diamonds have reduced the De Beers' singular grip. They still have a large share though. Video about this from Adam Ruins Everything: https://www.youtube.com/watch?v=N5kWu1ifBGU it turns out this ancient tradition [of giving diamonds rings for engagements] was invented less than a century ago by the De Beers Diamond Corporation... in 1938, the De Beers Diamond cartel launched a massive ad campaign, claiming that the only way for a real man to show his love is with an expensive hunk of crystallized carbon, and we bought that shit. It continues The only reason diamonds are even expensive is that De Beers has a global monopoly on diamond mining and they artificially restrict the supply, to jack the prices up. Because of this artificial supply restriction, the resale value of diamonds are quite low. |
Can I deduct “Non-Reimbursable Expenses”? | You can only deduct (with the 2% AGI threshold) expenses that: You've actually incurred. I.e.: you actually paid for equipment or services provided and can show receipts for the payment. At the request of the employer. I.e.: you didn't just decide on your own to buy a new book or take a class, your employer told you to. With business necessity. I.e.: it was in order for you to do your job. And you were not reimbursed by your employer. I.e.: you went somewhere and spent your after tax money on something employer explicitly told you to pay for, and you didn't get reimbursed for that. From your story - these conditions don't hold for you. As I said in the comments - I strongly suggest you talk to a lawyer. Your story just doesn't make any sense, and I suspect your employer is doing something very fishy here. |
Why would anyone want to pay off their debts in a way other than “highest interest” first? | It is true that all else being equal, you will pay a lower amount of total interest by paying down your highest interest rate debts first. However, all else is not always equal. I'm going to try to come up with some reasons why it might be better in some circumstances to pay your debts in a different order. And I'll try to use as much math as possible. :) Let's say that your goal is to eliminate all of your debt as fast as possible. The faster you do this, the lower the total interest that you will pay. Now, let's consider the different methods that you could take to get there: You could pay the highest interest first, you could pay the lowest interest first, or you could pay something in the middle first. No matter which path you choose, the quicker you pay everything off, the lower total interest you will pay. In addition to that, the quicker you pay everything off, the difference in total interest paid between the most optimal method and the least optimal method will be less. To put this in mathematical notation: limt→0 Δ Interest(t) = 0 Given that, anything we can do to speed up the time it takes to get to "debt free" is to our advantage. When paying large amounts of debt as fast as possible, sacrifice is needed. And this means that psychology comes into play. I don't know about you, but for me, gamifying the system makes everything easier. (After all, gamification is what gets us to write answers here on SE.) One way to do this is to eliminate individual debts as quickly as possible. For example, let's say that I've got 10 debts. 5 of them are for $1k each. 3 of them are for $5k each, 1 is a $20k car loan, and 1 is a $100k mortgage. Each one has a monthly payment. Let's say that I've got $3k sitting in the bank that I want to use to kickstart my debt reduction. I could pay all $3k toward one of my larger loans, or I could immediately pay off 3 of my 10 loans. Ignore interest for the moment, and let's say that we are going to pay off the smallest loans first. When I eliminate these three loans, three of my monthly payments are also gone. Now let's say that with the money I was paying toward these eliminated debts, and some other money I was able to scrape together $500 a month that I want to use toward debt reduction. In four months, I've eliminated the last two $1k debts, and I'm down to 5 debts instead of 10. Achievement Unlocked! Instead of this strategy, I could have paid toward my largest interest rate. Let's say that was one of the $5k loans. I paid the $3k toward the bank to it, and because I still had all the monthly payments after that, I was only able to scrape together $400 a month extra toward debt reduction. In four months, I still have 10 debts. Now let's say that after these four months, I have a bad month, and some unexpected expenses come up. If I've eliminated 5 of my debts, my monthly payments are less, and I'll have an easier month then I would have had if I still had 10 monthly payments to deal with. Each time I eliminate a debt, the amount extra I have each month to tackle the remaining debts gets bigger. And if your goal is eliminating debt quickly, these early wins can really help motivate you on. It really feels like you are getting somewhere when your monthly bills go down. It also helps you with the debt free mindset. You start to see a future where you aren't sending payments to the banks each month. This method of paying your smaller debts first has been popularized in recent years by Dave Ramsey, and he calls it the debt snowball method. There might be other reasons why you would pick one debt over another to pay first. For example, let's say that one of your loans is with a bank that has terrible customer service. They don't send you bills on time, they process your payment late, their website stinks, they are a constant source of stress, and you are getting sick of them. That would be a great reason to pay that debt first, and never set foot in that bank again. In conclusion: If you have a constant amount of extra cash each month that you are going to use to reduce your debt, and this will never change, then, yes, you will save money over the long run by paying the highest interest debt first. However, if you are trying to eliminate your debt as fast as possible, and you are sacrificing in your budget, sending every extra penny you can scrape together toward debt reduction, the "snowball" method of knocking out the small debts first can help motivate you to continue to sacrifice toward your goal, and can also ease the cash flow situation in difficult months when you find yourself with less extra to send in. |
Is 6% too high to trade stocks on margin? | That seems a little high in my experience. I've used a home equity line of credit instead, as the rates are much lower (~3.5%). |
Is it possible to improve stock purchase with limit orders accounting for volatility? | If you can afford the cost and risk of 100 shares of stock, then just sell a put option. If you can only afford a few shares, you can still use the information the options market is trying to give you -- see below. A standing limit order to buy a stock is essentially a synthetic short put option position. [1] So deciding on a stock limit order price is the same as valuing an option on that stock. Options (and standing limit orders) are hard to value, and the generally accepted math for doing so -- the Black-Scholes-Merton framework -- is also generally accepted to be wrong, because of black swans. So rather than calculate a stock buy limit price yourself, it's simpler to just sell a put at the put's own midpoint price, accepting the market's best estimate. Options market makers' whole job (and the purpose of the open market) is price discovery, so it's easier to let them fight it out over what price options should really be trading at. The result of that fight is valuable information -- use it. Sell a 1-month ATM put option every month until you get exercised, after which time you'll own 100 shares of stock, purchased at: This will typically give you a much better cost basis (several dollars better) versus buying the stock at spot, and it offloads the valuation math onto the options market. Meanwhile you get to keep the cash from the options premiums as well. Disclaimer: Markets do make mistakes. You will lose money when the stock drops more than the option market's own estimate. If you can't afford 100 shares, or for some reason still want to be in the business of creating synthetic options from pure stock limit orders, then you could maybe play around with setting your stock purchase bid price to (approximately): See your statistics book for how to set ndev -- 1 standard deviation gives you a 30% chance of a fill, 2 gives you a 5% chance, etc. Disclaimer: The above math probably has mistakes; do your own work. It's somewhat invalid anyway, because stock prices don't follow a normal curve, so standard deviations don't really mean a whole lot. This is where market makers earn their keep (or not). If you still want to create synthetic options using stock limit orders, you might be able to get the options market to do more of the math for you. Try setting your stock limit order bid equal to something like this: Where put_strike is the strike price of a put option for the equity you're trading. Which option expiration and strike you use for put_strike depends on your desired time horizon and desired fill probability. To get probability, you can look at the delta for a given option. The relationship between option delta and equity limit order probability of fill is approximately: Disclaimer: There may be math errors here. Again, do your own work. Also, while this method assumes option markets provide good estimates, see above disclaimer about the markets making mistakes. |
Why is the price of my investment only updated once per day? | Mutual funds are a collection of other assets, such as stocks, bonds and property. Unless the fund is a type that is traded on an exchange, you will only be able to buy into the fund by applying for units with the fund manager and sell out by contacting the fund manager. These type of non-traded funds are usually updated at the end of the day once the closing prices of all the assets in it are known. |
Received mysterious K-1 form, seeking answers | SXL is a Master Limited Partnership so all of the income is pass-through. Your equity purchase entitles you to a fraction of the 66% of the company that is not owned by Energy Transfer Partners. You should have been receiving the K-1s from SXL from the time that you bought the shares. Without knowing your specific situation, you will likely have to amend your returns for at most 6 years (if the omitted amount of gross income exceeds 25% of your gross income originally stated as littleadv has graciously pointed out in the comments) and include Schedule E to report the additional income (you'll also be able to deduct any depreciation, losses etc. that are passed through the entity on that form, so that will offset some of the gains). As littleadv has recommended, speak with a tax professional (CPA/EA or attorney) before you take any further steps, as everyone's situation is a bit different. This Forbes article has a nice overview of the MLP. There's a click-through to get to it, but it's not paywalled. |
Can I get a dividend “free lunch” by buying a stock just before the ex-dividend date and selling it immediately after? [duplicate] | It is important to remember that the stock price in principle reflects the value of the company, so the market cap should drop upon issuance of the the dividend. However, the above reasoning neglects to consider taxes, which make the question a bit more interesting. The key fact is that different investors are going to get taxed on the dividend to varying degrees, ranging from 20% for qualified dividends in the USA for a high-income individual in a taxable account (and even worse for non-qualified dividends) to 0% for tax-exempt nonprofits, retirement accounts, and low-income individuals. The high-tax investors are going to be a bit averse to paying tax on that dividend, whereas the tax-free investors are not. Hence in a tax-rational market the tax-free investors are going to be the ones buying right before a dividend and the tax-paying investors will be buying right afterwards. Tax-exempt investors could in principle make some amount of money buying dividends to keep them off the tax-paying investors' books. (Of course, the strategy could backfire if too many people did it all at once.) That said, the tax-payers have the tax disincentive to prevent them from fully exploiting the opposite strategy of selling just before a dividend. In particular, they are subject to capital gains tax when they sell at a profit (unless they have enough compensating capital losses), and it is to their after-tax profit to defer taxation by not trading. That said, the stock market has well-known irrationality when it comes to considering tax consequences, so logic based on assumed rationality of the market does not always apply to the extent one would expect. The foremost example of tax-irrationality is the so-called "dividend paradox", which basically states that corporations should favor stock buybacks (or perhaps loan repayment) to the complete exclusion of dividends because capital gains are taxed less harshly than dividends in a variety of ways, some of which are subtle: 1) Historically (although not currently in the USA for qualified dividends) the tax rate was higher for dividends. (In Canada, for example, dividends are taxed at twice the rate of capital gains.) 2) If you die holding appreciated stock then you (meaning your heirs) completely escape US the capital gains tax on the accrual during your lifetime. 3) Capital gains tax can be deferred by simply not selling. In comparison to dividends, this is roughly equivalent to getting a tax-free loan from the government which is invested for profit and paid at a later date after inflation has eaten away at the real value of the loan. For example, if all your stock investments increase by 10%/year but you sell every year, in a high-tax bracket situation you're total after-tax return will be only 8% per year. In contrast, if you hold the same investments for many many years and then sell, your total return will be nearly 10% per year, because you only pay 20% once (at the end). 4) A capital gain can often be neutralized by a capital loss in another stock, so that no tax results. If you loose money on a stock that is paying dividends, you're still going to have to pay tax on that dividend. There are companies that borrow money to pay out that taxable-dividend each quarter, which seems like gross tax malpractice on the part of the CFO. (If the dividend paradox doesn't make sense, first consider the case that you owned ALL the shares of a company. It wouldn't matter to you at all on a pre-tax basis whether you got a $1000 company buyback or a $1000 dividend, because after the buyback/dividend you'd still own the entire company and $1000. The number of shares would be reduced, but objecting that you owned fewer shares after the buyback would be like saying you have become shorter if your height is measured in inches rather than centimeters.) [Of course, in the case of many shareholders you can get burned by failing to sell into the buyback when the share price is too high, but that is another matter.] |
Is it worth working at home to earn money? Can I earn more money working at home? | It completely depends on what type of work you intend to do. Are you intending to run/setup your own business? Or stay with your current employer, but work from home instead of going to the office? If thats the case, then yes it is a good idea, since you will save on commuting costs amongst other things If you are asking about working from home under one of those "work from home piecework" schemes, I would be wary. Many of them require you do an insane amount of piecework, for literally peanuts, so it might not be worth the effort (since you could earn 2, 3x as much in a supermarket shift of the same duration) |
Ways to establish credit history for international student | I would like to post a followup after almost a quarter. littleadv's advice was very good, and in retrospect exactly what I should have done to begin with. Qualifying for a secured credit card is no issue for people with blank credit history, or perhaps for anyone without any negative entries in their credit history. Perhaps, cash secured loans are only useful for those who really have so bad a credit history that they do not qualify for any other secured credit, but I am not sure. Right now, I have four cash secured credit cards and planning to maintain a 20% utilization ratio across all of them. Perhaps I should update this answer in 1.5 years! |
how do capital gains work if you don't know the original purchase price? | There are two scenarios to determine the relevant date, and then a couple of options to determine the relevant price. If the stocks were purchased in your name from the start - then the relevant date is the date of the purchase. If the stocks were willed to you (i.e.: you inherited them), then the relevant date is the date at which the person who willed them to you had died. You can check with the company if they have records of the original purchase. If it was in "street name" - they may not have such records, and then you need to figure out what broker it was to hold them. Once you figured out the relevant date, contact the company's "investor relationships" contact and ask them for the adjusted stock price on that date (adjusted for splits/mergers/acquisitions/whatever). That would be the cost basis per share you would be using. Alternatively you can research historical prices on your favorite financial information site (Google/Yahoo/Bloomberg or the stock exchange where the company is listed). If you cannot figure the cost basis, or it costs too much - you can just write cost basis as $0, and claim the whole proceeds as gains. You'll pay capital gains tax on the whole amount, but that may end up being cheaper than conducting the investigation to reveal the actual numbers. |
Taxation from variations in currency | According to the answers to this question, you generally aren't taxed on gains until you sell the asset in question. None of those answered specifically for the U.K., so perhaps someone else will be able to weigh in on that. To apply those ideas to your question, yes your gains and losses are taxable. If you originally traded something worth $100 for the bitcoins, then when you converted back to dollars you received $200, you would have a $100 gain, simply on the foreign exchange trade. That is, this $100 of income is in addition to any income you made from your business (selling goods). |
Do retailers ever stock goods just to make other goods sell better? | They may stock items that frame the various price points. Of course they risk having the items go stale before they are sold. You also have situations where the store will advertise an item, but end up taking a loss on that sale because it will bring people in, and they will make other purchases. Determining what to stock, how to display it, and how to advertise it involves both math and psychology. |
How to avoid tax when taking a windfall in small chunks? | I agree with the other posters that you will need to seek the advice of a tax attorney specializing in corporate taxation. Here is an idea to investigate: Could you sell the company, and thereby turn the profits that are taxed as ordinary income into a long-term capital gain (taxed at 15%, plus state income tax, if any)? You can determine the value of a profitable business using discounted cash flow analysis, even if you expect that the revenue stream will dry up due to product obsolescence or expiry of licensing agreements. To avoid the capital gains taxes (especially if you live in a high-tax state like California), you could also transfer the stock to a Charitable Remainder Trust. The CRT then sells the shares to the third-party acquirer, invests the proceeds and pays you annual distributions (similar to an annuity). The flip side of a sale is that now the acquiring party will be stuck with the taxes payable on your company's profits (while being forced to amortize the purchase price over multiple years -- 15, if I recall correctly), which will factor into the valuation. However, it is likely that the acquirer has better ways to mitigate the tax impact (e.g. the acquirer is a company currently operating at a loss, and therefore can cancel out the tax liabilities from your company's profits). One final caveat: Don't let the tax tail wag the business dog. In other words, focus your energies on extracting the maximum value from your company, rather than trying to find convoluted tax saving strategies. You might find that making an extra dollar in profits is easier than saving fifty cents in taxes. |
What's the difference between TaxAct and TurboTax? | I typed my information into both last year, and while they were not exactly the same, they were within $10 of each other. For my simple 2009 taxes they were not different in any meaningful way. |
How does high frequency trading work if money isn't available for 2-3 days after selling? | As previously answered, the solution is margin. It works like this: You deposit e.g. 1'000 USD at your trading company. They give you a margin of e.g. 1:100, so you are allowed to trade with 100'000 USD. Let's say you buy 5'000 pieces of a stock at $20 USD (fully using your 100'000 limit), and the price changes to $20.50 . Your profit is 5000* $0.50 = $2'500. Fast money? If you are lucky. Let's say before the price went up to 20.50, it had a slight dip down to $19.80. Your loss was 5000* $0.2 = 1'000$. Wait! You had just 1000 to begin with: You'll find an email saying "margin call" or "termination notice": Your shares have been sold at $19.80 and you are out of business. The broker willingly gives you this credit, since he can be sure he won't loose a cent. Of course you pay interest for the money you are trading with, but it's only for minutes. So to answer your question: You don't care when you have "your money" back, the trading company will always be there to give you more as long as you have deposit left. (I thought no one should get margin explained without the warning why it is a horrible idea to full use the ridiculous high margins some broker offer. 1:10 might or might not be fine, but 1:100 is harakiri.) |
What does it mean for a company to have its market cap larger than the market size? | It is ALWAYS possible for a company's valuation in the market to be larger than the market it serves, and in fact it is not uncommon. There's valid argument that Uber would be a good example of this, with a market cap of more than $60 billion. Market cap is the total value of all shares outstanding. Keep in mind that what a company's shares trade for is less a reflection of its past (or, to some degree, even present) revenue activity and more of a speculative bet on what the company will do in the future. |
Is there a mathematical formula to determine a stock's price at a given time? | I found the answer. It was the Stock Ticker that I was looking for. So, if I understand correctly the price at certain moment is the price of the latest sale and can be used to get a global picture of what certain stock is worth at that certain instant. |
Is there a good options strategy that has a fairly low risk? | By coincidence, I entered this position today. Ignore the stock itself, I am not recommending a particular stock, just looking at a strategy. The covered call. For this stock trading at $7.47, I am able, by selling an in-the-money call to be out of pocket $5.87/sh, and am obliged to let it go for $7.00 a year from now. A 19% return as long as the stock doesn't drop more than 6% over that time. The chart below shows maximum profit, and my loss starts if the stock trades 21% below current price. The risk is shifted a bit, but in return, I give up potential higher gains. The guy that paid $1.60 could triple his money if the stocks goes to $12, for example. In a flat market, this strategy can provide relatively high returns compared to holding only stocks. |
Why is tax being paid on my salary multiple times? | Your wages are an expense to your employer and are therefore 100% tax deductible in the business income. The company should not be paying tax on that, so your double-tax scenario, as described, isn't really correct. [The phrase "double taxation" with respect to US corporations usually comes into play with dividends. In that case, however, it's the shareholders (owners) that pay double. The answer to "why?" in that case can only be "because it's the law."] |
How can all these countries owe so much money? Why & where did they borrow it from? | By the phrasing of your question it seems that you are under the mistaken impression that countries are borrowing money from other countries, in which case it would make sense to question how everyone can be a borrower with no one on the other side of the equation. The short answer is that the debt is owed mostly to individuals and institutions that buy debt instruments. For example, you know those US savings bonds that parents are buying to save for their children's education? Well a bond is just a way to loan money to the Government in exchange for the original money plus some interest back later. It is as simple as that. I think because the debt and the deficit are usually discussed in the context of more complex macroeconomic concerns people often mistakenly assume that national debts are denominated in some shadow banking system that is hidden from the common person behind some red-tape covered bureaucracy. This is not the case here. Why did they get themselves into this much debt? The same reason the average person does, they are spending more than they bring in and are enabled by access to easy credit. Like many people they are also paying off one credit card using another one. |
Are there Investable Real Estate Indices which track Geographical Locations? | Yes. S&P/ Case-Shiller real-estate indices are available, as a single national index as well as multiple regional geographic indices. These indices are updated on the last Tuesday of every month. According to the Case-Shiller Index Methodology documentation: Their purpose is to measure the average change in home prices in 20 major metropolitan areas... and three price tiers– low, middle and high. The regional indices use 3-month moving averages, published with a two-month lag. This helps offset delays due to "clumping" in the flow of sales price data from county deed recorders. It also assures sufficient sample sizes. Regional Case-Shiller real-estate indices * Source: Case-Shiller Real-estate Index FAQ. The S&P Case-Shiller webpage has links to historical studies and commentary by Yale University Professor Shiller. Housing Views posts news and analysis for the regional indices. Yes. The CME Group in Chicago runs a real-estate futures market. Regional S&P/ Case-Schiller index futures and options are the first [security type] for managing U.S. housing risk. They provide protection, or profit, in up or down markets. They extend to the housing industry the same tools, for risk management and investment, available for agriculture and finance. But would you want to invest? Probably not. This market has minimal activity. For the three markets, San Diego, Boston and Los Angeles on 28 November 2011, there was zero trading volume (prices unchanged), no trades settled, no open interest, see far right, partially cut off in image below. * Source: Futures and options activity[PDF] for all 20 regional indices. I don't know the reason for this situation. A few guesses: Additional reference: CME spec's for index futures and options contracts. |
How to sell option with no volume | A few observations - A limit order can certainly work, as you've seen. I've put in such an order far beyond the true value, and gotten back a realistic bid/ask within 10 minutes or so. That at least gave me an idea where to set my limit. When this doesn't work, an exercise is always another way to go. You'll get the full intrinsic value, but no time value, by definition. Per your request in comment - You own a put, strike price $100. The stock (or ETF) is trading at $50. You buy the stock and tell the broker to exercise the put, i.e. deliver the stock to the buyer of the put. |
Is it ever a good idea to close credit cards? | There is also security aspect. By reducing the number of active credit/debit cards, one significantly reduces the surface of attack. There is smaller chance of getting one of your card information stolen and misused (cf Target data leaks and others). |
How to keep control of shared expenses inside marriage? | Being new does not allow me yet to vote on your question, but what a good question it is. We share our opinion in separating finances in our very well going mariage. Currently I have found a sort of okay solution in two websites. These are http://www.yunoo.nl and http://www.moneytrackin.com/. You can actually tag spendings with multiple tags. I don't like the idea that the data is on a remote server, but since I have not found a proper local software solution, I just naively trust their promise that your data is save. Then again our financial situation is not that special. |
Investing thought experiment | Yes, if your assumptions are correct then your conclusions are correct. But your assumptions are never correct, and so this thought experiment doesn't tell us anything useful. |
Is Stock Trading legal for a student on F-1 Visa doing CPT in USA? | There are no legal reasons preventing you from trading as a F-1 visa holder, as noted in this Money.SE answer. Per this article, here are the things you need to set up an account: What do I need to have for doing Stock trading as F1 student ? Typically, most of the stock brokerage firms require Social Security Number (SSN) for stock trading. The reason is that, for your capital gains, it is required by IRS for tax purposes. If you work on campus, then you would already get SSN as part of the job application process…Typically, once you get the on-campus job or work authorization using CPT or OPT , you use that offer letter and take all your current documents like Passport, I-20, I-94 and apply for SSN at Social Security Administration(SSA) Office, check full details at SSA Website . SSN is typically used to report job wages by employer for tax purposes or check eligibility of benefits to IRS/Government. I do NOT have SSN, Can I still do stock trading as F1 student ? While many stock brokerage firms require SSN, you are not out of luck, if you do not have one…you will have to apply for an ITIN Number ( Individual Taxpayer Identification Number ) and can use the same when applying for stock brokerage account. While some of the firms accept ITIN number, it totally depends on the stock brokering firm and you need to check with the one that you are interested in. The key thing is that you'll need either a SSN or ITIN to open a US-based brokerage account. |
Personal finance software for Mac that can track stocks and mutual funds? (Even manual updating of share prices will do.) | I currently use Moneydance on my Mac. Before that I had used Quicken on a PC until version 2007. It is pretty good, does most simple investment stuff just fine. It can automatically download prices for regular stocks. Mutual funds I have to input by hand. |
What choices should I consider for investing money that I will need in two years? | Never invest money you need in the short term. As already suggested, park your money in CDs. |
Annuities question - Equations of value | These are the steps I'd follow: $200 today times (1.04)^10 = Cost in year 10. The 6 deposits of $20 will be one time value calculation with a resulting year 7 final value. You then must apply 10% for 3 years (1.1)^3 to get the 10th year result. You now have the shortfall. Divide that by the same (1.1)^3 to shift the present value to start of year 7. (this step might confuse you?) You are left with a problem needing 3 same deposits, a known rate, and desired FV. Solve from there. (Also, welcome from quant.SE. This site doesn't support LATEX, so I edited the image above.) |
Pros & cons in Hungary of investing retirement savings exclusively in silver? What better alternatives, given my concerns? | Because most of the posters have disparaged the pursuit of silver without a reflection upon what you wrote in the question - your concern about Hungary and its government, I'll weigh in it. In a stable and solid political and economic environment, this advice against silver would be generally correct. As you commented, though, this has not been the case and thus it is difficult for some to understand this. Given your concerns, here's a question to reflect upon - what can the government of Hungary not confiscate? Or what have they not confiscated in the past? If silver is on that list, then very few people here will understand because statements like, To be honest, I think a lot of people on this site are doing you a disservice by taking your idea as seriously as they are, are completely predicated on an environment that has been relatively stable over the years. I know my fellow Americans (and some Europeans) don't get this, but some countries have seen disasters - for instance, Brazil has been hyperinflation even when interest rates with insane interest rates (over 1000%). So this answer won't be popular, but depending on your environment, silver may be an excellent choice. If the government of Hungary has confiscated silver in the past (or you suspect they might), though, I'd stay far away from it. In reading and listening to people in these environments, citizens typically want something the government does want to take inventory of that tend to hold their value or rise during times of crisis. Most Americans (if they were honest) really can't relate to this and the few that can would agree. Another popular item to have, which doesn't physically exist, is a rare, but valuable skill that will be needed in a crisis. For instance, being highly skilled at negotiation and knowing the right people both come in handy at difficult times. Can you pay for learning or increasing those skill sets now? Never forget that self-investment can go far. And as a financial note and word of advice from someone who's been a financial adviser for over half a decade, a good financial adviser always seeks to get the person's information before providing advice and almost never says that a particular choice is always bad or always good; I would seldom say that a person should do one thing and it will always be good advice because that may not work in their country/state/environment/situation/etc. As they say in the SQL Server community - "it depends" and that holds true for finance. In the long run, those items which we may not think of as good investments or stores of value may end up having their day. To paraphrase Solomon, "There's a time and place for everything under the sun." Even in my short life, I've witnessed a period of gold and silver routing the stock market and the stock market routing gold and silver. I suspect I'll see both again if I live a few more decades. tl;dr |
Pay off debt with RRSPs, or refinance and roll into Mortgage? | I would personally look at consolidating your debt at a lower interest rate by refinancing your mortgage. I would leave any retirement funds alone unless it was absolutely necessary to touch it with no other avenues available. However, once you have consolidated your debt into the mortgage I would pay more than the minimum amount so that you don't take too long to pay it off. I would put about 50% of the freed-up cash flow back into the repayments, that way you will be paying more debt off quicker and you will have additional cash flow to help your monthly budget. Another good point would be to go through your monthly budget to see if there is any expenses you could reduce or eliminate. |
Friend was brainwashed by MLM-/ponzi investment scam. What can I do? | Even though this is really a psychology question, I'll try to give you an answer. You do nothing but stay away. What's going on is too small to matter. Bernie Madoff took investor's money and scammed them for $15B. That's B, billion, 9 zeros (Yes, I realize the UK Billion has 12, these are US Billion). Harry Markopolos was on to him, and presented his evidence to the government, but "No one would listen." In quotes because that's the title of the book he published on his experience. Even Barron's had an article suggesting that Madoff's returns were impossible. Eventually, it came to light. In my own experience, there was a mortgage acceleration product called "Money Merge Account." It claimed to help you pay off your mortgage in a fraction of the time "with no change to your budget." For two years or so, I was obsessed with exposing this scam, and wrote articles, nearly every week discussing every aspect of this product. Funny how even though mortgages are math that's pretty easy to explain, few sellers wanted to talk about the math. Using the same logic that you don't need to understand how a car works as long as you know how to drive. There were some people that would write to tell me I saved them the $3500 cost of that product, but mostly I argued with sellers who dismissed every word I wrote as if the math were incomprehensible to anyone but the software guys who wrote it. In the end, I had compiled a PDF with over 60 pages of my writing on the topic, and decided to call it quits. The product was recycled and now is sold as "Worth Unlimited," but the software is the same. This is all a tangent to your problem. It simply offers the fact that the big scam, Bernie, continued for a long time, and people who were otherwise intelligent, fell for his promises, and didn't want to believe otherwise. The mortgage software had many bloggers writing. Searching on the web found a lot of discussion, very easy to find. People will believe what they wish. Tell an Atheist that God exists, or a believer that He doesn't, and your words will fall on deaf ears. Unfortunately, this is no different. |
What does it mean to a life insurance policy holder to convert from a stock to mutual insurance company? | A stock insurance company is structured like a “normal” company. It has shareholders (that are the company's investors), who elect a board of directors, who select the senior executive(s), who manage the people who run the actual company. The directors (and thus the executives and employees) have a legal responsibility to manage the company in a way which is beneficial for the shareholders, since the shareholders are the ultimate owner of the company. A mutual insurance company is similar, except that the people holding policies are also the shareholders. That is, the policyholders are the ultimate owners of the company, and there generally aren't separate shareholders who are just “investing” in the company. These policyholder-shareholders elect the board of directors, who select the senior executive(s), who manage the people who run the actual company. In practice, it probably doesn't really make a whole lot of difference, since even if you're just a "customer" and not an "owner" of the company, the company is still going to want to attract customers and act in a reasonable way toward them. Also, insurance companies are generally pretty heavily regulated in terms of what they can do, because governments really like them to remain solvent. It may be comforting to know that in a mutual insurance company the higher-ups are explicitly supposed to be working in your best interest, though, rather than in the interest of some random investors. Some might object that being a shareholder may not give you a whole lot more rights than you had before. See, for example, this article from the Boston Globe, “At mutual insurance firms, big money for insiders but no say for ‘owners’ — policyholders”: It has grown into something else entirely: an opaque, poorly understood, and often immensely profitable world in which some executives and insiders operate with minimal scrutiny and, no coincidence, often reap maximum personal rewards. Policyholders, despite their status as owners, have no meaningful oversight of how mutual companies spend their money — whether to lower rates, pay dividends, or fund executive salaries and perks — and few avenues to challenge such decisions. Another reason that one might not like the conversion is the specific details of how the current investor-shareholders are being paid back for their investment in the process of the conversion to mutual ownership, and what that might do to the funds on hand that are supposed to be there to keep the firm solvent for the policyholders. From another Boston Globe article on the conversion of SBLI to a mutual company, “Insurer SBLI wants to get banks out of its business,” professor Robert Wright is cautiously optimistic but wants to ensure the prior shareholders aren't overpaid: Robert Wright, a professor in South Dakota who has studied insurance companies and owns an SBLI policy, said he would prefer the insurer to be a mutual company that doesn’t have to worry about the short-term needs of shareholders. But he wants to ensure that SBLI doesn’t overpay the banks for their shares. “It’s fine, as long as it’s a fair price,” he said. That article also gives SBLI's president's statement as to why they think it's a good thing for policyholders: If the banks remained shareholders, they would be likely to demand a greater share of the profits and eat into the dividends the insurance company currently pays to the 536,000 policyholders, about half of whom live in Massachusetts, said Jim Morgan, president of Woburn-based SBLI. “We’re trying to protect the policyholders from having the dividends diluted,” Morgan said. I'm not sure there's an obvious pros/cons list for either way, but I'd think that I'd prefer the mutual approach, just on the principle that the policyholders “ought” to be the owners, because the directors (and thus the executives and employees) are then legally required to manage the company in the best interest of the policyholders. I did cast a Yes vote in my proxy on whether SBLI ought to become a mutual company (I'm a SBLI term-life policyholder.) But policy terms aren't changing, and it'd be hard to tell for sure how it'd impact any dividends (I assume the whole-life policies must be the ones to pay dividends) or company solvency either way, since it's not like we'll get to run a scientific experiment trying it out both ways. I doubt you'd have a lot of regrets either way, whether it becomes a mutual company and you wish it hadn't or it doesn't become one and you wish it had. |
Where can I find information on the percentage of volume is contributed by shorts? | You can do a lot of deduction FINRA keeps a "REG-SHO" list created daily that tells what the daily short volume is. March 26th 2014's list: http://regsho.finra.org/FNSQshvol20140326.txt If you are talking about the United States, this answer may be better ;) |
Can a shareholder be liable in case of bankruptcy of one of the companies he invested in? | Not normally, for a limited liability company anyway. In extreme circumstances a court may "lift the veil" of incorporation and treat shareholders as if they were partners. If you are an office bearer or a director that is found to have breached duties/responsibiities then that is another matter. Dim views can be taken of shonky arrangents for companies formed for activites not of a bona fide business nature too. |
How does one typically exit (close out) a large, in-the-money long put option position? | The question is, how do I exit? I can't really sell the puts because there isn't enough open interest in them now that they are so far out of the money. I have about $150K of funds outside of this position that I could use, but I'm confused by the rules of exercising a put. Do I have to start shorting the stock? You certainly don't want to give your broker any instructions to short the stock! Shorting the stock at this point would actually be increasing your bet that the stock is going to go down more. Worse, a short position in the stock also puts you in a situation of unlimited risk on the stock's upside – a risk you avoided in the first place by using puts. The puts limited your potential loss to only your cost for the options. There is a scenario where a short position could come into play indirectly, if you aren't careful. If your broker were to permit you to exercise your puts without you having first bought enough underlying shares, then yes, you would end up with a short position in the stock. I say "permit you" because most brokers don't allow clients to take on short positions unless they've applied and been approved for short positions in their account. In any case, since you are interested in closing out your position and taking your profit, exercising only and thus ending up with a resulting open short position in the underlying is not the right approach. It's not really a correct intermediate step, either. Rather, you have two typical ways out: Sell the puts. @quantycuenta has pointed out in his answer that you should be able to sell for no less than the intrinsic value, although you may be leaving a small amount of time value on the table if you aren't careful. My suggestion is to consider using limit orders and test various prices approaching the intrinsic value of the put. Don't use market orders where you'll take any price offered, or you might be sorry. If you have multiple put contracts, you don't need to sell them all at once. With the kind of profit you're talking about, don't sweat paying a few extra transactions worth of commission. Exercise the puts. Remember that at the other end of your long put position is one (or more) trader who wrote (created) the put contract in the first place. This trader is obligated to buy your stock from you at the contract price should you choose to exercise your option. But, in order for you to fulfill your end of the contract when you choose to exercise, you're obligated to deliver the underlying shares in exchange for receiving the option strike price. So, you would first need to buy underlying shares sufficient to exercise at least one of the contracts. Again, you don't need to do this all at once. @PeterGum's answer has described an approach. (Note that you'll lose any remaining time value in the option if you choose to exercise.) Finally, I'll suggest that you ought to discuss the timing and apportioning of closing out your position with a qualified tax professional. There are tax implications and, being near the end of the year, there may be an opportunity* to shift some/all of the income into the following tax year to minimize and defer tax due. * Be careful if your options are near expiry! Options typically expire on the 3rd Friday of the month. |
Why can't you just have someone invest for you and split the profits (and losses) with him? | The 2 and 20 rule is a premium arrangement that hedge funds offer and venture capital funds offer, and they also offer different variations of it. The 2 is the management fee as percent of assets under management, the 20 is the profit cut, which they only get if they are profitable. There are 0/20, 1/15, and many variations. You're assuming that nobody offers this arrangement because it isn't offered to you, but that's because nobody offers it to people that aren't wealthy enough to legally qualify for their fund. When you park 6 or 7 figure amounts in bank accounts, they'll send your information out to the funds that operate the way you wish they operated. |
In US, is it a good idea to hire a tax consultant for doing taxes? | Good professional tax advice is expensive. If your situation is simple, then paying someone doesn't give you more than you could get from a simple software package. In this case, doing your own taxes will save you money this year, and also help you next year, as your situation grows steadily more complex. If you don't do your own taxes when you're single with a part time job, you'll never do it when you have a family, a full time job, a side business, and many deductions. Learning how to do your taxes over time, as your 'tax life' becomes complex, is a valuable skill. If your situation is complex, you will need pay a lot to get it done correctly. Sometimes, that cost is worthwhile. At bare minimum, I would say 'attempt to do your taxes yourself, first'. This will force you to organize your files, making the administrative cost of doing your return lower (ie: you aren't paying your tax firm to sort your receipts, because you've already ordered them nicely with your own subtotals, everything perfectly stapled together). If your situation is complex, and you find a place to get it done cheaply (think H&R Block), you will not be getting value for service. I am not saying a low-end tax firm will necessarily get things wrong, but if you don't have a qualified professional (read: university educated and designated) doing your return, the complexities can be ignored. Low-end tax firms typically hire seasonal staff, train them for 1-2 weeks, and mostly just show them how to enter tax slips into the same software you could buy yourself. If you underpay for professional services, you will pay the price, metaphorically speaking. For your specific situation, I strongly recommend you have a professional service look at your returns, because you are a non-resident, meaning you likely need to file in your home country as well. Follow what they do with your return, and next year, see how much of it you can do yourself. Before you hire someone, get a fee quote, and shop around until you find someone you are comfortable with. $1k spent now could save you many headaches in the future. |
In what ways can a public company ask for money? | There are many different methods for a corporation to get money, but they mostly fall into three categories: earnings, debt and equity. Earnings would be just the corporation's accumulation of cash due to the operation of its business. Perhaps if cash was needed for a particular reason immediately, a business may consider selling a division or group of assets to another party, and using the proceeds for a different part of the business. Debt is money that (to put it simply) the corporation legally must repay to the lender, likely with periodic interest payments. Apart from the interest payments (if any) and the principal (original amount leant), the lender has no additional rights to the value of the company. There are, basically, 2 types of corporate debt: bank debt, and bonds. Bank debt is just the corporation taking on a loan from a bank. Bonds are offered to the public - ie: you could potentially buy a "Tesla Bond", where you give Tesla $1k, and they give you a stated interest rate over time, and principal repayments according to a schedule. Which type of debt a corporation uses will depend mostly on the high cost of offering a public bond, the relationships with current banks, and the interest rates the corporation thinks it can get from either method. Equity [or, shares] is money that the corporation (to put it simply) likely does not have a legal obligation to repay, until the corporation is liquidated (sold at the end of its life) and all debt has already been repaid. But when the corporation is liquidated, the shareholders have a legal right to the entire value of the company, after those debts have been paid. So equity holders have higher risk than debt holders, but they also can share in higher reward. That is why stock prices are so volatile - the value of each share fluctuates based on the perceived value of the entire company. Some equity may be offered with specific rules about dividend payments - maybe they are required [a 'preferred' share likely has a stated dividend rate almost like a bond, but also likely has a limited value it can ever receive back from the corporation], maybe they are at the discretion of the board of directors, maybe they will never happen. There are 2 broad ways for a corporation to get money from equity: a private offering, or a public offering. A private offering could be a small mom and pop store asking their neighbors to invest 5k so they can repair their business's roof, or it could be an 'Angel Investor' [think Shark Tank] contributing significant value and maybe even taking control of the company. Perhaps shares would be offered to all current shareholders first. A public offering would be one where shares would be offered up to the public on the stock exchange, so that anyone could subscribe to them. Why a corporation would use any of these different methods depends on the price it feels it could get from them, and also perhaps whether there are benefits to having different shareholders involved in the business [ie: an Angel investor would likely be involved in the business to protect his/her investment, and that leadership may be what the corporation actually needs, as much or more than money]. Whether a corporation chooses to gain cash from earnings, debt, or equity depends on many factors, including but not limited to: (1) what assets / earnings potential it currently has; (2) the cost of acquiring the cash [ie: the high cost of undergoing a public offering vs the lower cost of increasing a bank loan]; and (3) the ongoing costs of that cash to both the corporation and ultimately the other shareholders - ie: a 3% interest rate on debt vs a 6% dividend rate on preferred shares vs a 5% dividend rate on common shares [which would also share in the net value of the company with the other current shareholders]. In summary: Earnings would be generally preferred, but if the company needs cash immediately, that may not be suitable. Debt is generally cheap to acquire and interest rates are generally lower than required dividend rates. Equity is often expensive to acquire and maintain [either through dividend payments or by reduction of net value attributable to other current shareholders], but may be required if a new venture is risky. ie: a bank/bondholder may not want to lend money for a new tech idea because it is too risky to just get interest from - they want access to the potential earnings as well, through equity. |
Idea for getting rich using computers to track stocks | I (and probably most considering trading) had a similar thought as you. I thought if I just skimmed the peaks and sold before the troughs, perhaps aided by computer, I'd be able to make a 2% here, 2% there, and that would add up quickly to a nice amount of money. It almost did seem "foolproof". Then I realized that sometimes a stock just slides...down...and there is no peak higher than what I bought it for. "That's OK," I'd think, "I'm sure it will recover and surpass the price I bought it for...so now I play the waiting game." But then it continues sliding, and my $10k is now worth $7k. Do I sell? Did I build a stop loss point into my computer program? If so, what is the right place to put that stop? What if there is a freak dip down and it triggers the stop loss but THEN my stock recovers? I just lost $14,000 like this last week--luckily, only virtually! The point is, your idea only has half a chance to work when there is a mildly volatile stock that stays around some stable baseline, and even then it is not easy. And then you factor in fees as others mentioned... People do make money doing this (day traders), and some claim you can use technical analysis to time orders well, so if you want to try that, read about technical analysis on this site or elsewhere. |
Why can't you just have someone invest for you and split the profits (and losses) with him? | At this point the cost of borrowing money is very low. For the sake of argument, say it is 1% per year for a large institution. I can either go out and find a client to invest 100,000$ and split profit and loss with them. Or, I could borrow 50,000$, pay 500$/year in interest, and get the same return and loss, while moving the market half as much (which would let me double my position!) In both cases the company is responsible for covering all fixed costs, like paying for traders, trades, office space, branding, management, regulatory compliance, etc. For your system to work, the cost to gather clients and interact with them has to be significantly less than 1% of the capital they provide you per year. At the 50% level, that might actually be worth it for the company in question. Except at the 50% level you'd have really horrible returns even when the market went up. So suppose a more reasonable level is the client keeps 75% of the returns (which compares to existing companies which offer larger investors an 80% cut on profits, but no coverage on losses). Now the cost to gather and interact with clients has to be lower than 2500$ per million dollars provided to beat out a simple loan arrangement. A single sales employee with 100% overhead (office, all marketing, support, benefits) earning 40,000$/year has to bring in 32 million dollar-years worth of investment every year to break even. Cash is cheap. Investment houses sell cash management, and charge for it. They don't sell shared investment risk (at least not to retail investors), because it would take a lot of cash for it to be worth their bother. More explicitly, for this to be viable, they'd basically have to constantly arrange large hedges against the market going down to cover any losses. That is the kind of thing that some margin loans may require. That would all by itself lower their profits significantly, and they would be exposed to counter-party risk on top of that. It is much harder to come up with a pile of cash when the markets go down significantly. If you are large enough to be worthwhile, finding a safe counterparty may be nearly impossible. |
US Banks offering Security Tokens in 2012 | Charles Schwab and HSBC offer security tokens. |
Are long-term bonds risky assets? | Bonds have multiple points of risk: This is part of the time value of money chapter in any finance course. Disclaimer - Duff's answer popped up as I was still doing the bond calculations. Similar to mine but less nerdy. |
If I own x% of company A, and A buys company B, do I own x% of B? | No, thanks to the principle of corporate personhood. The legal entity (company C) is the owner and parent of the private company (sub S). You and C are separate legal entities, as are C and S. This principle helps to legally insulate the parties for purposes such as liability, torts, taxes, and so forth. If company C is sued, you may be financially at stake (i.e. your investment in C is devalued or made worthless) but you are not personally being sued. However, the litigant may attach you as an additional litigant if the facts of the suit merit it. But without legal separateness of corporations, then potentially all owners and maybe a number of the employees would be sued any time somebody sued the business - which is messy for companies and messy for litigants. It's also far cleaner for lenders to lend to unified business entities rather than a variety of thousands of ever-shifting shareholders. Note that this is a separate analysis that assumes the companies are not treated as partnerships or disregarded entities (tax nothings) for tax purposes, in which case an owner may for some purposes be imputed to own the assets of C. I've also ignored the consolidated tax return, which would allow C and S to file a type of corporate joint return that for some purposes treats them similarly to common entity. For the simplest variation of your question, the answer is no. You do not own the assets of a corporation by virtue of owning a few of its shares. Edit: In light of your edit to include FB and Whatsapp, and the wrinkle about corporate books. If sub S is 100% owned by company C, then you do not have any inspection rights to S because you are not a shareholder. You also do not have virtual corporation inspection rights through company C. However, if a person has inspection rights to company C, and sub S appears on the books and financial records of C, then your C rights will do the job of seeing S information. However, Facebook is a public company, so they will make regular public filings and disclosures that should at least partly cover Whatsapp. So I hedge and clear my throat by averring that my securities training is limited, but I believe that the SEC filings of a public company will as a practical matter (maybe a matter of law?) moot the inspection rights. At the very least, I suspect you'd need a proper purpose (under DGCL, for example), to demand the inspection, and they will have already made extensive disclosures that I believe will be presumptively sufficient. I defer to more experienced securities experts on that question, but I don't believe inspection rights are designed for public companies. |
How to minimise the risk of a reduction in purchase power in case of Brexit for money held in a bank account? | If you are really worried your best bet is to move all your cash from Sterling into a foreign currency that you think will be resilient should Brexit occur. I would avoid the Euro! You could look at the US Dollar perhaps, make sure you are aware of the charges for moving the money over and back again, as you will at some stage probably want to get back into Sterling once it settles down, if it does indeed fall. Based on my experience on the stock markets (I am not a currency trader) I would expect the pound to fall fairly sharply on a vote for Brexit and the Euro to do the same. Both would probably rebound quite quickly too as even if there is a Brexit vote it doesn't mean the UK Government will honour the outcome or take the steps quickly. ** I AM NOT A FINANCIAL ADVISOR AND HAVE NO QUALIFICATIONS AS SUCH ** |
Options profit calculation and cash settlement | The other two answers seem basically correct, but I wanted to add on thing: While you can exercise an "American style" option at any time, it's almost never smart to do so before expiration. In your example, when the underlying stock reaches $110, you can theoretically make $2/share by exercising your option (buying 100 shares @ $108/share) and immediately selling those 100 shares back to the market at $110/share. This is all before commission. In more detail, you'll have these practical issues: You are going to have to pay commissions, which means you'll need a bigger spread to make this worthwhile. You and those who have already answered have you finger on this part, but I include it for completeness. (Even at expiration, if the difference between the last close price and the strike price is pretty close, some "in-the-money" options will be allowed to expire unexercised when the holders can't cover the closing commission costs.) The market value of the option contract itself should also go up as the price of the underlying stock goes up. Unless it's very close to expiration, the option contract should have some "time value" in its market price, so, if you want to close your position at this point, earlier then expiration, it will probably be better for you to sell the contract back to the market (for more money and only one commission) than to exercise and then close the stock position (for less money and two commissions). If you want to exercise and then flip the stock back as your exit strategy, you need to be aware of the settlement times. You probably are not going to instantly have those 100 shares of stock credited to your account, so you may not be able to sell them right away, which could leave you subject to some risk of the price changing. Alternatively, you could sell the stock short to lock in the price, but you'll have to be sure that your brokerage account is set up to allow that and understand how to do this. |
Do there exist any wikipedia type sites for evaluating financial service providers? | It is always a good idea if you are worried about customer service and hidden gotchas to visit http://getsatisfaction.com - they operate as an independent complaint board for many companies. http://getsatisfaction.com/bankofamerica for example alerts you to many problems with using BofA. In addition, googling for common complaint terms is a great idea. It's easy to learn why bank of america sucks and to see that not too many people think bank of america rocks. |
Credit card closed. Effect on credit score (USA) | So My question is. Is my credit score going to be hit? Yes it will affect your credit. Not as much as missing payments on the debt, which remains even if the credit line is closed, and not as much as missing payments on other bills... If so what can I do about it? Not very much. Nothing worth the time it would take. Like you mentioned, reopening the account or opening another would likely require a credit check and the inquiry will add another negative factor. In this situation, consider the impact on your credit as fact and the best way to correct it is to move forward and pay all your bills on time. This is the number one key to improving credit score. So, right now, the key task is finding a new job. This will enable you to make all payments on time. If you pay on time and do not overspend, your credit score will be fine. Can I contact the creditors to appeal the decision and get them to not affect my score at the very least? I know they won't restore the account without another credit check). Is there anything that can be done directly with the credit score companies? Depending on how they characterize the closing of the account, it may be mostly a neutral event that has a negative impact than a negative event. By negative events, I'm referring to bankruptcy, charge offs, and collections. So the best way to recover is to keep credit utilization below 30% and pay all your bills and debt payments on time. (You seem to be asking how to replace this line of credit to help you through your unemployment.) As for the missing credit line and your current finances, you have to find a way forward. Opening new credit account while you're not employed is going to be very difficult, if not impossible. You might find yourself in a situation where you need to take whatever part time gig you can find in order to make ends meet until your job search is complete. Grocery store, fast food, wait staff, delivery driver, etc. And once you get past this period of unemployment, you'll need to catch up on all bills, then you'll want to build your emergency fund. You don't mention one, but eating, paying rent/mortgage, keeping current on bills, and paying debt payments are the reasons behind the emergency fund, and the reason you need it in a liquid account. Source: I'm a veteran of decades of bad choices when it comes to money, of being unemployed for periods of time, of overusing credit cards, and generally being irresponsible with my income and savings. I've done all those things and am now paying the price. In order to rebuild my credit, and provide for my retirement, I'm having to work very hard to save. My focus being financial health, not credit score, I've brought my bottom line from approximately 25k in the red up to about 5k in the red. The first step was getting my payments under control. I have also been watching my credit score. Two years of on time mortgage payments, gradual growth of score. Paid off student loans, uptick in score. Opened new credit card with 0% intro rate to consolidate a couple of store line of credit accounts. Transferred those balances. Big uptick. Next month when utilization on that card hits 90%, downtick that took back a year's worth of gains. However, financially, I'm not losing 50-100 a month to interest. TLDR; At certain times, you have to ignore the credit score and focus on the important things. This is one of those times for you. Find a job. Get back on your feet. Then look into living debt free, or working to achieve financial independence. |
Can I buy and sell a house quickly to access the money in a LISA? | I've got £476,000 but the maximum house price is £450,000. What happens to the £26,000. Does it stay there with ~6% interest (and no bonus of course), and would be available when I retire at around 75 (there would be about £106,000 by then)? Yes, anything you don't withdraw for your house purchase stays in the Lifetime ISA and keeps growing there. Also you do keep the bonus on it, which was paid at the time you subscribed, unless you make a withdrawal before age 60. After age 60 you can withdraw and keep the bonus. Note that you need to be buying with a mortgage to be allowed to use the lifetime ISA money (without penalty). This is mentioned on the gov.uk website as well as in the actual regulations that establish lifetime ISAs (search for "first time residential purchase" and look at clause (6)). That would mean you'd need to withdraw even less than the £450K and artificially borrow the rest. All that said, I suspect the £450K limit would be raised by 2049, given inflation. Can I buy a house and "quickly" sell it again, to simply access the money, The regulations say that on completion of the purchase, you must "occupy the land as their only or main residence" (there are a few exceptions, such as if it's still being built, or if you are at the time posted abroad by the government, but essentially you have to move in as soon as possible). There's no time limit stated in the regulations, so in theory you could move in and then sell quite fast, but personally I'd be nervous about this being seen as not genuinely intending it to be my main residence. In theory you could be prosecuted for fraud if you claimed a valid withdrawal when it wasn't, though given the wording of the regulations it looks like you'd be complying with the letter of the law. |
What does a stock's quoted value represent? | Price for the latest transaction. If the stock is selling for $898.7 means that the stock is currently trading for $898.7, and it will be your ask price of stock if you purchase currently. |
Expecting to move in five years; how to lock mortgage rates? | If interest rates have gone up, don't sell when you move. Refinance to lock in a low rate and rent out your current house when you move. Let the rent pay your new mortgage. |
How can I legally and efficiently help my girlfriend build equity by helping with a mortgage? | I just wanted to give you a different perspective, as I own a house (purchased with a mortgage), with my girlfriend. I think it can be done safely and fairly, but you do need to involve legal help to do it right. There really is nothing to be terrified about, the extra cost to set this up was almost irrelevant in the bigger picture of legal costs around purchasing and the documents describing the ownership scheme are quite straightforward. Maybe it's a UK thing, but it seems rather commonplace here. We've chosen to hold this as "tenants in common" and use a trust deed for this when we purchased. We had a solicitor write the trust deed and it clearly states what percentage of the house is owned by either party and exactly what the steps would be taken, should we decide to end the trust (e.g. in case of a split-up). This includes things like the right to buy out the other person before selling on the market etc. We also had to make wills separately to indicate what should happen with our percentage of the property in case one of us died as with this type of ownership it doesn't automatically go to the other person. Finally we're both on the mortgage, which I guess is the main difference versus your situation. But again, you could get legal advice as to how this should best be handled. |
Why can't I short a stock that sells for less than $5? Is there another way to “go short” on them? | Timothy Sykes specializes in this type of trade, according to his website. He has some recommendations for brokers that allow shorting low-priced stocks: |
Which types of insurances do I need to buy? | Evaluate if the Rs 5 million term insurance is sufficient. Typically the term insurance provided by employer is in the range of 1 to 3 times the gross. Generally one should be covered in the range of 5 to 10 times the Gross. The sooner you start the lesser the premium and you can get insured for a large amount for a long duration at very nominal rate. NOTE: You can also buy a health insurance for your father, note these typically come at high cost, generally if over 70 years of age, 25% is the premium amount and 25% as co-pay. So if your dad doesn't fall ill once in 3 years, its a loss making proposition. Edit: Accident insurance best take is along with rider on term plan. Additional Health insurance is a good idea and helps if you are in between jobs. Plus the new company health insurance can reject a particular treatment as "Pre-Existing". i.e. certain illness [in certain plans] require one to have coverage for 3 years before the claim for it can be covered. |
I'm halfway through a 5-year purchase financing deal on my car. It's expensive. Can I sell it and get a cheaper car? | You say "it's expensive". I'm going to interpret this as "the monthly payments are too high". Basically, you need to get your old loan paid off, presumably by selling the car you have now. This is the tough part. If you sold the car now, how much would you get for it? You can use Kelley Blue Book to figure out what the car is roughly worth. That's not a guarantee that it will actually sell for that much. Look in your local classifieds to see what similar cars are selling for. (Keep in mind that you will usually get less for your old car if you trade it in versus sell it yourself.) Now, if you owe more than your car is worth, you're in a really tight spot. If you don't get enough money when you sell it, you are still stuck with the remainder of the loan. In that case, it is usually best to just stick with the car you have, and be more cautious about payments and loan length the next time you finance a car. Penalties: Most car loans don't have any kind of early repayment penalty. However, you should check your loan paperwork just to make sure. |
High dividend stocks | You might want to look up Dividend Yield Trap. Many stocks with high dividend yields got that way not because they decided to increase their dividend, but because their prices have dropped. Usually the company is not in good shape and will reduce their dividend, and you're stuck with a low-yield stock which has also decreased in price. |
How to sell a worthless option | The market maker will always take it off your hands. Just enter a market sell order. It will cost you a commission to pull the loss into this year. But that's it. |
Can a merchant charge you more in the US if you want to use a credit card? | I'm not sure about the laws in specific states. However it's part of their merchant agreement that they can not charge a fee for a customer paying with credit card. It's also against merchant agreements to require a minimum purchase to use a credit card, although this is less commonly enforced. Apparently (http://fso.cpasitesolutions.com/premium/le/06_le_ic/fg/fg-merchants.html) merchants can offer a cash discount. Offering payment by credit card, though practically a requirement in todays retail environment, is a privilege for the merchant. It's a way of making buying convenient for the customer. As a result, penalizing the customer in any way is not just against their agreement, but rather disingenuous as well. edit: here's a bit more information about what they can and can't do. Amex prohibits discrimination, so if a merchant can't do something to a Visa/MC customer they can't do it to an Amex customer either. http://fso.cpasitesolutions.com/premium/le/06_le_ic/fg/fg-merchants.html |
Trading an FHA loan to bank for an REO | What you are suggesting will not work. Banks have strict guidelines about what they can and cannot do with an FHA loan property. Remember the FHA is only an insurance policy to the bank saying that if you default they will cover a high percentage of the loan. The bank won't take the risk of violating their insurance policy and the government refusing to pay them off if you default. Instead, consider doing a creative sale on your property, maybe a rent to own deal or owner financing. As long as you pay the mortgage the bank won't even know you don't live there and you can rent the house out to someone who eventually will buy it after the timeframe expires. Meanwhile you can go and get a new home or condo either thru regular financing or owner financing(search the internet to see how to do this) and you can use owner financing until you complete the sale of the first house. Otherwise just tough it out in the house you are in until the time expires and then sell. You made no mention of the property value but I am assuming if you bought it 3 years ago that you may have a little equity. Pleas note that if you sell at that time though you will likely have to come out of cash because your equity won't cover the realtor fee and closing cost. But if you do the rent to own I suggested earlier you can sell at a slightly higher price making sure you can cover those cost. I realize this answer is a little out the box but I deal with people who don't want properties all day and I have completed transactions like this many times. Good Luck and God Bless! |
Why does AAPL trade at such low multiples? | This is also an opinion, the iPhone makes up too much of the company's total revenue. Last quarter results were very well received because of the somewhat dramatic increase in service revenue indicating that maybe the company can shift from relying so heavily on the iPhone. As it stands, Apple is a single product company and that hinders long term prospects, hence the relatively low multiple. And the company has missed estimates, in fact one of those large dips was an earnings miss. Additionally, if you're looking at the charts another one of the recent dips was likely caused by the brexit vote because everything was clobbered for a couple of days after that. |
Is giving my girlfriend money for her mortgage closing costs and down payment considered fraud? | With the standard "I am not a lawyer" disclaimer, consider this question: If you and your girlfriend split up sometime after purchasing the house but before getting married, would you expect her to repay you for the closing costs and downpayment? That is, if you write her a check for $5k, and 6 months after she signs the papers for the house one of you decides to break up with the other, would you expect her to write you a check for $5k in return? That is the difference between "a gift" and "a loan disguised as a gift". If the answer is no, you don't expect it back, then everything is fine and you're in the clear - it's perfectly legal to give someone money. If the answer is yes, you would want to be "paid back", then it's not a gift and you run the risk of running afoul of the regulations. With respect to a previous answer about "gifting money that is not taxed", in the US one person can give another up to $14,000 without worrying about gift taxes, and even in the event that you exceed that amount, the excess would simply eat into the lifetime exemption of $5,250,000. (Individual states may have different rules and exempt amounts that would apply to state taxes.) Please also consider the income issue for your "rental agreement". Your GF would be expected to declare that amount and pay income tax on it as a business. She might also declare part of that amount as expected income for purposes of securing the loan, but that may run into its own issues (you're not a roommate, and presumably the home is not a duplex or set up as apartments, and presumably she would not offer a similar deal to someone other than you). |
Forex vs day trading for beginner investor | Are you in the US? Because if so, there are tax discrepancies. Gains from sale of stocks held for less than one year are subject to ordinary income tax, so probably around 30%. If you hold those stocks for a year or more, gains will be taxed as capital gains tax, 15%. For Forex, taxes on your earnings will be split 60/40. 60% will be traded at the lower 15% rate, while the remaining 40& will be taxed at a higher rate, approximately 30%. So purely short-term, there is a tax advantage to dabbling in Forex. HOWEVER - these are both incredibly risky things to do with your money! I never would recommend anyone invest short-term looking to make quick cash! In fact, the tax code DISCOURAGES people from short-term investments. |
Is it unreasonable to double your investment year over year? | Nobody has consistently doubled their investment year after year, not even the "greats" like George Soros and Warren Buffett. Mr. Buffett's average annual returns have been over 20% for over 50 years. That's about twice the American average of 10%-11% a year. So Mr. Buffett has been "twice as good as average" for his adult life. That's like having a 200 IQ. And in a poll taken in 2000, he was rated the greatest portfolio manager of all time. No lesser person could hope to do better. What has happened is that people may double their investment in ONE year, then "give some back" the following year. Or else go through several years of "average" 10%-15% returns. The reason is that they will have an investment style that works for one particular market, but not for all markets, so they will have to wait for their "best" market, to have their "best" year. |
How is the time-premium on PUT options calculated | According to Yahoo, AAPL was trading at $113.26 at 1:10 PM on 11/13/15, which is the approximate time of your option quote. You provided a quote for AAPL at 4:15, and the stock happened to keep going down most of the that afternoon. To make a sensible comparison, you need to take contemporary prices on both the stock and the option. The quote on the option also shows the "price" being outside of the bid-ask range, which suggests that the option was trading thinly and that the last price occurred sometime earlier in the day. If you use a price in the bid-ask range ($21.90-$22.30) and use the price of AAPL at the time of the put quote, you'll come up with a price that's much closer to your expectation. |
Student loan payments and opportunity costs | Ponder this. Suppose that a reputable company or government were to come out and say hey, we are going to issue some 10 year bonds at 6.4%. Anyone interested in buying some? Assume that the company or government is financially solid and there is zero chance that they will go bankrupt. Think those bonds would sell? Would you be interested in buying such a bond? Well, I would wager that these bonds would sell like hotcakes, despite the fact that the long term stock market return beats it by a half percent. Heck, vanguard's junk bond fund is hot right now. It only yields 4.9% and those are junk bonds, not rock solid companies (see vanguard high yield corporate bond fund) Every time you make an extra principal payment on your student loan, you are effectively purchasing a investment with a rock solid, guaranteed 6.4% return for 10 years (or whatever time you have left on the loan if make no extra payments). On top of that, paying off a loan early builds your credit reputation, improves your monthly cash flow once the loan is paid, may increase your purchasing power for a house or car, and if nothing else, it frees you from being a slave to that debt payment every month. Edit Improved wording based on Ross's comment |
IS it the wrong time to get into the equity market immediately after large gains? | If your gut told you to buy during the depths of '09, your gut might be well-calibrated. The problem is stock market declines during recessions are frequently not that large relative to the average long run return of 9%: A better strategy might be hold a percentage in equities based upon a probability distribution of historical returns. This becomes problematic because of changes in the definition of earnings and the recent inflation stability which has encouraged high valuations: Cash flow has not been as corrupted as earnings now, and might be a better indicator: This obviously isn't perfect either, but returns can be improved. Since there is no formulaic way yet conventionally available, the optimal primary strategy is still buy & hold which has made the most successful investor frequently one of the richest people on the planet for decades, but this could still be used as an auxiliary for cash management reserves during recessions once retired. |
Can we estimate the impact of a large buy order on the share price? | If you look at a trade grid you can see how this happens. If there are enough bids to cover all shares currently on the sell side at a certain price, those shares will be bought and increased price quotes will be shown for the bids and ask. If there are enough bids to cover this price, those will get bought and higher prices will be shown and this process will repeat until the sell side has more power than the buy side. It seems like this process is going on all day long with momentum either on the upside or downside. But I think that much of this bidding and selling is automatic and is being done by large trading firms and high tech computers. I also feel that many of these bids and asks are already programmed to appear once there is a price change. So once one price gets bought, computers will put in higher bids to take over asks. It's like a virtual war between trading firms and their computers. When more money is on the buy side the stock will go up, and vice versa. I sort of feel like this high-frequency trading is detrimental to the markets and doesn't really give everyone a fair shot. Retail investors do not have the resources and knowledge in order to do this sort of high frequency trading. It also seems to go against certain free market principles in my opinion. |
Deriving the put-call parity | Think of it this way: C + (-P) = forward contract. Work it out from there. Anyways, this stack is meant for professionals, not students, I think. |
Investment strategy for retired couple | The safest investment in the United States is Treasures. The Federal Reserve just increased the short term rate for the first time in about seven years. But the banks are under no obligation to increase the rate they pay. So you (or rather they) can loan money directly to the United States Government by buying Bills, Notes, or Bonds. To do this you set up an account with Treasury Direct. You print off a form (available at the website) and take the filled out form to the bank. At the bank their identity and citizenship will be verified and the bank will complete the form. The form is then mailed into Treasury Direct. There are at least two investments you can make at Treasury Direct that guarantee a rate of return better than the inflation rate. They are I-series bonds and Treasury Inflation Protected Securities (TIPS). Personally, I prefer the I-series bonds to TIPS. Here is a link to the Treasury Direct website for information on I-series bonds. this link takes you to information on TIPS. Edit: To the best of my understanding, the Federal Reserve has no ability to set the rate for notes and bonds. It is my understanding that they can only directly control the overnight rate. Which is the rate the banks get for parking their money with the Fed overnight. I believe that the rates for longer term instruments are set by the market and are not mandated by the Fed (or anyone else in government). It is only by indirect influence that the Fed tries to change long term rates. |
Can I pay off my credit card balance to free up available credit? | Is it possible to pay off my balance more than once in a payment period in order to increase the amount I can spend in a payment period? Yes you can pay off the balance more than once even if its not due. This will get applied to outstanding and you will be able to spend again. If so, is there a reason not to do this? There is no harm. However note that it generally takes 2-3 days for the credit to be applied to the card. Hence factor this in before you make new purchases. I just got a credit card to start rebuilding my credit. Spending close to you credit limit does not help much; compared to spending less than 10% of your credit limit. So the sooner you get your limit on card increased the better. |
Do I need to file a 1099 form for contractors associated with hobby income? | You are expected to file 1099 for each person you pay $600 a year. I.e.: not a one time payment, but the total over the course of the year. Since we don't know how much and what else you paid - we cannot answer this question. The real question you're asking is that if you're treating the enterprise as a hobby, whether you're supposed to file 1099s at all. The answer to that question is yes. You should talk to your tax adviser (a EA/CPA licensed in your state) about this, and whether it is the right thing for you to do treating this as a hobby at all. |
Are precious metals/collectibles a viable emergency fund? | If you were asking if you should buy silver for an emergency fund, I'd say no. But, you already have it... Note: I wrote most of the below under the assumption that this is silver bullion coins/bars; it didn't occur to me till the end that it could be jewelry. Both of you have good arguments for your points of view. Breaking it down: Her points 1. A very good point. And while she may not be irresponsible, maybe the invisibility of it is good for her psychology? It's her's, so her comfort is important here. 2. Good. Make sure it's explicitly listed on the policy. 3. Bad. I think it will as well, at least the long run. But, this is not a good reason for an emergency fund -- the whole point of which is to be stable in case of emergencies. 4. Good. Identity theft is a concern, though unless her info is already "out there", it's insufficient for the emergency fund. And besides, she could keep cash. Your points 1. Iffy. On the one hand, you're right. On the other hand, Cyprus. It is good to remember that money in accounts is in someone else's control, not yours, as the Cypriots found out to their chagrin. And of course, it can't happen here, but that's what they thought too. There is value in having some hard assets physically in your control. Think of it as an EMERGENCY emergency fund. Cash works too, but precious metals are better for these mega-upheaval scenarios. Again, find out how having such an EMERGENCY fund would make her feel. Does having that give her some comfort? A gift from a family member of this much silver leads me to assume that her family might have a little bit of a prepper culture. If so, then even if she is not a prepper herself, she may derive some comfort from having it, just in case -- it'll be baked into her background. Definitely a topic to discuss with her. 2. Excellent point. This is precisely why you want your emergency fund in some form of cash. 3. Bad. You can walk into any pawn shop and sell it in a heartbeat. Or you can send it in to a company and have cash in days. 4. Bad. If you know a savings account that pays 3%-4%, please, please, please tell me where it is so I can get one. Fact is, all cash instruments pay negligible interest now, and all such savings are being eroded by inflation. 5. Maybe. There is value to looking at your net worth this way, but my experience has been that those that do take it way too far. I think there's more value at looking at allocation within a few broad "buckets" -- emergency fund, savings (car, house, college, etc), and retirement fund. If this is to be an EMERGENCY fund, as per point #1, then you should look at it as its own bucket (and maybe add a little cash too). Another thought to add: This is a gift from a family member -- they gave her a lot of silver. Of course it's your SO's now, and she can do whatever she wants with it, but how would the family member react if she did liquidate it? If that family member is a prepper, and gave her this with the emotional desire to see her prepped, they may be upset if she sold it. It just occurred to me this may be jewelry. Your SO may not have sentimental attachment to it, but what about the family member's sentiments? They may not like to see family silver they loving maintained and passed on casually discarded for mere cash by your SO. Another thing to discuss with her. Wrap up Generally, you are right about not keeping a 6 month emergency fund in silver. But there are other factors to consider here. There's also the fact that it's already bought -- the cost of buying (paying over market) has already been taken. Edit -- so it's silverware Ah, so it's silverware. Well, scratch everything, except how the family member feels about, which now looms large. This doesn't have much value as an emergency fund. Nor really as an investment. If you did keep it as an investment, think of it as an investment in collectibles/art, less so in precious metals. If no one will get upset, I'd say pick out the nicest set to keep for special occasions, and sell the rest. Find out first if it has collectible or historical value. It may be worth far more than the pure weight in silver. Ebay might be the way to go to sell it. |
A stock just dropped 8% in minutes and now all of a sudden the only way to buy is on the ask, what does this mean? | It doesn't sound fishy at all to me. Just seems like you may be dealing with a company that has relatively light trading volume to begin with, meaning that small trades could easily make the price drop 8% (which isn't much if you're talking about a stocks in the $5 or less range. If someone sells at the bid and the bid happens to be 8% lower than the current price, that bid is now the price, hence the drop. The bid moving up afterward, just means that someone is now willing to place a higher order than what the last trade was, to try to get in. |
What happens to all of the options when they expire? | Firstly "Most option traders don't want to actually buy or sell the underlying stock." THIS IS COMPLETELY UTTERLY FALSE Perhaps the problem is that you are only familiar with the BUY side of options trading. On the sell side of options trading, an options desk engages in DELTA HEDGING. When we sell an option to a client. We will also buy an appropriate amount of underlying to match the delta position of the option. During the life time of the option. We will readjust our hedge position whenever the delta changes (those who follow Black Scholes will know that normally that comes from (underlying) price changes). However, we lose money on each underlying change (we have to cross the bid-ask spread for each trade). That is why we lose money when there is volatility. That is why we are said to be "short VEGA" or "short volatility". So one way to think about "buying" options, is that you are paying someone to execute a specific trading strategy. In general, those who sell options, are also happy to buy options back (at a discount of course, so we make a profit). But when doing so, we need to unroll our hedging position, and that again incurs a cost (to us, the bank). Finally. Since this is "money" stackexchange rather than finance. You are most likely referring to "warrants" rather than "options", which are listed on stock exchanges. The exchange in most regions give us very specific and restrictive regulations that we must abide by. One very common one is that we MUST always list a price which we are willing to buy the warrants back at (which may not be an unreasonable spread from the sell price). Since an Option is a synthetically created investment instrument, when we buy back the Option from the investor, we simply unwind the underlying hedging positions that we booked to synthesize the Options with. Source: I've worked 2 years on a warrant desk, as a desk developer. |
What risks are there acting as a broker between PayPal and electronic bank transfers? | This is definitely a scam. I had a friend sign up for a very similar offer and what they did was send a fake check and then asked to transfer the same amount to them. So now you just send them a couple grand and you're holding a fake check. |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.