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Long-term capital gain taxes on ETFs? | Generally, ETFs and mutual funds don't pay taxes (although there are some cases where they do, and some countries where it is a common case). What happens is, the fund reports the portion of the gain attributed to each investor, and the investor pays the tax. In the US, this is reported to you on 1099-DIV as capital gains distribution, and can be either short term (as in the scenario you described), long term, or a mix of both. It doesn't mean you actually get a distribution, though, but if you don't - it reduces your basis. |
Mexican Index Mutual Funds | The recommendations you read were, very probably, talking about US listed funds in US dollars. The mexican Bolsa de Valores says that they list over 600 mutual funds so "Yes" you can invest in Mexico using Pesos if that is what you want. You need a Corredor de Bolsa or mexico broker. Here they are. Most international investors use exchange traded funds ETF because theirs fees are cheaper than mutual funds. The ETF are mostly listed and traded in us stock exchange. Here they are. US mutual funds are in dollars and, because you are living in Mexico, you will have a currency risk and probably taxes. Mexico mutual funds in Pesos do not carry any currency exposure unless the companies involved do business in the United States. You have to think about your currency exposure. B. Veo |
What is a checking account and how does it work? | A checking account is one that permits the account holder to write demand drafts (checks), which can be given to other people as payment and processed by the banks to transfer those funds. (Think of a check as a non-electronic equivalent of a debit card transaction, if that makes more sense to you.) Outside of the ability to write checks, and the slightly lower interest rate usually offered to trade off against that convenience, there really is no significant difference between savings and checking accounts. The software needs to be designed to handle checking accounts if it's to be sold in the US, since many of us do still use checks for some transactions. Adding support for other currencies doesn't change that. If you don't need the ability to track which checks have or haven't been fully processed, I'd suggest that you either simply ignore the checking account feature, or use this category separation in whatever manner makes sense for the way you want to manage your money. |
How does Robinhood stock broker make money? | Charging very high prices for additional standard services: See Commission & Fees: https://brokerage-static.s3.amazonaws.com/assets/robinhood/legal/RHF%20Retail%20Commisions%20and%20Fees%20Schedule.pdf Link is down in the footer, to the left... |
3% Equity options in software company, entitles me to revenue share? | It might, but it also might not. The Board of Directors gets to decide whether and how much dividends are paid to stockholders. So this will vary from company to company and may change over time. I suggest you ask the person making the offer. That said: It looks like they offered you OPTIONS, not Shares. An option is just the right to buy stock at a given price in the future. It is extremely unlikely that you would be entitled to any dividends since you don't have an ownership stake, just a potential to be a shareholder. |
What is “beta” for an investment or a portfolio, and how do I use it? | Beta is an indication of a Stock's risk with respect to the market. For instance if a stock had a beta of 1 it means it is in tandem with the S&P 500. If it is more than 1, the stock is volatile. If it is less than 1, it implies market movement doesn't affect this stock much. Tech stocks and small cap stocks have high beta, utilities have low beta. (In general, not always). Hope this helps - I've tried to explain it in very simple terms! |
When a stock price rises, does the company get more money? | When a stock price rises, the company's assets are worth more. This doesn't mean it gets more cash directly, but it can liquidate (= sell) some of its stocks for a higher return than before. |
Taxable income on full-time job + business earnings | I'm not sure I am fully understanding the nuance of your question, but based on your answer in the comments you and your business are not separate legal entities. So your income is the full $70K, there is no distinct business to have income. If you clarify your question to include why you want to know this I might be able to give a more meaningful answer for your situation. |
When I ask a broker to buy stock, what does the broker do? | You or the broker place an order to buy the share with the stock exchange. There has to be a matching sell order by someone. Once a match is made, you pay the money and get the share. |
If stock price drops by the amount of dividend paid, what is the use of a dividend | I'm not a financial expert, but saying that paying a $1 dividend will reduce the value of the stock by $1 sounds like awfully simple-minded reasoning to me. It appears to be based on the assumption that the price of a stock is equal to the value of the assets of a company divided by the total number of shares. But that simply isn't true. You don't even need to do any in-depth analysis to prove it. Just look at share prices over a few days. You should easily be able to find stocks whose price varied wildly. If, say, a company becomes the target of a federal investigation, the share price will plummet the day the announcement is made. Did the company's assets really disappear that day? No. What's happened is that the company's long term prospects are now in doubt. Or a company announces a promising new product. The share price shoots up. They may not have sold a single unit of the new product yet, they haven't made a dollar. But their future prospects now look improved. Many factors go into determining a stock price. Sure, total assets is a factor. But more important is anticipated future earning. I think a very simple case could be made that if a stock never paid any dividends, and if everyone knew it would never pay any dividends, that stock is worthless. The stock will never produce any profit to the owner. So why should you be willing to pay anything for it? One could say, The value could go up and you could sell at a profit. But on what basis would the value go up? Why would investors be willing to pay larger and larger amounts of money for an asset that produces zero income? Update I think I understand the source of the confusion now, so let me add to my answer. Suppose that a company's stock is selling for, say, $10. And to simplify the discussion let's suppose that there is absolutely nothing affecting the value of that stock except an expected dividend. The company plans to pay a dividend on a specific date of $1 per share. This dividend is announced well in advance. Everyone knows that it will be paid, and everyone is extremely confidant that in fact the company really will pay it -- they won't run out of money or any such. Then in a pure market, we would expect that as the date of that dividend approaches, the price of the stock would rise until the day before the dividend is paid, it is $11. Then the day after the dividend is paid the price would fall back to $10. Why? Because the person who owns the stock on the "dividend day" will get that $1. So if you bought the stock the day before the dividend, the next day you would immediately receive $1. If without the dividend the stock is worth $10, then the day before the dividend the stock is worth $11 because you know that the next day you will get a $1 "refund". If you buy the stock the day after the dividend is paid, you will not get the $1 -- it will go to the person who had the stock yesterday -- so the value of the stock falls back to the "normal" $10. So if you look at the value of a stock immediately after a dividend is paid, yes, it will be less than it was the day before by an amount equal to the dividend. (Plus or minus all the other things that affect the value of a stock, which in many cases would totally mask this effect.) But this does not mean that the dividend is worthless. Just the opposite. The reason the stock price fell was precisely because the dividend has value. BUT IT ONLY HAS VALUE TO THE PERSON WHO GETS IT. It does me no good that YOU get a $1 dividend. I want ME to get the money. So if I buy the stock after the dividend was paid, I missed my chance. So sure, in the very short term, a stock loses value after paying a dividend. But this does not mean that dividends in general reduce the value of a stock. Just the opposite. The price fell because it had gone up in anticipation of the dividend and is now returning to the "normal" level. Without the dividend, the price would never have gone up in the first place. Imagine you had a company with negligible assets. For example, an accounting firm that rents office space so it doesn't own a building, its only tangible assets are some office supplies and the like. So if the company liquidates, it would be worth pretty much zero. Everybody knows that if liquidated, the company would be worth zero. Further suppose that everyone somehow knows that this company will never, ever again pay a dividend. (Maybe federal regulators are shutting the company down because it's products were declared unacceptably hazardous, or the company was built around one genius who just died, etc.) What is the stock worth? Zero. It is an investment that you KNOW has a zero return. Why would anyone be willing to pay anything for it? It's no answer to say that you might buy the stock in the hope that the price of the stock will go up and you can sell at a profit even with no dividends. Why would anyone else pay anything for this stock? Well, unless their stock certificates are pretty and people like to collect them or something like that. Otherwise you're supposing that people would knowingly buy into a pyramid scheme. (Of course in real life there are usually uncertainties. If a company is dying, some people may believe, rightly or wrongly, that there is still hope of reviving it. Etc.) Don't confuse the value of the assets of a company with the value of its stock. They are related, of course -- all else being equal, a company with a billion dollars in assets will have a higher market capitalization than a company with ten dollars in assets. But you can't calculate the price of a company's stock by adding up the value of all its assets, subtracting liabilities, and dividing by the number of shares. That's just not how it works. Long term, the value of any stock is not the value of the assets but the net present value of the total future expected dividends. Subject to all sorts of complexities in real life. |
How to handle taxes related to affiliate marketing? | Is it right that I request form W-9 or form W-8BEN (for non U.S. citizens) from the affiliate users before sending them payments? Not just OK. Required. I know that I have to send form 1099, but I don't know where does this form should go to. Should I send it to the IRS or the affiliate user or both? Both. There's also form 1096 that you need to send to the IRS. Read the instructions. Should I send form 1099 once a year or each time I make a payment to the affiliate? Once a year. Read the instructions. Do I have to send form 1099 when the money earned by the affiliate hit a certain threshold or I have to send it anyway? $600 or more requires the form, but you can send for any amount. Read the instructions. Is there any other forms or documents to request from or send to the affiliate user or the IRS? There may be additional forms. Especially if the recipient is a foreign person and you withhold taxes. Talk to your tax adviser. |
How to calculate 1 share movement | The price of a share has two components: Bid: The highest price that someone who wants to buy shares is willing to pay for them. Ask: The lowest price that someone who has a share is willing to sell it for. The ask is always higher than the bid, since if they were equal the buyer and seller would have a deal, make a transaction, and that repeats until they are not equal. For stock with high volume, there is usually a very small difference between the bid and ask, but a stock with lower volume could have a major difference. When you say that the share price is $100, that could mean different things. You could be talking about the price that the shares sold for in the most recent transaction (and that might not even be between the current bid and ask), or you could be talking about any of the bid, the ask, or some value in between them. If you have shares that you are interested in selling, then the bid is what you could immediately sell a share for. If you sell a share for $100, that means someone was willing to pay you $100 for it. If after buying it, they still want to buy more for $100 each, or someone else does, then the bid is still $100, and you haven't changed the price. If no one else is willing to pay more than $90 for a share, then the price would drop to $90 next time a transaction takes place and thats what you would be able to immediately sell the next share for. |
What is the difference between the asset management division in an investment bank and an investment company? | I would say that there is no real difference. Asset management companies that is part of large banking groups usually seat in separate entities and operate independently from the rest of the bank. Assuming proper procedures (and regulators usually check that) are in place they will not share information with the rest of the bank and their assets are clearly segregated from the rest of the bank. They have the same fiduciary duties as an independent AM and are probably using the broker/dealer services of other banks as well as their parent. Reputation is a key issue for banks and conflict of interests are usually managed properly. Independence also comes and goes. The corporate history of Neuberger Berman is a good example. Neuberger Berman was once an independent asset manager. In 2003, it merged with Lehman Brothers, thus loosing its independence. When Lehman went bankrupt in 2008, NB did not join its parent company in bankruptcy and did not lose the assets of its clients. The company continued to operate until it was acquired by the management. Finally it is mostly a question of marketing and positioning. |
What prevents investors from buying high yield stocks and selling them as soon as their dividend is paid out? | This investment strategy may have tax advantages. In some countries, income received from dividends is taxed as income, whereas profits on share trades are capital gains. If you have already exceeded your tax-free income limit for the year, but not your capital gains tax allowance, it may be preferable to make a dealing profit rather than an investment income. These arrangements are called a bed-and-breakfast. |
How much should a new graduate with new job put towards a car? | So many answers here are missing the mark. I have a $100k mortgage--because that isn't paid off, I can't buy a car? That's really misguided logic. You have a reasonably large amount of college debt and didn't mention any other debt-- It's a really big deal what kind of debt this is. Is it unsecured debt through a private lender? Is it a federal loan from the Department of Education? Let's assume the worst possible (reasonable) situation. You lose your job and spend the next year plus looking for work. This is the boat numerous people out of college are in (far far far FAR more than the unemployment rates indicate). Federal loans have somewhat reasonable (indentured servitude, but I digress) repayment strategies; you can base the payment on your current income through income-based and income-continent repayment plans. If you're through a private lender, they still expect payment. In both cases--because the US hit students with ridiculous lending practices, your interest rates are likely 5-10% or even higher. Given your take-home income is quite large and I don't know exactly the cost of living where you live--you have to make some reasonable decisions. You can afford a car note for basically any car you want. What's the worst that happens if you can't afford the car? They take it back. If you can afford to feed yourself, house yourself, pay your other monthly bills...you make so much more than the median income in the US that I really don't see any issues. What you should do is write out all your monthly costs and figure out how much unallocated money you have, but I'd imagine you have enough money coming in to finance any reasonable new or used car. Keep in mind new will have much higher insurance and costs, but if you pick a good car your headaches besides that will be minimal. |
Buying an option in the money, at the money, or out of the money | I look for buying a call option only at the money, but first understand the background above: Let's suppose X stock is being traded by $10.00 and it's January The call option is being traded by $0.20 with strike $11.00 for February. (I always look for 2% prize or more) I buy 100 stocks by $10.00 each and sell the option, earning $0.20 for each X stock. I will have to deliver my stocks by $11.00 (strike value agreed). No problem for me here, I took the prize plus the gain of $1.00. (continuing from item 3) I still can sell the option for the next month with strike equal or higher than that I bought. For instance, I can sell a call option of strike $10.00 and it might be worth to deliver stocks by $10.00 and take the prize. (continuing from item 3) Probably, it won't be possible to sell a call option with strike at the price that I paid for the stock, but that's not a problem. At the end of the option life (in February), the strike was $11.00 but the stock's price is $8.00. I got the $0.20 as prize and my stocks are free for trade again. I'll sell the call option for March with strike $9.00 (taking around 2% of prize). Well, I don't want to sell my stocks by $9.00 and make loss, right? But I'm selling the call option anyway. Then I wait till the price of the stock gets near the strike value (almost ATM) and I "re-buy" the option sold (Example: [StockX]C9 where C means month = March) and sell again the call option with higher strike to April (Example [StockX]D10, where D means month = April) PS.: At item 9 there should be no loss between the action of "re-buy" and sell to roll-out to the next month. When re-buying it with the stock's price near the strike, option value for March (C9) will be lower than when selling it to April (D10). This isn't any rule to be followed, this is just a conservative (I think they call it hedge) way to handle options and stocks. Few free to make money according to your goals and your style. The perfect rule is the one that meet your expectation, don't take the generalized rules too serious. |
Can I pay taxes using bill pay from my on-line checking account? | I can't speak for the US, but I've completed direct tax payments via my online bank account (for business and personal) in two countries (South Africa and the UK). I find it easier and with a better record that the transaction took place than any of the other methods available (including going directly into a tax office to pay by cheque). Mail can go missing. Queueing in their offices takes hours and the result can still be misfiled (by them). Ditto allowing them to do a pay run on your account - they can make a mistake and you'll have difficulty proving it. A payment via my bank account gives me an electronic record and I can ensure all the details are correct myself. In addition, in the UK, paying online gives you a good few months extra grace to pay. Even in South Africa, online payments are given a few weeks grace over physical payments. Their recognising that you paying electronically saves them processing time. |
Official site to follow Warren Buffet's Berkshire Hathaway change in investment holdings? | Are you looking for this Warren Buffets Stock Portfolio? Or Berkshire Hathaway Portfolio WFC is near the bottom of the BH portfolio but it seems to be a rather large investment for both. |
How do I track 401k rollovers in Quicken? | When I did this I sold the stock out of my 401k account. Then transferred the cash to my rollover IRA account. No tax event was created for me. Make sure your rollover IRA account is listed as tax deferred. If this still doesn't work for you then it could be a bug in Quicken and your best bet is the Quicken forums. Good luck. |
How is gold shared in worldwide economies? | Money is no longer backed by gold. It's backed by the faith and credit of the issuing government. A new country,say, will first trade goods for dollars or other currency, so its ownership of gold is irrelevant. Its currency will trade at a value based on supply/demand for that currency. If it's an unstable currency, inflating too quickly, the exchange rate will reflect that as well. More than that your question kind of mixes a number of issues, loosely related. First is the gold question, second, the question of currency exchange rates and they are derived, with an example of a new country. Both interesting, but distinct processes. |
How to value employee benefits? | It would depend on the health insurance that was being offered, and if it covers your family or just you. We pay around $500-600 for individual health insurance for our employees (families cost north of 1500 a month). It's extremely expensive. Provide more details on the stock purchase plan as well (it sounds to me like in that case you'd only be getting for free what it would cost to purchase the stock... but that's only $10-15, so negligible in this case.) |
How to quantify differences in return with low expense ratio vs high expense ratio mutual funds? | Yes you should take in the expenses being incurred by the mutual fund. This lists down the fees charged by the mutual fund and where expenses can be found in the annual statement of the fund. To calculate fees and expenses. As you might expect, fees and expenses vary from fund to fund. A fund with high costs must perform better than a low-cost fund to generate the same returns for you. Even small differences in fees can translate into large differences in returns over time. You don't pay expenses, so the money is taken from the assets of the fund. So you pay it indirectly. If the expenses are huge, that may point to something i.e. fund managers are enjoying at your expense, money is being used somewhere else rather than being paid as dividends. If the expenses are used in the growth of the fund, that is a positive sign. Else you can expect the fund to be downgraded or upgraded by the credit rating agencies, depending on how the credit rating agencies see the expenses of the fund and other factors. Generally comparison should be done with funds invested in the same sectors, same distribution of assets so that you have a homogeneous comparison to make. Else it would be unwise to compare between a fund invested in oil companies and other in computers. Yes the economy is inter twined, but that is not how a comparison should be done. |
What is a normal amount of money to spend per week on food/entertainment/clothing? | Zero? Ten grand? Somewhere in the middle? It depends. Your stated salary, in U.S. dollars, would be high five-figures (~$88k). You certainly should not be starving, but with decent contributions toward savings and retirement, money can indeed be tight month-to-month at that salary level, especially since even in Cardiff you're probably paying more per square foot for your home than in most U.S. markets (EDIT: actually, 3-bedroom apartments in Cardiff, according to Numbeo, range from £750-850, which is US$1200-$1300, and for that many bedrooms you'd be hard-pressed to find that kind of deal in a good infield neighborhood of the DFW Metro, and good luck getting anywhere close to downtown New York, LA, Miami, Chicago etc for that price. What job do you do, and how are you expected to dress for it? Depending on where you shop and what you buy, a quality dress shirt and dress slacks will cost between US$50-$75 each (assuming real costs are similar for the same brands between US and UK, that's £30-£50 per shirt and pair of pants for quality brands). I maintain about a weeks' wardrobe at this level of dress (my job allows me to wear much cheaper polos and khakis most days and I have about 2 weeks' wardrobe of those) and I typically have to replace due to wear or staining, on average, 2 of these outfits a year (I'm hard on clothes and my waistline is expanding). Adding in 3 "business casual" outfits each year, plus casual outfits, shoes, socks, unmentionables and miscellany, call it maybe $600(£400)/year in wardrobe. That doesn't generally get metered out as a monthly allowance (the monthly amount would barely buy a single dress shirt or pair of slacks), but if you're socking away a savings account and buying new clothes to replace old as you can afford them it's a good average. I generally splurge in months when the utilities companies give me a break and when I get "extra" paychecks (26/year means two months have 3 checks, effectively giving me a "free" check that neither pays the mortgage nor the other major bills). Now, that's just to maintain my own wardrobe at a level of dress that won't get me fired. My wife currently stays home, but when she worked she outspent me, and her work clothes were basic black. To outright replace all the clothes I wear regularly with brand-new stuff off the rack would easily cost a grand, and that's for the average U.S. software dev who doesn't go out and meet other business types on a daily basis. If I needed to show up for work in a suit and tie daily, I'd need a two-week rotation of them, plus dress shirts, and even at the low end of about $350 (£225) per suit, $400 (£275) with dress shirt and tie, for something you won't be embarrassed to wear, we're talking $4000 (£2600) to replace and $800 (£520) per year to update 2 a year, not counting what I wear underneath or on the weekends. And if I wore suits I'd probably have to update the styles more often than that, so just go ahead and double it and I turn over my wardrobe once every 5 years. None of this includes laundering costs, which increase sharply when you're taking suits to the cleaners weekly versus just throwing a bunch of cotton-poly in the washing machine. What hobbies or other entertainment interests do you and your wife have? A movie ticket in the U.S. varies between $7-$15 depending on the size of the screen and 2D vs 3D screenings. My wife and I currently average less than one theater visit a month, but if you took in a flick each weekend with your wife, with a decent $50 dinner out, that's between $260-$420 (£165-270) monthly in entertainment expenses. Not counting babysitting for the little one (the going rate in the US is between $10 and $20 an hour for at-home child-sitting depending on who you hire and for how long, how often). Worst-case, without babysitting that's less than 5% of your gross income, but possibly more than 10% of your take-home depending on UK effective income tax rates (your marginal rate is 40% according to the HMRC, unless you find a way to deduct about £30k of your income). That's just the traditional American date night, which is just one possible interest. Playing organized sports is more or less expensive depending on the sport. Soccer (sorry, football) just needs a well-kept field, two goals and and a ball. Golf, while not really needing much more when you say it that way, can cost thousands of dollars or pounds a month to play with the best equipment at the best courses. Hockey requires head-to-toe padding/armor, skates, sticks, and ice time. American football typically isn't an amateur sport for adults and has virtually no audience in Europe, but in the right places in the U.S., beginning in just a couple years you'd be kitting your son out head-to-toe not dissimilar to hockey (minus sticks) and at a similar cost, and would keep that up at least halfway through high school. I've played them all at varying amateur levels, and with the possible exception of soccer they all get expensive when you really get interested in them. How much do you eat, and of what?. My family of three's monthly grocery budget is about $300-$400 (£190-£260) depending on what we buy and how we buy it. Americans have big refrigerators (often more than one; there's three in my house of varying sizes), we buy in bulk as needed every week to two weeks, we refrigerate or freeze a lot of what we buy, and we eat and drink a lot of high-fructose corn-syrup-based crap that's excise-taxed into non-existence in most other countries. I don't have real-world experience living and grocery-shopping in Europe, but I do know that most shopping is done more often, in smaller quantities, and for more real food. You might expect to spend £325 ($500) or more monthly, in fits and starts every few days, but as I said you'd probably know better than me what you're buying and what it's costing. To educate myself, I went to mysupermarket.co.uk, which has what I assume are typical UK food prices (mostly from Tesco), and it's a real eye-opener. In the U.S., alcohol is much more expensive for equal volume than almost any other drink except designer coffee and energy drinks, and we refrigerate the heck out of everything anyway, so a low-budget food approach in the U.S. generally means nixing beer and wine in favor of milk, fruit juices, sodas and Kool-Aid (or just plain ol' tap water). A quick search on MySupermarkets shows that wine prices average a little cheaper, accounting for the exchange rate, as in the States (that varies widely even in the U.S., as local and state taxes for beer, wine and spirits all differ). Beer is similarly slightly cheaper across the board, especially for brands local to the British Isles (and even the Coors Lite crap we're apparently shipping over to you is more expensive here than there), but in contrast, milk by the gallon (4L) seems to be virtually unheard of in the UK, and your half-gallon/2-liter jugs are just a few pence cheaper than our going rate for a gallon (unless you buy "organic" in the US, which carries about a 100% markup). Juices are also about double the price depending on what you're buying (a quart of "Innocent" OJ, roughly equivalent in presentation to the U.S. brand "Simply Orange", is £3 while Simply Orange is about the same price in USD for 2 quarts), and U.S.-brand "fizzy drinks" are similarly at a premium (£1.98 - over $3 - for a 2-liter bottle of Coca-Cola). With the general preference for room-temperature alcohol in Europe giving a big advantage to the longer unrefrigerated shelf lives of beer and wine, I'm going to guess you guys drink more alcohol and water with dinner than Americans. Beef is cheaper in the U.S., depending on where you are and what you're buying; prices for store-brand ground beef (you guys call it "minced") of the grade we'd use for hamburgers and sauces is about £6 per kilo in the UK, which works out to about $4.20/lb, when we're paying closer to $3/lb in most cities. I actually can't remember the last time I bought fresh chicken on the bone, but the average price I'm seeing in the UK is £10/kg ($7/lb) which sounds pretty steep. Anyway, it sounds like shopping for American tastes in the UK would cost, on average, between 25-30% more than here in the US, so applying that to my own family's food budget, you could easily justify spending £335 a month on food. |
What are the implications of a corporate stock repurchase or share buyback program? | A board authorizes the repurchase of shares because they feel the stock in undervalued. The hope is that the stocks will rise either directly by their repurchase, or in the near term due to the realization that the company is in better shape then the market thought. Eventually those shares will be resold back into the market thus bring in more cash at a later date. They will set limits on them maximum they will pay, they will also spread the repurchases out over a time period so they don't overwhelm the market. |
Where can I lookup accurate current exchange rates for consumers? | Current and past FX rates are available on Visa's website. Note that it may vary by country, so use your local Visa website. |
Buy tires and keep car for 12-36 months, or replace car now? | I tend to agree with Rocky's answer. However it sounds like you want to look at this from the numbers side of things. So let's consider some numbers: I'm assuming you have the money to buy the new car available as cash in hand, and that if you don't buy the car, you'll invest it reasonably. So if you buy the new car today, you're $17K out of pocket. Let's look at some scenarios and compare. Assuming: If you buy the new car today, then after 1 year you'll have: If you keep the old car, after 1 year you get: After 2 years, you have: And after 3 years, you're at: Or in other words, nothing depletes the value of your assets faster than buying the new car. After 1 year, you've essentially lost $5K to depreciation. However, over the short term the immediate cost of the tires combined with the continued depreciation of the old car do reduce your purchasing power somewhat (you won't be able to muster $25K towards a new car without chipping in a bit of extra cash), and inflation will tend to drive the cost of the new car up as time goes on. So the relative gap between the value of your assets and the cost of the new car tends to increase, though it stays well below the $5k that you lose to depreciation if you buy the new car immediately. Which is something that you could potentially spin to support whichever side you prefer, I suppose. Though note that I've made some fairly pessimistic assumptions. In particular, the current U.S. inflation rate is under 1%, and a new car may depreciate by as much as 25% in the first year while older cars may depreciate by less than the 8% assumed. And I selected the cheapest new car price cited, and didn't credit the tires with adding any value to your old car. Each of those aspects tends to make continuing to drive the older car a better option than buying the new one. |
What is the best use of “spare” money? | Investing in mutual funds, ETF, etc. won't build a large pool of money. Be an active investor if your nature aligns. For e.g. Invest in buying out a commercial space (on bank finance) like a office space and then rent it out. That would give you better return than a savings account. In few years time, you may be able to pay back your financing and then the total return is your net return. Look for options like this for a multiple growth in your worth. |
Transfer from credit to debit | I've called both BofA and Amex Customer Support, and they couldn't help. That's because you cannot. Debit card is tied to your checking account, so you can do a cash advance from your AMEX and deposit it to your BOA checking account. It will then be available to use with your debit card. |
Do I owe taxes if my deductions are higher than my income? | There's one factor the previous posters apparently missed here: You say "self-employment tax"--in other words, at least some of that $16k is from self employment. In a normal employment situation the FICA tax is taken out of your paycheck, it's normally spot on and generally doesn't show up on your tax return. However, for the self-employed it's another matter. You pay the whole 15.3% from the first dollar and this does show up on your tax return. If it's all self employment money you would have about $2.5k in tax from this. |
Why is it that stock prices for a company seem to go up after a layoff? | AMD is doing more than just laying off staff. Their earnings report also includes sales of real estate and other turn around strategies that could be reflected in the stock coming up on hope from investors. At the same time, consider how much of an up is a definite sign of positive news and how much may just be random noise as even a broken clock will be right twice a day. Often there will be more than just an announcement of x% of staff being laid off. There will be plans to improve future profits and this is what shareholders would want to know. What is the management doing to move the company forward to better profits down the road. |
Starting a large business with a not so large income? | For example, Biff Spoiles started an animation studio and production developing company to produce animations -- something in the ballpark of $12,000,000.00 U.S.D. -- and he had a $12K/yearly salary. I have no clue what you mean, as others have mentioned. (I'm not sure what the "12 million" refers to? Do you mean "total cost of animations created by the company in a year" or? If so, "12 million" would amount to say 5 to 20 major, brand name TV commercials, for example. Do you mean the "cost of plant" - so, for a "TV commercial production company" you mean purchasing desks, drawing pads, Porsches, and so on?) Your specific example of a "film or TV-commercial production company" is a bad example, it's not really a "business" - that is to say, it does not rely on capital and return on capital. The way famous "film or TV-commercial production companies" happens is precisely like this: A young guy/girl G (perhaps a designer or filmmaker) is working, just as you say, for a menial wage at a film company. (G got that first job perhaps out of art school.) G gets a chance at doing a photo shoot, animation, or helping direct a TV commercial. G does a fantastic job. Later that year, a large important animation or commercial job arrives at the company; due to the earlier excellent result, G is allowed to work on the new one. G again he does a fantastic job. Soon, within that company, G is a highly-regarded animator or director and has attracted fame amongst colleagues and clients. Eventually, G hears of a company (XYZ Hotel) that needs a TV ad made. (Or an animation, or whatever.) G says to XYZ, look, you could spend $230,000 with a production company, and in reality they'd have me direct it anyway. I'm leaving to work independently, so I will do your job for only $190,000. In a word, XYZ says "Yes" and hands over a cheque for $190,000. G spends $160,000 on the usual actors, cameramen, editing, etc, and uses 2 months of G's own time, and pockets $5000 after tax. G then doesn't get a job for a couple months, and then gets three more in the new year. Because the commercial for XYZ was so good, XYZ gave him another couple to do, for another product line. Eventually G has just enough money coming in that he "hires" a few freelance people for a few weeks here and there ... a cameraman, illustrator, gopher, and so on. Eventually G has enough TV ads solidly booked G can risk actually hiring long-time friend P as a producer. P spends most of her time actually bringing in more work - and it builds from there. Eventually. You have a very busy, well-known in the industry, TV commercial production company with many staff and endless clients (example, say, http://rsafilms.com) It might be at some point in there (say, around year three), G would like to borrow the odd million bucks to basically "help with cashflow." The answer to that is nothing more than "through business contacts, G knows a wealthy dentist/whoever who is prepared to do that." But note carefully that at that point, G's company is already very firmly established, famous for doing 20 spectacular animations/commercials, and so on. (Note too that 999 times out of 1000 when this happens, the money evaporates and the dentist D never sees a penny back. In that case G "apologizes".) Only much much later once the company has many, many staff and great cashflow, could the production company actually borrow from a bank, or perhaps from "actual investors", which is more what you have in mind. regarding your four categories. Numbers 1 and 3 are totally wrong; they do not work at all like you are asking. indeed the very simple answer is: "borrow money" to start a category 1 or 3 type of business. It's totally inconceivable. (The only exception would be if you literally just have an extremely rich Uncle, who loans you a few million to "start an animation studio" - which would be completely whacky. Because in that example: company XYZ could not care less if you "have" an animation studio (ie: your Uncle has given you a platinum card, and you bought a building, some drawing pads, and a few dozen Macs). XYZ just couldn't care less. All they care about is your folio of work. In this example, RSA would get the job :) ) My guess is you're thinking people somehow magically go around "borrowing money" to get businesses like that started. (Your examples 1 and 3.) The simple answer is they don't and can't - your fears are assuaged! :) |
How and Where can I easily pull data for the Dow 30? | The current Dow divisor is in Historical Divisor Changes. The OpenOffice GetQuote function offers fields for current dividend either in dollars or yield. |
Is This Money Laundering? | No, this is misbehavior of sales software that tries to automatically find the price point which maximizes profit. There have been much worse examples. Ignore it. The robot will eventually see that no sales occurred and try a more reasonable price. |
Are personal finance / money management classes taught in high school, anywhere? | In Houston, Texas USA where I went to a private high school they had a half-semester class in personal finance, but it was optional and didn't give you any credits towards graduation. You are right though, it should be a standard class. After all, who doesn't need that information in their adult lives, and not everyone goes to college. |
Financing with two mortgages: a thing of the past? | Depends on where we are in the credit cycle. When banks are scared like in 07 to 11, good luck. Now (13), they'll probably start begging you. There are more regulations that prevent it now, but they'll probably be eased as they usually are during good times. If the banks won't help you, private investors might. Just find your local mortgage investor club. |
Market Hours and Valuations | Company values (and thus stock prices) rely on a much larger time frame than "a weekend". First, markets are not efficient enough to know what a companies sales were over the past 2-3 days (many companies do not even know that for several weeks). They look at performance over quarters and years to determine the "value" of a company. They also look forward, not backwards to determine value. Prior performance only gives a hint of what future performance may be. If a company shut its doors over a weekend and did no sales, it still would have value based on its future ability to earn profits. |
Is it possible to quantify the probability of sudden big movements for a high-volume stock? | The P/E is currently 20. In hindsight, it's easy to see that when it was 50, not long ago, it was very overpriced. They were not adding customers or increasing revenue as they should have to sustain that P/E level. Probability? I suppose this can happen with any company that has both a high P/E and non-diversified business. Why did you think this company was large and stable? Their marketing blunders simply pricked the bubble level pricing these guys had. (Disclaimer - I am actually a happy customer of Netflix. For $8/mo, I get 6-8 DVDs and neither spend gas nor time to get them. Others who grew used to free streaming feel otherwise) |
How can I stop wasting food? | Let me start out by saying I know your pain. One of the most important things to do is have the basics in stock in your larder. They are the sorts of things that keep well, and you can make great simple meals from them whenever, without having to worry about them going off in a matter of days. A simple inventory like this - http://www.thesimpledollar.com/2006/12/06/the-well-stocked-kitchen-staple-foods-you-should-always-have-on-hand/ - can make a big difference. (This list is good, but check the comments for additional suggestions. There are a few extras that commenters reckon you should have and I think they are right - I certainly have more than just what's on that list.) And remember - frozen veg may or may not be as nutritious as fresh, but they are better than nothing. |
May 6, 2010 stock market decline/plunge: Why did it drop 9% in a few minutes? | Part of it was an Oops, but not all of it. There were reports that the sudden drop was caused by a trader who mistyped an order to sell a large block of stock. The drop in that stock's price was enough to trigger "sell" orders across the market. Source: http://www.msnbc.msn.com/id/36983596/ns/business-stocks_and_economy/ |
How to improve credit score and borrow money | I had to apply for an American Express card, which was also rejected. Then I had searched for a Marbles Credit Card Stop applying for credit cards/loans. Doing so is just making your credit rating worse. Credit agencies will downgrade your credit rating if they see lots of signs of credit checking. It's a sign you're desperately looking for credit, which you are...! 44.9% APR This is very expensive credit. You can get personal loans on the high street for 3-4%. 44.9% is really bad value. You're simply going to make the situation worse. Am I taking off a loan from website as amingos loans to help me build up my credit rating Again this is 44% interest! You also need a guarantor. So you're not only going to get yourself in trouble but a family member too: don't do this! This will only help your credit rating if you pay it back successfully, which given your situation seems like a risk. Contact the Money Advice Service or the National Debt Line. Explain your situation in detail to them. They are a government-backed service designed for people in your situation. They will offer practical advice and can even help negotiate with your creditors, etc. Here's some general advice about getting out of debt from Money Saving Expert Traditional debt help says 'never borrow your way out of a debt problem'. But this ignores the varying cost of different debts. The MoneySaving approach is: "Never borrow more to get out of a debt problem." |
What is the next step to collect money after a judgment has been ignored? | Do you have the following information? If the above conditions are met, you can use the county sheriff department to put a lien on his bank account. You can also garnish wages if he has a job but you don't know all of the above. |
Are there any Social Responsibility Index funds or ETFs? | Index funds: Some of the funds listed by US SIF are index funds. ETFs: ETFdb has a list, though it's pretty short at the moment. |
For Federal Crimes, where does the money collected from penalties go? | The SFGate had an article on this a few years ago: http://www.sfgate.com/business/networth/article/When-government-fines-companies-who-gets-cash-3189724.php "Civil penalties, often referred to as fines, usually go to the U.S. Treasury or victims." Short answer in the case you references it would be the US Treasury. In cases where there is a harmed party then they would get something to account for their loss. But it can get complicated depending on the crime. |
Why are interest rates on saving accounts so low in USA and Europe? | Typically developing economics are marked by moderate to high inflation [as they are growing at a faster pace], higher in savings rate and higher lending rates. If you reduce the lending rate, more business / start-up will borrow at cheaper rate, this in turn means lowers savings rate and leads to higher inflation. To combat this Central Banks make borrowing expensive, which lowers inflation and increases the saving rate. Essentially all these 3 are tied up. As to why these countries offer higher interest on USD is because most of the developing countries have trade [current account] deficit. They need to bring in more USD in the country. One of the ways is to encourage Non Resident Citizens to park their foreign earning back home, ensuring more funds USD inflow. The rate differential also acts as a guide as to how the currency would be valued against USD. For example if you get 8% on USD, less than 12% had you converted same to Rouble, at the end of say 3 years, the exchange rate between USD and Rouble would factor that 4%, ie rouble will go down. Developed countries on the other hand are marked by low inflation [they have already achieved everything] as there is no spurt in growth, it more BAU. They are also characterized by low savings and lending rates. |
The Asset Allocation Paradox | I recommend you take a look at this lecture (really, the whole series is enlightening), from Swenson. He identifies 3 sources of returns: diversification, timing and selection. He appears to discard timing and selection as impossible. A student kinda calls him out on this. Diversification reduces risk, not increase returns. It turns out they did time the market, by shorting .com's before the bubble, and real estate just before the downturn. In 1990, Yale started a "Absolute Return" unit and allocated like 15 percent to it, mostly by selling US equities, that specializes in these sorts of hedging moves. As for why you might employ managers for specific areas, consider that the expense ratio Wall Street charges you or me still represent a very nice salary when applied to the billions in Yale's portfolio. So they hire internally to reduce expenses, and I'm sure they're kept busy. They also need people to sell off assets to maintain ratios, and figuring out which ones to sell might take specialized knowledge. Finally, in some areas, you functionally cannot invest without management. For example, Yale has a substantial allocation in private equity, and by definition that doesn't trade on the open market. The other thing you should consider is that for all its diversification, Yale lost 25 percent of their portfolio in 2009. For a technique that's supposed to reduce volatility, they seem to have a large range of returns over the past five years. |
Why do I see multiple trades of very small quantities? | Probing for hidden limit orders usually involves sending the orders and then cancelling them before they get filled if they don't get filled. With trades actually going through multiple times for small amounts it looks more like a VWAP strategy where the trader is feeding small volumes into the market as part of a larger trade trying to minimize average cost. It could be probing but without seeing the orders and any cancels it would be difficult to tell. edit: I just had another thought; it could possibly be a market maker unwinding a bad position caused by other trading. Sometimes they drip trades into the market to prevent themselves from hitting big orders etc. that might move back against them. This is probably not right but is just another thought. source: I work for an organization that provides monitoring for these things to many large trading organizations. |
Calculating the Free Cash Flow (FCF) | First, don't use Yahoo's mangling of the XBRL data to do financial analysis. Get it from the horse's mouth: http://www.sec.gov/edgar/searchedgar/companysearch.html Search for Facebook, select the latest 10-Q, and look at the income statement on pg. 6 (helpfully linked in the table of contents). This is what humans do. When you do this, you see that Yahoo omitted FB's (admittedly trivial) interest expense. I've seen much worse errors. If you're trying to scrape Yahoo... well do what you must. You'll do better getting the XBRL data straight from EDGAR and mangling it yourself, but there's a learning curve, and if you're trying to compare lots of companies there's a problem of mapping everybody to a common chart of accounts. Second, assuming you're not using FCF as a valuation metric (which has got some problems)... you don't want to exclude interest expense from the calculation of free cash flow. This becomes significant for heavily indebted firms. You might as well just start from net income and adjust from there... which, as it happens, is exactly the approach taken by the normal "indirect" form of the statement of cash flows. That's what this statement is for. Essentially you want to take cash flow from operations and subtract capital expenditures (from the cash flow from investments section). It's not an encouraging sign that Yahoo's lines on the cash flow statement don't sum to the totals. As far as definitions go... working capital is not assets - liabilities, it is current assets - current liabilities. Furthermore, you want to calculate changes in working capital, i.e. the difference in net current assets from the previous quarter. What you're doing here is subtracting the company's accumulated equity capital from a single quarter's operating results, which is why you're getting an insane result that in no way resembles what appears in the statement of cash flows. Also you seem to be using the numbers for the wrong quarter - 2014q4 instead of 2015q3. I can't figure out where you're getting your depreciation number from, but the statement of cash flows shows they booked $486M in depreciation for 2015q3; your number is high. FB doesn't have negative FCF. |
What does a well diversified self-managed investment portfolio look like? | Diversified is relative. Alfred has all his money in Apple. He's done very well over the last 10 years, but I think most investors would say that he's taking an incredible risk by putting everything on one stock. Betty has stock in Apple, Microsoft, and Google. Compared to Alfred, she is diversified. Charlie looks at Betty and realizes that she is only investing in one particular industry. All the companies in an individual industry can have a downturn together, so he invests everything in an S&P 500 index fund. David looks at Charlie and notes that he's got everything in large, high-capitalization companies. Small-cap stocks are often where the growth happens, so he invests in a total stock market fund. Evelyn realizes that David has all his money tied up in one country, the United States. What about the rest of the world? She invests in a global fund. Frank really likes Evelyn's broad approach to equities, but he knows that some portion of fixed-income assets (e.g. cash deposits, bonds) can reduce portfolio volatility—and may even enhance returns through periodic rebalancing. He does what Evelyn does, but also allocates some percentage of his portfolio to fixed income, and intends to maintain his target allocations. Being diversified enough depends on your individual goals and investing philosophy. There are some who would say that it is wrong to put all of your money in one fund, no matter what it is. Others would say that a sufficiently broad index fund is inherently diversified as-is. |
Does this plan make any sense for early 20s investments? | The plan doesn't make sense. Don't invest your money. Just keep it in your bank account. $5000 is not a lot, especially since you don't have a steady income stream. You only have $1000 to your name, you can't afford to gamble $4000. You will need it for things like food, books, rent, student loans, traveling, etc. If you don't get a job right after you graduate, you will be very happy to have some money in the bank. Or what if you get a dream job, but you need a car? Or you get a job at a suit & tie business and need to get a new wardrobe? Or your computer dies and you need a new one? You find a great apartment but need $2500 first, last & security? That money can help you out much more NOW when you're starting out, then it will when you're ready to retire in your 60's. |
Mutual fund value went down, shares went up, no action taken by me | It is very likely that the fund paid out a dividend in the form of reinvested shares. This happens with many funds, especially as we come to the end of the year. Here's a simplified example of how it works. Assume you invested $1000 and bought 100 units at $10/unit. Ignoring the daily price fluctuations, if the fund paid out a 20% dividend, you would get $200 and the unit price would drop to $8/unit. Assuming you chose to reinvest your dividends, you would automatically purchase another $200 worth of units at the new price (so 25 more units). You would now have 125 units @ $8/unit = $1000 invested. In your example, notice that you now have more shares than you originally purchased, but that the price dropped significantly. Your market value is above what you originally invested, so there was probably also a bit of a price increase for the day. You should see the dividend transaction listed somewhere in your account. Just to confirm, I did a quick search on ICENX and found that they did indeed pay a dividend yesterday. |
CEO entitlement from share ownership? | In its basic form, a corporation is a type of 'privileged democracy'. Instead of every citizen having a vote, votes are allocated on the basis of share ownership. In the most basic form, each share you own gives you 1 vote. In most public companies, very few shareholders vote [because their vote is statistically meaningless, and they have no particular insight into what they want in their Board]. This means that often the Board is voted in by a "plurality" [ie: 10%-50%] of shareholders who are actually large institutions (like investment firms or pension funds which own many shares of the company). Now, what do shareholders actually "vote on"? You vote to elect individuals to be members of the Board of Directors ("BoD"). The BoD is basically an overarching committee that theoretically steers the company in whatever way they feel best represents the shareholders (because if they do not represent the shareholders, they will get voted out at the next shareholder meeting). The Board members are typically senior individuals with experience in either that industry or a relevant one (ie: someone who was a top lawyer may sit on the BoD and be a member of some type of 'legal issues committee'). These positions typically pay some amount of money, but often they are seen as a form of high prestige for someone nearing / after retirement. It is not typically a full time job. It will typically pay far, far less than the role of CEO at the same company. The BoD meets periodically, to discuss issues regarding the health of the company. Their responsibility is to act in the interests of the shareholders, but they themselves do not necessarily own shares in the company. Often the BoD is broken up into several committees, such as an investment committee [which reviews and approves large scale projects], a finance committee [which reviews and approves large financial decisions, such as how to get funding], an audit committee [which reviews the results of financial statements alongside the external accountants who audit them], etc. But arguably the main role of the BoD is to hire the Chief Executive Officer and possibly other high level individuals [typically referred to as the C-Suite executives, ie Chief Financial Officer, Chief Operating Officer, etc.] The CEO is the Big Cheese, who then typically has authority to rule everyone below him/her. Typically there are things that the Big Cheese cannot do without approval from the board, like start huge investment projects requiring a lot of spending. So the Shareholders own the company [and are therefore entitled to receive all the dividends from profits the company earns] and elects members of the Board of Directors, the BoD oversees the company on the Shareholders' behalf, and the CEO acts based on the wishes of the BoD which hires him/her. So how do you get to be a member of the Board, or the CEO? You become a superstar in your industry, and go through a similar process as getting any other job. You network, you make contacts, you apply, you defend yourself in interviews. The shareholders will elect a Board who acts in their interests. And the Board will hire a CEO that they feel can carry out those interests. If you hold a majority of the shares in a company, you could elect enough Board members that you could control the BoD, and you could then be guaranteed to be hired as the CEO. If you own, say, 10% of the shares you will likely be able to elect a few people to the Board, but maybe not enough to be hired by the Board as the CEO. Short of owning a huge amount of a company, therefore, share ownership will not get you any closer to being the CEO. |
What to do if my aging father is sustaining a hobby that is losing several thousand dollars every month? | You've already counted the cost. It will cost your family ~$10,000 per month until your father dies, or until there's no money left, to enable him to pretend that he is a successful business owner. I'd ask him when he thinks business is going to pick up again. He may be honest with himself. Or, ask him to consider what will happen if he outlives the money that's going out the door. Ask him if he would like to be bankrupt on top of needing to close his business. (I don't view asking those questions as being unloving, by the way.) |
What does pink-sheet mean related to stocks? | It's an over-the-counter stock quote system. Read all about it. Or visit it. |
When do companies typically announce stock splits? | In 2005, Apple announced a split on Feb 11... CUPERTINO, California — February 11, 2005 — Apple® announced today that its Board of Directors has approved a two-for-one split of the Company’s common stock and a proportional increase in the number of Apple common shares authorized from 900 million to 1.8 billion. Each shareholder of record at the close of business on February 18, 2005 will receive one additional share for every outstanding share held on the record date, and trading will begin on a split-adjusted basis on February 28, 2005. ...one month after announcing earnings. CUPERTINO, California—January 12, 2005—Apple® today announced financial results for its fiscal 2005 first quarter ended December 25, 2004. For the quarter, the Company posted a net profit of $295 million, or $.70 per diluted share. These results compare to a net profit of $63 million, or $.17 per diluted share, in the year-ago quarter. Revenue for the quarter was $3.49 billion, up 74 percent from the year-ago quarter. Gross margin was 28.5 percent, up from 26.7 percent in the year-ago quarter. International sales accounted for 41 percent of the quarter’s revenue. I wouldn't expect Apple to offer another split, as it's become somewhat fashionable among tech companies to have high stock prices (see GOOG or NFLX or even BRK-A/BRK-B). Additionally, as a split does nothing to the underlying value of the company, it shouldn't affect your decision to purchase AAPL. (That said, it may change the perception of a stock as "cheap" or "expensive" per human psychology). So, to answer your question: companies will usually announce a stock split after releasing their financial results for the preceding fiscal year. Regardless of results, though, splits happen when the board decides it is advantageous to the company to split its stocks. |
Understanding differences between S&P500 index-tracking ETFs | Back in the olden days, if you wanted to buy the S&P, you had to have a lot of money so you can buy the shares. Then somebody had the bright idea of making a fund that just buys the S&P, and then sells small pieces of it to investor without huge mountains of capital. Enter the ETFs. The guy running the ETF, of course, doesn't do it for free. He skims a little bit of money off the top. This is the "fee". The major S&P ETFs all have tiny fees, in the percents of a percent. If you're buying the index, you're probably looking at gains (or losses) to the tune of 5, 10, 20% - unless you're doing something really silly, you wouldn't even notice the fee. As often happens, when one guy starts doing something and making money, there will immediately be copycats. So now we have competing ETFs all providing the same service. You are technically a competitor as well, since you could compete with all these funds by just buying a basket of shares yourself, thereby running your own private fund for yourself. The reason this stuff even started was that people said, "well why bother with mutual funds when they charge such huge fees and still don't beat the index anyway", so the index ETFs are supposed to be a low cost alternative to mutual funds. Thus one thing ETFs compete on is fees: You can see how VOO has lower fees than SPY and IVV, in keeping with Vanguard's philosophy of minimal management (and management fees). Incidentally, if you buy the shares directly, you wouldn't charge yourself fees, but you would have to pay commissions on each stock and it would destroy you - another benefit of the ETFs. Moreover, these ETFs claim they track the index, but of course there is no real way to peg an asset to another. So they ensure tracking by keeping a carefully curated portfolio. Of course nobody is perfect, and there's tracking error. You can in theory compare the ETFs in this respect and buy the one with the least tracking error. However they all basically track very closely, again the error is fractions of the percent, if it is a legitimate concern in your books then you're not doing index investing right. The actual prices of each fund may vary, but the price hardly matters - the key metric is does it go up 20% when the index goes up 20%? And they all do. So what do you compare them on? Well, typically companies offer people perks to attract them to their own product. If you are a Fidelity customer, and you buy IVV, they will waive your commission if you hold it for a month. I believe Vanguard will also sell VOO for free. But for instance Fidelity will take commission from VOO trades and vice versa. So, this would be your main factor. Though, then again, you can just make an account on Robinhood and they're all commission free. A second factor is reliability of the operator. Frankly, I doubt any of these operators are at all untrustworthy, and you'd be buying your own broker's ETF anyway, and presumably you already went with the most trustworthy broker. Besides that, like I said, there's trivial matters like fees and tracking error, but you might as well just flip a coin. It doesn't really matter. |
Purchasing ETFs when (pretty much) everything else is maxed out | Most ETFs are index funds, meaning you get built in diversification so that any one stock going down won't hurt the overall performance much. You can also get essentially the same index funds by directly purchasing them from the mutual fund company. To buy an ETF you need a brokerage account and have to pay a transaction fee. Buying only $1000 at a time the broker transaction fee will eat too much of your money. You want to keep such fees way down below 0.1%. Pay attention to transaction fees and fund expense ratios. Or buy an equivalent index fund directly from the mutual fund company. This generally costs nothing in transaction fees if you have at least the minimum account value built up. If you buy every month or two you are dollar cost averaging, no matter what kind of account you are using. Keep doing that, even if the market values are going down. (Especially if the market values are going down!) If you can keep doing this then forget about certificates of deposit. At current rates you cannot build wealth with CDs. |
How best to grow my small amount of money starting at a young age? [duplicate] | I would like to add my accolades in saving $3000, it is an accomplishment that the majority of US households are unable to achieve. source While it is something, in some ways it is hardly anything. Working part time at a entry level job will earn you almost three times this amount per year, and with the same job you can earn about as much in two weeks as this investment is likely to earn, in the market in one year. All this leads to one thing: At your age you should be looking to increase your income. No matter if it is college or a high paying trade, whatever you can do to increase your life time earning potential would be the best investment for this money. I would advocate a more patient approach. Stick the money in the bank until you complete your education enough for an "adult job". Use it, if needed, for training to get that adult job. Get a car, a place of your own, and a sufficient enough wardrobe. Save an emergency fund. Then invest with impunity. Imagine two versions of yourself. One with basic education, a average to below average salary, that uses this money to invest in the stock market. Eventually that money will be needed and it will probably be pulled out of the market at an in opportune time. It might worth less than the original 3K! Now imagine a second version of yourself that has an above average salary due to some good education or training. Perhaps that 3K was used to help provide that education. However, this second version will probably earn 25,000 to 75,000 per year then the first version. Which one do you want to be? Which one do you think will be wealthier? Better educated people not only earn more, they are out of work less. You may want to look at this chart. |
Why haven't there been personal finance apps or softwares that use regression modeling or A.I.? | How would they make money from it? They sell you the software for $100 (US example; could as easily be 100 Euros or 10,000 Japanese Yen). You use it to make recommendations on your blog. Your blog becomes rich from advertising. They sold $100 worth of software. If they spent $1 million in labor developing it, they're way behind. Another problem is that the software would stop working and need adjusted periodically. This is easy to do on a server but annoying on a PC. And who pays for the adjustments? Put both those things together, and it's a lot easier to do on a server. Another advantage is that a server can get a better data feed as well. Pay a premium for the detailed information rather than relying on public sources. And people are used to renting server access where they expect to buy software once. Another issue is that they are unlikely to beat the market this way. Yes, AIs have done so. But that's the latest AI, constantly adjusted. This is going to be a previous generation AI. It's more likely to match the market. And we already have a way to match the market: an index fund. If someone had a brilliant AI, the best use would probably be to sell it to a fund manager. The fund manager could then use the AI to find opportunities for its existing investors. Note that a $10 billion fund with a 10% return that gives a .1% commission would be paying $1 million. And that has no marketing or packaging overhead. Think $10 billion is a lot? Fidelity has $2 trillion. |
What are some sources of information on dividend schedules and amounts? | You can use Yahoo! Finance to pull this information in my use. It is listed under Key Statistics -> Dividends & Splits. For example here is Exxon Mobile (XOM): Dividend Payout Information |
Could someone place an independent film on the stock market? | When we say "stock market," we are usually thinking of the publicly traded stocks, such as the New York Stock Exchange or the NASDAQ. Shares of individual products do not go on these exchanges, only large corporations. You won't see a stock ticker symbol for The Force Awakens or for the iPhone 6s Plus. The reason for this is that when investors buy a stock, they are looking for something that will grow in value theoretically forever. Individual products usually have a limited lifespan. Your movie will (hopefully) generate revenue when it comes out, but after a while sales will slow down after people have seen it. If someone bought a share of stock in a movie on the stock market, they have to realize that eventually the movie will stop making money, and their share of stock won't be worth anything anymore. Instead, people invest in companies that have the potential to make new products, such as Disney or Apple. So if you were envisioning seeing the ticker symbol of your movie going across the screen on CNBC, sorry, that's not going to happen. However, you could theoretically sell shares to individual investors for a percentage of the profit. You figure out how much money you need to create the movie, and estimate how much profit you think the movie will earn. Then you find an investor (or group of investors) that is willing to give you the money you need in exchange for a percentage of the profit. Unlike a stock market investor, these investors won't be looking for the long-term growth potential of the resale value of the stock, but simply a share of the profit. |
Purpose of having good credit when you are well-off? | Credit scores, or at least components of them, can sometimes factor into how much you pay for car insurance. Source: Consumer Reports: How a Credit Score Increases your Premium |
Make punctual contributions to IRS based on earnings | I will answer this question broadly for various jurisdictions, and also specifically for the US, given the OP's tax home: Generally, for any tax jurisdiction If your tax system relies on periodic prepayments through the year, and a final top-up/refund at the end of the year (ie: basically every country), you have 3 theoretical goals with how much you pre-pay: Specifically, for the U.S. All information gathered from here: https://www.irs.gov/businesses/small-businesses-self-employed/estimated-taxes. In short, depending on your circumstance, you may need to pay quarterly estimated tax payments to avoid penalties on April 15th. Even if you won't be penalized, you, may benefit from doing so anyway (to force yourself to save the money necessary by April 15th). I have translated the general goals above, into US-specific advice: |
How many warrants do I need to exercise to get a stock? | No, you trade the warrant and the warrant price of $11.50 for one stock. The warrant is a little like an option, but with a longer term. If you buy a IPOA.WS warrant then that warrant gives you the option to buy one share of class A stock at $11.50 at a future date. If in the future, the stock is worth $20, then you make $20 - $11.50 - per share. If you buy one IPOA.U, then you get 1/3 of a warrant and 1 share of stock, the warrants will be useless unless you buy in groups of 3 for the IPOA.U. I didn't see the timeframe of the warrant, they're usually good for 10+ years, and they're currently trading in the $1.5-1.8 range. To confirm, here's a decent article about how warrants work: http://www.investopedia.com/articles/04/021704.asp |
How do 401k handle rate of return | A 401(k) is an investment just like any other investment. You generally get two types of return lumped into that number, but there can be more and you should read your funds prospectus carefully. If you aren't investing in direct companies, you're using mutual funds for instance, then you should read the funds prospectus to see how they handle these situations for the underlying securities they hold for you. Although I think this is the basic answer to the question as you asked. |
Can I change my loan term from 60 to 36 months? | Some places banks/Credit Unions will allow you to refinance a auto loan. My credit Union only does this if the original loan was with another lender. They will send the money to the old lender, then give you a loan under the new terms. They are trying to get your business, not necessarily looking for a way make less money for themselves. You will have to see how much you will save. Which will be based on the delta of the length of the loan or the change in interest rate, or both. My Credit Union has a calculator to show you the numbers based on keeping the size of the payments the same, or keeping the number of payments the same. Make sure you understand any limitations regarding the refinance based on the age of the car, and if you are underwater. |
401(k) Investment stategies | Ending up with nothing is an unlikely situation unless you invest 100% in a company stock and the company goes under. In order to give you a good answer we need to see what options your employer gives for 401k investments. The best advice would be to take a list of all options that your employer allows and talk with a financial advisor. Here are a few options that you may or may not have as an option from an employer: Definitions from wikipedia: A target-date fund – also known as a lifecycle, dynamic-risk or age-based fund – is a collective investment scheme, usually a mutual fund, designed to provide a simple investment solution through a portfolio whose asset allocation mix becomes more conservative as the target date (usually retirement) approaches. An index fund or index tracker is a collective investment scheme (usually a mutual fund or exchange-traded fund) that aims to replicate the movements of an index of a specific financial market... An exchange-traded fund (ETF) is an investment fund traded on stock exchanges, much like stocks.[1] An ETF holds assets such as stocks, commodities, or bonds, and trades close to its net asset value over the course of the trading day. Most ETFs track an index, such as a stock index or bond index. ETFs may be attractive as investments because of their low costs, tax efficiency, and stock-like features. The capital stock (or stock) of an incorporated business constitutes the equity stake of its owners. Which one can you lose everything in? You can lose everything in stocks by the company going under. In Index funds the entire market that it follows would have to collapse. The chances are slim here since the index made up of several companies. The S&P 500 is made up of 500 leading companies publicly traded in the U.S. A Pacific-Europe index such as MSCI EAFE Index is made up of 907 companies. The chances of losing everything in an ETF are also slim. The ETF that follows the S&P 500 is made up of 500 companies. An Pacific-Europe ETF such as MSCI EAFE ETF is made up of 871 companies. Target date funds are also slim to lose everything. Target date funds are made up of several companies like indexes and etfs and also mix in bonds and other investments depending on your age. What would I recommend? I would recommend the Index funds and/or ETFs that have the lowest fee that make up the following strategy for your age: Why Not Target Date Funds or Stocks? Target date funds have high fees. Later in life when you are closer to retirement you may want to add bonds to your portfolio. At that time if this is the only option to add bonds then you can change your elections. Stocks are too risky for you with your current knowledge. If your company matches by buying their stock you may want to consider reallocating that stock at certain points to your Index funds or ETFs. |
Why should we expect stocks to go up in the long term? | The total value of the stock market more or less tracks the total value of the companies listed in the stock market, which is more or less the total value of the US economy (since very few industries are nationalized or dominated by privately held companies). The US economy has consistently grown over time, thanks to the wonders of industrialization, the discovery of new markets, new natural resources, etc. Thus, the stock market has continued to grow as well. Will it forever? No. The United States will not exist for ever. But there's no obvious reason it won't continue to grow, at least for a while, though of course if I could accurately predict that I would be far richer than I am. Why do other countries not have the same result? China is its own ball of wax since it's a sort-of-market-sort-of-command economy. Japan has major issues economically right now and doesn't really have the natural or people resources; it also had a huge market bubble a while back that it's never recovered from. And many European countries are doing fine. German's DAX30 index was at around 2500 in 2004 and is now at nearly 13000. That's pretty fast growth. If you go back further (there was a crash ending in around 2004), you can see around the fall of the Berlin wall it was still around 2000; even going that far back, that's about an 8% annual bump. The FTSE was also around 2000 back then, around 8000 now, which is around 5% annual growth. Many of these indexes were more seriously hurt than the US markets in the two major crashes of this millenium; while the US markets fell a lot in 2008, they didn't fall nearly as much as many smaller markets in 2002, so had less to recover from. Both DAX and FTSE suffered similar falls in 2002 to 2008, and so even though during good periods they've grown quite quickly, they haven't overall done as well as they could have given the crashes. |
Understanding taxes when buying goods at a store | States have made sales tax more confusing by expanding some categories and shrinking or eliminating other categories. In days of old there were taxes on items, and specific taxes on other small categories such as fuel and cigarets . In many states there were taxes implemented state wide, and in other cases they only applied to a specific city or region. As time went on taxes could be raised to bring in more money for the state or local government, but these tax increase were seen as unfair to the poor. So now the states are modifying and tweaking the tax rates. Some items are tax free, some have a low tax, and some are at the full tax rate. This can get confusing because the type of store can also play a factor. A bag a chips from a grocery store can be treated differently than a bag of chips from a hotdog stand. Some states have also added special taxes on snack foods. In general, purchases they want to encourage (staples from the grocery store) are tax free or low tax, items they don't want to encourage (snacks) are fully taxed. You can also be sure that they will treat luxury items as fully taxed. A new frontier of taxation are ones designed to tax people who don't live there. They have added taxes on restaurants and hotels. Since they are paid by tourists, the people most likely to pay them don't have a voice in setting the rate. States are now wanting to tax services as a way to make up shortfalls in taxing. Don't expect consistency from state to state, or year to year. Oh by the way that penny tax was for something that cost 17 cents or less, unless that item had a lower tax rate. The receipt should clearly identify the taxable items, and their tax level. |
Loan to son - how to get it back | I started a business a few years ago. At one point it wasn't going so well and my father "loaned" me an amount not too dissimilar to what you've done. From a personal perspective, the moment I took that loan there was a strain the relationship. Especially when I was sometimes late on the interest payments... Unfortunately thoughts like "he doesn't need this right now, but if I don't pay the car loan then that is taken away" came up a few times and paying the interest fell to the bottom of the monthly bill payment stack. At some point my wife and I finally took a hard look at my finances and goals. We got rid of things that simply weren't necessary (car payment, cable tv, etc) and focused on the things we needed to. Doing the same with the business helped out as well, as it helped focus me to to turn things around. Things are now going great. That said, two of my siblings ran into their own financial trouble that our parents helped them on. When this happened my father called us together and basically forgave everyone's debt by an equal amount which covered everything plus wrote a check to the one that was doing fine. This "cleared the air" with regards to future inheritance, questions about how much one sibling was being helped vs another, etc. Honestly, it made family gatherings more enjoyable as all that underlying tension was now gone. I've since helped one of my children. Although I went about it an entirely different way. Rather than loan them money, I gave it to them. We also had a few discussions on how I think they ought to manage their finances and a set of goals to work towards which we co-developed. Bearing in mind that they are an individual and sometimes you can lead a horse... Given the current state of things I consider it money well "spent". |
How should I handle taxes for Minecraft server donations? | Its is considered a "hobby" income, and you should be reporting it on the 1040 as taxable income. The expenses (what you pay) are hobby expenses, and you report them on Schedule A (if you itemize). You can only deduct the hobby expenses to the extent of your hobby income, and they're subject to the 2% AGI threshold. |
When will the U.K. convert to the Euro as an official currency? | I can't see it happening because most of the population seems to be against it, even if their reasoning on the whole is wrong. Theoretically, people are against the Euro here as a result of national pride. If it's the best thing to do for the good of the country then national pride shouldn't be taken into account. It'd be perverse in the sense that you'd be stopping your country from progressing because you love it. That doesn't add up. Personally, I don't think it's possible for an entire continent to have a single currency. There's too many different countries and cultures involved. For it to work you'd have to have centralised fiscal policy and this makes no sense at all for a continent. What works here might not work in France or Germany. What works in Greece might not work here. etc, etc. The make up of each country's economies is different. |
Does it make sense to take out student loans to start an IRA? | IRA contributions are limited; you cannot "dump the excess into a retirement account like an IRA" if the excess is more than $5500. Furthermore, as @firefly points out, you need to have earned income (technical term is compensation and it includes self-employment income, not just wages) to contribute to an IRA, and the limit mentioned above is actually the lesser of your earned income and $5500. (There are other limitations for people with high gross income, but these likely will not affect you) On the positive side, if your earned income is small, you can contribute your entire taxable earned income including the money withheld by your employer for Social Security and Medicare tax and Federal, State and local income taxes to an IRA, not just your take-home pay. For example, if your earned income is $5500 and take-home pay after tax withholding is $5000, you are still entitled to contribute $5500. So, where do you get that withheld money from so that it can be put into your IRA? Well, it can come from the student loan or interest earned from a bank or from the dividends and capital gains on your investments, etc. Money is fungible; it is not the case that only the cash received (or deposited into your bank account) as your take-home pay can be contributed. Subject to other limitations mentioned, your earned income can be contributed, not just your take-home pay. |
A debt collector will not allow me to pay a debt, what steps should I take? | This doesn't seem to explain the odd behavior of the collector, but I wanted to point out that the debt collector might not actually own the debt. If this is the case then your creditor is still the original institution, and the collector may or may not be allowed to actually collect. Contact the original creditor and ask how you can pay off the debt. |
If you want to trade an equity that reflects changes in VIX, what is a good proxy for it? | There is no good proxy for VIX, because it is a completely made-up value. Most listed options trade on an underlying security. I can therefore choose to buy either the stock, or a future or option on that stock. In this way, the future and option are derivatives in that they derive their value (in part) based on something else, in this case the stock price as of now. VIX is a different entity altogether. It is based on the volatility of the market, using "market expectation of near term volatility conveyed by stock index option prices". But the FAQ goes on to state that they are adding factors into the formula. So right away there is no one equity/stock that you can hold that will necessarily match the VIX in any significant way, because it is not directly based on stocks, but indirectly through other options and computations. In effect, therefore, the VIX in indeed only available through its options, and is not observable (tradable) in and of itself. |
Why do investors buy stock that had appreciated? | For the same reason you wanted it when you bought it. No-one guarantees that you'll be able to sell the stock you hold, and in fact many people get stuck with stocks they'd like to sell, but no-one is buying. But if investors think there's a profit potential that is not exhausted yet - they'll want to buy the stock. |
How does a company select a particular price for its shares? | In the case of an "initial public offering", the brokers underwriting the share issue will look at the current earnings being generated by the company and compare these to those of other competitor companies already listed in the stock market. For example, if a new telephone company is undertaking an initial public offering, then the share price of those telephone companies which are already traded on the stock market will serve as a reference for how much investors will be willing to pay for the new company's shares. If investors are willing to pay 15 times earnings for telecom shares, then this will be the benchmark used in determining the new share price. In addition, comparative growth prospects will be taken into account. Finally, the underwriter will want to see a successful sale, so they will tend to "slightly under price" the new shares in order to make them attractive. None of this is an exact science and we often see shares trading at a large premium to the initial offer price during the first few days of trading. More often that not, prices then settle down to something closer to the offer price. The initial price spike is usually the result of high demand for the shares by investors who believe that past examples of a price spike will repeat with this initial public offering. There will also usually be high demand for the new shares from funds that specialise in shares of the type being issued. In the case of a "rights issue", where an existing publicly traded company wishes to raise capital by issuing new shares, the company will price the new shares at a significant discount to the current market price. The new shares will be initially offered to existing shares holders and the discounted price is intended to encourage the existing shareholders to exercise their "rights" since the new shares may have the effect of diluting the value of their shares. Any shares which are not purchased by existing share holder will then be offered for sale in the market. |
How to exclude stock from mutual fund | Chris - you realize that when you buy a stock, the seller gets the money, not the company itself, unless of course, you bought IPO shares. And the amount you'd own would be such a small portion of the company, they don't know you exist. As far as morals go, if you wish to avoid certain stocks for this reason, look at the Socially Responsible funds that are out there. There are also funds that are targeted to certain religions and avoid alcohol and tobacco. The other choice is to invest in individual stocks which for the small investor is very tough and expensive. You'll spend more money to avoid the shares than these very shares are worth. Your proposal is interesting but impractical. In a portfolio of say $100K in the S&P, the bottom 400 stocks are disproportionately smaller amounts of money in those shares than the top 100. So we're talking $100 or less. You'd need to short 2 or 3 shares. Even at $1M in that fund, 20-30 shares shorted is pretty silly, no offense. Why not 'do the math' and during the year you purchase the fund, donate the amount you own in the "bad" companies to charity. And what littleadv said - that too. |
How is not paying off mortgage better in normal circumstances? | In some respects the analysis for this question is similar to comparing a "safe" return on a government bond vs. holding the stock market. Typically, the stock market's expected return will be higher -- i.e., there's a positive equity risk premium -- vs. a government bond (assuming it's held to maturity). There's no guarantee that the stock market will outperform, although the probability of outperformance rises (some analysts argue) the longer the holding period for equities beyond, say, 10 years. That's why there's generally a positive equity risk premium, otherwise no one (or relatively few investors) would hold equities. |
I own ASPIRO shares (Jay Z's new company). Now that it is going private, what about my shares? | From the press release Based on Aspiro's closing share price of SEK 0.66 as of 29 January 2015, the Offer values each Aspiro share at SEK 1.05 and the total value of the Offer at approximately SEK 464 million.[3] The Offer represents a premium of..... It seems you will get cash. I can't explain the pop to 11. You don't have any option to keep the shares. |
What is the economic explanation for the high cost of weddings? | There is the price they want and the price you pay. Everything is negotiable when its a service (always possible, but usually harder with actual "goods"). You should always haggle and price match your vendors. You can also try going to different vendors and not telling them its for a wedding and see if there really is a price difference. For example, call up a florist and say you need X, Y, and Z for a corporate banquet or for a special event for which you cannot give the details. If you then tell them its actually a wedding, and they blindly raise it without a good justification, move on. That said, they jack up the price because they know most people will says "it's my wedding", "it's once in a lifetime", "it's MY special day", etc.... The same is true about diamonds, their price does not reflect the actual supply and demand ratio, just the perception that has been created. However, as mentioned in some of the comments above, the service provided at a wedding may be different or more involved than just a normal dinner The more important issue is ensuring there are no back fees, no hidden fees, and you have well written, well reviewed contracts. For example, we know a couple whose caterer added a mandatory 20% gratuity, regardless of the service which was provided. Most venues or restaurants will not be making the bar a lose-leader, but they will charge for other things. You can also save money by buying used or looking on ebay for prices closer to wholesale for the product. I think a good analogy to this is the Recent Time Magazine article on the price of healthcare - it costs a lot because its a small market and its harder to navigate, and most are not experienced shoppers in the area or don't have control over the individual item costs. |
How much of a down payment for a car should I save before purchasing it? | I'd put more money down and avoid financing. I personally don't think car debt is good debt and if you can't afford the car, you are better off with a cheaper car. Also, you should read up on the 0% offer before deciding to commit. Here's one article that is slightly dated, but discusses some pros and cons of 0% financing. My main point though is that 0% financing is not "free" and you need to consider the cost of that financing before making the purchase. Aside from the normal loan costs of having a monthly payment, possibly buying too much car by looking at monthly cost, etc., a 0% financing offer usually forces you to give the dealer/financing company any rebates that are due to you, in essence making the car cost more. |
Why do gas stations charge different amounts in the same local area? | When I ran a gas station, our price was largely set by our neighbors-- the other gas stations in the area. We couldn't go below the current cost of replacement gas, but other than that we wanted to be at .05 over the average. (We got away with charging more because we were the last station on a major road.) Everybody else did the same thing. Also, we only set prices once a day, early in the morning before the commuter rush. Changing prices while somebody is pumping gas Was Not Done, for fairly obvious reasons. So, you'd get these ripples of price-changing, as one station changed its price, and then all its neighbors would react to that the next day, and then THEIR neighbors would change the day after that, and so on. |
What can I take from learning that a company's directors are buying or selling shares? | This could be another reason. "Companies buy their own stock in the market place to reduce the number of shares outstanding, and thus boosts the earnings per share. It also boosts the stock price, which benefits management that has stock options. " Taken from this article. http://www.forbes.com/sites/investor/2014/01/06/the-most-reliable-indicator-of-an-approaching-market-top/ and this article "Why are stock rising?" may help as well. http://www.forbes.com/sites/investor/2013/12/23/why-are-stocks-rising/ |
Once stock prices are down, where to look for good stock market deals? | Indexes are down during the summer time, and I don't think it has something to do with specific stocks. If you look at the index history you'll see that there's a price drop during the summer time. Google "Sell in May and go away". The BP was cheap at the time for a very particular reason. As another example of a similar speculation you can look at Citibank, which was less than $1 at its lowest, and within less than a year went to over $4 ( more than 400%). But, when it was less than $1 - it was very likely for C to go bankrupt, and it required a certain amount of willingness to loose to invest in it. Looking back, as with BP, it paid off well. But - that is looking back. So to address your question - there's no place where people tell you what will go up, because people who know (or think they know) will invest themselves, or buy lottery tickets. There's research, analysts, and "frinds' suggestions" which sometimes pay off (as in your example with BP), and sometimes don't. How much of it is noise - I personally don't think I can tell, until I can look back and say "Damn, that dude was right about shorts on Google, it did go down 90% in 2012!" |
What expenses do most people not prepare for that turn into “emergencies” but are not covered by an Emergency Fund? | Some things are nearly universal, and have been mentioned already. My "favorite" forseeable expenses in this category are: However, I also advocate saving for expenses that are specific to you. Look back on your expenses for the last 12 months, minimum (18 or 24 may be better). Ask yourself these questions: I ask about large expenditures because you may make enough that you can "eat" these lapses in budgeting, as I did for many years. It is not an emergency now, but it turned into an emergency down the road as my spending went out of control. Look at all expenditures over a certain level, say $100 or $200. Some personal examples of expenses that aren't quite so universal, but turned into small emergencies: This last one was rather unexpected. It is the reason why I ask the question "why didn't I budget for it?" These fees and dues are for my professional-level certifications. In my industry, they are "always" paid for by the company. A year ago, they weren't paid by my former employer because they planned to lay me off. This year, they weren't paid by my present employer because I am technically a temporary worker (4 years is temporary?). So, from now on, I plan to save for this expense. If my employer pays my dues, then I stop saving for the expense, but keep the money I've saved. |
Can I participate in trading Facebook shares on their IPO day from any brokerage? | Yes. The real question is whether you should. You should consider your investment options, and take into the account that there's much more hype than value in many companies. |
Can a Zelle Bank Transfer be reversed or denied after credit has been added? | After collecting information via web searching, the comments above, and a additional call to BOA, i have concluded the following to the best of my knowledge. Zelle Transfers are final. Irreversible. As Jay mentioned above, funds are subtracted from the sending account before the transfer is made, therefore it eliminates sending funds that do not exist. I validated this information with BOA, and the BOA representative said that once a zelle transfer is initiated and the receiving party has received the funds, it can no longer be canceled. Funds received by the receiving party is credited immediately. I will note that the BOA representative was a BOA representative and not a Zelle representative. I say this because the representatives seemed to be slightly weary in answering my questions about Zelle, as if he was looking up the information as we spoke. If someone is reading this and plans to transfer huge amount of cash from a highly likely malicious user, i would recommend contacting Zelle or your personal bank directly to further validate this information. Zelle, from what i can find, is a fairly new technology. I could not find a Zelle contact number via the web for questioning, so i can only rely on the knowledge on my BOA representative. |
How can I help others plan their finances, without being a “conventional” financial planner? | If you personally make any money from it then you need a Series 65, or a Series 63 license. It is a private industry/SEC regulation. The license itself basically spells out your duties and ethical standards for you. |
Explain: “3% annual cost of renting is less than the 9% annual cost of owning” | The house that sells for $200,000 might rent for a range of monthly numbers. 3% would be $6000/yr or $500/mo. This is absurdly low, and favors renting, not buying. 9% is $1500/mo in which case buying the house to live in or rent out (as a landlord) is the better choice. At this level "paying rent" should be avoided. I'm simply explaining the author's view, not advocating it. A quote from the article - annual rent / purchase price = 3% means do not buy, prices are too high annual rent / purchase price = 6% means borderline annual rent / purchase price = 9% means ok to buy, prices are reasonable Edit to respond to Chuck's comment - Mortgage rates for qualified applicants are pretty tight from low to high, the 30 year is about 4.4% and the 15, 3.45%. Of course, a number of factors might mean paying more, but this is the average rate. And it changes over time. But the rent and purchase price in a given area will be different. Very different based on location. See what you'd pay for 2000 sq feet in Manhattan vs a nice town in the Mid-West. One can imagine a 'heat' map, when an area might show an $800 rent on a house selling for $40,000 as a "4.16" (The home price divided by annual rent) and another area as a "20", where the $200K house might rent for $1667/mo. It's not homogeneous through the US. As I said, I'm not taking a position, just discussing how the author formulated his approach. The author makes some assertions that can be debatable, e.g. that low rates are a bad time to buy because they already pushed the price too high. In my opinion, the US has had the crash, but the rates are still low. Buying is a personal decision, and the own/rent ratios are only one tool to be added to a list of factors in making the decision. Of course the article, as written, does the math based on the rates at time of publication (4%/30years). And the ratio of income to mortgage one can afford is tied to the current rate. The $60K couple, at 4%, can afford just over a $260K mortgage, but at 6%, $208K, and 8%, $170K. The struggle isn't with the payment, but the downpayment. The analysis isn't too different for a purchase to invest. If the rent exceeds 1% of the home price, an investor should be able to turn a profit after expenses. |
What to sell when your financial needs change, stocks or bonds? | You have to understand what risk is and how much risk you want to take on, and weight your portfolio accordingly. I think your 80/20 split based on wrong assumptions is the wrong way to look at it. It sounds like your risk appetite has changed. Risk is deviation from expected, so risk is not bad, and you can have cases where everyone would prefer the riskier asset. If you think the roulette table is too risky, instead of betting $1, stick 50c in your pocket and you changed the payoffs from $2 or 0 to 50c or $1.50 If your risk appetite has changed - change your risk exposure. If not, then all you are saying is I bought the wrong stuff earlier, now I should get out. |
Clarification of Inflation according to Forbes | Inflation can be a misleading indicator. Partly because it is not measured as a function of the change in prices of everything in the economy, just the basket of goods deemed essential. The other problem is that several things operate on it, the supply of money, the total quantity of goods being exchanged, and the supply of credit. Because the supply of goods divides - as more stuff is available prices drop - it's not possible to know purely from the price level, if prices are rising because there's an actual shortage (say a crop failure), or simply monetary expansion. At this point it also helps to know that the total money supply of the USA (as measured by total quantity of money in bank deposits) doubles every 10 years, and has done that consistently since the 1970's. USA Total Bank Deposits So I would say Simon Moore manages to be right for the wrong reasons. Despite low inflation, cash holdings are being proportionally devalued as the money supply increases. Most of the increase, is going into the stock market. However, since shares aren't included in the measures of inflation, then it doesn't influence the inflation rate. Still, if you look at the quantity of shares your money will buy now, as opposed to 5 years ago, it's clear that the value of your money has dropped substantially. The joker in the pack is the influence of the credit supply on the price level. |
Where can I borrow money for investing? | Borrow money and start a business. Follow your business plan and invest in yourself and your entrepreneurship. If you mean invest in the market, do not borrow money. In your plan, you are willing to make payments right? There are lots of things you can do better, but borrowing money to invest in the market for a couple of years is not one of them. Investing is boring, saving is boring, and planning your financial future is boring. It takes a consistent effort and you aren't going to get rich quick. |
Income Tax form in India for freelancing | ITR1 or ITR2 needs to be filed. Declare the income through freelancing in the section "income from other sources" |
Debt collector has wrong person and is contacting my employer | Debt collectors are just doing their job as many people want to evade payment by not responding and skipping their debts, and they talk tough to force people found to make their obligated payments based on what they can afford and that’s all. I’m in the UK, but I assume the process is similar. Before I begin, I worked in debt collection and I presume that the debt collection agency have requested details for a source like a college and you have been returned as a possible match as you name is identical to their debtor but with differing date of birth etc. College/University students are very nomadic in nature and addresses aren’t very helpful when they are not current, but details of a current address/employer to a very similar name would be a possible lead to debtor and the debt collector is simply acting on flawed information which is fairly rare, and cases such as these are resolved when you can simply confirm your date of birth and other details so that they can eliminate you from their chasing activities. Whilst you may feel uncomfortable about giving your details, you are not the debtor and will have to confirm this, the debt collector is only interested in collection of valid debts values, and the current letter is most likely a standard letter to get you to act assuming that you are the debtor. If you try to ignore this or only partly answer their contact by telling them not to contact your employer etc, they will assume that you are the debtor and step up pursuit by contacting at work by phone, in person, or by other means, and you employer will see you in a bad light… I would advise you to write to them a one-time only letter confirming details of your home address and insist on correspondence in writing only to that home address, in addition you should confirm your full name including full middle names, date of birth, that you have never attended the college in question, agreed to any such debt in writing, and that you are not the correct data subject as the ss number also differs. The letter should also go on to state a range of costs which require payment before you act further, ie subsequent letter $xx.xx amount attending court $xx.xx per hour(not cheap) and that if they harass you or otherwise affect your standing with your credit reference, or employer or anyone else that you ‘Will’ take further action and ‘May’ take them to your ‘Local’ court and pursue the costs list above and losses as a result of their actions including pain and suffering. Speak tough and mean business and act decisively and your message will win through, share your details with them once and above all copy your employer in so that they know this is a case of mistaken identity. You can add a large heading at the top of the letter of ‘Mistaken Identity’ to prove your point. |
How to file income tax returns for profits from ESPP stock? | Consult a professional CA. For shares sold outside the Indian Stock Exchanges, these will be treated as normal Long Term Capital Gains if held more than one year. The rate would be 10% without Indexation and 20% with Indexation. If the stocks are held for less than 1 years, it will be short term gains and taxed according you to tax bracket. |
Why are Rausch Coleman houses so cheap? Is it because they don't have gas? | A 25% variance in price, in most markets, isn't so crazy as to require it be some sort of terrible scam, but that doesn't mean much else. It could be the inclusion of floor plans that are carefully designed to add square footage at minimum cost and thus reduce the average cost per square foot without actually being cheaper otherwise, less insulation, thinner walls, cheap piping, minimized wiring, or they are just efficient and competitive. As you pointed out they don't have gas, so that's certainly one way you know they cut costs - no gas lines to install! As the article from NAHB: Cost of Constructing A Home points out, though, what this figure includes can vary. Does it include the finished lot? If so then a smaller lot would mean lower square footage building price - because the land is smaller and cheaper, not the house! Is any kind of financing quoted in the price? Compare also change-plan costs, any penalties for delays in construction, grade of materials, floor plans, customization costs, fees or premiums to pick colors/floors/counters/cabinets/fixtures, and so on. What about central cooling and heating - are they quoting an electric furnace? How does electrical heating in your area compare to the cost of gas heat? (relative pricing of electric and gas vary widely by region and climate) In short: often square footage price isn't the whole story of what it would cost to construct a home. Ensure you are comparing everything that's important to you and you are getting a full quote, not comparing small isolate sales-pitch figures with no clear details. If it turns out the price is 25% lower than other builders in your area and they give you what you are wanting, and you have the good sense to have a qualified home inspector and/or structural engineer inspect the home thoroughly before you take possession, then you might just have found a good builder! I'd encourage you to personally visit some of their past construction work, such as houses they build 2-10 years ago and ensure they are in the sort of condition you'd expect. |
what's the difference between money raised in an ipo and its valuation? | A company generally sells a portion of its ownership in an IPO, with existing investors retaining some ownership. In your example, they believe that the entire company is worth $25MM, so in order to raise $3MM it is issuing stock representing 12% of the ownership stake (3/25), which dilutes some or all of the existing stockholders' claims. |
Filing Taxes for Two Separate Jobs Being Worked at the Same Time? | Welcome to the wonderful but oft confusing world of self-employment. Your regular job will withhold income for you and give you a W2, which tells you and the government how much is withheld. At the end of the year uber will give you and the government a 1099-misc, which will tell you how much they paid you, but nothing will be withheld, which means you will owe the government some taxes. When it comes to taxes, you will file a 1040 (the big one, not a 1040EZ nor 1040A). In addition you will file a schedule C (self-employed income), where you will report the gross paid to you, deduct your expenses, and come up with your profit, which will be taxable. That profit goes into a line in the 1040. You need to file schedule SE. This says how much self-employment tax you will pay on your 1099 income, and it will be more than you expect. Self employment tax is SS/Medicare. There's a line for this on the 1040 as well. You can also deduct half of your self-employment tax on the 1040, there's a line for it. Now, you can pay quarterly taxes on your 1099 income by filing 1040-ES. That avoids a penalty (which usually isn't that large) for not withholding enough. As an alternative, you can have your regular W2 job withhold extra. As long as you don't owe a bunch at tax time, you won't be a fined. When you are self-employed your taxes aren't as simple. Sorry. You can either spend some time becoming an expert by studying the instructions for the 1040, pay for the expensive version of tax programs, or hire someone to do it for you. Self-employed taxes are painful, but take advantage of the upsides as well. You can start a solo 401(k) or SEP IRA, for example. Make sure you are careful to deduct every relevant business expense and keep good records in case you get audited. |
Best way to start investing, for a young person just starting their career? | Warren Buffett answered this question very well at the 2009 Berkshire Hathaway annual meeting. He said that it was important to read everything you can about investing. What you will find is that you will have a number of competing ideas in your head. You will need to think these through and find the best way to solve them that fits you. You will mostly learn how to invest through good examples. There are fewer good examples out there than you might think, given how many books there are and how many people get paid to give advice in this area. If you want to see how professional investors actually think about specific investments, over a thousand investment examples can be found at www.valueinvestorsclub.com, just login as a guest. The site is run by Joel Greenblatt (you would benefit from reading his books also), and it will give you a sense of the work that investors put into their research. Good luck. |
Why YTM is higher than current yield in discount bond | Say you buy a bond that currently costs $950, and matures in one year, at $1000 face value. It has one coupon ($50 interest payment) left. The coupon, $50, is 50/950 or 5.26%, but you get the face value, $1000, for an additional $50 return. This is why the yield to maturity is higher than current yield. If the maturity were in two years, the coupons still provide 5.26%, and the extra 1000/950 is another 5.26% over 2 years, or (approx) 2.6%/yr compounded, for a total YTM of 7.86%. This is a back-of envelope calculation, the real way to calculate is with a finance calculator. Entering PV (present value) FV (future value) PMT (coupon payment(s)) and N (number of periods). With no calculator or spreadsheet, my estimate will be pretty close. |
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