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Treasury Bonds, and why has the NYSE 20+ Year Treasury Bond index (AXTWEN) gone up so much in the last year (2011)? | The price of a bond goes up when yields go down. For example, you purchase a 5% bond today for $100 and the very next day the same bond is being offered with a rate of 10%. Will you be able to sell you bond for the $100 you paid? No, you must compete with the 10% bonds being sold so you will have to sell your bond for less than the $100 you paid to compete with the new bonds being sold. Thus, bond prices are inversely related to bond yields. The 20-year index you cited tracks bond prices and bond prices have gone up over the last 10 years which means bond yields have gone down. Why have bond prices gone up? Demand. More investors are moving their savings into bonds. Why? I believe there a couple of reasons. One, US Treasuries are thought to be one of the safest investments. With the financial crisis and increased stock market volatility (see chart below) more investors are allocating more of their portfolios to safer investments. Two, a large portion of the US population is approaching retirement (see chart below). These folks are not interested in watching their retirement portfolios potentially shrink in the stock market so they move into bonds. |
Plan/education for someone desiring to achieve financial independence primarily through investing? | The basic problem here is that you need to have money to invest before you can make a profit from it. Now if you have say $500K or more, you can put that in mutual funds and live modestly off the profits. If you don't have that $500K to start out with, you're either looking at a long time frame to accumulate it - say by working a job for 30+ years, and contributing the max to your 401k - or are playing the market trying to get it. The last is essentially gambling (though with somewhat better odds than casinos or horse racing), and puts you up against the Gambler's Ruin problem: https://en.wikipedia.org/wiki/Gambler's_ruin You also, I think, have a very mistaken idea about the a typical investor's lifestyle. Take for instance the best known one, Warren Buffet. No offence to him, but from everything I've read he lives a pretty boring life. Spends all day reading financial reports, and what sort of life is that? As for flying places being exciting, ever tried it? I have (with scientific conferences, but I expect boardrooms are much the same), and it is boring. Flying at 30,000 ft is boring, and if it's a commercial flight, unpleasant as well. A conference room in London, Paris, or Milan is EXACTLY the same as a conference room in Podunk, Iowa. Even the cities outside the conference rooms are much of a muchness these days: you can eat at McDonalds in Paris or Shanghai. Only way to find interest is to take time from your work to get outside the conference rooms & commercial districts, and then you're losing money. |
Pros & cons in Hungary of investing retirement savings exclusively in silver? What better alternatives, given my concerns? | First is storage which is a big and a detrimental headache. Security is another big headache. Investing in precious metal has always been an investment opportunity in the countries in the east i.e. India and China because of cultural reason and due to absence of investment opportunities for the less fortunate ones. It isn't the case so in the West. Secondly what is the right an opportune moment is open to question. When the worlwide economy is up and running, that is probably the time to buy i.e. people would like to put money in use rather than store. The saying goes the other way when the economy is stagnating. Then there is also the case of waiting out the bad periods to sell your gold and silver. If you do want to buy precious metals then use a service like BullionVault, rather than doing those yourself. It takes care of the 2 big headaches, I mentioned earlier. |
Need something more basic than a financial advisor or planner | You know how when people called in on the Car Talk radio show (Click and Clack, I miss those guys), and while the caller asked a question about his car, really he needed marital advice? And the hosts would pounce on the part about the disagreement with family member and provide an unexpected answer ("Yeah, the trick to a using a clutch is [...], but really, if you want to learn to drive a stick shift, get your dad out of the car!") So I'm pouncing on the part about the spouse. It sounds like you and your spouse don't always agree on saving and spending, and you want to find a way to agree on saving and spending. If you can find a coach or planner or counselor that you both like and both trust, then go for it. You're looking more for the right personality than a precise job description. Start with exploring what you do agree on: we agree we need to save money, we agree we need to have a spending plan and budget, etc. The right coach will help you get to more agreement -- the job title is less important. |
What's the difference between Buy and Sell price on the stock exchange [duplicate] | The same as when you are buying a car. If a dealer quotes 10k and you quote 8k. 8k is the buy price and 10k is the sell price. Somebody might quote 8.5k and another dealer might quote 9.5k. The the new price that you see on your screen is 8.5k(Best buy price) and 9.5k(Best sell price). When the buyer and seller agree to an amount, the car(In your case stock) is traded. |
Free, web-based finance tracking with tag/label support? | hledger fits your criteria, have you tried it ? Here's the web interface. |
What's are the differences between “defined contribution” and “defined benefit” pension plans? | In short, defined contribution plans yield different amounts of return based on the market whereas defined benefit plans yield predetermined amounts defined based on factors such as salary and years of service. |
What are the benefits of investing to IRA/Roth IRA, 401(k) in comparison to investing in long term CDs? | For the period 1950 to 2009, if you adjust the S&P 500 for inflation and account for dividends, the average annual return comes out to exactly 7.0%. Source. Currently inflation is around 2%. So your 2% APY is a 0% real return where the stock market return is 7%. I.e. on average, stocks have a return that is higher by 7. If you mix in bonds, 70% stocks to 30% bonds, your real returns will drop to around 5.5%, but you are safer in individual years (bonds often have good years when stocks have bad years). We're making a bit of a false dichotomy here. We're talking about returns on stocks in retirement accounts versus returns on CDs in regular accounts. You can buy stocks in regular accounts and it is legally possible to have a CD in a retirement account. So you can get bankruptcy protection and tax advantages with a CD. |
Pros / cons of being more involved with IRA investments [duplicate] | diversifying; but isn't that what mutual funds already do? They diversify and reduce stock-specific risk by moving from individual stocks to many stocks, but you can diversify even further by selecting different fund types (e.g. large-cal, small-cap, fixed- income (bond) funds, international, etc.). Your target-date fund probably includes a few different types already, and will automatically reallocate to less risky investments as you get close to the target date. I would look at the fees of different types of funds, and compare them to the historical returns of those funds. You can also use things like morningstar and other ratings as guides, but they are generally very large buckets and may not be much help distinguishing between individual funds. So to answer the question, yes you can diversify further - and probably get better returns (and lower fees) that a target-date fund. The question is - is it worth your time and effort to do so? You're obviously comfortable investing for the long-term, so you might get some benefit by spending a little time looking for different funds to increase your diversification. Note that ETFs don't really diversify any differently than mutual funds, they are just a different mechanism to invest in funds, and allow different trading strategies (trading during the day, derivatives, selling short, etc.). |
Personal Loan: How to define loan purpose | I would imagine that it goes beyond purpose and also addresses the demographic as a poor credit risk. Those seeking a post secondary education are a poor credit risk. They are at the beginning of their careers so tend to have low income, a short credit history, and a very short time of managing money on their own. Also many don't know how to work. This later fact, to me, is a great predictor of financial success. Reading into the financial data surrounding student loans, it pretty easy to see that this demographic makes poor money decisions. I live near a state university. A large percentage of students drive late model luxury cars, frequent expensive bars and restaurants, and wear pretty nice clothes. They also graduate with, on average 60K in student loans. Keep in mind a 4 year degree could be had for about 30K and could be paid for working a part time job. And that, to me, is the wisdom in bank's decision. Sure they will loan you all the money you want with a government guarantee. However, once that disappears they will not you money for unnecessary purposes. |
When is the best time to put a large amount of assets in the stock market? | Trying to "time the market" is usually a bad idea. People who do this every day for a living have a hard time doing that, and I'm guessing you don't have that kind of time and knowledge. So that leaves you with your first and third options, commonly called lump-sum and dollar cost averaging respectively. Which one to use depends on where your preferences lie on the risk/reward scpectrum. Dollar cost averaging (DCA) has lower risk and lower reward than lump sum investing. In my opinion, I don't like it. DCA only works better than lump sum investing if the price drops. But if you think the price is going to drop, why are you buying the stock in the first place? Example: Your uncle wins the lottery and gives you $50,000. Do you buy $50,000 worth of Apple now, or do you buy $10,000 now and $10,000 a quarter for the next four quarters? If the stock goes up, you will make more with lump-sum(LS) than you will with DCA. If the stock goes down, you will lose more with LS than you will with DCA. If the stock goes up then down, you will lose more with DCA than you will with LS. If the stock goes down then up, you will make more with DCA than you will with LS. So it's a trade-off. But, like I said, the whole point of you buying the stock is that you think it's going to go up, which is especially true with an index fund! So why pick the strategy that performs worse in that scenario? |
From Facebook's perspective, was the fall in price after IPO actually an indication that it went well? | You are right that Facebook really doesn't get impacted as they got their $38. However it would make it slightly more difficult for Facebook to raise more money in future as large investors would be more cautious. This can keep the price lowers than it actually needs to be. Quite a few companies try to list the IPO at lower price so that it keeps going up and have more positive effect overall there by making it easier for future borrowings. See related question Why would a company care about the price of its own shares in the stock market? |
What is the best source of funding to pay off debt? | You can take a out loan against your 401k, which means you won't be penalized for the withdrawal. You will have to pay that amount back though, but it can help since the interest will be lower than a lot of credit card rates. You could refinance your home if you can get a reasonable interest rate. You could also get a 0% APR balance transfer credit card and transfer the balance and pay it off that way. There are a lot of options. I would contact a Credit Counselor and explore further options. The main objective is to get you out of debt, not put you more in debt - whether that is refinancing your mortgage, cashing in an annuity, etc. |
How can I understand why investors think a particular company should have a high PE ratio? | Does the company see itself expanding into new product lines or new territories? What is the current predicted growth for the company's earnings for the next 5 years? These would generally be where I'd look for growth in companies. In the case of Costco, there may be a perception of the company as being a "safe" company as the market capitalization for the stock is over $50 billion which is rather large. Thus, there is something to be said for Costco providing a dividend and may well weather the current market for an idea compared to holding funds in money markets that are paying nothing in some cases. There is also something to be said for looking at the industry and sector values that Costco is in where on Yahoo! Finance, I find the P/E for the industry and sector to be 35.05 and 28.47, respectively. Thus, Costco isn't as inflated as the other stocks in the same ballpark for another idea here. |
Question about Tax Information from a Prospectus | A mutual fund could make two different kinds of distributions to you: Capital gains: When the fund liquidates positions that it holds, it may realize a gain if it sells the assets for a greater price than the fund purchased them for. As an example, for an index fund, assets may get liquidated if the underlying index changes in composition, thus requiring the manager to sell some stocks and purchase others. Mutual funds are required to distribute most of their income that they generate in this way back to its shareholders; many often do this near the end of the calendar year. When you receive the distribution, the gains will be categorized as either short-term (the asset was held for less than one year) or long-term (vice versa). Based upon the holding period, the gain is taxed differently. Currently in the United States, long-term capital gains are only taxed at 15%, regardless of your income tax bracket (you only pay the capital gains tax, not the income tax). Short-term capital gains are treated as ordinary income, so you will pay your (probably higher) tax rate on any cash that you are given by your mutual fund. You may also be subject to capital gains taxes when you decide to sell your holdings in the fund. Any profit that you made based on the difference between your purchase and sale price is treated as a capital gain. Based upon the period of time that you held the mutual fund shares, it is categorized as a short- or long-term gain and is taxed accordingly in the tax year that you sell the shares. Dividends: Many companies pay dividends to their stockholders as a way of returning a portion of their profits to their collective owners. When you invest in a mutual fund that owns dividend-paying stocks, the fund is the "owner" that receives the dividend payments. As with capital gains, mutual funds will redistribute these dividends to you periodically, often quarterly or annually. The main difference with dividends is that they are always taxed as ordinary income, no matter how long you (or the fund) have held the asset. I'm not aware of Texas state tax laws, so I can't comment on your other question. |
Split buying a house 3 ways. How do I approach this? | I would second the advice to not do this. Real estate ownership is complex to begin with, involving a constant stream of maintenance, financing, and other decisions. It is difficult enough to do for a single individual or a family as a unit (a couple), but at least spouses are forced to compromise. Friends are not, and you can end up with long-running conflicts and impasses. Financial transactions of any kind impose tensions on relationships, and friendships are no exception. If you want your friendship to survivie, do not sacrifice it to the financial arrangement which seems like a good idea at the moment. My advice would be to steer clear, no matter how attractive on the surface the deal might look. Focus on your own individual finances and use discipline and patience to save the amount needed for acquiring a separate investment property. But it will be 100% yours, and will save tons of headache. Since you are still considering this deal, it's a great time to politely change your mind and walk away - believe me, a few minutes of inconvenience will save you years of frustration. Good luck! |
Is ScholarShare a legitimate entity for a 529 plan in California? | For a parent deciding on contributing to a 529 plan the first consideration is the plan run by the state government that will trigger a state income tax deduction. You do have to at least look at the annual fees for the program before jumping into the state program, but for many people the state program offers the best deal because of the state tax deduction. Unfortunately for you California does not offer a state tax deduction for 529 plan contributions. Which means that you can pick another states program if the fees are more reasonable or if the investing options are better. You can even select a nationwide plan unaffiliated with a state. Scholarshare is run by TIAA-CREF. TIAA-CREF is a large company that runs pension and 403(b) funds for many state and local governments. Many teacher unions use them. They are legitimately authorized by the state of California: The ScholarShare Investment Board sets investment policies and oversees all activities of ScholarShare, the state’s 529 college investment plan. The program enables Californians to save for college by putting money in tax-advantaged investments. After-tax contributions allow earnings to grow tax-deferred, and disbursements, when used for tuition and other qualified expenses, are federal and state tax-free. The ScholarShare Plan is managed by TIAA-CREF Tuition Financing, Inc. The ScholarShare Investment Board also oversees the Governor’s Scholarship Programs and California Memorial Scholarship Program. note: before picking a plan from another state make sure that they allow outside contributions. |
Pre-valuation of the company | The value of the company is ill-defined until it actually has some assets and/or product. You give the investors whatever equity stakes you and they negotiate as appropriate for their investment based on how convinced they are by your plan and how badly you need their money. |
How much hassle is it inheriting shares? | If you prefer the stock rather than cash, you might find it easier to take the cash, report it, and then buy the same stock from within your own country. |
Opening 5 credit cards at once with no history to ruin, is it a good idea? | I would not call this a "good" idea. But I wouldn't necessarily call it a bad idea either. Before you even consider it, you need to do a little bit of soul searching. If there is ANY chance that having multiple credit cards could entice you to spend more than you otherwise would, then this is definitely a bad idea. Avoiding temptation is the key to preventing regrettable actions (in all aspects of life). Psychoanalysis aside, let's take a mathematical approach to the question. I believe your conclusion is correct if you add some qualifiers to it: A few years from now, then your credit score will probably be higher than if you just had 1 credit card. Here are some other things to consider: And, saving the best for last: As for the hard inquiries, they should only have an effect on your credit score for 1 year (though they can be seen on your report for 2 years). Final thought: if you decide to do this (and I personally don't recommend it), I would keep the number of applications smaller (3-5 instead of 10-15). I also would only choose cards that have no annual fee. Try to choose 1 card that has 1-2% cash back and make that your regular card. |
My university has tranfered me money by mistake, and wants me to transfer it back | Call in to the bank using a publicly available number to verify the request. |
What are the options for a 19-year-old college student who only has about $1000? | At that sum, it essentially doesn't matter what you do, unless you just want to outright gamble the money. Let's look at some options: "High" interest guaranteed savings. A five year CD returns a sad 2% right now. That means if you invest all $1,000 into a CD, by 2016 you will have earned $105.08 in interest. Think about that: About a hundred bucks over the next five years. Of course, with 3% inflation, that $105.08 will be worth about $90.57. In fact, the total amount will be worth $953.25. Your "doing something with your money" did nothing. Stocks can return significantly more interest, but there is no guarantee. Even if you made 20% year on year, you would only make maybe $1,500 in returns or so in the next 5 years, and 20% every year is like Warren Buffet territory--totally unrealistic. That's also not taking into account inflation. And neither of these is taking into account taxes! However, if you go to a casino and gamble the $1,000, it is possible you could turn it into significantly more. It's very much unlikely, and I do not advise it at all, but it's possible. The point is, you need money to make money, and, in some sense, $1,000 is not money at all. I recommend you work on your skills, knowledge, and preparation for making money in the future, and by 25 or so you can really be cooking with gas. Don't waste your efforts trying to find a brilliant way to make a few hundred bucks over the next half decade. Save the money and find ways to try to double it by earning money on small projects. Then challenge yourself to double it again, and keep honing your skills. |
What is the next step to collect money after a judgment has been ignored? | On the off chance that your indebted person is unwilling to pay and you know they have the methods, it's a great opportunity to utilize your neighborhood sheriff. You have three alternatives to gather: a bank exact, wage garnishment, or a land lien. It sounds like you'll have to contact your nearby police/sheriff's specialty and they can additionally enable you to out and get you your cash. |
Where can I find historic performance data on Barclays Aggregate Canadian Bond Index? | I couldn't find historical data either, so I contacted Vanguard Canada and Barclays; Vanguard replied that This index was developed for Vanguard, and thus historical information is available as of the inception of the fund. Unfortunately, that means that the only existing data on historical returns are in the link in your question. Vanguard also sent me a link to the methodology Barclay's uses when constructing this index, which you might find interesting as well. I haven't heard from Barclays, but I presume the story is the same; even if they've been collecting data on Canadian bonds since before the inception of this index, they probably didn't aggregate it into an index before their contract with Vanguard (and if they did, it might be proprietary and not available free of charge). |
What's the general principle behind choosing saving vs. paying off debt? | Debt creates risk. Plain and simple. Comparing interest rates of debt vs. possible investing. To me, it is all meaningless. When you are in debt, you options are limited. If you are not in debt, you have more freedom. To me, it is a no brainer. Become debt free ASAP. |
Does a stock's price represent current liquidation of all shares? | Is the stock's price at any given moment the price at which all shares could be sold to new investors? No. For the simple fact that the current bid/offer always have sizes associated. What you should be looking at is the consolidated price to buy/sell X shares (10bn doesn't really work as not everyone is willing to sell/buy). If you look at the spread of the consolidated price at your quantity level, you'd notice it would be in stark contrast to the spread of the best bid/offer but (by definition) that would be the price to buy or sell X shares to new investors. Edit Calculation of the consolidated price of X shares: You go through the order book and calculate the size-weighted average price until you covered X. Example: So the consolidated price for 3000 shares would be $39.80, the consolidated price for 2000 shares would be $39.90. |
moving family deposits away from Greece (possibly in UK) | I can't comment about your tax liability in Greece. You will have to pay tax on interest in the UK. If you are earning massive amounts of interest, unlikely with the current interest policies from Merv, then you might be bumped up a tier. The receiving bank may ask for proof of the source of the funds, particularly if it is a fair chunk of change. |
Why could rental costs for apartments/houses rise while buying prices can go up and down? | I am from Australia, so my answer is based on my experience over here, however it should be similar for the USA. Generally, what determines both the price of houses/apartments and the rents for them is supply and demand. When there is high demand and low supply prices (or rents) generally go up. When there is low demand and high supply prices (or rents) usually go down. What can sometimes happen when house prices go down, is that the demand can drop but so can supply. As the prices drop, developers will make less money on building new houses, so stop building new houses. Other developers can go bankrupt. As less people (including investors) are buying houses, and more people (including investors) try to sell their existing houses, there will be more people looking to rent and less rental properties available to rent. This produces a perfect storm of high demand and low supply of rental properties, causing rents to rise strongly. When the property prices start to go up again as demand increases, there is a shortfall of new properties being built (due to the developers not building during the downturn). At this time developers start to build again but there is a lag time before the new houses can be completed. This lack of supply puts more pressure on both house prices and rents to go up further. Until equilibrium between supply and demand is realised or an oversupply of rental properties exists in the market, rents will continue to rise. |
What exactly is BATS Chi-X Europe? | Yes, it would be incorrect to refer to BATS Chi-X Europe as a market maker. Market makers make markets on BATS Chi-X Europe, which is a stock exchange. |
Why does a company's stock price affect its ability to raise debt? | As JB hints, it is likely due to superior or improving, fundamentals. If the fundamentals of a company improve then its ability to repay loans improves. If its ability to repay improves then more sources of cash become willing to lend to the company. Also if fundamentals are improving then more sources are willing to buy and/or hold the stock. |
What is the meaning of “writing put options”? | Write means sell to open. It is called that because options writers are creating (i.e. writing) new contracts. No such thing as "reading" an option. |
What is a “fiat” currency? Are there other types of currency? | fiat in Latin means "let it be" or "let it happen" - as in "fiat lux!" meaning "let there be light!". Thus, fiat money means money that are created by the government decree - they would be random worthless pieces of paper otherwise, so the government says "let this paper be worth $100" and it becomes $100. Non-fiat money have some value that is beyond declaration - e.g., gold coin has the value of gold that is made of. Since 1971, almost all world currencies are fiat money. |
How to calculate the closing price percentage change for a stock? | The previous day's close on Thursday 10th October was 5,000.00 The close on Friday 11th October is 5,025.92 So the gain on Friday was 25.92 (5025.92 - 5000) or 0.52% (25.92/5000 x 100%). No mystery! |
What can we learn from when the trading volume is much higher/lower than average? | You should not look at volume in isolation but look at it together with other indicators and/or the release of news (good or bad). When there is lower than average volume this could be an indication that the stock is in a bit of a holding pattern, possibly waiting for some company or economic news to come out (especially when accompanied by small changes in price). It could also mean that trading in a certain direction is drying up and the trend is about to end (this could be accompanied with a large move in price). When there is higher than average volume (2 to 3 times more or higher), this could be due to the release of company results, company or economic news, or the start or end of a trend (especially if accompanied by a gap). A large increase in volume accompanied by a large fall in price (usually a gap down) may also be an indication the stock has gone ex-dividend. There could be a range of reasons for variations in volume to the average volume. That is why you need to look at other indicators, company reporting and news, and economic news in combination with the volume changes to get a grasp of what is really happening. |
UK Contractor with Limited Company | I know a guy on a much higher rate than me, about £500 per day, and he claims to pay around 18% tax which has me bewildered He will be showing expenses, which are deductible. Check with your accountant about expenses, which can be legally claimed as expenses. This is the main benefit of operating through a limited company. Legtimate business expenses can be claimed, which you cannot do if you are a permanent employee. Your friend might also be claiming false expenses, with a shady accountant. If HMRC does decide to give a call, he might have to pay n times the money he has saved till now. And my suggestion is always ask your accountant first. He(she) knows the legal stuff, so he(she) would give you the legally correct options. If you aren't comfortable with him(her), you can always change accountants. holiday pay, sick pay and job security You miss those that is why you are paid at a rate much higher than an employee. benefit of a limited company You can arrange your salary to pay no PAYE and take the rest as dividends. You willn't have to pay PAYE on that. Secondly if you have a partner(s), all of you can be paid dividends without paying PAYE(if you don't cross the threshold). |
Should you always max out contributions to your 401k? | I think better advice would be always max out your 401K at least to the level that the company provides a match. For example, my company will match 50% up to 10% of your salary. Good luck finding another investment with a guaranteed immediate 50% return. Beyond the company match, it is probably good advice to put as much in the 401K as you can afford if you aren't disciplined enough to invest that money on your own. Otherwise it depends on a number of factors as to whether it is better to invest on your own or in the company plan. |
FX losses on non-UK mortgage for UK property - tax deductable? | I spoke to HMRC and they said #1 is not allowable but #2 is. They suggested using either their published exchange rates or I could use another source. I suggested the Bank of England spot rates and that was deemed reasonable and allowable. |
Does the profit of a company directly affect its stock or indirectly by causing people to buy or sell? | The short answer to your question is yes. Company performance affects stock price only through investors' views. But note that selling for higher and lower prices when the company is doing well or poorly is not an arbitrary choice. A stock is a claim on the future cash flows of the firm, which ultimately come from its future profits. If the company is doing well, investors will likely expect that there will large cash flows (dividends) in the future and be willing to pay more to hold it (or require more to sell it). The price of a stock is equal what people think the future dividends are worth. If market participants started behaving irrationally, like not reacting to changes in the expected future cash flows, then arbitrageurs would make a ton of money trading against them until the situation was rectified. |
Is there a limit on the dollar amount of a personal check? | As long as someone is willing to take it, you can write it! I personally wrote a check for a new car. The dealership didn't bat an eye. |
Health insurance deduction on schedule C if also full time employee with w2? | Do you satisfy the necessary criteria listed there? Then why not?... It sounds like you do. |
Do I still need to pay capital gains taxes when I profit from a stock in a foreign currency? | I'll break it down into steps. Total gain/ loss for the whole thing is 5 CAD. You only have to worry about these calculations if you keep some USD and convert it at your leisure. Or if you have a US dollar in your wallet from your last vacation. Don't forget to subtract commissions (converted to CAD of course). *Some people just use an average exchange rate for the whole year, which you can also get from the BoC. ^There's $200 of tax free gains allowed for pure currency transactions. This allows small gains to be ignored. |
Can a company have a credit rating better than that of the country where it is located? | In one personal finance book I read that if a company is located in a country with credit rating X it can't have credit rating better (lower - i.e. further from AAA level) than X. This is simply wrong. Real world evidence proves it wrong. Automatic Data Processing (ADP), Exxon Mobile (XOM), Johnson & Johnson (JNJ), and Microsoft (MSFT) all have a triple-A rating today, even though the United States doesn't. Toyota (TM) remained triple-A for many years even after Japanese debt was downgraded. The explanation was the following: country has rating X because risk of doing business with it is X and so risk of doing business with any company located in that country automatically can't be better than X. When reading financial literature, you should always be critical. Let's evaluate this statement. First off, a credit rating is not the "risk of doing business." That is way too generic. Specifically, a credit rating attempts to define an individual or company's ability to repay it's obligations. Buying treasuries constitutes as doing business with the gov't, but you can argue that buying stamps at USPS is also doing business with the gov't, and a credit rating won't affect the latter too much. So a credit rating reflects the ability of an entity to repay it's obligations. What does the ability of a government to repay have to do with the ability of companies in that country to repay? Not much. Certainly, if a company keeps it's surplus cash all in treasuries, then downgrading the government will affect the company, but in general, the credit rating of a company determines the company's ability to pay. |
Wash sale rule impact on different scenarios between different types of accounts | The wash sale rule only applies when the sale in question is at a loss. So the rule does not apply at all to your cases 3, 4, 7, 8, 11, 12, 15, and 16, which all start with a gain. You get a capital gain at the first sale and then a separately computed gain / loss at the second sale, depending on the case, BUT any gain or loss in the IRA is not a taxable event due to the usual tax-advantaged rules for the IRA. The wash sale does not apply to "first" sales in your IRA because there is no taxable gain or loss in that case. That means that you wouldn't be seeking a deduction anyway, and there is nothing to get rolled into the repurchase. This means that the rule does not apply to 1-8. For 5-8, where the second sale is in your brokerage account, you have a "usual" capital gain / loss as if the sale in the IRA didn't happen. (For 1-4, again, the second sale is in the IRA, so that sale is not taxable.) What's left are 9-10 (Brokerage -> IRA) and 13-14 (Brokerage -> Brokerage). The easier two are 13-14. In this case, you cannot take a capital loss deduction for the first sale at a loss. The loss gets added to the basis of the repurchase instead. When you ultimately close the position with the second sale, then you compute your gain or loss based on the modified basis. Note that this means you need to be careful about what you mean by "gain" or "loss" at the second sale, because you need to be careful about when you account for the basis adjustment due to the wash sale. Example 1: All buys and sells are in your brokerage account. You buy initially at $10 and sell at $8, creating a $2 loss. But you buy again within the wash sale window at $9 and sell that at $12. You get no deduction after the first sale because it's wash. You have a $1 capital gain at the second sale because your basis is $11 = $9 + $2 due to the $2 basis adjustment from wash sale. Example 2: Same as Example 1, except that final sale is at $8 instead of at $12. In this case you appear to have taken a $2 loss on the first buy-sell and another $1 loss on the second buy-sell. For taxes however, you cannot claim the loss at the first sale due to the wash. At the second sale, your basis is still $11 (as in Example 1), so your overall capital loss is the $3 dollars that you might expect, computed as the $8 final sale price minus the $11 (wash-adjusted) basis. Now for 9-10 (Brokerage->IRA), things are a little more complicated. In the IRA, you don't worry about the basis of individual stocks that you hold because of the way that tax advantages of those accounts work. You do need to worry about the basis of the IRA account as a whole, however, in some cases. The most common case would be if you have non-deductable contributions to your traditional IRA. When you eventually withdraw, you don't pay tax on any distributions that are attributable to those nondeductible contributions (because you already paid tax on that part). There are other cases where basis of your account matters, but that's a whole question in itself - It's enough for now to understand 1. Basis in your IRA as a whole is a well-defined concept with tax implications, and 2. Basis in individual holdings within your account don't matter. So with the brokerage-IRA wash sale, there are two questions: 1. Can you take the capital loss on the brokerage side? 2. If no because of the wash sale, does this increase the basis of your IRA account (as a whole)? The answer to both is "no," although the reason is not obvious. The IRS actually put out a Special Bulletin to answer the question specifically because it was unclear in the law. Bottom line for 9-10 is that you apparently are losing your tax deduction completely in that case. In addition, if you were counting on an increase in the basis of your IRA to avoid early distribution penalties, you don't get that either, which will result in yet more tax if you actually take the early distribution. In addition to the Special Bulletin noted above, Publication 550, which talks about wash sale rules for individuals, may also help some. |
Where do I invest my Roth IRA besides stock market and mutual funds? | Many investment companies are also offering target retirement date portfolios to invest in. They manage reducing the risk over time so you don't have to worry about it if you choose not to. |
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. |
How safe is a checking account? | Money in a U.S. checking account is FDIC insured, so it's "safe" in the sense that you don't have to worry about a run on the bank or going out of business. Purchase fraud is something else entirely -- you need to check with your bank and see what their policy is for unauthorized charges made with your debit card. Federal rules apply: report fraud within two days and your liability is limited to $50. The maximum liability rises to $500 after that. But many banks have a $0 fraud policy. Look at their web site and see what the policy is for your bank. source: http://blogs.wsj.com/totalreturn/2015/05/19/fraud-worries-debit-vs-credit-cards/ |
Do Americans really use checks that often? | From a Canadian point of view, I think we are generally very similar to how you describe Austria. The only thing I use cash for, is to pay for my coffee at a local micro-roaster who only accepts cash. Cheques, I only use to pay friends. Everything else is debit or credit card. Very few businesses around here will even accept cheques anymore. |
Who can I get to help me roll my 401(k) into an IRA when I live overseas? | It is typically very easy to roll a 401(k) into an IRA. Companies that provide IRA's are very experienced with it, and I would expect that they will take your calls from overseas. You will likely be able to do it over the internet without using a phone at all. Just open an IRA with any brokerage company (Scottrade, Vanguard, Fidelity, Schwab, Ameritrade, etc.) and follow instructions to roll your 401(k) into it. Most likely they will need your signature, but usually a scan of a form you have filled out will do. Be sure to have information on your 401(k) provider, including your account number there, on hand. These companies are all very reputable and this is not a difficult transaction. There's really no downside to rolling into an IRA. 401(k) plans usually have more limited options and/or worse fee structures and are frequently harder to work with, as you have observed. |
Is this trick enough to totally prevent bankrupcy in a case of a crash? | Your strategy fails to control risk. Your "inversed crash" is called a rally. And These kind of things often turn into bigger rallies because of short squeezes, when all the people that are shorting a stock are forced to close their stock because of margin calls - its not that shorts "scramble" to close their position, the broker AUTOMATICALLY closes your short positions with market orders and you are stuck with the loss. So no, your "trick" is not enough. There are better ways to profit from a bearish outlook. |
If I were to get into a life situation where I would not be able to make regular payments, do lenders typically provide options other than default? | For insight on what will happen, I suggest looking at the situation from the lender's perspective: If your setbacks are temporary, and you are likely to get back on your feet again, they will protect their investment by making accommodations, and probably charging you extra fees along the way. If your financial hardship seems irredeemable, they probably try to squeeze you for as much as possible, and then eventually take your house, protecting their investment as best they can. If they are going to foreclose, they may be reluctant to do it quickly, as foreclosure is expensive, takes man power, and looks bad on their books. So it may get pushed off for a Quarter, or a fiscal year. But if you are asking if they'll help you out from the goodness of their heart, well, a bank has no heart, and creditors are interested in ROI. They'll take the easiest path to profit, or failing that, the path to minimum financial losses. The personal consequences to you are not their concern. Once you realize this, it may change your thinking about your own situation. If you think you have a path to financial recovery, then you need to make that clear to them, in writing, with details. Make a business case that working with you is in their own best interests. If you cannot make such a case, recognize that they'll likely squeeze you for as much as possible in penalties, fees, interest payments, etc, before eventually foreclosing on you anyway. Don't play that game. If your home is a lost cause financially, plan how to get out from it with the smallest losses possible. Don't pay more than you need to, and don't throw good money after bad. |
Confirming that stocks are listed under my name | Street name is not what you think it is in the question. The broker is the owner in street name. There is no external secondary owner information. I don't know if there is available independent verification, but if the broker is in the US and they go out of business suddenly, you can make a claim to the SIPC. |
Money-market or cash-type ETFs for foreigners with U.S brokerage account | Securities and ETFs are also subjected to Estate Tax. Some ways: Draft a "Transfer on Death" instruction to the broker, that triggers a transfer to an account in the beneficiary's name, in most cases avoiding probate. If the broker does not support it, find another broker. Give your brokerage and bank password/token to your beneficiary. Have him transfer out holdings within hours of death. Create a Trust, that survives even after death of an individual. P.S. ETF is treated as Stock (a company that owns other companies), regardless of the nature of the holdings. P.S.2 Above suggestions are only applicable to nonresident alien of the US. |
Am I entitled to get a maintenance loan? | I think you're eligible for the tuition fee loan but not the maintenance loan. I think that SFE were suggesting that you'd be eligible under point 4 here 4: People with the right of permanent residence in the UK If you satisfy all the conditions under this category, you will be eligible for full Student Support. To be eligible: (a) you have the right of permanent residence in the UK; and (b) you are ordinarily resident in England on the first day of the first academic year of your course; and (c) you were ordinarily resident in the UK and Islands for three years before the first day of the first academic year of the course; and (d) if your three-year residence in the UK and Islands was at any time mainly for the purpose of receiving full-time education, you must have been ordinarily resident in the UK or elsewhere in the EEA and/or Switzerland immediately prior to the three-year period of ordinary residence in the UK and Islands. It does not matter if you were in the EEA and/or Switzerland mainly in order to receive full-time education during this earlier period. Point (b) would be the reason for asking you to prove you were in England on 1 September, but since you were under three years old when you left the UK, you wouldn't satisfy point (c). You should be eligible for the tuition fee loan under point 2 2: EU nationals, and family If you satisfy all the conditions under this category only, you are eligible only for a loan to pay your tuition fees. To be eligible: (a) on the first day of the first academic year of the course, you must be: a UK national; or a non-UK EU national who is in the UK as a self-sufficient person or as a student; the relevant family member of such a person above; and (b) you must have been ordinarily resident in the EEA and/or Switzerland for three years before the first day of the first academic year of the course; and (c) the main purpose for your residence in the EEA and/or Switzerland must not have been to receive full-time education during any part of the three year period. |
Why Gamma is highest for an option that is at the money | Yes, you've got it right. The change in price is less meaningful as the instrument is further from the price of the underlying. As the delta moves less, the gamma is much less. Gamma is to delta as acceleration is to speed. Speed is movement relative to X, and acceleration is rate of change in speed. Delta is movement relative to S, and gamma is the rate of change in delta. Delta changes quickly when it is around the money, which is another way of saying gamma is higher. Delta is the change of the option price relative to the change in stock price. If the strike price is near the market price, then the odds of being in or out of the money could appear to be changing very quickly - even going back and forth repeatedly. Gamma is the rate of change of the delta, so these sudden lurches in pricing are by definition the gamma. This is to some extent a little mundane and even obvious. But it's a useful heuristic for analyzing prices and movement, as well as for focusing analyst attention on different pricing aspects. You've got it right. If delta is constant (zero 'speed' for the change in price) then gamma is zero (zero 'acceleration'). |
How can I determine if my portfolio's rate of return has been “good”, or not? | There isn't really enough information here to go on. Without knowing when you invested that money we can't find your rate of return at all, and it's important to measure your rate against risk. If you take on significantly more risk than the overall market but only just barely outperform it, you probably got a lousy rate of return. If you underperform the market but your risk is significantly lower then you might have gotten a very good rate of return. A savings account earning a guaranteed 4% might be a better return than gambling on the roulette wheel and making 15%. |
Advantages/disadvantages of buying stocks on dips vs buying outright? | If your stock is rising and you want to buy on a dip, the best way to do this is by looking at the chart and incorporating simple Technical Analysis techniques. Firstly, an uptrend is defined as a price chart with higher highs and higher lowers. If you get a lower high or a lower low (or both), it could be the end of the uptrend - be cautious. This can be seen on the chart below with an uptrend line drawn. If you draw a trend line you can wait for the price to approach the trend line, bounce off it and start moving up again to buy your stock on a dip. If instead the price closes below the trend line, be very cautious - this could be the end of the uptrend and the start of a downtrend - no telling how low the price will go. If this is the case you can then draw a downtrend line and wait for the price to close above the downtrend line before making your purchase. |
Should I lease, buy new, or buy used? | Rule of thumb is always BUY, NEVER lease, unless you plan to use it for a business where you can expense the lease payments. Leasing is the biggest scam. Lease is just a fancy word for renting and the dealerships PRAY that people like us lease. As for new or old, new cars have better warranty but you may get a great deal on a 1-3 year old used car. |
Will I receive a 1099-B if I bought stocks but didn't sell? | A purchase of a stock is not a taxable event. No 1099 to worry about. Welcome to Money.SE |
Can saving/investing 15% of your income starting age 25, likely make you a millionaire? | It depends on how much you save, how much your savings earns each year. You can model it with a very simple spreadsheet: Formula view: You can change this simple model with any other assumptions you wish to make and model. This spreadsheet presumes that you only make $50,000/year, never get a raise, that your savings earns 6% per year and that the market never has a crash like 2008. The article never states the assumptions that the author has made, and therefore we can't honestly determine how truthful the author is. I recommend the book Engineering Your Retirement as it has more detailed models and goes into more details about what you should expect. I wrote a slightly more detailed post that showed a spreadsheet that is basically what I use at home to track my retirement savings. |
Sanity check on choosing the term for a mortgage refinance | If the best they can do is 1/8th of a percent for a 15 year term, you are best served by taking the 30 year term. Pay it down sooner if you can, but it's nice to have the flexibility if you have a month where things are tight. |
Get the maximum interest rate from a bank on short term holdings | You can open Savings Bank Account with some Banks that offer better interest rate. Note there would be restriction on number of withdrawals in quarter. There are better interest rates if you lock in for 90+ days. The other option to explore is to open a Demat / Brokrage account and invest in liquid funds. Note depending on various factors it may or may not suite your requirements. |
How can I legally and efficiently help my girlfriend build equity by helping with a mortgage? | I'm glad that you feel like being fair and equitable to your party. Other answerers are, of course, correct that being fair and equitable to your girlfriend is not in your best interests but that's not what you're trying to do here and I commend you for it. There is nothing that stops you drawing up a simple legal contract giving your girlfriend a share of the value of your house in return for her payments. Just get it signed and witnessed and checked over by a legal representative. You can include reasonable terms for the money to be paid back if you separate - perhaps when you sell the property or within two years of the breakup - that don't put you in immediate danger of losing the property. Just make clear that this contract is between you and her for a sum of money linked to the value of your house; it does not establish any legal claim on your house itself. A reasonable level for her to claim the property would be one half of the change in equity between when you start joint paying and when you separate - should that happen. |
Do I need to file taxes jointly with my girlfriend if we live together? | If you pay her rent, how do you differ from a tenant in the eyes of the law? I ask this to show that you are in a business relationship first and foremost. If you don't want to file jointly, there is nothing compelling about your situation to force it. (Grant you, in most countries, there is a benefit to filing jointly) but here, I would argue it would be difficult to make the case. There are, to the best of my knowledge, no laws barring opposite sex landlord-tenant rental situations. Furthermore, there are no laws barring romantic relationships amongst landlords and tenants. Indeed, you would need to prove your relationship in some fashion for it to even be considered. In establishing a date of separation from my soon-to-be-ex-wife, for example, I merely needed to prove that we were not "presenting ourselves as husband and wife." Once I showed that we didn't sit together at church and that she was attending parties I wasn't, that was sufficient. Proving you are in a relationship is actually a lot harder than proving you're not. |
Does wash sale apply if I buy stock on 2 two different dates and sell it later | Is wash rule applicable for this? No - because you made a gain on the sale. You paid $13,500 for the stock and sold it for $14,250. The wash rule prevents you from claiming a loss if you buy the same stock again within 30 days. You have no loss to claim, so the rule does not apply. |
Is it wise to have plenty of current accounts in different banks? | Another thing to factor in are deals provided by banks. In general, banks care about new customers more than their existing customers. Hence they explicitly restrict the best deals on credit cards, savings accounts, etc, to new customers only. (Of course, there are occasionally good deals for existing customers, and some banks choose not to discriminate.) If you have many different bank accounts, you are making yourself unavailable for switching bonuses and introductory rates. |
Why ever use a market order? | What you are saying is a very valid concern. After the flash crash many institutions in the US replaced "true market orders" (where tag 40=1 and has no price) with deep in the money limit orders under the hood, after the CFTC-SEC joint advisory commission raised concerns about the use of market orders in the case of large HFT traders, and concerns on the lack of liquidity that caused market orders that found no limit orders to execute on the other side of the trade, driving the prices of blue chip stocks into the pennies. We also applaud the CFTC requesting comment regarding whether it is appropriate to restrict large order execution design that results in disruptive trading. In particular, we believe there are questions whether it is ever appropriate to permit large order algorithms that employ unlimited use of market orders or that permit executions at prices which are a dramatic percentage below the present market price without a pause for human review So although you still see a market order on the front end, it is transformed to a very aggressive limit in the back end. However, doing this change manually, by selling at price 0 or buying at 9999 may backfire since it may trigger fat finger checks and prevent your order from reaching the market. For example BATS Exchange rejects orders that are priced too aggressively and don't comply with the range of valid prices. If you want your trade to execute right now and you are willing to take slippage in order to get fast execution, sending a market order is still the best alternative. |
How can I buy and sell the same stock on the same day? | You should not have to wait 3 days to sell the stock after purchase. If you are trading with a cash account you will have to wait for the sale to settle (3 business days) before you can use those funds to purchase other stock. If you meet the definition of a pattern day trader which is 4 or more day trades in 5 business days then your brokerage will require you to have a minimum of $25,000 in funds and a margin account. |
Should I move my money market funds into bonds? | It depends how much risk you're prepared to accept. The short-term risk-free rate of return at present is something in the vicinity of 0.1% (three month US treasuries are currently yielding 0.08%), so anything paying a higher rate on money that's accessible quickly will involve some degree of risk -- the higher the rate then the higher the risk. |
How does Robinhood stock broker make money? | Disclosure: I don't have an iPhone, so I don't use RobinHood. That being said, I have a less "they're-out-to-get-ya" view of what they're doing. As a small business owner (2 businesses), employees cost the most. If you can create a solid business with few (or no) employees and let robots run it, you will drastically reduce your costs. Joe Polish said it similarly with sales letters, something along the lines of they never complain about a headache, need to take a year off to discover themself, or just need a personal day. Robots are the same; they do not have human limits. Most simple trading can be done and maintained by well written code and AI, there's very little need for humans to do anything other than build it. Think about the efficiency of bitcoin versus all the central banks combined; how many people are employed by central banks? Robinhood states that they are using technology in these ways to minimize costs and they're using a system that doesn't need physical branches (this doesn't mean they will never have them, just that they don't need them). Robinhood does not indicate that they allow everything to happen for free; only stock trading. I worked for a large trading firm once and observed that stock trading wasn't the bulk of where they made their money anyway; trading options, futures, index funds, etc are where the big money was and Robinhood says nothing about those being free. Like the CQM mentioned too, they'll be charging for margin as well. In a way, the individual stock trader is dead; many people - including this forum - prefer index funds, so more than likely, Robinhood will strike up a deal with an index fund company or create their own (this is just easy, passive income with an expense ratio). In this category, the markets are their playground, but they do need to attract enough people to their platform, thus free stock trading is a good way to do it. As for selling your information for advertising, that is always a possibility, but they have quite a few other options that would be good for most investors (index funds, affiliating with financial fund companies, etc) where they can start before ever needing to dip their toe in selling information. This isn't to say they won't do it, but that there are few other options they have. The major concern I have for Robinhood is ongoing security. Just building it and letting it run kind of assumes that there won't be major compromises in the future and as AI evolves, superior AI might be able to crush older AI. |
How do you declare an interest free loan? | In principle, the US taxes both income and gifts. Simply thinking good thoughts is not necessarily sufficient to avoid filing or payment obligations. Giving somebody money with no repayment date, no interest, and no enforceable note looks an awful lot like either income or a gift. A loan normally has interest, money sitting in a savings account is insured, and other investments generally have an expected return. Why would somebody give a loan with no interest, with only flexible or informal payment expectations, in a way where it has neither deposit insurance nor any expectation of net returns? That looks a lot like a gift - at the very least, a gift of the time value and the default risk. The IRS definitely polices loan rates. The latest release is Revenue Ruling 2014-13. The AFR is useful for tax concepts such as Original Issue Discount (when issuers sell low-interest or no-interest bonds or loans at less than face value, attempting to recharacterize interest income as return of principal), various grantor trusts (e.g. GRATs), and so forth. It's a simple way for the IRS to link to market rates of interest. Documentation and sufficient interest, as well as clear payment schedule (and maybe call or demand rights) make it a bona fide loan. There is no real way for the IRS to distinguish between an informal arrangement and a post-hoc lie to conceal a gift. Moreover, an undocumented loan is generally difficult to enforce, so it looks less like a true loan. The lender declares the interest payments as income on his Form 1040, line 8a and if necessary Schedule B. |
What forms do I need to fill out for a super basic LLC closing? | If it is a sole proprietorship and you didn't make another mistake by explicitly asking the IRS to treat it as a corporation - there are no IRS forms to fill. You'll need to dissolve the LLC with your State, though, check the State's department of State/Corporations (depending on the State, the names of the departments dealing with business entities vary). |
What are the alternatives to compound interest for a Muslim? | I am not sure if these are available today in your country: but supposedly, back when Catholic countries similarly forbade usury, sinecures were invented to circumvent religious restrictions on finance. Meaning literally 'without care', sinecures were formally prestigious salary-paying jobs with few responsibilities. They were bought by the wealthy from the Church or State. The salaries for sinecures, accumulated over time, exceeded the initial purchase price. As such, some moderns consider sinecures usury in all but name. |
What implications does having the highest household debt to disposable income ratio have on Australia? | I'd like to see a credible source for "the highest", but it's certainly fairly high. Household debt could be broadly categorized as debt for housing and debt for consumption. Housing prices seem very high compared to equivalent rental income. This is generating a great deal of debt. Keynes(?) said that "if something cannot go on forever, it will stop." Just when it will stop, and whether it will stop suddenly or gradually is a matter of great interest. Obviously there are huge vested interests, including the large fraction of the population who already own property and do not wish to see it fall. Nobody really knows; my guess would be on a very-long-term plateau in nominal prices and decline in real prices. The Australian stock market is unlike the US: since it's a small country, a lot of the big companies are export-driven, either by directly exporting physical goods (miners, agriculture) or by FDI (property trusts, banks). So a local recession will hurt the stock market, but not across the board. A decline in the value of the Australian dollar would be very good news for some of these companies. Debt for consumption I think is the smaller fraction. Arguably it's driven by a wealth effect of Australia having had a reasonably good crisis with low unemployment and increasing international purchasing power. If this tops out, you'd expect to see reduced earnings for consumer discretionary companies. |
Can self-employed individuals deduct their mileage spent commuting to events? | I looked at Publication 463 (2014), Travel, Entertainment, Gift, and Car Expenses for examples. I thought this was the mot relevant. No regular place of work. If you have no regular place of work but ordinarily work in the metropolitan area where you live, you can deduct daily transportation costs between home and a temporary work site outside that metropolitan area. Generally, a metropolitan area includes the area within the city limits and the suburbs that are considered part of that metropolitan area. You cannot deduct daily transportation costs between your home and temporary work sites within your metropolitan area. These are nondeductible commuting expenses. This only deals with transportation to and from the temporary work site. Transportation expenses do not include expenses you have while traveling away from home overnight. Those expenses are travel expenses discussed in chapter 1 . However, if you use your car while traveling away from home overnight, use the rules in this chapter to figure your car expense deduction. See Car Expenses , later. You will also have to consider the cost of tolls of the use of a trailer if those apply. |
Which practice to keep finances after getting married: joint, or separate? | My wife and I maintain seperate accounts. We have the bills split between us so that certain bills are paid by one of us, and other bills by the other. This is not a perfect 50/50 split as we don't make the same amount of money, but comparable enough that neither feels like they're doing all the bills alone. Our investments are similar. That means we each have a pool of money that we can spend on toys or entertainment as we see fit without overspending. Once my bills are paid and my savings are paid for the month, if I want to go buy some DVDs and my wife wants to buy a new lens for the camera, we don't have to agree. We just use our own money and do it. For us that's led to minimal friction or arguments over what to spend money on, simply because we aren't using the same pool. Getting it work requires getting the split right AND having the mindset that the other person is just as entitled to spend their share of the money as you are to spend yours. It really helps to eliminate issues where she spent money that I expected to be able to spend before I could, which can happen in a joint account. (We have no joint accounts, only things like the mortgage are in both our names.) I've been told by more then one person that how we're doing it is "wrong", but it works a lot better for us then trying to combine finances ever did. I think it also helps that we're younger, and this seems far less common amongst older couples. |
After Hours S&P 500 | My original answer contained a fundamental error: it turns out that it is not true that any exchange can create its own product to track any underlying index. If the underlying index is copyrighted (such as the S&P indices, Russell indices, Dow Jones indices, etc.) then the exchange must enter into a licensing agreement (usually exclusive) with the copyright holder in order to use the index's formula (and name). Without such a license the exchange would only be able to approximate the underlying index, and I don't think that happens very much (because how would you market such a product?). The CME offers several futures (and other derivatives) whose face value is equivalent to some multiple of the S&P500's value on the date when the product expires. When such a product is actively traded, it may serve as a reasonable indicator of the "market"'s expectation of the S&P500's future value. So, you could pay attention to the front month of the CME's S&P 500 Mini future, which trades from 17:00-16:00 Chicago time, Sunday night through Friday afternoon. But remember that the prices quoted there are As another example, if you care about the Russell 2000 index, until 2017 the ICE Exchange happened to hold the license for its derivatives. They traded from 20:00-17:30 New York time, Sunday night through Friday afternoon. But in mid-2017 CME bought that license as well, so now you'll want to track it here. Moral: There's almost always some "after hours" product out there tracking whatever index you care about, but you may have to do some digging to find it, and it might not be all that useful for your specific purpose. |
What options do I have at 26 years old, with 1.2 million USD? | I'm surprised nobody else has suggested this yet: before you start investing in stocks or bonds, buy a house. Not just any house, but the house you want to live in 20 years from now, in a place where you want to live 20 years from now - but you also have to be savvy about which part of the country or world you buy in. I'm also assuming that you are in the USA, although my suggestion tends to apply equally anywhere in the world. Why? Simple: as long as you own a house, you won't ever have to pay rent (you do have to pay taxes and maintenance, of course). You have a guaranteed return on investment, and the best part is: because it's not money you earn but money you don't have to spend, it's tax free. Even if the house loses value over time, you still come out ahead. And if you live abroad temporarily, you can rent out the house and add the rent to your savings (although that does make various things more complicated). You only asked for options, so that is mine. I'll add some caveats. OK, now here are the caveats: |
Is there any kind of unsecured stock loan? | buy an option, they cost less and let you buy shares in the future at the price you see now. only if you plan to buy more than 100 shares of the stock at that future date though. better learn how to use options strategically first, which I won't go into. but this is indeed their purpose. |
How to invest in a specific market without investing in a specific company? | You need to hope that a fund exists targeting the particular market segment you are interested in. For example, searching for "cloud computing ETF" throws up one result. You'd then need to read all the details of how it invests to figure out if that really matches up with what you want - there'll always be various trade-offs the fund manager has to make. For example, with this fund, one warning is that this ETF makes allocations to larger firms that are involved in the cloud computing space but derive the majority of their revenues from other operations Bear in mind that today's stock prices might have already priced in a lot of future growth in the sector. So you might only make money if the sector exceeds that predicted growth level (and vice versa, if it grows, but not that fast, you could lose money). If the sector grows exactly as predicted, stock prices might stay flat, though you'd still make a bit of money if they pay dividends. Also, note that the expense ratios for specialist funds like this are often quite a bit higher than for "general market" funds. They are also likely to be traded less frequently, which will increase the "bid-ask" spread - i.e. the cost of buying into and getting out of these funds will be higher. |
1000 pound to invest | ChrisW's comment may appear flippant, but it illustrates (albeit too briefly) an important fact - there are aspects of investing that begin to look exactly like gambling. In fact, there are expressions which overlap - Game Theory, often used to describe investing behavior, Monte Carlo Simulation, a way of convincing ourselves we can produce a set of possible outcomes for future returns, etc. You should first invest time. 100 hours reading is a good start. 1000 pounds, Euros, or dollars is a small sum to invest in individual stocks. A round lot is considered 100 shares, so you'd either need to find a stock trading less than 10 pounds, or buy fewer shares. There are a number of reasons a new investor should be steered toward index funds, in the States, ETFs (exchange traded funds) reflect the value of an entire index of stocks. If you feel compelled to get into the market this is the way to go, whether a market near you of a foreign fund, US, or other. |
Why does a stock price drop as soon an I purchase several thousand shares at market price? | You might consider learning how the "matching" or "pairing" system in the market operates. The actual exchange only happens when both a buyer and a seller overlap their respect quotes. Sometimes orders "go to market" for a particular volume. Eg get me 10,000 Microsoft shares now. which means that the price starts at the current lowest seller, and works up the price list until the volume is met. Like all market it trades, it has it's advantages, and it's dangers. If you are confident Microsoft is going to bull, you want those shares now, confident you'll recoup the cost. Where if you put in a priced order, you might get only none or some shares. Same as when you sell. If you see the price (which is the price of the last completed "successful" trade. and think "I'm going to sell 1000 shares". then you give the order to the market (or broker), and then the same as what happened as before. the highest bidder gets as much as they asked for, if there's still shares left over, they go to the next bidder, and so on down the price... and the last completed "successful" trade is when your last sale is made at the lowest price of your batch. If you're selling, and selling 100,000 shares. And the highest bidder wants 1,000,000 shares you'll only see the price drop to that guys bid. Why will it drop (off the quoted price?). Because the quoted price is the LAST sale, clearly if there's someone still with an open bid on the market...then either he wants more shares than were available (the price stays same), or his bid wasn't as high as the last bid (so when you sale goes through, it will be at the price he's offering). Which is why being able to see the price queues is important on large traders. It is also why it can be important put stops and limits on your trades, een through you can still get gapped if you're unlucky. However putting prices ("Open Orders" vs "(at)Market Orders") can mean that you're sitting there waiting for a bounce/spike while the action is all going on without you). safer but not as much gain (maybe ;) ) that's the excitement of the market, for every option there's advantages...and risks... (eg missing out) There are also issues with stock movement, shadowing, and stop hunting, which can influence the price. But the stuff in the long paragraphs is the technical reasons. |
How do you find reasonably priced, quality, long lasting clothing? | The idea that you should buy quality, long lasting clothes shouldn't go unchallenged. It's just not true for everybody. If you have a job or a lifestyle that makes it so your clothes are going to get worn out fast regardless of quality, buying expensive clothes doesn't make sense. With that said: look for heavier-feeling fabrics, avoid colors that will fade (or worse: bleed into your other clothes in the wash). Check the laundry instructions so you can see whether they're on the delicate end of the spectrum. Re: how to extend the life: avoid bleach. Even color safe bleach contains peroxide which can break down fabrics faster. |
Can you help me find an ETF Selection website that evaluates my ETF holdings? | I used to use etfconnect before they went paid and started concentrating on closed end funds. These days my source of information is spread out. The primary source about the instrument (ETF) itself is etfdb, backed by information from Morningstar and Yahoo Finance. For comparison charts Google Finance can't be beat. For actual solid details about a specific ETF, would check read the prospectus from the managing firm itself. One other comment, never trust a site that "tells you" which securities to buy. The idea is that you need sources of solid information about financial instruments to make a decision, not a site that makes the decision for you. This is due to the fact that everyone has different strategies and goals for their money and a single site saying buy X sell Y will probably lead you to lose your money. |
How does a big lottery winner cash his huge check risk-free? | If the funds are deposited into a noninterest-bearing account, they will be covered by FDIC insurance regardless of the amount (However, this extended coverage may not be valid after Dec. 31, 2012): On November 9, 2010, the FDIC issued a Final Rule implementing section 343 of the Dodd-Frank Wall Street Reform and Consumer Protection Act that provides for unlimited insurance coverage of noninterest-bearing transaction accounts. Beginning December 31, 2010, through December 31, 2012, all noninterest-bearing transaction accounts are fully insured, regardless of the balance of the account, at all FDIC-insured institutions. (Source: http://www.fdic.gov/deposit/deposits/changes.html) |
Why does a stock's price fluctuate so often, even when fresh news isn't available? | according to me it's the news about a particular stock which makes people to buy or sell it mostly thus creates a fluctuation in price . It also dependents on the major stock holder. |
Should I try to negotiate a signing bonus? | I was able to request a modest advance on my salary when I started my first job out of college, for essentially the same reason. Alternatively, you might consider requesting a small personal loan from friends or family. If you have a credit card that can cover things like grocery expenses for that period, this may also be the appropriate time to use it. Buy cheap food, like lentils and beans. :P In the future, once you earn some money, you should keep around a few months' worth of essential expenses in a saving account to avoid this situation. :) |
Why are currency forwards needed? | e.g. a European company has to pay 1 million USD exactly one year from now While that is theoretically possible, that is not a very common case. Mostly likely if they had to make a 1 million USD payment a year from now and they had the cash on hand they would be able to just make the payment today. A more common scenario for currency forwards is for investment hedging. Say that European company wants to buy into a mutual fund of some sort, say FUSEX. That is a USD based mutual fund. You can't buy into it directly with Euros. So if the company wants to buy into the fund they would need to convert their Euros to to USD. But now they have an extra risk parameter. They are not just exposed to the fluctuations of the fund, they are also exposed to the fluctuations of the currency market. Perhaps that fund will make a killing, but the exchange rate will tank and they will lose all their gains. By creating a forward to hedge their currency exposure risk they do not face this risk (flip side: if the exchange rate rises in a favorable rate they also don't get that benefit, unless they use an FX Option, but that is generally more expensive and complicated). |
What is the smartest thing to do in case of a stock market crash | Remind yourself that markets recover, usually within a few years. If you believe this and can remind yourself of this, you will be able to see the down cycles of the market as an opportunity to buy stock "on sale". No one knows the future, so many people have found investing on a regular schedule to be helpful. By putting in the same amount of money each period, you will end up buying fewer shares when the market is up, and more when it is down. As long as your time horizon is appropriate, you should be able to wait out the ups and downs. Stocks are volatile by their very nature, so if you find that you are very concerned by this, you might want to consider whether you should adjust the amount of risk in your investments, since over time, most people lose money by trying to "time" the market. However, if your investment goals and requirements haven't changed, there likely isn't any need to change the types of assets you are investing in, as what you are choosing to invest in should depend on your personal situation. Edit: I am assuming you want to be a long-term investor and owner, making money by owning a portion of companies' profits, and not by trading stocks and/or speculation. |
Why does gold have value? | Gold has very useful physical properties for some engineering applications. Even tiny amounts of gold can substantially improve products, so it can be worthwhile to pay high prices per ounce for gold. For example: Gold can be "beaten" or electroplated to produce very thin shiny coatings. Entire roofs (of famous buildings) have been covered with "gold leaf", at a cost that was small compared to the supporting structure. A very thin layer of electroplated gold provides better protection against corrosion than a much thicker layer of electroplated nickel. Even if gold costs thousands of times more per ounce than nickel, it is cheaper to use gold as an anti-corrosion layer than nickel (for use in military-grade naval electronics). A thin layer of electroplated gold greatly increases the electrical current-carrying capacity of a thin copper wire. |
How to convert coins into paper money or deposit coins into bank account, without your bank in local? | Ask around your area. Some stores will exchange because it saves them having to go to the bank to stock up on change. Some stores have machines that will convert the coins for a small percentage fee. Some banks may do this exchange for folks who aren't customers, though that's uncommon. My solution was to open a small account locally specifically as a place to dump my coins into. They'll even run a pile of coins through their counting machine for me, free, so I don't have to make up coin rolls as I did in the past. |
Paying taxes on dividends even though your capital gains were $0? | The issue for you seems to be the sequence of events. Presumably, there will be a gain in the fund. In one year, you have a fund worth $100,000 and the $8500 your netted from the $10,000 dividend. (Dividends are taxed at 15% for most of us. If your taxable income is under $38K single, it's $0) An $8500 net return for the year. Now, if there were no initial dividend, and at the end of a full year, your $100K grew to $110K, and then gave you the $10K dividend, you might not be so unhappy. Even on day 2, you now have a fund worth $90K with a basis of $100K, and the promise of future dividends or cap gains. When you sell, the first $10K of gain from this point will effectively be tax free due to this quick drop. To directly answer the last few sentences, dividends and cap gains are different. And different still, for the way a fund processes them. |
Is it a good idea to teach children that work is linearly related to income? | Completely linear? We don't do that. Our daughter has a fixed allowance, and we expect a certain amount of help around the house as being part of the family. We don't make any explicit ties between the two, and we don't seem to have any problems. We bought an eBay lot of Polly Pockets and divided them up into $5 bags. (This is a better deal that what we could get in the store new.) Her allowance isn't enough that she can "buy" one every week. After sensing her frustration we gave her the opportunity to earn some more money by doing extra work. It happened to be cleaning up after our dogs in the back yard, a chore we had neglected for quite a while. She stuck with the job, and truly earned that money. (She'll be six in January.) What's more, it was a good deal for me. It needed to be done, and I didn't really want to do it. :) So, for now this seems like a fair balance. It prevents her from getting the idea that she won't work unless she gets paid, but she also knows that working harder does have its rewards. We still have time to teach her the idea of working smarter. (This isn't a formal study. It's just my experience.) |
Are stock prices likely drop off a little bit on a given friday afternoon? | There are classes of 'traders' who close their positions out every evening, not just on fridays. But their are other types of businesses who trade shortly before or nearly right at market close with both buys and sells There are lots of theories as to how the market behaves at various times of day, days of the week, months of the year. There are some few patterns that can emerge but in general they don't provide a lot of 'lift' above pure random chance, enough so that if you 'bet' on one of these your chances of being wrong are only very slightly different from being right, enough so that it's not really fair to call any of them a 'sure thing'. And since these events are often fairly widely spaced, it's difficult to play them often enough to get the 'law of large numbers' on your side (as opposed to say card-counting at a blackjack table) which basically makes betting on them not much different from gambling |
How exactly do dividend reinvestment plans (DRIPs) work? | I think Wikipedia offers a very good explanation: A dividend reinvestment program or dividend reinvestment plan (DRIP) is an equity investment option offered directly from the underlying company. The investor does not receive quarterly dividends directly as cash; instead, the investor's dividends are directly reinvested in the underlying equity. The investor must still pay tax annually on his or her dividend income, whether it is received or reinvested. This allows the investment return from dividends to be immediately invested for the purpose of price appreciation and compounding, without incurring brokerage fees or waiting to accumulate enough cash for a full share of stock. So essentially, a dividend reinvestment plan is offered by companies directly, allowing investors to bypass brokerages, and immediately re-invests dividends rather than paying them out in cash. Investopedia also gives a straighforward definition: A plan offered by a corporation that allows investors to reinvest their cash dividends by purchasing additional shares or fractional shares on the dividend payment date. A DRIP is an excellent way to increase the value of your investment. Most DRIPs allow you to buy shares commission free and at a significant discount to the current share price. Most DRIPS don't allow reinvestments much lower than $10. I had a hard time finding a comprehensive listing of companies that offered DRPs (or DRIPs), but MyDollarPlan.com offers these suggestions: Finding a Dividend Reinvestment Plan: Computershare offers one-stop shopping for hundreds of dividend reinvestment plans. They offer a searchable list that can be filtered to easily find a dividend reinvestment plan that fits your needs. You can also use OneShare. Probably the best way to find out if a company offers a dividend reinvestment plan is to visit the company website. Most companies have an Investor Relations area that will highlight the various options available to shareowners. For example: Coca-Cola, Disney, and Wal-Mart. Hope this helps! @YMCbuzz |
What is a “Junk Bond”? | A "junk bond" is one that pays a high yield UP FRONT because there is a good chance that it could default. So the higher interest rate is necessary to try to compensate for the default Junk bonds are used in leveraged buyouts (LBOs) because such deals are INHERENTLY risky. "Normal" companies may have 20%-30% debt and the rest equity, so that the company will have to lose 70%-80% of its value before the debtholders start losing money on "normal" bonds. But in an LBO, the company may have only 10%-20% equity and the rest debt. Meaning that if it loses that small equity cushion, the value of the "junk" bonds will be impaired. |
Should I make extra payments to my under water mortgage or increase my savings? | You say you are underwater by $10k-15k. Does that include the 6% comission that selling will cost you? If you are underwater and have to sell anyway, why would you want to give the bank any extra money? A loss will be taken on the sale. Personally i would want the bank to take as much of that loss as possible, rather than myself. Depending on the locale the mortgage may or may not be non-recourse, ie the loan contract implies that the bank can take the house from you if you default, but if 'non-recourse' the bank has no legal way to demand more money from you. Getting the bank to cooperate on a short sale might be massively painful. If you have $ in your savings, you might have more leverage to nego with the bank on how much money you have to give them in the event the loan is not 'non-recourse'. Note that even if not 'non-recourse', it's not clear it would be worth the banks time and money to pursue any shortfall after a sale or if you just walk away and mail the keys to the bank. If you're not worried about your credit, the most financially beneficial action for you might be to simply stop paying the mortgage at all and bank the whole payments. It will take the bank some time to get you out of the house and you can live cost-free during that time. You may feel a moral obligation to the bank. I would not feel this way. The banks and bankers took a ton of money out of selling mortgages to buyers and then selling securities based on the mortgages to investors. They looted the whole system and pushed prices up greatly in the process, which burned most home buyers and home owners. It's all about business -my advice is to act like a business does and minimize your costs. The bank should have required a big enough downpayment to cover their risk. If they did not, then they are to blame for any loss they incur. This is the most basic rule of finance. |
Can I buy only 4 shares of a company? | I'm not sure it is the best idea, but you can buy only 4 stocks generally. As you alluded to, you should take notice of the fees. Also note that many stocks trade at significantly lower prices than Apple's per shares, so you might want to factor that into your decision. You could probably get a better feel for transactions if you bought say 50 shares of a $30 stock; then it might be easier to see what it's like to sell some, etc. Note that specific trading sites might have various limits in place that would pose as barriers to this sort of behavior though. |
How can I save on closing costs when buying a home? | According to Realtor.com, there are a variety of options to save on closing costs: A general Google search on "how to reduce closing costs" will return a lot of results on other people's experiences, as well as tips and tricks. |
Figuring out an ideal balance to carry on credit cards [duplicate] | One factor you may be missing is that, even if you pay your balance in full each month, the utilization probably won't be zero, since the reporting period isn't usually lined up perfectly with the due date on your payment. In short: Your utilization is not the same thing as how much balance you carry over. My advice would be: don't try carry a balance just to get a minuscule benefit on your credit score (if there is one at all). It is certainly not worth the interest charges you will pay to do so. I think the advice you quoted is a mangled explanation of something that can benefit your credit. Specifically, don't let your cards go unused for long periods of time, which would make your utilization show as zero. At least a few times a year you should actually use those cards, even just a small amount, to make the accounts show that you are utilizing your credit. |
Dad paying for my new home in cash. How can I buy the house from him? | You have four basic options. |
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