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Conservative ways to save for retirement? | I didn't even have access to a 401(k) at age 24. You're starting early and that's good. You're frugal and that's good too. Retirement savings is really intended to be a set it and forget it kind of arrangement. You check in on it once a year, maybe adjust your contributions. While I applaud your financial conservatism, you're really hamstringing your retirement if you're too conservative. At age 24 you have a solid 30 years before retirement will even approach your radar and another 10 years after that before you have to plan your disbursements. The daily, monthly, quarterly movements of your retirement account will have literally zero impact on your life. There will be money market type savings accounts, bond funds, equity funds, and lifecycle funds. The lifecycle fund rolls your contributions to favor bonds and other "safer" investments as you age. The funds available in retirement accounts will all carry something called an expense ratio. This is the amount of money that the fund manager keeps for maintaining the fund. Be mindful of the expense ratios even more than the published performance of the fund. A low fee fund will typically have an expense ratio around 0.10%, or $1 per $1,000 per year in expense. There will be more exotic funds targeting this or that segment, they can carry expense ratios nearing 1% and some even higher. It's smart to take advantage of your employer's match. Personally, at age 24, at a minimum I would contribute the match to a low-fee S&P index fund. |
How much of each stock do index funds hold? | In general, the goal of an S&P 500 index fund is to replicate the performance of the S&P 500 Index. To do this, the fund will buy the same stocks in the same proportions as the weighting of the Index. The S&P 500 Index is free-float capitalization weighted. This means that the higher capitalization stocks (based on publicly traded shares only) are more heavily weighted and factor into the Index value more heavily than the smaller capitalization stocks, or the stocks that have a smaller publicly traded value. For example, companies like Apple, ExxonMobil, and Microsoft have a much larger weight in the index value than smaller companies. Alternatively, there are some S&P index funds that are equal-weighted. In these funds, the managers have chosen to purchase all 500 of the stocks in the index, but in equal proportions instead of the weighted proportions of the index. These equal-weighted funds will not as closely match the index price as the traditionally weighted index funds. Instead, they might do better or worse than the index, depending on how the individual stocks do. You'll need to look at the prospectus of the index funds you are interested in to see which approach the fund is taking. |
Can I rollover an “individual retirement annuity” to an IRA? | Annuities, like life insurance, are sold rather than bought. Once upon a time, IRAs inherited from a non-spouse required the beneficiary to (a) take all the money out within 5 years, or (b) choose to receive the value of the IRA at the time of the IRA owner's death in equal installments over the expected lifetime of the beneficiary. If the latter option was chosen, the IRA custodian issued the fixed-term annuity in return for the IRA assets. If the IRA was invested in (say) 15000 shares of IBM stock, that stock would then belong to the IRA custodian who was obligated to pay $x per year to the beneficiary for the next 23 years (say). There was no investment any more that could be transferred to another broker, or be sold and the proceeds invested in Facebook stock (say). Nor was the custodian under any obligation to do anything except pay $x per year to the beneficiary for the 23 years. Financial planners loved to get at this money under the old IRA rules by suggesting that if all the IRA money were taken out and invested in stocks or mutual funds through their company, the company would pay a guaranteed $y per year, would pay more than $y in each year that the investments did well, would continue payment until the beneficiary died (or till the death of the beneficiary or beneficiary's spouse - whoever died later), and would return the entire sum invested (less payouts already made, of course) in case of premature death. $y typically would be a little larger than $x too, because it factored in some earnings of the investment over the years. So what was not to like? Of course, the commissions earned by the planner and the lousy mutual funds and the huge surrender charges were always glossed over. |
Should I Use an Investment Professional? | Agree with the above poster regarding causation vs. correlation. Unless you can separate out the variables questions like this are somewhat impossible to answer. Additionally, one of the fundamental issues is the Agency Problem. Depending on the fee structure the advisor might be more interested in their own self benefit then yours. |
Where does the stock go in a collapse? | If we can agree that 2010 was closer to the low of 2009 than 2007 then the rich did all the buying while the super-rich did all the selling. http://www2.ucsc.edu/whorulesamerica/power/wealth.html Looks like the rich cleaned up during the Tech Crash too, but it looks like the poor lost faith. That limited data makes it look like the best investors are the rich. Market makers are only required by the exchanges to provide liquidity, bids & asks. They aren't required to buy endlessly. In fact, market makers (at least the ones who survive the busts) try to never have a stake in direction. They do this by holding equal inventories of long and shorts. They are actually the only people legally allowed to naked short stock: sell without securing shares to borrow. All us peons must secure borrowed shares before selling short. Also, firms involved in the actual workings of the market like bookies but unlike us peons who make the bets play by different margin rules. They're allowed to lever through the roof because they take on low risk or near riskless trades and "positions" (your broker, clearing agent, etc actually directly "own" your financial assets and borrow & lend them like a bank). http://www.finra.org/web/groups/industry/@ip/@reg/@notice/documents/notices/p004001.pdf This is why market makers can be assumed not to load up on shares during a decline; they simply drop the bids & asks as their bids are hit. |
Receiving important daily wires from abroad? | You can receive all the Money in your Bank. By Problem if you mean whether it will raise any alarms at the Bank. Most likely yes, such kind of activity would trigger AML. Bank would flag this off to regulators and questions would be asked. If you are doing a Legitimate business, its not an issue. Maintain a proper record of the transaction and pay your taxes. As funds are large 80 K a month, it makes sense to seek to advice of a Laywer and CA to help you keep thing in order. |
I'm upside down on my car loan and need a different car, what can I do? | Dealerships make a lot of money in the finance department. One of the thing they play upon is your emotional reaction of purchasing a new vehicle (new to you in this case). They perform all sorts of shenanigans, like adding undercoat, selling gap insurance, or extended warranties. They entice you with a promise of a lower interest rate, but really what they are trying to do is back you into a payment. So if you can fiance 20,000, but the car you are buying is 16,000, then they will try to move that figure up to the 20K mark. In your case it sounded like some borderline (at the least) illegal activity they used to fool you into paying more. It sounds like you regret this decision which puts you a step ahead of most. How many people brag about the extended warranty or gap insurance they got included in the sale? As mentioned in another answer the best bet is to go into the dealership with financing in place. Say you were able to get a 3% loan on 16K. The total interest would be ~1600. If you avoid the finance room, you might avoid their dubious add ons that would probably cost you more then the 1600 even if you can get 0%. If you are going to buy a car on time, my advice would be to not fill out a credit app at the dealership. The dealership people through a conniption fit, but hold your ground. If need be get up and walk out. They won't let you leave. One thing I must mention, is that one feels very wealthy without that monthly pain in the a$$ payment for a car. You may want to try and envision yourself without a car payment, and make steps to making that a reality for the rest of your life. |
How much time would I have to spend trading to turn a profit? | The high frequency trading you reference has no adverse impact on individual investors - at least not in the "going to take advantage of you" way that many articles imply. If anything, high-frequency trading is generally more helpful than harmful, adding liquidity to the system, although it can cause some volatility and "noise" in volume and other data, and the sudden entrance or exit of this type of trading can drive some abnormal market movements. As to research and time needed for trading, most data suggests that the less you try to "beat the market", the better you'll do. Trade activity tends to be inversely related to returns, particularly for individuals. Your best bet is likely to learn enough about investment risks to ensure you're comfortable with them, and invest in broadly diversified asset classes, regions, and sectors, and then mostly leave them alone, or rebalance annually. You'll almost surely do a lot better that way than you will if you spend countless hours researching the "right" stocks to buy. |
Is it possible to get life insurance as a beneficiary before the person insured dies? | I recall the following business from the AIDS crisis: viatical settlement But because there were life-extending treatments developed in the 1990s, many third parties which engaged in these took a bath and it's not as common. |
What's the best application, software or tool that can be used to track time? | Surprised nobody has mentioned Freshbooks yet. It's lightweight, easy to use, and free for low-end use (scaling up price-wise as you scale up). |
Invest all at once after maxing out Roth IRA - or each time I contribute? | This depends on the terms and conditions of your IRA account, and those of the investments you have chosen. In general, you are better off investing as quickly as is feasible given those terms. Money in your cash account doesn't earn much of a return, so the quicker you get money into something earning a return, the better. However, pay attention to the fees and costs associated with investing. If there is a per-transaction fee, you may want to consolidate, as it may be more efficient to do so - after all, if you contribute $500 at a shot, and it costs you $5 to make a trade, you're paying 1% off the top to make that trade if you make 11 of them, versus 0.1% to make 1, so the question is do you earn that 1% back over the course of the six months? That will depend on what you are investing in. More than likely you're going to earn more than 1% over the course of the six months, so it's probably worth investing it in pieces still in that situation, but if the transaction cost is higher, or the time differential lower, you may have a less clear-cut answer. I invest at Vanguard in their funds and have no transaction fees, so I have a more obvious answer (invest as soon as possible). You also need to consider whether you have minimums to pay attention to - maybe your investment is something you can only buy whole shares of, for example, or you might have a much higher fee if you make small transactions. In that case, you should wait until you have the minimum to make that transaction if the fee is more than the return you'll get. So the answer is - make the transactions as early as you can, subject to considering the fees you will pay for making them. |
What is the meaning of realization in finance? | Realization is, literally, when something is made real. For example, let's say that you own some stock. You bought the stock for $1000, and after many years the stock is worth $10,000. Your investment has gained $9,000. However, you don't actually have this $10,000; you just own stock that is supposedly worth $10,000 on paper. Tomorrow, the value of the stock could plummet and only be worth $8,000. But if you sell your stock today and obtain this $10,000, the gain has now become real. You have realized a $9,000 gain. In investing, realization of a gain or loss occurs when an asset that you own has been sold for more or less than what you purchased it for. Before the asset is sold, you only have a theoretical gain or loss based on what you might receive if you sold the asset today. And tomorrow, that theoretical gain or loss could change. |
Why do stocks track the price of Oil? | Anthony Russell - I agree with JohnFx. Petroleum is used in making many things such as asphalt, road oil, plastic, jet fuel, etc. It's also used in some forms of electricity generation, and some electric cars use gasoline as a backup form of energy, petrol is also used in electricity generation outside of cars. Source can be found here. But to answer your question of why shares of electric car companies are not always negatively related to one another deals with supply and demand. If investors feel positively about petroleum and petroleum related prospects, then they are going to buy or attempt to buy shares of "X" petrol company. This will cause the price of "X", petrol company to rise, ceteris paribus. Just because the price of petroleum is high doesn't mean investors are going to buy shares of an electric car company. Petrol prices could be high, but numerous electric car companies could be doing poorly, now, with that being said you could argue that sales of electric cars may go up when petrol prices are high, but there are numerous factors that come into play here. I think it would be a good idea to do some more research if you are planning on investing. Also, remember, after a company goes public they no longer set the price of the shares of their stock. The price of company "X" shares are determined by supply and demand, which is inherently determined by investors attitudes and expectations, ultimately defined by past company performance, expectations of future performance, earnings, etc.. It could be that when the market is doing well - it's a good sign of other macroeconomic variables (employment, GDP, incomes, etc) and all these factors power how often individuals travel, vacation, etc. It also has to deal with the economy of the country producing the oil, when you have OPEC countries selling petrol to the U.S. it is likely much cheaper per barrel than domestic produced and refined petrol because of the labor laws, etc. So a strong economy may be somewhat correlated with oil prices and a strong market, but it's not necessarily the case that strong oil prices drive the economy..I think this is a great research topic that cannot be answered in one post.. Check this article here. From here you can track down what research the Fed of Cleveland has done concerning this. My advice to you is to not believe everything your peers tell you, but to research everything your peers tell you. With just a few clicks you can figure out the legitimacy of many things to at least some degree. |
When will the 2017 US Federal Tax forms be released? | It's not quite as bad as the comments indicate. Form 1040ES has been available since January (and IME has been similarly for all past years). It mostly uses the prior year (currently 2016) as the basis, but it does have the updated (2017) figures for items that are automatically adjusted for inflation: bracket points (and thus filing threshhold), standard deductions, Social Security cap, and maybe another one or two I missed. The forms making up the actual return cannot be prepared very far in advance because, as commented, Congress frequently makes changes to tax law well after the year begins, and in some cases right up to Dec. 31. The IRS must start preparing forms and pubs -- and equally important, setting the specifications for software providers like Intuit (TurboTax) and H&RBlock -- several months ahead in order to not seriously delay filing season, and with it refunds, which nearly everyone in the country considers (at least publicly) to be worse than World War Three and the destruction of the Earth by rogue asteroids. I have 1040 series from the last 4 years still on my computer, and the download dates mostly range from late September to mid January. Although one outlier shows the range of possibility: 2013 form 1040 and Schedule A were tweaked in April 2014 because Congress passed a law allowing charitable contributions for Typhoon Haiyan to be deducted in the prior year. Substantive, but relatively minor, changes happen every year, including many that keep recurring like the special (pre-AGI) teacher supplies deduction ("will they or won't they?"), section 179 expensing (changes slightly almost every year), and formerly the IRA-direct-to-charity option (finally made permanent last year). As commented, the current Congress and President were elected on a platform with tax reform as an important element, and they are talking even more intensely than before about doing it, although whether they will actually do anything this year is still uncertain. However, if major reform is done it will almost certainly apply to future years only, and likely only start after a lag of some months to a year. They know it causes chaos for businesses and households alike to upend without advance warning the assumptions built in to current budgets and plans -- and IME as a political matter something that is enacted now and effective fairly soon but not now is just as good (but I think that part is offtopic). |
Can dividends be exploited? | No, the dividends can't be exploited like that. Dividends settlement are tied to an ex-dividend date. The ex-dividend, is the day that allows you to get a dividend if you own the stock. Since a buyer of the stock after this date won't get the dividend, the price usually drop by the amount of the dividend. In your case the price of a share would lose $2.65 and you will be credited by $2.65 in cash such that your portfolio won't change in value due to the dividend. Also, you can't exploit the drop in price by short-selling, as you would be owing the dividend to the person lending you the stock for the short sale. Finally, the price of the stock at the ex-dividend will also be affected by the supply and demand, such that you can't be precisely sure of the drop in price of the security. |
Borrowing money and then investing it — smart or nart? | It's incredibly foolish because it fails to use the investments as collateral to secure the loan. So instead of paying 5% or less for a loan secured by liquid assets, you'll be paying 10% or more for an unsecured loan. I do leveraged investments all the time and make a reasonable amount of money doing it (at high risk, I concede). I always use the investment to secure the loan and, as a result, pay a very low interest rate (since the lender can sell of my investments if I fail to repay the loan, reducing their risk dramatically). An unsecured loan would cost several times more. |
Why companies appear in several stock exchanges? | If I buy the one from NSY, is it the "real" Sinopec? No - you are buying an American Depository Receipt. Essentially some American bank or other entity holds a bunch of Sinopec stock and issues certificates to the American exchange that American investors can trade. This insulates the American investors from the cost of international transactions. The price of these ADRs should mimic the price of the underlying stock (including changes the currency exchange rate) otherwise an arbitrage opportunity would exist. Other than that, the main difference between holding the ADR and the actual stock is that ADRs do not have voting rights. So if that is not important to you then for all intents and purposes trading the ADR would be the same as trading the underlying stock. |
First time home buyer. How to negotiate price? | Well it all kind of depends. The Realtor is your pro, and you should communicate further with him. Is this a neighborhood on the decline? Is there a good reason to make such a low offer? Are you totally off base when you think 85K is fair, and if so why? Is he just working his tail off for you (a great thing)? One thing that is a key to this negotiation is financing. What does your financing status look like? A reasonable cash offer with no contingencies and a quick close might be less than 70K. A person with strong financing can get a better discount then a person that is questionable. It could be that the Realtor is testing the waters to find the bottom price. The home selling season is closed (typically the summer), and the home has been on the market for a bit. Offering 70K might mean a counter at 82K, so you can work on an offer between 80 and 82. To me, it sounds like this guy is working for you. You should thank him. It is pretty hard to find a realtor that is willing to negotiate his pay down in order to save you money. Also he can answer the closing cost question better than us as he is more familiar with your particular market. |
Need something more basic than a financial advisor or planner | What you are looking for is a Money Coach or a Personal Finance Coach. From mymoneycoach.com: "Money Coach: Everyone uses money, but few people fully understand how to use it wisely. To be debt free and enjoy a comfortable lifestyle takes special skills. Money coaches provide solutions for household budgeting, investing, using credit wisely, and saving for retirement. With the principles offered by a money coach, you can live the life you want to live." Usually money coaches or personal finance coaches will not tell you "you should put your money here or there" but instead they will work with you to identify and correct bad money behaviours that affect more than just your investments, and they will not sell you anything. Maybe you could take a look at some coaches in your area, but a lot of them work via the internet too. Good luck! |
Good habits pertaining to personal finance for someone just getting started? | nan |
Is the BA Avios Visa airlines rewards card worth it? | I am a proud member of the BA frequent fliers' club (Executive Club). Their service is superb. Their avios (aka miles) are quite useful. However, that is if you're not flying with British Airways, because if you do - you'll pay enormous amounts as "taxes". I've used their avios on Air Berlin, American Airlines and Iberia - several times each, and their prices are very reasonable (including trans-Atlantic flights, although I mostly used it for domestic flights in the US and EU). If you only fly BA - their club charges ridiculous amounts for taxes and you would probably want to be in one of their partners' clubs. Depending on your traveling pattern - I'd suggest American Airlines (if you travel a lot in the US) or Qantas (if you travel to far East). I'm not familiar with other partners' clubs, so can't tell. So whether or not the 50K avios worth the investment is really up to you - it depends greatly on your traveling pattern and where you can use them. If only on BA - not sure if it is worth the trouble (although you do end up with about 50%-70% discount of the regular price when you buy miles tickets). |
What do the points in a stock market index epresent? | The All Ords Index consists of the 500 largest companies by market capitalisation listed on the Australia Stock Exchange. Each stock in the All Ords. Index is given a weighting based on its market capitalisation. As the price of the stocks within the All Ords. Index change, so does the points on the index itself. The Index is more sensitive to changes in the larger capitalised stocks due to their larger weighting in the Index. Example: If a company has a weighting of 10% and its price goes up by 10%, and all other stocks in the Index don't go up or down, then this will cause the All Ords Index to go up by 1% (10% of 10%). |
What's the difference between Market Cap and NAV? | I think the key concept here is future value. The NAV is essentially a book-keeping exercise- you add up all the assets and remove all the liabilities. For a public company this is spelled out in the balance sheet, and is generally listed at the bottom. I pulled a recent one from Cisco Systems (because I used to work there and know the numbers ;-) and you can see it here: roughly $56 billion... https://finance.yahoo.com/q/bs?s=CSCO+Balance+Sheet&annual Another way to think about it: In theory (and we know about this, right?) the NAV is what you would get if you liquidated the company instantaneously. A definition I like to use for market cap is "the current assets, plus the perceived present value of all future earnings for the company"... so let's dissect that a little. The term "present value" is really important, because a million dollars today is worth more than a million dollars next year. A company expected to make a lot of money soon will be worth more (i.e. a higher market cap) than a company expected to make the same amount of money, but later. The "all future earnings" part is exactly what it sounds like. So again, following our cisco example, the current market cap is ~142 billion, which means that "the market" thinks they will earn about $85 billion over the life of the company (in present day dollars). |
Do people tend to spend less when using cash than credit cards? | I found the study "The irrationality of payment behaviour" accidentally while searching on the term "DNB Study" instead of "D&B Study". This study, which, when I followed the link, went to the web site dnb.nl (Dutch National Bank), instead of dnb.com (Dun & Bradstreet). It mentions all the salient points that I hear Dave Ramsey and others mention when they talk about studies on this subject of credit vs cash. Also, it cross references to many other studies by various researchers, banks, and universities. Is this the "missing mythical DNB study?" I'll let you decide. Relevant "coincidental" points from the study: To be fair and complete, I should mention that clearly the relevant parts of this DNB study are talking about discretionary spending. Auto-paying your mortgage with a card is clearly not going to cost you more (unless you somehow forget to pay off the card or some other silliness). |
Buy on dip when earnings fail? | What is cheap? A stock may fall from $20 per share to $10 per share, but it may have gone from making a $100M profit last year to a $100M loss this year. So now at $10 per share it may still be considered expensive. You need to be very careful when to consider that a stock is cheap or not, you'll have to look at more than just the share price. |
Is per diem taxable? | Per-diem is not taxable, if all the conditions are met. Conditions include: You can find this and more in this IRS FAQ document re the per-diem. |
Free Historical Commodity Prices in txt? | Goldprice.org has different currencies and historical data. I think silverprice.org also has historical data. |
How to motivate young people to save money | As a 20 year old who has just started earning enough to save, I suggest showing them the different types of lifestyles they could live in the future if they started saving now versus what their life would be like if they didn't save at all. Try showing them actual dollar values as well so it's not just an arbitrary idea. |
Are Certificates of Deposit worth it compared to investing in the stock market? | The difference is downside risk. Your CD, assuming you are in the US and the CD is purchased from a deposit bank, will be FDIC insured, your $10,000 is definitely coming back to you. Your stock portfolio has no such guarantee and can lose money. Your potential upside is theoretically correlated to the risk that some or all of your money may not be returned to you. |
What happened when the dot com bubble burst? | Well basically a lot of dot-com companies that had no real plans for having actual profit's, self-destructed. I had worked for a company called VarsityOnline.com which was depending on endless money from investor's, and had never really made any kind of profit, for which it had ample opportunity. People lost sight of reality, that just because it wasn't a real brick and mortar store, that common sense, good service and good products didn't matter. We were so clueless back then. |
New to Stock Trading | Investopedia got some good tutorials on stocks and a good simulator to play around without loosing hard earned money. http://www.investopedia.com/university/stocks/ http://www.investopedia.com/simulator/ |
How to buy stuff (stocks?) in IRA account? What else? | You can buy stocks in the IRA, similarly to your regular investment account. Generally, when you open an account with a retail provider like TDAmeritrade, all the options available for you on that account are allowable. Keep in mind that you cannot just deposit money to IRA. There's a limit on how much you can deposit a year ($5500 as of 2015, $6500 for those 50 or older), and there's also a limit on top of that - the amount you deposit into an IRA cannot be more than your total earned income (i.e. income from work). In addition, there are limits on how much of your contribution you can deduct (depending on your income and whether you/your spouse have an employer-sponsored retirement plan). |
give free budgeting advice | They've asked you, so your advice is welcome. That's your main concern, really. I'd also ask them how much, and what kind of advice. Do they want you to point them to good websites? On what subjects? Or do they want more personal advice and have you to look over their bank accounts and credit card statements, provide accountability, etc.? Treat them the same way you'd want to be treated if you asked for help on something that you were weak on. |
Someone asks you to co-sign a loan. How to reject & say “no” nicely or politely? | 'If i co-sign that makes me 100% liable if for any reason you can't or won't pay. Also this shows up on a credit report just like it's my debt. This limits the amount i can borrow for any reason. I don't want to take on your debt, that's your business and i don't want to make it mine'. |
Is it possible to make money by getting a mortgage? | Imagine a married couple without a mortgage, but live in a house fully paid for. They pay state income taxes, and property tax, and make charitable deductions that together total $12,599. That is $1 below the standard deduction for 2015, therefore they don't itemize. Now they decide to get a mortgage: $100,000 for 30 years at 4%. That first year they pay about $4,000 in interest. Now it makes sense to itemize. That $4,000 in interest plus their other deductions means that if they are in the 25% bracket they cut their tax bill by $1,000. These numbers will decrease each year. If they have a use for that pile of cash: such as a new roof, or a 100% sure investment that is guaranteed make more money for them then they are losing in interest it makes sense. But spending $4,000 to save $1,000 doesn't. Using the pile of cash to pay off the new mortgage means that the bank is collecting $4,000 a year so you can send $1,000 less to Uncle Sam. |
Recommended education path for a future individual investor? | My plan is that one day I can become free of the modern day monetary burdens that most adults carry with them and I can enjoy a short life without these troubles on my mind. If your objective is to achieve financial independence, and to be able to retire early from the workforce, that's a path that has been explored before. So there's plenty of sources that you might want to check. The good news is that you don't need to be an expert on security analysis or go through dozens of text books to invest wisely and enjoy the market returns. This is the Bogleheads philosophy. It's widely accepted by people in academia, and thoroughly tested. Look into it further if you want to see the rationale behind, but, to sum it up: It doesn't matter how expert you are. The idea of beating the market, that an index fund tracks, is about 'outsmarting' the rest of investors. That would be difficult, even if it was a matter of skill, but when it comes to predicting random events we're all equally clueless. *Total Expense Ratio: It gives an idea of how expensive is a given fund in terms of fees. Actively managed funds have higher TER than indexed ones. This doesn't mean there aren't index funds with, unexplainable, high TER out there. |
Are social media accounts (e.g. YouTube, Twitter, Instagram, etc.) considered assets? | Assets with zero value, perhaps. Unless you can prove that they have resale value. Good luck with that. In other words, not worth spending time on. |
Investment options | You are only 33, with plenty of time to generate long-term returns. A correction is an opportunity for you to buy more at a lower price. My advice: invest about half in an index fund (S&P 500, for example) and half in a target fund (pick your retirement age), keep saving regularly, and in 30 years you'll be very happy you did. 5-10K a month is fine until all of the money is invested. (You said this is a retirement account, so invest the entire amount. Keep a rainy day fund in your non-retirement savings.) You can fiddle around with how you invest the money and I'm sure you'll get variations on my answer. My above suggestions may not be the absolute best option, but they are certainly not the worst option. Given that you are very risk-averse, keep in mind that you are in this for the long term and should be investing in something where you can safely ignore short-term downswings. |
Advice on strategy for when to sell | You sell when you think the stock is over valued, or you need the money, or you are going to need the money in the next 5 years. I buy and hold a lot. I bought IBM in 8th grade 1980. I still own it. I bought 3 share it from $190 and its now worth $5,000 do to dividend reinvestment and splits. That stock did nothing for a thirteen years except pay a dividend but then it went up by 1800% the next 20 and paid dividends. So I agree with other posters the whole pigs get slaughtered thing is silly and just makes fund managers more money. Think if you bought aapl at $8 and sold at $12. The thing went to 600 and split 7-1 and is back to $120. My parents made a ton holding Grainger for years and I have had good success with MMM and MSFT owning those for decades. |
Why is it rational to pay out a dividend? | First, you need to understand that not every investor's goals are the same. Some investors are investing for income. They want to invest in a profitable company and use the profit from the company as income. If that investor invests only in stocks that do not pay a dividend, the only way he can realize income is to sell his investment. But he can invest in companies that pay a regular dividend and use that income while keeping his investment intact. Imagine this: Let's say I own a profitable company, and I offer to sell you part ownership in that company. However, I tell you this upfront: no matter how much profit our company makes, you will never get a penny from me. You will be getting a stock certificate - a piece of paper - and that's it. You can watch the company grow, and you can tell yourself you own it, but the only way you will personally benefit from your investment would be to sell your piece to someone else, who would also never see a penny in profit. Does that sound like a good investment? The fact of the matter is, stocks in companies that do not distribute dividends do have value, but this value is largely based on the potential of profits/dividends at some point in the future. If a company vows never ever to pay dividends, why would anyone invest? An investment would be more of a donation (like Kickstarter) at that point. A company that pays dividends is possibly past their growth stage. That doesn't necessarily mean that they have stopped growing altogether, but remember that an expansion project for any company does not automatically yield a good result. If a company does not have a good opportunity currently for a growth project, I as an investor would rather get a dividend than have the company blow all the profit on a ill-fated gamble. |
Why does an option lose time value faster as it approaches expiry | Don´t forget that changing volatility will have an impact on the time value too! So at times it can happen that your time value is increasing instead of decreasing, if the underlying (market) volatility moves up strongly. Look for articles on option greeks, and how they are interdependent. Some are well explaining in simple language. |
Where should my money go next: savings, investments, retirement, or my mortgage? | As the others said, you're doing everything right. So, at this it's not a matter of what you should do, it's a matter of what do you want to do? What would make you the happiest? So, what would you like to do most with that extra money? The point is, since you're already doing everything right with the rest of your money, there's really nothing you can do that's wrong with this money. Except using it on something that increases your monthly expenses, like a down payment on a car. In fact, there's no reason you have to do anything "sensible" with this money at all. You could blow it at nightclubs if you wanted to, and that would be perfectly ok. In fact, since you've got everything else covered, why not "invest" it in making some memories? How about vacations to exotic and rugged places, while you're still young enough to enjoy them? |
Do Online Currency Exchanges' registration with the government guarantee safety and reliability? | Government registering of financial institutions usually is to make the government safe (eg FINTRAC is watching for money laundering and financing terrorism) rather than to make it's customers safe. Most governments have many levels of registrations and regulatory bodies. The most stringent requirements are usually obligatory only for banks, and they indeed often include precautions for insuring customer's deposits. Even this insurances have limits, eg in most EU countries the state guarantees deposits up to 100kEUR. If you deposit more and the bank flops - you lose everything over the limit. Companies like forex or currency exchanges usually make their best effort to avoid as many regulations as possible, just because it's costly. If a given company does have guarantee funds and/or customer insurance, it should be advertised and explained on their website. However the whole issue of trust is misguiding. You don't have to "trust" in your grocery store to shop there. There is no government guarantee that the vegetables sold will be tasty. If you buy and the product fells short of your expectations, you call it a loss and start shopping elsewhere. Financial services are no different than any other product. I recommend to your aunt to start small and see how it works. If a service turns out well, she can increase the amount sent through exchange and decrease amount sent through bank. But still, it's always prudent to send eg $1000 every week instead of $4000 once a month. It's more time consuming and cumbersome than having your bank do it - but it's the safety and convenience you're paying premium for. |
What is the incentive for a bank to refinance a mortgage at a lower rate? | 1- Wells Fargo does not own our current mortgage. They have bundled it and sold it as an investment. 2- They make their money from 'servicing' the loan. Even if they only get $50 per month to service it (3% of our monthly payment), that adds up to $50,000,000 per month if they have a million homes under management. That is $600 million per year for each million homes being serviced 3- Managing the escrow gets them additional profit, because they can invest it and earn 2-3%. If 1,000,000 homes have an average balance of $2,000 in their escrow accounts, they can earn up to $60 per year, or $60,000,000 annually. 4- They make $1,000 every time they refinance the home. This is the approximate profit after paying real closing costs. Refinance those million homes, and you make a cool billion in profit! 5- They also want to be sure that they keep us as a customer. By lowering our payment, they decrease the likelyhood that we will refinance with someone else, and we are less likely to default. (Not that they lose if we default, because they don't own the loan!) 6- they make additional profit by paying off the old loan (they don't own it… remember), then packaging and selling the new mortgage. Since they are selling it as a security, they sell for future value, meaning they sell our $200,000 loan for a valuation of $360,000. This means that they sell for $200,000 PLUS some fraction of the additional $160,000. Let's say they only want a 10% premium of the $360,000 valuation. That means they sell our $200,000 loan for $236,000. They pocket $36,000. If they make a million of these transactions every year, that is $36 billion dollars in profit So… Wells fargo refinances one million homes every year, and they make: $36,000,000,000 initial profit for selling the loan (with absolutely no risk!), plus $1,000,000,000 for doing the loan $660,000,000 annually to service the loan (Very little risk, since it is being paid by the owner of the loan as a service fee) If they can retain the loans for their entire life (keep us from refinancing with someone else…), they can make $19,800,000,000 (that is 19.8 billion dollars in servicing fees) The profit they make in a refinance is much greater than the money then can make by holding the loan for 30 years. |
Bank statements - should I retain hardcopies for tax or other official purposes (or keep digital scanned copies)? | I am in the United States. There is no need to keep the statements in any form forever. Once the bank gives you a 1099 stating how much interest you have earned, you don't need to keep them. If you only have them in electronic form, that is good enough for the IRS. When you do need to show a bank statement, such as when applying for a loan, the loan company will be keeping a copy. It doesn't matter if it was a scan from the original, from a printed PDF, or if you printed it from your archives. In the US they used send the original check back to the person who wrote it, so they could keep it for their records. Then many banks went to carbons, but if you paid extra they would send you the original. Now the bank that cashes the check scans the check and destroys the original. If you want a copy for your records it only exists as a scanned image. |
How to protect your parents if they never paid Social Security? | I am unsympathetic. His mother made a conscious choice to evade taxes that would have provided her with at least a minimal security when she was too old to work. First while as business owner she should have been paying self employment tax on the income they made through the restaurant and his other merchant activities. Second while working in her own career selling Mary Kay and side work she should have paid her taxes on her income from that. There is a part of me that says good on you for getting by with out getting caught. But her ultimate failure was to plan for her future. She should have known she would be ineligible for SSI and saved for her retirement. Instead she choose to spend her money while benefiting from the government services that the rest of us pay taxes for. Now we will provide her with medicaid as well as welfare benefits. She has placed her son in the unenviable situation of having to either provide for his mother because she failed to do the minimum planning for herself or turn his back on her. He might be able to find a sympathetic prosecutor who would prosecute her for tax evasion. The government would take care of her needs(food and housing) and she would get her medical care taken care of. He could also move to Alaska. The oil industry provide residents of Alaska with a stipend, there is lots of work for people willing to work hard, and the compensation for that work is pretty good and would likely put him in a position where he is able to provide care for his mother. |
What is inflation? | Money itself has no value. A gold bar is worth (fuzzy rushed math, could be totally wrong on this example figure) $423,768.67. So, a 1000 dollars, while worthless paper, are a token saying that you own %.2 of a gold bar in the federal reserve. If a billion dollars are printed, but no new gold is added to the treasury, then your dollar will devalue, and youll only have %.1 percent of that gold bar (again, made up math to describe a hypothetical). When dollars are introduced into the economy, but gold has not been introduced to back it up, things like the government just printing dollars or banks inventing money out of debt (see the housing bubble), then the dollar tokens devalue further. TL;DR: Inflation is the ratio of actual wealth in the Treasury to the amount of currency tokens the treasury has printed. |
What's the difference when asked for “debit or credit” by a store when using credit and debit cards? | Credit in debit way - the card simply functions like a debit card for that transaction - pulling cash from your checking account. No difference. You've simply discovered the fact that some banks are using the same piece of plastic for two functions, debit which draws funds directly from your checking, and credit which offers you time to pay a bill the comes in some time later. It's a personal choice. |
What are some examples of unsecured loans | Auto loans are secured agains the car. "Signature" loans, from a bank that knows and trusts you, are typically unsecured. Unsecured loans other than informal ones or these are fairly rare. Most lenders don't want to take the additional risk, or balance that risk with a high enough interest rate to make the unsecured loan unattractive. |
Why does money value normally decrease? | Your house doesn't need to multiply in order to earn a return. Your house can provide shelter. That is not money, but is an economic good and can also save you money (if you would otherwise pay rent). This is the primary form of return on the investment for many houses. It is similar for other large capital investments - like industrial robots, washing machines, or automobiles. The value of money depends on: As long as the size and velocity of the money supply changes about as much as the overall economic activity changes, everything is pretty much good. A little more and you will see the money lose value (inflation); a little less and the money will gain value (deflation). As long as the value of inflation or deflation remains very low, the specifics matter relatively little. Prices (including wages, the price of work) do a good job of adjusting when there is inflation or deflation. The main problem is that people tend to use money as a unit of account, e.g. you owe $100,000 on your mortgage, I have $500 in the bank. Changing the value of those numbers makes it really hard to plan for the future! Imagine if prices and wages fell in half: it would be twice as hard to pay off your mortgage. Or if the bank expected massive inflation in the future: they would want to charge you a lot more interest! Presently, inflation is the norm because the government entities, who help adjust how much money there will be (through monetary policy - interest rates and the like - ask about it if you're interested), will generally gradually increase the supply of money a little bit more quickly than the economy in general. They may also be worried that outright deflation over the long term will lead to people postponing purchases (to get more for their money later), harming overall economic activity, so they tend to err on the slightly positive side. The value of money, however, has not really "ordinarily decreased" until the modern era (the 1930s or so). During much of history, a relatively low fixed amount of valuable commodities (gold) served as money. When the economy grew, and the same amount of money represented more economic activity, the money became more valuable, and deflation ensued. This could have the unfortunate effect of deterring investment, because rich jerks with lots of money could see their riches increase just by holding on to those riches instead of doing anything productive with them. And changes in the supply of gold wreaked havoc with the money supply whenever there was some event like a gold rush: Because precious metals were at the base of the monetary system, rushes increased the money supply which resulted in inflation. Soaring gold output from the California and Australia gold rushes is linked with a thirty percent increase in wholesale prices between 1850 and 1855. Likewise, right at the end of the nineteenth century a surge in gold production reversed a decades-long deflationary trend and is often credited with aiding indebted farmers and helping to end the Populist Party’s strength and its call for a bimetallic (gold and silver) money standard. -- The California Gold Rush Today, there is way too little gold production to represent all the growth in world economic activity - but we don't have a gold standard anymore, so gold is valuable on its own merits, because people want to buy it using money, and its price is free to fluctuate. When it gets more valuable, and people pay more for it, mines will go through more effort to locate, extract and refine it because it will be more profitable. That's how most commodities work. For more information on these tidbits of history, some in-depth articles on: |
I have $100,000 in play money… what to do? | For any sort of investment you need to understand your risks first. If you're going to put money into the stock or bond market I would get a hold of Graham's "The Intelligent Investor" first, or any other solid value investing book, and educate yourself on what the risks are. I can't speak about real estate investing but I am sure there are plenty of books describing risks and benefits of that as well. I could see inflation/deflation having an effect there but I think the biggest impact on the landlord front is quality of life in the area you are renting and the quality of the tenant you can get. One crazy tenant and you will be driven mad yourself. As for starting a business, one thing I would like to say is that money does not automatically make money. The business should be driven by a product or service that you can provide first, and the backing seed capital second. In my opinion you will have to put energy and time worth much more than the 100k into a business over time to make it successful so the availability of capital should not be the driving decision here. Hope this helps more than it confuses. |
Do stock prices drop due to dividends? | Share prices fall when dividends are paid out because the paid dividend (cash out) actually reduces the value of the company. Usually the share price falls by the amount of the dividend payment. |
Why does the biotechnology industry have such a high PE ratio? | Most biotech companies do not have a product they are selling. They have a set of possible drugs that they are developing. If any of these drugs get proven to be better than the current drugs they can be sold at a great profit. Therefore as soon as a biotech company proves a drug candidate is likely to pass large scale trials the company is often taken over by a large pharmaceutical company and is therefore no longer listed on the stock market. So mostly profit comes after the company stops being listed, therefore the profit will be negative for most biotech companies that are publicly traded. |
Ghana scam and direct deposit scam? | The reason this sort of question gets asked over and over again is because it's initially difficult to comprehend how you can possibly be scammed if you have no money in your bank account. Perhaps this would make it easier to understand: Someone approaches you in the parking lot of a mall and says, Excuse me, complete stranger, please take this $100 bill and go buy me a pair of $50 shoes at the shoe store. Then go buy whatever you'd like with the rest of the money. Sounds like a good deal, right? The $100 bill is counterfeit. If it were not, the person would buy the shoes themselves. It doesn't get any simpler than that. |
Is my stock gone forever from a reverse split / bought by another company? | GT BIOPHARMA, INC. ANNOUNCES REVERSE STOCK SPILT AS PART OF OXIS-GEORGETOWN PLANNED MERGER LOS ANGELES, CA / ACCESSWIRE / August 21, 2017 / GT Biopharma Inc. (formerly known as Oxis International, Inc.) announced today a 1-for-300 reverse stock split. Shareholders of GT Biopharma Inc. (OTCQB: OXIS and Euronext Paris: OXI.PA) will be issued 1 share of common stock for every 300 shares common stock that they owned. If you owned fewer than 300 shares, they cashed you out. |
Where can I find a definition of psychological barriers with respect to marketable securities? | GuruFocus has an excellent summary of psychological barriers in the markets: http://www.gurufocus.com/news.php?id=88451 |
Theoretically, if I bought more than 50% of a company's stocks, will I own the company? | The person holding the majority of shares can influence the decisions of the company. Even though the shareholder holds majority of the shares,the Board of Directors appointed by the shareholders in the Annual General Meeting will run the company. As said in the characteristics of the company,the owners and the administrators of the company are different. The shareholder holding majority of the shares can influence the business decisions like appointing the auditor,director etc. and any other business decisions(not taken in the ordinary business) that are taken in the Annual General Meeting. |
Which student loans to pay off first: Stafford or private? | Without knowledge of the special provisions of your loan contract, the one with the highest interest rate should be paid first. Or, if one's fixed payment is much larger than the other, and it is a burden, then it should be paid first, but refinancing may be an option. Socially speaking and possibly even economically since it could affect your reputation, it is probably best to either refinance the cosigned loan or pay that off as rapidly as possible. Economically speaking, I would recommend no prepayment since the asset that is leveraged is your mind which will last many decades, probably exceeding the term of the loan, but some caveats must be handled first: Many would disagree, but I finance the way I play poker: tight-aggressive. |
Would open source credit score formulas be feasible? | Has this already occurred, if not: why? What are the road blocks? I think it's just that the barriers to entry are rather high. Lenders would potentially be interested in a new score if it demonstrably saved them money (by more effectively weeding out risky borrowers), but because the FICO score already exists and they already know how to use it, there are costs and risks in making the transition, so lenders are unlikely to switch without solid evidence. But to get solid evidence, you would need to test out the new score and see how well it correlated with loan default and so forth. So there is a catch-22: no one will use the score until they know it works, but you can't know whether it works until people start using it. The existence of non-FICO credit scores (like VantageScore) shows that it is possible for alternatives to crop up. The question is just whether they have enough concrete advantages to overcome the track record and name recognition of FICO. Only time will tell. As for why an alternative score wouldn't be open source, you could ask the same about almost anything. Creating a measurably better score would likely take lots of time and money (to gather and analyze data both on characteristics of borrowers and on their record of debt payment). If someone is able to do that, they would probably rather do it secretly and then milk it for billions by selling the results of the secret for a long time without selling the secret itself, as FICO has done. |
Should you keep your stocks if you are too late to sell? | The price at which a stock was purchased is a sunk cost--that is, you cannot go back in time and reverse the decision you made to purchase that stock. Another example of a sunk cost would be purchasing a non-refundable, non-transferable movie ticket. Sunk costs have the tendency to create a cognitive bias in which we feel that the amount we paid at some point in the past should have some sort of bearing on the decision we make now--the purchaser of the ticket feels he must go see the movie even if he no longer wishes too, lest the ticket "go to waste"... the investor hopelessly clings to a battered stock for that tiny chance that just maybe some day it will return to its former glory. This is referred to as the "sunk cost fallacy" and is considered to be irrational behavior by economists. Keeping this in mind, your hopes and dreams for the stock at the time you purchased it should have no bearing on the decision you make now. Similarly, whether the stock has risen or fallen in price since your purchase date should have no bearing. Instead, you must consider what you expect the stock to do from this very moment on into the future--that is, you must act at the margin. You've indicated that you are faced with two choices--sell the stock now, incur the loss, but benefit from the tax break (Option A). This benefit is quite easily quantifiable--it is your marginal tax rate multiplied by the additive inverse of the loss (assuming you have/will have other gains to offset). Let's just assume that you incurred a $1000 loss, at a marginal tax rate of 20%, which means your tax benefit for the loss is $200. The second choice--to hold the stock in hopes of it rising in price (Option B)--is a bit harder to quantify. You must assume that today is day zero, and that every cent in price the stock rises is a gain to you, and every cent in price the stock looses is a loss to you. If you believe that the stock will rise to a price that will net your more than your tax benefit from option A, then holding the stock is more favorable than selling it at a loss today. Conversely, if you believe this stock will fall even further in the future, or not rise enough to net you $200 (per the example), then Option A is preferable. Granted, there are some additional complications that play into your decision. By selling the stock today, you not only get a tax benefit from the loss, but you've also freed up the funds previously used to purchase that stock to be invested elsewhere (in hopefully a better performing asset). If you choose to stick with your current stock, then the gains you may have netted elsewhere must be considered as an opportunity cost associated with Option B. Finally, the tax benefit is essentially guaranteed (so in our example, a $200 risk free return), while sticking with the stock in Option B still comes with some risk. |
Covered calls: How to handle this trade? | You are NOT responsible for liquidating the position. You will either end up retaining your 100 sh. after expiration, or they will be called away automatically. You don't have to do anything. Extending profitability can mean different things, but a major consideration is whether or not you want to hold the stock or not. If so, you can buy back the in-the-money call and sell another one at-the-money, or further out. There are lots of options. |
What would happen if the Euro currency went bust? | I'd have anything you would need for maybe 3-6 months stored up: food, fuel, toiletries, other incidentals. What might replace the currency after the Euro collapses will be the least of your concerns when it does collapse. |
How do I refinance a car loan into someone else's name so it can be their car? | I don't know of any way to "transfer" a debt to another person without their consent or the lender's consent. You are responsible for the loan, and you need to either pay it or give up the asset that it's tied to (the car). At least you weren't just a cosigner with no title to the car - then you'd be in worse shape. If you don't want your credit tarnished, I would start (or keep) making the payments, knowing that you are getting the equity that results from the principal you're paying (you're only out the interest portion). If it were me, here are the things I would do: |
Why is it rational to pay out a dividend? | The real value of a share of stock is the current cash value of all dividends the owner will receive, plus the current cash value of the final liquidation if any. Since people with different needs may judge the current cash value of an income stream differently, there would be a market basis for people to buy and sell stocks even if everyone could predict all future payouts perfectly. If shareholders knew that a company wouldn't pay any dividends until it was liquidated in the year 2066, whereupon it would pay $2000/share, then each share would in 2016 effectively be a fifty-year zero-coupon bond with a $2000 maturity value. While some investors would be willing to trade in such an instrument, the amount of money a company could charge for such an instrument would be far lower than the money it could charge for one with payouts that were more evenly distributed through time. Since the founders of most companies want their companies to be around for a long time, that would mean that shareholders would have no expectation of their shares ever yielding anything of value within any foreseeable timeframe. Even those who would be more interested in share-price appreciation than dividends wouldn't be able to see share prices rise if there wasn't any likelihood of the stock being bought by someone who wanted the dividends. |
Brokerage account for charity | I don't understand the logic in the other answer, and I think it doesn't make sense, so here is my take: You pay taxes on income, not on sales price. So if you put X $ of your own money in the account and it becomes X + Y $ in the future, at the moment of liquidation, you will own taxes on the Y $. Never on the X $, as it was your own (already taxed) money to begin with. The difference between long-term and short-term gains just influences the tax rate on Y. If you donate the gain alone (the Y $) to charity, you can deduct Y from your tax base. So adding Y to your tax base and then deducting Y again obviously leaves your tax base at the old value, so you pay no extra taxes. Which seems logical, as you didn't make any money in the process. Aside from extreme cases where the deductible gain is too large a percentage from your income or negative, I don't see why this would ever be different. So you can take your original 100 $ back out and donate all gains, and be fine. Note that potential losses are seen different, as the IRA regulations are not symmetric. |
Everyone got a raise to them same amount, lost my higher pay than the newer employees | This is one effect of rising minimum wages: compression of lower pay tiers. The new employees might have been offered a lower starting rate than the result of your raise, but your employer did not have that option as a matter of law. |
Which is the better strategy for buying stocks monthly? | It would seem that you are in a position where you are able to save money and you hope to have your money work for you. From your statement above, it is implied that you are a professional with a steady income not related to the finance field. With that said, it is better to diversify your portfolio and have your money work for you through passive investments rather than an active one, where you actively search for companies that are below market price. That research takes time and much more experience in order to properly execute. Now, if your overall goal is to trade actively, then maybe researching individual companies might be the best way to get your feet wet. But, if your goal is to create a diversified portfolio and make your money work for you, then passive is the way to go. Two passive financial Vehicles: Mutual funds and ETFs. Depending on what you are hoping to accomplish in the future, an ETF or a mutual fund will likely suite your situation. I would encourage you to do your due diligence and find out the weakness and strength of each. From there you are able to make an informed decision. |
Calculate a weekly payment on a loan when payment is a month away | At time = 0, no interest has accrued. That's normal. And the first payment is due after a month, when there's a month's interest and a bit of principal due. Note - I missed weekly payments. You'd have to account for this manually, add a month's interest, then calculate based on weekly payments. |
How do I adjust to a new social class? | And specifically regarding prices of housing, what factors drive prices in that regard? I mean, the houses are roughly the same... but almost 3 times as expensive. Rent, like so many things, is tied to supply and demand. On the demand side, rent is tied to income. People tend to buy as much house as they can afford, given that mortgage interest is deductible and public schools, financed through property tax, performs better in valuable neighborhoods. Raise the minimum wage and economists expect rents to go up accordingly. When employers and pensions offer COLA adjustments, it feeds into a price loop. During the past ten years, there was also some "animal spirits" / irrational behavior present; people feared that if they didn't buy now, home prices would outpace their growth in income. So even though it didn't make sense at the time, they bought because it would make even less sense later (if you assume prices only go up). There's also the whole California has nicer weather angle to explain why people move to SF or LA. On the supply side, it's all about housing stock. In your old town, you could find vacant lots or farmland in less than 5 minute's drive from anywhere. There's far less room for growth in say, the SF Bay area or NYC. There's also building codes that restrict the growth in housing stock. I'm told Boulder, CO is one such place. You would think that high prices would discourage people from moving or working there, but between the university and the defense contractors triangle, they seem to have an iron grip on the market. (Have you ever seen a cartoon where a character gets a huge bill at a restaurant, and their eyes shoot out of their eye sockets and they faint? Yeah... that's how I felt looking at some of the places around here...) Remember, restaurants have to cover the same rent problem you do. And they have higher minimum wages, and taxes, etc. Moreover, food has to be imported from miles away to feed the city, likely even from out of state. In California, there's also food regulations that in effect raise the prices. If people are footing those higher bills, I wouldn't be surprised if they're racking up debt in the process, and dodging the collectors calling about their Lexus, or taking out home equity loans to cover their lifestyle. |
Explain the details and benefits of rebalancing a retirement portfolio? | Rebalancing your portfolio doesn't have to include selling. You could simply adjust your buying to keep your portfolio in balance. If you portfolio has shifted from 50% stocks and 50% bonds to 75% stocks and 25% bonds, you can just only use new savings to buy bonds, until you are back at 50-50. Remember to take into account taxes if you are thinking of selling to rebalance in taxable accounts. The goal of rebalancing is to keep your exposures the way that you want them. Assuming that you had a good reason to have a portfolio of 50% stocks and 50% bonds, you probably want to keep your portfolio similar in the future. If you end up with a portfolio of 75% stocks and 25% bonds due to stock market fluctuations, the exposure and the risk / return profile of your portfolio will have changed, and it's probably not something that you want. You don't want to rebalance just for the sake of rebalancing either. There can be costs to rebalancing (taxes, transaction fees, etc...) and these aren't always worth the effort. That's why you don't need to rebalance every month or if your portfolio has shifted from 50/50 to 51/49. I take a look at my portfolio once a year, and adjust my automated investments so that by the end of the next year I'm back to the ratio I want. |
Is it accurate to say that if I was to trade something, my probability of success can't be worse than random? | If i do this, I would assume I have an equal probability to make a profit or a loss. The "random walk"/EMH theory that you are assuming is debatable. Among many arguments against EMH, one of the more relevant ones is that there are actually winning trading strategies (e.g. momentum models in trending markets) which invalidates EMH. Can I also assume that probabilistically speaking, a trader cannot do worst than random? Say, if I had to guess the roll of a dice, my chance of being correct can't be less than 16.667%. It's only true if the market is truly an independent stochastic process. As mentioned above, there are empirical evidences suggesting that it's not. is it right to say then that it's equally difficult to purposely make a loss then it is to purposely make a profit? The ability to profit is more than just being able to make a right call on which direction the market will be going. Even beginners can have a >50% chance of getting on the right side of the trades. It's the position management that kills most of the PnL. |
I'm thinking of getting a new car … why shouldn't I LEASE one? | It's a very simple equation. If we forget about the stress and limitations that come with the so-called "lease", and make the following assumptions: Then after 3 years of using this new car: I will never understand why people still "lease" a car. Even for very low income people who have to have a car, financing a per-owned decent car would do, but it's just "show off" seduction and lure that either unknowing minded or idiot teenagers fall for. |
What happens to my stocks when broker goes bankrupt? | If you are using a US broker, you are protected by SIPC up to $500,000. SIPC also oversees the liquidation of the broker itself, either by appointing a trustee, or by directly contacting clients. If they are able to transfer accounts to a healthy broker before bankruptcy, they will do so, but if not, you will need to file a claim with them. |
How to interpret stock performance charts “vs S&P 500” | tl;dr: The CNN Money and Yahoo Finance charts are wildly inaccurate. The TD Ameritrade chart appears to be accurate and shows returns with reinvested dividends. Ignoring buggy data, CNN most likely shows reinvested dividends for quoted securities but not for the S&P 500 index. Yahoo most likely shows all returns without reinvested dividends. Thanks to a tip from Grade Eh Bacon, I was able to determine that TD Ameritrade reports returns with reinvested dividends (as it claims to do). Eyeballing the chart, it appears that S&P 500 grew by ~90% over the five year period the chart covers. Meanwhile, according to this S&P 500 return estimator, the five year return of S&P 500, with reinvested dividends, was 97.1% between July 2012 to July 2017 (vs. 78.4% raw returns). I have no idea what numbers CNN Money is working from, because it claims S&P 500 only grew about 35% over the last five years, which is less than half of the raw return. Ditto for Yahoo, which claims 45% growth. Even stranger still, the CNN chart for VFINX (an S&P 500 index fund) clearly shows the correct market growth (without reinvesting dividends from the S&P 500 index), so whatever problem exists is inconsistent: Yahoo also agrees with itself for VFINX, but comes in a bit low even if your assume no reinvestment of dividends (68% vs. 78% expected); I'm not sure if it's ever right. By way of comparison, TD's chart for VFINX seems to be consistent with its ABALX chart and with reality: As a final sanity check, I pulled historical ^GSPC prices from Yahoo Finance. It closed at $1406.58 on 27 Aug 2012 and $2477.55 on 28 Aug 2017, or 76.1% growth overall. That agrees with TD and the return calculator above, and disagrees with CNN Money (on ABALX). Worse, Yahoo's own charts (both ABALX and VFINX) disagree with Yahoo's own historical data. |
Would it make sense to take a loan from a relative to pay off student loans? | I will start with the assumption that you will never have any late payments and will fully pay off the loan. This may be a big assumption, but if you can't assume that, then you wouldn't have asked the question in the first place. The answer depends on your income: You should calculate how much student loan interest you can deduct before and after the switch, and adjust the interest rate accordingly to compensate for any difference. |
W-4 and withholding taxes for self-employed spouse | With your income so high, your marginal tax rate should be pretty easy to determine. You are very likely in the 33% tax bracket (married filing jointly income range of $231,450 to $413,350), so your wife's additional income will effectively be taxed at 33% plus 15% for self-employment taxes. Rounding to 50% means you need to withhold $19,000 over the year (or slightly less depending on what business expenses you can deduct). You could use a similar calculation for CA state taxes. You can either just add this gross additional amount to your withholdings, or make an estimated tax payment every quarter. Any difference will be made up when you file your 2017 taxes. So long as you withhold 100% of your total tax liability from last year, you should not have any underpayment penalties. |
Technical Analysis: the concepts of overbought / oversold don't make sense | Investopedia's explanation of overbought: An asset that has experienced sharp upward movements over a very short period of time is often deemed to be overbought. Determining the degree in which an asset is overbought is very subjective and can differ between investors. Technicians use indicators such as the relative strength index, the stochastic oscillator or the money flow index to identify securities that are becoming overbought. An overbought security is the opposite of one that is oversold. Something to consider is the "potential buyers" and "potential sellers" of a stock. In the case of overbought, there are many more buyers that have appeared and driven the price to a point that may be seen as "unsustainably high" and thus may well come down soon if one looks at the first explanation. For oversold, consider the flip side of this. A real life scenario here would be to consider airline tickets where a flight may be "overbooked" that could also be seen as "oversold" in that more tickets were sold than seats that are available and thus people will be bumped as not all tickets can be honored in this case. For a stock scenario of "oversold" consider how IPOs work where several buyers have to exist to buy the shares so the investment bank isn't stuck holding them which sends up the price since the amount wanted by the buyers may be more than what can be sold. The price shifts in bringing out more of one side than the other is the point you are missing. In shifting the price up, this attracts more sellers to satisfy the buyers. However, if there is a surge of buyers that flood the market, then there could be a perception that the security is overbought in the sense that there may be few buyers left for the security and thus the price may fall in the near term. If the price is coming down, this attracts more buyers to achieve the other side. The potential part is what you don't see and I wonder if you can imagine this part of the market. The airline example I give as an example as you don't seem to think either side of buying or selling can be overloaded. In the case of an oversold flight, there were more seats sold than available so yes it is possible. Stocks exist in finite quantities as there are only X shares of a company trading at any one time if you look into the concept of a float. |
What is the best way to get a “rough” home appraisal prior to starting the refinance process? | I see your remarks regarding Zillow, but would add a question. Why not look only for recent sales? If you find homes similar to yours with recent sales, that's similar to how the appraisers do it. I've refinanced many times and each time, I looked at sales within three miles of my house. I hit the appraised price very close in my estimate, high or low compared to Zillow, but used transaction data from there.just my thought. I chose a random neighborhood, and this was the first house I clicked. The main view shows last sale date, so I'd obviously suggest the OP look for more recent ones. If turnover is that low in his neighborhood, I understand, but the comment that transactions aren't listed is factually incorrect. I'd like my 2pts back. :) |
Brief concept about price movement of a particular stock [duplicate] | There isn't a formula like that, there is only the greed of other market participants, and you can try to predict how greedy those participants will be. If someone decided to place a sell order of 100,000 shares at $5, then you can buy an additional 100,000 shares at $5. In reality, people can infer that they might be the only ones trying to sell 100,000 shares right then, and raise the price so that they make more money. They will raise their sell order to $5.01, $5.02 or as high as they want, until people stop trying to buy their shares. It is just a non-stop auction, just like on ebay. |
Question about being a resident | One thing to consider besides what rules Oregon has, is what rules your old state have. Of course the lack of income tax in Nevada means that most people are trying to convince their new state they are still a resident of Nevada. You are a full-year Oregon resident if you live in Oregon all year. You are also a full-year Oregon resident, even if you live outside Oregon, if all of the following are true: Part-year resident: You are a part-year resident if you moved into or out of Oregon during the tax year. The requirement for financial life means that you should: change all your Nevada banks to Oregon banks; Change all your mail to Oregon; Sell any property or end any leases you have in Nevada. Or course you need to research the rules for in state college tuition, death with dignity if any apply to you. In border areas you must be careful to establish residency for children to attend public schools. Some families try to cheat to get their children into a better school. |
Should I always pay my credit at the last day possible to maximize my savings interest? | Mostly ditto to Dillip Sarwate. Let me just add: I don't know how you're making your payments, whether through the biller's web site, your bank's web site, by mail, in person, etc. But whatever the mechanism, if there is a chance that waiting until the due date to pay may mean that you will miss the due date: don't. The cost of a late payment charge is likely to far exceed any interest you would collect on your savings. Bear in mind that we are talking pennies here. I don't know how much the monthly bills that we are discussing here come to. Say it's $3,000. I think that would be a lot for most people. You say you're getting 3.6% on your savings. So if, on the average, you pay a bill 2 weeks later than you might have, you're getting an extra 2 / 52 x 3.6% x $3,000 in interest, or $4 per month. I think the last time I paid a late fee on a credit card it was $35, so if you make one mistake every 8 months and end up getting a late fee it will outweigh any savings. Personally, I pay most of my bills through either my bank's web site or the biller's web site. I schedule all payments when I get a paycheck, and I generally try to schedule them for 1 week before the due date, so there's plenty of breathing room. |
How can I lookup the business associated with a FEIN? | I think much of that info is hidden behind pay-walls. Here is one site I've found. http://www.feinsearch.com/ Another that is for non-profits only is guidestar. http://www.guidestar.org/rxg/products/nonprofit-data-solutions/product-information/guidestar-premium/advanced-nonprofit-search.aspx |
Why are prices in EUR for consumer items often the same number as original USD price, but the GBP price applies the actual exchange rate? | It's mostly VAT (value added tax or sales tax). For example an US IPad is $499 without tax, and a German IPad is EUR 499 including 17% VAT. The base price is actually only EUR 417. In addition to that, cost of business is a little higher in Europe because of tax structures and because smaller countries cause higher overheads. |
Safe method of paying for a Gym Membership? | New York state actually has laws protecting gym members from predatory gym membership pricing. Your state may also have laws like that as well. |
How does remittance work? How does it differ from direct money transfer? | The Option 2 in your answer is how most of the money is moved cross border. It is called International Transfer, most of it carried out using the SWIFT network. This is expensive, at a minimum it costs in the range of USD 30 to USD 50. This becomes a expensive mechanism to transfer small sums of money that individuals are typically looking at. Over a period of years, the low value payments by individuals between certain pair of countries is quite high, example US-India, US-China, Middle-East-India, US-Mexico etc ... With the intention to reduce cost, Banks have built a different work-flow, this is the Option 1. This essentially works on getting money from multiple individuals in EUR. The aggregated sum is converted into INR, then transferred to partner Bank in India via Single SWIFT. Alongside the partner bank is also sent a file of instructions having the credit account. The Partner Bank in India will use the local clearing network [these days NEFT] to credit the funds to the Indian account. Option 3: Other methods include you writing a check in EUR and sending it over to a friend/relative in India to deposit this into Indian Account. Typically very nominal costs. Typically one month of timelines. Option 4: Another method would be to visit an Indian Bank and ask them to issue a "Rupee Draft/Bankers Check" payable in India. The charges for this would be higher than Option 3, less than Option 1. Mail this to friend/relative in India to deposit this into Indian Account. Typically couple of days timelines for transfer to happen. |
Is the stock market a zero-sum game? | Suppose everybody stopped all economic activity right now. No more work for others, no payments, no trade in kind or otherwise. Would average wealth stay the same? Of course not. Economic activity is not a zero sum game. Most of our economic activity is organized in the form of companies. If the companies manage to make more profits by doing useful things more efficiently, or when they find new useful things to do for profit, then not only the company's value grows but also the sum total of all useful things produced in the economy. That means it's not zero sum. When stock prices go up, that is often because the companies really have become more valueable. |
Why are credit cards preferred in the US? | Your question is based on a false premise. Debit cards are more popular in the US than credit cards are. Indeed it seems to be the non-US part of the world that is big in credit cards. See here for example |
Do common stocks and preferred stocks have any differences in terms of percentage of the company per unit they represent? | Typically, preferred shares come with one or both different benefits - a disproportionate share of votes, say 10 votes per share vs the normal 1, or a preferred dividend. The vote preference is great for the owner(s) looking to go public, but not lose control of the company. Say, I am a Walton (of Walmart fame) and when I went public, I sold 80% of the (1000 share total) company. But, in creating the share structure, 20% of shares were assigned 10 votes each. 800 shares now trade with 800 votes, 200 shares have 10 votes each or 2000 votes. So, there are still the 1000 shares but 2800 votes. The 20% of shares now have 2000/2800 or 71% of the total votes. So, my shares are just less than half ownership, but over 78% of votes. Preferred dividend is as simple as that, buy Stock A for ownership, or (same company) Stock A preferred shares which have ownership and $1/yr dividend. Edited to show a bit more math. I use a simple example to call out a total 1000 shares. The percentages would be the same for a million or billion shares if 20% were a 10 vote preferred. |
Should I include my hard assets as part of my net worth? | If the value of these hard assets is significant you probably have them insured, and for significant art work you should have had them appraised as part of getting them insured. Therefore the process of adding them into the net worth calculation would be trivial. Your goals should be a mix of liquid assets, and assets that are harder to sell, such as real estate. It should also include those items you are more reluctant to sell. In some cases these "investments" do need to be included in official calculations, such as applying for a student loan or financial aid, required financial disclosure statements for some government jobs, or applications for government assistance. |
Why does my bank suddenly need to know where my money comes from? | Bank runs very complex software to detect suspicious activity - terrorism financing, money laundering, etc. How would a program know that some person's activity is suspicious? It uses a set of rules. That set might be imperfect (that likely was not intended) - there might be some rule that triggers a warning on your account dominating the fact you've been with them for 15 years. So it's highly likely that an imperfect program triggered a warning on your account and the bank employer didn't dismiss it. |
Distribution rules LLC vs. S-Corp | It's actually the other way around. Distributions in an LLC are usually based on each member's equity share, although the operating agreement can specify how often such distributions are made. Shareholders in a corporation can receive dividends, but those are determined by the corporation's board and can vary depending on the class of stock each shareholder owns. Preferred-class shareholders, who may hold a smaller overall fraction of the company's outstanding shares than the common stock shareholders, may receive disproportionately larger dividends per share than common stock shareholders, which is one of the (many) reasons that preferred stock is a better choice when it is available. Take, for instance, what Berkshire Class "A" shareholders receive in dividends per year compared to Class "B" shareholders. Here's a good link from LegalZoom that can explain what you're asking about: Explanation of LLC distributions I hope this helps. Good luck! |
How to avoid getting back into debt? | First, you've learned a very good lesson that quite a few people miss out on: notice how easy it is to get out of debt when you get a windfall of money? The trouble is that if a person doesn't have the behavior to maintain their position, they will end up in the same place. Many lottery winners end up being poor in the long run because their behavior is the problem, not their finances. If you feel that you're going to end up in debt again, this means simply that somewhere in your finances, your expenses exceed your income. Simply put, there's only two fundamental things that can be done: You can do one or the other, or both. Over budgeting, I prefer automation - automate your bills and spending by setting up a bill and spending account and when the money's gone, it's gone (you can tell yourself at that point, "I have to find another source of income before I spend more"). This not only helps you show where your money is going now, it also puts a constraint on your spending, which sounds like most of the problem currently. Many of my friends and I make our saved/invested money VERY HARD to access, so that we can't get it immediately (like putting it in an account that will require three or four days to get to). The purpose of this is to shape your behavior into actions of either increasing your income, decreasing your spending, or both. |
Scam or Real: A woman from Facebook apparently needs my bank account to send money | Well, all of the previous answers already mentioned the upcoming scam and danger situation for your financial position. I thoroughly read all answers and wanted to add a few more lines on it. Cort Ammon) already shows details of it. Any kind of financial transaction involving a complete stranger is the first big scam tag that shows up and this should always 'Never Fall In' type situation. If you open a new bank account or give away any existing bank account to this lady, other than just losing some amount, you might pay earlier than clearing checks you deposited on behalf of your 'stranger' partner. Depending on their target/plan/experience with your bank account they can make you a victim of a bigger crime. There is a full length of scam plans, like sending you false checks to deposit and ask you withdrew money to send them back to even having very big incoming transaction to your account sitting idle on your account which might originate from a crime beyond the financial domain. You can try to be smart, thinking in mind, well, let them send some, I will never send them back before bank declare the deposited checks got horned and clear (and send back the amount after keeping your share). But, still you will face problems later. Even if your account fills up with real money and after confirming with bank you find it OK and never return them (scam a scammer). Still you will not have any valid authority or answer describing how/why you got this money if someone ask you later. Depending on scammer's ability, they might even give you control over fund to spend for your own (to gain some trust from your part). On this type of scam it is a sign of an even bigger danger. I live such a country, Bangladesh, from where recently they successfully transferred out around US$10 millions using a bank account of an outsider like you keeping in between source of money and final unknown destination. The result is the owner / operator of those accounts used for these transfers are now under law enforcement pressure, not only just to find out where ultimately money has gone, but for sure they will face some degree of charge for helping transfer of illegal money overseas". For someone who is not part of a full scam chain it is a big deal. It might ruin their life forever. To be on the safe side, and help protect others from falling on the same type of problem you may contact your local law enforcement agency. Depending on the situation, they might be interested to run a sting operation using your information and support to catch and stop the crime going to happen soon or later. I would give a rare chance of 2% legitimate reason for anyone to use a third-party bank account to pay some other living either different country (still it is not legal, but a lower-type crime). But obviously they will not ask randomly over the Internet/social network sites. In your case this is a real scam. Be careful and stay safe; Good Luck. |
Shares; are they really only for the rich/investors? | Shares are for investors. Most of the rich are investors. Unfortunately, the reverse is not true. But if you want to get rich, the first step is to become an investor. (The second is to become a SUCCESSFUL investor. 50 pounds might be too little. Try to start with at least 500 at a time. You can ADD amounts of 50 pounds. There are definitely fees involved. You will "pay for lessons." But it will be worth it, if you become even a moderately successful investor. As for rules, they'll teach you the rules. Everyone wants your business. People have gotten (modestly) rich, buying shares here and there. One man told me of investing $600 in a company called Limited, and ending up with $12,000 some years later. BRIC is not a "share." It is an acronym for four countries "of the future." High risk, high reward here. |
Effect on Bond asset allocation if Equity markets crash? | I agree that the cause of the crash can make a huge difference in the effect on the bond market. Here's a few other possibilities: All that to say that there's no definitive answer as to how the bond market will respond to an equity crash. Bonds are much more highly correlated to equities lately, but that could be due to much lower interest rates pushing more of the risk of bonds to the credit worthiness of the issuer, increasing correlation. |
Why should we expect stocks to go up in the long term? | A lot of these answers are strong, but at the end of the day this question really boils down to: Do you want to own things? Duh, yes. It means you have: By this logic, you would expect aggregate stock prices to increase indefinitely. Whether the price you pay for that ownership claim is worth it at any given point in time is a completely different question entirely. |
Are buying and selling futures based on objective data? | I own a gold mine and my cost of producing an ounce of gold is $600. Less than that, I lose money, anything over is profit. Today, at $1500, I sell futures to match my production for the next 2 years. I'm happy to lock in the profit. If gold goes to $3000, well, too bad, but if it drops to $500, I can still sell it for the $1500 as I mine it. I suppose I could also close out the contracts at a profit and still shut the mines down, but the point is illustrated. |
Best way to invest money as a 22 year old? | The classic answer is simple. Aim to build up a a financial cushion that is the equivalent of 3 times your monthly salary. This should be readily accessible and in cash, to cover any unforeseen expenses that you may incur (car needs repairing, washing machine breaks down etc). Once you have this in place its then time to think about longer term investments. Monthly 'drip feeding' into a mutual stock based investment fund is a good place to start. Pick a simple Index based or fund with a global investment bias and put in a set amount that you can regularly commit to each month. You can get way more complicated but for sheer simplicity and longer term returns, this is a simple way to build up some financial security and longer term investments. |
strategy for the out of favour mining sector | At this particular time, I would strongly suggest holding on and not bailing. I've been following this sector pretty closely for 10+ years now. It has taken an absolute beating since 2011 (up to 90% down in many areas), and has been in a slow downward grind all year. Given the cyclical nature of the markets, you're far far closer to a long term bottom, and have a much better risk/reward outlook now vs say, four, or even two years ago. Personally, I'm planning on jumping into the sector heavily as soon as I see signs of a wash-out, desperation low, where people like yourself start selling in panic and frustration. I may very likely start cost-averaging into it even now, although I personally feel we may get one more major bottom around the spring 2016 time-frame, coupled with a general market deflation scare, which might surprise many by its severity. But at the same time, the sector might turn up from here and not look back, since I think many share my view and are just patiently waiting, and with so many buyers waiting in support, it may never crash hard. In any case, I personally feel that we're approaching the cheap buying opportunity of a lifetime in this sector within the next year (precious metals miners that is, base metals may still falter if the economy is still iffy, and just look at the baltic dry index as an indicator of world trade and productivity... not looking so hot). If you've suffered this long already, and it is just a small portfolio portion, just keep hanging in there. And by next summer, if we get a confirmed panic low, and a subsequent strong, high-volume, consistent bounce pattern up past summer 2015 levels, then I'd start adding even more on dips and enjoy the ride. |
What are the best software tools for personal finance? | Intuit Quicken. Pros: Cons: |
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