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What to do if a state and federal refund is denied direct deposit? | Publication 17 Your Income Tax top of page 14 If the direct deposit cannot be done, the IRS will send a check instead. When your girlfriend gets the check, she can endorse it over to you for deposit into your account. |
Owing state tax Interest and a result of living in Maryland and working in Virginia | Ultimately, you are the one that is responsible for your tax filings and your payments (It's all linked to your SSN, after all). If this fee/interest is the result of a filing error, and you went through a preparing company which assumes liability for their own errors, then you should speak to them. They will likely correct this and pay the fees. On the other hand, if this is the result of not making quarterly payments, then you are responsible for it. (Source: Comptroller of Maryland Site) If you [...] do not have Maryland income taxes withheld by an employer, you can make quarterly estimated tax payments as part of a pay-as-you-go plan. If your employer does withhold Maryland taxes from your pay, you may still be required to make quarterly estimated income tax payments if you develop a tax liability that exceeds the amount withheld by your employer by more than $500. From this watered-down public-facing resource, it seems like you'll get hit with fees for not making quarterly payments if your tax liability exceeds $500 beyond what is withheld (currently: $0). |
Where do traders take their prices data from? How can it be different from their brokers'? | To add a bit to Daniel Anderson's great answer, if you want to 'peek' at what a the set of bid and ask spreads looks like, the otc market page could be interesting (NOTE: I'm NOT recommending that you trade Over The Counter. Many of these stocks are amusingly scary): http://www.otcmarkets.com/stock/ACBFF/quote You can see market makers essentially offering to buy or sell blocks of stock at a variety of prices. |
What is the process of getting your first share? | nan |
When are investments taxed? | This answer is about the USA. Each time you sell a security (a stock or a bond) or some other asset, you are expected to pay tax on the net gain. It doesn't matter whether you use a broker or mutual fund to make the sale. You still owe the tax. Net capital gain is defined this way: Gross sale prices less (broker fees for selling + cost of buying the asset) The cost of buying the asset is called the "basis price." You, or your broker, needs to keep track of the basis price for each share. This is easy when you're just getting started investing. It stays easy if you're careful about your record keeping. You owe the capital gains tax whenever you sell an asset, whether or not you reinvest the proceeds in something else. If your capital gains are modest, you can pay all the taxes at the end of the year. If they are larger -- for example if they exceed your wage earnings -- you should pay quarterly estimated tax. The tax authorities ding you for a penalty if you wait to pay five- or six-figure tax bills without paying quarterly estimates. You pay NET capital gains tax. If one asset loses money and another makes money, you pay on your gains minus your losses. If you have more losses than gains in a particular year, you can carry forward up to $3,000 (I think). You can't carry forward tens of thousands in capital losses. Long term and short term gains are treated separately. IRS Schedule B has places to plug in all those numbers, and the tax programs (Turbo etc) do too. Dividend payments are also taxable when they are paid. Those aren't capital gains. They go on Schedule D along with interest payments. The same is true for a mutual fund. If the fund has Ford shares in it, and Ford pays $0.70 per share in March, that's a dividend payment. If the fund managers decide to sell Ford and buy Tesla in June, the selling of Ford shares will be a cap-gains taxable event for you. The good news: the mutual fund managers send you a statement sometime in February or March of each year telling what you should put on your tax forms. This is great. They add it all up for you. They give you a nice consolidated tax statement covering everything: dividends, their buying and selling activity on your behalf, and any selling they did when you withdrew money from the fund for any purpose. Some investment accounts like 401(k) accounts are tax free. You don't pay any tax on those accounts -- capital gains, dividends, interest -- until you withdraw the money to live on after you retire. Then that money is taxed as if it were wage income. If you want an easy and fairly reliable way to invest, and don't want to do a lot of tax-form scrambling, choose a couple of different mutual funds, put money into them, and leave it there. They'll send you consolidated tax statements once a year. Download them into your tax program and you're done. You mentioned "riding out bad times in cash." No, no, NOT a good idea. That investment strategy almost guarantees you will sell when the market is going down and buy when it's going up. That's "sell low, buy high." It's a loser. Not even Warren Buffett can call the top of the market and the bottom. Ned Johnson (Fidelity's founder) DEFINITELY can't. |
How does Robinhood stock broker make money? | Charging very high prices for additional standard services: See Commission & Fees: https://brokerage-static.s3.amazonaws.com/assets/robinhood/legal/RHF%20Retail%20Commisions%20and%20Fees%20Schedule.pdf Link is down in the footer, to the left... |
Reinvesting dividends and capital gains | I have found The DRiP Investing Resource Center to be a useful resource for more information about DRIP investing. Moneypaper.com offers a list of companies offering both direct purchase options and dividend reinvestment plans. For those offering dividend reinvestment plans, but not direct purchase, you have the option of using a service to purchase your first shares to enroll in the DRIP program. The tax paperwork for DRIPs is a pain due to the partial shares purchased over time when you have to figure out your own cost basis upon sale of shares , but a spreadsheet and a FIFO (first in first out) approach makes it not too much of a headache. -MU |
Why buy insurance? | Regarding auto insurance, you have to look at the different parts. In the United Sates most states do require a level of specific coverage for all drivers. That is to make sure that if you are at fault there is money available to pay the victims. That payment may be for damage to their car or other property, but it also covers medical costs. Many policies also cover you if the other driver doesn't have insurance. The policy that covers the loss of the vehicle is required if you have a loan or are leasing the car. Somebody else owns it while there is a loan, so they can and do require you to pay to protect the vehicle. If there i no loan you don't have to have that portion of a policy. Other parts such as towing, roadside assistance, and rental cars replacement may be required by the insurance standards for your state, or might be almost impossible to drop because all insurance companies include it to stay competitive with their competition. Dropping the non-required parts of the coverage is acceptable when you don't have a loan. Some people do drop it to save money. But that does mean you are self insuring. If you can afford to self insure a new car, great. The interesting thing is that some people have more than enough assets to self inure the non-required part of auto insurance. But then they realize that they do need to up their umbrella liability insurance. This is to protect them from somebody deciding that their resources make them a tempting target when they are involved in a collision. |
How to calculate tax amounts withheld on mixed pre-tax and Roth 401(k) contributions, and match? | Its easier than that: employer matching contributions are always pre-tax. While your contribution is split between the pre-tax and the Roth post-tax parts, matching contributions are always pre-tax. Quote from the regulations I linked to: For example, matching contributions are not permitted to be allocated to a designated Roth account. So the tax you pay is only on the Roth portion of your contribution. One of the reasons for that is the complexity you're talking about, but not only. Matching is not always vested, and it would be hard to determine what portion to tax and at what rate if matching would be allowed to go to Roth. |
Can a shareholder be liable in case of bankruptcy of one of the companies he invested in? | Not normally, for a limited liability company anyway. In extreme circumstances a court may "lift the veil" of incorporation and treat shareholders as if they were partners. If you are an office bearer or a director that is found to have breached duties/responsibiities then that is another matter. Dim views can be taken of shonky arrangents for companies formed for activites not of a bona fide business nature too. |
How can I remove the movement of the stock market as a whole from the movement in price of an individual share? | You run the regression R_{i,t} = a + bR_{m,t} + e_t, then a + e_t is the variation that isn't shared with the market's variation. |
Does gold's value decrease over time due to the fact that it is being continuously mined? | The relative value of Gold (or any other commodity) as measured against any given currency (such as the USD), is not a constant function either. If you have inflationary pressure, the "value" of an ounce of gold (or barrel of oil, etc) may "double", but it's really because the underlying comparator has lost "half" its value. |
Is being a landlord a good idea? Is there a lot of risk? | Rather than thinking of becoming a landlord as a passive "investment" (like a bank account or mutual fund), it may be useful to think of it as "starting a small part-time business". While certainly many people can and do start their own businesses, and there are many success stories, there are many cases where things don't work out quite as they hoped. I wouldn't call starting any new business "low risk", even one that isn't expected to be one's main full-time job, though some may be "acceptable risk" for your particular circumstances. But if you're going to start a part-time business, is there any particular reason you'd do so in real estate as opposed to some other activity? It sounds like you'd be completely new to real estate, so perhaps for your first business you're starting you'd want it to be something you're more familiar with. Or, if you do want to enter the real estate world (or any other new business), be sure to do a lot of research, come up with a business plan, and be prepared for the possibility of losing money as with any investment or new business. |
Should I pay more than 20% down on a home? | Leverage increase returns, but also risks, ie, the least you can pay, the greater the opportunity to profit, but also the greater the chance you will be underwater. Leverage is given by the value of your asset (the house) over the equity you put down. So, for example, if the house is worth 100k and you put down 20k, then the leverage is 5 (another way to look at it is to see that the leverage is the inverse of the margin - or percentage down payment - so 1/0.20 = 5). The return on your investment will be magnified by the amount of your leverage. Suppose the value of your house goes up by 10%. Had you paid your house in full, your return would be 10%, or 10k/100k. However, if you had borrowed 80 dollars and your leverage was 5, as above, a 10% increase in the value of your house means you made a profit of 10k on a 20k investment, a return of 50%, or 10k/20k*100. As I said, your return was magnified by the amount of your leverage, that is, 10% return on the asset times your leverage of 5 = 50%. This is because all the profit of the house price appreciation goes to you, as the value of your debt does not depend on the value of the house. What you borrowed from the bank remains the same, regardless of whether the price of the house changed. The problem is that the amplification mechanism also works in reverse. If the price of the house falls by 10%, it means now you only have 10k equity. If the price falls enough your equity is wiped out and you are underwater, giving you an incentive to default on your loan. In summary, borrowing tends to be a really good deal: heads you win, tails the bank loses (or as happened in the US, the taxpayer loses). |
Buying a small amount (e.g. $50) of stock via eToro “Social Trading Network” using a “CFD”? | There are some useful answers here, but I don't think any of them are quite sufficient. Yes, there are some risks involved in CFD trading, but I will try and give you information so you can make your own decision. Firstly, Cyprus is part of the EU, which gives it a level of credibility. I'm not saying it's the safest or most well regulated market in the world, but that in itself would not particularly scare me away. The far more important issue here is the risk of using CFDs and of eToro themselves. A Contract for Difference is really just a specialization of an Equity Swap. It is in no way like owning a real stock. When you purchase shares of a company you own a real Asset and are usually entitled to dividends and voting rights. With a CFD, what you own is one side of a Swap contract. You have a legal agreement between yourself and eToro to "swap" the return earned on the underlying stock for whatever fees eToro decide to charge. As already mentioned, CFDs are not available to US citizens. Equity swaps have many benefits in financial markets. They can allow access to restricted markets by entering into swaps with banks that have the necessary licenses to trade in places like China. Many "synthetic" ETFs use them in Europe as a way to minimize tracking error as the return is guaranteed by the swap counterparty (for a charge). They also come with one signficant risk: counterparty credit risk. When trading with eToro, for as long as your position is open, you are at risk of eToro going bankrupt. If eToro failed, you do not actually own any stocks, you only own swap contracts which are going to be worthless if eToro ceased to exist. CFDs also have an ongoing cost to maintain the open position. This makes them less suitable for buy and hold strategies as those ongoing costs will eat into your returns. It's also not clear whether you would receive any dividends paid by the stock, which make up a significant proportion of returns for buy and hold investors. eToro's website is fairly non-committal: eToro intends to offer a financial compensation representing the dividends which will be allocated on stocks, to the extent such dividends shall be available to eToro. All of these points expose what CFDs are really for - speculating on the stock market, or as I like to call it: gambling. If you want to invest in stocks for the long term, CFDs are a bad idea - they have high ongoing costs and the counterparty risk becomes significant. Wait until you have enough money and then buy the real thing. Alternatively, consider mutual funds which will allow you to purchase partial shares and will ensure your investment is better diversified across a large number of stocks. If however, you want to gamble and only keep your position open for a short time, these issues may not be of concern to you. There's nothing wrong with gambling, it can be fun, many people gamble in casinos or on football matches - but bear in mind that's what CFDs are for. CFDs were in fact originally created for the UK market as a way to avoid paying capital gains tax when making short term speculative trades. However, if you are going to gamble, make sure you're not putting any more than 1% of your net worth at risk (0.1% may be a better target). There are a few other ways to take a position on stocks using less money than the share price: Fortunately, eToro do not allow leveraged purchase of stocks so you're reasonably safe on this point. They claim this is because of their 'responsible trading policy', although I find that somewhat questionable coming from a broker that offers 400:1 leverage on FX pairs. One final word on eToro's "social trading" feature. A few years ago I was in a casino playing Blackjack. I know nothing about Blackjack, but through sheer luck of the draw I managed to treble my money in a very small amount of time. Seeing this, a person behind me started "following" me by putting his chips down on my seat. Needless to say, I lost everything, but amazingly the person behind me got quite annoyed and started criticizing my strategy. The idea of following other people's trades just because they've been lucky in the past sounds entirely foolish to me. Remember the warning on every mutual fund: Past performance does not guarantee future returns |
Renting or Buying an House | I actually didn't do the math with your numbers, but I recall Sal from Khan Academy did a nice video about your question, challenging the notion that it is always better to buy. https://www.youtube.com/watch?v=YL10H_EcB-E |
Shorting stocks: Indicators that a stock will drop? | First utilize a security screener to identify the security profiles you are looking to identify for identifying your target securities for shorting. Most online brokers have stock screeners that you can utilize. At this point you may want to look at your target list of securities to find out those that are eligible for shorting. The SHO thresold list is also a good place to look for securities that are hard to borrow to eliminate potential target securities. http://regsho.finra.org/regsho-Index.html Also your broker can let you know the stocks that are available for borrowing. You can then take your target securities and then you can look at the corporate filings on the SEC's Edgar site to look for the key words you are looking for. I would suggest that you utilize XBRL so you can electronically run your key word searched in an automated manner. I would further suggest that you can run the key word XBRL daily for issuer filings of your target list of securities. Additional word searches you may want to consider are those that could indicate a dilution of the companies stock such as the issuance of convertible debt. Also the below link detailing real short interest may be helpful. Clearing firms are required to report short interest every two weeks. http://www.nasdaq.com/quotes/short-interest.aspx |
Can I Accept Gold? | Yes. "There is, ...no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services." Taken from the US Department of the Treasury. |
Loan to son - how to get it back | Seems fair. I think this is a real subjective thing. Financially lets get rid of that line before interest rates get too high. Maybe have him pay you the $200 he is paying towards the interest each month. |
Super-generic mutual fund type | Since this is your emergency fund, you generally want to avoid volatility while keeping pace with inflation. You really shouldn't be looking for aggressive growth (which means taking on some risk). That comes from money outside of the emergency fund. The simplest thing to do would be to shop around for a different savings account. There are some deals out there that are better than ING. Here is a good list. The "traditional" places to keep an emergency fund are Money Market Mutual Funds (not to be confused with Money Market Accounts). They are considered extremely safe investments. However, the returns on such a fund is pretty low these days, often lower than a high-yield online savings account. The next step up would be a bond fund (more volatility, slightly better return). Pick something that relies on Government bonds, not "high-yield" (junk) bonds or anything crazy like that. Fidelity Four in One comes pretty close to your "index of indexes" request, but it isn't the most stable thing. You'd probably do better with a safer investment. |
Dalbar: How can the average investor lose money? | It appears that there's a confusion between the different types of average. Saying "the average investor" generally means the most common type of small-scale unsophisticated investor - the mode (or possibly median) investor. However, while this class of investors is numerous, each of them has assets that are quite small compared to some other types of investors; and the market average performance is determined proportionally to the amount of assets held, not to the number of holders; so the performance of large investors "counts" that much more. For any measure, the mode of performance can be (and often is) different from the mean performance - in this case, Dalbar is saying that the most common results are lower than the (weighed) average results. |
Do banks give us interest even for the money that we only had briefly in our account? | As mentioned in other answers the interest you make is negligible and the calculations would depend on the bank. In saying that the general trend is calculate daily, pay monthly. A typical scenario would be that every night at midnight the interest for your account at that point in time is calculated. This occurs every midnight and at the end of the month the sum of those calculations will be added to your account. You could have had several significant transactions pass through your account in one day although if the interest is calculated at a specific point in time some transactions may not contribute to any interest. These calculations are worth thinking about, even in circumstances of negligible returns, as it could assist when considering combining credit cards with home loan offset accounts so it is not a complete waste of time to understand how interest is calculated. The more you know ;) |
Buying my first car out of college | I agree with the consensus as far as getting a cheaper car, paying with cash, getting a more fuel efficient car, etc. But I'd like to point out, you should make sure you really need a car at all. I ride a bike to work! If I need a car, I can use Zipcar or City Car Share or borrow a friend's car, rent a car, take the train, ride a bus, walk. But mostly, ride my bike. Burn fat not gasoline! ;) |
Which US services allow small/micro-payments using a credit card? | I don't know of any and it is unlikely that you will be able to find one. Most credit card processors charge a flat fee plus percentage. The flat fee is typically in the 35 cent range making the cost of doing business, in the manner you are suggesting, astronomical. Also what you are suggesting is contrary to best practices as hosting services, and many other industries, offer deep discounts when making a single payment for an extended period of time. This is not very helpful, but I think it is unrealistic to find what you are suggesting. |
If I put a large down payment (over 50%) towards a car loan, can I reduce my interest rate and is it smart to even put that much down? | Talk to your bank first but shop around a bit as well with other reputable lenders in your area. Another option, if you're willing to put down ~84% of the purchase price would be to talk to several dealerships BEFORE you set foot on a single lot. Tell them that you are interested in buying a Versa and that you are willing to pay cash but you are not willing to pay more than $10,200. They won't agree (trust me on that) but they will come down from $13,000. Say "Thanks, I'll call you back." and call one of the other dealerships on your list and tell them "I just spoke with this dealership and they are willing to sell me the car for [whatever number they gave you]." One of two things will happen, either the dealership will come back with a lower price or they will tell you to go buy the car there. Continue this process until you have one dealership left. I did this with 3 dealerships in 2011 and bought a truck with a $27,000 sticker price for just over $19,000. It took about a week to make all of the calls and I ended up going to a dealership 3 hours away but it was worth it for $8,000. |
Better ways to invest money held by my small, privately-held Canadian corporation? | Since you are talking about a small firm, for the long term, it would be advisable to invest your money into the expansion - growth, diversification, integration - of your business. However, if your intention is to make proper use of your earnings in the short term, a decent bank deposit would help you to increase the credit line for your business with the benefit of having a high enough liquidity. You can also look at bonds and other such low risk instruments to protect your assets. |
How should I choose an additional retirement investment plan? | It's a hard decision to make. Especially without knowing the complete contract details. I would in general stay away from financial "advisors" like tecis or other pyramid selling companies ("Strukturvertriebe" in german). They usually only offer a very limited range of products. In most cases they sell only 1 or 2 products and tell everyone that these offers are the best and fit exactly to the client. I would prefer an insurance broker (requires an education) which could in theory offer any product. Coming to your situation: If you already have a Riester product which is maxed out, I see no point in another private insurance without any aid. The insurance construction allows you to save some taxes but it does cost you a premium. I would buy the funds (preferable ETFs) on my own. This comes down to the question: Does the insurance construction payoff for you for the costs it generates? |
Debit card for minor (< 8 y.o.) | In the UK, the Osper card would do the trick exactly. The closest thing I can find in the US is the USAA Youth accounts which appear to be what you need but have some restrictions on mobile access until the youth is 13. |
How did I end up with a fraction of a share? | Theoretically, yes, you can only buy or sell whole shares (which is why you still have .16 shares in your account; you can't sell that fraction on the open market). This is especially true for voting stock; stock which gives you voting rights in company decisions makes each stock one vote, so effectively whomever controls the majority of one stock gets that vote. However, various stock management policies on the part of the shareholder, brokerage firm or the issuing company can result in you owning fractional shares. Perhaps the most common is a retirement account or other forward-planning account. In such situations, it's the dollar amount that counts; when you deposit money you expect the money to be invested in your chosen mix of mutual funds and other instruments. If the whole-shares rule were absolute, and you wanted to own, for instance, Berkshire Hathaway stock, and you were contributing a few hundred a month, it could take you your entire career of your contributions sitting in a money-market account (essentially earning nothing) before you could buy even one share. You are virtually guaranteed in such situations to end up owning fractions of shares in an investment account. In these situations, it's usually the fund manager's firm that actually holds title to the full share (part of a pool they maintain for exactly this situation), and your fractional ownership percentage is handled purely with accounting; they give you your percentage of the dividends when they're paid out, and marginal additional investments increase your actual holdings of the share until you own the whole thing. If you divest, the firm sells the share of which you owned a fraction (or just holds onto it for the next guy fractionally investing in the stock; no need to pay unnecessary broker fees) and pays you that fraction of the sale price. Another is dividend reinvestment; the company may indicate that instead of paying a cash dividend, they will pay a stock dividend, or you yourself may indicate to the broker that you want your dividends given to you as shares of stock, which the broker will acquire from the market and place in your account. Other common situations include stock splits that aren't X-for-1. Companies often aren't looking to halve their stock price by offering a two-for-one split; they may think a smaller figure like 50% or even smaller is preferable, to fine tune their stock price (and thus P/E ratio and EPS figures) similar to industry competitors or to companies with similar market capitalization. In such situations they can offer a split that's X-for-Y with X>Y, like a 3-for-2, 5-for-3 or similar. These are relatively uncommon, but they do happen; Home Depot's first stock split, in 1987, was a 3-for-2. Other ratios are rare, and MSFT has only ever been split 2-for-1. So, it's most likely that you ended up with the extra sixth of a share through dividend reinvestment or a broker policy allowing fractional-share investment. |
How should I begin investing real money as a student? | Without knowing what you are trying to achieve - make a bit of pocket money, become financially independent, invest for retirement, learn trading to become a trader - I'll give you a few thoughts ... The difficulty you will have trading with $400-600 is that brokerage will be a high proportion of your "profits". I'm not sure of the US (assuming US rather than AU, NZ, etc) rates for online brokers, but UK online brokers are the order of £6-10 / trade. Having a quick read suggests that the trading is similar $6-10/trade. With doing day trades you will be killed by the brokerage. I'm not sure what percent of profitable trades you have, but if it is 50% (e.g.), you will need to make twice the brokerage fees value on each profitable trade before you are actually making a profit. There can be an emotional effect that trips you up. You will find that trading with your own real money is very different to trading with fake money. Read up about it, this brief blog shows some personal thoughts from someone I read from time to time. With a $10 brokerage, I would suggest the following Another option, which I wouldn't recommend is to leverage your money, by trading CDFs or other derivatives that allow you to trade on a margin. Further to that, learn about trading/investing Plus other investment types I have written about earlier. |
Pros and cons of using a personal assistant service to manage your personal finances? | When you want to hire personal assistants, you must be sure that you are hiring in a trusted company or the person you talk to have been proven by a lot of people. You must be wise in choosing one because these people will handle some of your personal things and data. |
Does anyone offer no interest loans? | This is very much possible and happens quite a lot. In the US, for example, promotional offers by credit card companies where you pay no interest on the balance for a certain period are a very common thing. The lender gains a new customer on such a loan, and usually earns money from the spending via the merchant fees (specifically for credit cards, at least). The pro is obviously free money. The con is that this is usually for a short period of time (longest I've seen was 15 months) after which if you're not careful, high interest rates will be charged. In some cases, interest will be charged retroactively for the whole period if you don't pay off the balance or miss the minimum payment due. |
How can I determine which stores are regarded as supermarkets for a rewards credit card? | Each company that has an account with the credit card network has to classify themselves as a particular type of business. The credit card company uses that classification to catagorize the transaction on your statement. If you buy a T-shirt at a grocery, amusement park, gas station, or resturant; the transaction will be labeled by the vendor type. Look at recent credit card statements, even if they are from different cards, to see how the stores you want to know about are classified. |
What is a good asset allocation for a 25 year old? | The standard advice is that stocks are all over the place, and bonds are stable. Not necessarily true. Magazines have to write for the lowest common denominator reader, so sometimes the advice given is fortune-cookie like. And like mbhunter pointed out, the advertisers influence the advice. When you read about the wonders of Index funds, and see a full page ad for Vanguard or the Nasdaq SPDR fund, you need to consider the motivation behind the advice. If I were you, I would take advantage of current market conditions and take some profits. Put as much as 20% in cash. If you're going to buy bonds, look for US Government or Municipal security bond funds for about 10% of your portfolio. You're not at an age where investment income matters, you're just looking for some safety, so look for bond funds or ETFs with low durations. Low duration protects your principal value against rate swings. The Vanguard GNMA fund is a good example. $100k is a great pot of money for building wealth, but it's a job that requires you to be active, informed and engaged. Plan on spending 4-8 hours a week researching your investments and looking for new opportunities. If you can't spend that time, think about getting a professional, fee-based advisor. Always keep cash so that you can take advantage of opportunities without creating a taxable event or make a rash decision to sell something because you're excited about a new opportunity. |
Which US market indexes (Dow/DJIA, S&P500, NASDAQ) include reinvested dividends? | .INX (the S&P 500 index itself) does not include reinvested dividens. You can figure total return by going to Yahoo finance, historical data. Choose the start year, and end year. You should find that data for SPY (going back to 1993) will show an adjusted close, and takes dividends into account. This isn't perfect as SPY has a .09% expense ratio, but it's better than just the S&P index. One of the more popular Dow ETF is DIA, this will let you similarly track the Dow while accounting for dividends. |
Why do some companies offer 401k retirement plans? | Stated plainly... it's a benefit. Companies are not required to offer you any compensation above paying you minimum wage. But benefits attract higher quality employees. I think a big part of it is that it is the norm. Employees want it because of the tax benefits. Employees expect it because almost all reputable companies of any significant size offer it. You could run a great company, but if you don't offer a 401k plan, you can scare away good potential employees. It would give a bad impression the same way that not offering health insurance would. |
What is the difference between “good debt” vs. “bad debt”? | In general, all forms of debt are bad, as they keep you tied to a financial institution and can be an emotional burden for many. In the book Payback (by Margaret Atwood), debt is even described as a sin. However some forms of debt are necessary and some can help create wealth. "Good" debt: a mortgage - to purchase a home, which is an asset that usually appreciates in value. Necessary debt: car loan or lease - only when there is no other mode of transportation to get to work. Really bad debt: unpaid credit cards - for dinners out. |
What are the most efficient ways to bet on an individual stock beating the market? | You could buy options. I do not know what your time horizon is but it makes all the difference due to theta burn. There are weekly, monthly, quarterly, yearly and even longer duration options called leaps. You have decided how long of a time frame. You also have to see what the implied volatility is for the underlying because if you think hypothetically that the price of the spy is 100 dollars currently. Today is hypothetically a Thursday and you buy a weekly option expiring on Friday ( the next day) of strike 100.5 and the call option is priced at .55 cents and you buy it. This means that the underlying has to move .5 dollars in one day to be considered in the money but at time 0, the option should only be worth its intrinsic value which is the underlying, (Say the SPY moved 55 cents up from 100 to 100.55), (100.55) minus the strike (100.5) = 5 cents, so if you payed 55 cents and one day later at expiration its worth 5 cents ,you lost almost 91% of your money, rather with buying and holding you lose a lot less. The leverage is on a 10x scale typically. That is why timing is so important. Anyone can say x stock is going to go up in the future, but if you know ****when**** you can make a killing if it is not already priced into the market. Another thing you can do is figure out how much MSFT contributes to the SPX movement in terms of points. What does a 1% move in MSFT doto SPX. If you can calculate that and you think you know where MSFT is going, you can just trade the spy options synthetically as if it were microsoft. You could also buy msft stock on margin as a retail investor, but be careful. Like Rhaskett said, look into an etf that has microsoft. The nasdaq has a nasdaq-100 which microsoft is in called the triple Q. The ticker is qqq. PowerShares QQQ™, formerly known as "QQQ" or the "NASDAQ- 100 Index Tracking Stock®", is an exchange-traded fund based on the Nasdaq-100 Index®. Best of luck and always understand what you are buying before you buy it, JL |
For very high-net worth individuals, does it make sense to not have insurance? | Let's face it: most people pay more in insurance premiums than they "get back" in claims. I put "get back" in quotes because, with very few exceptions, the money paid out in claims does not go to the insured, but to others, such as doctors and hospitals. But even if you ignore the question who does the money actually go to, it's a losing proposition for most people. The exceptions are those who have a major loss, greater than what they put in over the years. But never forget: these are exceptions. The return on your money, on the average, is only a little better than playing the lottery. The usual counter-argument to the above is, but what if you are one of the exceptions? I for one refuse to let my life be dictated by worries of unlikely events that might happen. If you're the sort who obsesses on what could (but probably won't) happen, then maybe you should have insurance. Just don't tell me I need to do the same. When I lived in California, they had a program where you could deposit $25,000 with the State, and then you could drive, legally, without insurance. I did this for a while, didn't have any accidents, and exited the system (when I moved out of state) a few years later with more money (interest) than I put in. You don't accomplish that with insurance. But let's get back to rich people. Unless you get into an accident with you at fault and the other guy needing a head transplant as a result (joke), you could probably absorb the cost of an accident without blinking an eye. Those in the upper-middle-class might do well with high-deductible insurance that only pays out if there's an extreme accident. Then again if you have to borrow to buy something expensive (making monthly payments), they will usually demand you buy insurance with it. This is a way for the lender to protect himself at your expense, and if you refuse, good luck getting a loan somewhere else. I hate the idea of insurance so much I would make an act of insurance punishable by law. |
Why are American-style options worth more than European-style options? | An option is an instrument that gives you the "right" (but not the obligation) to do something (if you are long). An American option gives you more "rights" (to exercise on more days) than a European option. The more "rights," the greater the (theoretical) value of the option, all other things being equal, of course. That's just how options work. You could point to an ex post result, and and say that's not the case. But it is true ex ante. |
Are you preparing for a possible dollar (USD) collapse? (How?) | Depends what kind of expenses you intend to use this money for. If you plan to buy housing in the future (eg you're saving a deposit), then you need to ensure that the value doesn't deteriorate relative to the value of the housing you are likely to buy - so you could buy a Residential REIT, or buy some investment property. If you expect to use this money for food, then you should buy suitable assets (eg Wheat futures, etc). Link the current asset to the future expense, and you will be fine. If you buy Gold, then you are making a bet that Gold will retain its value compared to the thing you want to purchase in future. It doesn't matter what the price of Gold does in $US. |
Basic Algorithmic Trading Strategy | This strategy is called trading the 'Golden Cross' if the 50 day SMA moves above the 200 day, or the 'Death Cross' when the 50 day SMA moves below the 200 day SMA. Long-term indicators carry more weight than shorter-term indicators, and this cross, in a positive direction signals a change in momentum of the stock. You will not catch the very bottom using this method, but there is a better chance that you will catch a move near the beginning of a longer-term trend. Golden Cross Information - Zacks |
Using stock options to lower income tax in the USA? | You're talking about NQO - non-qualified stock options. Even assuming the whole scheme is going to work, the way NQO are taxed is that the difference between the fair market value and the strike price is considered income to you and is taxed as salary. You'll save nothing, and will add a huge headache and additional costs of IPO and SEC regulations. |
How to divide a mortgage and living area fairly? | I suggest that you first decide on what %'s of the home value you each have a legal claim to. Then split the mortgage using the same %'s. Then, if someone feels their % is slightly higher, they are compensated because they 'own' a correspondingly higher share of the house. Use the same %'s for downpayments (which may mean that an 'adjustment' payment might be required to bring your initial cash outlay from 70/30 into the %'s that you agree to). Tenant income gets split the same way. Utilities are a bit more difficult - as heating depends more on square feet, but water and hydro depend more on how many people are there. You can try to be really precise about working out the %'s, or just keep it simple by using the same %'s as the mortgage. |
Is an Income Mutual Fund a good alternative to a savings account? | Risk. Volatility. Liquidity. Etc. All exist on a spectrum, these are all comparative measures. To the general question, is a mutual fund a good alternative to a savings account? No, but that doesn't mean it is a bad idea for your to allocate some of your assets in to one right now. Mutual funds, even low volatility stock/bond blended mutual funds with low fees still experience some volatility which is infinitely more volatility than a savings account. The point of a savings account is knowing for certain that your money will be there. Certainty lets you plan. Very simplistically, you want to set yourself up with a checking account, a savings account, then investments. This is really about near term planning. You need to buy lunch today, you need to pay your electricity bill today etc, that's checking account activity. You want to sock away money for a vacation, you have an unexpected car repair, these are savings account activities. This is your foundation. How much of a foundation you need will scale with your income and spending. Beyond your basic financial foundation you invest. What you invest in will depend on your willingness to pay attention and learn, and your general risk tolerance. Sure, in this day and age, it is easy to get money back out of an investment account, but you don't want to get in the habit of taping investments for every little thing. Checking: No volatility, completely liquid, no risk Savings: No volatility, very liquid, no principal risk Investments: (Pick your poison) The point is you carefully arrange your near term foundation so you can push up the risk and volatility in your investment endeavors. Your savings account might be spread between a vanilla savings account and some CDs or a money market fund, but never stock (including ETF/Mutual Funds and blended Stock/Bond funds). Should you move your savings account to this mutual fund, no. Should you maybe look at your finances and allocate some of your assets to this mutual fund, sure. Just look at where you stand once a year and adjust your checking and savings to your existing spending. Savings accounts aren't sexy and the yields are awful at the moment but that doesn't mean you go chasing yield. The idea is you want to insulate your investing from your day to day life so you can make unemotional deliberate investment decisions. |
Should I fund a move by borrowing or selling other property assets? | It is a lot easier to make money when you are not in debt. If you can sell the apartment, get rid of your existing mortgage and buy the new house outright, that is probably the best course of action. |
Are stocks always able to be bought and sold at market price? | Many of the Bitcoin exchanges mimic stock exchanges, though they're much more rudimentary offering only simple buy/sell/cancel orders. It's fairly normal for retail stock brokerage accounts to allow other sorts of more complex orders, where once a certain criteria is met, (the price falls below some $ threshold, or has a movement greater than some %) then your order is executed. The space between the current buy order and the current sell order is the bid/ask spread, it's not really about timing. Person X will buy at $100, person Y will sell at $102. If both had a price set at $101, they would just transact. Both parties think they can do a little bit better than the current offer. The width of the bid/ask spread is not universal by any means. The current highest buy order and the current lowest sell order, are both the current price. The current quoted market price is generally the price of the last transaction, whether it's buy or sell. |
Was this a good deal on a mortgage? | The price of the loan may be justified if you're considered a high-risk applicant for some reason (e.g. you're putting very little money in initial payment), and if it includes all the associated expenses. What is more relevant to your situation is that you're probably better off renting. Think about it: your $300'000 house will require some repairs in those 30 years (let's estimate those at $100'000). That means in 30 years you'll build $200'000 of equity spending $720'000 on it. Of course this assumes that the value of the house will remain constant. You're effectively be throwing away $520'000, or more than $1'400 a month. If you can rent a place for $1'400 a month or less, you'll build more equity by renting that place for 30 years and saving the excess money in a bank account. If you consider the interest that money in your bank account will earn you (e.g. 3% annually), you'll build more than $200'000 equity in 30 years even if you spend as much as $1'650 on your rent and save only $350 a month. |
Website for managing personal cash inflow and outflow, applicable to India? | http://www.mint.com attaches to all your accounts and lists all your transactions. I love it. |
Debt collector has wrong person and is contacting my employer | Did you receive a summons, or other notice of proceedings, from the court which granted the judgement? If you were not served with the proceedings, contact the court. It is unlawful to enforce a judgement against someone who was not a party to the original lawsuit. |
Contributing factors to historical increase in trading volume | It's not primarily more people investing. In the 1980s stock exchanges went from open outcry trading floors where all trades involved actually exchanging pieces of paper to electronic trading. Once that happened, it wasn't long before most trades were executed by computer programs rather than human beings, turning stocks over rapidly for very short-term profits rather than long-term investment, greatly increasing the number of trades (and also increasing liquidity for the actual investors; it's by no means all bad). |
Is it a good idea to get a mortgage when buying a house, for credit reasons? | I would go with the family route if I was you. And i think many other people would if they were fortunate to have such a great option. This will allow you to move faster when your trying to buy a new house because you can easily get a mortage if you see a stellar deal. Also you can establish credit in much cheaper ways than paying the 4% or so on a mortgage. finance a car that you have the money to buy because the interest rates are much lower .9% and you build the credit while paying less interest. Or even better, try and make most of your purchases on a 0 fee credit card and every 6-8 months get a new credit card to have multiple lines of ongoing credit. to use the mortage to establish credit isnt worth the 4% hit in wealth that it offers. now mind you if your options were to buy the house with your own money outright or get a mortgage i would say get the mortgage because the added leverage would help your investments beat the market most years . figure if you get 6% an average portfolio each year and you can write off the taxes on your mortgage you will be ahead by more than 2% |
Should you always max out contributions to your 401k? | Definitely not. You are too young. Let me explain: Your money will be locked up for at least 40 years, and you will have to navigate some really quirky and trap-laden rules in order to get money for simple things. Let's say you want to buy a house. You won't be able to leverage the 401K for that. College Tuition? Limits. Your money is locked in and you may get some match, but that assumes your smartest decision at your age is to save money for retirement. At your age, you should be investing in your career, and that requires cash at hand. If you want to withdraw early you pay more of a penalty than just the tax rate. Put differently: investing in your human capital, at a young age, can yield stronger results than just squirreling money. I'd say don't worry until you are 30. BTW: I'm 24 now. I used to save money in a 401K for a few months, before I understood the rules. Since then, I decided against 401K and just saved the money in a bank. After a few years, I had enough to start my business :) the 401K couldn't give me that opportunity. Further Explanation: I am in the NYC area. Many of my friends and I had to decide between living in manhattan or choosing to live in the outer boroughs or NJ. One thing I noticed was that, while the people in manhattan were burning much more money (to the tune of 1500 per month), they were actually much more productive and were promoted more often. Having lived in brooklyn and in manhattan, even though it is less expensive, you actually lose at least an hour a day thanks to the commute (and have to deal with crap like the 6 train). Personally, after moving in, I invested the extra time in myself (i.e. sleeping more, working longer hours, side projects). Now, when all is said and done, the people who decided to invest in themselves in the short term are financially more secure (both job-wise and economically, thanks to a few bonus cycles) than those who decided to save on rent and put it in a 401K. As far as the traps are concerned, my dad tried to take out a student loan and was denied thanks to a Vanguard quirk which didnt allow more than 50K to be borrowed (even though the account had over 500K to begin with). |
How to prevent myself from buying things I don't want | There are a lot of good answers above, all of them will probably work for you in some way or another. One point to note (from the procrastination theme) is that you could invest your free money that you have currently in some investment instrument which would require you to do some paperwork etc. to get out, this way the immediate cash flow is decreased and also invested. Now from each montly budget save a small amount for the things that you would like to buy. Give this small savings some months to accumulate so that you can afford only one of the items that you want to buy or target an item that you want to buy. After the money is accumulated, if you still want to buy the item, then you probably should. One point of note is that budgeting is also important on a monthly basis, Pete has provided excellent suggestion in this regard. |
Everyone got a raise to them same amount, lost my higher pay than the newer employees | This question is largely opinion based but I wanted to balance out the people jumping on you. There are lots of factors that go into salary/pay, such as what you contribute to the company and whather you go above or beyond whats expected of you. I would say seniority is one factor, or at least there is a case to be made that it is important. If someone has worked 5 years for me, that is five years that I have not had to search, interview, and train a replacement. I am not a business owner but I do employ people and when someone quits its an extremely stressful process. Not having to go through that, again in my opinion, is worth a small bump in pay. I cant comment on if its fair or not. That is opinion. What is fact is that whenever a broad group of people are given a pay raise for arbitrary reasons and other employees arent, its creates discontent, it hurts morale, employees leave, and in severe cases the business becomes crippled. So Im not sure if its fair, but is it a bad idea? Generally. See here and I highly recommend going here for anyone who thinks dramatically raising pay 'because its the right thing to do' is a good idea |
Hobby vs. Business | Miscellaneous income -- same category used for hobbies. |
My ex sold our car that still had money owed | This is not a finance issue, it is a legal one. You need to talk to a lawyer. To save your credit you can pay off the bank now and fight out the details with your ex later. The bank is still owed their money. |
How much life insurance do I need? | One simple calculation to determine your life insurance need: D.I.M.E. method D: Debt All your car loan balances, credit card balances, student loans, business loans, etc. I: Income Your annual income times 10 (for 10 years of income replacement). M: Mortgage Your home mortgage balance. E: Education Your children's education expenses. You add up all these items, and you'll come up with a proper amount of life insurance coverage. This should be sufficient model for a majority of people. Yes, your life insurance needs will change as you move through life. Therefore you should sit down with your life insurance agent to review your policy every year and adjust it accordingly. |
Why certain currencies are considered safe havens in times of turmoil | It's a combination of neutrality, economic power, economic freedom, a history of stability, and tradition. In the case of the Japanese yen, it's obviously economic power that is the determining factor, as Japan is the world's third largest economy. Switzerland, on the other hand, is only the 19th largest economy, but ranks very high in all the other criteria. |
Do I have to repay the First-Time Homebuyers tax credit if I refinance? | No. As long as you live in the house for 3 years, it's yours to keep. Financing has nothing to do with that. |
Are car buying services worth it? | I went through the Costco program for the so-called "no-hassle" bargain price when I bought my Prius. According to other Prius owners that I've met on forums and TrueCar's web site, I paid "average." Lots of people in my area managed to negotiate a better price by $1-2k. So much for getting a deal. I do not plan to use Costco to buy another vehicle again. |
Are Certificates of Deposit worth it compared to investing in the stock market? | Of course CDs are worth it compared to the stock market. In fact, most institutional investors are envious of the CDs you have access to as an individual investor that are unavailable to them. You just need to be competent enough to shop around for the best rates and understand your time horizon. There are several concepts to understand here: Banks give out CDs with competitive rates projecting future interest rates. So while the Federal funds rate is currently extremely low, banks know that in order to get any takers on their CDs they have to factor in the public expectation that rates will rise, so if you lock in a longer term CD you get a competitive rate. Institutional investors do not have access to FDIC insured CDs and the closest analog they participate in are the auctions and secondary markets of US Treasuries. These two types of assets have equivalent default (non-)risk if held to maturity: backed by the full faith and credit of the U.S. Here are the current rates (as of question's date) taken from Vanguard that I can get on CDs versus Treasuries (as an individual investor). Notice that CDs outperform Treasuries across any maturity timescale! For fixed-income and bond allocations, institutional investors are lining up for buying treasuries. And yet here you are saying "CDs are not worth it." Might want to rethink that. Now going into the stock market as an investor with expectations of those high returns you quote, means you're willing to stay there for the long-term (at least a decade) and stay the course during volatility to actually have any hope of coming up with the average rate of return. Even then, there's the potential downside of risk that you still lose principal after that duration. So given that assumption, it's only fair to compare against >= 10 year CDs which are currently rated at 2 percent APY. In addition, CDs can be laddered -- allowing you to lock-in newer (and potentially higher) rates as they become available. You essentially stagger your buyin into these investments, and either reinvest upon the stilted maturity dates or use as income. Also keep in mind that while personal emergencies requiring quick access to cash can happen at any time, the most common scenario is during the sudden change from a bull market into a recession -- the time when stocks plummet. If you need money right away, selling your stocks at these times would lock in severe losses, whereas with CDs you still won't lose principal with an early exit and the only penalty is usually a sacrifice of a few months of potential interest. It's easy to think of the high yields during a protracted bull market (such as now), but personal finance has a huge behavioral component to it that is largely ignored until it's too late. One risk that isn't taken care of by either CDs or Treasuries is inflation risk. All the rates here and in the original question are nominal rates, and the real return will depend on inflation (or deflation). There are other options here besides CDs, Treasuries, and the stock market to outpace inflation if you'd like to hedge that risk with inflation protection: Series I Savings Bonds and TIPS. |
What ETF or other security tracks closest to 30 year mortgage rates? | Mortgage rates tend to track the yield on the 10-year Treasury note. The CBOE Interest Rate 10-Year T-Note, TNX, is a security directly related to this rate. Divide the CBOE price of TNX by 10 to get the yield. One can also track the 10Y T-Note yield at yahoo finance using ticker symbol (^TNX). One can also track the 10Y T-Note yield at yahoo finance using ticker symbol (^TNX). |
How to get a down payment for your next home? Use current home as the down payment on the new one? | What you're looking at is something called "Bridge-Financing". Essentially, it allows you to borrow your down-payment from the bank, using your old home as collateral. The interest rate varies, but if you get the bridge from the same institution as your new mortgage, they will often be a bit flexible. You take possession of the new home, and begin mortgage payments on it normally. When the old home is sold, the bridge is paid off. Note that the deposit on signing for the new house will still have to be cash. All bets are off if you are talking about a NEW new home, as builders usually require advance payments during the build. |
What is the incentive for a bank to refinance a mortgage at a lower rate? | What are you missing? Volume. Bank of America is more than willing to refinance a loan from Wells Fargo as long as the loan is still profitable. There are some caveats with that, though. For one, many land have penalties if they are paid off within two or three years. Additionally, the fact that banks are offering to refinance at great rates doesn't mean that you'll be approved, or that you'll get those rates. If you could post some actual numbers, we could help you see if it's a good deal to refi, and explain exactly where the bank expects it's profit. |
Value of put if underlying stays below strike? | The value at expiration does not depend on the price path for a plain vanilla European or American option. At expiration, the value would simply be: max[K - S_T, 0], where: K is the strike price, and S_T is the underlying price at expiration. |
Paid credit card bill, but money didn't leave my checking account [duplicate] | You probably don't need to call the bank. Today is Sunday, so three days ago was probably Friday (or Thursday depending on how you count the days). Banks normally don't post transactions on weekends - and transactions that do happen on the weekend sometimes don't get posted until Tuesday. I would give it till Tuesday and then call them if you still don't see it show up on your account. |
In a competitive market, why is movie theater popcorn expensive? | It's called extracting consumer surplus. Basically I have a bunch of movie goers (who have paid a lot for their tickets). Some of them don't like popcorn, and some do. Of the people in the latter group, there are some who are willing to pay a lot for it. That's partly because I have a select group (rich movie goers) and partly because some of these people would be willing to pay more for popcorn with a movie than without. If I were just selling "popcorn," I'd have to charge a competitive price. But I'm really selling movies, which have more than covered my costs (rent, heat, etc.) So my costs of selling popcorn are less than that of a non-movie popcorn seller, and I don't really "need" to sell it. Ironically, it means that I can "take my chances" and sell a relatively small amount at a high price, thereby maximizing my UNIT profit. I don't mind having people NOT buy popcorn because I've already made my profit from them with the movie. From the point of view of the consumer, most consumers see popcorn as an "afterthought." They will seldom think, "I can buy popcorn $2.00 cheaper at Theater A than Theater B, and there's a 20 percent chance that I will want to buy popcorn, so Theater A is 40 cents ($2.00*.20) cheaper than Theater B." Instead, most make the decision to buy the popcorn after they've arrived at Theater B, because it as "impulse item." And even if they do the "40 cents" calculation, Theater B might be selected because other factors (convenience, location, etc.) outweigh the 40 cent extra cost of popcorn (purchased "sometimes"). Put another way, the cost of popcorn is (usually) heavily discounted because of its "remoteness" to other facets of the decision. |
Can I withdraw unsettled funds? | Yes, via a margin account, one can trade or transfer on unsettled funds. These are tight regulations that begin with the Federal Reserve, extend to FINRA, and downward. In a cash account, this is not possible. Since speed is a necessity, a margin account can actually be approved nearly instantly. |
Is an investor of a startup subjected under a vesting schedule? | Recently, I asked about what the company valuation is and how many shares does my 4% represent.CFO told me that there is no point to talk about "shares" or "stock" since the company is not public. Is it right? No, it is wrong. Shares and stocks exist regardless of how they can be traded. Once a company is formed, there are stocks that belong to the owners in the proportion of the ownership. They may not exist physically, but they do exist on paper. As an owner of 5% of the company, you own 5% of the company stocks. I asked if my investor portion equity will be subjected under a vesting schedule, CFO said yes. That doesn't make sense to me, because I bought those 4%? Aren't those supposed to be fully vested? I agree to my employee equity to be vested. Doesn't make sense to me either, since your money is already in their pocket. But I'm not sure if its illegal. If that's what is written in the signed contract - then may be its possible to have that situation. But it doesn't make much sense, because these shares are granted to you in return to your money, not some potential future work (as the 1% employee's portion). You already gave the money, so why wouldn't they be vested? Best to read the contract upon which you gave them your money, I really hope you have at least that and not just gave them a check.... |
How to send money from europe to usa EUR - USD? | The website http://currencyfair.com/ provides a service which gives you both a decent exchange rate (about 1% off from mid-market rate) and a moderately low fee for the transfer: 4 USD for outgoing ACH in the US, 10 USD for same-day US wire. For the reverse (sending money from the US to EU) the fees are: 3 EUR for an ACH, 8 EUR for a same-day EUR wire. It has been online for quite a while, so I assume its legit, but I'd do a transfer for a smaller sum first, to see if there are any problems, and then a second transfer for the whole sum. |
What can cause rent prices to fall? | In Memphis, Tn., rents were stabilized from falling in the recession because all the foreclosed on home owners added to the rental market, increasing demand and thus stabilizing pricing. |
Opportunity to buy Illinois bonds that can never default? | If you give money to a person or entity, and they don't have the ability to pay you back, it doesn't matter if they are legally required to pay you. |
Help: Being charged interest on a loan for which I received no statements telling me of this debt for the past 15 years. Surprise! | Investigate the statute of limitations in your area. 15 years sounds like in most places it is past the allowable time a debt collector can legally collect or report it on your credit report. The statute of limitations means you still owe the debt, but they collector can no longer use the court system to collect it from you. They can file a lawsuit, they will just lose. Please read up on how to handle yourself with a debt that is past the SoL, so that you don't accidentally reset the clock. What I don't know for sure is how that applies to a business, and I cannot remember ever hearing a difference between personal vs business debt, but it is best to consult a lawyer regarding it. References: |
Can I write off time I spent working on my business? | To expand a little on what littleadv said, you can only deduct what something cost you. Even if you had done volunteer work for a charity as a sole prop you could only deduct your actual costs. If you paid an employee to do charity work or to learn something related to the business that would be deductible as a normal business expense. Some common sense would show that if you could deduct something that didn't cost you anything (your time) you could deduct away all of your income and avoid paying taxes altogether. Back to your more nuanced question could 2 businesses you own bill each other for services? Yes, but you will still have to pay taxes for money earned under each of them. You will also need to be careful that the IRS does not construe the transactions as being done solely to lower your tax bill. |
I carelessly invested in a stock on a spike near the peak price. How can I salvage my investment? | I had a coworker whose stock picking skills were clearly in the 1% level. I had a few hundred shares of EMC, bought at $10. When my coworker bought at $80, I quietly sold as it spiked to $100. It then crashed, as did many high tech stocks, and my friend sold his shares close to the $4 bottom advising that the company would go under. So I backed up the truck at $5, which for me, at the time, meant 1000 shares. This was one of nearly 50 trades I made over a good 10 year period. He was loud enough to hear throughout the office, and his trades, whether buy or sell, were 100% wrong. Individual stocks are very tough, as other posters have offered. That, combined with taking advice from those who probably had no business giving it. For the record, I am semi-retired. Not from stock picks, but from budgeting 20% of income to savings, and being indexed (S&P) with 90% of the funds. If there are options on your stock, you might sell calls for a few years, but that's a long term prospect. I'd sell and take my losses. Lesson learned. I hope. |
Is this reply promising a money order and cashier check a scam? | It's a scam. The cashier's check will be forged. Craigslist has a warning about it here (item #3). What kind of payment do you think is not fakable? Or at least not likely to be used in scams? When on craigslist - deal only locally and in person. You can ask to see the person's ID if you're being paid by check When being paid by check, how can seeing his/her ID help? In case the check isn't cashable, I can find that person by keeping record of his/her ID? If you're paid by check, the payers details should be printed on the check. By checking the ID you can verify that the details match (name/address), so you can find the payer later. Of course the ID can be faked too, but there's so much you can do to protect yourself. You'll get better protection (including verified escrow service) by selling on eBay. Is being paid by cash the safest way currently, although cash can be faked too, but it is the least common thing that is faked currently? Do you recommend to first deposit the cash into a bank (so that let the bank verify if the cash is faked), before delivering the good? For Craigslist, use cash and meet locally. That rules out most scams as a seller. What payment methods do you think are relatively safe currently? Then getting checks must be the least favorite way of being paid. Do you think cash is better than money order or cashier order? You should only accept cash. If it is a large transaction, you can meet them at your bank, have them get cash, and you receive the cash from the bank. Back to the quoted scam, how will they later manipulate me? Are they interested in my stuffs on moving sale, or in my money? They will probably "accidentally" overpay you and ask for a refund of some portion of the overpayment. In that case you will be out the entire amount that you send back to them and possibly some fees from your bank for cashing a bad check. |
Should I collect receipts after paying with a card? | Keeping a receipt does allow you to verify that the expected amount was charged/debited it also can help when you need to return an item. Regarding double charging, the credit card companies look for that. If the same card is used at the same vendor for the same exact amount in a short period of time the credit card company will flag the transaction. They assume either a mistake was made, or fraud is being attempted. The most likely result is that the transaction is denied. A dishonest vendor can write down the card number, expiration date and CVV number. Then after you leave make up a new transaction for any amount they want. You of course wouldn't have a paper receipt for this fraudulent transaction. The key is reviewing your transaction history every few days: looking for unexpected amounts, locations, or number of transactions. |
What expenses do most people not prepare for that turn into “emergencies” but are not covered by an Emergency Fund? | The most obvious one these days is unexpected and extended unemployment. If you are living paycheck to paycheck, you are asking for trouble in this economy. |
Good way to record currency conversion transactions in personal accounting software? | I found an answer by Peter Selinger, in two articles, Tutorial on multiple currency accounting (June 2005, Jan 2011) and the accompanying Multiple currency accounting in GnuCash (June 2005, Feb 2007). Selinger embraces the currency neutrality I'm after. His method uses "[a]n account that is denominated as a difference of multiple currencies... known as a currency trading account." Currency trading accounts show the gain or loss based on exchange rates at any moment. Apparently GnuCash 2.3.9 added support for multi-currency accounting. I haven't tried this myself. This feature is not enabled by default, and must be turned on explicity. To do so, check "Use Trading Accounts" under File -> Properties -> Accounts. This must be done on a per-file basis. Thanks to Mike Alexander, who implemented this feature in 2007, and worked for over 3 years to convince the GnuCash developers to include it. Older versions of GnuCash, such as 1.8.11, apparently had a feature called "Currency Trading Accounts", but they behaved differently than Selinger's method. |
What is the difference between Protected-equity loan vs Equity loan? | In simple terms : Equity Loan is money borrowed from the bank to buy assets which can be houses , shares etc Protected equity loan is commonly used in shares where you have a portfolio of shares and you set the minimum value the portfolio can fall to . Anything less than there may result in a sell off of the share to protect you from further capital losses. This is a very brief explaination , which does not fully cover what Equity Loan && Protected Equity Loan really mean |
What happened when the dot com bubble burst? | To add to the already existing answers, most of the dotcom companies used an accounting sheningan so profusely that everything looked rosy. To account for revenues, what dotcom companies did was, get into a barter transaction with another dotcom company by selling advertising space and stuff on each other's website. So the final outcome was each had quite a substantial amount of revenue while in reality there wasn't any revenue earned. This cooked up their books to look quite rosy to investors who then poured in their money, without realizing they were pouring money into a black hole. As someone mentioned Cisco, which sells networking gear and was heavily dependent on the dotcom boost. So when everything went bust, its stock price also crashed heavily. This was for the losers, but some good ones did sail through. Dotcom companies which had substance took a hit, in fact everybody did, during the bust but more than made up for it later on when investors realized they are valuable. |
When does giving a gift “count” for tax year? | Generally it goes by when they receive the check, not when they cash the check. Though if the check was received prior to midnight on December 31st, but after the bank closes, they would probably let the tax payer decide to count it for the next year. Of course if the check is from person A to person B then the only issue is gift tax, or annual limit calculations. If it is company to person then income tax could be involved. The IRS calls this Constructive receipt Income Under the cash method, include in your gross income all items of income you actually or constructively receive during your tax year. If you receive property or services, you must include their fair market value in income. Example. On December 30, 2011, Mrs. Sycamore sent you a check for interior decorating services you provided to her. You received the check on January 2, 2012. You must include the amount of the check in income for 2012. Constructive receipt. You have constructive receipt of income when an amount is credited to your account or made available to you without restriction. You do not need to have possession of it. If you authorize someone to be your agent and receive income for you, you are treated as having received it when your agent received it. Example. Interest is credited to your bank account in December 2012. You do not withdraw it or enter it into your passbook until 2013. You must include it in your gross income for 2012. Delaying receipt of income. You cannot hold checks or postpone taking possession of similar property from one tax year to another to avoid paying tax on the income. You must report the income in the year the property is received or made available to you without restriction. Example. Frances Jones, a service contractor, was entitled to receive a $10,000 payment on a contract in December 2012. She was told in December that her payment was available. At her request, she was not paid until January 2013. She must include this payment in her 2012 income because it was constructively received in 2012. Checks. Receipt of a valid check by the end of the tax year is constructive receipt of income in that year, even if you cannot cash or deposit the check until the following year. Example. Dr. Redd received a check for $500 on December 31, 2012, from a patient. She could not deposit the check in her business account until January 2, 2013. She must include this fee in her income for 2012. In general it is best not to cut it close. If the check is to be counted as an January event it is best to send it in January. If it is to be December event it is best to send it early enough to be able to say with confidence that the check arrived at the destination before the end of the year. |
How much is inflation? | FYI...prices don't always go up. Inflation is a monetary phenomenon. I'm simplifying greatly here: if more money is printed (or the money supply increases through fractional reserve banking) and it is chasing the same amount of goods then prices will go up. Conversely, if money is held constant and the economy becomes more productive, producing more goods, then a constant amount of money is chasing an increasing amount of goods and prices go down. After the Civil War the greenback went back to being on a gold standard in 1879. After 1879 greenbacks could be redeemed for gold. Gold restricts money growth since it is difficult to obtain. Here are the price and wage indexes from 1869 - 1889 (from here): Notice from 1879 to 1889 that wholesale and consumer prices fall but wages start to increase. Imagine your salary staying the same (or even increasing) but the prices of items falling. Still don't think inflation is a monetary phenomenon? Here is a CPI chart from 1800 to 2007: Notice how the curve starts to go drastically up around 1970. What happen then? The US dollar went off the gold-exchange standard and the US dollar became a purely fiat currency backed by nothing but government decree which allows the Federal Reserve to print money ad nauseum. |
Implied or historical volatility to calculate theoretical options price with black scholes? | Option pricing models used by exchanges to calculate settlement prices (premiums) use a volatility measure usually describes as the current actual volatility. This is a historic volatility measure based on standard deviation across a given time period - usually 30 to 90 days. During a trading session, an investor can use the readily available information for a given option to infer the "implied volatility". Presumably you know the option pricing model (Black-Scholes). It is easy to calculate the other variables used in the pricing model - the time value, the strike price, the spot price, the "risk free" interest rate, and anything else I may have forgotten right now. Plug all of these into the model and solve for volatility. This give the "implied volatility", so named because it has been inferred from the current price (bid or offer). Of course, there is no guarantee that the calculated (implied) volatility will match the volatility used by the exchange in their calculation of fair price at settlement on the day (or on the previous day's settlement). Comparing the implied volatility from the previous day's settlement price to the implied volatility of the current price (bid or offer) may give you some measure of the fairness of the quoted price (if there is no perceived change in future volatility). What such a comparison will do is to give you a measure of the degree to which the current market's perception of future volatility has changed over the course of the trading day. So, specific to your question, you do not want to use an annualised measure. The best you can do is compare the implied volatility in the current price to the implied volatility of the previous day's settlement price while at the same time making a subjective judgement about how you see volatility changing in the future and how this has been reflected in the current price. |
Advantage of Financial Times vs. free news sources for improving own knowledge of finance? | If you are interested in a career in algorithmic trading, I strongly encourage you to formally study math and computer science. Algorithmic trading firms have no need for employees with financial knowledge; if they did, they'd just be called "trading" firms. Rather, they need experts in machine learning, statistical modeling, and computer science in general. Of course there are other avenues of employment at an algorithmic trading firm, such as accounting, clearing, exchange relations, etc. If that's the sort of thing you're interested in, again you'll probably want a formal education in those areas as opposed to just reading about finance in the news. If you edit your question or add a comment below with information about your particular background, I could perhaps advise you in a bit more detail. ::edit:: Given your comment, I would say you have a fine academic background for the industry. When hiring mathematicians, firms care most about the ease with which you can explore and extract features from massive datasets (especially time series) regardless of what the dataset might represent. An intelligent firm will not care whether you arrive at their doorstep with zero finance knowledge; they will want to teach you everything from scratch anyway. Nonetheless, some domain knowledge could be helpful, but you're not going to get "more" of it from reading any mass market news source, whether you have to pay for it or not. That's because Some non-mass-market news sources in the industry are These are subscription-only and actually discuss real information that real professional investors care about. They are loaded with industry jargon, they're extremely opinionated, and (in my opinion) they're useless. I can't imagine trying to learn about the industry from them, but if you want to spend money for news in order to be exposed to the innards of the industry, then either of these is far better than the Financial Times. Despite requiring a subscription, the Financial Times still does not cover the technical details of professional trading. Instead of trying to learn from news, then, I would suggest some old favorites: and, above all else, Read everything in the navigation box on the right side under Financial Markets and Financial Instruments. |
On paper I have 1 share in my company. How can I sell a smaller percentage of my company to another party? | You actually have a few options. First, you can do a share split and then sell an equal number of shares from both you and your wife to maintain parity. Second, you can have the company issue additional shares/convert shares and then have the company sell the appropriate percentage to the third party while the rest is distributed to you and your wife. Third, you can have the company issue a separate class of stock. For example there are companies that have voting stock and non-voting stock. Depending on your goal, you could just issue non-voting stock and sell that. Best bet is to contact a lawyer who specializes in this type of work and have them recommend a course of action. One caveat that has not been mentioned is that what/how you do this will also depend on the type of corporation that you have created. |
How do I get into investing in stocks? | Before putting any significant money into stocks, I would recommend spending at least a year paper trading. It is amazing how much money you can lose trading stocks when you don't know what you are doing! |
How can an Indian citizen get exposure to global markets? | You can invest upto $200K per year abroad, and yes, you can buy Google as a stock. Consider opening an international account with a broker like interactive brokers (www.interactivebrokers.co.in) which allows you to fund the account from your local Indian account, and then on, buy shares of companies listed abroad. |
Recent college grad. Down payment on a house or car? | $27,000 for a car?! Please, don't do that to yourself! That sounds like a new-car price. If it is, you can kiss $4k-$5k of that price goodbye the moment you drive it off the lot. You'll pay the worst part of the depreciation on that vehicle. You can get a 4-5 year old Corolla (or similar import) for less than half that price, and if you take care of it, you can get easily another 100k miles out of it. Check out Dave Ramsey's video. (It's funny that the car payment he chooses as his example is the same one as yours: $475! ;) ) I don't buy his take on the 12% return on the stock market (which is fantasy in my book) but buying cars outright instead of borrowing or (gasp) leasing, and working your way up the food chain a bit with the bells/whistles/newness of your cars, is the way to go. |
Standard Deviation with Asset Prices? | James Roth provides a partial solution good for stock picking but let's speed up process a bit, already calculated historical standard deviations: Ibbotson, very good collection of research papers here, examples below Books |
Cannot get a mortgage because I work through a recruiter | They are looking at your work history to see that you have maintained a similar level of income for a period of time, and that you have a reasonable expectation to continue that for the foreseeable future. They are looking to make a commitment for 15-30 years. They see the short term contract, and have no confidence in making a guess to your ability to pay. Before the real estate bubble burst, you would have had a chance with a no documentation loan. These were setup for people who earned fluctuating incomes, mostly due to being commissioned based. They were easily abused, and lenders have gotten away from them becasue they were burned too often. Just like building your credit rating over time, and your down payment over time, you might have to wait to build a work history. |
What to sell when your financial needs change, stocks or bonds? | You have to understand what risk is and how much risk you want to take on, and weight your portfolio accordingly. I think your 80/20 split based on wrong assumptions is the wrong way to look at it. It sounds like your risk appetite has changed. Risk is deviation from expected, so risk is not bad, and you can have cases where everyone would prefer the riskier asset. If you think the roulette table is too risky, instead of betting $1, stick 50c in your pocket and you changed the payoffs from $2 or 0 to 50c or $1.50 If your risk appetite has changed - change your risk exposure. If not, then all you are saying is I bought the wrong stuff earlier, now I should get out. |
Are my parents ripping me off with this deal that doesn't allow me to build my equity in my home? | First, this was never an arrangement for you to build equity, this was an arrangement for them to speculate on another house under the guise of teaching you a life lesson like responsibility or something contrived. The only way you profit from this is if the value of the house goes up and you sell it. You get 25% of the proceeds, maybe. If this was an equitable arrangement then they would be paying 75% of the property taxes and a little more for your maintenance efforts. |
Standardized loan options to purchase employee stock options | What you want is a cashless transaction. It's part of the normal process. My employer gives me 1000 options at $1, I never need to come up with the money, the shares are bought and sold in one set of transactions, and if the stock is worth $10, I see $9000 less tax withholding, hit the account. No need for me to come up with that $1000. |
How to calculate cost basis for stock bought before a company spinoff? (USA) | Your brokerage account statement should report the Questar cost basis adjusted for the spinoff (and would have done so starting the day the spinoff happened), shifting the portion of it over to your shiny new QEP stock based on the opening price. At what price did you buy into Questar? The Questar IR site also has a document with more detail. |
Is it accurate to say that if I was to trade something, my probability of success can't be worse than random? | I'm just trying to visualize the costs of trading. Say I set up an account to trade something (forex, stock, even bitcoin) and I was going to let a random generator determine when I should buy or sell it. If I do this, I would assume I have an equal probability to make a profit or a loss. Your question is what a mathematician would call an "ill-posed problem." It makes it a challenge to answer. The short answer is "no." We will have to consider three broad cases for types of assets and two time intervals. Let us start with a very short time interval. The bid-ask spread covers the anticipated cost to the market maker of holding an asset bought in the market equal to the opportunity costs over the half-life of the holding period. A consequence of this is that you are nearly guaranteed to lose money if your time interval between trades is less than the half-life of the actual portfolio of the market maker. To use a dice analogy, imagine having to pay a fee per roll before you can gamble. You can win, but it will be biased toward losing. Now let us go to the extreme opposite time period, which is that you will buy now and sell one minute before you die. For stocks, you would have received the dividends plus any stocks you sold from mergers. Conversely, you would have had to pay the dividends on your short sales and received a gain on every short stock that went bankrupt. Because you have to pay interest on short sales and dividends passed, you will lose money on a net basis to the market maker. Maybe you are seeing a pattern here. The phrase "market maker" will come up a lot. Now let us look at currencies. In the long run, if the current fiat money policy regime holds, you will lose a lot of money. Deflation is not a big deal under a commodity money regime, but it is a problem under fiat money, so central banks avoid it. So your long currency holdings will depreciate. Your short would appreciate, except you have to pay interest on them at a rate greater than the rate of inflation to the market maker. Finally, for commodities, no one will allow perpetual holding of short positions in commodities because people want them delivered. Because insider knowledge is presumed under the commodities trading laws, a random investor would be at a giant disadvantage similar to what a chess player who played randomly would face against a grand master chess player. There is a very strong information asymmetry in commodity contracts. There are people who actually do know how much cotton there is in the world, how much is planted in the ground, and what the demand will be and that knowledge is not shared with the world at large. You would be fleeced. 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%. A physicist, a con man, a magician and a statistician would tell you that dice rolls and coin tosses are not random. While we teach "fair" coins and "fair" dice in introductory college classes to simplify many complex ideas, they also do not exist. If you want to see a funny version of the dice roll game, watch the 1962 Japanese movie Zatoichi. It is an action movie, but it begins with a dice game. Consider adopting a Bayesian perspective on probability as it would be a healthier perspective based on how you are thinking about this problem. A "frequency" approach always assumes the null model is true, which is what you are doing. Had you tried this will real money, your model would have been falsified, but you still wouldn't know the true model. Yes, you can do much worse than 1/6th of the time. Even if you are trying to be "fair," you have not accounted for the variance. Extending that logic, then for an inexperienced trader, is it right to say then that it's equally difficult to purposely make a loss then it is to purposely make a profit? Because if I can purposely make a loss, I would purposely just do the opposite of what I'm doing to make a profit. So in the dice example, if I can somehow lower my chances of winning below 16.6667%, it means I would simply need to bet on the other 5 numbers to give myself a better than 83% chance of winning. If the game were "fair," but for things like forex the rules of the game are purposefully changed by the market maker to maximize long-run profitability. Under US law, forex is not regulated by anything other than common law. As a result, the market maker can state any price, including prices far from the market, with the intent to make a system used by actors losing systems, such as to trigger margin calls. The prices quoted by forex dealers in the US move loosely with the global rates, but vary enough that only the dealer should make money systematically. A fixed strategy would promote loss. You are assuming that only you know the odds and they would let you profit from your 83.33 percentage chance of winning. So then, is the costs of trading from a purely probabilistic point of view simply the transaction costs? No matter what, my chances cannot be worse than random and if my trading system has an edge that is greater than the percentage of the transaction that is transaction cost, then I am probabilistically likely to make a profit? No, the cost of trading is the opportunity cost of the money. The transaction costs are explicit costs, but you have ignored the implicit costs of foregone interest and foregone happiness using the money for other things. You will want to be careful here in understanding probability because the distribution of returns for all of these assets lack a first moment and so there cannot be a "mean return." A modal return would be an intellectually more consistent perspective, implying you should use an "all-or-nothing" cost function to evaluate your methodology. |
Help Understanding Market/Limit Orders and Bid/Ask Price | Your logic breaks down because you assume that you are the only market participant on your side of the book and that the participant on the other side of the book has entered a market order. Here's what mostly happens: Large banks and brokerages trading with their own money (we call it proprietary or "prop" trading) will have a number of limit (and other, more exotic) orders sitting on both sides of the trading book waiting to buy or sell at a price that they feel is advantageous. Some of these orders will have sat on the book for many months if not years. These alone are likely to prevent your limit orders executing as they are older so will be hit first even if they aren't at a better price. On more liquid stocks there will also be a number of participants entering market orders on both sides of the book whose orders are matched up before limit orders are matched with any market orders. This means that pairing of market orders, at a better price, will prevent your limit order executing. In many markets high frequency traders looking for arbitrage opportunities (for example) will enter a few thousand orders a minute, some of these will be limit orders just off touch, others will be market orders to be immediately executed. The likelihood that your limit order, being as it is posited way off touch, is hit with all those traders about is minimal. On less liquid stocks there are market makers (large institutional traders) who effectively set the bid and offer prices by being willing to provide liquidity and fill the market orders at a temporary loss to themselves and will, in most cases, have limit orders set to provide this liquidity that will be close to touch. They are paid to do this by the exchange and inter-dealer brokers through their fees structure. They will fill the market orders that would hit your limit if they think that it would provide more liquidity in such a way that it fulfils their obligations. Only if there are no other participants looking to trade on the instrument at a better price than your limit (which, of course they can see unless you enter it into a dark pool) AND there is a market order on the opposite side of the book will your limit order be instantaneously be hit, executed, and move the market price. |
Is there a good rule of thumb for how much I should have set aside as emergency cash? | The bare minimum should be 6-months of expenses. Ideally, it should be at least 1 year. My personal preference is 2+ years, but one thing at a time. Figure out your necessary expenses: food, shelter, transportation and necessary extras. An example of a necessity, beyond the basics, for me is a decent internet connection. Telephone costs is another good example. (Meanwhile, electricity and such bills should be included in the figure for shelter.) You may want to include some allowance for clothing as well; especially for the 2+ year plan. |
Should I buy a house with a friend? | I did this about 8 years ago with a buddy in Chicago for the reasons specified in the original post. As other posters have suggested, we discussed a lot of the same questions listed above, figured out the possible scenarios, and then had a lawyer draw up a contract. We bought a 3 bedroom house, and rented out the 3rd bedroom. Overall, it was a great experience. We both built equity while having a renter pay a third of the mortgage. Plus the property tax and interest on the loan were tax deductible. Compared with renting an apartment, it made us a lot more money. In the end, we sold the house, and split the profits. Assuming you have the personalities to make it work, I say go for it. |
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