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Why do stock exchanges close at night?
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Most stocks are not actively trades by lots of people. When you buy or sell a stock the price is set by the “order book” – that is the other people looking to trade in the given stock at the same time. Without a large number of active traders, it is very likely the pricing system will break down and result in widely changing prices second by second. Therefore for the market to work well, it need most people to be trading at the same time.
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Meaning of “readily transferable”?
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Securities or quite a few negotiable instruments can change title of ownership without any issue. Many at times the owner ship in implicit if you are holding a certain instrument. So for example in Stock its a fractional ownership in a company, this ownership transfers to the buyer from the seller without requiring any permission from the company. In case of say Loans, One cannot transfer the loan to some one else without the Banks permission.
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Once stock prices are down, where to look for good stock market deals?
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Do your own research There are hundreds of places where people will give you all sorts of recommendations. There is as much noise in the recommendations as there is in the stock market itself. Become your own filter. You need to work on your own instinct. Pick a couple of sectors and a few stocks in each and study them. It is useful to know where the main indexes are going, but - unless you are trading the indexes - it is the individual sectors that you should focus on more.
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Why there's always a very huge volume of trades for AAPL every day before market close?
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A huge amount of money in all financial markets is from institutional investors, such as mutual funds, government pension plans, sovereign wealth funds, etc. For various reasons these funds do all of their trading at the end of the day. They care primarily that their end-of-day balances are in line with their targets and are easy to audit and far less about "timing the market" for the best possible trades. So, if you're looking at a stock that is owned by many institutional investors -- such as a stock (like AAPL) that makes up a significant portion of an index that many funds track -- there will be a huge amount of activity at this time relative to stocks that are less popular among institutions. Even just in its introduction this paper (PDF) gives a fair overview of other reasons why there's a lot of trading at end-of-day in general. (In fact, because of all this closing activity and the reliance on end-of-day prices as signposts for financial calculations, the end-of-day has for decades been the single most fraud-ridden time of the trading day. Electronic trading has done away with a lot of the straight-up thievery that floor traders and brokers used to get away with at the expense of the public, but it still exists. See, for example, any explanation of the term banging the close, or the penalties against 6 banks just last month for manipulating the FX market at the close.)
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What are “headwinds” and “tailwinds” in financial investments?
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The term "tailwinds" describes some condition or situation that will help move growth higher. For example, falling gas prices will help a delivery company be more profitable. Lower gas prices is said to be a tailwind for the freight services industry. "Headwinds" are just the opposite. Its a situation what will make growth more difficult. For example, if the price of beef goes much higher, McDonald's is facing headwinds. It's a nautical term. If the wind is at your back (tailwind), that will help you move forward more quickly. If you are moving into a headwind, that will only make progress more difficult.
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Why would a tender offer be less than the market price?
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As an addition to Chris Rea's excellent answer, these tender offers are sometimes made specifically to cast doubt on the current market price. For instance, a large public company that contracts with a smaller supplier or service company, also public, might make a tender offer below market price. The market will look at this price and the business relationship, and wonder what the larger company knows about the smaller one that they don't. Now, what happens when investors lose confidence in a stock? They sell it, supply goes up, demand goes down, and the price drops. The company making the tender offer can then get its shares either way; directly via the offer, or on the open market. This is, however, usually not successful beyond the very short term, and typically only works because the company making a tender offer is the 800-pound gorilla, which can dictate its own terms with practically anyone else it meets. Such offers are also very closely watched by the SEC; if there's any hint that the larger company is acting in a predatory manner, or that its management is using the power and information of the company to profit themselves, the strategy will backfire as the larger company finds itself the target of SEC and DoJ legal proceedings.
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How Should I Start my Finance Life and Invest?
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I'd suggest looking at something like the Dummies series of books for this. Something like: Sometimes the books are combined into one big book. This would be the best bet. It's were I started. Every time I wondered something I just looked it up and learned. They are perfectly fine for the novice. Hope this helps.
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Should I use a bank or a credit union for my savings account?
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Your instructor's numbers do not seem to have any basis in current reality. At this page you can see a comparison of interest rates offered by banks and credit unions. In the most recent table for June 2014, banks paid an average interest rate of 0.12 percent on savings accounts, while credit unions paid an average of 0.13 percent. If you look back further, you will see that interest rates paid by banks and credit unions are generally comparable. Credit union rates tend to be a little bit higher, but certainly not 7 times higher. The last time any financial institution paid as much as 15% on a savings account would probably be the early 1980s. You can see here a historical chart of the "prime rate" for lending. Savings account rates (at either banks or credit unions) would typically be lower. (This is based on the US, in accordance with your tag. Interest rates in other places, especially developing countries with less stable currencies, can be dramatically different.)
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How to transfer personal auto lease to business auto lease?
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See what the contract says about transfers or subleases. A lease is a credit agreement, so the lessor may not allow transfers. You probably ought to talk to an accountant about this. You can probably recognize most of the costs associated with the car without re-financing it in another lease.
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Can I get a dividend “free lunch” by buying a stock just before the ex-dividend date and selling it immediately after? [duplicate]
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There are indeed various strategies to make money from this. As Ben correctly said, the stock price drops correspondingly on the dividend date, so the straightforward way doesn't work. What does work are schemes that involve dividend taxation based on nationality, and schemes based on American Options where people can use market rules to their advantage if some options are not exercised.
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If I have $1000 to invest in penny stocks online, should I diversify risk and invest in many of them or should I invest in just in one?
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I've never invested in penny stocks. My #1 investing rule, buy what you know and use. People get burned because they hear about the next big thing, go invest! to just end up losing everything because they have no clue in what they're investing in. From what I've found, until you have minimum of $5k to invest, put everything in a single investment. The reason for this, as others have mentioned, is that commissions eat up just about all your profits. My opinion, don't put it in a bond, returns are garbage right now - however they are "safe". Because this is $1000 we're talking about and not your life savings, put it in a equity like a stock to try and maximize your return. I aim for 15% returns on stocks and can generally achieve 10-15% consistently. The problem is when you get greedy and keep thinking it will go above once you're at 10-15%. Sell it. Sell it right away :) If it drops down -15% you have to be willing to accept that risk. The nice thing is that you can wait it out. I try to put a 3 month time frame on things I buy to make money. Once you start getting a more sizable chunk of money to play around with you should start to diversify. In Canada at least, once you have a trading account with a decent size investment the commissions get reduced to like $10 a trade. With your consistent 10% returns and additional savings you'll start to build up your portfolio. Keep at it and best of luck!
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How can home buying be considered a sound investment with all of that interest that needs to be paid?
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Housing prices are inseparable from the job market of an area. The 40k you want to use as a down payment will buy an entire house outright in many places of the country that have no jobs. If your job is mobile why not follow cheap housing, even if it is just to rent?
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Is Stock Trading legal for a student on F-1 Visa doing CPT in USA?
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you dont need any permits or be inside the US to trade the exact same securities on US exchanges. you can literally move your bitcoin from a chinese exchange to us exchange in seconds. i don't see how you can possibly run into legal issues if anyone from outside the country can trade bitcoins on an exchange inside the country without any permit. a lot of these exchanges dont ask for ID or social security number anyways. none of it is government regulated. also trading anything is never a passive income. theres no such thing as an easy or obvious investment. there are always risks- and the actual risk is often deceivingly low
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Why is the breakdown of a loan repayment into principal and interest of any importance?
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It's important because you may be able to reduce the total amount of interest paid (by paying the loan faster); but you can do nothing to reduce the total of your principal repayments. The distinction can also affect the amount of tax you have to pay. Some kinds of interest payments can be counted as business expenses, which means that they reduce the amount of income you have to pay tax on. But this is not generally the case for money used to repay the loan principal.
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What kind of trade is this?
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The question mentions a trailing stop. A trailing stop is a type of stop loss order. It allows you to protect your profit on the stock, while "keeping you in the stock". A trailing stop is specified as a percentage of market price e.g. you might want to set a trailing stop at 5%, or 10% below the market price. A trailing stop goes up along with the market price, but if the market price drops it doesn't move down too. The idea is that it is there to "catch" your profit, if the market suddenly moves quickly against you. There is a nice explanation of how that works in the section titled Trailing Stops here. (The URL for the page, "Tailing Stops" is misleading, and a typo, I suspect.)
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If something is coming into my account will it be debit or credit in my account?
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It sounds like you're mixing a simple checkbook register with double-entry bookkeeping. Do you need a double-entry level of rigor? Otherwise, why not have two columns, one for income (like a paycheck) and one for expenses (like paying a cable bill)? Then add up both columns and then take the difference of the sums to get your increase or decrease for the time period. If you want to break up income and expenses further, then you can do that too.
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Is it possible for all the owners of a stock to gain or lose money at the same time?
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Take the case where a stock has just two owners, A and B, both at $10. One of them sells his shares to C, at $11. Now B has made $1 in profit but is no longer an owner of the stock. A hasn't sold anything but his shares are worth 10% more due to the last traded price printed. C has bought shares at $11 and the price is $11, so technically he hasn't lost any money. In a larger market, there are winners and losers every day on a single stock, but they may not remain owners of a stock. There could be days in which those that remain owners are all winners - say when a stock goes up to an all time high and all those that are currently owners have an average buy price lower than the last traded price. And the reverse applies too. It is of course more complicated. Say you own a stock and let someone else "borrow" it for a short-selling opportunity (he sells it in the market). For each uptick in price, you win, the short seller loses, and the guy he sold it to also wins. A person that has a covered call on a stock is not a winner beyond a point. And so on.
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Do I pay a zero % loan before another to clear both loans faster?
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This is a case where human nature and arithmetic lead to different results. Depending on the your income, the effective interest rate on the mortgage is probably right around 2.5%. So purely by arithmetic, the absolute cheapest way to go is to put the $11k to the bigger car loan, then pay off the mortgage, then the smaller car loan. The Debt Snowball is more effective however, because it works better for people. Progress is demonstrated quickly, which maintains (and often enhances) motivation to continue. I can say as a case in point, having tried both methods, that if does indeed work. So, I am with you ... pay off the car loan first, and roll that payment into the bigger car loan. If you add no extra dollars, you should get the small loan paid off in 6 to 8 months and the bigger car loan in another 16 to 18 months. It sounds like from your message that you have another $1500 or so a month. If that is the case ... small loan paid off in two months, bigger loan paid off in another year. If you stick with the Ramsay program, you then build an emergency fund and start investing. Good luck!
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Weekly budgets based on (a variable) monthly budget
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I think the real problem here is dealing with the variable income. The envelope solution suggests the problem is that your brother doesn't have the discipline to avoid spending all his money immediately, but maybe that's not it. Maybe he could regulate his expenses just fine, but with such a variable income, he can't settle into a "normal" spending pattern. Without any savings, any budget would have to be based on the worst possible income for a month. This isn't a great: it means a poor quality of life. And what do you do with the extra money in the better-than-worst months? While it's easy to say "plan for the worst, then when it's better, save that money", that's just not going to happen. No one will want to live at their worst-case standard of living all the time. Someone would have to be a real miser to have the discipline to not use that extra money for something. You can say to save it for emergencies or unexpected events, but there's always a way to rationalize spending it. "I'm a musician, so this new guitar is a necessary business expense!" Or maybe the car is broken. Surely this is a necessary expense! But, do you buy a $1000 car or a $20000 car? There's always a way to rationalize what's necessary, but it doesn't change financial reality. With a highly variable income, he will need some cash saved up to fill in the bad months, which is replenished in the good months. For success, you need a reasonable plan for making that happen: one that includes provisions for spending it other than "please try not to spend it". I would suggest tracking income accurately for several months. Then you will have a real number (not a guess) of what an average month is. Then, you can budget on that. You will also have real numbers that allow you to calculate how long the bad stretches are, and thus determine how much cash reserve is necessary to make the odds of going broke in a bad period unlikely. Having that, you can make a budget based on average income, which should have some allowance for enjoying life. Of course initially the cash reserve doesn't exist, but knowing exactly what will happen when it does provides a good motivation for building the reserve rather than spending it today. Knowing that the budget includes rules for spending the reserves reduces the incentive to cheat. Of course, the eventual budget should also include provisions for long term savings for retirement, medical expenses, car maintenance, etc. You can do the envelope thing if that's helpful. The point here is to solve the problem of the variable income, so you can have an average income that doesn't result in a budget that delivers a soul crushing decrease in quality of living.
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Can you please explain what the information in this stock quote means?
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Yes, that's what it means. Also, it tells you that the share price went up by $0.39 yesterday, which was an increase of 1.43% from the previous day's price, and that the total value of all of Microsoft's shares is $232.18 billion (from which we can deduce that there are a bit less than 10 billion Microsoft shares in total).
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How can I improve my credit score if I am not paying bills or rent?
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If credit scoring works in the UK like it does in the US, then I think the fact that you own+use a credit card and pay off your everyday expenses will give you perfectly good credit. Just keep doing what you're doing. I have seen people in the United States with very high credit scores based solely upon owning & occasionally using a credit card, paid in full and on time every month.
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What one bit of financial advice do you wish you could've given yourself five years ago?
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Bank every dollar possible to have more cash available for investing during the 2008/2009 crisis.
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How do you calculate the P/E ratio by industry?
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You could sum the P/E ratio of all the companies in the industry and divide it by the number of companies to find the average P/E ratio of the industry. Average P/E ratio of industry = Sum of P/E ratio of all companies in Industry / Number of companies in industry
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Vanguard ETF vs mutual fund
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One reason is that it is not possible (at Vanguard and at many other brokerages) to auto-invest into ETFs. Because the ETF trades like a stock, you typically must buy a whole number of shares. This makes it difficult to do auto-investing where you invest, say, a fixed dollar amount each month. If you're investing $100 and the ETF trades for $30 a share, you must either buy 3 shares and leave $10 unspent, or buy 4 and spend $20 more than you planned. This makes auto-investing with dollar amounts difficult. (It would be cool if there were brokerages that handled this for you, for instance by accumulating "leftover" cash until an additional whole share could be purchased, but I don't know of any.) A difference of 0.12% in the expense ratios is real, but small. It may be outweighed by the psychological gains of being able to adopt a "hands-off" auto-investing plan. With ETFs, you generally must remember to "manually" buy the shares yourself every so often. For many average investors, the advantage of being able to invest without having to think about it at all is worth a small increase in expense ratio. The 0.12% savings don't do you any good if you never remember to buy shares until the market is already up.
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Ethics and investment
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Avoiding tobacco, etc is fairly standard for a fund claiming ethical investing, though it varies. The hard one on your list is loans. You might want to check out Islamic mutual funds. Charging interest is against Sharia law. For example: http://www.saturna.com/amana/index.shtml From their about page: Our Funds favor companies with low price-to-earnings multiples, strong balance sheets, and proven businesses. They follow a value-oriented approach consistent with Islamic finance principles. Generally, these principles require that investors avoid interest and investments in businesses such as liquor, pornography, gambling, and banks. The Funds avoid bonds and other conventional fixed-income securities. So, it looks like it's got your list covered. (Not a recommendation, btw. I know nothing about Amana's performance.) Edit: A little more detail of their philosophy from Amana's growth fund page: Generally, Islamic principles require that investors share in profit and loss, that they receive no usury or interest, and that they do not invest in a business that is prohibited by Islamic principles. Some of the businesses not permitted are liquor, wine, casinos, pornography, insurance, gambling, pork processing, and interest-based banks or finance associations. The Growth Fund does not make any investments that pay interest. In accordance with Islamic principles, the Fund shall not purchase conventional bonds, debentures, or other interest-paying obligations of indebtedness. Islamic principles discourage speculation, and the Fund tends to hold investments for several years.
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Should I Use an Investment Professional?
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Let me start with something you might dismiss as trite - Correlation does not mean Causation. A money manager charging say, 1%, isn't likely to take on clients below a minimum level. On the other hand, there's a long debate regarding how, on average, managed funds don't beat the averages. I think that you should look at it this way. People that have money tend to be focused on other things. A brain surgeon making $500K/yr may not have the time, nor the inclination to want to manage her own money. I was always a numbers person. I marveled at the difference between raising 1.1 to the 40th power, getting 45.3 (i.e. Getting 45.3 times your investment after 40 years at 10%) vs 31.4 at 9%. That 1% difference feels like nothing, but after a lifetime, 1/3 of your money has been skimmed off the top. the data show that one can do better by simply putting their money into a mix of S&P index and cash, and beat the average money manager over time, regardless of convoluted 12 asset class allocations. Similarly - There are people who use a 'tax guy.' In quotes because I mean this as an individual whom they go to, year after year, not a storefront. My inlaws used to go to one, and I was curious what they got for their money. Each year he sent them a form. 3 pages they needed to fill in. Every cell made its way into the guy's tax program. The last year, I went with them to pick up the tax return. I asked him if he noticed that they might benefit from small Roth conversions each year, or by making some of their IRA RMD directly to charity. He kindly told me "That's not what we do here" and whisked us away. I planned both questions in advance. The Roth conversion was a strategy that one could agree made sense or dismiss as convoluted for some clients. But. The RMD issue was very different. They didn't have enough Schedule A deductions to itemize. Therefore the $3000 they donated each year wasn't impacting their return. By donating directly from their IRAs, this money would avoid tax. It would have saved them more than the cost of the tax guy, who charged a hefty fee, in my opinion. It seemed to me, this particular strategy should be obvious to one whose business is preparing returns.
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Is it possible to trade US stock from Europe ?
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Any large stockbroker will offer trading in US securities. As a foreign national you will be required to register with the US tax authorities (IRS) by completing and filing a W-8BEN form and pay US withholding taxes on any dividend income you receive. US dividends are paid net of withholding taxes, so you do not need to file a US tax return. Capital gains are not subject to US taxes. Also, each year you are holding US securities, you will receive a form from the IRS which you are required to complete and return. You will also be required to complete and file forms for each of the exchanges you wish to received market price data from. Trading will be restricted to US trading hours, which I believe is 6 hours ahead of Denmark for the New York markets. You will simply submit an order to the desired market using your broker's online trading software or your broker's telephone dealing service. You can expect to pay significantly higher commissions for trading US securities when compared to domestic securities. You will also face potentially large foreign exchange fees when exchaning your funds from EUR to USD. All in all, you will probably be better off using your local market to trade US index or sector ETFs.
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How do I find a legitimate, premium credit repair service?
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If the bad credit items are accurate, disputing the accuracy of the items seems at best, unethical. If the bad credit items are inaccurate, the resolution process provided by each of the 3 credit bureaus, while time consuming, seems the way to go.
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Pay off car loan entirely or leave $1 until the end of the loan period?
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There's two scenarios: the loan accrues interest on the remaining balance, or the total interest was computed ahead of time and your payments were averaged over x years so your payments are always the same. The second scenarios is better for the bank, so guess what you probably have... In the first scenario, I would pay it off to avoid paying interest. (Unless there is a compelling reason to keep the cash available for something else, and you don't mind paying interest) In the second case, you're going to pay "interest over x years" as computed when you bought the car no matter how quickly you pay it off, so take your time. (If you pay it earlier, it's like paying interest that would not have actually accrued, since you're paying it off faster than necessary) If you pay it off, I'm not sure if it would "close" the account, your credit history might show the account as being paid, which is a good thing.
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Pros and Cons of Interest Only Loans
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The advantage of interest only mortgages is that they can increase your cashflow as you are only paying the interest and not any part of the principle. We have most of our investment loans on interest only for 10 years. When we got the loans about 6 to 7 years ago our LVR was only 60% and the property prices have increased by about 40% in that time. We also place our excess cashflow into offset accounts linked to the investment loans, so there is extra cash available in case things go bad. The disadvantage of interest only mortgages is that you are not paying off any principal for the length of the interest only period. If you are over extended this could cause problems as you need to rely totally on the price of the property going up for your equity to increase. As you are currently paying mortgage insurance leads me to believe your LVR is above 80%, so you would not have much equity available in your home. With an interest only loan this could pose you some problems. You should never try to over extend yourself, the slightest thing that goes wrong could get you into financial troubles. Always try to have some buffer to help you stay on your feet if circumstances do change for the worst.
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Can my broker lock my cash account if I try to use the money from a stock sale during the three-day settlement period?
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Here's how this works in the United States. There's no law regarding your behavior in this matter and you haven't broken any laws. But your broker-dealer has a law that they must follow. It's documented here: The issue is if you buy stock before your sell has settled (before you've received cash) then you're creating money where before none existed (even though it is just for a day or two). The government fears that this excess will cause undue speculation in the security markets. The SEC calls this practice freeriding, because you're spending money you have not yet received. In summary: your broker is not allowed to loan money to an account than is not set-up for loans; it must be a margin account. People with margin account are able to day-trade because they have the ability to use margin (borrow money). Margin Accounts are subject to Pattern Daytrading Rules. The Rules are set forth by FINRA (The Financial Industry Reporting Authority) and are here:
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Investing small amounts at regular intervals while minimizing fees?
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You could just commingle your funds. That way, she also learns how to keep track of things and how to figure things out, rather just learning to have the guy at the brokerage hand her an account statement which she blindly accepts. It might cause some tax problems though if the money grows to be substantial.
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What differentiates index funds and ETFs?
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I think that assuming that you're not looking to trade the fund, an index Mutual Fund is a better overall value than an ETF. The cost difference is negligible, and the ability to dollar-cost average future contributions with no transaction costs. You also have to be careful with ETFs; the spreads are wide on a low-volume fund and some ETFs are going more exotic things that can burn a novice investor. Track two similar funds (say Vanguard Total Stock Market: VTSMX and Vanguard Total Stock Market ETF: VTI), you'll see that they track similarly. If you are a more sophisticated investor, ETFs give you the ability to use options to hedge against declines in value without having to incur capital gains from the sale of the fund. (ie. 20 years from now, can use puts to make up for short-term losses instead of selling shares to avoid losses) For most retail investors, I think you really need to justify using ETFs versus mutual funds. If anything, the limitations of mutual funds (no intra-day trading, no options, etc) discourage speculative behavior that is ultimately not in your best interest. EDIT: Since this answer was written, many brokers have begun offering a suite of ETFs with no transaction fees. That may push the cost equation over to support Index ETFs over Index Mutual Funds, particularly if it's a big ETF with narrow spreads..
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Why are there many small banks and more banks in the U.S.?
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Actually it seems you are not quite correct about the number of different banks in Canada. https://en.wikipedia.org/wiki/List_of_banks_and_credit_unions_in_Canada According to this link there are 82-86 banks in Canada plus credit unions. This may still be lower than what would correspond to the number of banks in the US, scaled for canadian population. One further reason not mentioned before could be that the population density in Canada outside of the metropolitan areas could be lower than in the US, leaving to few small towns large enough (10,000+ (a guess corrected due to comment)) to support a bank.
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How does a bank make money on an interest free secured loan?
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Generally speaking, an interest-free loan will be tied to a specific purchase, and the lender will be paid something by the vendor. The only other likely scenario is an introductory offer to try to win longer-term more profitable business, such as an initial interest-free period on a credit card. Banks couldn't make money if all their loans were interest-free, unless they were getting paid by the vendors of whatever was being purchased with the money that was lent.
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What would the broker do about this naked call option?
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Yes, it can buy back the call, but much before stock hits the $30 mark. Let us say you got 1$ from selling the call. So the total money in your account is 4$ + 1 $ = 5 $. When stock hits 10$ (your strike), the maintenance margin is 5$. As soon as stock goes past 10, your maintenance margin is violated. So broker will buy back your call (at least IB does that, it does not wait for a margin call). Now if the stock gapped up from 8 to 30,then yes, broker will buy it back at 30, so your account will have a negative balance. Assume the call cost 20$ when stock hit 30, your balance is: 5 - (30-10) = -15. Depending on broker, I suppose they will ask you to bring your account balance back up to positive. If they don't do that, they risk going out of business.
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Is an interest-only mortgage a bad idea?
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Normally interest only mortgages are taken incase one planning to sell off the property after a few years and purchase of the property is for investment. In such a case instead of burdening oneself with a huge EMI, one opts for an interest only mortgage, and towards the end of the term, sell off the house at profit and repay back the entire principal. I am not to sure if interest only mortgages are encouraged for properties you plan to live in. Although I do not know about the ING scheme, normally there is no prepayment option on interest only mortgages, its Bank way of earning a fixed income for the contracted period and thats the reason why the interest rates are lower than a regular mortgage. If you do the math, you may be paying more in total interest than on a regular mortgage.
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What are the disadvantages of using a small leverage?
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The major drawback to borrowing to invest (i.e. using leverage) is that your return on investment must be high enough to overcome the cost of finance. The average return on the S&P 500 is about 9.8% (from CNBC) a typical unsecured personal loan will have an interest rate of around 18-36% APR (from NerdWallet). This means that on average you will be paying more interest than you are receiving in returns so are losing money on the margin investment. Sometimes the S&P falls and over those periods you would be paying out interest having lost money so will have a negative return! You may have better credit and so be able to get a lower rate but I don't know your loan terms currently. Secured loans, such as remortgaging your house, will have lower costs but come with more life changing risks. The above assumes that you are getting financing by directly borrowing money, however, it is also possible to trade on margin. This is where you post a proportion of the value that you wish to trade with as collateral against a loan to buy the security. This form of finance is normally used by day traders and other short term holders of stocks. Although the financing costs here are low (I am not charged an interest rate on intraday margin trading) there are very high costs if you exceed the term of the loan. An example is that I am charged a fee if I hold a position overnight and my profits and losses are crystallised at that time. If I am in a losing position at that time the crystallisation process and fee can result in not having enough margin to recover the position and the loss of a potentially profit making position. Additionally if the amount of collateral cash (margin) posted is insufficient to cover the expected losses as calculated by your broker they will initiate a margin call asking for more collateral money. If you do not (or cannot) post this extra margin your losing position will be cashed out and you will take as a loss the total loss at that time. Since the market can change very rapidly, such as in a flash crash, this can result in your losing more money than you had in the first place. As this is essentially a loan you can be bankrupted by this. Overall using leverage to invest magnifies your potential profits but it also magnifies your potential losses. In many cases this magnification could be sufficient to lose you more money than you had originally invested. In addition to magnification you need to consider the cost of finance and that your return over the course of the loan needs to be higher than your cost of finance as well as inflation and other opportunity costs of capital. The S&P 500 is a relatively low volatility market in general so is unlikely to return losses in any given period that will mean that leverage of 1.25 times will take you into losses beyond your own capital investment but it is not impossible. The low level of risk automatically means that your returns are lower and so your cost of capital is likely to be a large proportion of your returns and your returns may not completely cover the cost of capital even when you are making money. The key thing if you are going to trade or invest on leverage is to understand the terms and costs of your leverage and discount them from any returns that you receive before declaring to yourself that you are profitable. It is even more important than usual to know how your positions are doing and whether you are covering your cost of capital when using leverage. It is also very important to know the terms of your leverage in detail, especially what will happen when and if your credit runs out for whatever reason be it the end of the financing period (the length of the loan) or your leverage ratio gets too high. You should also be aware of the costs of closing out the loan early should you need to do so and how to factor that into your investing decisions.
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If my put option reaches expiration on etrade and I don't log in to the site will it automatically exercise if it's in the money or be a total loss?
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There are a number of choices: I prefer Dilip's response "Have you tried asking etrade?" No offense, but questions about how a particular broker handles certain situations are best asked of the broker. Last - one should never enter into any trade (especially options trades) without understanding the process in advance. I hope you are asking this before trading.
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Is there a “reverse wash sale” rule?
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Yes, the newly bought shares will have a long-term holding period, regardless of when you sell them. In addition, it's only a wash sale if you sold the first shares for a loss; it's not a wash sale if you sold them for a gain. Wikipedia mentions this: When a wash sale occurs, the holding period for the replacement stock includes the period you held the stock you sold. Example: You've held shares of XYZ for 10 years. You sell it at a loss but then buy it back within the wash sale period. When you sell the replacement stock, your gain or loss will be long-term — no matter how soon you sell it. Charles Schwab also mentions this: Here's a quick example of a wash sale. On 9/30/XX, you buy 500 shares of ABC at $10 per share. One year later the stock price starts to drop, and you sell all your shares at $9 per share on 10/4/XY. Two days later, on 10/6, ABC bottoms out at $8 and you buy 500 shares again. This series of trades triggers a wash sale. The holding period of the original shares will be added to the holding period of the replacement shares, effectively leaving you with a long-term position.
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Is candlestick charting an effective trading tool in timing the markets?
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Candlesticks and TA are a relic of pre-computer trading, period. Market makers use sophisticated algorithms not for trading, but manipulations.
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Should I prioritize retirement savings inside of my HSA?
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You would want to prioritize Roth and retirement over HSA. As the HSA is only for health and dental expenses, which you will always have, overfunding it will put you in a bit of a pickle for all of the life involved. For example, even if you or a loved one develop a strange & expensive ailment, the HSA will only cover the medical costs, but not any travel to specialists, hotel stays, home alterations, special vehicles, or lifestyle alterations (food, clothing). However, you will eventually stop working even if you are healthy throughout your life. I would suggest that you treat the HSA as a part of your overall emergency fund, giving it a cap the same as you would normal non-retirement savings. Since you stated you have three young children, small and large medical expenses (such as braces, trips to the emergency room) are something that are almost guaranteed, thus having fairly large amount in the HSA would be very beneficial throughout their time with you. Once the children have left however, if you still have an overwhelming balance in your HSA, you may not want to add anymore to the HSA. Setting a cap for the HSA based off a certain number of years of deductible payments for medication would be a good place to start. Roth accounts, whether it be within your company's 401k plan or the IRAs for yourself and your spouse, are single-handedly the best location for your money for long-term savings. Roth money grows tax-free, is immune to Required Minimum Distribution provisions, and will avoid estate escrow when going to one's beneficiaries. Even if you tap into the funds prior to age 59 1/2, you would only pay taxes on any investment growth, in addition to the 10% early withdrawal penalty. If you have established Roth IRA accounts and have an AGI that disallows you to further contribute to them, there is still a provision to get Roth funds contributed via conversion through what is commonly called a "back door" Roth.
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Why doesn’t every company and individual use tax-havens to pay less taxes?
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There are tax free bonds in the United States. They are for things like public housing and other urban projects. They are tax free for everyone but only rich people buy them. Why? The issue is that the tax free nature of the bond is included in its yield. So rather than yielding say a 5% return, they figure that the owner is getting 20% off due to not paying taxes. As a result, they only give a 4% return but are as risky as a 5% return investment. Net result, only rich people invest in tax free bonds. "Rich" is defined here to mean people paying a 20% tax on long term investment returns. Or take the State and Local Tax (SALT) deduction, which has been in the news recently. Again, it is technically open to everyone. But there is also a standard deduction that is open to everyone. For the typical family, state and local taxes might be 5% of income. So for a family making $100k a year, that's $5k. The same family can take a $13k or so standard deduction instead of itemizing. So why would they take the smaller deduction? As a practical matter, two groups take the SALT deduction. People rich enough to pay more than $13k in state and local taxes and people who also take the mortgage interest deduction. So it helps a lot of people who are rich quite a bit. And it helps a few middle class people some. But if you are lower middle class with a $30k mortgage on a tiny house and paying 4% interest, then that's only $1200 a year. Add in property taxes of $3000 and SALT of $2.8k and that's only $7k. Even if the person gives $3k to charity, the $13k deduction is a lot better and requires less paperwork. Contrast that with someone who has $500k mortgage at 3.6% interest. That's $18k in interest alone. Add in a SALT of $7k and property taxes of $50k, and there's $75k of itemized deductions, much better than $13k. Now a $7k donation to charity is entirely deductible. And even after the mortgage interest deduction goes away, the other $64k remains.
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How to invest in stocks without using an intermediary like a broker? Can shares be bought direct?
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Am I wrong? Yes. The exchanges are most definitely not "good ole boys clubs". They provide a service (a huge, liquid and very fast market), and they want to be paid for it. Additionally, since direct participants in their system can cause serious and expensive disruptions, they allow only organizations that know what they're doing and can pay for any damages the cause. Is there a way to invest without an intermediary? Certainly, but if you have to ask this question, it's the last thing you should do. Typically such offers are only superior to people who have large investments sums and know what they're doing - as an inexperienced investor, chances are that you'll end up losing everything to some fraudster. Honestly, large exchanges have become so cheap (e.g. XETRA costs 2.52 EUR + 0.0504% per trade) that if you're actually investing, then exchange fees are completely irrelevant. The only exception may be if you want to use a dollar-cost averaging strategy and don't have a lot of cash every month - fixed fees can be significant then. Many banks offer investments plans that cover this case.
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Is it worth investing in Index Fund, Bond Index Fund and Gold at the same time?
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Index funds can be a very good way to get into the stock market. It's a lot easier, and cheaper, to buy a few shares of an index fund than it is to buy a few shares in hundreds of different companies. An index fund will also generally charge lower fees than an "actively managed" mutual fund, where the manager tries to pick which stocks to invest for you. While the actively managed fund might give you better returns (by investing in good companies instead of every company in the index) that doesn't always work out, and the fees can eat away at that advantage. (Stocks, on average, are expected to yield an annual return of 4%, after inflation. Consider that when you see an expense ratio of 1%. Index funds should charge you more like 0.1%-0.3% or so, possibly more if it's an exotic index.) The question is what sort of index you're going to invest in. The Standard and Poor's 500 (S&P 500) is a major index, and if you see someone talking about the performance of a mutual fund or investment strategy, there's a good chance they'll compare it to the return of the S&P 500. Moreover, there are a variety of index funds and exchange-traded funds that offer very good expense ratios (e.g. Vanguard's ETF charges ~0.06%, very cheap!). You can also find some funds which try to get you exposure to the entire world stock market, e.g. Vanguard Total World Stock ETF, NYSE:VT). An index fund is probably the ideal way to start a portfolio - easy, and you get a lot of diversification. Later, when you have more money available, you can consider adding individual stocks or investing in specific sectors or regions. (Someone else suggested Brazil/Russia/Indo-China, or BRICs - having some money invested in that region isn't necessarily a bad idea, but putting all or most of your money in that region would be. If BRICs are more of your portfolio then they are of the world economy, your portfolio isn't balanced. Also, while these countries are experiencing a lot of economic growth, that doesn't always mean that the companies that you own stock in are the ones which will benefit; small businesses and new ventures may make up a significant part of that growth.) Bond funds are useful when you want to diversify your portfolio so that it's not all stocks. There's a bunch of portfolio theory built around asset allocation strategies. The idea is that you should try to maintain a target mix of assets, whatever the market's doing. The basic simplified guideline about investing for retirement says that your portfolio should have (your age)% in bonds (e.g. a 30-year-old should have 30% in bonds, a 50-year-old 50%.) This helps maintain a balance between the volatility of your portfolio (the stock market's ups and downs) and the rate of return: you want to earn money when you can, but when it's almost time to spend it, you don't want a sudden stock market crash to wipe it all out. Bonds help preserve that value (but don't have as nice of a return). The other idea behind asset allocation is that if the market changes - e.g. your stocks go up a lot while your bonds stagnate - you rebalance and buy more bonds. If the stock market subsequently crashes, you move some of your bond money back into stocks. This basically means that you buy low and sell high, just by maintaining your asset allocation. This is generally more reliable than trying to "time the market" and move into an asset class before it goes up (and move out before it goes down). Market-timing is just speculation. You get better returns if you guess right, but you get worse returns if you guess wrong. Commodity funds are useful as another way to diversify your portfolio, and can serve as a little bit of protection in case of crisis or inflation. You can buy gold, silver, platinum and palladium ETFs on the stock exchanges. Having a small amount of money in these funds isn't a bad idea, but commodities can be subject to violent price swings! Moreover, a bar of gold doesn't really earn any money (and owning a share of a precious-metals ETF will incur administrative, storage, and insurance costs to boot). A well-run business does earn money. Assuming you're saving for the long haul (retirement or something several decades off) my suggestion for you would be to start by investing most of your money* in index funds to match the total world stock market (with something like the aforementioned NYSE:VT, for instance), a small portion in bonds, and a smaller portion in commodity funds. (For all the negative stuff I've said about market-timing, it's pretty clear that the bond market is very expensive right now, and so are the commodities!) Then, as you do additional research and determine what sort investments are right for you, add new investment money in the places that you think are appropriate - stock funds, bond funds, commodity funds, individual stocks, sector-specific funds, actively managed mutual funds, et cetera - and try to maintain a reasonable asset allocation. Have fun. *(Most of your investment money. You should have a separate fund for emergencies, and don't invest money in stocks if you know you're going need it within the next few years).
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How does a limit order work for a credit spread?
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As you probably know, a credit spread involves buying a call (or put) at one strike and selling another call (or put) at another with the same maturity, so you're dealing with two orders. Your broker will likely have to fill this order themselves, meaning that they'll have to look at the existing bid/asks for the different strikes and wait until the difference matches (or exceeds) your limit order. Obviously they can't place limit orders on the legs individually since they can't guarantee that they will both be executed. They also don't care what the individual prices are; they just care what the difference is. It's possible that they have computer systems that examine existing bids and asks that would fill your order, but it's still done by the broker, not the exchange. The exchange never sees your actual limit order; they will just see the market orders placed by your broker.
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Do I even need credit cards?
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Credit cards are great. You get free money for 30+ days and a bunch of additional benefits like insurance, extended warranties and reward programs. When vendors don't behave, you dispute the charge with the credit card and they deal with it on your behalf. Just get a fee-free American Express card and pay the balance off each month. There's nothing wrong with using cash either, but I would avoid debit cards like the plague.
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How to manage paying expenses when moving to a weekly pay schedule and with a pay increase?
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This is really just a matter of planning. It's good that you don't want the train to go off the rails but really you just need to budget your fixed expenses. I do this by having two checking accounts. One account gets a direct deposit to cover all of my fixed expenses, the other is my regular checking account. Take your rent and other fixed expenses, if you have any, and total them. Take that total and divide by four. That's how much of each check you should be socking away in to the separate account. Additionally, with a 30% pay increase you can probably start a savings account. You should start to establish an emergency fund so this really never becomes a problem. Take 10% of your pay and put it in savings, this will still leave you with a healthy pay increase to enjoy but you'll keep some of your money for yourself too.
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How to find out if I have a savings account already?
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If you're in the UK, there's a free service here that lets you trace lost bank accounts. If you're in a different country, try Googling to see if that country has a similar service.
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How to invest Rs.10k in India
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I am going to assume that this is going to be a long term investment and you don't need this money before 5-6years at the very least. My advise would be to invest in one of the following funds : IDFC Premier equity fund growth plan (Direct) (Only SIP allowed right now) ICICI Discovery fund growth plan (Direct) DSP microcap fund growth plan (Direct) In case you do not want to be invested in small and mid cap and want a little less volatility then my first choice for that would be : Quantum long term equity fund dividend plan Whatever you go for make sure you go directly with the fund house and not through a broker as you end up getting charged an extra .63% extra as opposed to going direct and you will also be paying for a demat account which can be avoided if you invest directly with a fund house. Out of the above mentioned funds Quantum has the lowest expense ratio of 1.25% and it is a huge benefit if you are talking 10+ years because it makes a lot of difference. Source : My own research and experience as an investor.
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How often do typical investors really lose money?
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So how often do investors really lose money? The short answer is, every day. Let's first examine your assumptions: If the price of the share gets lower, the investor can just wait until it gets higher. What are the chances that it won't forever, or for years? There are many stocks whose price goes down and then down further and then to zero. The most apparent example is, of course, Enron. The stock went from about $90 per share to zero in about 18 months. For it to have been sold at $90, obviously, someone had to buy it. Almost no matter where they sold it, they lost money. If they didn't sell it, when the stock was worthless, they lost money. https://en.wikipedia.org/wiki/Enron#/media/File:EnronStockPriceAugust2000toJanuary2001.svg There are more modern examples of companies that are declining in a rapidly changing market. For example, Sears Holdings is getting beat down by Amazon and many other on-line retailers. I suspect that if you buy it today and wait for it to go higher, you will be disappointed. https://www.google.com/finance?q=NASDAQ%3ASHLD&ei=E8_fWIjWGsSGmAGx7b_IAw The more common way to lose money is to either not have a plan or not stick to the plan. Disciplined investors typically plan to buy quality stocks at a fair price and hold them long enough for increasing sales and profits to bring the stock price up. If, later, he hears a bit of bad news about his stock and decides to sell out of panic or fear and become a trader instead of keeping to the plan to remain a disciplined investor, he is likely to lose money. He will lose because no-one can predict accurately that a stock is going down and will never recover; nor can he predict accurately when a stock is going up and will never falter. The chance of bankruptcy (especially for huge companies like Apple) is really low, as I see it, but I may be wrong. Thousands of people lost billions of dollars thinking that about Enron, too. I too believe Apple is a fine stock with excellent prospects, but technology changes and markets change. Twenty or thirty years from now, it may be a different case.
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Offshore bank account with online International wire-transfer facility for Indians
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Well first off, I would advice you to do this research yourself. You should not base your selection off someone's opinion such as mines. With that being said, these are some factors I suggest you consider and research before talking to an offshore bank account: Now, when opening an offshore account most offshore banks do not require you to be present at all. You can open an account simply by calling them or filling out their application online. However, be prepared to provide them with some information to verify who you are and the nature of your business such as a notarized passport along with other various forms of information that they may require. Just think of what your local bank requires is generally what they will ask as well. Here is a compiled list of offshore bank accounts to consider: These banks overall have a range between $0 - $1 million (domestic currency) minimum deposits. Most of them ranging from $1000-$5000. It all depends on the type of account, the nature of the account, and the business associated with the account.
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Investing / Options idiot - how can I get out of this position?
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Your broker should make you whole by adjusting the quantity of the underlying (see: http://www.schaeffersresearch.com/education/options-basics/key-option-concepts/dividends-stock-splits-and-other-option-contract-adjustments) but I would check with them that this will happen. You will then have an option on 4 times the underlying for each option. Unless the price has risen in the interim or you bought them after the split was announced you should not make a loss.
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Typical return for an IRA? How can I assess if my returns were decent?
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Do you want to retire? If so, when? How long do you expect to live? How much per month in today's dollars do you want to have at your disposal when you reach that age? Once you've answered those questions, then you'll be in a better position to say whether you should be disappointed or not. But the fact that you don't know indicates that you haven't looked into these questions yet.
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Can my accounting for Tax Basis differ from my broker's
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No. If you didn't specify LIFO on account or sell by specifying the shares you wish sold, then the brokers method applies. From Publication 551 Identifying stock or bonds sold. If you can adequately identify the shares of stock or the bonds you sold, their basis is the cost or other basis of the particular shares of stock or bonds. If you buy and sell securities at various times in varying quantities and you cannot adequately identify the shares you sell, the basis of the securities you sell is the basis of the securities you acquired first. For more information about identifying securities you sell, see Stocks and Bonds under Basis of Investment Property in chapter 4 of Pub. 550. The trick is to identify the stock lot prior to sale.
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How to avoid maintenance fee when balance drops below minimum?
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Looks like you have three options: Outside of this you might need to look for a different type of account. Hope that helps.
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Fetching technical indicators from yahoo api
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Still working on exact answer to question....for now: (BONUS) Here is how to pull a graphical chart with the required data: Therefore: As r14 = the indicator for RSI. The above pull would pull Google, 6months, line chart, linear, large, with a 50 day moving average, a 200 day exponential moving average, volume, and followed up with RSI. Reference Link: Finance Yahoo! API's
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What are my options to make my money work for me?
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As stated in the comments, Index Funds are the way to go. Stocks have the best return on investment, if you can stomach the volatility, and the diversification index funds bring you is unbeatable, while keeping costs low. You don't need an Individual Savings Account (UK), 401(k) (US) or similar, though they would be helpful to boost investment performance. These are tax advantaged accounts; without them you will have to pay taxes on your investment gains. However, there's still a lot to gain from investing, specially if the alternative is to place them in the vault or similar. Bear in mind that inflation makes your money shrink in real terms. Even a small interest is better than no interest. By best I mean that is safe (regulated by the financial authorities, so your money is safe and insured up to a certain amount) and has reasonable fees (keeping costs low is a must in any scenario). The two main concerns when designing your portfolio are diversification and low TER (Total Expense Ratio). As when we chose broker, our concern is to be as safe as we possibly can (diversification helps with this) and to keep costs at the bare minimum. Some issues might restrict your election or make others seem better. Depending on the country you live and the one of the fund, you might have to pay more taxes on gains/dividends. e.g. The US keeps some of them if your country doesn't have a special treaty with them. Look for W-8Ben and tax withholding for more information. Vanguard and Blackrock offer nice index funds. Morningstar might be a good place for gathering information. Don't trust blindly the 'rating'. Some values are 'not rated' and kick ass the 4 star ones. Again: seek low TER. Not a big fan of this point, but I'm bound to mention it. It can be actually helpful for sorting out tax related issues, which might decide the kind of index fund you pick, and if you find this topic somewhat daunting. You start with a good chunk of money, so it might make even more sense in your scenario to hire someone knowledgeable and trustworthy. I hope this helps to get you started. Best of luck.
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2008-2009 Stock Market Crash — what caused the second drop?
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The second drop was part of the same event. The short-term resurgence is often called a "dead cat bounce". Mongus Pong's answer is a great answer, I'm going to approach from a more anecdotal POV. Think about the fear that was in the air in Fall 2008. From my recollection, that short-term stabilization came from the Fed, President, Congress, etc standing up and saying that the government would do everything in its power to maintain liquidity in the marketplace. So the fear of a broader collapse of investment banks (beyond Lehman Brothers, Merrill Lynch, etc) due to the Fed behaving as it did in 1929 was abated. By the time you got to Q1 of 2009, it became clear that business vaporized -- nothing was happening. No cars were selling, Christmas was dismal, vacations were cancelled. (example: I went on vacation to a fancy resort in December 2008 and paid $60/night for a $450/night room! The place was half empty.)
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What strike to choose if I want to sell weekly calls against a long LEAP put
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What I do not get is why does the author choose to buy an ITM put. If the goal was to not lose more than 5.6%, he could have chosen a out of money put where the strike is ~6% OTM. The reason why he is buying a ITM put instead of a put 5-6% below the ATM price, is because he wants to only lose 5-6% after all fee's. A put at 5-6% below ATM is not free, so it will not actually provide a 6% cushion, more likely 10%-15% maximum loss after it's cost is accounted for. You cannot rely on the strike alone to determine the level of protection you are buying. Real world example. SPY DEC 2017 195 strike put, costs $2150, it's about 6% OTM, but it costs roughly 10% of SPY $207, at best it would protect 85% of your net worth. Strike - Costs = Protection Did he choose an ITM put because he does not want to pay any time premium? Does he not lose in wide bid-ask spreads what he gains by not paying time premium? Nope, you were just misunderstanding how he calculated his protection. He wanted to protect 5-6% after the cost of the hedge. He 'needed' to select an ITM put because time premiums are so high that an OTM put wouldn't suffice.
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Tax treatment of a boxed trade?
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Here's how capital gains are totaled: Long and Short Term. Capital gains and losses are either long-term or short-term. It depends on how long the taxpayer holds the property. If the taxpayer holds it for one year or less, the gain or loss is short-term. Net Capital Gain. If a taxpayer’s long-term gains are more than their long-term losses, the difference between the two is a net long-term capital gain. If the net long-term capital gain is more than the net short-term capital loss, the taxpayer has a net capital gain. So your net long-term gains (from all investments, through all brokers) are offset by any net short-term loss. Short term gains are taxed separately at a higher rate. I'm trying to avoid realizing a long term capital gain, but at the same time trade the stock. If you close in the next year, one of two things will happen - either the stock will go down, and you'll have short-term gains on the short, or the stock will go up, and you'll have short-term losses on the short that will offset the gains on the stock. So I don;t see how it reduces your tax liability. At best it defers it.
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In US, is it a good idea to hire a tax consultant for doing taxes?
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There are few things going on here: My advice would be: with 75k income and a regular pay check there isn't a whole let you can do to adjust your tax burden. It's unlikely that any adviser will save enough money to warrant professional advice and the associated cost. Use off the shelf software for tax return and tax planning.
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What happens when PayPal overdrafts a checking account (with an ample backup funding source available)?
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I made this mistake and tried calling Paypal...the first time I have ever been unhappy with their service. The girl gave me some number but didn't make it clear whether it was an order reference number or a reference phone number for the company I ordered from. I called within 10 minutes of placing my order and they were unable to cancel or change the payment method. I did find however, that even though you can't pay paypal with your credit card, some banks will let you. I went into my account and "paid" my account the amount needed using my credit card from the same bank that I had intended to use in the first place...hopefully it went through quickly enough to not get a service fee from Paypal
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Debit cards as bad as credit cards?
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If your goal is to make it harder for you to use to make impulse purchases then YES. Having to always have cash for purchases will make you less likely to make impulse purchases you don't really need.
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Does the P/E ratio not apply to bond ETFs?
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A bond fund has a 5% yield. You can take 1/.05 and think of it as a 20 P/E. I wouldn't, because no one else does, really. An individual bond has a coupon yield, and a YTM, yield to maturity. A bond fund or ETF usually won't have a maturity, only a yield.
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Rate of return of stock index
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The return from one day to the next is based on the Day's closing price. To be clear - opening prices can be quite different from the prior day close. In your example, they are pretty close, but this is not always the case. Just pull a larger data set to observe this. The above aside, dividends are not reflected in the index, so, after a dividend has occurred, you'd need to account for this if you are looking for true total return. In 2011, the S&P closed at 1257.60 vs a 2010 year end 1257.64. The return, however was 2.11%, not zero, after accounting for the dividends. To me, articles that suggest the yearly return was zero are inaccurate and misleading.
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Buying a mortgaged house
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Go on a website that has real estate listings. Find similar homes in the same neighborhood and list out the prices. Once you have prices, pick out two with different prices and call the realtor of the more expensive listing. Tell that realtor about the other listing and ask why their listing is more expensive. Compare their answer to the home that you are considering buying. For example, they may say that their house has a newly remodeled kitchen. Does the house you are considering have a newly remodeled kitchen? If so, then use the higher priced listing and throw out the cheaper one. If not, use the cheap listing and throw out the expensive one. Or they might say that the expensive house is in a better location than the cheaper house. Further away from traffic. Easier to get to the highway or public transportation. If so, ask how the location compares to the house you are actually considering. The realtor will tell you if the listings are comparable. When I talk about "similar homes," I mean homes that are similar in square footage, number of bedrooms, and number of bathrooms. Generally real estate sites will allow you to search by all of these as well as location. After all this, the potential seller may still turn you down. If he really wanted to sell, he'd have suggested a price. He may just be seeing if you're willing to overpay. If so, he could turn down an otherwise reasonable offer. How much he is willing to take is up to him. Note that this would all be easier if you just bought a house the normal way. Then the realtors would do the comparables portion of the work. You might be able to find a realtor or appraiser who would do the work for a set fee. Perhaps your bank would help you with that, as they have to appraise the property to offer a mortgage. You asked if you can buy out a mortgaged house with a mortgage. Yes, you can. That's a pretty normal occurrence. Normally the realtors would make all the necessary arrangements. I'm guessing that a title transfer company could handle that.
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Where to find detailed information about stock?
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You can take a look at EDGAR (Electronic Data Gathering, Analysis, and Retrieval), a big database run by the SEC where all companies, foreign and domestic, are required to file registration statements, periodic reports, and other forms electronically.
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What is considered high or low when talking about volume?
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The daily Volume is usually compared to the average daily volume over the past 50 days for a stock. High volume is usually considered to be 2 or more times the average daily volume over the last 50 days for that stock, however some traders might set the crireia to be 3x or 4x the ADV for confirmation of a particular pattern or event. The volume is compared to the ADV of the stock itself, as comparing it to the volume of other stocks would be like comparing apples with oranges, as difference companies would have different number of total stocks available, different levels of liquidity and different levels of volatility, which can all contribute to the volumes traded each day.
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Snowball debt or pay off a large amount?
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I want to know if I cut the citi card in half for example, how much would the min payment go down? If you goal is to become debt-free, the minimum payment shouldn't matter. Even if the minimum payment goes down, continue your current payment amount (or more, if you can afford it) until the balance is paid off. Paying the minimum will just keep you in debt longer.
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Does a market maker sell (buy) at a bid or ask price?
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The everyday investor buys at the ask and sells at the bid but the market maker does the opposite This is misleading; it has nothing to do with being either an investor or a market maker. It is dependent on the type of order that is submitted. When a market trades at the ask, this means that a buy market order has interacted with a sell limit order at the limit price. When a market trades at the bid, this means that a sell market order has interacted with a buy limit order at the limit price. An ordinary investor can do exactly the same as a market maker and submit limit orders. Furthermore, they can sit on both sides of the bid and ask exactly as a market maker does. In the days before high frequency trading this was quite common (an example being Daytek, whose traders were notorious for stepping in front of the designated market maker's bid/ask on the Island ECN). An order executes ONLY when both bid and ask meet. (bid = ask) This is completely incorrect. A transaction occurs when an active (marketable) order is matched with a passive (limit book) order. If the passive order is a sell limit then the trade has occurred at the ask, and if it is a buy limit the trade has occurred at the bid. The active orders are not bids and asks. The only exception to this would be if the bid and ask have become crossed. When a seller steps in, he does so with an ask that's lower than the stock's current ask Almost correct; he does so with an order that's lower than the stock's current ask. If it's a marketable order it will fill the front queued best bid, and if it's a limit order his becomes the new ask price. A trade does not need to occur at this price for it to become the ask. This is wrong, market makers are the opposite party to you so the prices are the other way around for them. This is wrong. There is no distinction between the market maker and yourself or any other member of the public (beside the fact that designated market makers on some exchanges are obliged to post both a bid and ask at all times). You can open an account with any broker and do exactly the same as a market maker does (although with nothing like the speed that a high frequency market-making firm can, hence likely making you uncompetitive in this arena). The prices a market maker sees and the types of orders that they are able to use to realize them are exactly the same as for any other trader.
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What does APR mean I'm paying?
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Credit Cards typically charge interest on money you borrow from them. They work in one of two ways. Most cards will not charge you any interest if you pay the balance in full each month. You typically have around 25 days (the "grace period") to pay that off. If that's the case, then you will use your credit card without any cost to yourself. However, if you do not pay it in full by that point, then you will owe 19.9% interest on the balance, typically from the day you charged the payment (so, retroactively). You'll also immediately begin owing interest on anything else you charge - typically, even if you do then pay the next month the entire balance on time. It's typically a "daily" rate, which means that the annual rate (APR) is divided into its daily rate (think the APR divided by 365 - though it's a bit different than that, since it's the rate which would be 19.9% annualized when you realize interest is paid on interest). Say in your case it's 0.05% daily - that means, each day, 0.05% is added to your balance due. If you charged $1000 on day one and never made a payment (but never had to - ignore penalties here), you'd owe $1199 at the end of the year, paying $199 interest (19.9*1000). Note that your interest is calculated on the daily balance, not on your actual credit limit - if you only charge $100, you'd owe $19.90 interest, not $199. Also note that this simplifies what they're actually doing. They often use things like "average daily balance" calculations and such to work out actual interest charged; they tend to be similar to what I'm describing, but usually favor the bank a bit (or, are simpler to calculate). Finally: some credit cards do not have a grace period. In the US, most do, but not all; in other countries it may be less common. Some simply charge you interest from day one. As far as "Standard Purchases", that means buying services or goods. Using your credit card for cash advances (i.e., receiving cash from an ATM), using those checks they mail you, or for cash-like purchases (for example, at a casino), are often under a different scheme; they may have the same rate, or a different rate. They likely incur interest from the moment cash is produced (no grace period), and they may involve additional fees. Never use cash advances unless you absolutely cannot avoid it.
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Should we buy a house, or wait?
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Some highly pessimistic things worth noting to go alongside all the stability and tax break upside that homes generally provide: Negative equity is no joke and basically the only thing that bankrupts the middle classes consistently en masse. The UK is at the end of a huge housing bull run where rents are extremely cheap relative to buying (often in the 1% range within the M25), Brexit is looming and interest rates could well sky rocket with inflation. Borrowing ~500k to buy a highly illiquid asset you might have to fire sale in case of emergency/job loss etc for 300k in a few years when lots of (relatively) cheap rental housing is available to rent risk free, could be argued to be a highly lopsided and dangerous bet vs the alternatives. Locking in 'preferential' mortgage rates can be a huge trap: low interest rates generally increase asset values. If/when they rise, assets fall in value as the demand shrinks, making you highly exposed to huge losses if you need to sell before it is paid off. In the case of housing this can be exceptionally vicious as the liquidity dramatically dries up during falls, meaning fire sales become much more severe than they are for more liquid assets like stock. Weirdly and unlike most products, people tend to buy the very best house they can get leverage for, rather than work out what they need/want and finding the best value equivalent. If a bank will lend you £20 a day to buy lunch, and you can just afford to pay it, do you hunt out the very best £20 lunch you can every day, or do you make some solid compromises so you can save money for other things etc? You seem to be hunting very close to the absolute peak amount you can spend on these numbers. Related to above, at that level of mortgage/salary you have very little margin for error if either of you lose jobs etc. Houses are much more expensive to maintain/trade than most people think. You spend ~2-5% every time you buy and sell, and you can easily spend 2-20k+ a year depending what happens just keeping the thing watertight, paid for, liveable and staying up. You need to factor this in and be pessimistic when you do. Most people don't factor in these costs to the apparent 'index' rise in house values and what they expect to sell for in x years. In reality no buy and hold investor can ever realise even close to the quoted house price returns as they are basically stocks you have to pay 5% each time you buy or sell and then 1-20% percent a year to own - they have to rise dramatically over time for you to even break even after all the costs. In general you should buy homes to make memories, not money, and to buy them at prices that don't cause you sleepless nights in case of disasters.
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How to accurately calculate Apple's EPS
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On closer look, it appears that Google Finance relies on the last released 10-k statement (filing date 10/30/2013), but outstanding shares as of last 10-Q statement. Using these forms, you get ($37,037M / 5.989B ) = $6.18 EPS. I think this is good to note, as you can manually calculate a more up to date EPS value than what the majority of investors out there are relying on.
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What are the usual terms of a “rent with an option to buy” situation?
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While the other people have tried to answer your question as thoroughly as possible, I fear they are entirely incorrect in answering your question itself as it stands. The answer is that there are no usual terms. There are a handful of different options coming out now for this exact scheme. Examples include the UK Governments "Help To Buy" scheme. Accomodation is offered at a normal rate, and a small portion of the rent is set aside each month. At the end of a fixed period, that money becomes a deposit which the letter hands over to a mortgage provider who accepts it as a deposit. This might well be a terminology thing, since the other scenario which people described falls into the same name you've used. That scenario is where the investor who owns the property is considering sale of the property, and is happy to negotiate a price up front for the next year. Usually the rent and price is higher than the market rate because if the market goes well over the next year they could end up out of pocket. Putting that into perspective, over that year they are gaining their $1,000 a month or so, but having $100,000 invested means a return of 12%. If the property value is over $250,000 which I believe to be more likely, they are achieving a return of (I think) 4.8%. That's not a bad rate, by any means, but realistically they are losing a bit more for maintenance, and they could be making more from their money. If the market were to go up in that time by more than 4.8% (my house, for instance, increased in value by over 15% in the last 12 months), they are making a substantial loss since you are getting a house at 15% below the market rate. The total works out to a 10.2% loss for them. Note that I don't know the US housing market at all, I'm speaking mostly from my experience of the market here in the UK. This is what I hear, what I see, and what I've played. To summarise a bit: Make sure you check your terms before signing anything.
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How much house can I afford, waiting around 3 years or so
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On $4K/mo gross about $1000/mo can go to the mortgage, and at today's rates, that's about $200K of mortgage the bank might lend you. Income is qualified based on gross, not net, so if $48,000/yr is wrong, please scale my guesstimate down a bit. In the end, today's rates allow a mortgage of nearly 4X one's gross income. This is too high, in my opinion. I'm answering what the bank would approve you at, not what I think is wise. Wise, in my opinion is 2.5-3X one's income, tops.
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Are bonds really a recession proof investment?
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Bonds by themselves aren't recession proof. No investment is, and when a major crash (c.f. 2008) occurs, all investments will be to some extent at risk. However, bonds add a level of diversification to your investment portfolio that can make it much more stable even during downturns. Bonds do not move identically to the stock market, and so many times investing in bonds will be more profitable when the stock market is slumping. Investing some of your investment funds in bonds is safer, because that diversification allows you to have some earnings from that portion of your investment when the market is going down. It also allows you to do something called rebalancing. This is when you have target allocation proportions for your portfolio; say 60% stock 40% bond. Then, periodically look at your actual portfolio proportions. Say the market is way up - then your actual proportions might be 70% stock 30% bond. You sell 10 percentage points of stocks, and buy 10 percentage points of bonds. This over time will be a successful strategy, because it tends to buy low and sell high. In addition to the value of diversification, some bonds will tend to be more stable (but earn less), in particular blue chip corporate bonds and government bonds from stable countries. If you're willing to only earn a few percent annually on a portion of your portfolio, that part will likely not fall much during downturns - and in fact may grow as money flees to safer investments - which in turn is good for you. If you're particularly worried about your portfolio's value in the short term, such as if you're looking at retiring soon, a decent proportion should be in this kind of safer bond to ensure it doesn't lose too much value. But of course this will slow your earnings, so if you're still far from retirement, you're better off leaving things in growth stocks and accepting the risk; odds are no matter who's in charge, there will be another crash or two of some size before you retire if you're in your 30s now. But when it's not crashing, the market earns you a pretty good return, and so it's worth the risk.
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Diversification reduces risk, but does this base on the assumption that expected return of each asset is always in proportion to its risk?
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If you have 100% of your money in one security that is inherently more risky than splitting your money 50/50 between two securities, regardless of the purported riskiness of the two securities. The calculations people use to justify their particular breed of diversification may carry some assumptions related risk/reward calculations. But these particular justifications don't change the fact that spreading your money across different assets protects your money from value variances of the individual assets. Splitting your $100 between Apple and Microsoft stock is probably less valuable (less well diversified) than splitting your money between Apple and Whole Foods stock but either way you're carrying less risk than putting all $100 in to Apple stock regardless of the assumed rates of return for any of these companies stock specifically. Edit: I'm sure the downvotes are because I didn't make a big deal about correlation and measuring correlation and standard deviations of returns and detailed portfolio theory. Measuring efficacy and justifying your particular allocations (that generally uses data from the past to project the future) is all well and good. Fact of the matter is, if you have 100% of your money in stock that's more stock risk than 25% in cash, 25% in bonds and 50% in stock would be because now you're in different asset classes. You can measure to your hearts delight the effects of splitting your money between different specific companies, or different industries, or different market capitalizations, or different countries or different fund managers or different whatever-metrics and doing any of those things will reduce your exposure to those specific allocations. It may be worth pointing out that currently the hot recommendation is a plain vanilla market tracking S&P 500 index fund (that just buys some of each of the 500 largest US companies without any consideration given to risk correlation) over standard deviation calculating actively managed funds. If you ask me that speaks volumes of the true efficacy of hyper analyzing the purported correlations of various securities.
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How are mortgage payments decided? [duplicate]
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It has nothing to do with forcing people to pay off their debt; in that case it would make better sense to have people pay off debt rather than interest. It is because you want to have your actual payment stay the same each month, which is easier for the vast majority of people to comprehend and put into their budget. It is called an annuity in Finance terms. In theory you could use another method - eg. pay of the same amount of debt each month - then your interest payments will decrease over time. But in that case your monthly payment (debt + interest) will not be stable - It will start of high and decrease a little bit each month. With an annuity you have a constant cashflow. In Finance you generally operate with three methods of debt repayment: Annuity: Fixed cashflow. High interest payment in the beginning with small debt payments - later it will be reversed. Serial loan: Fixed debt payments. Debt payments are equally spread out accross the period - interst is paid on the remaining debt. Cash flow will decrease over time, because interest payments become smaller for each period. Standing loan: You only pay interest on the loan, no debt payments during the period. All debt is payed back in the end of the loan. In Europe it is common practise to combine a 30 year annuity with a 10 year standing loan, so that you only pay interest on the loan for the first 10 years, thereafter you start paying back the debt and interest, the fixed amount each month (the annuity). This is especially common for first-time buyers, since they usually have smaller salaries early in life than later and therefore need the additional free cash in the beginning of their adult life.
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Borrowing money to buy shares for cashflow?
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Buying individual/small basket of high dividend shares is exposing you to 50%+ and very fast potential downswings in capital/margin calls. There is no free lunch in returns in this respect: nothing that pays enough to help you pay your mortgage at a high rate won’t expose you to a lot of potential volatility. Main issue here looks like you have very poorly performing rental investments you should consider selling or switching up rental usage/how you rent them (moving to shorter term, higher yield lets, ditching any agents/handymen that are taking up capital/try and refinance to lower mortgage rates etc etc). Trying to use leveraged stock returns to pay for poorly performing housing investments is like spraying gasoline all over a fire. Fixing the actual issue in hand first is virtually always the best course of action in these scenarios.
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What would a stock be worth if dividends did not exist? [duplicate]
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Unrealistic assumption, but I'll play along. Ultimately, dividends would exist because some innovative shareholder of some company, at some time, would desire income from their investment and could propose the idea of sharing the profit. Like-minded investors also desiring income could vote for dividends to come into existence — or, rather, vote for a board of directors that supports enactment of the idea. (In your fictitious world, shareholders do still control the corporation, right?) In this world, though, dividends wouldn't be called "dividends", a terrible name that's too "mathy" for the inhabitants of that world. Rather, they would institute a quarterly or annual shareholder profit share. Governments would enact legislation to approve of—nay, encourage such an innovation because it becomes a new source of recurring income they can tax. Alternatively, even if the idea of a cash dividend didn't occur to anybody in that world, investors would realize the stock price is depressed and could propose and vote for the board to institute share buybacks. The company repurchasing some portion of shares periodically would provide income to shareholders participating in the buyback. If the buyback were oversubscribed, they could structure it fairly (pro-rata participation, etc.) Alternatively, shareholders would pressure the board (or fire them and vote in a new board) to put the company up for sale and find a larger buyer, who would purchase the shares for cash. This can't scale forever, though, so the pressure will increase for solutions like #1 and #2.
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Why haven't there been personal finance apps or softwares that use regression modeling or A.I.?
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Consumer facing finance is heavily regulated. You are liable for the recommendations you make; if they are based on a black box you risk problems when sued. It is difficult to explain in a court of law why a neural network came to a particular conclusion. It is much easier to provide advice (models) in the "educated counterparty" market. Not only do institutional investors in general expect to pay for a quality advice (consumers in general expect to get online advice for free) but the legal implications are different.
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Is UK house price spiral connected to debt based monetary system?
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No. Rural Scotland has exactly the same monetary system, and not the same bubble. Monaco (the other example given) doesn't even have its own monetary system but uses the Euro. Look instead to the common factor: a lot of demand for limited real estate. Turning towards the personal finance part of it, we know from experience that housing bubbles may "burst" and housing prices may drop suddenly by ~30%, sometimes more. This is a financial risk if you must sell. Yet on the other hand, the fundamental force that keeps prices in London higher than average isn't going away. The long-term risk often is manageable. A 30% drop isn't so bad if you own a house for 30 years.
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How are long term capital gains taxes calculated?
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Capital gains taxes for a year are calculated on sales of assets that take place during that year. So if you sell some stock in 2016, you will report those gains/losses on your 2016 tax return.
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Is there any real purpose in purchasing bonds?
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Here are my reasons as to why bonds are considered to be a reasonable investment. While it is true that, on average over a sufficiently long period of time, stocks do have a high expected return, it is important to realize that bonds are a different type of financial instrument that stocks, and have features that are attractive to certain types of investors. The purpose of buying bonds is to convert a lump sum of currency into a series of future cash flows. This is in and of itself valuable to the issuer because they would prefer to have the lump sum today, rather than at some point in the future. So we generally don't say that we've "lost" the money, we say that we are purchasing a series of future payments, and we would only do this if it were more valuable to us than having the money in hand. Unlike stocks, where you are compensated with dividends and equity to take on the risks and rewards of ownership, and unlike a savings account (which is much different that a bond), where you are only being paid interest for the time value of your money while the bank lends it out at their risk, when you buy a bond you are putting your money at risk in order to provide financing to the issuer. It is also important to realize that there is a much higher risk that stocks will lose value, and you have to compare the risk-adjusted return, and not the nominal return, for stocks to the risk-adjusted return for bonds, since with investment-grade bonds there is generally a very low risk of default. While the returns being offered may not seem attractive to you individually, it is not reasonable to say that the returns offered by the issuer are insufficient in general, because both when the bonds are issued and then subsequently traded on a secondary market (which is done fairly easily), they function as a market. That is to say that sellers always want a higher price (resulting in a lower return), and buyers always want to receive a higher return (requiring a lower price). So while some sellers and buyers will be able to agree on a mutually acceptable price (such that a transaction occurs), there will almost always be some buyers and sellers who also do not enter into transactions because they are demanding a lower/higher price. The fact that a market exists indicates that enough investors are willing to accept the returns that are being offered by sellers. Bonds can be helpful in that as a class of assets, they are less risky than stocks. Additionally, bonds are paid back to investors ahead of equity, so in the case of a failing company or public entity, bondholders may be paid even if stockholders lose all their money. As a result, bonds can be a preferred way to make money on a company or government entity that is able to pay its bills, but has trouble generating any profits. Some investors have specific reasons why they may prefer a lower risk over time to maximizing their returns. For example, a government or pension fund or a university may be aware of financial payments that they will be required to make in a particular year in the future, and may purchase bonds that mature in that year. They may not be willing to take the risk that in that year, the stock market will fall, which could force them to reduce their principal to make the payments. Other individual investors may be close to a significant life event that can be predicted, such as college or retirement, and may not want to take on the risk of stocks. In the case of very large investors such as national governments, they are often looking for capital preservation to hedge against inflation and forex risk, rather than to "make money". Additionally, it is important to remember that until relatively recently in the developed world, and still to this day in many developing countries, people have been willing to pay banks and financial institutions to hold their money, and in the context of the global bond market, there are many people around the world who are willing to buy bonds and receive a very low rate of return on T-Bills, for example, because they are considered a very safe investment due to the creditworthiness of the USA, as well as the stability of the dollar, especially if inflation is very high in the investor's home country. For example, I once lived in an African country where inflation was 60-80% per year. This means if I had $100 today, I could buy $100 worth of goods, but by next year, I might need $160 to buy the same goods I could buy for $100 today. So you can see why simply being able to preserve the value of my money in a bond denominated in USA currency would be valuable in that case, because the alternative is so bad. So not all bondholders want to be owners or make as much money as possible, some just want a safe place to put their money. Also, it is true for both stocks and bonds that you are trading a lump sum of money today for payments over time, although for stocks this is a different kind of payment (dividends), and you only get paid if the company makes money. This is not specific to bonds. In most other cases when a stock price appreciates, this is to reflect new information not previously known, or earnings retained by the company rather than paid out as dividends. Most of the financial instruments where you can "make" money immediately are speculative, where two people are betting against each other, and one has to lose money for the other to make money. Again, it's not reasonable to say that any type of financial instrument is the "worst". They function differently, serve different purposes, and have different features that may or may not fit your needs and preferences. You seem to be saying that you simply don't find bond returns high enough to be attractive to you. That may be true, since different people have different investment objectives, risk tolerance, and preference for having money now versus more money later. However, some of your statements don't seem to be supported by facts. For example, retail banks are not highly profitable as an industry, so they are not making thousands of times what they are paying you. They also need to pay all of their operating expenses, as well as account for default risk and inflation, out of the different between what they lend and what they pay to savings account holders. Also, it's not reasonable to say that bonds are worthless, as I've explained. The world disagrees with you. If they agreed with you, they would stop buying bonds, and the people who need financing would have to lower bond prices until people became interested again. That is part of how markets work. In fact, much of the reason that bond yields are so low right now is that there has been such high global demand for safe investments like bonds, especially from other nations, such that bond issues (especially the US government) have not needed to pay high yields in order to raise money.
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What investment strategy would you deduce from the latest article from Charles Munger?
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So, I've read the article in question, "Basically, It's Over". Here's my opinion: I respect Charlie Munger but I think his parable misses the mark. If he's trying to convince the average person (or at least the average Slate-reading person) that America is overspending and headed for trouble, the parable could have been told better. I wasn't sure how to follow some of the analogies he was making, and didn't experience the clear "aha" I was hoping for. Nevertheless, I agree with his point of view, which I see as: In the long run, the United States is going to have serious difficulty in supporting its debt habit, energy consumption habit, and its currency. In terms of an investment strategy to protect oneself, here are some thoughts. These don't constitute a complete strategy, but are some points to consider as part of an overall strategy: If the U.S. is going to continue amassing debt fast, it would stand to reason it will become a worse credit risk, requiring it to pay higher interest rates on its debt. Long-term treasury bonds would decline as rates increase, and so wouldn't be a great place to be invested today. In order to pay the mounting debt and debt servicing costs, the U.S. will continue to run the printing presses, to inflate itself out of debt. This increase in the money supply will put downward pressure on the U.S. dollar relative to the currencies of better-run economies. U.S. cash and short-term treasuries might not be a great place to be invested today. Hedge with inflation-indexed bonds (e.g. TIPS) or the bonds of stronger major economies – but diversify; don't just pick one. If you agree that energy prices are headed higher, especially relative to U.S. dollars, then a good sector to invest a portion of one's portfolio would be world energy producing companies. (Send some of your money over to Canada, we have lots of oil and we're right next door :-) Anybody who has already been practicing broad, global diversification is already reasonably protected. Clearly, "diversification" across just U.S. stocks and bonds is not enough. Finally: I don't underestimate the ability of the U.S. to get out of this rut. U.S. history has impressed upon me (as a Canadian) two things in particular: it is highly capable of both innovating and of overcoming challenges. I'm keeping a small part of my portfolio invested in strong U.S. companies that are proven innovators – not of the "financial"-innovation variety – and with global reach.
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Cash out 401k for house downpayment
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As @AlexKuhl says, ever? yes, but generally? no. If your 401k is invested in stocks and bonds, the long term return is very likely higher than the interest on a mortgage. Long term return on the stock market is around 7%. Mortgage rates these days are around 4%. Add the tax penalty on top of that and you're almost surely better to keep your money in the 401k. There's also the psychological/budgeting factor. People very often say, "I'll pull money out of my retirement fund for this important purchase and then put it back later." And then later comes and there are other expenses and things they want to do and they never put the money back.
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IRR vs. Interest Rates
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IRR is subjective, if you could provide another metric instead of the IRR; then this would make sense. You can't spend IRR. For example, you purchase a property with a down payment; and the property provides cash-flow; you could show that your internal rate of return is 35%, but your actual rate of importance could be the RoR, or Cap Rate. I feel that IRR is very subjective. IRR is hardly looked at top MBA programs. It's studied, but other metrics are used, such as ROI, ROR, etc. IRR should be a tool that you visually compare to another metric. IRR can be very misleading, for example it's like the cash on cash return on an investment.
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Can a CEO short his own company?
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Yes. It's called executive hedging, and it's a lot more common than most people know. As long as it's properly disclosed and the decision is based on publicly available information, there's technically nothing wrong with it. Krispy Kreme, Enron, MCI, and ImClone are the most notable companies that had executives do it on a large scale, but almost every company has or had executives execute a complex form of hedging known as a prepaid variable forward (PVF). In a PVF, the executive gives his shares to an investment bank in exchange for a percentage of cash up front. The bank then uses the executive shares to hedge in both directions for them. This provides a proxy that technically isn't the executive that needs to disclose. There's talk about it needing to be more public at the SEC right now. http://www.sec.gov/news/statement/020915-ps-claa.html
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How should I begin investing real money as a student?
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I started my account with $500 so I know where you're coming from. For the words of caution, in about 2009 we entered a pretty significant bull market. During this period you could basically buy almost any big name company and do pretty well for yourself. So don't be too cocky about your ability to pick winners in the middle of a bull market. Over the last few years you'd have to try pretty hard to consistently pick losers. I absolutely think you should put real money in the game when you have this sort of interest. However, at your $400-600 level broker fees will eat any sort of active trading or short term profit you could muster. Stock trading is not a great way to make money in the short term. If you're looking to save for something specific you should put that money in a zero risk savings account. You should do more research on brokers. Find the lowest possible trade commission at an organization where you can meet the account opening minimum. A $10 commission is 11% more than a $9 commission.
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Record retention requirements for individuals in the U.S.?
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Indeed the IRS publication references the 3-6 year time span. And no limit for fraud. But. I get a notice that some stock I owned 10 years ago has a settlement pending, and the records of this stock purchase and sale would potentially get me back some money. I get my Social Security statement (the one they stopped sending, but this was before then) and I see the 1995 income shows zero. Both of these were easily resolved with my returns going all the way back, and my brokerage statement as well. For the brokerage, I recently started downloading all statements as PDFs, and storing a copy away from home. Less concerned about the bank statements as I've never had an issue where I'd need them.
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Which tax year does a bonus fall under?
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From HMRC Note that the rule is when a person becomes entitled to payment of earnings. This is not necessarily the same as the date on which an employee acquires a right to be paid. For example, an employee's terms of service may provide for the employee to receive a bonus for the year to 31 December 2004, payable on 30 June 2005 if the employee is still in the service of the employer on 31 December 2004. If the condition is satisfied the employee becomes entitled to a payment on 31 December 2004 but is only entitled to payment of it on 30 June 2005. So PAYE applies to it on 30 June 2005 and it is assessable for 2005/06. The date that matters is the date the employee is entitled to be paid the bonus. But why are you worried about paying tax. That is your employer's responsibility and they will do it for you. Ask you firm's finance department also for further clarification. HMRC are not an organization to mess with, they will tie up your life in knots.
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How can I make $250,000.00 from trading/investing/business within 5 years?
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The answer to your question is Forex trading. You can get to 250K quicker than any other "investment" scheme. You'll just need to start with at least 500K.
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Comparison between buying a stock and selling a naked put
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Option prices are computed by determining the cost of obtaining the option returns using a strategy that trades the underlying asset continuously. It sounds like what you are describing is rapidly trading the option in order to obtain returns similar to those of the stock. The equality goes both ways. If the option is appropriately priced, then a strategy that replicates stock returns using the option will cost the same as buying the stock. Because you can't trade continuously, you won't actually be able to replicate the stock return, and it may seem like you are making arbitrage profit (puts may seem abnormally expensive), but you do so by bearing tail risk (i.e., selling puts loses more money than owning the associated stock if an unusually bad event occurs).
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Can a company donate to a non-profit to pay for services arranged for before hand?
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Can a company say "StackExchange" donate to a non-profit company say $5,000 in agreement that they will spend that on paying a designer for a new website? And most importantly is this donation still tax deductible? A non-profit would have to typically create a bucket for IT Services or Website design. As long as "StackExchange" specify they employ a profession service to get it done, there would be no issue. If "StackExchange" were to specify an individula/company it would be an issue.
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Can I pay off my credit card balance to free up available credit?
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Is it possible to pay off my balance more than once in a payment period in order to increase the amount I can spend in a payment period? Yes you can pay off the balance more than once even if its not due. This will get applied to outstanding and you will be able to spend again. If so, is there a reason not to do this? There is no harm. However note that it generally takes 2-3 days for the credit to be applied to the card. Hence factor this in before you make new purchases. I just got a credit card to start rebuilding my credit. Spending close to you credit limit does not help much; compared to spending less than 10% of your credit limit. So the sooner you get your limit on card increased the better.
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Why will the bank only loan us 80% of the value of our fully paid for home?
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If you get a loan for 80% of the value of your house, that's equivalent to buying a house with a 20% down payment (assuming the appraised value is what you'd buy it for). That's the minimum down payment for Fannie Mae backed loans without PMI (mortgage insurance). See this table for more details. Freddie Mac (the other major mortgage backer) has a good fact sheet on cash out loans (which is what this is called) here. It also specifies: Maximum LTV ratio of 80 percent for 1-unit primary residences As noted in other answers, the 80% rule is to protect the bank (and ultimately, Fannie Mae and Freddie Mac, who will eventually buy most of these loans) so it is more likely to recoup the total value of the mortgage if they must foreclose on the house.
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Personal Asset Protection - How to protect asset against a deficiency judgement?
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You should talk to a bankruptcy attorney local to you. While bankruptcy laws are federal, there are a variety of local rules. As an example in CA, I've heard of a trustee going after a debtor's IRA account. Retirement accounts are generally off limits, but not always. Additionally, structuring your assets for the purpose of shielding them from creditors after the start of foreclosure proceedings may constitute fraud. At the very least that may open those assets back up to your creditor(s).
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Closing a credit card with an annual fee without hurting credit score?
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The two factors that will hurt you the most is the age of the credit account, and your available credit to debt ratio. Removing an older account takes that account out of the equation of calculating your overall credit score, which can hurt significantly, especially if that is the only, or one of just a couple, of open credit lines you have available. Reducing your available credit will make your current debt look bigger than what it was before you closed your account. Going over a certain percentage for your debt to available credit can make you look less favorable to lenders. [As stated above, closing a credit card does remove it from the credit utilization calculation which can raise your debt/credit ratio. It does not, however; affect the average age of credit cards. Even closed accounts stay on your credit report for ten years and are credited toward average age of cards. When the closed credit card falls off your report, only then, will the average age of credit cards be recalculated.] And may I suggest getting your free credit report from https://www.annualcreditreport.com . It's the only place considered 'official' to receive your free annual credit report as told by the FTC. Going to other 3rd party sites to pull your credit report can risk your information being traded or sold. EDIT: To answer your second point, there are numerous factors that banks and creditors will consider depending on the type of card you're applying for. The heavier the personal rewards (cash back, flyer miles, discounts, etc.) the bigger the stipulation. Some factors to consider are your income to debt ratio, income to available credit ratio, number of revolving lines of credit, debt to available credit ratio, available credit to debt ratio, and whether or not you have sufficient equity and/or assets to cover both your debt and available credit. They want to make sure that if you go crazy and max out all of your lines of credit, that you are capable of paying it all back in a sufficient amount of time. In other words, your volatility as a debt-consumer.
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Is the stock market too risky for long term retirement funds? Why should a 20- or 30-something person invest in stocks?
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I would start with long term data. It would show how 40 years worth of stock investing puts the investor so far ahead of the "safe" investor that they can afford to lose half and still be ahead. But - then I would explain about asset allocation, and how the soon to be retired person had better be properly allocated if they weren't all along so that the impact of down years is mitigated. The retiree is still a long term investor as life spans of 90 are common. Look at the long term charts for the major indexes. So long as you average in, reinvest earnings (dividends) and stay diversified, you will be ahead. The market is still not where it was at the end of 2001, but in the decade, our worth has risen from 5X our income to 12.5X. This was not genius, just a combination of high savings and not panicking.
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