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A University student wondering if investing in stocks is a good idea?
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For most people, investing in the stock market directly is one of the last things to do. That's not to say you shouldn't, but rather that there are other things to consider as well. Start with automatic monthly deposits to a liquid account such as savings or money market. The morale boost you get from seeing the balance grow is nearly impossible to beat. Following that, paying down any debts such as student loans or credit cards. Once you've done that, then you should look at company sponsored 401k plans or IRAs. Sharebuilder offers IRAs holding whichever stock or fund you pick. Again, automatic monthly deposits are the way to go here. Good luck, and happy investing :)
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Should I sell the home in 2014 or continue to rent it out?
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You need to get the current tax software, the 2013 filing software is out already, even though it needs to update itself before filing, as the final forms aren't ready yet. Then you will look carefully at Schedule E to understand what gets written off. I see you are looking at the $2200 rent vs your own rent of $2100, but of course, the tax form doesn't care about your rent. You offset the expenses of that house against the income. The expenses are the usual suspects, mortgage interest, property tax, repairs, etc. But there's one big thing new landlords are prone to forgetting. Depreciation. It's not optional. Say the house cost you $400K. This is your basis. You need to separate the value of land which is not depreciated. For a condo with no land it can be as little as 10%, when we bought our house, for insurance purposes, the land was nearly 40% of the full value. Say you do the research and decide 30% (for land), then 70% = $280K. Depreciation is taken each year over a 27.5 year period, or just over $10,000 per year. (Note, the forms will help you get your year 1 number, as you didn't have a full year.) This depreciation helps with your cash flow during the year (as you should do the math, and if you keep the house, adjust your W4 withholdings for 2014, that lump sum you'll get in April won't pay the bills each month) but is 'recaptured' on sale. At some point in the future, you may save enough to buy a house where you wish to live, but need to sell the rental. Consider a 1031 Exchange. It's a way to sell a rental and buy a new one without triggering a taxable event. What I don't know is how long the new house must be a rental before the IRS would then allow you to move in. The same way you turned your home into a rental, a rental can be turned back to a primary residence. I just doubt you can do it right after the purchase. As fellow member @littleadv would advise, "get professional advice." And he's right. I've just offered what you might consider. The first year tax return with that Schedule E is the toughest as it's brand new. The next year is simple in comparison. The question of selling immediately is tough. Only you can decide whether the risk of keeping it is too great. You're saying you don't have the money to cover two month's vacancy. That scares me. I'd focus on beefing up the emergency account. And securing a credit line. You mentioned the tax savings. My opinion is that for any investment,the tax tail should never wag the investing dog. Buy or sell a stock based on the stock, not the potential tax bill for the sale. In your situation, the rent and expenses will cancel each other, and the depreciation is a short term loan, from a tax perspective. If you sold today, what do you net? If you analyzed the numbers now, what is your true income from the property each year? Is that return worth it? A good property will provide cash flow, principal reduction each year, and normal increase in value. This takes a bit of careful looking at the numbers. You might feel you're just breaking even, but if the principal is $12K less after a year, that's something you shouldn't ignore. On the other hand, an exact 'break-even' with little equity at stake offered you a leveraged property where any gains are a magnified percentage of what you have at risk. Last - welcome to Money.SE - consider adding some more details to your profile.
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Should I pay off a 0% car loan?
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Mathematically, the wisest choice is to invest your extra money somewhere else and not pay off your 0% loan early. An extreme example highlights this. Suppose some colossal company offered to loan you a billion dollars at 0 % interest. Would you take it? Or would you say "No thanks, I don't want that much debt." You would be crazy not to accept. You could put that money in the safest investments available and still pocket millions while making the minimum payments back to them. Your choice here is essentially the same, but unfortunately, on much smaller scale. That said, math doesn't always trump other factors. You need to factor in your peace of mind, future purchases, the need for future borrowing, your short term income and job security, and whether you think you can reliably make payments on this loan without messing up and triggering fees that wipe out the mathematical advantage of slow paying the loan. You are fortunate because you really can't make a wrong choice here. Paying off debt is never a bad choice IMO. However, it may not always be the best choice.
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How does end-of-year interact with mutual fund prices (if it does)?
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This answer is applicable to the US. Similar rules may hold in some other countries as well. The shares in an open-ended (non-exchange-traded) mutual fund are not traded on stock exchanges and the "market" does not determine the share price the way it does for shares in companies as brokers make offers to buy and sell stock shares. The price of one share of the mutual fund (usually called Net Asset Value (NAV) per share) is usually calculated at the close of business, and is, as the name implies, the net worth of all the shares in companies that the fund owns plus cash on hand etc divided by the number of mutual fund shares outstanding. The NAV per share of a mutual fund might or might not increase in anticipation of the distribution to occur, but the NAV per share very definitely falls on the day that the distribution is declared. If you choose to re-invest your distribution in the same fund, then you will own more shares at a lower NAV per share but the total value of your investment will not change at all. If you had 100 shares currently priced at $10 and the fund declares a distribution of $2 per share, you will be reinvesting $200 to buy more shares but the fund will be selling you additional shares at $8 per share (and of course, the 100 shares you hold will be priced at $8 per share too. So, you will have 100 previous shares worth only $800 now + 25 new shares worth $200 for a total of 125 shares at $8 = $1000 total investment, just as before. If you take the distribution in cash, then you still hold the 100 shares but they are worth only $800 now, and the fund will send you the $200 as cash. Either way, there is no change in your net worth. However, (assuming that the fund is is not in a tax-advantaged account), that $200 is taxable income to you regardless of whether you reinvest it or take it as cash. The fund will tell you what part of that $200 is dividend income (as well as what part is Qualified Dividend income), what part is short-term capital gains, and what part is long-term capital gains; you declare the income in the appropriate categories on your tax return, and are taxed accordingly. So, what advantage is there in re-investing? Well, your basis in those shares has increased and so if and when you sell the shares, you will owe less tax. If you had bought the original 100 shares at $10 and sell the 125 shares a few years later at $11 and collect $1375, you owe (long-term capital gains) tax on just $1375-$1200 =$175 (which can also be calculated as $1 gain on each of the original 100 shares = $100 plus $3 gain on the 25 new shares = $175). In the past, some people would forget the intermediate transactions and think that they had invested $1000 initially and gotten $1375 back for a gain of $375 and pay taxes on $375 instead. This is less likely to occur now since mutual funds are now required to report more information on the sale to the shareseller than they used to in the past. So, should you buy shares in a mutual fund right now? Most mutual fund companies publish preliminary estimates in November and December of what distributions each fund will be making by the end of the year. They also usually advise against purchasing new shares during this period because one ends up "buying a dividend". If, for example, you bought those 100 shares at $10 on the Friday after Thanksgiving and the fund distributes that $2 per share on December 15, you still have $1000 on December 15, but now owe taxes on $200 that you would not have had to pay if you had postponed buying those shares till after the distribution was paid. Nitpickers: for simplicity of exposition, I have not gone into the detailed chronology of when the fund goes ex-dividend, when the distribution is recorded, and when cash is paid out, etc., but merely treated all these events as happening simultaneously.
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What are the best software tools for personal finance?
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For any android device you can try: Daily Expense Manager - to track your expenses and a host of other apps to suit your specific needs.
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Does a stock really dip in price on the ex-dividend date? And why would it do this?
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The stock should fall by approximately the amount of the dividend as that is what is paid out. If you have a stock trading at $10/share and it pays a $1/share dividend, the price should drop to $9 as what was trading before the dividend was paid would be both the dividend and the stock itself. If the person bought just for the dividend then it would likely be neutral as there isn't anything extra to be gained. Consider if this wasn't the case. Wouldn't one be able to buy a stock a few days before the dividend and sell just after for a nice profit? That doesn't make sense and is the reason for the drop in price. Similarly, if a stock has a split or spin-off there may be changes in the price to reflect that adjustment in value of the company. If I give you 2 nickels for a dime, the overall value is still 10 cents though this would be 2 coins instead of one. Some charts may show a "Dividend adjusted" price to factor out these transactions so be careful of what prices are quoted.
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How does a lender compute equity requirement for PMI?
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Never ever use a giant monster mega bank for home loans. I am sure you probably didn't and they bought your loan from someone else. You have no legal options. What you should do Is look at getting a new loan maybe a 15 year loan. Your payment might be the same with no PMI. I would check with a relator to see what they think your home is worth. Also if you have any money you can always pay extra to the principle and get yourself to 20% based on the next appraisal. You might have a legal option regarding what they say you need in value 350k is what it should appraise to for you to get rid of pmi when you owe 280k Remember Citibank is a publicly traded company and their goal is to make more money. The CEO has a fiduciary relationship with stock holders not customers. They seriously have board meetings to figure out what charges they can invent to screw their customers and make shitloads of money. There is no incentive for them to let you get out of your PMI.
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What publicly available software do professional stock traders use for stock analysis?
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Factset also provides a host of tools for analysis. Not many people know as they aren't as prevalent as Bloomberg. CapitalQ and Thomson Reuters also provide analysis tools. Most of the market data providers also provide analysis tools to analyze the data they and others provide.
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If I want a Credit Card offered through a different Credit Union should I slowly transition my banking to that CU?
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As has been stated, you don't need to actively bank with a credit union to apply for one of their credit cards. That said, one benefit to having account activity, and significant capital with a CU, is to increase the likelihood of having a larger credit line granted to you, when you do apply. If you are going to use the card sparingly however, then this is a non issue. That said, if you really want to maximize card benefits, then you want to look for cards with large sign up bonuses (e.g. Chase Sapphire, or Ink Bold if you have a business) and sign up exclusively for those bonuses. These cards offer rewards in excessive value of $1000 in travel services (hotels/plane tickets), or $500 cash back if you prefer straight cash back redemptions. If you prefer to keep it really simple, you can sign up for a cash back card, like the Amex Fidelity, which offers 2% cash back everywhere, with no annual fee (albeit the cash back is through their investment account, which you don't actually have to 'invest' with). Personally, I have the Penfed card, and use it exclusively for gas (5% cash back). I also have a Charles Schwab bank account, which I keep funded exclusively for ATM withdrawals (free ATM usage, worldwide, 100% fee reimbursement). I use the accounts exclusively for the benefit they provide me, and no more and have never had an issue. I also have 3 dozen other credit cards which I signed up for exclusively for the sign up bonus, but that's outside the scope of this question. I only mention it because you seem to believe it is difficult to get approved for a new credit line. If your credit is good however, you won't have a problem. For a small idea, of how to maximize credit card bonus categories, I would advise you read this. As mentioned in the article, its possible to get rewards almost everywhere you shop. In short, anytime you use cash, you are missing out on a multitude of benefits a credit card offers you (e.g. see the benefits of a visa signature card) in addition to points/cash back.
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What's the difference between shares outstanding and regular shares?
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outstanding shares are the shares(regular shares) that are still tradable in the market, where the firm in question is listed. The term is primarily used to distinguish from shares held in treasury(treasury stock), which have been bought back(buybacks) from the market and aren't currently tradable in the market. Wikipedia is a bit more clearer and mentions the diluted outstanding shares(used for convertible bonds, warrants, etc) which is used to calculated diluted EPS.
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How to keep control of shared expenses inside marriage?
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JoeTaxpayer's answer mentions using a third "house" account. In my comment on his answer, I mentioned that you could simply use a bookkeeping account to track this instead of the overhead of an extra real bank account. Here's the detail of what I think will work for you. If you use a tool like gnucash (probably also possible in quicken, or if you use paper tracking, etc), create an account called "Shared Expenses". Create two sub accounts under that called "his" and "hers". (I'm assuming you'll have your other accounts tracked in the software as well.) I haven't fully tested this approach, so you may have to tweak it a little bit to get exactly what you want. When she pays the rent, record two transactions: When you pay the electric bill, record two transactions: Then you can see at a glance whether the balances on "his" and "hers" match.
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Buying & Selling Call Options
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If you sold bought a call option then as you stated sold it to someone else what you are doing is selling the call you bought. That leaves you with no position. This is the case if you are talking about the same strike, same expiration.
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Should I switch to this high rate checking account for my emergency fund?
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If you're relatively certain that you're going to meet the requirements, it sounds like a good move for you. The #1 priority with emergency funds should be easy access to the money when you need it. Before the current economic situation, money market funds were great for this since they preserved the value of the dollars you put in. Now the rates on money market accounts are barely better than the 0.2% you're currently getting.
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Using credit cards online: is it safe?
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Why do online services ask for all those CVV codes and expiration date information, if, whenever you poke the card out of your wallet, all of its information becomes visible to everyone in the close area? What can I do to secure myself? I'd guess that's to protect the card company, not you. The number of the card is guessable, but each other bit of information makes it much harder to guess (the CVV code makes it ~1000 times harder, the expiration date makes it about 50-100 times harder). Since you wouldn't be responsible for the payment anyway, adding security for online transactions provides the company with less liability. As for the security of your information online, that's trickier. It depends entirely on the site you're using whether they've implemented the appropriate security measures or not (and, given the SSL attacks we've seen, even that might not help). (source: I'm a web developer, and have worked on payments systems before that implemented the security mandated by the cards). At the very least never, ever type in your information on a non-https site (there's normally a little "lock" icon that will display if you're on HTTPS instead of HTTP).
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How to change a large quantity of U.S. dollars into Euros?
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The right answer to this question really depends on the size of the transfer. For larger transfers ($10k and up) the exchange rate is the dominant factor, and you will get the best rates from Interactive Brokers (IB) as noted by Paul above, or OANDA (listed by user6714). Under $10k, CurrencyFair is probably your best bet; while the rates are not quite as good as IB or OANDA, they are much better than the banks, and the transaction fees are less. If you don't need to exchange the currency immediately, you can put in your own bids and potentially get better rates from other CurrencyFair users. Below $1000, XE Trade (also listed by user6714) has exchange rates that are almost as good, but also offers EFT transfers in and out, which will save you wire transfer fees from your bank to send or receive money to/from your currency broker. The bank wire transfer fees in the US can be $10-$30 (outgoing wires on the higher end) so for smaller transfers this is a significant consideration you need to look into; if you are receiving money in US, ING Direct and many brokerage accounts don't charge for incoming wires - but unless you have a commercial bank account with high balances, expect to spend $10-$20 minimum for outgoing. European wire transfer fees are minimal or zero in most cases, making CurrencyFair more appealing if the money stays in Europe. Below $100, it's rarely worth the effort to use any of the above services; use PayPal or MoneyBookers, whatever is easiest. Update: As of December 2013, CurrencyFair is temporarily suspending operations for US residents: Following our initial assessment of regulatory changes in the United States, including changes arising from the Dodd-Frank Act, CurrencyFair will temporarily withdraw services for US residents while we consider these requirements and how they impact our business model. This was a difficult and very regretful decision but we are confident we will be able to resume services in the future. The exact date of re-activation has not yet been determined and may take some time. We appreciate your patience and will continue communicating our status and expected return.
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If I invest in a company that goes bankrupt, is that a gain or a loss?
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I'll give the credit to @Quid in the comments section of the question. You put out $10k, you got back $20k, that's a cash gain of $10k, how the asset was valued between your purchase and sale isn't relevant. From an accounting perspective, the company is the only party that is realizing the loss (as they have sold the asset for 40K less than par). You the buyer, only get to see the initial buy and sale of such capital asset. Example: A company purchases a car for $20,000 and after depreciation it is worth (book valued at) $2,000. It is then sold to a customer for $3,000. Does the customer realize a loss of $1,000? No. Does the company realize a gain of $1,000? Yes. Your bank analogy is flawed in two ways:
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Why does a stock's price fluctuate so often, even when fresh news isn't available?
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Investors are "forever" comparing the prices of stocks to other stocks. As others have pointed out, this is done faster and more frequently nowadays with high-speed computer programs. There may be no "fresh" news on stock A, but if there is fresh news on stock B (as there usually is), the news on B affects the COMPARISON with stock A. That could be what causes trading in stock A that has "no news."
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Historically how do share prices perform after mass selling after an employee reward scheme?
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Like others have already said, it may cause an immediate dip due to a large and sudden move in shares for that particular stock. However, if there is nothing else affecting the company's financials and investors perceive no other risks, it will probably bounce back a bit, but not back to the full value before the shares were issued. Why? Whenever a company issues more stock, the new shares dilute the value of the current shares outstanding, simply because there are now more shares of that stock trading on the market; the Earnings Per Share (EPS) Ratio will drop since the same profit and company value has to be spread across more shares. Example: If a company is valued at $100 dollars and they have 25 shares outstanding, then the EPS ratio equates to $4 per share (100/25 = 4). If the company then issues more shares (stock to employees who sell or keep them), let's say 25 more shares, then shares outstanding increase to 50, but the company's value still remains at $100 dollars. EPS now equates to $2 per share (100/50 = 2). Now, sometimes when shareholders (especially employees...and especially employees who just received them) suddenly all sell their shares, this causes a micro-panic in the market because investors believe the employees know something bad about the company that they don't. Other common shareholders then want to dump their holdings for fear of impending collapse in the company. This could cause the share price to dip a bit below the new diluted value, but again if no real, immediate risks exist, the price should go back up to the new, diluted value. Example 2: If EPS was at $4 before issuing more stock, and then dropped to $2 after issuing new stock, the micro-panic may cause the EPS to drop below $2 and then soon rebound back to $2 or more when investors realize no actual risk exists. After the dilution phase plays out, the EPS could actually even go above the pre-issuing value of $4 because investors may believe that since more stock was issued due to good profits, more profits may ensue. Hope that helps!
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Shorting Obvious Pump and Dump Penny Stocks
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Shorting penny stocks is very risky. For example, read this investopedia article, which explains some of the problems. In general: If you have some sort of method for perfectly identifying Pump and Dump schemes, it's possible you could make money if you time things right, but that timing is going to be very difficult to identify.
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What is Fibonacci values?
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Usually when a stock is up-trending or down-trending the price does not go up or down in a straight line. In an uptrend the price may go up over a couple of days then it could go down the next day or two, but the general direction would be up over the medium term. The opposite for a downtrend. So if the stock has been generally going up over the last few weeks, it may take a breather for a week or two before prices continue up again. This breather is called a retracement in the uptrend. The Fibonacci levels are possible amounts by which the price might retract before it continues on its way up again. By the way 50% is not actually a Fibonacci Retracement level but it is a common retracement level which is usually used in combination with the Fibonacci Retracement levels.
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Tax Write-offs and knowing how much I need to spend before the end of the year
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(I'm assuming USA tax code as this is untagged) As the comments above suggest there is no "right" answer or easy formula. The main issue is that you likely got into business to make money and if you make money consistently you will pay taxes. Reinvesting generally should be a business decision where the main concern is revenue growth and taxes are an important but secondary concern. Taxes can be complicated, but for a small LLC shouldn't be that bad. I highly recommend that you take some time closely analyze your business and personal taxes for the previous year. Once you understand the problem better, you can optimize around it. If it is a big concern, some companies buy software so they can estimate their taxes periodically through the year and make better decisions.
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How do I invest and buy/sell stocks? What does “use a broker” mean?
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There are 2 main types of brokers, full service and online (or discount). Basically the full service can provide you with advice in the form of recommendations on what to buy and sell and when, you call them up when you want to put an order in and the commissions are usually higher. Whilst an online broker usually doesn't provide advice (unless you ask for it at a specified fee), you place your orders online through the brokers website or trading platform and the commissions are usually much lower. The best thing to do when starting off is to go to your country's stock exchange, for example, The ASX in Sydney Australia, and they should have a list of available brokers. Some of the online brokers may have a practice or simulation account you can practice on, and they usually provide good educational material to help you get started. If you went with an online broker and wanted to buy Facebook on the secondary market (that is on the stock exchange after the IPO closes), you would log onto your brokers website or platform and go to the orders section. You would place a new order to buy say 100 Facebook shares at a certain price. You can use a market order, meaning the order will be immediately executed at the current market price and you will own the shares, or a limit price order where you select a price below the current market price and wait for the price to come down and hit your limit price before your order is executed and you get your shares. There are other types of orders available with different brokers which you will learn about when you log onto their website. You also need to be careful that you have the funds available to pay for the share at settlement, which is 3 business days after your order was executed. Some brokers may require you to have the funds deposited into an account which is linked to your trading account with them. To sell your shares you do the same thing, except this time you choose a sell order instead of a buy order. It becomes quite simple once you have done it a couple of times. The best thing is to do some research and get started. Good Luck.
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How to get a credit card as a minor?
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I have a job and would like to buy equipment for producing music at home and it would be easier for me to pay for the equipment monthly I just want to address your contention that it would be easier to pay monthly, with an interest calculation. Lets say you get a credit card with a very reasonable rate of 12% and you buy $2,500 of equipment. A typical credit card minimum payment is interest charges + 1% of the principle. You can see how this is going. You've paid nearly $200 to clear about $100 off your principle. Obviously paying the minimum payment will take forever to wipe out this debt. So you pay more, or maybe you get 0% interest for a while and take advantage of that. Paying $100 per month against $2,500 at 12% per year will take 29 months and cost about $390 in interest. At $200 per month it'll take 14 months and cost $184 in interest. Also note, you'll probably get an interest rate closer to 16 or 17%. It's always easier to pay small amounts frequently than it is to pay a lot of money all at once, that ease has a cost. If you're buying the gear to start a little business, or you already have a little business going and want to upgrade some gear, great; disciplined debt handling is a wonderful skill to have in business. If you want to start yourself in to a new hobby, you should not do that with debt. If interest rates are low enough financing something can make sense. 0.9% apr on a car, sure; 15% apr on a mixing board, no. Credit card interest rates are significant and really should not be trifled with.
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Does it make sense to trade my GOOGL shares for GOOG and pocket the difference?
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It appears very possible that Google will not have to pay any class C holders the settlement amount, given the structure of the settlement. This is precisely because of the arbitrage opportunity you've highlighted. This idea was mentioned last summer in Dealbreaker. As explained in a Dealbook article: The settlement requires Google to pay the following amounts if, one year from the issuance of the Class C shares, the value diverges according to the following formula: If the C share price is equal to or more than 1 percent, but less than 2 percent, below the A share price, 20 percent of the difference; If the C share price is equal to or more than 2 percent, but less than 3 percent, below the A share price, 40 percent of the difference; If the C share price is equal to or more than 3 percent, but less than 4 percent, below the A share price, 60 percent of the difference; If the C share price is equal to or more than 4 percent, but less than 5 percent, below the A share price, 80 percent of the difference.” If the C share price is equal to or more than 5 percent below the A share price, 100 percent of the difference, up to 5 percent. ... If the Class A shares trade around $450 (after the split/C issuance) and the C shares trade at a 4.5 percent discount during the year (or $429.75 per share), then investors expect a payment of: 80 percent times $450 times 4.5 percent = $16.20. The value of C shares would then be $445.95 ($429.75 plus $16.20). But if this is the new trading value during the year, that’s only a discount of less than 1 percent to the A shares. So no payment would be made. But if no payment is made, we are back to the full discount and this continues ad infinitum. In other words, the value of a stock can be displayed as: {equity value} + {dividend value} + {voting value} + {settlement value} = {total share value} If we ignore dividend and voting values, and ignore premiums and discounts for risk and so forth, then the value of a share is basic equity value plus anticipated settlement payoff. The Google Class C settlement is structured to reduce the payoff as the value converges. And the practice of arbitrage guarantees (if you buy into at least semi-strong EMH) that the price of C shares will be shored up by arbitrageurs that want the payoff. The voting value of GOOGL is effectively zero, since the non-traded Class B shares control all company decisions. So the value of the Class A GOOGL voting is virtually zero for the time being. The only divergence between GOOGL and GOOG price is dividends (which I believe is supposed to be the same) and the settlement payoff. Somebody who places zero value on the vote and who expects dividend difference to be zero should always prefer to buy GOOG to GOOGL until the price is equal, disregarding the settlement. So technically someone is better off owning GOOG, if dividends are the same and market prices are equal, just because the vote is worthless and the nonzero chance of a future settlement payoff is gravy. The arbitrage itself is present because a share that costs (as in the article) $429.75 is worth $445.95 if the settlement pays out at that rate. The stable equilibrium is probably either just before or just after the threshold where the settlement pays off, depending on how reliably arbitrageurs can predict the movement of GOOG and GOOGL. If I can buy a given stock for X but know that it's worth X+1, then I'm willing to pay up to X+1. In the google case, the GOOG stock is worth X+S, where S is an uncertain settlement payment that could be zero or could be substantial. We have six tiers of S (counting zero payoff), so that the price is likely to follow a pattern from X to X+S5 to X-S5+S4 to X-S4+S3, and climbing the tier ladder until it lands in the frontier between X+S1 and X+S0. Every time it jumps into X+S1, people should be willing to pay that new amount for GOOG, so the price moves out of payoff range and into X+S0, where people will only pay X. I'm actually simplifying here, since technically this is all based on future expectations. So the actual price you'd pay is expressed thus: {resale value of GOOG before settlement payoff = X} + ( {expectation that settlement payoff will pay 100% of difference = S5} * {expected nominal difference between GOOG and GOOGL = D} ) + ({S4} * {80% D}) + ({S3} * {60% D}) + ({S2} * {40% D}) + ({S1} * {20% D}) + ({S0} * {0% D}) = {price willing to pay for Class C GOOG = P} Plus you'd technically have to present value the whole thing for the time horizon, since the payoff is in a year. Note that I've shunted any voting/dividend analysis into X. It's reasonable to thing that S5, S4, S3, and maybe S2 are nearly zero, given the open arbitrage opportunity. And we know that S0 times 0% of D is zero. So the real analysis, again ignoring PV, is thus: P = X + (S1*D) Which is a long way of saying: what are the odds that GOOG will happen to be worth no more than 99% of GOOGL on the payoff determination date?
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Why do interest rates increase or decrease?
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My answer is specific to the US because you mentioned the Federal Reserve, but a similar system is in place in most countries. Do interest rates increase based on what the market is doing, or do they solely increase based on what the Federal Reserve sets them at? There are actually two rates in question here; the Wikipedia article on the federal funds rate has a nice description that I'll summarize here. The interest rate that's usually referred to is the federal funds rate, and it's the rate at which banks can lend money to each other through the Federal Reserve. The nominal federal funds rate - this is a target set by the Board of Governors of the Federal Reserve at each meeting of the Federal Open Market Committee (FOMC). When you hear in the media that the Fed is changing interest rates, this is almost always what they're referring to. The actual federal funds rate - through the trading desk of the New York Federal Reserve, the FOMC conducts open market operations to enforce the federal funds rate, thus leading to the actual rate, which is the rate determined by market forces as a result of the Fed's operations. Open market operations involve buying and selling short-term securities in order to influence the rate. As an example, the current nominal federal funds rate is 0% (in economic parlance, this is known as the Zero Lower Bound (ZLB)), while the actual rate is approximately 25 basis points, or 0.25%. Why is it assumed that interest rates are going to increase when the Federal Reserve ends QE3? I don't understand why interest rates are going to increase. In the United States, quantitative easing is actually a little different from the usual open market operations the Fed conducts. Open market operations usually involve the buying and selling of short-term Treasury securities; in QE, however (especially the latest and ongoing round, QE3), the Fed has been purchasing longer-term Treasury securities and mortgage-backed securities (MBS). By purchasing MBS, the Fed is trying to reduce the overall risk of the commercial housing debt market. Furthermore, the demand created by these purchases drives up prices on the debt, which drives down interest rates in the commercial housing market. To clarify: the debt market I'm referring to is the market for mortgage-backed securities and other debt derivatives (CDO's, for instance). I'll use MBS as an example. The actual mortgages are sold to companies that securitize them by pooling them and issuing securities based on the value of the pool. This process may happen numerous times, since derivatives can be created based on the value of the MBS themselves, which in turn are based on housing debt. In other words, MBS aren't exactly the same thing as housing debt, but they're based on housing debt. It's these packaged securities the Fed is purchasing, not the mortgages themselves. Once the Fed draws down QE3, however, this demand will probably decrease. As the Fed unloads its balance sheet over several years, and demand decreases throughout the market, prices will fall and interest rates in the commercial housing market will fall. Ideally, the Fed will wait until the economy is healthy enough to absorb the unloading of these securities. Just to be clear, the interest rates that QE3 are targeting are different from the interest rates you usually hear about. It's possible for the Fed to unwind QE3, while still keeping the "interest rate", i.e. the federal funds rate, near zero. although this is considered unlikely. Also, the Fed can target long-term vs. short-term interest rates as well, which is once again slightly different from what I talked about above. This was the goal of the Operation Twist program in 2011 (and in the 1960's). Kirill Fuchs gave a great description of the program in this answer, but basically, the Fed purchased long-term securities and sold short-term securities, with the goal of twisting the yield curve to lower long-term interest rates relative to short-term rates. The goal is to encourage people and businesses to take on long-term debt, e.g. mortgages, capital investments, etc. My main question that I'm trying to understand is why interest rates are what they are. Is it more of an arbitrary number set by central banks or is it due to market activity? Hopefully I addressed much of this above, but I'll give a quick summary. There are many "interest rates" in numerous different financial markets. The rate most commonly talked about is the nominal federal funds rate that I mentioned above; although it's a target set by the Board of Governors, it's not arbitrary. There's a reason the Federal Reserve hires hundreds of research economists. No central bank arbitrarily sets the interest rate; it's determined as part of an effort to reach certain economic benchmarks for the foreseeable future, whatever those may be. In the US, current Fed policy maintains that the federal funds rate should be approximately zero until the economy surpasses the unemployment and inflation benchmarks set forth by the Evans Rule (named after Charles Evans, the president of the Federal Reserve Bank of Chicago, who pushed for the rule). The effective federal funds rate, as well as other rates the Fed has targeted like interest rates on commercial housing debt, long-term rates on Treasury securities, etc. are market driven. The Fed may enter the market, but the same forces of supply and demand are still at work. Although the Fed's actions are controversial, the effects of their actions are still bound by market forces, so the policies and their effects are anything but arbitrary.
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What does cryptocurrency mean for governments?
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Government's tax citizens and businesses in their currency. Earnings (even earnings in cryptocurrencies) are taxable income.
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If I have some old gold jewellery, is it worth it to sell it for its melt value?
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Get your jewelery appraised. (Don't let whoever does the appraisal be the same person whom you would sell it to.) Logically jewelery must be worthy more than the raw gold that makes it up because somebody took the time to design patterns and do specialty craft to the metal.
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Trader Fostering Program on Futures Day Trading
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a) Contracts are for future delivery of said underlying. So if you are trading CL (crude oil) futures and don't sell before delivery date, you will be contacted about where you want the oil to be delivered (a warehouse presumably). 1 contract is the equivalent of 1000 barrels. b) 600 contracts depends entirely on what you are trading and how you are trading. If you are trading ES (S&P 500 e-Mini), you can do the 600 contracts in less than a second. c) No fees does not make particular sense. It's entirely possible that you are not trading anything, it's just a fake platform so they can judge your performance. d) The catch typically is that when it's time to pay you, they will avoid you or worst case, disappear. e) Trading is a full-time job, especially for the first 4-5 years when you're only learning the basics. Remember, in futures trading you are trading against all the other professionals who do only this 24/7 for decades. If you are only risking your time with the reward being learning and possibly money, it seems like a good deal. There's typically a catch with these things - like you would have to pay for your data which is very expensive or withdrawing funds is possible only months later.
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Why are taxes on actively managed funds higher than those on index funds?
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First, consider what causes taxes to apply to a mutual fund, index or actively managed. Dividends and capital gains are generally what will be distributed to shareholders given the nature of a mutual fund since the fund itself doesn't pay taxes. For funds held in IRAs or other tax-advantaged accounts, this isn't a concern and thus people may not have this concern for those situations which can account for a lot of investing situations as people may have 401(k)s and IRAs that hold their investments rather than taxable accounts. Second, there can be tax-managed funds so there can be cases where a fund is managed with taxes in mind that is worth noting here as what is referenced is a "Dummies" link that is making a generalization. For taxable accounts, it may make more sense to have a tax-managed fund rather than an index fund though I'd also argue to be careful of asset allocation as to maintain a purity of style can require selling of stocks that grow too big and thus trigger capital gains,e.g. small-cap and mid-cap funds that can't hold onto the winners as they would become mid-cap and large-cap instead of representing the proper asset class. A FUND THAT PLAYED IT SAFE--AND WAS SORRY would be a Businessweek story from 1998 of an actively managed fund that went mostly to cash and missed the rise of the stock market at that time if you want a specific example of what an actively managed fund can do that an index fund often cannot do. The index fund is to track the index and stay nearly all invested all the time.
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What's the difference between TaxAct and TurboTax?
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Like most software it's about what you put in to them. We use ProSeries software which is like TurboTax but $4500 with no questions. I would do your taxes on online and then have a professional do them. You then can ask any questions you may have to better understanding of what's going on. Only take copies of your documents because some unprofessional places will try to keep them. Do this each time something big changes in your life, you have a baby, buy a house or start a business. May cost more but could save you thousands in the long run. I have been doing taxes professionally for 7 years.
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1040 Schedule A Un-Reimbursed Business Expense Reporting
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It would be unusual but it is possible that the expenses could be very high compared to your income. The IRS in pub 529 explains the deduction. You can deduct only unreimbursed employee expenses that are: Paid or incurred during your tax year, For carrying on your trade or business of being an employee, and Ordinary and necessary. An expense is ordinary if it is common and accepted in your trade, business, or profession. An expense is necessary if it is appropriate and helpful to your business. An expense doesn't have to be required to be considered necessary. The next part lists examples. I have cut the list down to highlight ones that could be large. You may be able to deduct the following items as unreimbursed employee expenses. Damages paid to a former employer for breach of an employment contract. Job search expenses in your present occupation. Legal fees related to your job. Licenses and regulatory fees. Malpractice insurance premiums. Research expenses of a college professor. Rural mail carriers' vehicle expenses. Tools and supplies used in your work. Work clothes and uniforms if required and not suitable for everyday use. Work-related education. If the term of employment was only part of the year, one or more of the these could dwarf your income for the year. Before deducting something that large be sure you can document it. I believe the IRS computers would flag the return and I wouldn't be surprised if they ask for additional proof.
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Why are U.S. credit unions not open to everyone?
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It's required by law. 12 USC 1759 (b) requires that membership in a credit union be limited to one or more groups with a "common bond", or to people within a particular geographic area. For lots more gory details on how this is interpreted and enforced, you can read the manual given to credit unions by the National Credit Union Administration, which is their regulatory agency.
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Source of income: from dividends vs sale of principal or security
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Some people have this notion that withdrawing dividends from savings is somehow okay but withdrawing principal is not. Note, this notion. Would someone please explain the "mistake" on P214 and why it's a mistake? Because there may be times where withdrawing principal may be a good idea as one could sell off something that has gained enough that in re-balancing the portfolio there are capital gains that could be used for withdrawing in retirement. How and why does the sale of financial instrument equate to the receipt of dividends? In either case, one has cash equivalents that could be withdrawn. If you take the dividends in cash or sell a security to raise cash, you have cash. Thus, it doesn't matter what origin it has. If I sell a financial instrument that later appreciates in value, then this profit opportunity is lost. In the case of a dividend, I'd still possess the financial security and benefit from the stock's appreciation? One could argue that the in the case of a dividend, by not buying more of the instrument you are missing out on a profit opportunity as well. Thus, are you out to make the maximum profit overall or do you have reason for taking the cash instead of increasing your holding?
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Is it a good practice to keep salary account and savings account separate?
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This seems like a risky setup. All it takes is one missed or delayed transfer for you to overdraw your "savings". There is a benefit to keeping your regular expenses and savings separate, and I can see some benefits in having multiple checking accounts depending on how you organize your finances, but I don't see a benefit to having a paycheck go to one account and all regular spending (and "savings") come from another. It requires some regular maintenance to transfer money over to use for regular spending. I suppose if you have a checking account that earns interest, but requires direct deposits, and a savings account that earns slightly higher interest you could squeeze out a bit, but it's probably not worth the effort these days unless you have a LOT of money going in and out. Also, it should not be easy to tap into savings, but your day-to-day spending should be very accessible. All those factors suggest (to me) that your paycheck should go into your regular spending account, and keep your savings separate.
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What effect would sovereign default of a European country have on personal debt or a mortgage?
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If the default happens through mass monetary inflation rather than openly ("We're not paying interest on our bonds") then make sure you pay off your house. There may not be a very long window to do so. If the currency becomes worthless, then it depends on what you have of value that would be accepted by the lender as payment. If you don't have anything, the lender will take it back, as they're probably entitled to on the notes.
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Are the stocks of competitor companies negatively correlated?
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Not especially. It depends on why sales have changed. If it's just consumer demand, that affects everyone in parallel rather than pushing in opposite direactions. If it's changes other than sales, that may have no effect on other companies. If it's because someone introduced the next must-have-it device and they're selling rapidly and drawing customers from the competing brands, maybe. And that's all neglecting the fact that this may already have been incorporated into the competitor's share price long ago, in anticipation of this news. Sorry, but the market just ain't simple.
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Credit and Debit
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In view of business, we have to book the entries. Business view, owner and business are different. When capital is invested in business by owner, in future business has to repay it. That's why, capital always credit. When we come about bank (business prospective) - cash, bank, fd are like assets which can help in the business. Bank is current asset (Real account) - Debit (what comes into the business) Credit (what goes out of the business) Hence credit and debit differs from what type of account is it.... credit - when business liables debit - what business has and receivables
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Is a car loan bad debt?
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What's missing in your question, so Kate couldn't address, is the rest of your financial picture. If you have a fully funded emergency account, are saving for retirement, and have saved up the $15K for the car, buy in cash. If you tell me that if the day after you buy the car in cash, your furnace/AC system dies, that you'd need to pay for it with an $8K charge to a credit card, that's another story. You see, there's more than one rate at play. You get close to zero on you savings today. You have a 1.5% loan rate available. But what is your marginal cost of borrowing? The next $10K, $20K? If it's 18% on a credit card, I personally would find value in borrowing at sub-2.5% and not depleting my savings. On the other side, the saving side, does your company offer a 401(k) with company match? I find too many people obsessing over their 6% debt, while ignoring a 100% match of 4-6% of their gross income. For what it's worth, trying to place labels on debt is a bit pointless. Any use of debt should be discussed 100% based on the finances of the borrower.
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How to maximise savings?
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First: it sounds like you are already making wise choices with your cash surplus. You've looked for ways to keep that growing ahead of inflation and you have made use of tax shelters. So for the rest of this answer I am going to assume you have between 3-6 months expenses already saved up as a “rainy day fund” and you're ready for more sophisticated approaches to growing your funds. To answer this part: Are there any other ways that I can save/ invest that I am not currently doing? Yes, you could look at, for example: 1. Peer to peer These services let you lend to a 'basket' of borrowers and receive a return on your money that is typically higher than what's offered in cash savings accounts. Examples of peer to peer networks are Zopa, Ratesetter and FundingCircle. This involves taking some risks with your money – Zopa's lending section explains the risks. 2. Structured deposits These are a type of cash deposit product where, in return for locking your money away for a time (typically 5 years), you get the opportunity for higher returns e.g. 5% + / year. Your deposit is usually guaranteed under the FSCS (Financial services compensation scheme), however, the returns are dependent on the performance of a stock market index such as the FTSE 100 being higher in x years from now. Also, structured deposits usually require a minimum £3,000 investment. 3. Index funds You mention watching the stock prices of a few companies. I agree with your conclusion – I wouldn't suggest trying to choose individual stocks at this stage. Price history is a poor predictor of future performance, and markets can be volatile. To decide if a stock is worth buying you need to understand the fundamentals, be able to assess the current stock price and future outlook, and be comfortable accepting a range of different risks (including currency and geographic risk). If you buy shares in a small number of companies, you are concentrating your risk (especially if they have things in common with each other). Index funds, while they do carry risks, let you pool your money with other investors to buy shares in a 'basket' of stocks to replicate the movement of an index such as the FTSE All Share. The basket-of-stocks approach at least gives you some built-in diversification against the risks of individual stocks. I suggest index funds (as opposed to actively managed funds, where you pay a management fee to have your investments chosen by a professional who tries to beat the market) because they are low cost and easier to understand. An example of a very low cost index fund is this FTSE All Share tracker from Aberdeen, on the Hargreaves Lansdown platform: http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/a/aberdeen-foundation-growth-accumulation General principle on investing in stock market based index funds: You should always invest with a 5+ year time horizon. This is because prices can move up and down for reasons beyond your anticipation or control (volatility). Time can smooth out volatility; generally, the longer the time period, the greater your likelihood of achieving a positive return. I hope this answer so far helps takes into account the excess funds. So… to answer the second part of your question: Or would it be best to start using any excess funds […] to pay off my student loan quicker? Your student loan is currently costing you 0.9% interest per annum. At this rate it's lower than the last 10 years average inflation. One argument: if you repay your student loan this is effectively a 0.9% guaranteed return on every pound repaid – This is the equivalent of 1.125% on a cash savings account if you're paying basic rate tax on the interest. An opposing argument: 0.9% is lower than the last 10 years' average inflation in the UK. There are so many advantages to making a start with growing your money for the long term, due to the effects of compound returns, that you might choose to defer your loan repayments for a while and focus on building up some investments that stand a chance to beat inflation in the long term.
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What are the implications of lending money to my sole member S-corp?
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You can make a capital contribution, not a loan. It's not a taxable event, no interest, and you can take a distribution later when the business has the money to pay you back. So yes, transfer the money. If you use software like Quickbooks, make use of unique accounts for tracking the contribution
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Can I open a Solo 401(k) if I am an independent contractor but also work part-time as an employee?
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I'm in a similar situation as I have a consulting business in addition to my regular IT job. I called the company who has my IRA to ask about setting up the Individual 401k and also mentioned that I contribute to my employer's 401k plan. The rep was glad I brought this up because he said the IRS has a limit on how much you can contribute to BOTH plans. For me it would be $24K max (myAge >= 50; If you are younger than 50, then the limit might be lower). He said the IRS penalties can be steep if you exceed the limit. I don't know if this is an issue for you, but it's something you need to consider. Be sure to ask your brokerage firm before you start the process.
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How can I improve my credit score if I am not paying bills or rent?
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So you work, and give a small irregular amount to you parents. You live with very low expenses. Assuming you make a bit below the average salary in the UK, you should be able to save around £1000. If you found a part time job could you save double? I bet you could. So why do you need credit? Why do you need a credit score? Having poor or no credit can be remedied by having a large down payment. Essentially the bank asks, if this person could afford the payment of this loan why have they not been saving the money? You could save the money and either buy the thing(s) you desire with cash (the smartest), or put 50% down. Putting 50% or more down turns you into a good credit risk despite having no credit history. In case you missed it: why not just save the money and buy it for cash? Why have compounding interest working against you? Why do you want to work for the bank? Making the interest payments on loans in order to build a credit score is just silly. It is an instance of a "tail wagging the dog".
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Good book-keeping software?
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I like using Mint.com to track my expenses. It makes it very easy to watch my budget and monitor my spending.
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Legal documents required for managing an investment portfolio among friends?
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You have to register with the SEC as an Investment Company. The SEC has a "Investment Company Regulation and Registration Package", available here: http://www.sec.gov/divisions/investment/invcoreg121504.htm I found that off their overall page for funds and advisors: http://www.sec.gov/divisions/investment.shtml Finally, bear in mind that your state may have various requirements as well.
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What are the advantages of paying off a mortgage quickly?
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The main reason for paying your mortgage off quickly is to reduce risk should a crisis happen. If you don't have a house payment, you have much higher cash flow every month, and your day-to-day living expenses are much lower, so if an illness or job loss happens, you'll be in a much better position to handle it. You should have a good emergency fund in place before throwing extra money at the mortgage so that you can cover the bigger surprises that come along. There is the argument that paying off your mortgage ties up cash that could be used for other things, but you need to be honest with yourself: would you really invest that money at a high enough rate of return to make up your mortgage interest rate after taxes? Or would you spend it on other things? If you do invest it, how certain are you of that rate of return? Paying off the mortgage saves you your mortgage interest rate guaranteed. Finally, there is the more intangible aspect of what it feels like to be completely debt free with no payments whatsoever. That feeling can be a game-changer for people, and it can free you up to do things that you could never do when you're saddled with a mortgage payment every month.
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What does “Settling your Debt” entail, and how does it compare to other options?
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These agencies consolidate your debt and make it an easy monthly instalment for you. They also try to negotiate with credit cards. They do so for a fee. Other option is to not pay the debt. During this time , expect credit cards to keep sending you bills and reminders and ways to contact you. Once it is not paid for a significant amount of time ( 18 months ) , the lender will "sell" your debt to a collection agency. You will start getting bills from collection agencies. Collection agencies can settle for up to 40 % of the actual debt. So if you had 5 credit cards , you would have 5 different collection agencies trying to get in touch with you. You can call them and tell them that you cannot pay the full amount. They will offer you settlements which you can accept or decline. The longer the unpaid debt , the more the discount they will offer. One very important thing to remember is that the unpaid amount will be sent to you on a 1099-c form . This means you have to recognize this as income. It is applicable to the year when the debt is settled. In a nut shell , you owe 120,000. You don't pay. Credit cards keeps calling you. You don't pay. After 12-18 months , they handover your debt to collection agencies. Collection agencies will try to get in touch with you. Send you lawsuit letters. You call and settle for say 50,000. You pay off 50,000 in 2016. Your debt is settled. But wait you will get 1099-C forms from different agencies totaling 70,000 ( unpaid debt ). You will have to declare that as income and you will owe tax on that. Assuming say 30 % tax you will have to pay up 21,000 as tax to IRS assuming no other income for simplicity. SO what you did was pay up 50 + 21 = 71,000 and settled the debt of 120,000. Your credit score will be much better than if you never paid at all.
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How do you calculate the rate of return (ROR) when buying and selling put options?
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RoR for options you bought is fairly easy: (Current Value-Initial Cost)/Initial Cost gives you the actual return. If you want the rate of return, you need to annualize that number: You divide the return you got above by the number of days the investment was in place, and then multiply that number by the number of days in a year. (365 if you're using calendar days, about 255 if you're using trading days.) RoR for options you sold is much more complex: The problem is that RoR is basically calculating the size of your return relative to the capital it tied up to earn it. That's simple when you bought something; the capital tied up is the money you put up. It's more complex on a position like a short option, where the specific transaction in question generates cash when it's put on. The correct way to deal with this is to A) Bundle your strategy (options, stock and collateral) into one RoR where appropriate, and B) include any needed collateral to support the short option in the calculation. So, if you sell a "cash-secured" put, where you have to post the money that you'd need to take delivery of the shares if they were put to you, the initial cost is the total amount you'd need to put the trade on: in this case, it's the cash amount, less the premium you collected for selling the put. That's just one example. But the approach holds more broadly: if you're using covered calls, your original cost is the cost of the stock less the premium generated by the sale of the call.
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Why not pay in full upfront for a car?
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In general I'd say, yeah, if you can pay cash, pay cash. If you pay cash, then by definition you pay zero interest. If you get a loan, you'll pay interest. Most people get a loan to buy a car because they don't have the cash. Possible reasons not to pay cash when you could: One: Technically you can pay cash, but if you did, you would have little or no reserve for emergencies. Like if the car costs, say, $20,000.00, and you have $20,010.00 in your bank account, then technically you could afford to pay cash, but you probably shouldn't, because you don't want to have just $10 left. What if tomorrow something comes up? Two: Arguably, you have a place to invest money that pays more than the interest on the loan. Like say you can get a car loan for, whatever the going rate is today, say 6%. And you know a place to invest your money that is very safe and almost guaranteed to pay 10%. It would make sense to borrow to buy the car, invest the cash, and then withdraw money from the investment to make the payments on the car. You'd end up 4% ahead. There are a lot of catches to that strategy, though. The biggest is that the more the investment pays, the more likely that it is risky. If you thought the investment would pay 10% but it ends up paying only 4%, then you will lose money by this strategy. Also, there's the psychological element: Many people SAY and fully INTEND to invest their money, but then find other things they want to buy and so spend it instead. If you pay cash, you're committed.
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How should I pay off my private student loans that have a lot of restrictions?
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The one thing that I saw in here that raised a big red flag is that you said you "overpaid" on your interest. ALWAYS make sure you tell them that any extra money should be applied to principal only, not to interest. You accrue interest based on your outstanding principal amount, so getting that lower reduces the overall amount of interest you end up paying. Paying the interest ahead saves you nothing. However, make sure you pay the current interest owed that month. They can capitalize past due interest - in affect, change that to be considered an addition to the loan principal amount and you end up paying interest on the interest.
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Clothing Store Credit Card Account closed but not deleted
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You have little chance of getting it deleted. I have the same situation, I closed mine in 2006, and the login still works. Keep the paperwork that you closed it (or print a PDF of the site showing so), and forget about it. If someone is trying to cheat, re-opening it should be the same difficulty as making a new one in your name, so it is not really an additional risk. You could also set the username and password both to a long random string, and not keep them. That soft-forces you to never login again. Note that it will also stay on your credit record for some years (but that's not a bad thing, as it is not in default; in the contrary). The only negative is that if you apply for credit, you might be ashamed of people seeing you ever having had a Sears or Macy's card or so.
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Why buy insurance?
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There are several insurance products that I buy for legal reasons: Both of these protect me from lawsuits and fines. Many people buy similar products to protect their business operations. (e.g. medical malpractice insurance) There are some insurance products I buy for tax planning and financial planning purposes: I have a large amount of savings available, so I have several tricks to reduce my insurance costs, and I have several products that I avoid. Several of these reasons are mentioned in other answers, but I thought I would collect them into a single answer to demonstrate that there are reasons other than the rational calculation of what the payout will be for the insurance products vs. the premium paid. If I gain access to a tax advantaged Health savings account, that is a bigger benefit to me than avoiding the premium, especially when my employer is paying the majority of the premium. Perhaps it makes no sense to buy insurance given sufficient savings (like the products I listed that make no sense for me given my finances) but not everyone can self-insure; it does require a certain level of wealth.
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Entering the stock market in a poor economy
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Buy low and sell high. Right now stocks are cheap (or at least cheapish). If you wait for better forecasts, the price will be higher. They might go down still farther, but no one knows for sure when that will happen, or where the bottom is -- despite what the talking heads on TV say. Remember that what you really care about is sell price minus purchase price (plus dividends, but I'll ignore that). What happens between the time you buy and the time you sell is irrelevant financially, but can be important psychologically. If it was me, and you are sure you won't need the money for at least 10 years, or better still 15-20, I would buy some index funds. Pick something that you are comfortable with (some are more aggressive/risky than others), and then only look at it a few times a year, if that much. Only do this as long as you are sure that you won't sell if the market drops further. That is a guaranteed way to lose money. This is what I've been doing for my retirement funds for 15 years, and its worked well so far.
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How to hedge against specific asset classes at low cost
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The essence of hedging is to find an investment that performs well under the conditions that you're concerned about. If you're concerned about China stock dropping, then find something that goes up in value if that asset class goes down. Maybe put options on a Chinese index fund, or selling short one of those funds? Or, if you're already "in the money" on your Chinese stock position, set a stop loss: instruct your broker to sell if that stock hits X or lower. That way you keep some gains or limit your losses. That involves liquidating your position, but if you've had a nice run-up, it may be time to consider selling if you feel that the prospects are dimming.
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Why I cannot find a “Pure Cash” option in 401k investments?
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The short term bond fund, which you are pretty certain to have as an option, functions in this capacity. Its return will be low, but positive, in all but the most dramatic of rising rate scenarios. I recall a year in the 90's when rates rose enough that the bond fund return was zero or very slightly negative. It's not likely that you'd have access to simple money market or cash option.
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The Benefits/Disadvantages of using a credit card
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The thing you need to keep in mind is that if you take on debt, you need to have a plan to pay it off and execute on it. You also need to understand what your carrying cost is (what you will pay in finance charges every month.) There are times when you need to take on debt in order to be a productive person. For example, in many places in the US, you need a car in order to have a job. It's ludicrous for someone to assert that you shouldn't take on any debt in order to get a reliable vehicle. That doesn't mean you go out and lease the fanciest car that you can get on your income. In this case, I'd say it's a bit of a grey area. Could you live in an unfurnished apartment for a while? Perhaps. Many people would have a hard time living like that and it could affect your ability to perform at work. I would argue that buying a decent mattress to sleep on falls under the same category as getting a car so that you can work. You don't want to be missing work because your back is in spasm from sleeping on the floor or a worn out mattress. As far as the rest of it goes, it really depends on how fast you can pay it off. If you are looking at more than a few months (6 tops) to pay off the purchase in full, you should reassess. Realize that the interest you are paying is increasing the cost of the furniture and act accordingly. As mentioned, you can often get 0% financing for a limited period. Understand that if you don't pay off the entire balance in that period, you will normally be retroactively charged interest on the entire starting amount and that interest rate will likely be quite high. The problem with credit is when you start using it and continually growing the balance. It's easy to keep saying that you will start paying it off later and the next thing you know you are buried. It's not a big one-time purchase (by itself) that normally gets people into trouble, it's continual spending beyond their means month after month.
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Indie Software Developers - How do I handle taxes?
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Congratulations! I would start with an attorney. As a 17 year old, you legally cannot sign contracts, so you're going to have to setup some sort of structure with your parents first. Get attorney references -- your parents can ask around at work, if you're friendly with any business owners, ask them, etc. Talk to a few and pick someone who you are comfortable with. Ask your attorney for advice re: sole proprietor/S-Corp/LLC. You have assets, and your parents presumably have some assets, so you need advice about isolating your business from the rest of your life. Do the same thing for accountant references, but ask your attorney for a reference as well.
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Are credit histories/scores international?
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Credit history is local, so when you move to the US you start with the blank slate. Credit history length is a huge factor, so in the first year expect that nobody would trust you and you may be refused credit or asked for deposits. I was asked for deposits at cell phone company and refused for store cards couple of times. My advice - get a secured credit card (that means you put certain sum of money as a deposit in the bank and you get credit equal to that sum of money) and if you have something like a car loan that helps too (of course, you shouldn't buy a car just for that ;) but if you're buying anyway, just know it's not only hurting but also helping when you pay). Once you have a year or two of the history and you've kept with all the payments, you credit score would be OK and everybody would be happy to work with you. In 4-5 years you can have excellent credit record if you pay on time and don't do anything bad. If you are working it the US, a lot of help at first would be to take a letter from your company on an official letterhead saying that you are employed by this and that company and are getting salary of this and that. That can serve as an assurance for some merchants that otherwise would be reluctant to work with you because of the absence of credit history. If you have any assets overseas, especially if they are held in a branch of international bank in US dollars, that could help too. In general, don't count too much on credit for first 1-2 years (though you'd probably could get a car loan, for example, but rates would be exorbitant - easily 10 percentage points higher than with good credit), but it will get better soon.
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What is the minimum lot size (number of shares) for the London Stock Exchange?
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1 lot is 100 shares on London stock exchange
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Married, 55, grown kids: Should I buy life insurance, or invest in stocks? The ultimate decision
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The following is from Wikipedia - Term life insurance (with very minor editing) Because term life insurance is a pure death benefit, its primary use is to provide coverage of financial responsibilities, for the insured. Such responsibilities may include, but are not limited to, consumer debt, dependent care, college education for dependents, funeral costs, and mortgages. Term life insurance is generally chosen in favor of permanent life insurance because it is usually much less expensive (depending on the length of the term). Many financial advisors or other experts commonly recommend term life insurance as a means to cover potential expenses until such time that there are sufficient funds available from savings to protect those whom the insurance coverage was intended to protect. For example, an individual might choose to obtain a policy whose term expires near his or her retirement age based on the premise that, by the time the individual retires, he or she would have amassed sufficient funds in retirement savings to provide financial security for their dependents. This suggests the questions "why do you have this policy?" also "how many term life policies do you need?" or "how much insurance do you need?" Clearly you will be better off investing the premiums in the market. Your beneficiaries may be better off either way (depends when you die and to a lesser extent on market performance). If you are not able to retire now but expect to be able to later, you should strongly consider having sufficient insurance to provide income replacement for your spouse. This is a fairly common why.
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Pay off credit cards in one lump sum, or spread over a few months?
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I know you say you are aware of secured and unsecured debt and you've made your decision. Did you do the numbers? You will pay 44k over the life of the mortgage for that 24k (Based on 4.5% APR mortgage). Once you refinance your mortgage, do you plan on using credit for a while? Lots of Americans are hyperfocused on credit scores. The only times it affects your life are when you finance something, when you apply to rent a house or apartment, and sometimes when you apply for a job. Credit score should not be a factor in this decision. You're borrowing the money at a lower rate to pay off the high rate cards because you want to pay less in interest. Considering #1 is there any reason NOT to pay off the cards immediately, if not sooner?
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Can limits be placed by a merchant on which currency notes are accepted as legal tender? [duplicate]
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Can they reject a hundred dollar bill as a payment of debt?! No. A creditor cannot refuse payment in cash, whatever denomination you use. HOWEVER, when you're buying stuff - you don't owe anything to the business owner. There's no debt, so the above rule doesn't apply. As long as there's no debt in existence, the matter of payment is decided between two parties based on the mutual agreement. The demand not to use large bills is reasonable in places like 7/11 or taxi-cab that are frequently robbed, or at a small retailer that doesn't want to invest into forgery detection and fraud prevention. So the answer to this question: Is it the case where this practice of accepting small bills and rejecting large bills is perfectly legal? Is yes. You can find the full explanation on Treasury.gov, including code references.
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US citizen married to non-resident alien; how do I file taxes?
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Congrats on the upcoming wedding! Here is the official answer to this question, from the IRS. They note that you can choose to treat your spouse as a US resident for tax purposes and file jointly if you want to, by attaching a certain declaration to your tax return. Though I'm not a tax expert, if your partner has significant income it seems like this might increase your taxes due. You can also apply for an SSN (used for tax filings, joint or separate return) at a social security office or US consulate, by form SS-5, or file form W-7 with the IRS to get a Taxpayer Identification Number which is just as useful for this purpose. Without that, you can write "Non Resident Alien" (or "NRA") in the box for your partner's SSN, and mail in a paper return like that. See IRS Publication 17 page 22 (discussions on TurboTax here, here, etc.).
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Why diversify stocks/investments?
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Basically, diversifying narrows the spread of possible results, raising the center of the returns bell-curve by reducing the likelihood of extreme results at either the high or low end. It's largely a matter of basic statistics. Bet double-or-nothing on a single coin flip, and those are the only possible results, and your odds of a disaster (losing most or all of the money) are 50%. Bet half of it on each of two coin flips, and your odds of losing are reduced to 25% at the cost of reducing your odds of winning to 25%, with 50% odds that you retain your money and can try the game again. Three coins divides the space further; the extremes are reduced to 12.5% each, with the middle being most likely. If that was all there was, this would be a zero-sum game and pure gambling. But the stock market is actually positive-sum, since companies are delivering part of their profits to their stockholder owners. This moves the center of the bell curve up a bit from break-even, historically to about +8%. This is why index funds produce a profit with very little active decision; they treat the variation as mostly random (which seems to work statistically) and just try to capture average results of a (hopefully) slightly above-average bucket of stocks and/or bonds. This approach is boring. It will never double your money overnight. On the other hand, it will never wipe you out overnight. If you have patience and are willing to let compound interest work for you, and trust that most market swings regress to the mean in the long run, it quietly builds your savings while not driving you crazy worrying about it. If all you are looking for is better return than the banks, and you have a reasonable amount of time before you need to pull the funds out, it's one of the more reliably predictable risk/reward trade-off points. You may want to refine this by biasing the mix of what you're holding. The simplest adjustment is how much you keep in each of several major investment categories. Large cap stocks, small cap stocks, bonds, and real estate (in the form of REITs) each have different baseline risk/return curves, and move in different ways in response to news, so maintaining a selected ratio between these buckets and adding the resulting curves together is one simple way to make fairly predictable adjustments to the width (and centerline) of the total bell curve. If you think you can do better than this, go for it. But index funds have been outperforming professionally managed funds (after the management fees are accounted for), and unless you are interested in spending a lot of time researching and playing with your money the odds of your doing much better aren't great unless you're willing to risk doing much worse. For me, boring is good. I want my savings to work for me rather than the other way around, and I don't consider the market at all interesting as a game. Others will feel differently.
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Why do credit cards require a minimum annual household income?
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While you're asking about a particular bank, I'll give my opinion of this in general. I think a $12,000 household income is pretty low to be given credit. The risk to the bank is certainly higher than if the income were at that $35,000 level. They can use this to differentiate what they offer for perks, and if they ever collateralize the debt of these cards, it's a clearly defined demographic.
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CEO entitlement from share ownership?
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If I own shares of a company, am I entitled to apply as position of CEO? Sure, but anybody else can apply too. Who decides? The corporate board of directors, who are nominally chosen by a vote of the stockholders. I say nominally, because in practice they are nominated by the current CEO and it's very rare for stockholders to veto the CEO's choice. Once in a while a group of stockholders will nominate their own candidate for the board, but they rarely win. I'd like to think there's some socio-corporate or investor-relationship advantage to working or having the option to work in certain positions in said company -- especially by privilege or total outstanding share ownership numbers. Why? Simply holding a large number of shares doesn't necessarily mean you know anything about running the business.
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Would I qualify for a USDA loan?
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How realistic is it that I will be able to get a home within the 250,000 range in the next year or so? Very unlikely in the next year. The debt/income ratio isn't good enough, and your credit score needs to show at least a year of regular payments without late or default issues before you can start asking for mortgages in this range. You don't mention how long you've been employed at these incomes, this can also count against you if you haven't both been employed for a full year at these incomes. They will look even more unfavorably on the employment situation if they aren't both full time jobs, although if you have a full year's worth of paychecks showing the income is regular then that might mitigate the full time/part time issue. next year or so? If you pay down your high interest debt (car, credit cards), and maintain employment (keep your check stubs and tax returns, the loan officer will want copies), then there's a slight chance. And, from this quick snap shot of our finances, does it look like we would be able to qualify for a USDA loan? Probably not. Mostly for the same reasons - the only time a USDA loan helps is when you would be able to get a regular loan if you had the down payment. Even with an available down payment of 50k, you wouldn't be able to get a regular loan, therefore it's unlikely that you'd qualify for a USDA loan. If you are anxious to get into a house, choose something much smaller, in the 100k-150k range. It would improve your debt/loan ratio enough that you might then qualify for a USDA loan. However, I think you'd still have issues if you haven't both been employed at this rate of income for at least a year, and have made regular payments on all your debts for at least a year. I'll echo what others have suggested, though, strengthen your credit, eliminate as much of your high interest debt as you can (car, credit cards), and keep your jobs for a year or two. Start a savings plan so you can contribute a small down payment - at least 3-5% of the desired home price - when you are in a better position to buy. During this time keep track of your paycheck stubs, you may need them to prove income over the time period your loan officer will request. Note that even with a USDA loan you still have to pay closing costs, and those can run several thousand dollars, so don't expect to be able to come to the table with no cash. Lastly, there's good reason to be very conservative regarding house cost and size. If you can, consider buying the house as if you only had the 46k per year. Move the debt to the person making the lower income, and if you buy the house in the name of the person only making 46k per year, then the debt/loan ratio looks very positive. Further it may be that the credit history of that person is better, and the employment history is better. If one of you has better history in these ways, then you might have a better chance if only one of you buys the house. Banks can't tell you about this, but it does work. Keep in mind, though, that if you two part ways it could be very unhappy since one would be left with all the debt and the house would be in the other's name. Not a great situation to be in, so make sure that you both carefully consider the risks associated with the decisions made.
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Is sales tax for online purchases based on billing- or shipping address?
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From my understanding as a seller, and having read through Amazon's 8 page calculation methodology document, the default is the ship to address, however the seller still has the option to charge the tax or not, only charge the state rate and local (city, county, district, etc.) rate(s), or even set their own self-determined default tax rate. In other words, the seller has a lot of control in determining what rate they use and the billing and shipping addresses may not even matter. Just remember that whatever tax you pay to Amazon, your state will probably still hold you responsible for calculating and reporting any additional use tax, based on your location. And if the seller does overcharge for tax you may have a right to request a refund from them.
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Understanding SEC Filings
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The most important filings are: Form 10-K, which is the annual report required by the U.S. Securities and Exchange Commission (SEC) and Form 10-Q, for the interim quarters.
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Is the money you get from shorting a stock free to use for going long on other stocks?
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You sold $10,000 worth of stock so that money is essentially yours. However, you sold this stock without actually owning any which means that you, through your broker, are currently borrowing shares amounting to (at the time of your sale) $10,000 from someone who actually owns this stock. You will be paying this person interest for the privilege of borrowing their shares, the exact amount charged varies wildly and depends on factors such as short interest in the stock (loads of people want to go short = shareholders can charge high interest) etc. If I remember correctly hovering over the "position" column in your portfolio in the IB Workstation should give you information about the interest rate charged. You will have to buy back these shares from the lender at some point which is why the $10k isn't just "free money." If the stock has gone up in price in the meantime you are going to be paying more than the $10k you got for the same amount of shares and vice versa.
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When will the U.K. convert to the Euro as an official currency?
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I read an account of why the U.K. didn't end up with the euro as its currency in David M. Smick's great book The World Is Curved: Hidden Dangers to the Global Economy. Chapter 6 of the book is titled "Nothing Stays the Same: The 1992 Sterling Crisis." Here's a very brief excerpt; emphasis mine: [...] As this story shows, such blindness to the realities of a changing world can be very dangerous. In this case, the result was the brutal collapse of the British pound, which explains why the British people still use their own currency, the pound or sterling, and not the euro. The events that unfolded in the autumn of 1992 were totally unforeseen, yet they reshaped the European monetary world and represent a phenomenon that continues to impact global economies. [...] Smick's account of the events around 1992 runs about 28 pages. Here's my version, in a nutshell: At the time, Britain was part of the European Exchange Rate Mechanism, or ERM. The belief in Europe was that by uniting currencies under a common mechanism, Europe could gain influence in international financial policy largely dominated by the United States. The ERM was a precursor to monetary union. The Maastricht Treaty would eventually create the European Union and the euro. Britain joined the ERM later than other nations, in 1990, and after some controversy. Being part of the ERM required member nations to agree to expand and contract their currencies only within certain agreed upon limits called currency bands. Due to the way this had been structured, Germany's strong position placed it at the top of the system. At some point in 1992, Germany had raised interest rates to curb future inflation. However, Britain wanted Germany to cut rates – Britain was not in as enviable a position, economically speaking, and its currency was under pressure. The currency band system would put Britain in a tighter spot with Germany raising rates. Enter George Soros, the Hungarian billionaire, a.k.a. "the man who broke the Bank of England." Soros took a huge short position against the Sterling. He believed the Sterling was overvalued relative to the German deutsche mark, and Britain would be forced to devalue its currency and realign with respect to the ERM. Other traders followed and also sold the Sterling short. With much pressure on the currency, the Bank of England had to buy up Sterling in order to maintain its agreement under the ERM. Of course, they needed to borrow other currencies to do this. Soon the BoE was in over its head defending the Sterling, realizing the exchange rate it needed to maintain under the ERM simply wasn't sustainable. Britain was forced to withdraw from the ERM on Black Wednesday, September 16th, 1992. And so, Britain does not use the euro today – and any talk of doing so is politically controversial. Therefore I wouldn't bet on Britain adopting the euro any time soon – too many of the players are still in politics and remember 1992 well. I think if Britain adopting the euro is ever to happen, it will be when the memory of 1992 has faded away. BTW, George Soros made off with more than US$1 billion. Soros is a very smart guy.
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I made an investment with a company that contacted me, was it safe?
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It is a Scam. Don't invest more money here. Their website is the proof. Investments may appreciate or depreciate and you may not receive more than you initially invested. The Peterson Group offers products that are traded on margin and entail a degree of risk. You may incur losses that exceed your initial investment. Please ensure you are aware of and fully understand the risks involved, and seek independent advice if necessary. Losses exceeding your initial investments does not sound a good investment even if it is not a scam. Not much contact information. Their contact page has only a form. No email. No phone number. No social media links. I would like to point some information from Dumbcoder's answer, Just browsed their website. Not a single name of anybody involved. Their application process isn't safe(No https usage while transferring private information). No names of the person's involved is a thing to notice. All the companies websites name their owner, CEO and the like.
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Life insurance policy
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From the details you have given it looks like you have "Unit Linked" insurance policy. In such policies a part of the premium goes towards the "Insurance", the balance is invested into "Mutual Funds / stock Market". It is generally not advisable to have "Unit Linked" policy compared to pure "Term" policy. Generally the amount of fees charged for "Unit Linked" policy is high and hence the returns to the end user are low. i.e. if you buy a "Term" insurance for the same sum insured and invest on your own the balance in any "Mutual Fund" you will end up making more that what you are getting now. Typically these policies have 3 years lock-in period. As you have purchased this in 2008, you can cancel the policy without any penalties. This will save you future premium and you can buy a term insurance and invest the difference yourself. Note the unit linked policy is useful for people who do not invest on their own and this is a good way to be forced into saving than nothing else.
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How smart is it to really be 100% debt free?
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You might miss an opportunity or three by strictly avoiding debt, but I can't think of a problem you will create by being debt free. So maybe it isn't the absolutely smartest thing to avoid debt on principle*, but it certainly is pretty smart at the very least.
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What actions should I be taking to establish good credit scores for my children?
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When I was in high school, my mom got me a joint credit account with both of our names on it for exactly this reason. Well, that, and to have in case I found myself in some sort emergency, but it was mostly to build credit history. That account is still on my credit report (it's my oldest by a few years), and looking at the age of it, I was 17 at the time we opened it (and I think my younger sister got one around the same time). In my case, I now have an "excellent" credit score and my weakest area is the age of my accounts, so having that old account definitely helps me. I don't think I've really taken advantage of it, and I'm not sure if I'd really be worse off if my mom hadn't done that, but it certainly hasn't hurt. And I plan on buying a house in the next year or so, so having anything to bump up the credit score seems like a good thing.
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Do I live in a state for tax purposes if my permanent home is in another state?
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You're most likely required to file in both for 2013 - since you've lived in both. From 2014 and on you're definitely a NY resident (since you're renting a place there and live there), and you may very well continue being NJ resident (since you're essentially continue being domiciled there). I suggest talking to a EA/CPA licensed in NY and NJ to try and see what you can do to avoid being resident in both the states, or see if it is at all an issue other than filing everything double.
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What return are you getting on your money from paying down a mortgage on a rental property?
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This is a great question, considering that all of your expenses including PITA, Maintenance, etc. are paid by a tenant, your cash flow is $0. Most people would stop and assume your investment is not performing and your only chance at making money is through appreciation. Your question eliminates appreciation so here are the returns you would get on your investment. The math will probably surprise many that you are actually earning a return on your money. Annual Return = [((Future Value)/(Initial Investment))^((Periods per Year)/(Number of Periods) -1]*100 % 5.51% = [($200,000/$40,000)^(12/360)-1]*100 % As Chris Rea commented: The subtlety that some would miss is that while "income covers expenses exactly", embedded in the "expenses" is actually a repayment of the loan principal (and technically, that's not an "expense") so not all of the income is "lost" covering the "expenses". That repayment of principal portion of the rental income constitutes the return on the original capital invested.
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What's a good personal finance management web app that I can use in Canada?
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I use MoneyStrands (formerly called Expensr), but mostly just to track expenses and look at reports on my spending habits. It has some really pretty charts, with the ability to drill down into categories and sub-categories, or graph monthly spending for any custom date range. It does a half-decent job of auto-categorizing the imported bank transactions, and you can set up additional rules for common vendors, but I still have to do some manual work after each import. It does a good job of integrating my credit cards, bank accounts, and I can even manually add cash transactions. It has some basic budgeting capabilities, but they're not very useful for someone who needs to carefully budget thier monthly spending. Another one I've heard about is mint.com, but it only supports American banks (last I heard, anyway).
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How to find out the amount of preferred stock of Coca Cola Company?
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You can find this in the annual report. Preferred value is not the same as common value.
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Can I get a mortgage from a foreign bank?
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You definitely used to be able to (see this BBC article from 2006), and I would imagine that you still can, although I also imagine that it would be more difficult than it used to be, as with all mortgages. EDIT: And here's an article from last year about Chinese banks targeting the UK mortgage market.
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How to calculate lump sum required to generate desired monthly income?
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The product you seek is called a fixed immediate annuity. You also want to be clear it's inflation adjusted. In the US, the standard fixed annuity for a 40year old male (this is the lowest age I find on the site I use) has a 4.6% return. $6000/ yr means one would pay about $130,000 for this. The cost to include the inflation adder is about 50%, from what I recall. So close to $200,000. This is an insurance product, by the way, and you need to contact a local provider to get a better quote.
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What's an Exchange-Traded Fund (ETF)?
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ETFs offer the flexibility of stocks while retaining many of the benefits of mutual funds. Since an ETF is an actual fund, it has the diversification of its potentially many underlying securities. You can find ETFs with stocks at various market caps and style categories. You can have bond or mixed ETFs. You can even get ETFs with equal or fundamental weighting. In short, all the variety benefits of mutual funds. ETFs are typically much less expensive than mutual funds both in terms of management fees (expense ratio) and taxable gains. Most of them are not actively managed; instead they follow an index and therefore have a low turnover. A mutual fund may actively trade and, if not balanced with a loss, will generate capital gains that you pay taxes on. An ETF will produce gains only when shifting to keep inline with the index or you yourself sell. As a reminder: while expense ratio always matters, capital gains and dividends don't matter if the ETF or mutual fund is in a tax-advantaged account. ETFs have no load fees. Instead, because you trade it like a stock, you will pay a commission. Commissions are straight, up-front and perfectly clear. Much easier to understand than the various ways funds might charge you. There are no account minimums to entry with ETFs, but you will need to buy complete shares. Only a few places allow partial shares. It is generally harder to dollar-cost average into an ETF with regular automated investments. Also, like trading stocks, you can do those fancy things like selling short, buying on margin, options, etc. And you can pay attention to the price fluctuations throughout the day if you really want to. Things to make you pause: if you buy (no-load) mutual funds through the parent company, you'll get them at no commission. Many brokerages have No Transaction Fee (NTF) agreements with companies so that you can buy many funds for free. Still look out for that expense ratio though (which is probably paying for that NTF advantage). As sort of a middle ground: index funds can have very low expense ratios, track the same index as an ETF, can be tax-efficient or tax-managed, free to purchase, easy to dollar-cost average and easier to automate/understand. Further reading:
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Why Are Credit Card Rates Increasing / Credit Limits Falling?
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Of course your situation is very hurtful at a personal level, and I sympathize. I just don't get your point about being driven further into debt? It would seem that with a lower credit score you are prevented from taking on more debt. That can absolutely be hurtful especially to someone who runs a business that relies on short term credit. As for why they do this, they do it to reduce their risk - they don't want to lend more money, they are afraid that you will lose your job and default. Of course it is not as personal as I am writing it, not for you (they don't target you personally - they target your credit profile) and not for them (it is a matter of how the market views the debt and how much they can trade on such debt, not what they want to do personally). As for the TARP bailouts not releasing enough credit - this is reality. Goverment always thinks it can influence the situation more than it actually can. In order to unfreeze credit there needs to be a growing economy that makes the risk look acceptable. No amount of Goverment nudging will really change that more than marginally. By the way, legislation like this (forcing credit card companies to not raise their rates) can lead to credit restrictions. By artifically forcing the rates down the risk has to be ballanced somewhere - so it will be ballanced by lowering credit lines or by other means. Like any price control, if you restrict the price, it causes shortages. Intrest rates are the price of credit.
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I file 83(b) election, but did't include a copy of it in that year’s tax return
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This may be relevant: it suggests that IRS is lenient with the attachment of the form with 1040. To paraphrase: "The ruling involved a taxpayer who timely filed the election with the IRS within 30 days of the property transfer but who did not attach a copy of the election to his or her Form 1040 for the year of the transfer. Fortunately for the taxpayer in question, the ruling indicated that the submission of the election to the IRS within 30 days of the property transfer fulfilled the requirements for a valid election, and the failure to attach the copy to the tax return did not affect the validity of the election. The IRS requested that the taxpayer forward a copy of the election to the IRS to be associated with the processing of the tax return. - See more at: http://www.bnncpa.com/services/employee_benefit_plans/blog/irs_rules_that_failure_to_attach_83b_election_to_form_1040_did_not_invalida#sthash.0c3h2nJY.dpuf" If someone wants to grok the IRS ruling: http://www.irs.gov/pub/irs-wd/1405008.pdf And this is the article where I saw the above referenced. www.bnncpa.com/services/employee_benefit_plans/blog/irs_rules_that_failure_to_attach_83b_election_to_form_1040_did_not_invalida
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Historical stock prices: Where to find free / low cost data for offline analysis?
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I also prefer to crunch the numbers myself. Here are some resources:
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What evidence exists for claiming that you cannot beat the market?
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There seems to be a common sentiment that no investor can consistently beat the market on returns. What evidence exists for or against this? First off, even if the markets were entirely random there would be individual investors that would consistently beat the market throughout their lifetime entirely by luck. There are just so many people this is a statistical certainty. So let's talk about evidence of beating the market due to persistent skill. I should hedge by saying there isn't a lot of good data here as most understandably most individual investors don't give out their investment information but there are some ok datasets. There is weak evidence, for instance, that the best individual investors keep outperforming and interestingly that the trading of individual investors can predict future market movements. Though the evidence is more clear that individual investors make a lot of mistakes and that these winning portfolios are not from commonly available strategies and involve portfolios that are much riskier than most would recommend. Is there really no investment strategy that would make it likely for this investor to consistently outperform her benchmark? There are so, many, papers (many reasonable even) out there about how to outperform benchmarks (especially risk-adjusted basis). Not too mention some advisers with great track records and a sea of questionable websites. You can even copy most of what Buffet does if you want. Remember though that the average investor by definition makes the average "market" return and then pays fees on top of that. If there is a strategy out there that is obviously better than the market and a bunch of people start doing it, it quickly becomes expensive to do and becomes part the market. If there was a proven, easy to implement way to beat the market everyone would do it and it would be the market. So why is it that on this site or elsewhere, whenever an active trading strategy is discussed that potentially beats the market, there is always a claim that it probably won't work? To start with there are a large number of clearly bad ideas posed here and elsewhere. Sometimes though the ideas might be good and may even have a good chance to beat the market. Like so many of the portfolios that beat the market though and they add a lot of uncertainty and in particular, for this personal finance site, risk that the person will not be able to live comfortably in retirement. There is so much uncertainty in the market and that is why there will always be people that consistently outperform the market but at the same time why there will be few, if any, strategies that will outperform consistently with any certainty.
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Theoretically, if I bought more than 50% of a company's stocks, will I own the company?
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The usual pattern is that shareholders don't run companies in a practical sense, so "if someone was just simply rich to buy > 50%, but does not know how to handle the company" doesn't change anything. In large companies, the involvement of shareholders is limited to a few votes on key issues such as allocating profit (how much to keep in company vs pay in dividends) and choosing board members. And board members also don't run the company - they oversee how the company is being run, and choose executives who will actually run the company. If a rich person simply buys 50% and doesn't desire to get personally involved, then they just vote for whatever board members seem apropriate and forget about it.
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What are the top “market conditions” to follow?
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The best advice I've heard regarding market conditions is: Buy into fear, and sell into greed. That is, get in when everyone is a bear and predicting economic collapse. Start selling when you hear stock picks at parties and family functions. That said. You are better off in the long term not letting emotion (of you or the market) control your investing decisions). Use dollar cost averaging to put a fixed amount in at fixed intervals and you will most likely end up better off for it.
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Is there any chance for a layperson to gain from stock exchange? [duplicate]
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Currencies are a zero-sum game. If you make money, someone else will lose it. Because bank notes sitting in a pile don't create anything useful. But shares in companies are different, because companies actually do useful things and make money, so it's possible for all investors to make money. The best way to benefit is generally to put your money into a low-cost index fund and then forget about it for at least five years.
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collateralized mortgage obligations
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Actually, you're missing the key feature of CDOs. Most CDOs use (much to our economic misery, ultimately) a system call tranching. To simplify this idea, I'll make a two tranch example. Suppose I buy mortgages covering a face value of $120,000,000. Because they are subprime, if I just put them in a pool and finance them with bonds, the rating will be lousy and most investors will shun them (at least investors who are safety oriented). What I do is divide them into two tranches. One bond issue is for $100,000,000 and another for $20,000,000. The idea is that any defaulting mortgage comes out of the latter bond issue. I'll probably keep these bonds (the lower tranch). Thus buyers of the first issue are safe unless defaults exceed $20,000,000. Then the rating agencies rate the first issue AAA and it gets snapped up by investors. In a strict sense it is overcollateralized, basically the entire $120,000,000 backs up the first bond issue. In reality, many CDOs had multiple tranches, with the lowest tranch being retained by the underwriters and the other tranches sold as bonds of various ratings.
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How can my dad (grandpa) transfer shares to my 2 year old son?
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A UTMA may or may not fit your situation. The main drawbacks to a UTMA account is that it will count against your child for financial aid (it counts as the child's asset). The second thing to consider is that taxes aren't deferred like in a 529 plan. The last problem of course is that when he turns 18 he gets control of the account and can spend the money on random junk (which may or may not be important to you). A 529 plan has a few advantages over a UTMA account. The grandparents can open the account with your son as the beneficiary and the money doesn't show up on financial aid for college (under current law which could change of course). Earnings grow tax free which will net you more total growth. You can also contribute substantially more without triggering the gift tax ~$60k. Also many states provide a state tax break for contributing to the state sponsored 529 plan. The account owner would be the grandparents so junior can't spend the money on teenage junk. The big downside to the 529 is the 10% penalty if the money isn't used for higher education. The flip side is that if the money is left for 20 years you will also have additional growth from the 20 years of tax free growth which may be a wash depending on your tax bracket and the tax rates in effect over those 20 years.
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Possible Risks of Publicizing Personal Stock Portfolio
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I am considering making my investment history publicly available online What is the benefit you are looking for by doing this? Just to establish that you are a successful investor, so in long run can predict things ... have tons of followers? If so yes. Go ahead. Updates to the portfolio would have to be near real-time than post facto else no one will believe you and it would be useless. are there any reasons (legal, personal, etc.) not to publicize my personal investment history legal, depends on country; I can't think any [check the agreement with your broker / depository] on how much can be displayed. i.e. they may forbid from revealing contract ref / or some other details. On Personal front, it depends who takes a liking to your stuff. Relatives: They know you are making huge profits and may want to borrow stuff ... or queue up to you requesting to make similar huge profits for them; only to realize when there is loss they blame you ... this can strain relationships. Friends: Although close friends may have a general idea, if you are too successful and it shows; it can have its own set of issues to deal with. Colleagues / Manager: If you are too successful, it may mean you may notionally be earning more than them ... they would start unconsciously monitoring your behaviour ... this guy spends all day in office researching for stocks and doesn't work. That way he knows how to pick good stock ... he is wasting company time. The same happens if you are loosing stock ... a unrelated bad day you are having maybe equated to loss in stocks. Depending on the job / roles, they may move you to different role as the perceived risk of you swindling goes up. Generally important work doesn't get assigned, as it would be assumed that if you are successful in investing, you may quite soon and start full time into it. Identify Theft: As mentioned by keshlam, to much data one can easily risk identity theft. Realize phone banking to get some routine stuff just asks for basic details [that are available on face book] and few recent debits / credits to the account. This will be easy see the trades you have done. None of us here are expert identity theifs. But the real one have tons of way t
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Paying myself a dividend from ltd company
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Adding to webdevduck's answer: Before you calculate your profits, you can pay money tax-free into a pension fund for the company director (that is you). Then if you pay yourself dividends, if you made lots of profit you don't have to pay it all as dividends. You can take some where the taxes are low, and then pay more money in later years. What you must NOT do is just take the money. The company may be yours, but the money isn't. It has to be paid as salary or dividend. (You can give the company director a loan, but that loan has to be repaid. Especially if a limited company goes bankrupt, the creditors would insist that loans from the company are repaid). After a bit more checking, here's the optimal approach, perfectly legal, expected and ethical: You pay yourself a salary of £676 per month. That's the point where you get all the advantages of national insurance without having to pay; above that you would have to pay 13.8% employers NI contributions and 12% employee's NI contributions, so for £100 salary the company has to pay £113.80 and you receive £88.00. Below £676 you pay nothing. You deduct the salary from your revenue, then you deduct all the deductible business costs (be wise in what you try to deduct), then you pay whatever you want into a pension fund. Well, up to I think £25,000 per year. The rest is profit. The company pays 19% corporation tax on profits. Then you pay yourself dividends. Any dividends until your income is £11,500 per year are tax free. Then the next £5,000 per year are tax free. Then any dividends until income + dividends = £45,000 per year is taxed at 7.5%. It's illegal to pay so much in dividends that the company can't pay its bills. Above £45,000 you decide if you want your money now and pay more tax, or wait and get it tax free. Every pound of dividend above £45,000 a year you pay 32.5% tax, but there is nobody forcing you to take the money. You can wait until business is bad, or you want a loooong holiday, or you retire. So at that time you will stay below £45,000 per year and pay only 7.5% tax.
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How can I find out what factors are making a stock's price rise?
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At any moment, the price is where the supply (seller) and demand (buyer) intersect. This occurs fast enough you don't see it as anything other than bid/ask. What moves it? News of a new drug, device, sandwich, etc. Earning release, whether above or below expectations, or even dead-on, will often impact the price. Every night, the talking heads try to explain the day's price moves. When they can't, they often report "profit taking" for a market drop, or other similar nonsense. Some moves are simple random change.
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Understanding the phrase “afford to lose” better
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The way I approach "afford to lose", is that you need to sit down and figure out the amount of money you need at different stages of your life. I can look at my current expenses and figure out what I will always roughly be paying - bills, groceries, rent/mortgage. I can figure out when I want to retire and how much I want to live on - I generally group 401k and other retirement separately to what I want to invest. With these numbers I can figure out how much I need to save to achieve this goal. Maybe you want to purchase a house in 5 years - figure out the rough down payment and include that in your savings plan. Continue for all capital purchases that you can think you would aim for. Subtract your income from this and you have the amount of money you have greater discretion over. Subtracting current liabilities (4th of July holiday... christmas presents) and you have the amount you could "afford to lose". As to the asset allocation you should look at, as others have mentioned that the younger you the greater your opportunity is to recoup losses. Personally I would disagree - you should have some plan for the investment and use that goal to drive your diversification.
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Looking at Options Liquidity: what makes some stocks so attractive for options traders?
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The penny pilot program has a dramatic effect on increasing options liquidity. Bids can be posted at .01 penny increments instead of .05 increments. A lot of money is lost dealing with .05 increments. Issues are added to the penny pilot program based on existing liquidity in both the stock and the options market, but the utility of the penny pilot program outweighs the discretionary liquidity judgement that the CBOE makes to list issues in that program. The reason the CBOE doesn't list all stocks in the penny pilot program is because they believe that their data vendors cannot handle all of the market data. But they have been saying this since 2006 and storage and bandwidth technology has greatly improved since then.
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A friend wants to use my account for a wire transfer. Is this a scam or is it legitimate?
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100% scam. This is classic of mixing real (Exxon) with fiction. This gives credibility to story. Don't give any thing, there is no damage yet. If you take the bait, there are multiple ways to get money from you.
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Cash out 401k for house downpayment
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Absolutely never.Even in a hot market, it's like picking up dimes in front of a bulldozer. It's just plain stupid. If you can't afford a 20% down payment and a 15 year mortgage, just rent.
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Ballpark salary equivalent today of “healthcare benefits” in the US?
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As a contractor, I have done this exact calculation many times so I can compare full time employment offers when they come. The answer varies greatly depending on your situation, but here's how to calculate it: So, subtracting the two and you get I've run many different scenarios with multiple plans and employers, and in my situation with a spouse and 1 child, the employer plans usually ended up saving me approximately $5k per year. So then, to answer your question: ...salary is "100k", "with healthcare", or then "X" "with no healthcare" - what do we reckon? I reckon I would want to be paid $5K more, or $105K. This is purely hypothetical though and assumes there are no other differences except for with or without health insurance. In reality, contractor vs employee will have quite a few other differences. But in general, the calculation varies by company and the more generous the employer's health benefits, the more you need to be compensated to make up for not having it. Note: the above numbers are very rough, and there are many other factors that come into play, some of which are: As a side note, many years ago, during salary talks with a company, I was able to negotiate $2K in additional yearly salary by agreeing not to take the health insurance since I had better insurance through my spouse. Health insurance in the US was much cheaper back then so I think closer to $5K today would be about right and is consistent with my above ballpark calculation. I always wondered what would have happened if I turned around and enrolled the following year. I suspect had I done that they could not have legally lowered my salary due to my breaking my promise, but I wouldn't be surprised if I didn't get a raise that year either.
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Could someone please provide an example of a portfolio similiar to the GFP or Couch potato, but for Australia?
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The portfolio described in that post has a blend of small slices of Vanguard sector funds, such as Vanguard Pacific Stock Index (VPACX). And the theory is that rebalancing across them will give you a good risk-return tradeoff. (Caveat: I haven't read the book, only the post you link to.) Similar ETFs are available from Vanguard, iShares, and State Street. If you want to replicate the GFP exactly, pick from them. (If you have questions about how to match specific funds in Australia, just ask another question.) So I think you could match it fairly exactly if you wanted to. However, I think trying to exactly replicate the Gone Fishin Portfolio in Australia would not be a good move for most people, for a few reasons: Brokerage and management fees are generally higher in Australia (smaller market), so dividing your investment across ten different securities, and rebalancing, is going to be somewhat more expensive. If you have a "middle-class-sized" portfolio of somewhere in the tens of thousands to low millions of dollars, you're cutting it into fairly small slices to manually allocate 5% to various sectors. To keep brokerage costs low you probably want to buy each ETF only once every one-two years or so. You also need to keep track of the tax consequences of each of them. If you are earning and spending Australian dollars, and looking at the portfolio in Australian dollars, a lot of those assets are going to move together as the Australian dollar moves, regardless of changes in the underlying assets. So there is effectively less diversification than you would have in the US. The post doesn't mention the GFP's approach to tax. I expect they do consider it, but it's not going to be directly applicable to Australia. If you are more interested in implementing the general approach of GFP rather than the specific details, what I would recommend is: The Vanguard and superannuation diversified funds have a very similar internal split to the GFP with a mix of local, first-world and emerging market shares, bonds, and property trusts. This is pretty much fire-and-forget: contribute every month and they will take care of rebalancing, spreading across asset classes, and tax calculations. By my calculations the cost is very similar, the diversification is very similar, and it's much easier. The only thing they don't generally cover is a precious metals allocation, and if you want that, just put 5% of your money into the ASX:GOLD ETF, or something similar.
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When is Cash Value Life Insurance a good or bad idea?
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Buy term and invest the difference is certainly the standard recommendation, and for good reason. When you start looking at some sample numbers the "buy term and invest the difference" strategy starts to look very good. Here are the rates I found (27 yr old in Texas with good health, non-smoker, etc): $200k term life: $21/month $200k whole life: $177/month If you were to invest the difference in a retirement account for 40 years, assuming a 7% rate of return (many retirement planning estimates use 10%) you would have $411,859 at the end of that period. (If you use 10% that figure jumps to over $994k.) Needless to say, $400k in a retirement account is better than a $200k death benefit. Especially since you can't get the death benefit AND the cash value. Certainly one big difficulty is making sure you invest that difference. The best way to handle that is to set up a direct deposit that goes straight from your paycheck to the retirement account before it even touches your bank account. The next best thing would be an automatic transfer from your bank account. You may wonder 'What if I can no longer afford to invest that money?' First off, take a second and third look at your finances before you start eating into that. But if financial crisis comes and you truly can't afford to fund your own life insurance / retirement account then perhaps it will be a good thing you're not locked into a life insurance policy that forces you to pay those premiums. That extra freedom is another benefit of the "buy term and invest the difference" strategy. It is great that you are asking this question now while you are young. Because it is much easier to put this strategy into play now while you are young. As far as using a cash value policy to help diversify your portfolio: I am no expert in how to allocate long term investments after maxing out my IRA and 401k. (My IRA maxes out at $5k/year, another $5k for my wife's, another $16.5k for my 401k.) Before I maxed that out I would have my house paid for and kid's education saved for. And by then it would make sense to pay a financial adviser to help you manage all those investments. They would be the one to ask about using a cash value policy similar to @lux lux's description. I believe you should NEVER PUT YOUR MONEY INTO SOMETHING YOU DON'T UNDERSTAND. Cash value policies are complex and I don't fully understand them. I should add that of course my calculations are subject to the standard disclaimer that those investment returns aren't guaranteed. As with any financial decision you must be willing to accept some level of risk and the question is not whether to accept risk, but how much is acceptable. That's why I used 7% in my calculation instead of just 10%. I wanted to demonstrate that you could still beat out whole life if you wanted to reduce your risk and/or if the stock market performs poorly.
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