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Is there any instance where less leverage will get you a better return on a rental property?
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QUICK ANSWER When it comes to fixed income assets, whether rental real estate or government bonds, it's unusual for highly-leveraged assets to yield less than the same asset unleveraged or lowly-leveraged. This is especially so in countries where interest costs are tax deductible. If we exclude capital losses (i.e. the property sells in future at a price less than it was purchased) or net rental income that doesn't keep up with maintenance, regulatory, taxation, inflation and / or other costs, there is one primary scenario where higher leverage results in lower yields compared to lower leverage, even if rental income keeps up with non-funding costs. This occurs when variable rate financing is used and rates substantially increase. EXPLANATION Borrowers and lenders in different countries have different mortgage rate customs. Some are more likely to have long-term fixed rates; some prefer variable rates; and others are a hybrid, i.e. fixed for a few years and then become variable. If variable rates are used for a mortgage and the reference rates increase substantially, as they did in the US during the 1970s, the borrower can easily become "upside-down," i.e. owe more on the mortgage than the property is then worth, and have mortgage service costs that exceed the net rental income. Some of those costs aren't easy to pass along to renters, even when there are periodic lease renewals or base rent increases referencing inflation rates. Central banks set policies for what would be the lowest short-term rates in a country that has such a bank. Private sector rates are established broadly by supply and demand for credit and can thus diverge markedly from central bank rates. Over time, the higher finance-carrying-cost-to-net-rental-income ratio should abate as (1) rental market prices change to reflect the costs and (2) the landlord can reinvest his net rental income at a higher rate. In the short-term though, this can result in the landlord having to "eat" the costs making his yield on his leveraged fixed income asset less than what he would have without leverage, even if the property was later sold at same price regardless of financing method. ========== Interestingly, and on the flip side, this is one of the quirks in finance where an accounting liability can become, at least in part, an economic asset. If a landlord borrows at a high loan-to-value ratio for a fixed interest rate for the life of the mortgage and rates, variable and fixed, were to increase substantially, the difference between his original rate and the present rates accrues to him. If he's able to sell the property with the loan attached (which is not uncommon for commercial, industrial and sometimes municipal real estate), the buyer will be assuming a liability with a lower carrying cost than his present alternatives and will hence pay a higher price for the property than if it were unleveraged. With long-term rates in many economically advanced countries at historic lows, if a borrower today were to take a long-term fixed rate loan and rates shortly after increased substantially, he may have an instant profit in this scenario even if his property hasn't increased in value.
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If the co-signer on my car loan dies, can the family take the car from me like they're threatening to?
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Possession is 9/10 of the law, and any agreement between you and your grandfather is covered under the uniform commercial code covering contracts. As long as your fulfilling your obligation of making payments, the contract stands as originally agreed upon between you and the lender. In short, the car is yours until you miss payments, sell it, or it gets totalled. The fact that your upside down on value to debt isn't that big of a deal as long as you have insurance that is covering what is owed.
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Online tools for monitoring my portfolio gains/losses in real time?
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The trick is real time. I like to wake up in the morning, turn on my computer and see at a glance the gain or loss data on each of my stock and bond at that moment. Companies like Ameritrde offer them, but you have to enroll and trade stock in them.
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Can I profit from anticipating a drop in value?
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To expand on the comment made by @NateEldredge, you're looking to take a short position. A short position essentially functions as follows: Here's the rub: you have unlimited loss potential. Maybe you borrow a share and sell it at $10. Maybe in a month you still haven't closed the position and now the share is trading at $1,000. The share lender comes calling for their share and you have to close the position at $1,000 for a loss of $990. Now what if it was $1,000,000 per share, etc. To avoid this unlimited loss risk, you can instead buy a put option contract. In this situation you buy a contract that will expire at some point in the future for the right to sell a share of stock for $x. You get to put that share on to someone else. If the underlying stock price were to instead rise above the put's exercise price, the put will expire worthless — but your loss is limited to the premium paid to acquire the put option contract. There are all sorts of advanced options trades sometimes including taking a short or long position in a security. It's generally not advisable to undertake these sorts of trades until you're very comfortable with the mechanics of the contracts. It's definitely not advisable to take an unhedged short position, either by borrowing someone else's share(s) to sell or selling an option (when you sell the option you take the risk), because of the unlimited loss potential described above.
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When following a buy and hold investment strategy, on what conditions should one sell?
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You talk about an individual not being advised to sell (or purchase) in response to trends in the market in such a buy and hold strategy. But think of this for a moment: You buy stock ABC for $10 when both the market as a whole and stock ABC are near the bottom of a bear market as say part of a value buying strategy. You've now held stock ABC for a number of years and it is performing well hitting $50. There is all good news about stock ABC, profit increases year after year in double digits. Would you consider selling this stock just because it has increased 400%. It could start falling in a general market crash or it could keep going up to $100 or more. Maybe a better strategy to sell ABC would be to place a trailing stop of say 20% on the highest price reached by the stock. So if ABC falls, say in a general market correction, by less than 20% off its high and then rebounds and goes higher - you keep it. If ABC however falls by more than 20% off its high you automatically sell it with your stop loss order. You may give 20% back to the market if the market or the stock crashes, but if the stock continues going up you benefit from more upside in the price. Take AAPL as an example, if you bought AAPL in March 2009, after the GFC, for about $100, would you have sold it in December 2011 when it hit $400. If you did you would have left money on the table. If instead you placed a trailing stop loss on AAPL of 20% you would have been still in it when it hit its high of $702 in September 2012. You would have finally been stopped out in November 2012 for around the $560 mark, and made an extra $160 per share. And if your thinking, how about if I decided to sell AAPL at $700, well I don't think many would have picked $700 as the high in hindsight. The main benefit of using stop losses is that it takes your emotions out of your trading, especially your exits.
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what is a mortgage gift exchange?
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I'm guessing since I don't know the term, but it sounds like you're asking about the technique whereby a loan is used to gather multiple years' gift allowance into a single up-front transfer. For the subsequent N years, the giver pays the installments on the loan for the recipient, at a yearly amount small enough to avoid triggering Gift Tax. You still have to pay income tax on the interest received (even though you're giving them the money to pay you), and you must charge a certain minimum interest (or more accurately, if you charge less than that they tax you as if the loan was earning that minimum). Historically this was used by relatively wealthy folks, since the cost of lawyers and filing the paperwork and bookkeeping was high enough that most folks never found out this workaround existed, and few were moving enough money to make those costs worthwhile. But between the "Great Recession" and the internet, this has become much more widely known, and there are services which will draw up standard paperwork, have a lawyer sanity-check it for your local laws, file the official mortgage lien (not actually needed unless you want the recipient to also be able to write off the interest on their taxes), and provide a payments-processing service if you do expect part or all of the loan to be paid by the recipient. Or whatever subset of those services you need. I've done this. In my case it cost me a bit under $1000 to set up the paperwork so I could loan a friend a sizable chunk of cash and have it clearly on record as a loan, not a gift. The amount in question was large enough, and the interpersonal issues tricky enough, that this was a good deal for us. Obviously, run the numbers. Websearching "family loan" will find much more detail about how this works and what it can and can't do, along with services specializing in these transactions. NOTE: If you are actually selling something, such as your share of a house, this dance may or may not make sense. Again, run the numbers, and if in doubt get expert advice rather than trusting strangers on the web. (Go not to the Internet for legal advice, for it shall say both mu and ni.)
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What is the preferred way to set up personal finances?
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There's a lot of personal preference and personal circumstance that goes into these decisions. I think that for a person starting out, what's below is a good system. People with greater needs probably aren't reading this question looking for an answer. How many bank accounts should I have and what kinds, and how much (percentage-wise) of my income should I put into each one? You should probably have one checking account and one savings / money market account. If you're total savings are too low to avoid fees on two accounts, then just the checking account at the beginning. Keep the checking account balance high enough to cover your actual debits plus a little buffer. Put the rest in savings. Multiple bank accounts beyond the basics or using multiple banks can be appropriate for some people in some circumstances. Those people, for the most part, will have a specific reason for needing them and maybe enough experience at that point to know how many and where to get them. (Else they ask specific questions in the context of their situation.) I did see a comment about partners - If you're married / in long-term relationship, you might replicate the above for each side of the marriage / partnership. That's a personal decision between you and your partner that's more about your philosophy in the relationship then about finance specifically. Then from there, how do I portion them out into budgets and savings? I personally don't believe that there is any generic answer for this question. Others may post answers with their own rules of thumb. You need to budget based on a realistic assessment of your own income and necessary costs. Then if you have money some savings. Include a minimal level of entertainment in "necessary costs" because most people cannot work constantly. Beyond that minimal level, additional entertainment comes after necessary costs and basic savings. Savings should be tied to your long term goals in addition to you current constraints. Should I use credit cards for spending to reap benefits? No. Use credit cards for the convenience of them, if you want, but pay the full balance each month and don't overdo it. If you lack discipline on your spending, then you might consider avoiding credit cards completely.
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Tools to evaluate REITs
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REIT's are a different beast than your normal corporate stock (such as $AAPL). Here is a good article to get you started. From there you can do some more research into what you think you will need to truly evaluate an REIT. How To Assess A Real Estate Investment Trust (REIT) Excerpt: When evaluating REITs, you will get a clearer picture by looking at funds from operations (FFO) rather than looking at net income. If you are seriously considering the investment, try to calculate adjusted funds from operations (AFFO), which deducts the likely expenditures necessary to maintain the real estate portfolio. AFFO is also a good measure of the REIT's dividend-paying capacity. Finally, the ratio price-to-AFFO and the AFFO yield (AFFO/price) are tools for analyzing an REIT: look for a reasonable multiple combined with good prospects for growth in the underlying AFFO. Good luck!
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Why might it be advisable to keep student debt vs. paying it off quickly?
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Congratulations for achieving an important step in the road to financial freedom. Some view extending loan payment of loans that allow the deduction of interest as a good thing. Some view the hit on the credit score by prematurely paying off an installment loan as a bad thing. Determining the order of paying off multiple loans in conjunction with the reality of income, required monthly living expense, and the need to save for emergencies is highly individualized. Keeping an artificial debt seems to make little sense, it is an expensive insurance policy to chase a diminishing tax benefit and boost to a credit score. Keep in mind it is a deduction, not a credit, so how much you save depends on your tax bracket. It might make sense for somebody to extend the loan out for an extra year or two, but you can't just assume that that advice applies in your situation. Personally I paid off my student loan early, as soon as it made sense based on my income, and my situation. I am glad I did, but for others the opposite made more sense.
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Risk tolerance as I age
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You say you have 90% in stocks. I'll assume that you have the other 10% in bonds. For the sake of simplicity, I'll assume that your investments in stocks are in nice, passive indexed mutual funds and ETFs, rather than in individual stocks. A 90% allocation in stocks is considered aggressive. The problem is that if the stock market crashes, you may lose 40% or more of your investment in a single year. As you point out, you are investing for the long term. That's great, it means you can rest easy if the stock market crashes, safe in the hope that you have many years for it to recover. So long as you have the emotional willpower to stick with it. Would you be better off with a 100% allocation in stocks? You'd think so, wouldn't you. After all, the stock market as a whole gives better expected returns than the bond market. But keep in mind, the stock market and the bond market are (somewhat) negatively correlated. That means when the stock market goes down, the bond market often goes up, and vice versa. Investing some of your money in bonds will slightly reduce your expected return but will also reduce your standard deviation and your maximum annual loss. Canadian Couch Potato has an interesting write-up on how to estimate stock and bond returns. It's based on your stocks being invested equally in the Canadian, U.S., and international markets. As you live in the U.S., that likely doesn't directly apply to you; you probably ignore the Canadian stock market, but your returns will be fairly similar. I've reproduced part of that table here: As you can see, your expected return is highest with a 100% allocation in stocks. With a 20 year window, you likely can recover from any crash. If you have the stomach for it, it's the allocation with the highest expected return. Once you get closer to retirement, though, you have less time to wait for the stock market to recover. If you still have 90% or 100% of your investment in stocks and the market crashes by 44%, it might well take you more than 6 years to recover. Canadian Couch Potato has another article, Does a 60/40 Portfolio Still Make Sense? A 60/40 portfolio is a fairly common split for regular investors. Typically considered not too aggressive, not too conservative. The article references an AP article that suggests, in the current financial climate, 60/40 isn't enough. Even they aren't recommending a 90/10 or a 100/0 split, though. Personally, I think 60/40 is too conservative. However, I don't have the stomach for a 100/0 split or even a 90/10 split. Okay, to get back to your question. So long as your time horizon is far enough out, the expected return is highest with a 100% allocation in stocks. Be sure that you can tolerate the risk, though. A 30% or 40% hit to your investments is enough to make anyone jittery. Investing a portion of your money in bonds slightly lowers your expected return but can measurably reduce your risk. As you get closer to retirement and your time horizon narrows, you have less time to recover from a stock market crash and do need to be more conservative. 6 years is probably too short to keep all your money in stocks. Is your stated approach reasonable? Well, only you can answer that. :)
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Quantiative Easing fuels stock markets, but why?
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There's a premium or discount for various stocks subject to influence by the alternatives available to investors, meaning investments are susceptible to the principle of supply and demand. This is easily seen when industries or business models get hot, and everybody wants a tech company, a social media company, or a solar company in his portfolio. You'll see bubbles like the dotcom bubble, the RE bubble, etc., as people start to think that the industry and not its performance are all that matters. The stock price of a desired industry or company is inflated beyond what might otherwise be expected, to accommodate the premium that the investment can demand. So if bonds become uniformly less attractive in terms of returns, and certain institutional investors are largely obliged to continue purchasing them anyway, then flexible investors will need to look elsewhere. As more people want to buy stocks, the price rises. Supply and demand is sometimes so elementary it feels nearly counter-intuitive, but it applies here as elsewhere.
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How many days does Bank of America need to clear a bill pay check
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I just had this happen to me with Chase and speaking with my executive support contact, they will not return the funds unless you request them back. Which I find appalling and just one more reason that I don't like working with Chase!
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Money transfer from Australia to India - avoid receiving ends service tax
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All Bank fees were included in the service tax ambit [For example Check bounce, issue of duplicate statement, fees charged for remittance etc]. However as quite a few Banks structured the Remittance Business to show less charges and cover the difference in the Fx rate involved, the Govt has redone the service tax and one needs to pay Rs 120 for an amount of Rs 100,000. There is no way to avoid service tax on remittance if you are using a remittance service.
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Why do governments borrow money instead of printing it?
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I believe there are two ways new money is created: My favorite description of this (money creation) comes from Chris Martenson: the video is here on Youtube. And yes, I believe both can create inflation. In fact this is what happened in the US between 2004 and 2007: increasing loans to households to buy houses created an inflation of home prices.
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In what state should I register my web-based LLC?
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Is it really necessary? If $800 / year registration fee is too much to you, an LLC is apparently not something you need right now. Many people conduct web-based business online on personal terms. My suggestion is that you focus on your business first and try to grow it as much as you can before you get down to a company.
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How do financial services aimed at women differ from conventional services?
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Less so today, but there was a time that women played a smaller role in the household finances, letting the husband manage the family money. Women often found themselves in a frightening situation when the husband died. Still, despite those who protest to the contrary, men and women tend to think differently, how they problem solve, how they view risk. An advisor who understands these differences and listens to the client of either sex, will better serve them.
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How should I value personal use television for donation?
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Is it a tube television, digital, analog, what? Tube televisions are no longer made in (or imported to) the U.S., and if it's an analog set then it would require a digital converter just for anyone to use it for watching broadcast signals, since analog television signals are gone and have been replaced by DTV. That makes all the difference in the world as far as valuation. If it doesn't have resale value to begin with then I doubt you can put a real value on it for donation purposes.
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What college degree should I pursue to learn about stock and forex markets?
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There are several paths of study you could undertake. If you want to learn the fundamentals of the stock market and become a financial analyst, then finance, economics, and accounting (yes, accounting) are all good to study either on your own or in an institution. Furthermore, if you want to study a specific industry, it can't hurt to know a fair amount of the science behind that particular industry. For example, if you want to understand the pharmaceutical or biotechnology industries, knowledge of clinical trials, the FDA's approval process (in the US, at least), off-label uses for drugs, genetic engineering, etc. are all good to know. You don't have to become an expert, but having a firm grasp on the science is extremely useful when evaluating a company's prospects. If you're interested in becoming an algorithmic trader or a quant, then physics, certain fields of engineering, signals processing, applied math, computer science, or econometrics will get you much farther than a standard finance or accounting degree. Most people can learn the basics of finance; not everyone can learn advanced mathematics. A lot of the above applies to learning about the forex market as well. Economics is certainly helpful, especially central bank policy, but since the forex market is so massive and liquid, many mathematical tools are necessary because algorithms play a key role as well. Per littleadv's suggestion, an MBA with a concentration in finance may be an option for someone who already has a degree. Also, an MSF (Master of Science in Finance) or a degree in financial engineering (called an MFE, or ORFE, for Operations Research and Financial Engineering) are other, potentially better options for someone pursuing a more technical career. A high-octane trading firm may not care that you've taken marketing and management classes; they want to hire someone who can understand complex algorithms and design and implement new ones quickly. Some MSF programs are pre-experience programs, which means that in exchange for taking more time to complete, they don't expect you to have significant work experience in the financial industry. An MBA might require such experience, however.
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Calculating profits for a private fund
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The total number of shares on April 1st is 100 + 180 + 275 = 555. The price on April 1st is required. The current price is stated as $2, but $2 * 555 = $1110 and the current fund values is stated as $1500. Opting to take the current value as $1500, the price on April 1st can be calculated as $1500/555 = $2.7027. The amounts invested as number of shares x share price are: (Note these investment amounts do not match the example scenario's investment amounts, presumably because the example numbers are just made up.) The monthly returns can be calculated: The current values for each investor as invested amount x returns are: Checking the total:
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Insider Trading?
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Nope, its not legal. Easy to explain: If you know something that isn't public known ("inside") it's called insider trading. Hard to prove (impossible), but still illegal. To clarify: If the CEO says it AND its known in public its not illegal. In any case the CEO could face consequences (at least from his company).
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What are the usual terms of a “rent with an option to buy” situation?
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Things I would specifically draw your attention to: the contract typically allows for an "option" to purchase; it does not typically compel purchase, although this is seen the purchase price is negotiated before anything gets signed the option to buy is typically available to the renter for the period of the lease contract (ie., if it's a 12 month contract the renter can opt to buy at any time in that 12 months) the amount of rent paid over time that will be applied to the purchase price is negotiated up-front before anything gets signed rent is paid at a slight premium (as Joe notes, if the rent should be $1000 per month, expect to pay $1200 per month) if the renter walks away they walk away empty handed; they do not get back the premium Having said all that - it's a contract negotiated between renter and seller and all of this is negotiable. See also, ehow for a good overview.
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If a stock doesn't pay dividends, then why is the stock worth anything?
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This is an excellent question, one that I've pondered before as well. Here's how I've reconciled it in my mind. Why should we agree that a stock is worth anything? After all, if I purchase a share of said company, I own some small percentage of all of its assets, like land, capital equipment, accounts receivable, cash and securities holdings, etc., as others have pointed out. Notionally, that seems like it should be "worth" something. However, that doesn't give me the right to lay claim to them at will, as I'm just a (very small) minority shareholder. The old adage says that "something is only worth what someone is willing to pay you for it." That share of stock doesn't actually give me any liquid control over the company's assets, so why should someone else be willing to pay me something for it? As you noted, one reason why a stock might be attractive to someone else is as a (potentially tax-advantaged) revenue stream via dividends. Especially in this low-interest-rate environment, this might well exceed that which I might obtain in the bond market. The payment of income to the investor is one way that a stock might have some "inherent value" that is attractive to investors. As you asked, though, what if the stock doesn't pay dividends? As a small shareholder, what's in it for me? Without any dividend payments, there's no regular method of receiving my invested capital back, so why should I, or anyone else, be willing to purchase the stock to begin with? I can think of a couple reasons: Expectation of a future dividend. You may believe that at some point in the future, the company will begin to pay a dividend to investors. Dividends are paid as a percentage of a company's total profits, so it may make sense to purchase the stock now, while there is no dividend, banking on growth during the no-dividend period that will result in even higher capital returns later. This kind of skirts your question: a non-dividend-paying stock might be worth something because it might turn into a dividend-paying stock in the future. Expectation of a future acquisition. This addresses the original premise of my argument above. If I can't, as a small shareholder, directly access the assets of the company, why should I attribute any value to that small piece of ownership? Because some other entity might be willing to pay me for it in the future. In the event of an acquisition, I will receive either cash or another company's shares in compensation, which often results in a capital gain for me as a shareholder. If I obtain a capital gain via cash as part of the deal, then this proves my point: the original, non-dividend-paying stock was worth something because some other entity decided to acquire the company, paying me more cash than I paid for my shares. They are willing to pay this price for the company because they can then reap its profits in the future. If I obtain a capital gain via stock in as part of the deal, then the process restarts in some sense. Maybe the new stock pays dividends. Otherwise, perhaps the new company will do something to make its stock worth more in the future, based on the same future expectations. The fact that ownership in a stock can hold such positive future expectations makes them "worth something" at any given time; if you purchase a stock and then want to sell it later, someone else is willing to purchase it from you so they can obtain the right to experience a positive capital return in the future. While stock valuation schemes will vary, both dividends and acquisition prices are related to a company's profits: This provides a connection between a company's profitability, expectations of future growth, and its stock price today, whether it currently pays dividends or not.
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APR for a Loan Paid Off Monthly
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If your APR is quoted as nominal rate compounded monthly, the APR is 108.6 %. Here is the calculation, (done in Mathematica ). The sum of the discounted future payments (p) are set equal to the present value (pv) of the loan, and solved for the periodic interest rate (r). Details of the effective interest rate calculation can be found here. http://en.wikipedia.org/wiki/Effective_interest_rate#Calculation
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What happens to my savings if my country defaults or restructures its debt?
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In theory, anything can happen, and the world could end tomorrow. However, with a reasonably sane financial plan you should be able to ride this out. If the government cannot or won't immediately pay its debt in full, the most immediate consequence is that people are going to be unwilling to lend any more money in future, except at very high rates to reflect the high risk of future default. Presumably the government has got into this state by running a deficit (spending more than they collect in tax) and that is going to have to come to an abrupt end. That means: higher taxes, public service retrenchments and restrictions of service, perhaps cuts to social benefits, etc. Countries that get into this state typically also have banks that have lent too much money to risky customers. So you should also expect to see some banks get into trouble, which may mean customers who have money on deposit will have trouble getting it back. In many cases governments will guarantee deposits, but perhaps only up to a particular ceiling like $100k. It would be very possible to lose everything if you have speculative investments geared by substantial loans. If you have zero or moderate debt, your net wealth may decrease substantially (50%?) but there should be little prospect of it going to zero. It is possible governments will simply confiscate your property, but I think in a first-world EU country this is fairly unlikely to happen to bank accounts, houses, shares, etc. Typically, a default has led to a fall in the value of the country's currency. In the eurozone that is more complex because the same currency is used by countries that are doing fairly well, and because there is also turbulence in other major currency regions (JPY, USD and GBP). In some ways this makes the adjustment harder, because debts can't be inflated down. All of this obviously causes a lot of economic turbulence so you can expect house prices to fall, share prices to gyrate, unemployment to rise. If you can afford it and come stomach the risk, it may turn out to be a good time to buy assets for the long term. If you're reasonably young the largest impact on you won't be losing your current savings, but rather the impact on your future job prospects from this adjustment period. You never know, but I don't think the Weimar Republic wheelbarrows-of-banknotes situation is likely to recur; people are at least a bit smarter now and there is an inflation-targeting independent central bank. I think gold can have some room in a portfolio, but now is not the time to make a sudden drastic move into it. Most middle class people cannot afford to have enough gold to support them for the rest of their life, though they may have enough for a rainy day or to act as a balancing component. So what I would do to cope with this is: be well diversified, be sufficiently conservatively positioned that I would sleep at night, and beyond that just ride it out and try not to worry too much.
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Equity market inflow meaning
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Inflows to the US equity market can come from a variety of sources; for instance: You were paid a year-end bonus and decided to invest it in US equities instead of foreign equities, bonds, savings or debt reduction. You sold foreign equities, bonds, or other non-US equities and decided to invest in US equities. You decided a better use of cash in a savings account, CD or money market fund, was to invest in US equities. If for every buyer, there's a seller, doesn't that also mean that there were $25B in outflows in the same time period? Not necessarily. Generally, the mentions we see of inflows and outflows are net; that is, the gross investment in US equities, minus gross sales of US equities equals net inflows or outflows. The mere fact that I sold my position in, say, Caterpillar, doesn't mean that I had to re-invest in US equities. I may have bought a bond or a CD or a house. Because of fluctuations in existing stocks market value, bankruptcies and new issues, US equities never are and never will be a zero-sum game.
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Starting off as an investor
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You've asked eleven different questions here. Therefore, The first thing I'd recommend is this: Don't panic. Seek answers to your questions systematically, one at a time. Search this site (and others) to see if there are answers to some of them. You're in good shape if for no other reason than you're asking these when you're young. Investing and saving are great things to do, but you also have time going for you. I recommend that you use your "other eight hours per day" to build up other income streams. That potentially will get you far more than a 2% deposit. Any investment can be risky or safe. It depends on both your personal context and that of the larger economy. The best answers will come from your own research and from your advisors (since they will be able to see where you are financially, and in life).
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What argument(s) support the claim that long-term housing prices trend upward?
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It is supported by inflation and historical values. if you look at real estate as well as the stock market they have consistently increased over a long period of history even with short term drops. It is also based on inflation and the fact that the price of land and building material has increased over time.
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When filing a US 1065 as a General Partnership, do we combine our expenditures for a home office?
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Your home doesn't belong to the partnership, it belongs to you. So you can (if qualified) deduct home office usage as a business expense on your individual tax return. Same goes to your partner. Similarly any other unreimbursed expense.
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Why do stocks go up? Is it due to companies performing well, or what else? [duplicate]
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Prices can go up or down for a variety of reasons. If interest rates decline typically every stock goes up, and vice versa. Ultimately, there are two main value-related factors to a price of a stock: the dividends the company may issue or the payoff in the event the company is bought by someone else. Any dividend paid will give concrete value to a stock. For example, imagine a company has shares selling at $1.00 and they announce that they will pay a dividend at the end of the year of $1.00 per share. If their claim is believable then the stock is practically FREE at $1.00 a share, so in all likelihood the stock will go up a lot, just on the basis of the dividend alone. If a company is bought by another, they need to buy at least a majority of the shares, and in some cases all the shares. Since the price the buyer will be willing to pay for the company is related to its potential future income for the buyer, the more profitable the company is, the more a buyer will be willing to pay and hence the greater the value of the stock.
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How to build a U.S. credit history as a worker on a visa?
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Credit is important for many reasons. Establishing credit is an important step and should be no challenge for someone who already has good habits. The same lessons and advice that you would find for a student to establish credit would be applicable to your case as well. Factors that influence credit score, Since you are already established in your home country (Australia), you probably have a credit card (and references) that you can provide for the first few challenges (renting a car, renting an apartment). Here are the steps, Your credit score should improve quickly as the first couple of credit cards and the installment loan show good payment history, low utilization, and gain some age. After 1-2 years, you should have a good score.
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Why would a company care about the price of its own shares in the stock market?
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Stock price is an indicator about the health of the company. Increased profits (for example) will drive the stock price up; excessive debt (for example) will drive it down. The stock price has a profound effect on the company overall: for example, a declining share price will make it hard to secure credit, attract further investors, build partnerships, etc. Also, employees are often holding options or in a stock purchase plan, so a declining share price can severely dampen morale. In an extreme case, if share prices plummet too far, the company can be pressured to reverse-split the shares, and (eventually) take the company private. This recently happened to Playboy.
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Where can I see the detailed historical data for a specified stock?
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Yahoo Finance's Historical Prices section allows you to look up daily historical quotes for any given stock symbol, you don't have to hit a library for this information. Your can choose a desired time frame for your query, and the dataset will include High/Low/Close/Volume numbers. You can then download a CSV version of this report and perform additional analysis in a spreadsheet of your choice. Below is Twitter report from IPO through yesterday: http://finance.yahoo.com/q/hp?s=TWTR&a=10&b=7&c=2013&d=08&e=23&f=2014&g=d
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New car cash vs finance
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The question is about the dealer, right? The dealer isn't providing this financing to you, Alfa is, and they're paying the dealer that same "On the Road" price when you finance the purchase. So the dealer gets the same amount either way. The financing, through Alfa, means your payments go to Alfa. And they're willing to give you 3,000 towards purchase of the car at the dealer in order to motivate those who can afford payments but not full cash for the car. They end up selling more cars this way, keeping the factories busy and employees and stockholders happy along the way. At least, that's how it's supposed to work out.
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which types of investments should be choosen for 401k at early 20's?
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Split your contributions evenly across the funds on that list with the word "core" or "S&P" in the name. Maybe add "International Large Cap Index". Leave it & rebalance occasionally. Read a book on Modern Portfolio Theory sometime in the next 5 years.
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Economics Books
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i'm absolutely a newcomer in economics and i wish to understand how things work around finance. This is a pretty loaded question. To understand finance, you need the basics of economics. In almost every economics school in the country, you first study microeconomics and then economics. So, we'll start with micro. One of, if not the, most popular books is "Principles of Microeconomics" by Mankiw. This book covers the fundamentals of micro econ (opportunity, supply, demand, consumer choice, production, costs, basic game theory, and allocation of resources) in a clear and effective manner. It's designed for the novice and very easy to read. Like Mankiw's other book, "Principles of Macroeconomics" is also top notch. There is some overlap in key areas (i.e. opportunity cost, supply, demand, indifference curves, elasticity, taxation) because they are fundamental to economics and the overlap will always be there, but from there the book goes into key macro concepts like GDP, CPI, Employment, Monetary and Fiscal policy, and Inflation. An excellent intro primer indeed. Now that you have the fundamentals down, it's time to learn about finance. The best resource, in my opinion, is "Financial Markets" by Robert Shiller on Open Yale Courses. I've personally taken Prof. Shiller's class last semester, and the man is brilliant. The lectures cover every single aspect of finance and can turn the complete novice into a fairly experienced finance student. The first lecture also covers all the math required so you don't get lost at any point. Be warned, however, that the course is very deep. We used Fabozzi's textbook "Foundations of Financial Markets and Institutions," which is over 600 pages deep and we were required to know essentially all of it. Watch the videos and follow the readings and you'll be a finance whiz soon! Financial Markets on Open Yale And that's your roadmap to what you want. There are other economics books and it's true that the first few chapters of both Mankiw books are largely the same, but that's because any economics course always covers the basics first. If you want to look at other books, Krugman has written some good books as well. Be sure to read reviews because some books are meant for 2nd/3rd year econ students, so you don't want to get a too advanced book. At the novice level, we're interested in understanding the basic concepts so we can master Fabozzi. As for finance books - Fabozzi teaches you all the fundamentals of financial markets so you've got a powerful foundation. From there you can expand to more niche books such as books on investing or on monetary policy or whatever you want. Best of luck!
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How is taxation for youtube/twitch etc monetization handled in the UK?
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The difference between a hobby and a business is income. Yes, every country I know of allows you to do something as a hobby until it becomes profitable and then change it into a business once it becomes likely to turn a profit. There's usually a limit in terms of how much profit or revenue you can make before it must be declared as business. I'm sure someone else will mention the exact numbers for the UK.
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What are the consequences of being classified as a day trader, in Australia?
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In Australia the ATO can determine if you are considered a shareholder or a share trader. The ATO defines a shareholder as: A shareholder is a person who holds shares for the purpose of earning income from dividends and similar receipts. Whilst they define a share trader as: A share trader is a person who carries out business activities for the purpose of earning income from buying and selling shares. To find out the differences between them you can refer to the following link describing The difference between a share trader and a shareholder. The ATO also describes: To be classed as a share trader, you may be asked to provide evidence that demonstrates you are carrying on a business of share trading, for example: the purchase of shares on a regular basis through a regular or routine method a trading plan use of share trading techniques in managing your share acquisitions, such as decisions based on thorough analysis of relevant market information a contingency plan in the event of a major shift in the market. Losses incurred in the business of share trading are treated the same as any other losses from business. If your activities change from investor to trader, your investment changes from a CGT (capital gains tax) asset to trading stock. This can trigger CGT event for any investments you currently hold as they change from CGT assets to trading stock. Once you have changed over to a trader you will not be entitled to the 50% CGT discount for stocks held over 12 months. You will, however, be able to count any paper losses at the end of Financial Year to reduce your other income.
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Can I contribute to an IRA from investment income?
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Your contributions must come from "compensation". Quoting IRS Publication 590 on IRAs, "Generally, compensation is what you earn from working." So it is unlikely that your stock sale proceeds, if they're your sole source of income, can be used to fund your IRA. If you do have W-2 income, or self employment income, you can use the proceeds of a stock sale to fund an IRA. The IRS doesn't care where the exact dollars that go into the IRA come from, only that you earned (from working) at least as much as you contributed.
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How to calculate my real earnings from hourly temp-to-hire moving to salaried employee?
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I would not assume they would pay for any benefits. You will be responsible for paying entirely for health insurance and social security and Medicare. This move is most likely not in your best interests. At a minimum, I would charge double your current hourly rate and would charge for all hours worked including time and half for overtime. 3 times is actually probably a better choice if you want to cover holidays (which they will not pay you for), vacation time, etc. I know when I did project bids, we always priced at 2-3 times the salary we paid the employees.
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What numbers to look for investment returns
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(Value of shares+Dividends received)/(Initial investment) would be the typical formula though this is more of a percentage where 1 would indicate that you broke even, assuming no inflation to be factored. No, you don't have to estimate the share price based on revenues as I would question how well did anyone estimate what kind of revenues Facebook, Apple, or Google have had and will have. To estimate the value of shares, I'd likely consider what does my investment strategy use as metrics: Is it discounted cash flow, is it based on earnings, is it something else? There are many ways to determine what a stock "should be worth" that depending on what you want to believe there are more than a few ways one could go.
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Capitalize on a falling INR
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By no means is this a comprehensive list, but a few items to consider:
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What is meant by “unexpected expenses” in my 401k plan?
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IANAL, but it sounds like indemnification language. They are saying they have the option to charge expenses to participants if they would like. It should say explicitly (you mention that it does) who the 'default payer' is. Unexpected expenses could be anything that's not in the normal course of business. I know that doesn't help much, but some examples may be plan document restatements or admin expenses from plan failures/corrections. We have language in some of our PFDs that say in the absence of revenue-sharing a participants' share of expenses may be higher. Yes, 'from participant accounts' means they have the authority to deduct from your 401k account.
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The difference between Islamic Banks and Western Banks
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To answer your first part, its not an opposition to profit. It's an opposition to usury - the practice of charging excessive interest on loans. There are extensive passages in the Qur'an condemning the practice, and in many cases "excessive interest" is any interest. To the second part of the question, these may well be more risky investments. But if you're trying to build a strong and thriving community financial spirit, one might expect there to be significant social pressures to use the loaned money responsibly. Additionally, while it removes some of the penalty for failure, it doesn't remove the rewards for success. The incentive is still there to succeed. It's merely the penalty for failure is no longer financial ruination. It may also temper the incentive for banks to give money to riskier borrowers, but rather to prudently invest in ventures with an acceptable amount of risk. The question as to whether or not this is a "house of cards" likely depends on the questioner. Whether or not this is also true for the western banking system likely remains to be seen, but it hasn't exactly been doing a sterling job of convincing me it isn't true for the past decade.
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If stock price drops by the amount of dividend paid, what is the use of a dividend
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Another plus, besides supplemental income, to receiving dividend checks as opposed to reinvesting them is that those $$ are now out of the market and can't drop 50% or 60% like Y2K and 2008. The idea of investing for the long term is now fraught with worry after those two events, because the next time, (smart economists say), it might not come back - a la 25 years to recover from the great depression. Plusfact technological quantum leaps, IT, automation, and the robots are taking over - can't hold that back forever, and the market will be the first one to smell the end of the economic status quo, and head for the hills, or in this case, deep dark scary valleys.
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Do I pay a zero % loan before another to clear both loans faster?
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At the moment, you are paying about $1,300 interest each month (£431k @ 3.625% / 12) on your mortgage and repaying capital at about $1,500 per month. Paying $11,000 off your mortgage would save you about $9,000 as it is reduces your balance by about seven monthly capital repayments: but you will only see this benefit at the end of the mortgage because you will pay it off seven months earlier. There is only about $1,000 interest remaining on your car loans. Paying the $11,000 off your interest free loan then paying extra agianst the interest bearing loan brings that down to $500 and paying it off your interest bearing loan brings it down to $200. Either way, both car loans would be finished by early 2018. In summary, if you use the $11,000 against your car loans, you will save $8,500-$8,800 less than paying it off the mortage, but you will have no car loans in one year rather than three. Google spreadsheet for calculations here.
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Pay index fund expense ratios with cash instead of fund balance
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It seems at most a cosmetic difference - nothing keeps you from adding the 9$ cash to the fund the same day the fees are deducted from the shares.
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Why pay estimated taxes?
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While the US tax code does not directly impose an obligation to pay estimated taxes, it does impose a penalty on individuals for failure to pay enough taxes either through withholding or estimated tax. USMTG Anyone can choose how s/he wants to pay their taxes but they better deal with any consequences of not paying them instead of just complaining about it like most people do. Most people get the hatred towards the IRS but most complaints are misdirected and should be directed towards Congress who creates and messes around with the US Tax Code. Some people actually do not make estimated payments and pay any possible taxes with their returns knowing that there may be underpayment penalty. For those people, the penalty is relatively small compared to what they can do with the cash over a year's time (i.e. investing or paying down debt). It's their choice!
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Should I cancel an existing credit card so I can open another that has rewards?
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Hits to your credit rating for canceling one of the newer cards will be a small hit for a few months. You do have some options. I also believe that a person with good credit should have multiple cards: I like having a cash back card for the majority of our transactions. Unfortunately that card isn't accepted everywhere, so I have two other cards with broad market coverage to make sure we always have an option if the vendor doesn't take the main card. Also having multiple cards makes sure that if there is an issue with one card you are never caught without a card. One time the main card was rejected by a gas station because my wife just used the same account to buy gas across town. When we got home their was a fraud alert message on our phone.
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Paying Off Principal of Home vs. Investing In Mutual Fund
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Paying off the debt is low-risk, low-reward. You're effectively guaranteed a 4% return. If you buy a mutual fund, you're going to have to take some risk to have a decent chance of getting better than 4% and change return in the long run, which probably means a fund that invests primarily in stocks. Buying a stock mutual fund is high-risk, high reward, especially when you're in significant debt. On the other hand, 4% and change is very low-interest. If you wanted to buy stocks on margin, financing stock investments directly with debt, you'd pay a heck of a lot more. Bottom line: It comes down to your personal risk tolerance.
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Dividends - Why the push to reinvest?
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Good question, here are some possible answers: Its a Good Idea There is probably some validity to the statictics and having money invested, generally speaking, has proven far more valuable than having it sit in a savings account. It tends to reinforce strength Suppose you own two stocks, one that is a great performer, and one that isn't. Generally speaking the high performer will pay out more, and if you reinvest more into that stock, you will be wealthier if you contributed equally to both stocks. You might forget People tend to forget to do things that are not in the forefront, and reinvestment is one of those things that slip people's mind. One of the wealth building tools that people universally recommend is automation. Reinvesting is a way to automate one aspect of one's financial life. You might spend it on something else If you put the dividends into your checking account, there is a non-zero chance that it might get put towards something else. Better to have it out of sight and mind and invested. They make money Generally speaking, the more money you have in a brokerage account, the more the brokerage makes. So it is good for them, as well as yourself. While there is some attraction to being able to see a balance that is the result of dividend investments, its just far better to have them be poured right back into whatever investment seem appropriate.
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devastated with our retirement money that we have left
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When you say: I am 48 and my husband is 54. We have approx. 60,000.00 left in our retirement accounts. We want to move our money into something so our money will grow. We've been looking at annunities. We've talked to 4 different advisors about what is best for us. Bad mistake, I am so overwhelmed with the differences they all have til I can't even think straight anymore. @Havoc P is correct: ...It's very likely that 60k is not nearly enough, and that making the right investment choices will make only a small difference. You could invest poorly and maybe end up with 50K when you retire, or invest well and maybe end up with 80-90k. But your goal is probably more like a million dollars, or more, and most of that will come from future savings. This is what a planner can help you figure out in detail. TL; DR Here is my advice:
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Do credit checks affect credit scores?
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Hard pulls you give your explicit permission to run do affect your credit. Soft pulls do not. While hard pulls affect your score, they don't affect it much. Maybe a couple few point for a little while. In your daily activities, it is inconsequential. If you are prepping to get a mortgage, you should be mindful. Similar type hard pulls in a certain time window will only count once, because it is assume you are shopping. For example, mortgage shopping will result in a lot of hard pulls, but if they are all done in a fortnight, they only count against once. (I believe the time window is actually a month, but I have always had two weeks in my head as the safe window.) The reason soft pulls don't matter is because businesses typically won't make credit decisions based on them. A soft pull is so a business can find a list of people to make offers to, but that doesn't mean they ACTUALLY qualify. Only the information in a hard pull will tell them that. I don't know, but I suspect it is more along the lines of "give me everybody who is between 600 and 800 and lives in zip code 12344" not "what is series0ne's credit score?" A hard pull will lower your score because of a scenario where you open up many many lines of credit in a short period of time. The credit scoring models assume (I am guessing) that you are going to implode. You are either attempting to cover obligations you can't handle, or you are about to create a bunch of obligations you can't handle. Credit should be used as a convenient method of payment, not a source of wealth. As such, each credit line you open in a short time lowers the score. You are disincentivized to continue opening lines, and lenders at the end of your credit line opening spree will see you as riskier than the first.
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Can I save our credit with a quickie divorce?
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If you're not insolvent, doing something like this is both a moral and legal hazard: When you are insolvent, the tax and moral hazard issues can be a non-issue. Setting up a scenario that makes you appear to be insolvent is where the fraud comes in. If you decide to go down this road, spend a few thousand dollars on competent legal advice.
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How do financial services aimed at women differ from conventional services?
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It is just marketing and market segmentation. We could all shop at WalMart, but some people prefer wider aisles and mood music so they shop at Macys. Other people are fine shopping at Target or online. Women face no different challenges. The challenges in investing depend on who you are, where you are in life and what your goals are. I think it is fine to target a certain demographic over another, but they are just trying to make a niche. I prefer to not think about worst case scenarios, and I view all financial advisors with a healthy skepticism, regardless of gender.
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What traditionally happens to bonds when the stock market crashes?
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It depends on why the stocks crashed. If this happened because interest rates shot up, bonds will suffer also. On the other hand, stocks could be crashing because economic growth (and hence earnings) are disappointing. This pulls down interest rates and lifts bonds.
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How can I legally and efficiently help my girlfriend build equity by helping with a mortgage?
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I just wanted to give you a different perspective, as I own a house (purchased with a mortgage), with my girlfriend. I think it can be done safely and fairly, but you do need to involve legal help to do it right. There really is nothing to be terrified about, the extra cost to set this up was almost irrelevant in the bigger picture of legal costs around purchasing and the documents describing the ownership scheme are quite straightforward. Maybe it's a UK thing, but it seems rather commonplace here. We've chosen to hold this as "tenants in common" and use a trust deed for this when we purchased. We had a solicitor write the trust deed and it clearly states what percentage of the house is owned by either party and exactly what the steps would be taken, should we decide to end the trust (e.g. in case of a split-up). This includes things like the right to buy out the other person before selling on the market etc. We also had to make wills separately to indicate what should happen with our percentage of the property in case one of us died as with this type of ownership it doesn't automatically go to the other person. Finally we're both on the mortgage, which I guess is the main difference versus your situation. But again, you could get legal advice as to how this should best be handled.
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Avoid Capital Gains on Rental
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What you are looking for is a 1031 exchange. https://www.irs.gov/uac/like-kind-exchanges-under-irc-code-section-1031 Whenever you sell business or investment property and you have a gain, you generally have to pay tax on the gain at the time of sale. IRC Section 1031 provides an exception and allows you to postpone paying tax on the gain if you reinvest the proceeds in similar property as part of a qualifying like-kind exchange. Gain deferred in a like-kind exchange under IRC Section 1031 is tax-deferred, but it is not tax-free. You may also sell your house for bitcoin and record the sales price on the deed with an equal or lesser amount that you bought it for.
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Placing bid in market price
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Market price is just the bid or offer price of the last sell or buy order in the market. The price that you actually receive or pay will be the price that the person buying the stock off you or selling it to you will accept. If there are no other participants in the market to make up the other side of your order (i.e. to buy off you if you are selling or to sell to you if you are buying) the exchange pays large banks to be "market makers"; they fulfil your order using stocks that they don't want to either buy or sell just so that you get your order filled. When you place an order outside of market hours the order is kept on the broker's order books until the market reopens and then, at market opening time there is an opening "auction" at which orders are matched to opposing orders (i.e. each buy order will be matched with a sell) at a price determined by auction. You will not know what price the order was filled at until it has been filled. If you want to guarantee a price you can do so by placing a limit order that says not to pay more than a certain price for any unit of the stock.
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What are the ramifications of lawsuits over “breaches of fiduciary duty” for the average shareholder?
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Mostly these are results of arguments between shareholders. These suits come when shareholders alleged that directors didn't act in their best interests. Unless its a class action suit, I'd say there's no ramifications for an average shareholder.
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How to avoid getting back into debt?
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I'm going to subtly and cheekily change the obvious advice. There are three ways to deal with negative cashflow, not two: You're currently studying for a degree. You don't say what country you're in or how your studies are funded, but most people in the US, UK, and a fair number of other countries, run up debts while studying for a degree. They do this because a degree is valuable to them. They can't avoid it because the tuition alone costs more than most students can generate in income, never mind their living expenses. So by all means look for savings, (1). Clearly strangers on the internet can't just think up ways for you to spend less money without knowing anything about what you do spend money on. But you can at least list your expenditures for yourself, and see what's necessary. Consider also how much fun you want your studies to be: 4 years in a cold house to avoid paying for heating, and never going out with friends to avoid spending on unnecessary stuff is all very well. But with hindsight you'll regret torturing yourself if you're ever well-off enough to pay back whatever you would have borrowed to use for heating and fun. Only do (2) if it doesn't affect your studies or if the money you're paid justifies delaying the valuable asset you seek to acquire (a degree, leading perhaps to a better job but at least to the capacity to do a full-time job rather than fitting work around your studies). There are some jobs that are really good fits for students (reasonably low hours that don't clash with classes) and some jobs that are terrible. If these fail, resort to (3). I don't mean dishonest book-keeping, I mean accept that you are going to borrow money in order to pay for something of value that you can account as an asset. Work out now what you'll need to borrow and how you think you can pay it back, make sure the sum is worth it, budget for that, stick to your budget. You'll still have negative cashflow, nothing changes there, but your capital account looks fine. Personally I wouldn't actually put a monetary value on the degree, I'm not that bothered about the accounts and it's really difficult to be accurate about it. You can just consider it, "more than I expect to borrow" and be done with it. Studying costs money. Once you've graduated, you probably aren't going to be back here saying, "I want to buy a house but I have no capital and I don't want to go into debt". Are you? ;-) Although if you are, the answer happens to be "Islamic mortgage"! I don't know whether Islamic banks have an equivalent answer for student debt, since they can't own a share of your degree like they can a share of your home. Unless you're a Muslim, presumably the ways that Islamic finance avoids interest payments would not in any case satisfy your desire to be "not in debt".
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Why is auto insurance ridiculously overpriced for those who drive few miles?
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Many services charge prices that do not scale linearly with usage. This is because the service provider has fixed costs that they must recoup by charging a rate with a fixed component. A 5-mile taxi ride is unlikely to cost half what a 10-mile taxi ride costs. Even a half sandwich at a sandwich place usually costs more than half of what a full sandwich costs. In this respect, insurance is no different from many other items you may purchase.
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A calculator that takes into account portfolio rebalancing?
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Note that if 1) The stock prices are continuously differentiable (they aren't) 2) You rebalance continuously in the absence of trading fees and taxes then the return fraction (future price / original price) will be the geometric mean of the return fractions for each investment. If you don't rebalance then the return fraction will be the arithmetic mean. But the arithmetic mean is ALWAYS greater than or equal to the geometric mean, so continuous rebalancing in the case of continuously differentiable prices will always hurt you, even abscent trading costs/taxes. Any argument in favor of blind rebalancing which does not somehow fail in the continuously differentiable case is simply wrong. See https://dl.dropboxusercontent.com/u/38536036/to%20karim.pdf -JT
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Bait-and-switch on new car lease
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I strongly discourage leasing (or loans, but at least you own the car at the end of it) in any situation. it's just a bad deal, but that doesn't answer your question. Most new cars are "loss leaders" for dealerships. It's too easy to know what their costs are these days, so they make most of their money though financing. They might make a less than $500 on the sale of a new car, but if it's financed though them then they might get $2,000 - $4,000 commission/sale on the financing contract. Yes, it is possible and entirely likely that the advertised rate will only go to the best qualified lessees (possibly with a credit score about 750 or 800 or so other high number, for example). If the lessee meets the requirements then they won't deny you, they really want your business, but it is more likely to start the process and do all the paperwork for them to come back and say, "Well, you don't qualify for the $99/month leasing program, but we can offer you the $199/month lease." (since that's the price you're giving from other dealerships). From there you just need to negotiate again. Note: Make sure you always do your research and negotiate the price of the car before talking about financing.
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Are warehouse clubs like Costco and Sam's Club worth it?
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Whether or not they are worth it depends entirely on your situation. For my family, they are worth it, but I know a number of people who it would not be worthwhile for. The big things that we find are cheaper to get at bulk stores are toiletries, detergents (laundry, dishwasher), meats (only if you have a big freezer), bread, and certain types of prepackaged foods. Right now, it's just my wife and me, but once we have kids it will become even more worthwhile with things like diapers, wipes, and various other items. If you have a large family, or a large freezer odds are they are worth it. One thing to be careful of however is that they usually don't accept coupons. So if you're a big time deal shopper the gain may be minimal. They only cost $40 a year, so worst case scenario if you don't get back your full investment you're not out too much.
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Can stock brokerage firms fail?
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Yes, the entire financial system is based on trust. As we have seen repeatedly, even the ratings agencies can be wrong and in collusion. You need to understand what products have any insurance/contingency/recourse if things don't go as planned. A lot of people were surprised when they found out SIPC didn't ensure futures when MF Global declared bankruptcy last fall.
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What resources can I use to try and find out the name of the manager for a given fund?
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Yahoo Finance: http://finance.yahoo.com/q/pr?s=VFINX+Profile Under "Management Information"
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For a mortgage down-payment, what percentage is sensible?
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Well hindsight tells us now that by and large, doing 100% borrowing was not the best policy we could have taken. It gets nitpicky, but in the US the traditional 20% is the answer I presently feel comfortable with. It could be a reactionary judgement I am making to the current mess (in which I have formed the opinion that all parties are responsible) and arm-chair quarterbacking "if we had only stuck with the 20% rule, we wouldn't be here right now. The truth is probably much more gray than that, but like all things personal finance it is really up to you. If the law allows 100% financing ask yourself if it really makes sense that a bank would just loan you hundreds of thousands of dollars to live somewhere.
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Paid cash for a car, but dealer wants to change price
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Lets look at it this way. Your son bought the car and then 2 days later, he wants to change the price. Will the dealership let him do that after all the paperwork is signed?
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How do I find a good mutual fund to invest 5K in with a moderately high amount of risk?
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The "Money 70" is a fine list: http://money.cnn.com/magazines/moneymag/bestfunds/index.html Money magazine is usually more reasonable than the other ones (SmartMoney, Kiplinger's, etc. are in my opinion sillier). If you want a lot of depth, the Morningstar Analyst Picks are useful but you have to pay for a membership which is probably not worth it for now: http://www.morningstar.com/Cover/Funds.aspx (side note: Morningstar star ratings are not useful, I'd ignore those. analyst picks are pretty useful.) Vanguard is a can't-go-too-wrong suggestion. They don't have any house funds that are "bad," while for example Fidelity has some good ones mixed with a bunch that aren't so much. Of course, some funds at Vanguard may be inappropriate for your situation. (Vanguard also sells third-party funds, I'm talking about their own branded funds.) If getting started with 5K I think you'd want to go with an all-in-one fund like a target date retirement fund or a balanced fund. Such a fund also handles rebalancing for you. There's a Vanguard target date fund and balanced fund (Wellington) in the Money 70 list. fwiw, I think it's more important to ask how much risk you need to take, rather than how much you are willing to take. I wrote this down at more length here: http://blog.ometer.com/2010/11/10/take-risks-in-life-for-savings-choose-a-balanced-fund/ First pick your desired asset allocation, then pick your fund after that to match. Good luck.
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What's the best online tool that can track my entire portfolio including gains/losses?
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You can use a tool like WikiInvest the advantage being it can pull data from most brokerages and you don't have to enter them manually. I do not know how well it handles dividends though.
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Why is Insider Trading Illegal?
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Secret formulas are legal, "privileged information" is not. And that may be the whole point. People are allowed to trade stocks profitably if doing so results only from their skill. A "secret formula" (for evaluating information) is part of that skill. But having "privileged information" is not considered skill. It is considered an unfair, illegal advantage. Because company officials (and others) with privileged information are 1) not permitted to trade stocks while that information is privileged and 2) are not allowed to share that information with others. Inevitably, some do one or the other, which is why they are prosecuted. "Raj" took the process to new highs (or lows). He not only "dealt" in privileged information, he PAID for it. Anything from a new car or house to $500,000 a year in cash. In essence, he had a bunch of strategically placed "spies" inside or close to corporations including one on the board of Goldman Sachs, "selling out" their companies, and thereby practicing a form of corporate "treason."
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So the vending machine tore my $5 in pieces. What now?
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There is usually contact information for the owner of the machine printed somewhere on it. Call that number. If it is in a business you could always try the clerk. Whether you get your money back is up to that person, I suppose.
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How frequently should I request additional credit?
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I do this all the time, my credit rating over time plotted on a graph looks like saw blades going upward on a slope I use a credit alert service to get my credit reports quarterly, and I know when the credit agencies update their files (every three months), so I never have a high balance at those particular times Basically, I use the negative hard pulls to propel my credit score upwards with a the consequentially lowered credit utilization ratio, and the credit history. So here is how it works for me, but I am not an impulse buyer and I wouldn't recommend it for most people as I have seen spending habits: Month 1: charge cards, pay minimum balance (raises score multiple points) Month 2: PAY OFF ALL CREDIT CARDS, massive deleveraging using actual money I already have (raises score multiple points) Month 3: get credit report showing low balance, charge cards, pay minimum balance ask for extensions of credit, AND followup on new credit line offers (lowers score several points per credit inquiry) Month 4: charge cards, pay minimum balance, discretionally approving hard pulls - always have room for one or two random hard pulls, such as for a new cell phone contract, or renting a car, or employment, etc Month 5: PAY OFF CREDIT CARDS using actual money you have. (the trick is to NEVER really go above a 15% credit utilization ratio, and to never overleverage. Tricky because very quickly you will get enough credit to go bankrupt) Month 6: get credit report showing low balances, a slight dip in score from last quarter, but still high continue.
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Freelancing and getting taxes taken out up front instead of end of year?
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Maybe I can explain a little clearer: Your LLC is not a person, and cannot have taxes withheld on its behalf. Therefore, anyone paying your company should not withhold taxes. If they are paying you directly, and withholding taxes, they are treating you as an employee, and will probably issue a W2 instead of a 1099. Put it this way: Your LLC is a separate company providing services to that company. They shouldn't withhold taxes any more than they would when paying their ISP, or power company.
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Should I use put extra money toward paying off my student loans or investing in an index fund?
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Not all debt is bad. If it carries a reasonable interest rate, you don't need to clear it immediately. As for investing in an index fund, they're an affordable, easy way to spread your money over various assets. However, asset allocation is just one of many investment strategies. Ideally, you want to invest according to your goals, tax situation, and risk tolerance. You want a portfolio that dynamically allocates to various investment strategies, both beta and alpha, according to changing market conditions. Most importantly, you want systematic risk management for every aspect of your investments.
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What to do when a job offer is made but with a salary less than what was asked for?
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If you take less than you think you are worth, you will hate that job with a purple passion in short order. Either make peace with the amount you settle on or move on.
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How can a person protect his savings against a country default?
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The default of the country will affect the country obligations and what's tied to it. If you have treasury bonds, for example - they'll get hit. If you have cash currency - it will get hit. If you're invested in the stock market, however, it may plunge, but will recover, and in the long run you won't get hit. If you're invested in foreign countries (through foreign currency or foreign stocks that you hold), then the default of your local government may have less affect there, if at all. What you should not, in my humble opinion, be doing is digging holes in the ground or probably not exchange all your cash for gold (although it is considered a safe anchor in case of monetary crisis, so may be worth considering some diversifying your portfolio with some gold). Splitting between banks might not make any difference at all because the value won't change, unless you think that one of the banks will fail (then just close the account there). The bottom line is that the key is diversifying, and you don't have to be a seasoned investor for that. I'm sure there are mutual funds in Greece, just pick several different funds (from several different companies) that provide diversified investment, and put your money there.
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What should I do with the 50k I have sitting in a European bank?
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You might want to just keep it in cash. For one step further you could do an even split of USD, EUR and silver. USD hedges against loss of value in the euro, precious metal hedges against a global financial problem. Silver over gold because of high gold:silver ratio is high. You could lose money this way. There are some bad things that can happen that will make your portfolio fall, but there are also many bad things that can happen that would result in no change or gain. With careful trades in stocks and even more aggressive assets, you could conceivably see large returns. But since you're novice, you won't be able to make these trades, and you'll just lose your investment. Ordinarily, novices can buy an S&P ETF and enjoy decent return (7-8% annual on average) at reasonable risk, but that only works if you stay invested for many years. In the short term, S&P can crash pretty badly, and stay low for a year or more. If you can just wait it out, great (it has always recovered eventually), but if some emergency forces you to take the money out you'd have to do so at a big loss. Lately, the index has shown signs of being overvalued. If you buy it now, you could luck out and be 10-15% up in a year, but you could also end up 30% down - not a very favorable risk/reward rate. Which is why I would hold on to my cash until it does crash (or failing that, starts looking more robust again) and then think about investing.
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How do I evaluate reasonability of home improvement projects?
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If you're looking for some formula, I don't think one exists. People talk about this all the time and give conflicting advice. If there was a proven-accurate formula, they wouldn't be debating it. There are basically 3 reasons to do a home improvement project: (a) Correct a problem so that you prevent on-going damage to your home. For example, have a leaking roof patched or replaced, or exterminate termites. Such a job is worthwhile if the cost of fixing the problem is less than the cost of future damage. In the case of my termite and leaking roof examples, this is almost always worth doing. Lesser maintenance problems might be more debatable. Similarly, some improvements may reduce expenses. Like replacing an old furnace with a newer model may cut your heating bills. Here the question is: how long does it take to repay the investment, compared to other things you might invest your money in. Just to make up numbers: Suppose you find that a new furnace will save you $500 per year. If the new furnace costs $2000, then it will take 4 years to pay for itself. I'd consider that a good investment. If that same $2000 furnace will only cut your heating bills by $100 per year, then it will take 20 years to pay for itself. You'd probably be better off putting the $2000 into the stock market and using the gains to help pay your heating bill. (b) Increase the resale value of your home. If you are paying someone else to do the work, the harsh reality here is: Almost no job will increase the resale value by more than the cost of getting the job done. I've seen many articles over the years citing studies on this. I think most conclude that kitchen remodeling comes closet to paying for itself, and bathrooms come next. New windows are also up there. I don't have studies to prove this, but my guesses would be: Replacing something that is basically nice with a different style will rarely pay for itself. Like, replacing oak cabinets with cherry cabinets. Replacing something that is in terrible shape with something decent is more likely to pay back than replacing something decent with something beautiful. Like if you have an old iron bathtub that's rusting and falling apart, replacing it may pay off. If you have a 5-year-old bathtub that's in good shape but is not premium, top of the line, replacing it with a premium bathtub will probably do very little for resale value. If you can do a lot of the work yourself, the story changes. Many home improvement jobs don't require a lot of materials, but do require a lot of work. If you do the labor, you can often get the job done very cheaply, and it's likely that the increase in resale value will be more than what you spend. For example, most of my house has hardwood floors. Lots of people like pretty hardwood floors. I just restained the floors in two rooms. It cost me, I don't know, maybe $20 or $30 for stain and some brushes. I'm sure if I tried to sell the house tomorrow I'd get my twenty bucks back in higher sale value. Realtors often advise sellers to paint. Again, if you do it yourself, the cost of paint may be a hundred dollars, and it can increase the sale price of the house by thousands. Of course if you do the work yourself, you have to consider the value of your time. (c) To make your home more pleasant to live in. This is totally subjective. You have to make the decision on the same basis that you decide whether anything that is not essential to survival is worth buying. To some people, a bottle of fancy imported wine is worth thousands, even millions, of dollars. Others can't tell the difference between a $10,000 wine and a $15 wine. The thing to ask yourself is, How important is this home improvement to me, compared to other things I could do with the money? Like, suppose you're considering spending $20,000 remodeling your kitchen. What else could you do with $20,000? You could buy a car, go on an elaborate vacation, eat out several times a week for years, retire a little earlier, etc. No one can tell you how much something is worth to you. Any given home improvement may involve a combination of these factors. Like say you're considering that $20,000 kitchen remodeling. Say you somehow find out that this will increase the resale value by $15,000. If the only reason you were considering it was to increase resale value, then it's not worth it -- you'd lose $5,000. But if you also want the nicer kitchen, then it is fair to say, Okay, it will cost me $20,000, but ultimately I'll get $15,000 of that back. So in the long run it will only cost me $5,000. Is having a nicer kitchen worth $5,000 to me? Note, by the way, that resale value only matters if and when you sell the house. If you expect to stay in this house for 20 years, any improvements done are VERY long-term investments. If you live in it until you die, the resale value may matter to your heirs.
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Is the return on investment better with high or low dividends?
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Let's say two companies make 5% profit every year. Company A pays 5% dividend every year, but company B pays no dividend but grows its business by 5%. (And both spend the money needed to keep the business up-to-date, that's before profits are calculated). You are right that with company B, the company will grow. So if you had $1000 shares in each company, after 20 years company A has given you $1000 in dividends and is worth $1000, while company B has given you no dividends, but is worth a lot more than $2000, $2653 if my calculation is right. Which looks a lot better than company A. However, company A has paid $50 every year, and if you put that money into a savings account giving 5% interest, you would make exactly the same money either way.
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Investing in dividend-yielding stocks with money borrowed from margin account?
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I wouldn't recommend leveraged dividend fishing. Dividend stocks with such high dividends are highly volatile, you will run out of collateral to cover your trades very quickly
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To rebalance or not to rebalance
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Rebalancing is, simply, a way of making sure your risk/reward level is where you want it to be. Let's say you've decided that your optimal mix is 50% stocks and 50% bonds (or 50% US stocks, 50% international, or 30/30/30 US large-cap/US small-cap/US midcap...). So you buy $100 of each, but over time, the prices will of course fluctuate. At the end of the year, the odds that the ratio of the value of your investments is equal to the starting ratio is nil. So you rebalance to get your target mix again. Rebalance too often and you end up paying a lot in transaction fees. Rebalance not often enough and you end up running outsize risk. People who tell you that you should rebalance to make money, or use "dollar cost averaging" or think there is any upside to rebalancing outside of risk management are making assumptions about the market (mean regressing or some such thing) that generally you should avoid.
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Where is “Cash Credit from Unsettled Activity” coming from?
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The Cash Credit from Unsettled Activity occurs because AGG issued a dividend in the past week. Since you purchased the ETF long enough before the record date (June 5, 2013) for that trade to settle, you qualified for a dividend. The dividend distribution was $0.195217/share for each of your six shares, for a total credit of $1.17 = 6 * 0.195217. For any ETF, the company's website should tell you when dividends are issued, usually under a section titled "Distributions" or something similar. If you look in your Fidelity account's History page, it should show an entry of "Dividend Received", which confirms that the cash credit is coming from a dividend distribution. You could look up your holdings and see which one(s) recently issued a dividend; in this case, it was AGG.
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Dec 31 accounting for S Corp - what to do with loss?
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Conceptually, the entries are: Yes. And since you're the sole owner, your basis will equal to the equity balance on the balance sheet. Keep in mind the book and tax basis will probably be different, so you may want to keep a separate calculation to track the tax basis. There is no journal additional journal entry for this. If you're using bookkeeping software, be sure to research its book-closing/closing entries feature, as it is handled differently depending on the software. For example Quickbooks doesn't explicitly close its books, but re-computes the balance sheet dynamically depending on the selected date range.
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What do I need to consider when refinancing one home to pay the down-payment of another?
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and I need to upgrade my current home to a larger, longer-term property Would selling your current home give you (at least) a 20% DP on the new home? Take additional cash out of the refinance of the first home to accelerate saving Dittoing D Stanley, that makes no sense. Purchase and move to a second property of greater cost and value to first You'll need to find the new house at the same time you're selling the existing home, and write the new-home purchase contract in such a way that you can back out in case the purchaser of your home backs out.
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How can a person protect his savings against a country default?
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Since you are going to be experiencing a liquidity crisis that even owning physical gold wouldn't solve, may I suggest bitcoins? You will still be liquid and people anywhere will be able to trade it. This is different from precious metals, whereas even if you "invested" in gold you would waste considerable resources on storage, security and actually making it divisible for trade. You would be illiquid. Do note that the bitcoin currency is currently more volatile than a Greek government bond.
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What is the meaning of realization in finance?
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Realization is when you actually have something in hand, it isn't just theoretical anymore. For instance, you may win the lottery, but until they hand you a check, you haven't realized the windfall. Another example is that you may be paid a particular hourly wage, but until you cash the paycheck, you haven't realized the pay.
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How should I value personal use television for donation?
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I used TurboTax last year. It had a section for donations where it figured out the amounts of the IRS approved values for a donation. You would need to know the size of the television and the current condition it is in. He's a screenshot - though it's not from the TV section. https://turbotax.intuit.com/tax-tools/tax-tips/Taxes-101/Video--How-to-Estimate-the-Value-of-Clothing-for-IRS-Deductions/INF13870.html+&cd=8&hl=en&ct=clnk&gl=us TurboTax offers a free online tool called ItsDeductible that does the same thing (though I haven't tried it). Unfortunately, I don't have the current one with TV's to give you the range of amounts that apply to yours. --I am not affiliated with TurboTax and did not receive it for free for a review.
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Is there a legal deadline for when your bank/brokerage has to send your tax forms to you?
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Many of the custodians (ie. Schwab) file for an extension on 1099s. They file for an extension as many of their accounts have positions with foreign income which creates tax reporting issues. If they did not file for extension they would have to send out 1099s at the end of January and then send out corrected forms. Obviously sending out one 1099 is cheaper and less confusing to all. Hope that helps,
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Can I deduct “Non-Reimbursable Expenses”?
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You can only deduct (with the 2% AGI threshold) expenses that: You've actually incurred. I.e.: you actually paid for equipment or services provided and can show receipts for the payment. At the request of the employer. I.e.: you didn't just decide on your own to buy a new book or take a class, your employer told you to. With business necessity. I.e.: it was in order for you to do your job. And you were not reimbursed by your employer. I.e.: you went somewhere and spent your after tax money on something employer explicitly told you to pay for, and you didn't get reimbursed for that. From your story - these conditions don't hold for you. As I said in the comments - I strongly suggest you talk to a lawyer. Your story just doesn't make any sense, and I suspect your employer is doing something very fishy here.
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New car price was negotiated as a “cash deal”. Will the price change if I finance instead?
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There is no rule that says the dealer has to honor that deal, nor is there any that says he/she won't. However, if you are thinking of financing through though the dealership they are likely to honor the deal. They PREFER you finance it. If you finance it through the dealer the salesman just got TWO sales (a car and a loan) and probably gets a commission on both. If you finance it through a third party it makes no difference to the dealer, it is still a cash deal to them because even though you pay off the car loan over years, the bank pays them immediately in full.
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What US tax laws apply to a 13 year old game developer?
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13 or 30, the only real difference is that as a minor, you are claimed as a dependent on your parent's return, so you don't have you own exemption. But you do have a standard deduction of $6300 when it comes to earned income. Yes, you'll pay taxes, federal, state, and tax for social security. There's nothing wrong with paying taxes. In fact, I hope you have to pay a small fortune in tax! That would mean you've made a large fortune, and after taxes, still got to keep a good chunk of it. If your income is minimal, you'll actually pay very little in taxes, not enough to even think about wanting to give away what you can sell.
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Wardrobe: To Update or Not? How-to without breaking the bank
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We have a ton of student loan debt (mostly mine) and right now, I'm on a strict 'replace' only budget. I have some shirts I put elbow holes in that I'm only keeping around as a reminder to replace them. I wait until there is a deal of some sort (50% off or BOGO Free) unless I really need it - a white dress shirt for job interviews for instance. Outside of that, make it a line item in your budget and decide when you will spend it. For example, budget $60/mo for it, but only spend it when it reaches $180 or $300 or either of those amounts AND a sale (memorial day is the next big shopping sale after Easter). It is totally up to you. Waiting to replace two shirts (gray and green) and a pair of black dress pants.
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What is the most common and profitable investment for a good retirement in Australia?
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In Australia anyone thinking about retirement should be concentrating on superannuation. Contribution is compulsory (I think the current minimum contribution rate is 9.5% of salary) and both contributions and investment returns are very tax efficient. The Government site is quite comprehensive - http://www.australia.gov.au/topics/economy-money-and-tax/superannuation - have a read and come back with any specific questions.
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Visitor Shopping in the US: Would I get tax refund? Would I have to pay anything upon departure?
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The US doesn't have a Value Added Tax, which is the one usually refundable upon departing the country... so sales taxes you pay in this country stay in this country and you don't get a refund. Just remember to treat the tax as an implied part of the price. (And be aware that state and local taxes may vary, so the total price may be higher in one place than in another. New York City adds a few percent on top of the state sales tax, for example.) If you aren't sure how much tax would be, don't be afraid to ask.
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I cosigned for a friend who is not paying the payment
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Sue the friend. When you win, garnish his wages. It does not have to be by so much that it makes him quit his job, but get 75.00 per pay period to come to you. This may require the use of a private investigator but, if you want to make this "friend" face consequences, this is your only option. Otherwise, let it go and keep paying his bill.
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Value of tokens bought at an older price
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You will make a profit in nominal dollars (or nominal units of whatever currency you used to buy the token). Whether you'll make a profit in real dollars depends on inflation, and in practice whether it would be possible to sell your existing tokens to someone else for the new price. Suppose when the price was 50 U (50 "units", since you didn't specify a currency), you bought one token. Today you can either spend 52 U for a token, and get a liter of milk, or you can spend your existing token (for which you paid 50 U) and get a liter of milk. It looks like you are making a profit of 2 U by spending your token. However, whether that profit is real or illusory depends on what else you could do with the token. For instance, suppose that, since the price of a token is now 52 U, you will have no trouble finding someone who wants to buy your token from you for 52 U. If you sell your token for 52 U, you'll still only be able to buy 1 L of milk. So if you measure your wealth in milk, you have made no profit: in the past you had a token representing 1 L of milk, and today you still have a token representing 1 L of milk. Suppose now that in the past, when a token cost 50 U, a hamburger also cost 50 U. Suppose further that a hamburger now costs 52 U. So you can sell your token for 52 U, but that 52 U will still only buy you one hamburger. So, again, if you measure your wealth in hamburgers, your have made no profit. In the past, you could have sold your token and bought a hamburger; today, you can still sell your token and buy a hamburger, and you'll have nothing left over, so you have gained nothing. If, on the other hand, the price of a hamburger today is still 50 U, then you call sell your token for 52 U, buy a hamburger for 50 U, and still have 2 U left over. You have made a profit. What this all goes to show is that, in practice, the idea of "profit" depends on the overall economy, and whether you could exchange the currency units you have in your possession for a greater quantity of goods than you could in the past. Whether this is possible depends on the relative changes in price of various goods. In other words, if you get your money by selling Product A, and later you buy Product B, you may or may not make a profit depending on how the prices of the two products moved relative to one another. Also, in your hypothetical setup, the "currency" (the token) is directly linked to the value of a single good, so you can always at least get 1 L of milk for your token. Most real currency is not bound to specific goods like your milk token, so it is possible for your currency to lose value in an absolute sense. For instance, suppose you sell a book for $5. The $5 is not a "book token" and you cannot rely on being able to exchange it for a book in the future; in the future, all books may cost $10, and the prices of all goods may rise similarly, so your currency will actually be worth less no matter how you try to use it. This could happen with the milk token if the milkman announces that henceforth 1 L of milk will cost 2 tokens; your existing token suddenly loses half its value. In sum, it is easy to calculate whether you made a profit in currency units. What is harder is to calculate whether you made a profit in "real terms" (often referred to as "real dollars" or "inflation-adjusted dollars", or the equivalent in your favorite currency). The reason this is hard is because the idea of "real dollars" is fundamentally linked to the possibility of exchanging currency for goods (and services), and so it depends what goods you're buying. Inflation statistics published by governments and the like use a "basket" of goods to approximate the overall price movements in the economy as a whole.
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How can I determine if leaving a lower paying, tax advantaged, job for a higher paying one makes sense financially?
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It looks like a coin toss. What you have isn't bad at all. If you have enough free time with your $50k job to do extra stuff on the side, you can use that time to build a business. You're obviously a go-getter type, so this might suit you. Which job is closer to your calling? All other things being equal, the more fulfilling job should win, no?
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When does giving a gift “count” for tax year?
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Based on past case law, a check made payable to qualified charity and delivered (e.g., placed in the mail on 12/31 would count as delivered as it is out of the hands of the donor) would fall under the "constructive receipt doctrine". However, for non-charitable gifts (e.g., gifts to family members) it is the date the check is cashed (honored by the receiving bank). This is important as the annual gift exclusion is just that "Annual". Therefore, if I gift my child $14,000 by writing a check on 12/31/2014 but they deposit it on 1/3/2015 then I have used my annual gift exclusion for 2015 and not 2014. This means I could not gift them anything further in 2015. BTW the annual gift amount is for ALL gifts cash and non-cash. Most people don't seem to realize this. If I give $14,000 of cash to my child and then also give them Christmas gifts with a value of $1,000 I have exceeded my annual gift exclusion to that child. Usually there are ways around this issue as I can give $14,000 to each and every person I want and if married my spouse can do the same. This allows us to give $14,000 from each of us to each child plus $14,000 from each of us to their spouse if married and $14,000 from each of us to each of their children if they have any.
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Should I pay cash or prefer a 0% interest loan for home furnishings?
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Remember that due to inflation you are paying back the loan with cheaper dollars in the future. If there are no gimmicks in the loan like early payment penalties, or must pay by a certain date or that the credit was for a store that sold the products at a higher price than you could get elsewhere then you are not just getting free money they are paying you to take the money.
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