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What are the consequences of not respecting a notice period when leaving a job? | It depends on your employer. They may not care to pursue matters if you don't give enough notice. They might be happy to see you go. Or they might be really sad to see you go, but not feel like they need to punish you. Or they might be really angry to see you go, and decide that they want to punish you to the full extent of the law just out of spite. Essentially, we can't tell you that, because different employers will behave differently. My advice? Be a mensch. Give the old employer as much notice as humanly possible so that they can find, hire, and train your replacement. Leave on as good terms as possible. Don't burn bridges. Chances are your new job can wait for another week or two. |
Apartment lease renewal - is this rate increase normal? | If it is true that for the same price, you could get a better place (or that for a lower price you could get an equivalent place), you should do some soul-searching to decide what monetary value you would place on the hassle of moving to such an alternative. You should then negotiate aggressively for a rent that is no more than the rent of the alternative place plus your hassle costs, and if the landlord does not meet your price, you should refuse to renew your lease, and instead move out to an alternative. (Of course, you might also want to double-check your research to ensure you really can get such a good alternative, and that your new landlords won't try a similar bait-and-switch and force you to move again in a year.) Barring local ordinances such as rent control laws, I don't think it's worth it to worry about whether the increase is "normal". If you can get a better deal somewhere else, then what your landlords are asking is too much. If you have a good relationship with them on a personal level you may be able to tell them this in a nice way and thus get them to make a more reasonable offer. Otherwise, the landlords will learn that their expectations are unreasonable when all their tenants move out to cheaper places. |
What to do with $50,000? | Before anything else, pay down any debt at higher interest rates. Best guaranteed return on investment you can get. What do you plan to use the money for, when, with how much advance planning? How risk-tolerant are you, and how patient are you ? Would you see a dip in an asset's value as lost money or a buying opportunity? A good financial advisor -- and I mean one who is ONLY an advisor and not trying to sell you anything but their services -- can take answers of that sort and recommend a mix of investment types that will suit your needs. Knowing that balance, you can the pick specific investments to suit. (I remain a fan of low-fee index funds as a painless way to get good diversification, with some small percentage for more active trading if you really want to invest the effort and are convinced you can beat the odds.) Other answers here on the personal finance discussion go into this in detail, so I don't think it's worth repeating here unless there's something really unusual about your situation. |
Transferring money from One business checking to another business checking | You should have separate files for each of the two businesses. The business that transfers money out should "write check" in its QB file. The business that receives money should "make deposit" in its QB file. (In QB you "write check" even when you make the payment by some other means like ACH.) Neither business should have the bank accounts of the other explicitly represented. On each side, you will also need to classify the payment as having originated from / gone to some other account - To know what's correct there, we'd need to know why your transferring the money in the first place and how you otherwise have your books established. I think that's probably beyond the scope of what's on-topic / feasible here. Money into your business from your personal account is probably owner's equity, unless you have something else going on. For example, on the S Corp you should be paying yourself a salary. If you overpay by accident, then you might write a check back to the company from your personal account to correct the mistake. That's not equity - It's probably a "negative expense" in some other account that tracks the salary payments. |
Is keeping track of your money and having a budget the same thing? | What you are doing is neither one. You are simply watching to make sure you don't overdraw, which itself suggests you might be living hand to mouth and not saving. Keeping track of your money and budgeting are useful tools which help people get on top of their money. Which tends to have the effect of allowing you to save. How much did you spend on groceries last month? Eating out? Gas? If you were "keeping track of your money", you could say immediately what you spent, and whether that is above or below average, and why. How much do you plan to spend in the next 3 months on gas, groceries, eating out? If you knew the answer to that question, then you would have a "budget". And if those months go by, and your budget proves to have been accurate, or educates you as to what went wrong so you can learn and fix it... then your budget is a functioning document that is helping you master your money. Certainly the more powerful of the two is the "keeping track", or accounting of what has happened to you so far. It's important that you keep track of every penny without letting stuff "slip through the cracks". Here you can use proper accounting techniques and maybe accounting software, just like businesses do where they reconcile their accounting against their bank statements and wallet cash. I shortcut that a little. I buy gift cards for McDonalds, Panera, Starbucks, etc. and buy my meals with those. That way, I only have one transaction to log, $40 - McDonalds gift card instead of a dozen little meals. It works perfectly fine since I know all that money went to fast food. A little more dangerous is that I treat wallet cash the same way, logging say two monthly entries of $100 to cash rather than 50 little transactions of left $1 tip at restaurant. This only works because cash is a tiny part of my overall expenditures - not worth accounting. If it added up to a significant part, I'd want accounting on that. |
Can you explain “time value of money” and “compound interest” and provide examples of each? | Compound interest means that the interest in each time period is calculated taking into account previously earned interest and not only the initial sum. Thus, if you had $1000 and invested it so that you'd earn 5% each year, than if you would withdraw the earnings each year you in 30 years you would earn 0.05*30*1000 = $1500, so summarily you'd have $2500, or 150% profit. However, if you left all the money to earn interest - including the interest money - then at the end of 30 years you'd have $4321 - or 330% profit. This is why compound interest is so important - the interest on the earned interest makes money grow significantly faster. On the other hand, the same happens if you owe money - the interest on the money owed is added to the initial sum and so the whole sum owed grows quicker. Compound interest is also important when calculating interest by time periods. For example, if you are told the loan accumulates 1% interest monthly, you may think it's 12% yearly. However, it is not so, since monthly interest is compounded - i.e., in February the addition not only February's 1% but also 1% on 1% from January, etc. - the real interest is 12.68% yearly. Thus, it is always useful to know how interest is compounded - both for loans and investments - daily, monthly, yearly, etc. |
How is my employer affected if I have expensive claims on my group health insurance? | Your employers insurance premiums will definitely go up if there are a lot of claims when it is time for them to renew their policy. It is also possible that if this happens the employer will pass along some of the additional cost to employees. The insurance company will not try to have you removed, it doesn't work that way with group policies. They just jack up the price as mentioned previously. If you take a new job your cancer will affect the future employer in the same way. As to whether you should keep it a secret, I don't think it is something you have to disclose unless it affects your ability to perform your job, even then it may be protected under the Americans with Disabilities Act. It is true that some employers could exhibit some bias because of this, especially a small company that is likely to have a small group that is more likely to see price hikes because of a single employee making expensive claims. Bottom line: I wouldn't lie about it to a future employer, but I wouldn't volunteer that information either unless it is material to your job performance. |
What is the difference between equity and assets? | Equity does not represent production divisions in a company (i.e. chocolate, strawberry, and vanilla does not make sense). In Sole proprietorship, equity represents 1 owner. In Partnership, equity has at least two sub-accounts, namely Partner 1 and Partner 2. In Corporations, equity may have Common Stockholders and Preferred Stockholders, or even different class of shares for insiders and angel investors. As you can see, equity represents who owns the company. It is not what the company does or manufactures. First and foremost, define the boundary of the firm. Are your books titled "The books of the family of Doe", "The books of Mr & Mrs Doe", or "The books of Mr & Mrs Doe & Sons". Ask yourself, who "owns" this family. If you believe that a marriage is perpetual until further notice then it does not make any sense to constantly calculate which parent owns the family more. In partnership, firm profits are attributed to partner's accounts using previously agreed ratio. For example, (60%/40% because Partner 1 is more hard working and valuable to the firm. Does your child own this family? Does he/she have any rights to use the assets, to earn income from the assets, to transfer the assets to others, or to enforce private property rights? If they don't have a part of these rights, they are certainly NOT part of Equity. So what happens to the expenses of children if you follow the "partnership" model? There are two ways. The first way is to attribute the Loss to the parents/family since you do not expect the children to repay. It is an unrecoverable loss written off. The second way is to create a Debtor(Asset) account to aggregate all child expense, then create a separate book called "The books Children 1", and classify the expense in that separate book. I advise using "The family of Doe" as the firm's boundary, and having 1 Equity account to simplify everything. It is ultimately up to you to decide the boundaries. |
Using a Roth IRA instead of a college savings account | One problem with this plan is that the individual must have earned income to contribute to a Roth IRA. If you have an infant, unless she is the new Gerber baby or something like that, there is probably no legitimate way for her to earn income. If you own a business and have kids who are older, you can employ them to do work for you, but they must really do work and earn around the market rate for that work. Otherwise, it is unlikely that they will be able to earn enough to fund an IRA until they are teenagers. When they are old enough to work, you can "match" their earnings by contributing the same amount to a Roth IRA on their behalf, but this will not give you the amount of contributions and growth time that you were counting on. |
Company A is buying company B, what happens to the stock? | I think the correct statement is that Expedia wants to buy Orbitz for $12/share. The market price is $11, which means there is somebody willing to sell for that price. But you can't say that a stock price of $11 means that everybody is willing to sell for that price. And Expedia is unlikely to bid $12/share for just 40% of Orbitz shares; they'll want at least a controlling majority. |
That “write your own mortgage” thing; how to learn about it | You are asking about a common, simple practice of holding the mortgage when selling a house you own outright. Typically called seller financing. Say I am 70 and wish to downsize. The money I sell my house for will likely be in the bank at today's awful rates. Now, a buyer likes my house, and has 20% down, but due to some medical bills for his deceased wife, he and his new wife are struggling to get financing. I offer to let them pay me as if I were the bank. We agree on the rate, I have a lien on the house just as a bank would, and my mortgage with them requires the usual fire, theft, vandalism insurance. When I die, my heirs will get the income, or the buyer can pay in full after I'm gone. In response to comment "how do you do that? What's the paperwork?" Fellow member @littleadv has often posted "You need to hire a professional." Not because the top members here can't offer great, accurate advice. But because a small mistake on the part of the DIY attempt can be far more costly than the relative cost of a pro. In real estate (where I am an agent) you can skip the agent to hook up buyer/seller, but always use the pro for legal work, in this case a real estate attorney. I'd personally avoid the general family lawyer, going with the specialist here. |
Ideal investments for a recent college grad with very high risk tolerance? | An ideal investment for a highly risk tolerant college grad with a background in software and programming, is a software company. That's because it's the kind of investment that you will be able to judge better than most other people, including yours truly. Hopefully, one day the software company for a highly risk tolerant investor will be your own.(Ask Bill Gates or even Michael Dell, although the latter was more involved in hardware.) |
I'm 23 and was given $50k. What should I do? | To add to @michael's solid answer, I would suggest sitting down and analyzing what your priorities are about paying off the student loan debt versus investing that money immediately. (Regardless, the first thing you should do is, as michael suggested, pay off the credit card debt) Since it looks like you will be having some new expenses coming up soon (rent, possibly a new car), as part of that prioritization you should calculate what your rent (and associated bills) will cost you on a monthly basis (including saving a bit each month!) and see if you can afford to pay everything without incurring new debt. I'd recommend trying to come up with several scenarios to see how cheaply you can live (roommates, maybe you can figure out a way to go without a car, etc). If, for whatever reason, you find you can't afford everything, then I would suggest taking a portion of your inheritance to at least pay off enough of your student loans so that you can afford all of your costs per month, and then save or invest the rest. (You can invest all you like, but if you don't live within your means, it won't do you any good.) Finally -- be aware that you may have other factors that come into play that may override financial considerations. I found myself in a situation similar to yours, and in my case, I chose to pay off my debts, not because it necessarily made the best financial sense, but that because of those other considerations, paying off that debt meant I had a significant level of stress removed from my life, and a lot more peace of mind. |
Can I buy only 4 shares of a company? | I have done this last year. Just open an account with an online brocker and buy a couple of Apple shares (6 I think, for 190$ each or something like that :) ). If this is just to test how stock exchange works, I think this is a good idea. I am also in Europe (France), and you'r right the charge to buy on NasDaq are quite expensive but still reasonnable. Hope this helps. |
Is buying a lottery ticket considered an investment? | Although this has been touched upon in comments, I think the following line from the currently accepted answer shows the biggest issue: There is a clear difference between investing and gambling. The reality is that the difference isn't that clear at all. Tens of comments have been written arguing in both directions and looking around the internet entire essays have been written arguing both positions. The underlying emotion that seems to shape this discussion primarily is whether investing (especially in the stock market) is a form of gambling. People who do invest in this way tend to get relatively emotional whenever someone argues that this is a form of gambling, as gambling is considered a negative thing. The simple reality of human communication is that words can be ambiguous, and the way investors will use the words 'investments' and 'gambles' will differ from the way it is used by gamblers, and once again different from the way it's commonly used. What I definitely think is made clear by all the different discussions however is that there is no single distinctive trait that allows us to differentiate investing and gambling. The result of this is that when you take dictionary definitions for both terms you will likely end up including lottery tickets as a valid form of investment. That still however leaves us with a situation where we have two terms - with a strong overlap - which have a distinctive meaning in communication and the original question whether buying lottery tickets is an investment. Over on investorguide.com there is an absolutely amazing strongly recommended essay which explores countless of different traits in search of a difference between investing and gambling, and they came up with the following two definitions: Investing: "Any activity in which money is put at risk for the purpose of making a profit, and which is characterized by some or most of the following (in approximately descending order of importance): sufficient research has been conducted; the odds are favorable; the behavior is risk-averse; a systematic approach is being taken; emotions such as greed and fear play no role; the activity is ongoing and done as part of a long-term plan; the activity is not motivated solely by entertainment or compulsion; ownership of something tangible is involved; a net positive economic effect results." Gambling: "Any activity in which money is put at risk for the purpose of making a profit, and which is characterized by some or most of the following (in approximately descending order of importance): little or no research has been conducted; the odds are unfavorable; the behavior is risk-seeking; an unsystematic approach is being taken; emotions such as greed and fear play a role; the activity is a discrete event or series of discrete events not done as part of a long-term plan; the activity is significantly motivated by entertainment or compulsion; ownership of something tangible is not involved; no net economic effect results." The very interesting thing about those definitions is that they capture very well the way those terms are used by most people, and they even acknowledge that a lot of 'investors' are gambling, and that a few gamblers are 'investing' (read the essay for more on that). And this fits well with the way those two concepts are understood by the public. So in those definitions normally buying a lottery ticket would indeed not be an investment, but if we take for example Vadim's operation example If you have $1000 and need $2000 by next week or else you can't have an operation and you will die (and you can't find anyone to give you a loan). Your optimal strategy is to gamble your $1000, at the best odds you can get, with a possible outcome of $2000. So even if you only have a 1/3 chance of winning and getting that operation, it's still the right bet if you can't find a better one. this can suddenly change the perception and turn 'gambling' into 'high-risk investing'. |
Which is better when working as a contractor, 1099 or incorporating? | I am surprised no one has mentioned the two biggest things (in my opinion). Or I should say, the two biggest things to me. First, 1099 have to file quarterly self employment taxes. I do not know for certain but I have heard that often times you will end up paying more this way then even a W-2 employees. Second, an LLC allows you to deduct business expenses off the top prior to determining what you pay in taxes as pass-through income. With 1099 you pay the same taxes regardless of your business expenses unless they are specifically allowed as a 1099 contractor (which most are not I believe). So what you should really do is figure out the expense you incur as a result of doing your business and check with an accountant to see if those expenses would be deductible in an LLC and if it offsets a decent amount of your income to see if it would be worth it. But I have read a lot of books and listened to a lot of interviews about wealthy people and most deal in companies not contracts. Most would open a new business and add clients rather than dealing in 1099 contracts. Just my two cents... Good luck and much prosperity. |
What are the best software tools for personal finance? | Excel Pros: Cons: |
What is the purpose of the wash sale rule? | Equal sized gains and losses in alternating years would lead to an unjust positive tax. On the contrary. If I can take my gains at the long term rate (15%) in even years, but take losses in odd years, up to $3000, or let them offset short term gains at ordinary rate, I've just gamed the system. What is the purpose of the wash sale rule? Respectfully, we here can do a fine job of explaining how a bit of tax code works. And we can suggest the implication of those code bits. But, I suspect that it's not easy to explain the history of particular rules. For wash sale, the simple intent is to not let someone take a loss without actually selling the stock for a time. You'd be right to say the +/- 30 days is arbitrary. I'd ask you to keep 2 things in mind if you continue to frequent this board - |
Accounting Entry for Selling a Covered Call | Option contracts typically each represent 100 shares. So the 1 call contract you sold to open (wrote) grants the buyer of that option the right to purchase your 100 shares for $80.00 per share any time before the option expiration date. You were paid a gross amount of $100 (100 shares times $1.00 premium per share) for taking on the obligation to deliver should the option holder choose to exercise. You received credit in your account of $89.22, which ought to be the $100 less any trading commission (~$10?) and miscellaneous fees (regulatory, exchange, etc.) per contract. You did capture premium. However, your covered call write represents an open short position that, until either (a) the option expires worthless, or (b) is exercised, or (c) is bought back to close the position, will continue to show on your account as a liability. Until the open position is somehow closed, the value of both the short option contract and long stock will continue to fluctuate. This is normal. |
What exactly is a “bad,” “standard,” or “good” annual raise? If I am told a hard percentage and don't get it, should I look elsewhere? | TLDR: You will probably need to move to a different employer to get the raise you want/need/deserve. Some employers, in the US, punish longevity through a number of practices. My wife worked as a nurse for about 20 years. During that time she had many employers, leveraging raises with job changes. She quit nursing about 6 years ago and was being paid $38/hour at the time. She had a friend that worked in the same system for 18 years. They had the same position in the same hospital that friend's current rate of pay: $26/hour. You probably don't want to be that person. Given your Stack Overflow participation, I would assume you are some type of web developer. I would recommend updating your resume, and moving for a 20% increase or more. You'll get it as it is a great time to be a web developer. Spending on IT tends to go in cycles, and right now budgets are very healthy for hiring new talent. While your current company might not have enough money in the budget to give you a raise, they would not hesitate hiring someone with your skills at 95K if they had an opening. Its common, but frustrating to all that are involved except the bean counters that looks at people like us as commodities. Think about this: both sides of the table agree that you deserve a 5K raise. But lets say next year only 3k is in the budget. So you are out the 5k you should have been given this year, plus the 2k that you won't get, plus whatever raise was fair for you next year. That is a lot of money! Time to go! Don't bother on holding onto any illusions of a counter offer by your current employer. There will be too much resentment. Shake the dust off your feet and move on. Edit: Some naysayers will cite short work histories as problems for future employment. It could happen in a small number of shops, but short work histories are common in technology that recruiters rarely bat an eye. If they do, as with any objection, it is up to you to sell yourself. In Cracking the Code Interview the author cites that no one is really expecting you to stay beyond 5 years. Something like this would work just fine: "I left Acme because there were indications of poor financial health. Given the hot market at the time I was able to find a new position without the worry of pending layoffs." If you are a contractor six month assignments are the norm. Also many technology resumes have overlapping assignments. Its what happens when someone is in demand. |
How are the $1 salaries that CEOs sometimes take considered legal? | Even under the executive exemption, see Exemption for Executive Employees Under the Fair Labor Standards Act (FLSA) Section 13(a)(1) as defined by Regulations, 29 CFR Part 541, it seems that a minimum compensation is required. To qualify for the executive employee exemption, all of the following tests must be met: The employee must be compensated on a salary basis (as defined in the regulations) at a rate not less than $455 per week... etc. There is one other possibility under FLSA Section 13(a)(1), as a "bona fide exempt executive". Exemption of Business Owners Under a special rule for business owners, an employee who owns at least a bona fide 20-percent equity interest in the enterprise in which employed, regardless of the type of business organization (e.g., corporation, partnership, or other), and who is actively engaged in its management, is considered a bona fide exempt executive. |
Is there a correlation between self-employment and wealth? | In a well-managed company, employees bring more dollars to their employers than the employers pay the employees (salary and benefits). Employees trade potential reward for security (a regular paycheck). Employers take on the risk of needing to meet payroll and profit from the company's income, minus expenses. The potential rewards are much higher as an employer (self or otherwise), so the ones that do make it do quite well. But this is also consistent with your other statement that the reverse is not true; the risk of self-employment is high, and many self-employed people don't become millionaires. |
Book or web site resources for an absolute beginner to learn about stocks and investing? | If you just want to save for retirement, start with a financial planning book, like this one: http://www.amazon.com/Smart-Simple-Financial-Strategies-People/dp/0743269942 and here's my editorial on the investing part: http://blog.ometer.com/2010/11/10/take-risks-in-life-for-savings-choose-a-balanced-fund/ If you're thinking of spending time stock-picking or trading for fun, then there are lots of options. Web site: Morningstar Premium (http://morningstar.com) has very good information. They analyze almost all large-cap stocks and some small caps too, plus mutual funds and ETFs, and have some good general information articles. It doesn't have the sales-pitch hot-blooded tone of most other sites. Morningstar analyzes companies from a value investing point of view which is probably what you want unless you're day trading. Also they analyze funds, which are probably the most practical investment. Books: If you want to be competent (in the sense that a professional investor trying to beat the market or control risk vs. the market would be) then I thought the CFA curriculum was pretty good: However, this will quickly teach you how much is involved in being competent. The level 1 curriculum when I did it was 6 or 7 thick textbooks, equivalent to probably a college semester courseload. I didn't do level 2 or 3. I don't think level 1 was enough to become competent, it's just enough to learn what you don't know. The actual CFA charter requires all three levels and years of work experience. If you more want to dabble, then Benjamin Graham's The Intelligent Investor certainly isn't a bad place to start, but you'd also want to read some efficient markets stuff (Random Walk Down Wall Street, or something by Bogle, or The Intelligent Asset Allocator http://www.amazon.com/Intelligent-Asset-Allocator-Portfolio-Maximize/dp/0071362363, are some options). It wouldn't be bad to just read a textbook like http://www.amazon.com/Investments-Irwin-Finance-Zvi-Bodie/dp/0256146381 which would be the much-abridged version of the CFA level 1 stuff. If you're into day trading / charting, then I don't know much about that at all, some of the other answers may have some ideas. I've never been able to find info on this that didn't seem like it had a sketchy sales pitch kind of vibe. Honestly in a world of high-frequency trading computers I'm skeptical this is something to get into. Unless you want to program HFT computers: http://howtohft.wordpress.com/ |
I carelessly invested in a stock on a spike near the peak price. How can I salvage my investment? | You should be worried. You have made the mistake of entering an investment on the recommendation of family/friend. The last think you should do is make another mistake of just leaving it and hoping it will go up again. Your stock has dropped 37.6% from its high of $74.50. That means it has to go up over 60% just to reach the high of $74.50. You are correct this may never happen or if it does it could take a long, long time to get up to its previous highs. What is the company doing to turn its fortunes around? Take a look at some other examples: QAN.AX - Qantas Airways This stock reached a high of around $6 in late 2007 after a nice uptrend over a year and a half, it then dropped drastically at the start of the GFC, and has since kept falling and is now priced at just $1.15. QAN reported its first ever loss earlier this year, but its problems were evident much earlier. AAPL - Apple Inc. AAPL reach a high of just over $700 in September 2013, then dropped to around $400 and has recovered a bit to about $525 (still 25% below its highs) and looks to be at the start of another downtrend. How long will it take AAPL to get back to $700, more than 33% from its current price? TEN.AX - Ten Network Holdings Limited TEN reached a high of $4.26 in late 2004 after a nice uptrend during 2004. It then started a steep journey downwards and is still going down. It is now priced at just $0.25, a whopping 94% below its high. It will have to increase by 1600% just to reach its high of $4.26 (which I think will never happen). Can a stock come back from a drastic downtrend? Yes it can. It doesn't always happen, but a company can turn around and can reach and even surpass it previous highs. The question is how and when will this happen? How long will you keep your capital tied up in a stock that is going nowhere and has every chance of going further down? The most important thing with any investment is to protect your current capital. If you lose all your capital you cannot make any new investments until you build up more capital. That is why it is so important to have a risk management strategy and decide what is your get out point if things go against you before you get into any new investment. Have a stop loss. I would get out of your investment before you lose more capital. If you had set a stop loss at 20% off the stock's last highs, you would have gotten out at about $59.60, 28% higher than the current share price of $46.50. If you do further analysis on this company and find that it is improving its prospects and the stock price breaks up through its current ranging band, then you can always buy back in. However, do you still want to be in the stock if it breaks the range band on the downside? In this case who knows how low it can continue to go. N.B. This is my opinion, as others would have theirs, and what I would do in your current situation with this stock. |
What to do with an old building to get money | There are a few ways to get money from property, but I'm not sure any would work for you: 1) Firstly you could sell it. Selling the building might require enough repairs that the building is habitable; if the repair costs are too high, you might not be able to recover costs from selling. For a particularly old and unkempt building, this is more likely to be the case. In extreme scenarios, you may earn more net profit by demolishing a decrepit building, and simply selling the land. Make sure you aren't setting your price too high if you are desperate to sell; dropping your price might make the headache of upkeep go away, and might be better for you financially in the long run. 2) You could rent it - but if it is so uninhabitable you can't sell it, then this is unlikely without repairs (and it seems you don't want to do this anyway). 3) If your building is in an area where the zoning laws are not strict, you may be able to apply for a permit to have it zoned for commercial use - and either run a business out of it, or rent it to someone else to do so. Again, this would be dependent on repairs if the building is uninhabitable, and also would require the building to well-situated for a business. 4) You could take out a mortgage on the building. Of course, this has two big caveats: (a) the bank would need to assess the building for value [and it seems not to be worth much in your case]; and (b) this provides only temporary cash, which you would need to pay back to the bank over time. In some cases, if you had a solid plan, you might be able to take a mortgage out against the value of the land, and use the cash from the mortgage to do some repairs, so that it would be in good shape for selling. |
What's the difference between buying bonds and buying bond funds for the long-term? | A bond fund will typically own a range of bonds of various durations, in your specific fund: The fund holds high-quality long-term New York municipal bonds with an average duration of approximately 6–10 years So through this fund you get to own a range of bonds and the fund price will behave similar to you owning the bonds directly. The fund gives you a little diversification in terms of durations and typically a bit more liquidity. It also may continuously buy bonds over time so you get some averaging vs. just buying a bond at a given time and holding it to maturity. This last bit is important, over long durations the bond fund may perform quite differently than owning a bond to maturity due to this ongoing refresh. Another thing to remember is that you're paying management fees for the fund's management. As with any bond investment, the longer the duration the more sensitive the price is to change in interest rates because when interest rates change the price will track it. (i.e. compare a change of 1% for a one year duration vs. 1% yearly over 10 years) If I'm correct, why would anyone in the U.S. buy a long-term bond fund in a market like this one, where interest rates are practically bottomed out? That is the multi-trillion dollar question. Bond prices today reflect what "people" are willing to pay for them. Those "people" include the Federal Reserve which through various programs (QE, Operate Twist etc.) has been forcing the interest rates to where they want to see them. If no one believed the Fed would be able to keep interest rates where they want them then the prices would be different but given that investors know the Fed has access to an infinite supply of money it becomes a more difficult decision to bet against that. (aka "Don't fight the Fed"). My personal belief is that rates will come up but I haven't been able to translate that belief into making money ;-) This question is very complex and has to do not only with US policies and economy but with the status of the US currency in the world and the world economy in general. The other saying that comes to mind in this context is that the market can remain irrational (and it certainly seems to be that) longer than you can remain solvent. |
What is an “Options Account”? | Options are a derivative product, and in this case, derive their value from an underlying security, a traded stock. An option gives you the right, but not the obligation, to buy a stock at a given price (the strike price) by a given time (the expiration date.) What I just described is a call option. The opposite instrument is a put, giving you the right, but not the obligation, to sell the stock at a given price. Volumes have been written on the subject, but I'd suggest that for a custodial Roth, I'd not activate the ability to trade options. How to get started with options investing? offers a nice introduction to trading options. In my response, I offer an example of a trade that's actually less risky due to the option component. |
S-Corp partnership startup. How to pay owners with minimal profit? | We don't make enough to really consider it a salary, but I've heard using a draw without a salary is a bad idea. As any other illegal action, not paying yourself a reasonable salary when being a corporate officer is indeed a bad idea. I have no idea what I need to do to actually get some money in our pockets. The answer is simple. You need to earn more money. Since it is S-Corp, it doesn't matter if you keep the profits on the corporate account or distribute - the profits will be taxed to you. You are also, as I said above, required by law to pay yourself a reasonable salary. Reasonable meaning corresponding to market rates. Paying a CPA or a Software Engineer a minimum wage will not be reasonable. That is, of course, if you're profitable, you're not required to pay yourself more money than the corporation actually has. Just to be clear, my answer refers to the question asked, and the confusing answer above that made a claim that has no substantiation in the law. I do not intend to write a thesis about pros and cons of using S-Corp every time a question about reasonable salary is asked. |
Why are the administrative fees for the three biggest donor-advised funds identical? | The commenters who referred you to the prisoner's dilemma are exactly correct, but I wanted to give a more detailed explanation because I find game theory quite interesting. The prisoner's dilemma is a classic scenario in game theory where even though it's in the best interests of two or more players to cooperate, they fail to do so. Wikipedia has a simple example using prisoners, but I'll use a simple example using Fidel and Charles, who are fund managers at Fidelity and Charles Schwab, respectively. To make the table shorter, I abbreviated a bit: INC = increase fees, KEEP=keep fees the same, DEC=decrease fees. Here is the dilemma itself, in the table that shows the resulting market shares if each fund manager follows the course of action in question. While this example isn't mathematically rigorous because I completely fabricated the numbers, it makes a good example. The most profitable course of action would be both fund managers agreeing to increase their fees, which would keep their market shares the same but increase their profits as they earn more fees. However, this won't happen for several reasons. Because economies of scale exist in the market for investment funds, it's reasonable to assume in a simple example that as funds grow larger, their costs decrease, so even though a fund manager decreases his fees (betraying the other players), this decrease won't be enough to reduce their profits. In fact, the increased market share resulting from such a decrease may well dominate the decreased fees and lead to higher profits. The prisoner's dilemma is highly applicable to markets such as these because they exist as oligopolies, i.e. markets where a relatively small number of established sellers possess considerable market power. If you actually wanted to model the market for donor-advised funds using game theory, you need to take a few more things into account. Obviously there are more than two firms. It's probably a valid assumption that the market is an oligopoly with significant economies of scale, but I haven't researched this extensively. There is more than one time period, so some form of the iterated prisoner's dilemma is needed. The market for donor-advised funds is also complicated by the fact that these are philanthropic funds. This may introduce tax implications or the problem of goodwill and institutional opinion of these funds. Although both funds increasing their fees may increase their profits in theory, institutional investors may look on this as a pure profit-seeking and take their funds elsewhere. For example, they may choose to invest in smaller funds with higher fees but better reputations. While reputation is important for any company, it might make more of a difference when the fund/investment vehicle is philanthropic in nature. I am by no means an expert on game theory, so I'm sure there are other nuances to the situation that I'm unaware of. |
Can company owners use lay offs to prevent restricted stock from vesting before an acquisition? | Depending on your local laws, such a layoff may be an unlawful act. If the whole purpose of the lay-off is to strip the employees of their RSU's, the employer may be liable and get sued. However, you have to check that with a lawyer licensed in your jurisdiction. In many places there are no laws against this. In any case, you may claim that there was no good faith/just cause in the action and still sue the employer. Mere threat of a lawsuit may thwart the whole deal, so I suggest the employees to lawyer up and talk to the employer. That, by the way, will require to create a union - a representative body for the employees. In some places that by itself may be a just cause for termination (in some extremely anti-union jurisdictions, I would guess if there were some they would be in the US). Bottom line - talk to a lawyer. |
What emergencies could justify a highly liquid emergency fund? | You are not wrong - just about anything can be charged and paid off in 30 days with a sale of non-liquid investments. So there are not any emergencies I can think of that require completely liquid funds (cash). For me, the risks are more behavioral than financial: I'm not saying it's a ridiculous, stupid idea, and these are all "what-if"s that can be countered with discipline and wise decisions, but having an emergency fund in cash certainly makes all of this simpler and reduces risk. If you have investments that you would have no hesitation liquidating to cover an emergency, then you can make it work. For most people, the choice is either paying cash, or charging it without having investment funds to pay it off, and they're back in the cycle of paying minimum payments for months and drowning in debt. |
A merchant requests that checks be made out to “Cash”. Should I be suspicious? | To put a positive spin on the whole thing, maybe it's a small family shop, and having the check made out to "cash" means that your barber can hand it to someone else without the need to countersign. Or maybe his last name is "Cash" - there was a pretty famous singer who fit that description. Either way, it's not your place to nanny his finances. |
Are stories of turning a few thousands into millions by trading stocks real? | I did once read a book titled "How I made a million dollars on the stock market". It sounded realistic enough to be a true story. The author made it clear on the first page that (a) this was due to some exceptional circumstances, (b) that he would never again be able to pull off something like this, and (c) you would never be able to pull of something like this, except with extreme luck. (The situation was small company A with a majority shareholder, other small company B tries to gain control by buying all the shares, the majority shareholder of A trying to prevent this by buying as many shares as possible, share price shooting up ridiculously, "smart" traders selling uncovered shorts to benefit when the price inevitably drops, the book author buying $5,000 worth of shares because they were going up, and then one enormous short squeeze catching out the traders. And he claimed having sold his shares for over a million - before the price dropped back to normal). Clearly not a matter of "playing your cards right", but of having an enormous amount of luck. |
Gigantic point amount on rewards card - what are potential consequences? | If you want to maximize your expected benefits, at minimal risk of financial repercussions or sleepless nights, I would suggest the following. Send an email explaining the situation, and announce that you plan to use the points if they do not advise otherwise. Here is an example message: Dear sir/madam, I recently contacted your helpdesk to mention that I believe my points balance is higher than it should be, and I was told that I could consider the extra points a gift. I assume that settles it, but in case I am mistaken please contact me within 4 weeks. My customer number is xxxx. Kind regards, Note that it is no problem if they don't reply, but you may want to push for a (possibly automated) confirmation of receiving your message. I would not be surprised if they still reduce your balance sometime in the future, but you should be reasonably covered if they try to reclaim any points that you already spent. |
What are some good ways to control costs for groceries? | Please stay away from snakes. Don't use a credit card to buy your food. Those credit companies will eat you alive. Those are reward points they're giving you. It's like the casino giving you a free $50 to start out with. They designed the game. They are going to win. As for groceries, if you are a coupon clipper, check out thegrocerygame.com: "Teri's List is a weekly publication of the lowest-priced products at your supermarket or drugstore matched with manufacturers' coupons and specials - advertised and unadvertised. Teri does all the hard work and research, and presents it to you in a straightforward format. Log in each week and print your list!" Nathon HouseholdBudgetNerd.com Family Budgets for Both of Us |
Thinking of doing an MBA: Is an $80K top MBA school better than a $24K online MBA school? | If you can get into the top school, it's a no-brainer to go that route. An MBA at a top school will not only give you an education taught by world-renowned professors but also a large network of students and alumni. |
My company didn't pay taxes on my behalf | Many a time even if the tax is deducted and paid by the company it does not reflect as a credit against your PAN for various reasons like, you not submitting it to your employer in time, errors of reconciliation, etc. Its advisable that you inform your company finance officer that you have received such a letter. Q1. The sure shot way of knowing that your company is depositing tax with government is to view your tax credit report. This was set-up in 2004 and gives the details of all credits against your PAN and the tax deducted against your PAN. It shows if the tax was TDS and which employer paid it, or if this was a self assessment, or TCS, etc. To view this report there are 2 options: Register directly at http://www.tin-nsdl.com/panregistration.asp. Follow the one time registration process and keep viewing the tax credits. Note it normally takes 2-3 months to reflect the data. The other alternative is that quite a few leading banks [Citi, SBI, etc] provide a direct access to this report from their internet banking frontend, provided your PAN is associated to your account. Q2. The only details you need to submit are the Form 16. This would have all the details of when the tax was paid and the BSR number required for reconciling. Q3. TDS is the liability of the employer. However if this has not been deducted or too little was deducted based on incorrect/incomplete information give by you, then its your liability. For example if you change jobs in a year, the tax deducted is always less and you have to pay the difference. Q4. If its established that the company was at fault for not deducting the tax or deducting and not paying it to government on time, there are enough provisions to penalize the company including putting the top management team behind bars. |
Are cashiers required to check a credit card for a signature in the U.S.? | Who cares? If your card gets stolen, most cards provide you with 100% liability protection. Just sign the thing! |
How can we determine how much income our savings could generate if we purchase an annuity? | Note that it isn't always clear that "turning it all into an annuity" is the right answer. Annuities are essentially insurance policies -- you're paying them a share of your income to guarantee a specific payout. If you outlive the actuarial tables, that may be a win. If the market crashes, that may be a win. But I'm increasingly hearing the advice that staying in investments (albeit in a very conservative position) may pay better longer. There are tools which will do monte-carlo modelling based on what the market has done in the past. You give them your estimate of how much in today's dollars would be needed to "maintain your lifestyle", and they'll tell you how much savings you need -- and what form you might want to keep those savings in -- to have good odds of being able to live entirely off the earnings and never touch the capital My employer makes such a tool available to us, and in fact Quicken has a simpler version built into it; it's nice that the two agree. |
Digital money pots? | If you can live with managing the individual category amounts yourself, this is trivial. Just set up a spreadsheet listing each category (and a column for the total amount of money in the account), adding or subtracting as you deposit or withdraw money to the account. To the bank it will be just one (physical) account, but to you, it can be any number of (accounting asset) accounts. You can choose to keep a history, or not. It's all up to how complex you want to make it. It doesn't even have to be a spreadsheet - you can just as well do this on paper if you prefer that. But the computer makes it easier. I imagine most personal finance software will help you, too; I know GnuCash can be coaxed into doing this with only a bit of creativity, and it almost certainly isn't the only one. I do this myself and it works very well. I don't know but imagine that companies do it all the time: there is no reason why there must be a one-to-one relationship between bank accounts and accounting asset accounts, and in fact, doing so would probably quickly become impractical. |
What one bit of financial advice do you wish you could've given yourself five years ago? | Do your homework on all types bonds and other lower-risk instruments, including bond funds and ETFs. I left too much money sitting around as cash over the last 5 years. |
If accepting more than $10K in cash for a used boat, should I worry about counterfeiting? | I'd not do business under these terms. A bill of sale needs a signature, right? Your signature is your word, and your word is your bond. I wouldn't participate in such a fraud, nor would I accept this sum of cash, who knows its origins? |
Buying and selling the same stock | Elaborating on kelsham's answer: You buy 100 shares XYZ at $1, for a total cost of $100 plus commissions. You sell 100 shares XYZ at $2, for a total income of $200 minus commissions. Exclusive of commissions, your capital gain is $100 for this trade, and you will pay taxes on that. Even if you proceed to buy 200 shares XYZ at $1, reinvesting all your income from the sale, you still owe taxes on that $100 gain. The IRS has met this trick before. |
What is a maximum amount that I can wire transfer out of US? | Chase has a limit of $500,000 per day. A banker should be able to help you determine any immediate tax liabilities that will arise as a direct result of the transaction. You may wish to consult with a tax professional about any indirect implications the transfer may have. This transaction will be reported to the government but assuming that you are not involved in any illegitimate activities the likelihood of the US government taking any action on the notice is incredibly low. I have heard of 7 and 14 day holds being placed on out of character transfers but if you are buying property you should work with your bank to help facilitate. Bankers understand the business and can help you avoid any appearances of impropriety that the government flags. Should your account be flagged, I would retain a lawyer immediately. If you feel you have a reason to be concerned, then I would contact a lawyer in the US and Thailand before initiating the transfer. As they say an ounce of prevention is worth a pound of cure. |
Definition of “secular” in the context of markets? | Secular means a long term. A secular basis is something done on a long term basis while a secular trend is a long term trend. http://financial-dictionary.thefreedictionary.com/Secular |
Does Edmunds get a kick-back from the use of Edmunds Price Promise? | Yes, Edmunds gets money from the dealerships in this program. According to this USA Today article from 2013, dealers pay Edmunds a monthly fee to participate in the program. This contrasts with TrueCar.com, a similar service, where dealers pay a fee for each sale. And yes, it is certainly possible to negotiate a lower price than the Edmunds Price Promise quote, if you enjoy haggling. The purpose of the program is not to get you the best price, just the easiest buying experience. From the USA Today article: Edmunds.com's price promise business model is designed to take the uncertainty out of pricing, speed up the buying process and also comes with the expectation that the customer will be given top-notch customer service. Dealers who have participated find that they are able to sell their cars for $300 to $500 more than consumers who go through the more traditional price quote request process. Customers, [Edmunds.com president and chief operating officer Seth] Berkowitz said, are willing to pay a little more than the best possible deal if they can save time, get great customer service and know they are getting a fair price. |
How is gold shared in worldwide economies? | You might want to read about about the Coase Theorem. "In law and economics, the Coase theorem, attributed to Ronald Coase, describes the economic efficiency of an economic allocation or outcome in the presence of externalities. The theorem states that if trade in an externality is possible and there are no transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of property rights. In practice, obstacles to bargaining or poorly defined property rights can prevent Coasian bargaining." This is similar to what you are asking. Each country has an endowment of gold, and they must create a set amount of money to represent their endowment of gold. This will establish an exchange rate. If I have 5 tons of gold and you have 5 tons, and I print 10 dollars and you print 20, then one of my dollars is worth two of your dollars. Thus, the amount of money is not relevant- it's the exchange rate between the countries. If all the nations know each other's gold endowment, then we will have a perfect exchange rate. If we don't, then currency printing will vary but arbitrage should drive it to an accurate price. Gold and diamonds are both valuable in part due to scarcity, but gold has been used as a measure of value because it's been historically used as a medium of exchange. People just realized that swapping paper was safer and cheaper than physically transporting gold, but the idea of gold as a measure of value is present because "that's how it's always been." Nobody "creates/supervises" these procedures, but organizations like the IMF, ECB, Fed Reserve, etc implement monetary policy to regulate the money supply and arbitrage drives exchange rates to fair values. |
How hard for US customers make payments to non-resident freelancer by wire transfer? | You are right in insisting upon a proper B2B contract in any business relationship. You wish to reduce your risk and be compensated fairly. In addition to the cost and complexity of international wire transfers, the US companies may also be considering the fact that as an international contractor in a relatively hard-to-reach jurisdiction, payments to you place the company at higher risk than payments to a domestic contractor. By insisting upon PayPal or similar transmitters, they are reducing their internal complexity and reducing their financial exposure to unfulfilled/disputed contract terms. Therefore, wire payments are "hard" in an internal business sense, as well as in a remittance transfer reporting sense. The internal business procedure will likely be the hardest to overcome--changing risk management is harder than filling out forms. |
I'm about to be offered equity by my employer. What should I expect? | Yes, what they said. You don't mention where you are on the totem pole. Are you reporting to the top dog, or are you 3 levels down? Not to be a downer, but until you know your cut, I'd not get too excited either way. 1000 shares/options of a LinkedIn turned to nearly $100K. Nothing to sneeze at, to be sure, but not enough to retire, nor bother contacting a lawyer. The details of the equity should be spelled out clearly, nothing against Lawyers, but it's likely to be wasted money. |
Pensions, annuities, and “retirement” | There are broadly two kinds of pension: final salary / defined benefit, and money purchase. The text you quote above, where it talks about "pension" it is referring to a final salary / defined benefit scheme. In this type of scheme you earn a salary of £X during your working life, and you are then entitled to a proportion of £X (the proportion depends on how long you worked there) as a pension. These types of scheme are relatively rare now (outside the public sector) because the employer is liable for making enough investments into a pot to have enough money to pay everyone's pension entitlements, and when the investments do poorly the liability for the shortfall ends up on the employer's plate. You might have heard about the "black hole in public sector pensions" which is what this refers to - the investments that the government have made to pay public sector workers' pensions has not in fact been sufficient. The other type of scheme is a money purchase scheme. In this scheme, you and/or your employer make payments into an investment pot which is locked away until you retire. Once you retire, that pot is yours but there are restrictions on what you can do with it - you can use it to purchase an annuity (I will give you my £X,000 pension pot in return for you giving me an annual income of £Y, say) and you can take some of it as a lump sum. The onus is on you to make sure that you (and/or your employer) have contributed enough to make a large enough pot to give you the income you want to live on, and to make a sensible decision about what to do with the pot when you retire and what to use it as income. With either type of scheme, you can claim this pension after you reach retirement age, whether or not you are still working. In some schemes you are also permitted to claim the pension earlier than retirement age if you have stopped working - it will depend on the rules of the scheme. What counts as "retirement age" depends on how old you are now (and whether you are male or female) as the government has been pushing this age out as people have been living longer. In addition to both schemes, there is also a "state pension" which is a fixed, non-means-tested, weekly amount paid from government funds. Again you are entitled to receive this after you pass retirement age, whether or not you are still working. |
What is the meaning of the net worth of a person? | An individual's net worth is the value of the person's assets minus his debt. To find your net worth, add up the value of everything that you own: your house, your cars, your bank accounts, your retirement investments, etc. Then subtract all of your debt: mortgage, student loans, credit card debt, car loans, etc. If you sold everything you own and paid off all your debts, you would be left with your net worth. If Bill Gates' net worth is $86 Billion, he likely does not have that much cash sitting in the bank. Much of his net worth is in the form of assets: stocks, real estate, and other investments. If he sold everything that he has and paid any debts, he would theoretically have the $86 Billion. I say "theoretically" because in the amounts of stock that he owns, he could cause a price drop by selling it all at once. |
Why does AAPL trade at such low multiples? | This is also an opinion, the iPhone makes up too much of the company's total revenue. Last quarter results were very well received because of the somewhat dramatic increase in service revenue indicating that maybe the company can shift from relying so heavily on the iPhone. As it stands, Apple is a single product company and that hinders long term prospects, hence the relatively low multiple. And the company has missed estimates, in fact one of those large dips was an earnings miss. Additionally, if you're looking at the charts another one of the recent dips was likely caused by the brexit vote because everything was clobbered for a couple of days after that. |
Which credit card is friendliest to merchants? | From experience, Mastercard and Visa charge vendors about the same (around 2%-5%) while American Express and Diners Club are astonishingly expensive (6%-10%) and you'll find that few small retailers are very comfortable accepting these. The variation comes from the volume of trade that vendors provide. A big retailer will negotiate a very low rate while smaller businesses will be hit with higher charges. |
Price movement behaviour before earnings announcements | This depends entirely on what the market guesses the news will be and how much of that guess has already been factored into the price. There is no general answer beyond that. Note that this explains the apparently paradoxical responses where a stock good down on good news (the market expected better) or up on bad news (the market expected worse). |
Why are American-style options worth more than European-style options? | An option gives you an option. That is, you aren't buying any security - you are simply buying an option to buy a security. The sole value of what you buy is the option to buy something. An American option offers more flexibility - i.e. it offers you more options on buying the stock. Since you have more options, the cost of the option is higher. Of course, a good example makes sense why this is the case. Consider the VIX. Options on the VIX are European style. Sometimes the VIX spikes like crazy - tripling in value in days. It usually comes back down pretty quick though - within a couple of weeks. So far out options on the VIX aren't worth just a whole lot more, because the VIX will probably be back to normal. However, if the person could have excercised them right when it got to the top, they would have made a fortune many times what their option was worth. Since they are Euroopean style, though, they would have to wait till their option was redeemable, right when the VIX would be about back to normal. In this case, an American style option would be far more valuable - especially for something that is difficult to predict, like the VIX. |
Shorting Stocks And Margin Account Minimum | First, you are not exactly "giving" the brokerage $2000. That money is the margin requirement to protect them in the case the stock price rises. If you short 200 shares as in your example and they are holding $6000 from you then they are protected in the event of the stock price increasing to $30/share. Sometime before it gets there the brokerage will require you to deposit more money or they will cover your position by repurchasing the shares for your account. The way you make money on the short sale is if the stock price declines. It is a buy low sell high idea but in reverse. If you believe that prices are going to drop then you could sell now when it is high and buy back later when it is lower. In your example, you are selling 200 shares at $20 and later, buying those at $19. Thus, your profit is $200, not counting any interest or fees you have paid. It's a bit confusing because you are selling something you'll buy in the future. Selling short is usually considered quite risky as your gain is limited to the amount that you sold at initially (if I sell at $20/share the most I can make is if the stock declines to $0). Your potential to lose is unlimited in theory. There is no limit to how high the stock could go in theory so I could end up buying it back at an infinitely high price. Neither of these extremes are likely but they do show the limits of your potential gain and loss. I used $20/share for simplicity assuming you are shorting with a market order vs a limit order. If you are shorting it would be better for you to sell at 20 instead of 19 anyway. If someone says I would like to give you $20 for that item you are selling you aren't likely to tell them "no, I'd really only like $19 for it" |
Is it really possible to get rich in only a few years by investing? | 10 year US Treasury bonds are currently yielding 3.46%. If you're offered an investment that looks better than that, you should ask yourself why big investors are putting their money in US Treasuries instead of what you've been offered. And obviously at 3.46% per year, you're not going to get rich quick -- it will take you over twenty years to double your money, and that's without allowing for inflation. |
In a competitive market, why is movie theater popcorn expensive? | People have moods, that mean they don't have the same level of demand for luxuries every day. There might be some days when I'm feeling a bit poor, or feel like I need to save money, and the price I'm prepared to pay for a box of popcorn might be 50c. There might be other days, for example, the day after I receive my wages, when I feel rich and I don't care how much I spend on things. On such a day, the price I'm prepared to pay for a box of popcorn might be $10. Now, when a supermarket sells popcorn, they're not really able to price discriminate between these two groups. People come through their doors in all kinds of mood, so the profit-maximising price for popcorn is going to be somewhere in the middle. But the only people who go to a movie theatre are people who are already in the right mood to spend money on needless luxuries. So the very fact of being in a movie theatre means that a popcorn stall, whether affiliated to the theatre or not, is open only to the high-spending end of the market. They have already caught me when I'm in the mood to spend, so their profit-maximising price will be much higher than that of the supermarket. |
Does a company's stock price give any indication to or affect their revenue? | It would be very unusual (and very erroneous) to have a company's stock be included in the Long Term Investments on the balance sheet. It would cause divergent feedback loops which would create unrepresentative financial documents and stock prices. That's how your question would be interpreted if true. This is not the case. Stock prices are never mentioned on the financial documents. The stock price you hear being reported is information provided by parties who are not reporting as part of the company. The financial documents are provided by the company. They will be audited internally and externally to make sure that they can be presented to the market. Stock prices are quoted and arbitrated by brokers at the stock exchange or equivalent service. They are negotiated and the latest sale tells you what it has sold for. What price this has been reported never works its way onto the financial document. So what use are stock prices are for those within the company? The stock price is very useful for guessing how much money they can raise by issuing stock or buying back stock. Raising money is important for expansion of the company or to procure money for when avenues of debt are not optimal; buying back stock is important if major shareholders want more control of the company. |
Why is a “long put” called long if you have a higher net position if the price decreases? | Long here does not mean you wish for the underlying stock to increase in value, in fact, as the chart shows, just the opposite is true. "Long means you bought the derivative, and you own the option. The guy that sold it to you is at your mercy, he is short the put, and it's your decision to put the stock to him should it fall in value. The value of the put itself rises with the falling stock price, you are long the put and want the put, itself, to rise in value. |
After Market Price change, how can I get it at that price? | Buying stocks is like an auction. Put in the price you want to pay and see if someone is willing to sell at that price. Thing to remember about after hours trading; There is a lot less supply so there's always a larger bid/ask price spread. That's the price brokers charge to handle the stocks they broker over and above the fee. That means you will always pay more after the market closes. Unless it is bad news, but I don't think you want to buy when that happens. I think a lot of the after market trading is to manipulate the market. Traders drive up the price overnight with small purchases then sell their large holdings when the market opens. |
Any Ubiquitous Finance App That is on Mac, iOS and Windows? | As I have said before on this site, I personally use Moneydance. They have Mac, Linux and Windows support, and recently added an iOS mobile version that syncs with the desktop. I have only used the Mac "desktop" version, and it seems to function well, but have not tried the other platforms, nor the iOS version. I have no company affiliation, but am a (mostly) happy user. :-) |
What would I miss out on by self insuring my car? | Convenience, and of course money. In case of an event, you'll have to spend the full worth of money to fix/replace, while if you're insured - you get the insurance to pay for it. It is up to you to decide, if the money saved on the lower premiums worth the risk of paying much more in case of an event. Of course, the cheaper the car the more it makes sense not to pay the premiums. Many people do that. Regarding the bargaining power, I actually think that you would pay less if it is not going through insurance than the bill the insurance pays. I fixed a nasty dent for like $300 at one shop, while at the other they said "It's $1200, but what do you care, your insurance will cover it" (I had $500 deductible, so in the end it was cheaper for me to pay $300 without the insurance at all). |
Ballpark salary equivalent today of “healthcare benefits” in the US? | Equation: (M x 12) + MOOP = Worst case scenario cost Where M equals the monthly cost and MOOP is the maximum out of pocket amount. So, if a plan costs $500 a month and the maximum out of pocket amount is $12,000 - which in a worst case scenario you would pay (it's almost always over the deductible) ... ($500 x 12) + 12,000 = $18,000 Most people look at the deductible, but be aware this is incorrect in a worst case. The last one (maximum out of pocket) really hurts most people because they overlook it: Deductible vs. out-of-pocket maximum The difference between your deductible and an out-of-pocket maximum is subtle but important. The out-of-pocket maximum is typically higher than your deductible to account for things like co-pays and co-insurance. For example, if you hit your deductible of $2,500 but continue to go for office visits with a $25 co-pay, you’ll still have to pay that co-pay until you’ve spent your out-of-pocket maximum, at which time your insurance would take over and cover everything. New in 2016: embedded out-of-pocket maximums One change in 2016 is that, even with an aggregate deductible, one person cannot pay more than the individual out-of-pocket maximum within a family plan, even if the aggregate deductible is more than the individual out-of-pocket maximum, which is $6,850 for 2016. For instance, even if the overall aggregate deductible was $10,000, a single person in that family plan could not incur more than $6,850 in out-of-pocket expenses. (In 2017, the out-of-pocket maximum will increase to $7,150.) After they hit that number, insurance covers everything for that person, even as the rest of the family is still subject to the deductible. From your question: Thanks - not sure I totally follow you. My question is, essentially: "Say a typical large employer X gives you 'healthcare' as a benefit on top of your salary. In fact, how much does that cost corporation X each year?" ie, meaning, in the US, about how much does that typically cost a corporation X each year? That's a good question because they may qualify for tax advantages by offering to a number of employees and there may be other benefits if they encourage certain tests (like blood work and they waive the monthly fee). More than likely, using the above equation may be the maximum that they'll pay each year per employee and it might be less depending on the tax qualifications. You can read this answer of the question and it appears they are paying within the range of these premiums listed above this. |
Is losing money in my 401K normal? | Bottom line is our system is broken. For three years running I am 0% return with over 600k in. Yet, the 401k admin institution charges us all enormous fees that most aren't even aware exist. A helpful tip is to also check out your expense ratios and learn how those work as well so you know how much you are paying in hidden fees. |
Exercising an option without paying for the underlying | As other answers state, selling the options contracts to the market is a definite way out, and probably the best in most cases. If you're determined to exercise your options (or there's not enough liquidity to reasonably sell your contracts to the market), then you could plan ahead and exercise smaller number of contracts at a time and sell the resulting position in the underlying, which will give you funds to exercise some more contracts and sell the underlying. If you think you're going down this path, however, make sure that you take into account your broker's rules for settlement. You may need to start the exercise / sell cycle before the option's expiration date. |
Job Offer - Explain Stock Options [US] | Since the 2 existing answers addressed the question as asked. Let me offer a warning. You have 10,000 options at $1. You've worked four years and the options are vested. The stock is worth $101 when you get a job offer (at another company) which you accept. So you put up $10k and buy the shares. At this moment, you put up $10K for stock worth $1.01M, a $1M profit and ordinary income. You got out of the company just in time. For whatever reason, the stock drops to $21 and at tax time you realize the $1M gain was ordinary income, but now the $800k loss is a capital loss, limited to $3000/yr above capital gains. In other words you have $210k worth of stock but a tax bill on $1M. This is not a contrived story, but a common one from the dotcon bubble. It's a warning that 'buy and hold' has the potential to blow up in your face, even if the shares you buy retain some value. |
Are there any statistics that support the need for Title Insurance? | When I bought the house I had my lawyer educate me about everything on the forms that seemed at all unclear, since this was my first time thru the process. On of the pieces of advice that he gave was that title insurance had almost no value in this state unless you had reason to believe the title might be defective but wanted to buy the property anyway. In fact I did get it anyway, as an impulse purchase -- but I'm fully aware that it was a bad bet. Especially since I had the savings to be able to self-insure, which is always the better answer if you can afford to risk the worst case scenario. Also: Ask the seller whether they bought title insurance. Often, it is transferrable at least once. |
Why do Americans have to file taxes, even if their only source of income is from a regular job? | Politics is certainly part of the equation, in two ways that I can think of. These don't necessarily reflect my views; just trying to explain as I see it. First, there are a lot of interests in having the current, convoluted tax system entrenched. ProPublica did a piece talking about the question you're asking, and Intuit, makers of the popular tax software TurboTax, is mentioned as someone who lobbied heavily to keep the kind of system you describe out. It's spun as increasing the size and cost of government (which, I guess, is true - someone has to do the work if you aren't filing) while opening up possibilities for error, but the piece portrays the companies as being more interested in preserving the status quo. Second, plenty of people don't like the idea that taxation is done automatically, out of sight and out of mind. An issue that illustrates this is airline pricing. Consumers don't like seeing a $19 fare advertisement and then finding out that they'll actually have to pay $50 after the taxes are added. However, those in the airline industry and those who are generally against taxes don't like the idea that a tax can be added without the consumer really knowing that the government was responsible for the price increase. You sometimes see this with gasoline prices, where taxes are built into the price per gallon. My home state of Pennsylvania recently raised the gas tax without anyone really noticing since the overall price was dropping dramatically at the time. Contrast that to Pittsburgh-area bars who were able to very specifically pin an alcohol tax on its creator. Point being, direct deposits with automatic deductions already take most of the thinking out of taxation. Those in that situation really only think about their income in terms of the amount that shows in their bank account. For some, that time of filing taxes is the one time a year where you actually get to reflect on the amount of money you're paying the government for its services. The more automatic taxation is and the less that the public thinks about it, the easier it is for the government to raise it without people noticing. |
Why is property investment good if properties de-valuate over time? | nan |
Is there any drawback in putting all my 401K into a money market fund? | What you're describing is called timing the market. That is, if you correctly predict when the market will drop, you can sell before the drop, wait for the drop, then buy after the drop has occurred. Sell high, buy low. The fundamental problem with that, though, is: What ends up happening, on average, is you end up slightly behind. There's quite a lot of literature on this; see Betterment's explanation for example. Forbes (click through ad first) also has a detailed piece on the matter. Now, we're not really talking HFT issues here; and there are some structural things that some argue you can take advantage of (restrictions on some organizational investors, for example, similar to a blackjack dealer who has to hit on 16). However, everyone else knows about these too - so it's hard to gain much of an edge. Plenty of people say they can time the market right, and even yourself perhaps you timed a particular drop accurately. This tends to lead to false confidence though; how many drops that you timed badly do you remember? Ultimately, most investors end up slightly down when they attempt to time the market, because of the transaction costs (if you guess two drops, one 'right' and one 'wrong', and they have exactly opposite gains/losses before commissions, you will lose a bit on each due to commission), and because of the overall upward trend in the market (ie, if you picked at random one month a year to be out of the market, you'd lose around 10% annualized gains from doing that; same applies here). All of that aside, there is one major caveat: risk tolerance. If you are highly risk tolerant, say a 30 year old investing your 401(k), then you should stay in no matter what. If you're not - say you're 58 and retiring in a few years - then knowledge that there's a higher risk time period coming up might suggest moving to a less risky portfolio, even at the known cost of some gains. |
Investing thought experiment | The market cap always reflect the company's equity. Except that you cannot fix a stock price in a free market. A company with such profit pattern would have stock price behave like present value of a perpetuity (future income stream discounted by risk free rate) Since your assumption is unachievable, there is no point in determining the logic. |
What are NSCC illiquid charges? | NSCC illiquid charges are charges that apply to the trading of low-priced over-the counter (OTC) securities with low volumes. Open net buy quantity represents the total unsettled share amount per stock at any given time during a 3-day settlement cycle. Open net buy quantity must be less than 5,000,000 shares per stock for your entire firm Basically, you can't hold a long position of more than 5 million shares in an illiquid OTC stock without facing a fee. You'll still be assessed this fee if you accumulate a long position of this size by breaking your purchase up into multiple transactions. Open net sell quantity represents the total unsettled share amount per stock at any given time during a 3-day settlement cycle. Open net sell quantity must be less than 10% percent of the 20-day average volume If you attempt to sell a number of shares greater than 10% of the stock's average volume over the last 20 days, you'll also be assessed a fee. The first link I included above is just an example, but it makes the important point: you may still be assessed a fee for trading OTC stocks even if your account doesn't meet the criteria because these restrictions are applied at the level of the clearing firm, not the individual client. This means that if other investors with your broker, or even at another broker that happens to use the same clearing firm, purchase more than 5 million shares in an individual OTC stock at the same time, all of your accounts may face fees, even though individually, you don't exceed the limits. Technically, these fees are assessed to the clearing firm, not the individual investor, but usually the clearing firm will pass the fees along to the broker (and possibly add other charges as well), and the broker will charge a fee to the individual account(s) that triggered the restriction. Also, remember that when buying OTC/pink sheet stocks, your ability to buy or sell is also contingent on finding someone else to buy from/sell to. If you purchase 10,000 shares one day and attempt to sell them sometime in the future, but there aren't enough buyers to buy all 10,000 from you, you might not be able to complete your order at the desired price, or even at all. |
Does FIFO cost basis applies across multiple accounts? | To sum up: My question came from misunderstanding what cost basis applies to. Now I get it that it applies to stocks as physical entities. Consider a chain of buys of 40 stock A with prices $1-$4-$10-$15 (qty 10 each time) then IRS wants to know exactly which stock I am selling. And when I transfer stocks to different account, that cost basis transfers with them. Cost basis is included in transfers, so that removes ambiguity which stock is being sold on the original account. In the example above, cost basis of 20 stocks moved to a new account would probably be $1 x 10 and $4 x 10, i.e. FIFO also applies to transfers. |
Are there capital gains taxes or dividend taxes if I invest in the U.S. stock market from outside of the country? | The country from which you purchase stock cannot charge you tax on either income or capital gains. Taxation is based on residency, so even when you purchase foreign stock its the tax laws of Malaysia (as your country of residence) that matter. At the time of writing, Malaysia does not levy any capital gains tax and there is no income tax charged on dividends so you won't have to declare or pay any tax on your stocks regardless of where you buy them from. The only exception to this is Dividend Withholding Tax, which is a special tax taken by the government of the country you bought the stock from before it is paid to your account. You do not need to declare this tax as it his already been taken by the time you receive your dividend. The US withholding tax rate on dividends is 30%, although this can be reduced to 15% if there as a tax treaty in place between the US and your country of residence. Malaysia does have a double taxation agreement with the US (see here: http://www.mida.gov.my/env3/index.php?page=double-taxation-agreement) but it is flagged as a "limited" agreement. You'd need to find the full text of the agreement to see whether a reduced rate of dividend withholding tax would be available in the Malaysia/US treaty. See my other answer for more details on withholding taxes and how to partially reclaim under a double tax treaty: What is the dividend tax rate for UK stock Note: Although the taxation rules of both countries are similar, I am a resident of Singapore not Malaysia so I can't speak from first hand experience, but current Malaysia tax rates are easy to find online. The rest of this information is common to any non-US/UK resident investor (as long as you're not a US person). |
Is it ok to use a check without a pre-printed check number? | For the clearing house, only the routing number and the check amount [which gets encoded before its presented to clearing] is important. The check numbers were put in as a fraud prevention mechanism to ensure that one check was only presented once and that it was issued to a particular account. Typically issued in sequence. So as your account is new, the bank may have a mechanism to verify the checks [maybe based on amount and other info]. If your volume of check issuing increases, they may start putting in a check number to better track. |
What are my options other than stock piling money in a savings account? | I think you need to understand the options better before you go around calling anything worthless... $11k in a 1% savings account gets you just over $100 each year. Obviously you're not buying Ferraris with your returns but it's $100 more than your checking account will pay you. And, you're guaranteed to get your money back. I think a CD ladder is a great way to store your emergency fund. The interest rate on a CD is typically a bit better than a regular savings account, though the money is locked away and while we seem to be on the cusp of a rate increase it might not be the best time to put the money in jail. Generally there is some sort of fee or lost interest from cashing a CD early. You're still guaranteed to get your money back. Stock trading is probably a terrible idea. If you want some market exposure I'd take half of the money and buy a low expense S&P ETF, I wouldn't put my whole savings if I were you (or if I were me). Many large brokers have an S&P ETF option that you can generally buy with no commission and no loads. Vanguard is a great option VOO, Schwab has an S&P mutual fund SWPPX, and there are others. Actively trading individual stocks is a great way to let commissions and fees erode your account. There are some startup alternatives with lower fees, but personally I would stay away from individual stock picking unless you are in school for Finance and have some interest in paying attention and you're ready to possibly never see the money again. You're not guaranteed to get your money back. There are also money market accounts. These will typically pay some interest based on exposing your funds to some risk. It can be a bit better return than a savings account, but I probably wouldn't bother. An IRA (ROTH and Traditional) is just an account wrapper that offers certain tax benefits while placing certain restrictions on the use of some or all of the money until you reach retirement age. As a college student you should probably be more concerned about an emergency fund or traveling than retirement savings, though some here may disagree with me. With your IRA you can buy CDs or annuities, or stocks and ETFs or any other kind of security. Depending on what you buy inside the IRA, you might not be guaranteed to get your money back. First you need to figure out what you'd like to use the money for. Then, you need to determine when you'd need the money for that use. Then, you need to determine if you can sleep at night while your stock account fluctuates a few percent each day. If you can't, or you don't have answers for these questions, a savings account is a really low friction/low risk place store money and combat inflation while you come up with answers for those questions. |
Filing taxes on stocks | You need to talk to an accountant who practices tax accounting, preferaby someone who is an Enrolled Agent (EA) with the IRS, and possibly an attorney who specializes in tax law. There are multiple issues here, and the executor of your father's estate might need to be involved here too. Presumably you were a minor in 2007 since the transactions took place in a custodial account, and perhaps you were a dependent of your father in 2007. So, were the transactions reported on your father's 2007 income tax return? or did he file a separate income tax return in your name? You say you have a W2 for 2007. So you were earning some income in 2007? This complicates matters. It is necessary to determine who has the responsibility to file income tax returns for a minor with earned income. Above all, I urge you to not file income tax returns on your own or using a tax return preparation program, or after talking to a tax return preparation service (where you will likely get someone who works on a seasonal basis and is unlikely to be familiar with tax law as of 2007). |
I have a 2008 HHR under finance it needs a new engine | I know, this isn't a direct answer to your question about unloading a used car-- I've always donated it to charity and written off the price it got at auction on my taxes -- but I think the following might be useful to anyone facing a big repair bill: You know your car's condition. (If in doubt, pay your mechanic to evaluate it "as if he was considering buying it for his daughter".) If you were shopping for a used car, and you found one exactly like yours, in exactly the same condition, treated exactly as well as you treat yours (and with all the records to prove that), but with the repairs already done... how much would you be willing to pay for it? If that number is more than the repair cost, repairing is a good deal. If it's less than the repair cost, is it enough less to justify the hassle of car shopping? If so, unload it and use the repair money to buy something better. If it's in the middle... flip a coin, or pick whichever makes you feel better. |
Does the IRS reprieve those who have to commute for work? | You cannot deduct commute expenses. Regarding your specific example, something to consider is that if the standard of living is higher in San Francisco, presumably the wages are higher too. Therefore, you must make a choice to trade "time and some money for commuting costs" for "even more money" in the form of higher wages. For example, if you can make $50K working 2 hours away from SF, or $80K working in SF, and it costs you $5K extra per year in commute costs, you still come out ahead by $25K (minus taxes). If it ends up costing $20K more to live in SF (due to higher rent/mortgage/food/etc), some people choose to trade 4 extra hours of commuting time to put that extra $20K in their pocket. It's sort of like having an extra part time job, except you get paid to read/watch tv/sleep on the job (assuming you can take a train to work). |
What are the risks of Dividend-yielding stocks? | Dividend Stocks like any stock carry risk and go both up and down. It is important to choose a stock based on the company's potential and performance. And, if they pay a dividend it does help. -RobF |
Understanding the Nasdaq insider trading information | Their argument is mostly nonsense. Take someone like Tim Cook, CEO of Apple. He has a not very large salary, and makes a lot more money through stock bonuses. You would never, ever expect him to buy Apple shares. And assuming that he doesn't want to end up one day as the richest man in the cemetery, you would expect him to sell significant numbers of shares, independent on whether he expects Apple to go up or down. |
What is the compound annual growth rate of the major markets? | Center for Research in Security Prices would be my suggestion for where to go for US stock price history. Major Asset Classes 1926 - 2011 - JVL Associates, LLC has a PDF with some of the classes you list from the data dating back as far as 1926. There is also the averages stated on a Bogleheads article that has some reference links that may also be useful. Four Pillars of Investing's Chapter 1 also has some historical return information in it that may be of help. |
Borrowing share with a covered call for short? | No, if your stock is called away, the stock is sold at the agreed upon price. You cannot get it back at your original price. If you don't want your stock to be called, make sure you have the short call position closed by expiration if it is ITM. Also you could be at risk for early assignment if the option has little to no extrinsic value, although probably not. But when dividends are coming, make sure you close your short ITM options. If the dividend is worth more than the extrinsic value, you are pretty much guaranteed to be assigned. Been assigned that way too many times. Especially in ETFs where the dividends aren't dates are not always easy to find. It happens typically during triple witching. If you are assigned on your short option, you will be short stock and you will have to pay the dividend to the shareholder of your short stock. So if you have a covered call on, and you are assigned, your stock will be called away, and you will have to pay the dividend. |
If a stock has only buyers and no sellers how does its price go up? | Depending on what currency the price is quoted in and is originally sold, currency fluctuation can also carry over onto the price in your currency. An example for that would be bitcoin prices which sometimes show heavy ups and downs in one currency, but seem totally stable in another and can be tracked back to changed exchange rates between currencies. Also like others have said, prices on stocks are not actually fixed. You can offer to buy or sell at any price. Only if 2 people want to buy or sell for the same price there will actually be a transaction. |
Why can I refinance my recent car loan at a lower rate than I had received originally? | The simple answer might just be that the increased credit score you mentioned was enough to suddenly make you eligible for this lenders better rate, so maybe that's why you weren't able to get that low a rate before. Another option I can think of is that this particular bank offers these loans as a "teaser rate" to hopefully get more of your business later on. It's not exactly a loss leader I would think, given the non-existing deposit rates they're probably still able to make money on the spread but they might be able to undercut other banks enough to get their hooks into you. Figuratively speaking, of course. Of course in order to evaluate if it's worth switching to this deal, you'll also have to look at prepayment penalties and fees on your current loan. These extra costs might be enough to make the switch uneconomic. |
Bond prices: Why is a high yield sometimes too good to be true? | Those are the expected yields; they are not guaranteed. This was actually the bread and butter of Graham Newman, mispriced bonds. Graham's writings in the Buffett recommended edition of Securities Analysis are invaluable to bond valuation. The highest yielder now is a private subsidiary of Société Générale. A lack of financial statements availability and the fact that this is the US derivatives markets subsidiary are probably the cause of the higher rates. The cost is about a million USD to buy them. The rest will be similar cases, but Graham's approach could find a diamond; however, bonds are big ticket items, so one should expect to pay many hundreds of thousands of USD per trade. |
How to amend an amended return? | File a 2nd amended return that corrects the mistake I made on the 1st amended return This. Pay the $500 before April 27th and try to get it back later This. |
Do algorithmic trading platforms typically have live-data access to stock data? | Yes, Interactive Brokers is a good source for live data feeds and they have an API which is used to programmatically access the feeds, you will have to pay for data feeds from the individual data sources though. The stock exchanges have a very high price for their data and this has stifled innovation in the financial sector for several decades in the united states. But at the same time, it has inflated the value and mystique of "quants" doing simple algorithms "that execute within milliseconds" for banks and funds. Also RIZM has live feeds, it is a younger service than other exchanges but helps people tap into any online broker's feeds and let you trade your custom algorithms that way, that is their goal. |
Why do people use mortgages, when they could just pay for the house in full? | Condensed to the essence: if you can reliably get more income from investing the cost of the house than the mortgage is costing you, this is the safest leveraged investment you'll ever make. There's some risk, of course, but there is risk in any financial decision. Taking the mortgage also leaves you with far greater flexibility than if you become "house- rich but cash-poor". (Note that you probably shouldn't be buying at all if you may need geographic flexibility in the next five years or so; that's another part of the liquidity issue.) Also, it doesn't have to be either/or. I borrowed half and paid the rest in cash, though I could have taken either extreme, because that was the balance of certainty vs.risk that I was comfortable with. I also took a shorter mortgage than I might have, again trading off risk and return; I decided I would rather have the house paid off at about the same time that I retire. |
Price difference among shares in Hong Kong and Shang Hai | Wikipedia talks about the Chinese currency: Scholarly studies suggest that the yuan is undervalued on the basis of purchasing power parity analysis. so despite it appearing cheaper due to the official exchange rate, the price in China might actually be fair. There are also restrictions on foreign exchange (purportedly "to prevent inflows of hot money"), which, in concert with any other legal obstacles to owning or trading on the Chinese exchange, may also explain why the high-frequency traders aren't tripping over each other to arbitrage away the difference. |
Financing a vehicle a few months before I expect to apply for a mortgage? | Usually, it's not a good idea as it will not only raise your debt to income ratios, but also impact your credit scores. However, if you have extensive credit history, having owned a home or two for a while (read: 10-20 years), taken out multiple auto loans in the past and paid them satisfactory, your credit score may not take a big hit. Possibly ust 5-10 points or it can be 30-40 points. It really depends on the depth of your credit profile. |
Am I considered in debt if I pay a mortgage? | Yes. A mortgage is a kind of debt. Someone lends you money to buy your house, and you owe them the money, so you have debt. |
When can you use existing real estate as collateral to buy more? | You put 20% down and already owe the 80% or $80k, so you don't have the ability to borrow $100k or even $20k for that matter. As LittleAdv stated, the banks have really tightened their lending criteria. Borrowing out more than 80% carries a high premium if you can get it at all. In your example, you want the property to increase in value by at least 10% to borrow $10K. |
What evidence is there that rising interest rates causes Canadian condo prices to go down? | Yes, it's unreasonable to think the prices will drop 10-20% in that time frame. Housing prices are not an equation that can can be solved to "home prices are X% overvalued." You have 3 answers so far, Quanty's "prices are inversely proportional to rates," Rob's "there's no strong correlation between interest rates and house prices," and MB's, "rising interest rates create downward pressure on housing prices." Any research into price history had better take every other variable into account. Articles that look at rates vs price don't always address a key item, income. Say we agree that the data show your city to be 10% too high. But if sellers like their high price and have some 'dig my heels in' power, prices won't drop. The seller simply stays put, and the supply/demand curves result not in a lower price, but in less supply. And the effect is to change the demographic of that area, i.e. attracting higher income earners. Rob linked to an article with a nice set of charts. One chart showing the US30 yr fixed rate and 'Real House Prices'. What results is a chart that can refute the relationship between rates and prices. But that would ignore an historical point that's too important to forget. The tumble that started in Jan '06 had nothing to do with the 30 year rate. It was the result of a series of insane financial products including 'interest only option ARMs' which permitted buyers to get approved for a purchase based on a payment that wasn't fixed, and would change to a fully amortizing mortgage at a higher rate that was unaffordable. A product that was a financial time bomb. Canada Banks offered no such product, and when the US market got pneumonia, Canada experienced a mild cold. With respect to any answers that offer US centric data to prove any hypothesis, I don't feel such comparisons are appropriate. Correlations, and the data used to prove them are an interesting thing. I can suggest that you take the US 30 year rate, along with our median income, or rather 25% of monthly median income. Calculate the mortgage that results. This translates nicely to the home a median family can afford. And I claim that long term this is the equilibrium price of that median home. But supply/demand has another factor, 'stickyness' or the more technical term, 'inelasticity of demand.' This means that for example, a 10% increase in the price of cigarettes does not cause a 10% drop in consumption. Each and every good has its own elasticity, and in the case of housing, a rise in cost would certainly impact the marginal buyers, but others will simply adjust their budgets. Not all buyers were planning to hit the bank's limit on what they could afford, so the rise doesn't change their mind, just their budget. Last - I know that Canada does not have a 30 year mortgage, most common is a 5 year rate with 30 year amortization. (correction/clarification, anyone?) The effect of this is less volatility in the market, since I believe your rates are not poised for the 2.5% to 4% jump implied by another response. Small increases can be absorbed. In a beautiful coincidence, the Federal Reserve Board sent me a link to The Interest Rate Elasticity of Mortgage Demand: Evidence From Bunching at the Conforming Loan Limit. It's a bit long but a worthwhile look at how the correlation isn't as instant as some might think. |
How to increase my credit score | You need to get yourself a credit card, and use it regularly and also repay on time. This will help increase your credit score. Hope you have a regular job which is bringing in money every month, but having just this isnt enough, get a credit card. |
Was on debt..can I now enter UK on visitor visa | Whether or not you'll be allowed to enter the UK is a topic for a different forum (and really more a topic for a lawyer rather than strangers on the internet). That being said, as a non-lawyer giving my opinion of the situation, you should be granted access to the UK as the banks/money lenders/phone companies don't have a relationship with Border Entry. With regards to debts in the UK, there is some precedent to debts being waived after a certain period of time, but the minimum is 6 years for unsecured debt, and the companies you owe money to can still chase you for payment, but can't use legal proceedings to force you to pay. However, the big caveat to this is that this only applies to residents of England and Wales. From the cleardebt.co.uk site: What is out of date debt? Debts like these are covered by the Limitation Act 1980, which is a statute of limitations that provides time scales as to how long a creditor can chase you (the debtor) for an unpaid debt. The Limitation Act 1980 only applies when no acknowledgement of a debt has been made between you and the creditor for six years for unsecured debts or 12 years for mortgage shortfalls and secured loans. This law only applies to residents of England and Wales. When does debt go out of date? If the creditor fails to maintain contact with you for six years or more, you may be able to claim that the outstanding debt is statute barred under the Limitation Act 1980. This means the creditor cannot use the legal system to enforce payment of the outstanding debt. The time limit starts from when you last acknowledged owing the debt or made a payment to the account. When can a creditor pursue an unsecured debt? You may think a creditor has written off your debt if you haven’t heard from them for a long time. The reality is that the debt still exists. The creditor can still contact you and they are entitled to chase the outstanding debt, even if the debt has been statute barred, but they are unable to use legal proceedings to force you to pay. Creditors can pursue an unsecured debt if: |
Optimal pricing of close to zero marginal cost content | It seems this will be very much driven by price discrimination. If there are some customers who will pay up to $100, sell at that; and if there are others who'll pay $1 sell at that price. For instance you see computer games, which have zero marginal cost of production, sold at "normal new release" prices, at premium prices with a special box or doo-dad, and at discount prices once the game is a bit old. |
Why do investors buy stock that had appreciated? | A few reasons. First, it's hard to buy a stock that has never gone up, and isn't necessarily wise to do so. Even if you just wait for a stock go down, what if you wait and it goes up two dollars, then drops 10 cents? Has it gone up or down? When should you buy it? In general, your idea is correct, the higher the price the less you should want the stock. But in some sense, the past price is irrelevant, you can't buy it at the past price. You should buy it now if it's the best option now. And that is based on your assessment of whether it's future prospects are worth the current price (and in fact enough worth enough to make buying the stock the best economic decision you can currently make). Finally, the price may have gone up for a reason. The company may have done something, or some information about the company may have become known, that affects it's future prospects. That might make it a better deal, perhaps even better than it was before the price increase. |
What should we consider when withdrawing a large amount of money from a bank account? | withdraw in cash - bank reports it to IRS no matter what. Would this affect my tax filing in the coming year? No, and no. The bank doesn't report to the IRS. In the US - the bank will probably report to FinCEN. It has nothing to do with your tax return. withdraw in check - bank does not seem to report it. Is this correct? Doesn't have to. Still might, if they think it is a suspicious/irregular activity. wire-transfer to another person's account - would this always be slapped with a "gift tax"? If this is a gift it would. Regardless of how you transfer the money. Is it? Answers to your follow up questions: In the US, what documents do we need to prepare in case our large sum withdraw from the bank triggers a flag in relevant government (local and/or federal) divisions and they decide to investigate? Depending on what the investigators request. FinCEN would investigate money laundering, the IRS would investigate tax evasion, the FBI would investigate terrorism sponsorship, etc. Depending on who's investigating and what the suspicions are - different documents may be required. But the bottom line is that you should be able to explain the source of the funds and the destination. For example "I found $1M in cash and sent it to some drug lord because he's such a good friend of mine" will probably not fly. Does the (local/federal) government care if we stash our money (in cash or check) under our mattress, if we purchase foreign properties (taxable? documents needed for proof?), or if we give it away (to individuals or organizations - individual: a gift tax, organization: tax waivable) ? The government cares about taxes, and illegal activities. Stashing money under a mattress is not illegal, but earning cash and not paying income tax on it usually is. In many cases money stashed under the mattress was obtained illegally and/or income taxes were not paid. It seems that no matter what we do (except spreading thin our assets to multiple accounts in multiple banks), the government will always be notified of any large bank transaction and we would be forever flagged since. Is this correct ? Yes, reportable transactions will be reported. Also spreading around in multiple accounts/transactions to avoid reporting is called "structuring" and is on its own a crime. This is for cash/cash equivalent transactions only, of course. Not sure about the "forever flagged since", that part is probably sourced in your imagination. |
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