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Should I use my non-tax advantaged investment account to pay off debt? | Paying off debts will reduce your monthly obligation to creditors (less risk) and also remove the possibility of foreclosure / repossession / lawsuit if you ever lost access to income (less risk). Risk is an important part of the equation that can get overlooked. It sounds like pulling that money out of the market will reduce your yearly tax bill as well. |
Buying from an aggressive salesperson | In my experience when a salesperson says a particular deal is only good if you purchase right now, 100% of the time it is not true. Of course I can't guarantee that is universally the case, but if you leave and come back 5 minutes later, or tomorrow, or next week, it's extremely likely that they'll still take your money for the original price. (In fact, sometimes after you leave you get a call with even a lower price than the "excellent offer"...) Most of the time when you are presented with high pressure sales accompanied by a "this price is only good right now" pitch, it ends up being because they don't want you to go search the competition and read reviews. In this case you have already done that and deemed the item to be worthwhile. Perhaps a better tactic for the salesperson would have been to try to convince you that others are interested in the item and if you wait it might be sold to someone else at that excellent price. Sales is an art, and it requires the salesperson to size you up and try to figure out your vulnerability and exploit it. This particular salesperson obviously misjudged you and/or you don't have an easily exploitable vulnerability. I wouldn't let the shortcomings of the salesperson get in the way of your purchase. If you are worried about the scenario of someone else snatching up the item, consider offering a deposit to hold the item for a certain amount of time while you "reflect" and/or "arrange for the funds". |
Economics of buy-to-let (investment) flats | but the flat would be occupied all the time. Famous last words. Are you prepared to have a tenant move in, and stop paying rent? In the US, it can take 6 months to get a tenant out of the apartment and little chance of collecting back rent. I don't know how your laws work, but here, they do not favor the landlord. The tiny sub 1% profit you make while funding principal payments is a risky proposition. It seems to me that even normal repairs (heater, appliances, etc) will put you to the negative. On the other hand, if this property has bottomed in terms of price and it rises in value, you may have a nice profit. But if you are just renting it out, it feels like it's too close to call. By the way, if you can go with a 30yr fixed, I'd suggest that. This would get you to a better cash flow sooner. A shorter mortgage simply means more money to principal each month. EDIT - as far as equity goes, at the beginning it seems the equity build up is really from your pocket, definitely so by switching from the 30 to the 15. What is your goal? The assumption I may have made is you wish to be a real estate investor with multiple properties. Doing so means saving up for the next down payment. Given the payoff time even if the property ran a high profit, I imagine you'd want to focus on cash flow, minimize the monthly expense, maximize what you can take each month to save for the next down payment. It's your choice, years from now to have one paid property, or 3 properties each with that 30% down payment, and let time be your friend. |
How to find an optimum linear combination of various investments? | You're talking about modern portfolio theory. The wiki article goes into the math. Here's the gist: Modern portfolio theory (MPT) is a theory of finance that attempts to maximize portfolio expected return for a given amount of portfolio risk, or equivalently minimize risk for a given level of expected return, by carefully choosing the proportions of various assets. At the most basic level, you either a) pick a level of risk (standard deviation of your whole portfolio) that you're ok with and find the maximum return you can achieve while not exceeding your risk level, or b) pick a level of expected return that you want and minimize risk (again, the standard deviation of your portfolio). You don't maximize both moments at once. The techniques behind actually solving them in all but the most trivial cases (portfolios of two or three assets are trivial cases) are basically quadratic programming because to be realistic, you might have a portfolio that a) doesn't allow short sales for all instruments, and/or b) has some securities that can't be held in fractional amounts (like ETF's or bonds). Then there isn't a closed form solution and you need computational techniques like mixed integer quadratic programming Plenty of firms and people use these techniques, even in their most basic form. Also your terms are a bit strange: It has correlation table p11, p12, ... pij, pnn for i and j running from 1 to n This is usually called the covariance matrix. I want to maximize 2 variables. Namely the expected return and the additive inverse of the standard deviation of the mixed investments. Like I said above you don't maximize two moments (return and inverse of risk). I realize that you're trying to minimize risk by maximizing "negative risk" so to speak but since risk and return are inherently a tradeoff you can't achieve the best of both worlds. Maybe I should point out that although the above sounds nice, and, theoretically, it's sound, as one of the comments points out, it's harder to apply in practice. For example it's easy to calculate a covariance matrix between the returns of two or more assets, but in the simplest case of modern portfolio theory, the assumption is that those covariances don't change over your time horizon. Also coming up with a realistic measure of your level of risk can be tricky. For example you may be ok with a standard deviation of 20% in the positive direction but only be ok with a standard deviation of 5% in the negative direction. Basically in your head, the distribution of returns you want probably has negative skewness: because on the whole you want more positive returns than negative returns. Like I said this can get complicated because then you start minimizing other forms of risk like value at risk, for example, and then modern portfolio theory doesn't necessarily give you closed form solutions anymore. Any actively managed fund that applies this in practice (since obviously a completely passive fund will just replicate the index and not try to minimize risk or anything like that) will probably be using something like the above, or at least something that's more complicated than the basic undergrad portfolio optimization that I talked about above. We'll quickly get beyond what I know at this rate, so maybe I should stop there. |
As a parent of a high school student, what should my short-term cash policy be to optimize my college costs? | There is no simple answer to your question. It depends on many things, perhaps most notably what college your daughter ends up going to and what kind of aid you hope to receive. Your daughter will probably fill out the FAFSA as part of her financial aid application. Here is one discussion of what parental assets "count" towards the Expected Family Contribution on the FAFSA. You can find many similar pages by googling. Retirement accounts and primary residence are notable categories that do not count. So, if you were looking to reduce your "apparent" assets for aid purposes, dumping money into your mortgage or retirement account is a possibility. However, you should be cautious when doing this type of gaming, because it's not always clear exactly how it will affect financial aid. For one thing, "financial aid" includes both grants and loans. Everyone wants grants, but sometimes increasing your "eligibility" may just make you (or your daughter) eligible for larger loans, which may not be so great. Also, each college has its own system for allocating financial aid. Individual schools may ask for more detailed information (such as the CSS Profile). So strategies for minimizing your apparent assets that work for one school may not work for others. Some elite schools with large endowments have generous aid policies that allow even families with sizable incomes to pay little or nothing (e.g., Stanford waives tuition for most families with incomes under $125,000). You should probably research the financial aid policies of schools your daughter is interested in. It can be helpful to talk to financial aid advisors at colleges, as well as high school counselors, not to mention general financial advisors if you really want to start getting technical about what assets to move around. Needless to say, it all begins with talking with your daughter about her thoughts on where to go. |
Any experience with maxing out 401(k)? | The biggest challenge as a young person maxing out a 401k in my opinion is the challenge of saving for a house, and (if necessary) paying off student loans. You have to consider - are you OK renting for the next 3, 5, 10 years? Or do you eventually want to buy a place? how much will that cost vs your current expenses? That being said, I didn't max out but had over 8-10% of 401k contribution in the same situation you're in right now and I don't regret it. Rereading your question, I see you are considering investing in a Roth IRA. Especially at your current age, assuming your wages will go UP, investing to the company match with the 401K and then maxing out a Roth IRA would be my recommendation. THEN continue maxing out the 401k (if you wish). P.S. I highly recommend doing two things if you go down this path: |
Any experience with maxing out 401(k)? | You want to take the hit now. There are tons of calculators out there, but the rule of 70 should be enough to help convince you: Assume you can put an extra $10k in a 401k now, or keep it. If you pay ~30% in taxes, you can have either: A) $7k now, or: B) What $10K will grow to in your 40 years till retirement less taxes at the end. The rule of 70 is a quick, dirty way to calculate compounded returns. It says that if you divide 70 by your assumed return, you get the approximate number of years it will take to double your money. So let's say you assume a 5% rate of return (you can replace that with whatever you want): 1) 70/5 is 14, so you'll double your $10k every 14 years. 2) In 40 years, you'll double your money almost 3 times (2.86) 3) That means you'll end up with almost $80k before taxes 4) Even if we assume the same tax rate at retirement of 30% (odds are decent it's lower, since you'll have less income, presumably), you still have $56k. Whatever you think inflation will be, $56k later is a LOT better than $7k now. |
Can I get a mortgage from a foreign bank? | Simple answer YES you can, there are loads here are some links : world first , Baydon Hill , IPF Just googling "foreign currency mortgage", "international mortgage", or "overseas mortgage" gets you loads of starting points. I believe its an established and well used process, and they would be "classified" as a "normal" mortgage. The process even has its own wiki page Incidentally I considered doing it myself. I looked into it briefly, but the cost of fee's seemed to outweigh the possible future benefits of lower interest rates and currency fluctuations. |
When to buy and sell bonds | Why does the yield go up if the country is economically unstable? The yield will rise when instability increases because the risk of default increases. If the case of Greece, the instability of government finances resulted in a 50% "haircut" for bond holders in 2011. In other words, bond holders suffered a 50% write down in the nominal value of their bonds. This means that holding these bonds until maturity will mean they will only receive half of the original nominal value of the bond, and that is assuming no further write downs occur. Why does selling a bond drive up the yield? Significant selling of bonds means that sellers are worried about future prospects. Sellers will outnumber buyers, so sellers will have to reduce their offer price in order to attract new buyers. So if you think Greece is not going to default as it's highly likely a country would completely default, wouldn't it make sense to hold onto the bonds? If you think that it is highly unlikely that Greece will default and the prices and yields are attractive, then Greek bonds may look like an attractive investment. However, keep in mind the fate of bond holders in 2011. They were attracted to Greek bonds by the price and yield, but they suffered a 50% haircut. |
How to pay for Alzheimer's care? | The cost of Alzheimer's care depends on the facility that provides this care. Specialized facilities usually have higher costs than general geriatric care ones. Though there are several ways to cover the cost: I think you'd better read the article http://www.autumngrove.com/blog/how-to-pay-for-alzheimers-care/ or learn their brochure http://www.autumngrove.com/wp-content/uploads/cost-of-assisted-living.pdf |
What prevents interest rates from rising? | A lot of loans are taken out on a fixed rate basis, so the rate is part of the contract and is therefore covered by contract law. If the loan is taken out on a variable basis then in principle the rate can rise within the terms of the contract. If a particular lender tries to raise its rates out of line with the market then its customers will seek alternative, cheaper, loans and pay off their expensive loan if they can. If rates rise sharply in general due to unusual politico-economic circumstances then those with variable rate loans can find themselves in severe trouble. For example the base rate in the UK (and therefore variable mortgage rates closely tied to it) spiked sharply in the late 80s which caused severe stress to a lot of borrowers and undoubtedly pushed some into financial difficulties. |
How do I manage my portfolio as stock evaluation criteria evolve? | Unfortunately I believe there is not a good answer to this because it's not a well posed problem. It sounds like you are looking for a theoretically sound criteria to decide whether to sell or hold. Such a criteria would take the form of calculating the cost of continuing to hold a stock and comparing it to the transactions cost of replacing it in your portfolio. However, your criteria for stock selection doesn't take this form. You appear to have some ad hoc rules defining whether you want the stock in your portfolio that provide no way to calculate a cost of having something in your portfolio you don't want or failing to have something you do want. Criteria for optimally rebalancing a portfolio can't really be more quantitative than the rules that define the portfolio. |
Why would a company care about the price of its own shares in the stock market? | Why do companies exist? Well, the corporate charter describes why the company exists. Usually the purpose is to enrich the shareholders. The owners of a company want to make money, in other words. There are a number of ways that a shareholder can make money off a stock: As such, maintaining the stock price and dividend payouts are generally the number one concern for any company in the long term. Most of the company's business is going to be directed towards making the company more valuable for a future buyout, or more valuable in terms of what it can pay its shareholders directly. Note that the company doesn't always need to be worried about the specifics of the day-to-day moves of the stock. If it keeps the finances in line - solid profits, margins, earnings growth and the like - and can credibly tell people that it's generally a valuable business, it can usually shrug off any medium-term blips as market craziness. Some companies are more explicitly long-term about things than others (e.g. Berkshire Hathaway basically tells people that it doesn't care all that much about what happens in the short term). Of course, companies are abstractions, and they're run by people. To make the people running the company worry about the stock price, you give them stock. Or stock options, or something like that. A major executive at a big company is likely to have a significant amount of stock. If the company does well, he does well; if it does poorly, he does poorly. Despite a few limitations, this is really a powerful incentive. If a company is losing a lot of money, or if its profits are falling so it's just losing a lot of its value as a business, the owners (stockholders) tend to get upset, and may vote in new management, or launch some sort of shareholder lawsuit. And, as previously noted, to raise funds, a company can also issue new shares to the market as a secondary offering as well (and they can issue fewer shares if the price is high - meaning that whatever the company is worth afterward, the existing owners own proportionally more of it). |
What is a good open source Windows finance software | Have you tried others on Wikipedia's list? |
Are stories of turning a few thousands into millions by trading stocks real? | you'll need 25k to start or 2k in multiple accounts, that way you have access to margin, and don't have to worry about Pattern day trading limits. Be right more than you are wrong. Go up look for 3x potential up vs down risk. Compound daily. you can't double a penny every day every day for a month it becomes to difficult. but you can do 1%/day or maybe better. 2k compounded 1% every day becomes 75k at the end of a year (but you'll likely have to take weekends off, or look for other markets) |
I cosigned for a friend who is not paying the payment | I came across such a situation and I am still facing it. My friend borrowed my credit card for his expenses as he had misplaced his debit card and for the time being had asked for my credit card to handle the expenses he does. He paid for initial 2 months and then was not able to make payments, mainly due to not being able to arrange money or if it was a contri party, he would collect cash from friends but again spend the same. Months passes by... the bill had come upto 65k and calls from bank and other respective organizations Finally my dad came into picture and slowly the issue is resolving he has paid 50K remaining is still pending. So basically, the reason I shared this part of story was he is my Best friend and in order to not spoil our friendship I did not want to take any such step which would later on affect our friendship. This completely depends on the individuals how they react to the situation. Keeping Ego, superiority, favour sort of feelings and words apart things can be resolved between friends. You do not know what is the situation on the other side. Probably you can connect with him ask him to explain you why is not able to pay the debts and take action accordingly. If he is not able to provide a proper reason then you may take some actions like mentioned in initial answers, run after the assets he own or anything else.Stay Calm and patient. Do not take any such step which you would regret later on...! |
Trying to figure out my student loans | Is there anything here I should be deathly concerned about? A concern I see is the variable rate loans. Do you understand the maximum rate they can get to? At this time those rates are low, but if you are going to put funds against the highest rate loan, make sure the order doesn't change without you noticing it. What is a good mode of attack here? The best mode of attack is to pay off the one with the highest rate first by paying more than the minimum. When that is done roll over the money you were paying for that loan to the next highest. Note if a loan balance get to be very low, you can put extra funds against this low balance loan to be done with it. Investigate loan forgiveness programs. The federal government has loan forgiveness programs for certain job positions, if you work for them for a number of years. Some employers also have these programs. What are the payoff dates for the other loans? My inexact calculations put a bunch in about 2020 but some as late as 2030. You may need to talk to your lender. They might have a calculator on their website. Why do my Citi loans have a higher balance than the original payoff amounts? Some loans are subsidized by the federal government. This covers the interest while the student is still in school. Non-subsidized federal loans and private loans don't have this feature, so their balance can grow while the student is in school. |
Making $100,000 USD per month, no idea what to do with it | If you are making that much, don't waste your time here. Pay a few hundred bucks for a consultation with a fee-only certified financial planner. (Not one of the "free" services, which make their money via commissions on sales and are thus motivated to direct you to whatever gets them the largest commission.) In fact, in your bracket you might want to consider hiring someone to manage your portfolio for you on an ongoing basis. A good one will start by asking what your goals are, over what timeframe, and will help you determine how you feel about risk and volatility. From that information they will be able to suggest a strategic mix of kinds of investments which is balanced for those constraints. |
What percentage of my portfolio should be in individual stocks? | I think it depends entirely on your risk tolerance. Putting money in individual stocks obviously increases your risk and potentially increases your reward. Personally (as a fairly conservative investor) I'd only invest in individual stocks if I could afford to lose the entire investment (maybe I'd end up buying Enron or Nortel). If you enjoy envesting and feel 10% is an acceptable loss I think you have your answer |
Considering investing in CHN as a dividend stock | CHN is a Closed-End Fund. CHN actually pays out three types of distributions: In the case of CHN, they appear to be paying yearly. The most recent dividend, with exdate of 18 Dec 2014, consisted of $3.4669 of Long-term capital gains and $0.2982 cash dividend. Prior to that, the dividend with exdate of 19 Dec 2013 consisted of $2.8753 long-term capital gains and $0.4387 cash dividend. For a standard dividend yield you typically would not expect short-term and long-term capital events to be included in a yield calculation, as these events really only occur in relation to a fund rebalancing (changing its investments) and are not really due to the actual performance of the fund in any way. Most free sites that provide dividend information do not make a distinction on the dividend type. Data source: Premium Data Full Disclosure: I am a co-owner of Premium Data/Norgate. |
How aggressive should my personal portfolio be? | You're completely missing the most important thing you can do: minimize fees. |
Pros and Cons of Interest Only Loans | The main disadvantage is that interest rates are higher for the interest-only loan. It's higher risk to the bank, since the principal outstanding is higher for longer. According to the New York Times, "Interest rates are usually an eighth- to a half-percentage point higher than on fully amortized jumbo loans." They're also tougher to qualify for, and fewer lenders offer them, again due to the risk to the bank. Since you can always put extra towards the principal, strictly speaking, these are the only downsides. The upside, of course, is that you can make a lower payment each month. The question is what are you doing with this? If this is the only way you can afford the payments, there's a good chance the house is too expensive for you. You're not building equity in the home, and you have the risk of being underwater if the house price goes down. If you're using the money for other things, or you have variable income, it might be a different story. For the former, reinvesting in a business you own might be a reason, if you're cognizant of the risks. For the latter, salespeople on commission, or financial industry types who get most of their income in bonuses, can benefit from the flexibility. |
What are the top “market conditions” to follow? | If you're investing for the long term your best strategy is going to be a buy-and-hold strategy, or even just buying a few index funds in several major asset classes and forgetting about it. Following "market conditions" is about as useful to the long term trader as checking the weather in Anchorage, Alaska every day (assuming that you don't live in Anchorage, Alaska). Let me suggest treating yourself to a subscription to The Economist and read it once a week. You'll learn a lot more about investing, economics, and world trends, and you won't be completely in the dark if there are major structural changes in the world (like gigantic housing bubbles) that you might want to know about. |
Is there a mathematical formula to determine a stock's price at a given time? | The fallacy in your question is in this statement: "The formulas must exist, because prices can be followed real time." What you see are snapshots of the current status of the stock, what was the last price a stock was traded at, what is the volume, is the price going up or down. People who buy and hold their stock look at the status every few days or even every few months. Day traders look at the status every second of the trading day. The math/formula comes in when people try to predict where the stock is going based on the squiggles in the line. These squiggles move based on how other people react to the squiggles. The big movements occur when big pieces of news make large movements in the price. Company X announces the release of the key product will be delayed by a year; the founder is stepping down; the government just doubled the order for a new weapon system; the insiders are selling all the shares they can. There are no formulas to determine the correct price, only formulas that try to predict where the price may go. |
What happens if I just don't pay my student loans? | Never forget that student lenders and their collection agencies are dangerous and clever predators, and you, the student borrower, are their legal prey. They look at you and think, "food." My friend said she never pays her student loans and nothing has happened. She's wrong. Something has happened. She just doesn't know about it yet. Each unpaid bill, with penalties, has been added to the balance of her loan. Now she owes that money also. And she owes interest on it. That balance is probably building up very fast indeed. She's playing right into the hands of her student lender. They are smiling about this. When the balance gets large enough to make it worthwhile, her student lender will retain an aggressive collection agency to recover the entire balance. The agency will come after her in court, and they are likely to win. If your friend lives in the US, she'll discover that she can't declare bankruptcy to escape this. She has the bankruptcy "reform" act of 2006, passed during the Bush 43 regime, to thank for this. A court judgement against her will make it harder for her to find a job and even a spouse. I'm not saying this is right or just. I believe it is wrong and unjust to make university graduates into debt slaves. But it is true. As for being paid under the table, I hope your friend intends on dying rather than retiring when she no longer can work due to age. If she's paid under the table she will not be eligible for social security payments. You need sixteen calendar quarters of social security credit to be eligible for payments. I know somebody like this. It's a hell of a way to live, especially on weekends when the local church feeding programs don't operate. Paying people under the table ought to be a felony for the business owner. |
Recognizing the revenue on when virtual 'credits' are purchased as opposed to used | I'll assume United States as the country; the answer may (probably does) vary somewhat if this is not correct. Also, I preface this with the caveat that I am neither a lawyer nor an accountant. However, this is my understanding: You must recognize the revenue at the time the credits are purchased (when money changes hands), and charge sales tax on the full amount at that time. This is because the customer has pre-paid and purchased a service (i.e. the "credits", which are units of time available in the application). This is clearly a complete transaction. The use of the credits is irrelevant. This is equivalent to a customer purchasing a box of widgets for future delivery; the payment is made and the widgets are available but have simply not been shipped (and therefore used). This mirrors many online service providers (say, NetFlix) in business model. This is different from the case in which a customer purchases a "gift card" or "reloadable debit card". In this case, sales tax is NOT collected (because this is technically not a purchase). Revenue is also not booked at this time. Instead, the revenue is booked when the gift card's balance is used to pay for a good or service, and at that time the tax is collected (usually from the funds on the card). To do otherwise would greatly complicate the tax basis (suppose the gift card is used in a different state or county, where sales tax is charged differently? Suppose the gift card is used to purchase a tax-exempt item?) For justification, see bankruptcy consideration of the two cases. In the former, the customer has "ownership" of an asset (the credits), which cannot be taken from him (although it might be unusable). In the latter, the holder of the debit card is technically an unsecured creditor of the company - and is last in line if the company's assets are liquidated for repayment. Consider also the case where the cost of the "credits" is increased part-way through the year (say, from $10 per credit to $20 per credit) or if a discount promotion is applied (buy 5 credits, get one free). The customer has a "tangible" item (one credit) which gets the same functionality regardless of price. This would be different if instead of "credits" you instead maintain an "account" where the user deposited $1000 and was billed for usage; in this case you fall back to the "gift card" scenario (but usage is charged at the current rate) and revenue is booked when the usage is purchased; similarly, tax is collected on the purchase of the service. For this model to work, the "credit" would likely have to be refundable, and could not expire (see gift cards, above), and must be usable on a variety of "services". You may have particular responsibility in the handling of this "deposit" as well. |
How can I legally and efficiently help my girlfriend build equity by helping with a mortgage? | Have her chip in for the regular expenses, utilities, food, etc., and a bit for "rent." Then tell her to be sure to deposit to her retirement account, preferably a matched 401(k). It's admirable to want her to build 'equity' but it's pretty convoluted. You can't actually give her ownership, and in the event you break up (I know you won't, but this is to help other readers) you'll have to pay her back a lump sum when she moves out. That might not be so easy. |
Which Roth IRA is the best for a 21 year old who has about $1500? | Your question seems like you don't understand what a Roth IRA is. A Roth IRA isn't an investment, per se. It is just a type of account that receives special tax treatment. Just like a checking and savings account are different at a bank, a ROTH IRA account is just flagged as such by a brokerage. It isn't an investment type, and there aren't really different ROTH IRA accounts. You can invest in just about anything inside that account so that is what you need to evaluate. One Roth IRA account is as good as any other.As to what to invest your money in inside a ROTH, that is a huge question and off-topic per the rules against specific investing advice. |
How can my friend send $3K to me without using Paypal? | Many banks offer online payment. He can add a payee and just type your name and address in. The bank will mail the check out if they cannot deliver payment electronically. Edit: Recently I came across this (Citibank Global Transfer), you and your friend should see if your bank offers a similar service. Citibank requires both of you to have an account with them. |
What to do when a job offer is made but with a salary less than what was asked for? | It depends on your situation. Take the job only if you really need the job and there's no job close to your experience and salary expectations. IMO $70K is not much in NYC given the cost of living there, even if you stay in Jersey City, NJ and take a train. However, it does depend on your lifestyle. Also, if HR is not willing to keep their commitment now, they generally won't keep any other commitments like negotiated perks as part of the job offer. However, sometimes you may have to compromise because of other factors that make the job desirable: the team, the work, and enthusiasm for the business. |
If I put in a limit order for the same price and size as someone else, which order goes through? | While littleadv's answer is true for many exchanges (in particular the stock market, it's called FIFO matching) you should also know that some markets trade pro rata. That is, for a match at some price level everyone at that level gets a chunk of the deal proportional to their input (i.e. order size). E.g. match for quantity X at a price level and passive side orders y1, y2; the order y1 would get y1 / (y1 + y2) of X and y2 would get y2 / (y1 + y2) (for X = min(X, y1 + y2)). |
Pay off credit card debt or earn employer 401(k) match? | A matching pension scheme is like free money. No wait, it actually IS free money. You are literally earning 100% interest rate on that money the instant you pay it in to the account. That money would have to sit in your credit card account for at least five years to earn that kind of return; five years in which the pension money would have earned an additional return over and above the 100%. Mathematically there is no contest that contributing to a matching pension scheme is one of the best investment there is. You should always do it. Well, almost always. When should you not do it? |
classify investments in to different asset types | A foreign stock mutual fund definitely belongs in stocks. It's composed of stocks. Your self occupied house is definitely real estate. You don have to keep in mind,however that selling it would create costs such as rent. I wouldn't leave it out, if doing that would cause you to buy more real estate. This would cause you to be overweighted in the real estate area. I would tend to think if a CD as cash. While it could be considered a bond, as you said the principal doesn't go down. The REIT is the toughest one. I would really like to see a graph showing how correlated it is to the real estate market. That would determine where I would put it. |
Retirement formula for annual compound interest with changing principal | The equation is the same one used for mortgage amortization. You first want to calculate the PV (present value) for a stream of $50K payments over 20 years at a10% rate. Then that value is the FV (future value) that you want to save for, and you are looking to solve the payment stream needed to create that future value. Good luck achieving the 10% return, and in knowing your mortality down to the exact year. Unless this is a homework assignment, which need not reflect real life. Edit - as indicated above, the first step is to get that value in 20 years: The image is the user-friendly entry screen for the PV calculation. It walks you though the need to enter rate as per period, therefore I enter .1/12 as the rate. The payment you desire is $50K/yr, and since it's a payment, it's a negative number. The equation in excel that results is: =PV(0.1/12,240,-50000/12,0) and the sum calculated is $431,769 Next you wish to know the payments to make to arrive at this number: In this case, you start at zero PV with a known FV calculated above, and known rate. This solves for the payment needed to get this number, $568.59 The excel equation is: =PMT(0.1/12,240,0,431769) Most people have access to excel or a public domain spreadsheet application (e.g. Openoffice). If you are often needing to perform such calculations, a business finance calculator is recommended. TI used to make a model BA-35 finance calculator, no longer in production, still on eBay, used. One more update- these equations whether in excel or a calculator are geared toward per period interest, i.e. when you state 10%, they assume a monthly 10/12%. With that said, you required a 20 year deposit period and 20 year withdrawal period. We know you wish to take out $4166.67 per month. The equation to calculate deposit required becomes - 4166.67/(1.00833333)^240= 568.59 HA! Exact same answer, far less work. To be clear, this works only because you required 240 deposits to produce 240 withdrawals in the future. |
Are there any banks with a command-line style user interface? | I think I get your question, but your wording is throwing a lot of us off. If what you want is a clean, effective and efficient interface over port 80, then USAA.com has done some great usability work. Additionally, they have really done some pioneering work with web services and mobile applications. On top of that, they have excellent document archiving. I can navigate their site more quickly than any of the other I've used. |
What's the best application, software or tool that can be used to track time? | People rave about Basecamp by 37signals. The impressive part is all the add-ins you can get for it. There are add-ins for invoicing, billing, accounting, and time tracking. |
How do I figure out if I will owe taxes | Do you have a regular job, where you work for somebody else and they pay you a salary? If so, they should be deducting estimated taxes from your paychecks and sending them in to the government. How much they deduct depends on your salary and what you put down on your W-4. Assuming you filled that out accurately, they will withhold an amount that should closely match the taxes you would owe if you took the standard deduction, have no income besides this job, and no unusual deductions. If that's the case, come next April 15 you will probably get a small refund. If you own a small business or are an independent contractor, then you have to estimate the taxes you will owe and make quarterly payments. If you're worried that the amount they're withholding doesn't sound right, then as GradeEhBacon says, get a copy of last year's tax forms (or this year's if they're out by now) -- paper or electronic -- fill them out by estimating what your total income will be for the year, etc, and see what the tax comes out to be. |
Getting started in stock with one special field of activity | It depends on what you're talking about. If this is for your retirement accounts, like IRAs, then ABSOLUTELY NOT! In your retirement accounts you should be broadly diversified - not just between stocks, but also other markets like bonds. Target retirement funds and solid conservative or moderate allocation funds are the best 'quick-and-dirty' recommendation for those accounts. Since it's for the long haul, you want to be managing risk, not chasing returns. Returns will happen over the 40 or so years they have to grow. Now, if you're talking about a taxable stock account, and you've gotten past PF questions like "am I saving enough for retirement", and "have I paid off my debt", then the question becomes a little more murky. First, yes, you should be diversified. The bulk of how a stock's movement will be in keeping with how its sector moves; so even a really great stock can get creamed if its sector is going down. Diversification between several sectors will help balance that. However, you will have some advantage in this sector. Knowing which products are good, which products everybody in the industry is excited about, is a huge advantage over other investors. It'll help you pick the ones that go up more when the sector goes up, and down less when the sector goes down. That, over time and investments, really adds up. Just remember that a good company and a good stock investment are not the same thing. A great company can have a sky-high valuation -- and if you buy it at that price, you can sit there and watch your investment sink even as the company is growing and doing great things. Have patience, know which companies are good and which are bad, and wait for the price to come to you. One final note: it also depends on what spot you are in. If you're a young guy looking looking to invest his first few thousand in the market, then go for it. On the other hand, if you're older, and we're talking about a couple hundred grand you've got saved up, then it's a whole different ball of wax. It that spot, you're back to managing risk, and need to build a solid portfolio, at a measured pace. |
Diversification reduces risk, but does this base on the assumption that expected return of each asset is always in proportion to its risk? | If you are diversifying just for diversification purposes then all you are doing is averaging down your returns. You shouldn't just buy two securities because you think it is safer than putting all your money into one. A better method is to use money management and position sizing to limit your risk and exposure in any one security. You should know what your maximum risk is before you buy any security and know when it is time to get out of it. There are better ways to manage your risk. Don't put all your eggs in the one basket - yes, but don't diversify just for diversification purposes. |
Should I really pay off my entire credit card balance each month or should I maintain some balance? | I think you got the message mixed up a little: Racking up big balances can hurt your scores, regardless of whether you pay your bills in full each month. What's typically reported to the credit bureaus, and thus calculated into your scores, are the balances reported on your last statements. (That doesn't mean paying off your balances each month isn't financially smart -- it is -- just that the credit scores don't care.) You typically can increase your scores by limiting your charges to 30% or less of a card's limit. -- from 7 Ways to Fix Your Credit Score In other words, ALWAYS pay off your balance if you can. But don't fill up your card to the max of your credit limit each month. i.e. if your credit limit is $5000, only spend $2000 each month. |
What's the appeal of dividends in investing? [duplicate] | A dividend is one method of returning value to shareholders, some companies pay richer dividends than others; some companies don't typically pay a dividend. Understand that shareholders are owners of a company. When you buy a stock you now own a portion (albeit an extremely small portion) of that company. It is up to you to determine whether holding stock in a company is worth the risk inherent to equity investing over simply holding treasury notes or some other comparable no risk investment like bank savings or CDs. Investing isn't really intended to change your current life. A common phrase is "investing in tomorrow." It's about holding on to money so you'll have it for tomorrow. It's about putting your money to work for you today, so you'll have it tomorrow. It's all about the future, not your current life. |
Super-generic mutual fund type | Since you already have twice your target in that emergency fund, putting that overage to work is a good idea. The impression that I get is that you'd still like to stay on the safe side. What you're looking for is a Balanced Fund. In a balanced fund the managers invest in both stocks and bonds (and cash). Since you have that diversification between those two asset classes, their returns tend to be much less volatile than other funds. Also, because of their intended audience and the traditions from that class of funds' long history, they tend to invest somewhat more conservatively in both asset classes. There are two general types of balanced funds: Conservative Allocation funds and Moderate Allocation funds. Conservative allocation funds invest in more fixed income than equity (the classic mix is 60% bonds, 40% stocks). Moderate allocation funds invest in more equity than fixed income (classic mix: 40% bonds, 60% stocks). A good pair of funds that are similar but exemplify the difference between conservative allocation and moderate allocation are Vanguard's Wellesley Income Fund (VWINX) for the former and Vanguard's Wellington Fund (VWELX) for the latter. (Disclaimer: though both funds are broadly considered excellent, this is not a recommendation.) Good luck sorting this out! |
Adjusting a value for inflation each month using rolling 12-monthly inflation figures | In the style of the Bank of England's Inflation Calculator, you can do the calculation like so. The third column is an index made from the inflation figures and the forth column shows the inflation-adjusted values. Using the index to calculate the difference in costs, for example: The formulas used to produce the table above are shown below. |
Problems with Enterprise Value and better valuation techniques | How you use the metric is super important. Because it subtracts cash, it does not represent 'value'. It represents the ongoing financing that will be necessary if both the equity plus debt is bought by one person, who then pays himself a dividend with that free cash. So if you are Private Equity, this measures your net investment at t=0.5, not the price you pay at t=0. If you are a retail investor, who a) won't be buying the debt, b) won't have any control over things like tax jurisdictions, c) won't be receiving any cash dividend, etc etc .... the metric is pointless. |
My university has tranfered me money by mistake, and wants me to transfer it back | Really a very straightforward situation, and subsequently, answer. Call the university pursors that you normally deal with, ask them to document the last 3 months of disbursements and highlight the incorrect one(s). If the money is already spent out, ask them if they can apply it to future disbursements via adjusting entries, and call it a day. If not, and you CAN pay it back, go to your bank and ask them to figure it out...which they should be able to do, having the original sender's info. |
What determines price fluctuation of groceries | That is true. Since commodities are basically a futures contract, their actual price is not reflected in grocery stores. It is more of a supply and demand issue with your grocer. |
Tenant wants to pay rent with EFT | Other options would be to use paypal, your tenant would only need your e-mail address. Most banks have a similar system to do a person-to-person transfers. My bank uses an e-mail address and only the last 4 digits of the account number. |
Is inflation a good or bad thing? Why do governments want some inflation? | Inflation is a bad thing. It makes it much more difficult for people to compare prices and prosperity over a long period of time. This causes people to ignore the wisdom of their elders (who remember prices from a long time ago). Back in my day, you could get a burger and fries for 15 cents -- a dime for the burger, and a nickel for the fries. But the minimum wage was only a quarter an hour! That doesn't help me decide if things have gotten better or worse. How long is "a long period of time"? That depends on the inflation rate. At 1 percent per year, 50 or 100 years is "a long time". At 10 percent per year, 5 or 10 years. At 100 percent per year, a few months. Because of the Spanish conquests of gold and silver mines in Mexico and Peru, prices in the sixteenth century rose by a factor of 5.5 during the century. This inflation was recognized as causing lots of social and governmental problems. Note that this means an average inflation rate of 2 percent per year for a century is known to be a very bad thing. There are several reasons that most governments want some inflation: |
Paid part of my state refund back last year; now must declare the initial amount as income? | If you get 1099-G for state tax refund, you need to declare it as income only if you took deduction on state taxes in the prior year. I.e.: if you took standard deductions - you don't need to declare the refund as income. If you did itemize, you have to declare the refund as income, and deduct the taxes paid last year on your schedule A. If this year you're not itemizing - you lost the tax benefit. If it was not clear from my answer - the taxes paid and the refund received are unrelated. The fact that you paid tax and received refund in the same year doesn't make them in any way related, even if both refer to the same taxable year. |
How to get started with the stock market? [duplicate] | You can try paper trading to sharpen your investing skills(identifying stocks to invest, how much money to allocate and stuff) but nothing compares to getting beaten black and blue in the real world. When virtual money is involved you mayn't care, because you don't loose anything, but when your hard earned money disappears or grows, no paper trading can incite those feelings in you. So there is no guarantee that doing paper trading will make you a better investor, but can help you a lot in terms of learning. Secondly educate yourself on the ways of investing. It is hard work and realize that there is no substitute for hard work. India is a growing economy and your friends maybe safe in the short term but take it from any INVESTOR, not in the long run. And moreover as all economies are recovering from the recession there are ample opportunities to invest money in India both good and bad. Calculate your returns and compare it with your friends maybe a year or two down the lane to compare the returns generated from both sides. Maybe they would come trumps but remember selecting a good investment from a bad investment will surely pay out in the long run. Not sure what you do not understand what Buffet says. It cannot get more simpler than that. If you can drill those rules into your blood, you mayn't become a billionaire but surely you will make a killing, but in the long run. Read and read as much as you can. Buy books, browse the net. This might help. One more guy like you. |
What risks are there acting as a broker between PayPal and electronic bank transfers? | There are several red flags here. can they get my bank account info in any way from me transferring money to them? Probably yes. Almost all bank transactions are auditable, and intentionally cause a money track. This track can be followed from both sides. If they can use your bank account as if they were you, that is a bit deeper than what you are asking, but yes they (and the polish cops) can find you through that transfer. I did look up the company and didn't find any scam or complaints concerning them. Not finding scams or complains is good, but what did you find? Did you find good reviews, the company website, its register, etc, etc? How far back does the website goes (try the wayback machine) Making a cardboard front company is very easy, and if they are into identity theft the company is under some guy in guam that never heard of poland or paypal. As @Andrew said above, it is probably a scam. I'd add that this scam leverages on the how easier is to get a PayPal refund compared to a regular bank transfer. It is almost impossible to get the money back on an international transaction. Usually reverting a bank transfer requires the agreement in writing of the receiver and of both banks. As for paypal, just a dispute from the other user: You are responsible for all Reversals, Chargebacks, fees, fines, penalties and other liability incurred by PayPal, a PayPal User, or a third party caused by your use of the Services and/or arising from your breach of this Agreement. You agree to reimburse PayPal, a User, or a third party for any and all such liability. (source) Also, you might be violating the TOS: Allow your use of the Service to present to PayPal a risk of non-compliance with PayPal’s anti-money laundering, counter terrorist financing and similar regulatory obligations (including, without limitation, where we cannot verify your identity or you fail to complete the steps to lift your sending, receiving or withdrawal limit in accordance with sections 3.3, 4.1 and 6.3 or where you expose PayPal to the risk of any regulatory fines by European, US or other authorities for processing your transactions); (emphasis mine, source) So even if the PayPal transfer is not disputed, how can you be sure you are not laundering money? Are you being paid well enough to assume that risk? |
Buying a home with down payment from family as a “loan” | Say you're buying a 400K house. Your relative finances 120K (30%). Say I'm optimistic, but the real-estate market recovers, and your house is worth 600K in 5-6 years (can happen, with the inflation and all). The gain is 200K. Your relative gets 100K. You repay him 220K on 120K loan for 5 years. Roughly, 16% APR. Quite an expensive loan. I'm of course optimistic, it seems to me that so is your relative. The question is: if the house loses value in that term, does your relative take 50% of the losses? Make calculations based on several expected returns (optimistic, "realistic", loss case, etc), and for each calculate how much in fact will that loan cost. It will help you to decide if you want it. Otherwise your relationships with your relative might go very bad in a few years. BTW: Suggestion: it's a bad idea to mix business and friend/family you don't want to lose. |
Can I donate short-stock to charity? | With a short position you make your money (profit) when you buy the stocks back to close the position at a lower price than what you bought them at. As short selling is classed as speculation and not investing and you at no time own any actual assets, you cannot donate any short possition to charity. If you did want to avoid paying tax on the profits you could donate the proceeds of the profits after closing the position and thus get a tax deduction equal to the profits you made. But that raises a new and more important question, why are you trading in the first place if you are afraid to make profits in case you have to pay tax on those profits? |
Tax withheld by USA working in UK (Form 1042-S and Form 1099) | The shares are "imputed income" / payment in kind. You worked in the UK, but are you a "US Person"? If not, you should go back to payroll with this query as this income is taxable in the UK. It is important you find out on what basis they were issued. The company will have answers. Where they aquired at a discount to fair market value ? Where they purchased with a salary deduction as part of a scheme ? Where they acquired by conversion of employee stock options ? If you sell the shares, or are paid dividends, then there will be tax withheld. |
Can I depreciate a car given to me? | Yes, you can depreciate gifts to your business subject to the special rules in § 1011 and Regulation § 1.1011–1 and 1.167(g)–1. It is dual basis property so when you sell the item your gain/loss basis will be different. Adjusted basis of the donor for gain, FMV on the date received for the loss. Minus any depreciation you add, of course, in both cases. |
Is it sensible to keep savings in a foreign currency? | Is it sensible to keep savings in a foreign currency? The answer varies from one country to the next, but in the UK (or any other mature economy), I would advise against it. There are better ways to hedge against currency risks with the funds readily available to you through your ISA. You can keep your money relatively safe and liquid without ever paying a currency exchange fee. |
Discussing stock and stock index movement: clarifying percentage vs. points? | I think that the general public is conditioned to think more in terms of points rather than percentages, so that 200 points is easier to fathom than the equivalent percent. We all translate internally what this means. Of course it is less precise, but it also makes for good copy in the publishing industry ("Market Down 1000 points!") |
Does the premium of an option of a certain strike price increase at a slower rate from OTM to ITM as gamma affects delta? | If we assume constant volatility, gamma increases as the stock gets closer to the strike price. Thus, delta is increasing at a faster rate as the stock reaches closer to ITM because gamma is the derivative of delta. As the stock gets deeper ITM, the gamma will slow down as delta reaches 1 or -1 (depends if a call or a put). Thus, the value of the option will change depending upon the level of the delta. I am ignoring volatility and time for this description. See this diagram from Investopedia: Gamma |
Is investing exlusively in a small-cap index fund a wise investment? | Stock portfolios have diversifiable risk and undiversifiable risk. The market rewards investors for taking undiversifiable risk (e.g. owning an index of oil producing companies) and does not reward investors for assuming diversifiable risk (e.g. owning a single oil producing company). The market will not provide investors with any extra return for owning a single oil company when they can buy an oil index fund at no additional cost. Similarly, the market will not reward you for owning a small-cap index fund when you can purchase a globally diversified / capitalization diversified index fund at no additional cost. This article provides a more detailed description. The Vanguard Total World Stock Index Fund is a much better staring point for an equity portfolio. You will need to make sure that the asset allocation of your overall portfolio (e.g. stocks, bonds, P2P lending, cash) is consistent with your time horizon (5-10 years). |
Why are options created? | At my soon to be legendary Stock Options Cafe, I recently wrote an article "Betting On Apple at 9 to 2." It described a trade in which a 35% move in a stock over a fixed time (2 years) would result in a 354% gain in one's bet. In this case, the options serve to create remarkable leverage for speculators. In general, option help provide liquidity and extend the nature of the risk/reward curve. There are option trades that range from conservative (e.g. a 'covered call') to wildly speculative, as the one I described above. |
Why is the fractional-reserve banking not a Ponzi scheme? | You are forgetting one crucial point regarding the money supply. The US Federal Reserve increases the money supply, meaning some of the money is not really loaned, it just appears out of nowhere. At first glance this seems even worse: over the short term, the Fed changes the money supply to help the economy in whatever way it sees fit. But over the long term, the money supply increases to reflect economic growth. As new technology is introduced, more can be accomplished with the same labor and resources, and thus the money supply needs to be increased. Money is really just a convenient replacement for the barter system, so if there are more things to barter "for" (goods and services) then there should also be more things to barter "with" (money). Also keep in mind inflation. The cost of goods and services goes up over time due to the inflation of currency, and so the money supply must also be increased so that those goods and services do not artificially increase in value, which would be very bad. |
Vanguard Target Retirement Fund vs. Similar ETF Distribution (w/ REIT) | Target Date Funds automatically change their diversification balance over time, rebalancing and reassigning new contributions to become progressively more protective of what you've already earned. (As opposed to other funds which continue to maintain the same balance of investments until you explicitly move the money around.) You can certainly make that same evolution manually; we all used to do that before target funds were made available, and many of us still do so. I'm still handling the relative allocations by hand. But I'm also close to my retirement target, so a target fund wouldn't be changing that much more anyway, and since I'm already tracking the curve... Note that if you feel a bit braver, or a bit more cautious, than the "average investor" the target fund was designed for, you can tweak the risk/benefit curve of a Target Date Fund by selecting a fund with a target date a bit later or earlier, respectively, than the date at which you intend to start pulling money back out of the fund. |
Online tool to connect to my bank account and tell me what I spend in different categories? | I'm not convinced this is completely possible without additional data. I'm categorizing my purchases now, and I keep running into things like "was this hardware store purchase for home repair, hobby tools and supplies, cookware, ..." Ditto for department stores, ditto for cash purchases which appear only as an ATM withdrawal. Sometimes I remember, sometimes I guess, sometimes I just give up. In the end, this budget tracking isn't critical for me so that's good enough. If you really want accuracy, though, I think you are stuck with keeping all your receipts, of taking notes, so you can resolve these gaps. |
In what state should I register my web-based LLC? | In GA, LLC fees are $50 a year. Incorporating is a one time $100 fee. This information is current as of September 2013. |
Are lottery tickets ever a wise investment provided the jackpot is large enough? | According to a financial adviser I spoke to, lottery is the riskiest of investments, whereas cash is the safest. Everything else falls between these 2 extremes. |
Rules for Broker Behavior with Covered Calls | I think the question, as worded, has some incorrect assumptions built into it, but let me try to hit the key answers that I think might help: Your broker can't really do anything here. Your broker doesn't own the calls you sold, and can't elect to exercise someone else's calls. Your broker can take action to liquidate positions when you are in margin calls, but the scenario you describe wouldn't generate them: If you are long stock, and short calls, the calls are covered, and have no margin requirement. The stock is the only collateral you need, and you can have the position on in a cash (non-margin) account. So, assuming you haven't bought other things on margin that have gone south and are generating calls, your broker has no right to do anything to you. If you're wondering about the "other guy", meaning the person who is long the calls that you are short, they are the one who can impact you, by exercising their right to buy the stock from you. In that scenario, you make $21, your maximum possible return (since you bought the stock at $100, collected $1 premium, and sold it for $120. But they usually won't do that before expiration, and they pretty definitely won't here. The reason they usually won't is that most options trade above their intrinsic value (the amount that they're in the money). In your example, the options aren't in the money at all. The stock is trading at 120, and the option gives the owner the right to buy at 120.* Put another way, exercising the option lets the owner buy the stock for the exact same price anyone with no options can in the market. So, if the call has any value whatsoever, exercising it is irrational; the owner would be better off selling the call and buying the stock in the market. |
Does the rise in ACA premiums affect employer-provided health insurance premiums? | There are a lot of moving parts, individual premiums and annual increases have little to do with employer premiums and annual increases and vice versa. Most people think of XYZ insurer as a single company with a single pool of insured folks. This common knowledge isn't accurate. Insurers pool their business segments separately. This means that Individual, small business, mid-size business, and large business are all different operating segments from the viewpoint of the insurer. It's possible to argue that because so many people are covered by employer plans that individual plans have a hard time accumulating the required critical mass of subscribers to keep increases reasonable. Age banded rating: Individual coverage and small group coverage is age rated, meaning every year you get older. In addition to your age increase, the premium table for your plan also receives an increase. Employers with 100+ eligible employees are composite rated (in general), meaning every employee costs the same amount. The 18 year old employee costs $500 per month, the 64 year old costs $500 per month. Generally, the contributions an employee pays to participate in the plan are also common among all ages. This means that on a micro level increases can be more incremental because the employer is abstracting the gross premium. Composite rating generally benefits older folks while age rating generally benefits younger folks. Employer Morale Incentive: Generally the cost to an employee covered by an employer plan isn't directly correlated to the gross premium, and increases to the contribution(s) aren't necessarily correlated to the increases the employer receives. Employers are incentivised by employee morale. It's pretty common for employers to shoulder a disproportionate amount of an increase to keep everyone happy. Employers may offset the increase by shopping some ancillary benefit like group life insurance, or bundling the dental program with the medical carrier. Remember, employees don't pay premiums they pay contributions and some employers are more generous than others. Employers are also better at budgeting for planned increases than individuals are. Regulators: In many of the states that are making the news because of their healthcare premium increases there simply isn't a regulator scrutinizing increases. California requires all individual and small group premiums to be filed with the state and increases must be justified with some sort of math and approved by a regulator. Without this kind of oversight insurers have only the risk of subscriber flight to adjust plan provisions and press harder during provider contract negotiations. Expiring Transitional Reinsurance Fee and Funds: One of the fees introduced by healthcare reform paid by insurers and self-insured employers established a pot of money that individual plans could tap to cope with the new costs of the previously uninsurable folks. This fee and corresponding pot of money is set to expire and can no longer be taken in to account by underwriters. Increased Treatment Availability: It's important that as new facilities go online, insurer costs will increase. If a little town gets a new cancer clinic, that pool will see more cancer treatment costs simply as a result of increased treatment availability. Consider that medical care inflation is running at about 4.9% annually as of the most recent CPI table, the rest of the increases will result from the performance of that specific risk pool. If that risk pool had a lot of cancer diagnoses, you're looking at a big increase. If that risk pool was under priced the prior year you will see an above average increase, etc. |
Saving for a non-necessity | The same as you would save for anything else, buget and make sure your expenses are less than your income each week. Put away a little each week for the item you want to buy, and when you have saved up enough for the item you can buy it. In the mean time whilst you are saving for it, you can shop around to see where you can buy it at the lowest price. |
Do I repay Social Security Disability Insurance (SSDI) if I suddenly have income and assets | There are two types of insurance, which causes some confusion. Social Security Disability Insurance (which you indicate you have) is insurance you can receive benefit from if you earn enough "work credits" (payroll taxes) prior to your disability onset. It is not a needs-based program. Supplemental Security Income is a need-based program which does not consider your work history. To qualify for this, your total assets need to be lower than some threshold and your family income also below some threshold. If you inherit a home, or money, I doubt this would jeopardize your SSDI qualification, since your qualification was based on a disabling condition and work history. If you inherit an income property, which you manage (i.e. you become a landlord), this may jeopardize your claim that you are unable to work. Even if you are not making an "income" as the landlord, but the work your are performing is deemed to have some "value" this too could jeopardize your claim. All of this can be very complicated, and there are some excellent references on the web including SSA website, and some other related websites. Finally, if you become able to work while on SSDI, your benefit may/will end depending on the level of work you are able to perform. But just because you are able to work again does not mean you need to repay past benefits received (assuming your condition has not been falsified). Your local social security office, or the social security main office both offer telephone support and can also answer questions regarding your concern. Here are a couple relevant links: |
Why are some long term investors so concerned about their entry price? | Because buying at discount provides a considerable safety of margin -- it increases the likelihood of profiting. The margin serves to cushion future adverse price movement. Why is so much effort made to get a small percentage off an investment, if one is then willing to let the investment drop another 20% or more with the reason of being in it for the long term? Nobody can predict the stock price. Now if a long term investor happens to buy some stocks and the market crashes the next day, he could afford to wait for the stock prices to bounce back. Why should he sells immediately to incur a definite loss, should he has confidence in the underlying companies to recover eventually? One can choose to buy wisely, but the market fluctuation is out of his/her control. Wouldn't you agree that he/she should spend much efforts on something that can be controlled? |
Investing tax (savings) | If you have a mortgage, making part of it a mortgage-backed overdraft (ANZ call theirs a Flexi loan) is worth looking at. I'm in a similar situation, consulting since 2010. I pay GST and provisional tax every six months. If I've budgeted right, the balance on the mortgage-backed overdraft loan goes to zero right before I send the massive payment to the tax department in May and October. One problem is that some banks don't like to give these accounts to sole traders. Using a mortgage broker may help get around that restriction. |
Where to find LEAPS option quotes (full chain)? CBOE & Yahoo! Finance not working | I'm familiar with and have traded U.S.-listed LEAPS and I've always used the CBOE quotes page you linked to. So, I too was surprised I couldn't find 3M (MMM) LEAPS quotes at that page, even after checking the "List all options, LEAPS, Credit Options & Weeklys if avail." radio button. Used to work! Fortunately, I was able to get access to the full chain of option quotes from the CBOE's other quotes page: Go to the "Quotes & Data" menu, then select Delayed Quotes - NEW! Here's how: I think the new interface is terrible: it's too many steps to get to the information desired. I preferred the all-in-one table of the Delayed Quotes Classic page, the one you linked to. As to why that classic page isn't yielding the full chain, I can only suggest it is a recently introduced bug (software defect). I certainly was able to get LEAPS quotes from that page before. On Yahoo! Finance option quotes: I don't know why their chain is incomplete – I can't see the logic, for instance, as to why MMM Jan 2012 60 calls are missing. I thought at first it may be lack of volume or open interest, but nope. Anyway, I don't trust Yahoo! to provide accurate, reliable quotes anyway, having seen too many errors and missing data in particular in the feed of Canadian stocks, which I also trade. I rely on the exchange's quotes, and my broker's real-time quotes. I check Yahoo! only for convenience sake, and when it actually matters I go to the other more reliable sources. For what it's worth, though, you can also get full chain option quotes at NASDAQ. See here for the 3M (MMM) example then click on the "Jan 12" link near the top. However, I would consider CBOE's quotes more definitive, since they are the options exchange. |
Why do deep in the money options trade below their intrinsic value? | You made 94$ on an investment of 554.80 *100 = 55480$ for an approx holding period of 1 year. So the % return is ~0.16%, which is not much better than the short term us treasury rate. The current 1 year treasury rate is 0.27%: http://ycharts.com/indicators/1_year_treasury_rate So yes, you have a risk free portfolio, so you make the risk free rate. Remember this is an European option, so you are stuck for 1 year. if you found the same mispricing in an American option, then you found an arbitrage. |
Is the stock market too risky for long term retirement funds? Why should a 20- or 30-something person invest in stocks? | The stock market, as a whole, is extremely volatile. During any 3 year period, the market could go up or down. However, and this is the important point,the market as a whole has historically been a good long term investment. If you need the money in 5 years, then you want to put it in something less volatile (so there's less chance of losing it). If you need the money in 50 years, put it in the market; the massive growth over those 50 years will more than make up for any short term drops, and you will probably come out ahead. Once you get closer to retirement age, you want to take the money out of stocks and put it in something safer; essentially locking in your profit, and protecting yourself from the possibility of further loss. Something else to consider: everyone lost money in 2008. There were no safe investments (well, ok, there were a few... but not enough to talk about). Given that, why would you choose another investment over stocks? Taking a 50% loss after decades of 10% annual returns is still better than a 50% loss after decades of 5% growth (in fact, after 20 years of growth, it's still 250% better - and that ratio will only improve the longer you leave it in). |
Return on asset (ROA) value for a stock is reported differently on Yahoo Finance and MarketWatch | IESC has a one-time, non-repeatable event in its operating income stream. It magnifies operating income by about a factor of five. It impacts both the numerator and the denominator. Without knowing exactly how the adjustments are made it would take too much work for me to calculate it exactly, but I did get close to their number using a relatively crude adjustment rule. Basically, Yahoo is excluding one-time events from its definitions since, although they are classified as operating events, they distort the financial record. I teach securities analysis and have done it as a profession. If I had to choose between Yahoo and Marketwatch, at least for this security, I would clearly choose Yahoo. |
What does Dividend 165% mean in stock market? | Do not confuse the DIV (%) value and the dividend yield. As you can see from this page, the DIV (%) is, as you say, 165%. However, the dividend yield is 3.73% at the time of writing. As the Investopedia page referenced above says: The payout ratio is calculated as follows: Annual Dividends per Share / Earnings per Share. which means that the dividends being paid out are more than the earnings of the company: In extreme cases, dividend payout ratios exceed 100%, meaning more dividends were paid out than there were profits that year. Significantly high ratios are unsustainable. |
Clarification on student expenses - To file the tax for the next year | Assuming here that you're talking about deducting your tuition as a below the line deduction as a business expense or similar, then it depends. Per 1.162-5, if the education: Then it qualifies as a legitimate business expense and is deductible. If not - if you're going to school for a different career, such as someone employed as a waiter but going to school to get a degree in nursing, or someone employed as a teacher getting a law degree - then it's not; you'd have to qualify under one of the other (simpler, but lesser) credits. Read more on this topic at Tax topic 513. Note that the other most commonly applicable deduction - the above the line Tuition and Fees deduction - expired in 2016 and is not applicable (yet?) in 2017, and further would not require most of what you describe as it only counts tuition and fees paid directly to the institution and required as a condition of attendance, so books, parking, etc. don't count. |
Are PINs always needed for paying with card? | For the first part of your question; Refer to related question Why do some online stores not ask for the 3-digit code on the back of my credit card? The other case of Airport ticket machines, requires the physical presence of card. The assumption is that if you had the card before and after the transaction, it was you who used it for transaction. As the amounts are small its really easy by anyone [merchant, Banks] to write this off. The only way to misuse would be if you lost the card and someone used it. Also these ticket machines would have built in feature where by you cannot buy more than "X" tickets for the day. Ensuring max loss on a stolen card is limited to a small amount. |
Should I have to pay income tax on contribution to home office rent from company? | This is essentially a reimbursement of your expense. Since you can deduct the expense, the fact that the reimbursement is taxable doesn't affect you much. You deduct your home office expenses on your annual tax return using form 8829. See the IRS site for more details. If you're asking about the UK tax, there may be some other considerations, but from the US tax perspective it is (nearly) a wash. |
Using Loan to Invest - Paying Monthly Installments by Selling Originally Bought Shares | I will add one point missing from the answers by CQM and THEAO. When you take a loan and invest the proceeds, the interest that you pay on the loan is deductible on Schedule A, Line 14 of your Federal income tax return under the category of Investment Interest Expense. If the interest expense is larger than all your investment earnings (not just those from the loan proceeds), then you can deduct at most the amount of the earnings, and carry over the excess investment interest paid this year for deduction against investment earnings in future years. Also, if some of the earnings are long-term capital gains and you choose to deduct the corresponding investment interest expense, then those capital gains are taxed as ordinary income instead of at the favored LTCG rate. You also have the option of choosing to deduct only that amount of interest that offsets dividend (and short-term capital gain) income that is taxed at ordinary rates, pay tax at the LTCG rate on the capital gains, and carry over rest of the interest for deduction in future years. In previous years when the tax laws called for reduction in the Schedule A deductions for high-income earners, this investment interest expense was exempt from the reduction. Whether future tax laws will allow this exemption depends on Congress. So, this should be taken into account when dealing with the taxes issue in deciding whether to take a loan to invest in the stock market. |
Best steps to start saving money for a fresh grad in Singapore? | Firstly, make sure annual income exceeds annual expenses. The difference is what you have available for saving. Secondly, you should have tiers of savings. From most to least liquid (and least to most rewarding): The core of personal finance is managing the flow of money between these tiers to balance maximizing return on savings with budget constraints. For example, insurance effectively allows society to move money from savings to stocks and bonds. And a savings account lets the bank loan out a bit of your money to people buying assets like homes. Note that the above set of accounts is just a template from which you should customize. You might want to add in an FSA or HSA, extra loan payments, or taxable brokerage accounts, depending on your cash flow, debt, and tax situation. |
To pay off a student loan, should I save up a lump sum payoff payment or pay extra each month? | The interest accrues daily based on the amount you owe. The less you owe the less the daily interest accrual. The faster you pay it off the less you pay in the lifetime of the loan. You are losing money if you bank money rather than applying it to the loan immediately. Since student loans cannot be declared in bankruptcy and interest rates cannot be refinanced, or are nonnegotiable, then you should consider your student loan a priority in case your employment/income runs into problems. |
Emulating a 'long straddle' without buying or selling Options? | A long straddle using equity would be more akin to buying a triple leveraged ETF and an inverse triple leveraged ETF, only because one side will approach zero while the other can theoretically increase to infinity, in a short time span before time decay hits in. The reason your analogy fails is because the delta is 1.0 on both sides of your trade. At the money options, a necessary requirement for a straddle, have a delta of .5 There is an options strategy that uses in the money calls and puts with a delta closer to 1.0 to create an in the money strangle. I'm not sure if it is more similar to your strategy, an analogous options strategy would be better than yours as it would not share the potential for a margin call. |
Why are Bank of America and Citi trading so far below book value? | Its not just Citi and BoFA, even Barclays, HSBC and other large Banks are trading below book value in markets they are listed. Are there particular assets that are causing these two banks to be valued lower relative to their book values than the other banks? There no particular assets. Given the current economic situation most Banks are not making good returns, i.e. expected returns of markets are around 10-12% and the returns getting generated are around 4-6%. The overall slow down in various segments as well as regulations in most countries mean that banks have to relook at the business model in short term and generate more revenue. The market believes that Banks may loose money faster and hence the negative outlook and the trading below the book value. Note Book Value is derived in ideal conditions, i.e. when the company is healthy. If any company were to sell the assets in distress, the actual funds raised would be quite a bit less than Book Value. Its also to be noted that typically Banks would not close out and hence Book Value to an extent is just an indicator. Or is it a residual loathing based on their being the biggest losers of 2008 that are still around today? The 2008 has gone past. This is more recent. If you look most of these banks were doing quite well till last year and had recovered substantially after 2008. |
Options vs Stocks which is more profitable | Nearly 3 years ago, I wrote an article, Betting on Apple at 9 to 2 which described a bet in which a 35% move in the stock returned 354% on the option trade. Leverage works both ways, no move, or a slight move down, and the bet would have been lost. While I find this to be entertaining, I don't call it investing. With $2-$3K, I recommend paper trading first, and if you enter option trades, no one trade should be more than 20% of this money. If you had $50K in betting money, no position over 10%. |
Why buy insurance? | Apart from legal requirements to have insurance, e.g. 3rd party car that other answers have covered well. We can think of all insurance as protecting our “usable” income, as we can use cashflow to pay the costs of a loan to replace whatever we decided not to insure. So for example, if I don’t insure my house contents, I can replace them on my credit card if needed. Therefore we are paying for insurance out of our income, so as to protect our income, knowing that the cost of the protection is on average more than the benefit we get from it. But we all know that having an income of $50K is less than double the value of having an income of $25K. (E.g. being able to eat and remain warm is more important to us then being able to go on anther holiday.) This is way when someone has a higher income; it requires more money to effect their actions. Loss aversion is another factor; we are people not logistical machines. |
Do technical indicators actually work while analyzing stocks? [duplicate] | Sure they work - right until they don't. Explanation: A stock picking strategy based on technical indicators is at worst a mix of random guessing and confirmation bias, which will "work" only due to luck. At best, it exploits a systematic inefficiency of the market. And any such inefficiency will automatically disappear when it is exploited by many traders. If it's published in a book, it is pretty much guaranteed not to work anymore. Oh, and you only get to know in hindsight (if at all) which of the two cases above applies to any given strategy. |
Are underlying assets supposed to be sold/bought immediately after being bought/sold in call/put option? | When you can exercie your option depends on your trading style. In the american options trading style (the most popular) you're allowed to exercice your options and make profit (if any) whenever you want before the expiration date. Thus, the decision of exercising your option and make a profit out of it does not rely only on the asset price. The reason is, you already paid for the premium to get the option. So, if taken into account the underlying price AND your premium, your investment is profitable then you can exercice your contract anytime. |
Is giving my girlfriend money for her mortgage closing costs and down payment considered fraud? | With the standard "I am not a lawyer" disclaimer, consider this question: If you and your girlfriend split up sometime after purchasing the house but before getting married, would you expect her to repay you for the closing costs and downpayment? That is, if you write her a check for $5k, and 6 months after she signs the papers for the house one of you decides to break up with the other, would you expect her to write you a check for $5k in return? That is the difference between "a gift" and "a loan disguised as a gift". If the answer is no, you don't expect it back, then everything is fine and you're in the clear - it's perfectly legal to give someone money. If the answer is yes, you would want to be "paid back", then it's not a gift and you run the risk of running afoul of the regulations. With respect to a previous answer about "gifting money that is not taxed", in the US one person can give another up to $14,000 without worrying about gift taxes, and even in the event that you exceed that amount, the excess would simply eat into the lifetime exemption of $5,250,000. (Individual states may have different rules and exempt amounts that would apply to state taxes.) Please also consider the income issue for your "rental agreement". Your GF would be expected to declare that amount and pay income tax on it as a business. She might also declare part of that amount as expected income for purposes of securing the loan, but that may run into its own issues (you're not a roommate, and presumably the home is not a duplex or set up as apartments, and presumably she would not offer a similar deal to someone other than you). |
Why would you ever turn down a raise in salary? | This would never apply for tax "brackets". It's not as though making an extra dollar will put you into an entire separate bracket, the IRS isn't that bad. They bump up the "brackets" every $50, so you will never turn down a raise because it would cause you to lose income. However if your raise would preclude you from contributing to your IRA because it pushes you over $110,000 then yes, you could turn it down or explain to your boss that it would need to be just a little bit higher to cover your IRA contribution loss. |
Stock options: what happens if I leave a company and then an acquisition is finalized? | When you exercise your options, you come up with cash to buy the shares. This makes you an owner of the company for shares at the share price your options let you have. Ideally, your share price is at a significant discount to what the company is worth. Being a shareholder, you gain from any share price appreciation in a sale. The only thing the "60-day window" applies to is whether you come up with the cash to buy fast enough, or your shares get permanently deleted from the company finances, where everyone else potentially makes more, you make nothing. The sale of the company is based on whenever the sell finalizes, which is between your company and the acquiring company. |
What are the pros and cons of investing in a closed-end fund? | The pros and cons of investing in a closed end fund both stem from the fact that the price per share is likely to differ from the net asset value (NAV) of the underlying assets. That could work to your advantage if the fund is selling for LESS than NAV, or at a discount. Then you get the "benefit of the bargain" and hope to sell the shares in the future for "par" or even a premium (MORE than NAV). On the other hand, if you buy such a fund at a premium, you stand to have a RELATIVE loss if the value of the fund goes back to par (or a discount) compared to NAV. That's because a closed end fund has a FIXED number of shares, with the assets continually being reinvested. In essence, you are "buying out" an existing shareholder of the fund at a price determined by supply and demand. This differs from an OPEN end fund, in which your contribution creates NEW shares (all other things being equal). Then the fund, has to invest YOUR money (and charges you a fee for the service) on exactly a pro rata basis with other investors in the fund, meaning that you will enter and exit such a fund at "par." In either case, your return depends mainly on the performance of the underlying assets. But there are premium/discount issues for investing in a closed end fund. |
Is there a measure that uses both cost of living plus income? | But what if I am getting paid salary from a source in India? In other words, it may be that in India a research assistant at a college on average earns a third of what a research assistant like me earns here in US. In that case, even if my cost of living there is much less, so is my salary. There are sites that provide a good guidance for what the average salary for an profession with x years of experience would be. Of course some would get paid more than average. So you can try and make a logic, if in US say you are being paid more than average, you would be paid more than average elsewhere. Plus If moving from Developed to Developing country, one has the Advantage of positive pedigree bias. There are also websites that would give the Purchasing Power Parity for quite a few currency pairs. The Real difficulty to find is whether the Lifestyle you have in a specific country would be similar in other country. If you compare like for like it becomes slightly skewed. If you compare equivalence, then can you adjust. A relevant example my friend in US had a Independent Bungalow in US. It was with Basement and attic, 2 levels of living space with 4 bedroom. He shifted to India and got a great salary compared to normal Indian salary. However this kind of house in India in Bangalore would be affordable only to CEO's of top companies. So is living in a 3 room apartment fine? There are multiple such aspects. Drinking a Starbucks coffee couple of times a day is routine for quite a few in US. In India this would be considered luxury. A like for equivalent comparison is "One drinks 3-4 mugs of Coffee" in US, and average Indian drinks "Tea/Coffee 3-4 mugs". In India the local Tea / Coffee would be Rs 10 - Rs 20. A Starbucks would come with starting price of Rs 150. The same applies to food. A McBurger in India would be around Rs 100. The Indian equivalent Wada Pav is for Rs 10. A Sub Way would be Rs 150. A Equivalent Mumbai Sandwich around Rs 25. I personally am picky about food, so it doesn't matter where I go, I can only eat specific things, which means I spend a huge amount of money if I am outside of India. When I was in US, I couldn't afford a maid, driver or any help. In India I have 2 maids, a cooking maid and a driver. Plus I get plumber, electrician, window cleaner, and all the help without costing me much. Things that I absolutely can't dream in US. My colleague in UK preferred to stay in a specific locality as it has a very good Church. So if its important, one may find few good ones in India if one is Roman Catholic, if one follows Lutheran, Greek Orthodox, tough luck. Citizenship: Does it matter ... A foreign national may never get an Indian citizenship. Children don't qualify either unless both parents are Indian. Health Care: Again is quite different. One may feel Health care in US is not good or very expensive ... but there are multiple aspects of this. So in essence its very broad there is traffic, cleanliness, climate, culture, etc ... PS: A research assistant in India is poorly paid, because colleges don't have funds. Research in fundamental science is quite low. Industry to university linkages are primitive and now where close to what we have in US. |
Should I put more money down on one property and pay it off sooner or hold on to the cash? | I'd suggest taking all the money you have saved up and putting in a mutual fund and hold off on buying a rental property until you can buy it outright. I know it seems like this will take forever, but it has a HUGE advantage: I know it seems like it will take forever to save up the money to buy a property for cash, but in the long run, its the best option by far. |
To pay off a student loan, should I save up a lump sum payoff payment or pay extra each month? | As someone in the very same position as you here is what I suggest: Have $1,000 for each possible large expense you currently have. For example, house, car, pregnant wife, etc. As someone who only has a car (living at home still) I only have $1,000 in my eFund (emergency fund). The ABSOLUTE rest of my money goes to paying off the loans as soon as possible. I mean ever single dollar. There is no point for investing unless you have a really good return on investment. I am not too sure how common returns of 6.8% are, but that seems above average. If in fact you're just stashing it in a bank account at ~1%, you're doing it wrong. Getting out of debt is not only just about the financial benefits but the emotional benefits too. It feels really nice to not owe anybody anything. Good luck man! P.S. Try using a tracker like ReadytoZero to show how much you're losing a day by remaining in debt. This will better help you understand if your investments are making you money or losing your money. |
Should I buy a house because Mortgage rates are low | There is a significant tie between housing prices and mortgage rates. As such, don't assume low mortgage rates mean you will be financially better off if you buy now, since housing prices are inversely correlated with mortgage rates. This isn't a huge correlation - it's R-squared is a bit under 20%, at a 1.5-2 year lag - but there is a significant connection there. Particularly in that 10%+ era (see chart at end of post for details) in 1979-1982, there was a dramatic drop in housing price growth that corresponded with high interest rates. There is a second major factor here, though, one that is likely much more important: why the interest rates are at 10%. Interest rates are largely set to follow the Federal Funds rate (the rate at which the Federal Reserve loans to banks). That rate is set higher for essentially one purpose: to combat inflation. Higher interest rates means less borrowing, slower economic growth, and most importantly, a slower increase in the money supply - all of which come together to prevent inflation. Those 10% (and higher!) rates you heard about? Those were in the 70's and early 80's. Anyone remember the Jimmy Carter years? Inflation in the period from 1979 to 1981 averaged over 10%. Inflation in the 70s from 1973 to 1982 averaged nearly 9% annually. That meant your dollar this year was worth only $0.90 next year - which means inevitably a higher cost of borrowing. In addition to simply keeping pace with inflation, the Fed also uses the rate as a carrot/stick to control US inflation. They weren't as good at that in the 70s - they misread economic indicators in the late 1970s significantly, lowering rates dramatically in 1975-1977 (from ~12% to ~5%). This led to the dramatic double-digit inflation of the 1979-1981 period, requiring them to raise rates to astronomic levels - nearly 20% at one point. Yeah, I hope nobody bought a house on a fixed-rate mortgage from 1979-1981. The Fed has gotten a lot more careful over the years - Alan Greenspan largely was responsible for the shift in policy which seems to have been quite effective from the mid 1980s to the present (though he's long gone from his spot on the Fed board). Despite significant economic changes in both directions, inflation has been kept largely under control since then, and since 1991 have been keeping pretty steady around 6% or less. The current rate (around 0%) is unlikely to stay around forever - that would lead to massive inflation, eventually - but it's reasonable to say that prolonged periods over 10% are unlikely in the medium term. Further, if inflation did spike (and with it, your interest rates), salaries tend to spike also. Not quite as fast as inflation - in fact, that's a major reason a small positive inflation around 2-3% is important, to allow for wages to grow more slowly for poorer performers - but still, at 10% inflation the average wage will climb at a fairly similar pace. Thus, you'd be able to buy more house - or, perhaps a better idea, save more money for a house that you can then buy a few years down the road when rates drop. Ultimately, the advice here is to not worry too much about interest rates. Buy a house when you're ready, and buy the house you're ready for. Interest rates may rise, but if so it's likely due to an increase in inflation and thus wage growth; and it would take a major shift in the economy for rates to rise to the 10-11% level. If that did happen, housing prices (or at least growth in prices) would likely drop significantly. Some further references: |
Are my parents ripping me off with this deal that doesn't allow me to build my equity in my home? | No It's not a loan. It's an equity investment. Think of it as a business. The parents bought 75% of the equity with $115K, and are entitled to 75% of the sale proceeds, should you someday liquidate the business (i.e. selling the house). The $500 per month is just business revenue and is paid to your parents as a dividend. Imagine you rent it out to your self and charge a $666.66 rent - you take 25% of that back and give your parents the rest. Like any equity investment, the risk for them is that if the value of the house goes down, they will have to shoulder the loss. And you are right, there is no way to build equity. You already sold that to your parents. |
Figuring flood insurance into financing cost | Self-insure a $250K+ house that's deemed to be in a flood zone? Wake up, have coffee. If you don't change your mind, have another cup. |
W-4 was not updated when moving from part-time to full-time, still showed Tax-Exempt. What happens now? | The W4 specifies withholding for income taxes, FICA taxes are not impacted. The tax withholding is do that you do not need to make estimated tax payments. Failing to make sufficient quarterly estimated tax payments or withholding a sufficient amount could result in you being hit with under payment penalties but nothing more. The under payment penalties will be figured out as part of you income tax return. What you should have done when you discovered this was use the extra withholding line on the W4 to further increase your withholding. The nice thing about withholding is that you back load it and the IRS does not care. The company has no liability here. It is your responsibility to update them when your personal circumstances change. You will be fully responsible for the tax bill. There is no company paid portion of your income tax so they are not impacted. The company only pays an employer share of FICA and that is not impacted by how you fill out the W4. First thing to do is figure out how much you owe the IRS. Then determine if you can pay it or if you need to investigate an installment option. In any case make sure to file your return on time. |
How U.S. Depreciation works Explain in brief? | If a business tool has a limited lifespan, it's value decreases (depreciates) from year to year. The business can capture that loss of value on some things that it couldn't otherwise write off as expenses. A few tools can be either expenses or depreciated, but only one of those can be chosen for that particular object. This is generally not relevant for individual taxpayers, unless you can show that the item is being used for income-producing purposes. |
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