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When does a low PE ratio not indicate a good stock? | Some companies have a steady, reliable, stream of earnings. In that case, a low P/E ratio is likely to indicate a good stock. Other companies have a "feast or famine" pattern, great earnings one year, no earnings or losses the following year. In that case, it is misleading to use a P/E ratio for a good year, when earnings are high and the ratio is low. Instead, you have to figure out what the company's AVERAGE earnings may be for some years, and assign a P/E ratio to that. |
Life insurance policy | First off, I would question why do you need a LI policy? While you may be single are you supporting anyone? If not, and you have some money saved to cover a funeral; or, your next of kin would be able to pay for final expenses then you probably don't have a need. In, general, LI is a bad investment vehicle. I do not know hardly anything about the Indian personal finance picture, but here in the US, agents tout LI as a wonderful investment. This can be translated as they make large commissions on such products. Here in the US one is far better off buying a term product, and investing money elsewhere. I image it is similar in India. Next time if you want to help a friend, listen to his sales presentation, give some feedback, and hand him some cash. It is a lot cheaper in the long run. |
Company wants to sell all of its assets, worth more than share price? | Why is the stock trading at only $5 per share? The share price is the perceived value of the company by people buying and selling the stock. Not the actual value of the company and all its assets. Generally if the company is not doing well, there is a perceived risk that it will burn out the money fast. There is a difference between its signed conditional sale and will get money and has got money. So in short, it's trading at $5 a share because the market doesn't feel like it's worth $12 per share. Quite a few believe there could be issues faced; i.e. it may not make the $12, or there will be additional obligations, i.e. employees may demand more layoff compensation, etc. or the distribution may take few years due to regulatory and legal hurdles. The only problem is the stock exchange states if the company has no core business, the stock will be suspended soon (hopefully they can release the $12 per share first). What will happen if I hold shares in the company, the stock gets suspended, and its sitting on $12 per share? Can it still distribute it out? Every country and stock markets have laid out procedures for de-listing a company and closing a company. The company can give $10 as say dividends and remaining later; or as part of the closure process, the company will distribute the balance among shareholders. This would be a long drawn process. |
Receive money from US Client to Myself in India by selling services | Depending on how tech savvy your client is you could potentially use bitcoin. There is some take of indian regulators stopping bitcoin exchanges, meaning it might be hard to get your money out in your local country but the lack of fees to transfer and not getting killed on the exchange rate every time has a huge impact, especially if your individual transaction sizes are not huge. |
How to account for personal baby sitter? | You said your mother-in-law lives with you. Does she pay rent, or are you splitting the cost of housing? That would also have to figured into the equation. If you had a business you would now have to declare the expense on your business taxes. This would also then be income for her, which she would have to account for on her taxes. Remember there are both state and federal taxes involved. Regarding expenses like diapers. If the MIL had the business she could deduct them as a business expense. If you have the business it would greatly complicate the taxes. Your business would be essentially covering your personal expenses. If your MIL was not a business the cost of diapers would be paid by you regardless of the working situation of you and your spouse. To claim the tax credit: You must report the name, address, and taxpayer identification number (either the social security number, or the employer identification number) of the care provider on your return. If the care provider is a tax-exempt organization, you need only report the name and address on your return. You can use Form W-10 (PDF), Dependent Care Provider's Identification and Certification, to request this information from the care provider. If you do not provide information regarding the care provider, you may still be eligible for the credit if you can show that you exercised due diligence in attempting to provide the required information. The IRS will be looking for an income tax form from your MIL that claims the income. Getting too cute with the babysitting situation, by starting a business just for the purpose of saving money on taxes could invite an audit. Also it is not as if you just claim 3000 and you are good to go. You can only claim a percentage of the expenses based on the household AGI, the more the make the more you have to have in expenses to get the full 3000 credit, which mil cause more taxes for your MIL. Plus the whole issue with having to pay social security and other taxes on a household employee. It might be best to skip the risk of the audit. Claiming your MIL as a dependent might just be easier. |
What are the opportunities/implications of having a designated clearing bank in my home country? | I strongly urge you against this despite the fact that you may enjoy lucrative interest rates in the short run. Considering the reckless usage of deposits and other public monies to build buildings just to claim that gdp is high (they count the cost of real estate as investment not their final sales as the rest of the world does), all depositors in Chinese banks stand to lose or at least have their funds frozen (since all credit funding the real estate building comes from the banks and taxes & land seizures to a lesser degree). China's reckless building: http://www.youtube.com/watch?v=wm7rOKT151Y East Asian Crisis (Chapters 11 & 12): http://www.pbs.org/wgbh/commandingheights/lo/story/ch_menu_03.html This can be prolonged if they open their financial system to outside funding, but that will also amplify the effect. |
Paying tax for freelance work while travelling | Having freelanced myself in South America I could give you a sound advice BUT you would first need to answer some questions. 1) How long do you plan on being in South America? At the end of 2017 will you be back in Ireland or still being in South America? In other words was is your country of residence for tax purposes on Dec. 31 2017 ? That is the key element to consider. Link 2) In latin America you can freelance with a legal working permit BUT in all these countries more than 50% of the economy is under the table. In all these countries expatriate work under the table. The question you need to answer is then: Who will be your employer, a company or the owner of this company? Working undeclared in Latin America is very common, what are the risks? The legal risks depend on the country and their laws. In which country will you travel? How long will you stay there? You will have a tourist visa or a working visa? 3) An important detail, your health. Check how long you can be out of Ireland without loosing your social health benefits in Ireland? In my country, if I am abroad for more than 180 days, I loose my national health coverage. Evaluate the amount of days you will be out of Ireland and where you want to be on Dec. 31th. That could change a lot of things in your life. |
Is the need to issue bonds a telltale sign that the company would have a hard time paying coupons? | People borrow money all the time to buy a house. Banks will lend money on one (up to 80%, sometimes more), because they consider it an "investment." If you own a large company and want to expand, a bank or bond issuer will first look at what you plan to do with the money, like build new factories, or whatever. Based on their experience, they may judge that you will earn enough money to pay them back. If you don't, they may "repossess" your factories and sell them to someone who can pay. As protection, you may be asked to "mortgage" your existing company to protect the lenders of the new money. If you don't pay back the money, the lenders get not only your new "factories" but also your existing company. |
What is the rationale behind stock markets retreating due to S&P having a negative outlook on the USA? | If you spoke in front of a group of people in 2001 about the possibility of be lowered, you would be written off as a kook. Now S&P is talking about a negative credit outlook -- scary stuff. It's scary because a base assumption in any risk model is that US Treasury debt is utterly reliable and comes with zero default risk. So publicly banding about the notion that US Treasury debt may be less the AAA in two years is a shock to the system and changes the way many people assess risk. It's also scary because Treasury debt is auctioned... will a spooked market still accept a measely 2.9% return for a 7 year T-Bill? But while the prospect of a credit downgrade is truly a bad thing, you also need to take the S&P statements with a grain of salt -- since being a named a villain during the mortgage implosion (these were the guys who declared junk mortgage securities as AAA), they now err on the side of doom and gloom. So while things are bad, they've been bad since the Bush administration was forced to put Fannie Mae & Freddie Mac on the government balance sheet to stave off a bank panic. The scary stuff about default in July due to the debt ceiling debate is not very credible at all. Unless the Republican House plans on dramatically slashing spending on Medicare, Defense or Social Security and have the votes to stick to that strategy, the debt ceiling will be raised after much ado. Politicians talk tough, but have a proven track record of creating financial problems tomorrow to fix electoral problems today. |
Taxes on selling stock | You realise a capital gain as soon as you sell the stock. At that point, you will have to pay taxes on the profits when you fill in your tax return. The fact that you used the money to subsequently purchase other stocks is not relevant, unless you sell those stocks within the same tax year. For example, purchase $5000 of stock A in 2010. Sell for $6000 in 2010. Purchase $6000 of stock B in 2010. Sell stock B for $6500 in 2010. Purchase $6500 of stock C in 2010. Sell stock C for $7000 in 2011. You owe capital gains on ($6000 - $5000) + ($6500 - $6000) = $1500 for tax year 2010. You owe capital gains on ($7000 - $6500) = $500 for 2011. |
What is the most effective saving money method? | In a word: budgeting. In order to have money left over at the end of the month, you need to be intentional about how you spend it. That is all a budget is: a plan for spending your money. Few people have the discipline and abundance of income necessary to just wing it and not overspend. By making a plan at home ahead of time, you can decide how much you will spend on food, entertainment, etc, and ensure you have enough money left over for things like rent/mortgage and utility bills, and still have enough for longer-term savings goals like a car purchase or retirement. If you don't have a plan, it's simply not reasonable to expect yourself to know if you have enough money for a Venti cup as you drive past the Starbucks. A good plan will allow you to spend on things that are important to you while ensuring that you have enough to meet your obligations and long-term goals. Another thing a budget will do for you is highlight where your problem is. If your problem is that you are spending too much money on luxuries, the budget will show you that. It might also reveal to you that your rent is too high, or your energy consumption is too great. On the other hand, you might realize after budgeting that your spending is reasonable, but your income is too low. In that case, you should focus on spending more of your time working or looking for a better paying job. |
What should I do with $4,000 cash and High Interest Debt? | I'm going to suggest a slightly different approach. Most answers seem to suggest paying off the lower rate card to clear it. Some answers / comments also talk about emergency funds. One risk of paying off a card is that the card issuer may choose to reduce your credit limit if they see you as high risk, to prevent you re-spending the money. If you don't trust yourself with the card then this could be a good thing (and remember you're always free to ask for a limit decrease). But if you want access to emergency funds, then I would suggest paying half onto each card. That way if one card cuts you off, you have a chance of still having access to the other in an emergency. |
Will my Indian debit card work in the U.S.? | I recommend that you first try to use your card at a store in your home country, just to make sure that the point-of-sale features are enabled. After you've verified that, you need to contact your bank and ask them if the card will work in both ATMs and in stores in the U.S. They may need to enable it to work in another country. If you are going to be living in the U.S. for a while, you should consider opening an American bank account after you get there. If you don't want a credit card, you should be able to get a debit card here. |
Capital Gains Tax - Does this apply only to the actual “gains” or to the entire amount of my sale? | Assuming you bought the stocks with after-tax money, you only pay tax on the difference. Had you bought he shares in a pretax retirement account, such as an IRA or 401(k), the taxation waits until you withdraw, at which point, it's all taxed as ordinary income. |
Someone asks you to co-sign a loan. How to reject & say “no” nicely or politely? | Oh, how about something like "I'd rather not. It exposes me to more financial liability than I want. If you were in the hospital, or some emergency like that, it might be different, but..." |
Should I make more conservative investments in my company 401(K) if I'm going to leave the job in a couple of years? | Your retirement PLAN is a lifelong plan and shouldn't be tied to your employer status. Max out your 401(k) contribution to the maximum that your employer matches (that's a 100% ROI!) and as much as you can afford. When you leave the work force rollover your 401(k) to an IRA account (e.g.: you can create an IRA account with any of the online brokerage firms Schwab, E-Trade, Sharebuilder, or go with a brick-and-mortar firm like JP Morgan, Stifel Nicolaus, etc.). You should have a plan: How much money do you need/month for your expenses? Accounting for inflation, how much is that going to be at retirement (whatever age you plan to retire)? How much money do you need to have so that 4.5% of that money will provide for your annual living expenses? That's your target retirement amount of savings. Now figure out how to get to that target. Rule #1 Invest early and invest often! The more money you can sock away early in your career the more time that money has to grow. If you aren't comfortable allocating your investments yourself then you could go with a Targeted Retirement Fund. These funds have a general "date" for retirement and the assets are allocated as appropriate for the amount of risk appropriate for the time to retirement. |
Why trade futures if you have options | Yes, from the point-of-view to the end speculator/investor in stocks, it is ludicrous to take on liabilities when you don't have to. That's why single-stock options are far more liquid than single-stock futures. However, if you are a farmer with a huge mortgage depending upon the chaos of agricultural markets which are extremely volatile, a different structure might appeal to you. You could long your inputs while shorting your outputs, locking in a profit. That profit is probably lower than what one could expect over the long run without hedging, but it will surely be less volatile. Here's where the advantage of futures come in for that kind of structure: the margin on the longs and shorts can offset each other, forcing the farmer to have to put up much less of one's own money to hedge. With options, this is not the case. Also, the gross margin between the inputs rarely fluctuate to an unmanageable degree, so if your shorts rise faster than your longs, you'll only have to post margin in the amount of the change in the net of the longs and shorts. This is why while options on commodities exist to satisfy speculators, futures are the most liquid. |
Co- Signed car loan and need to have the other signer relinquish claim to ownership | The key here is the bank, they hold the title to the car and as such have the final say in things. The best thing you can do is to pay off the loan. Could you work like crazy and pay off the car in 6 months to a year? The next best thing would be to sell the car. You will probably have to cover the depreciation out of pocket. You will also need to have some cash to buy a different car, but buy it for cash like you should have done in the first place. The worst option and what most people opt for, which is why they are broke, is to seek to refinance the car. I am not sure why you would have to wait 6 months to a year to refinance, but unless you have truly horrific credit, a local bank or credit union will be happy for your business. Choose this option if you want to continue to be broke for the next five years or so. Once any of those happen it will be easy to re-title the car in your name only provided you are on good terms with the girlfriend. It is just a matter of going to the local title office and her signing over her interest in the car. My hope is that you understand the series of foolish decisions that you made in this vehicle purchase and avoid them in the future. Or, at the very least, you consciously make the decision to appear wealthy rather than actually being wealthy. |
Why can't I short a particular stock? | In order to short a stock, you have to borrow the number of shares that you're shorting from someone else who holds the shares, so that you can deliver the shares you're shorting if it becomes necessary to do so (usually; there's also naked short selling, where you don't have to do this, but it's banned in a number of jurisdictions including the US). If a stock has poor liquidity, or is in high demand for shorting, then it may well be impossible to find anyone from whom it can be borrowed, which is what has happened in this instance. |
Debit card for minor (< 8 y.o.) | In the UK, the Osper card would do the trick exactly. The closest thing I can find in the US is the USAA Youth accounts which appear to be what you need but have some restrictions on mobile access until the youth is 13. |
Who is the issuer in a derivative contract? | While the issuer of the security such as a stock or bond not the short is responsible for the credit risk, the issuer and the short of a derivative is one. In all cases, it is more than likely that a trader is owed securities by an agent such as a broker or exchange or clearinghouse. Legally, only the Options Clearing Corporation clears openly traded options. With stocks and bonds, brokerages can clear with each other if approved. While a trader is expected to fund margin, the legal responsibility is shared by all in the agent chain. Clearinghouses are liable to exchanges. Exchanges are liable to members. Traders are liable to brokerages. Both ways and so on. Clearinghouses are usually ultimately liable for counterparty risk to the long counterparty, and the short counterparty is ultimately liable to the clearinghouse. Clearinghouses are not responsible for the credit risk of stocks and bonds because the issuers are not short those securities on the exchange, thus no margin is required. Credit risk for stocks and bonds is mitigated away from the clearing process. |
Are Certificates of Deposit worth it compared to investing in the stock market? | For the specific example you gave, a CD with a 0.05% rate of return, I'd shop around some more, that's a VERY low rate of return. A more realistic one would be 0.5%, depending on the terms. As has been mentioned, CDs are good when you need to preserve your capital. What might be a situation for that? They are great for Emergency funds, which you should always have a reasonable amount of cash in. I have a set up 3 CDs with 12 month terms, each carrying about 30% of my emergency savings. The remaining 10% I keep in a standard savings account, for quick access dealing with a short term emergency. The 3 are spaced about 4 months apart, so that I'm always within 4 months of having one come to term. They have a 3 month penalty if I withdraw early, but based on the fact that I have never had to touch more than 10% of my emergency savings, I'm perfectly okay with that. What about more long term savings? Well, it depends on what your timeframe is for using the money. If it's more than 10 years, and you are willing to risk losing some of it, then by all means invest in a higher risk higher reward investment. If it's only a few years, maybe a bond fund is something that would be better. And if you really need to preserve the money, then a CD can be great too. |
What are the best software tools for personal finance? | I use iBank for Mac to keep track of my expenses. I also use the iPhone version since they can sync over Wi-Fi and I can capture expenses right on the spot instead of trying to remember what I spent on when I turn on my laptop. |
For very high-net worth individuals, does it make sense to not have insurance? | The point of insurance is to trade high variable costs for much lower fixed costs. The question isn't whether you can afford what would be a catastrophic event for anyone else, but whether it would be better to pay a small amount regularly vs. a possibly larger amount occasionally. One of the reasons to buy insurance is to avoid costly litigation (rich people are more frequently targeted for litigation). By purchasing liability insurance, the insurance company pays for the litigation and/or settlement. If you are wealthy enough to keep an experienced litigation firm on retainer, you may not need that benefit, but it might be worth giving that stress to a third party. Life insurance is also an important part of estate planning because of the tax treatment of insurance payouts compared to the tax treatment of a large estate. There are certainly classes of insurance that make less sense for those with great cash flow, but money doesn't obviate all the benefits of insurance. |
Are lottery tickets ever a wise investment provided the jackpot is large enough? | I think playing certain kinds of lottery is as economically sound as buying certain kinds of insurance. A lottery is an inverted insurance. Let me elaborate. We buy insurance for at least two reasons. The first one is clear: We pay a fee to protect ourselves from a risk which we don't want to (or cannot) bear. Although on average buying insurance is a loss, because we pay all the insurance's office buildings and employee's salaries, it still is a reasonable thing to do. (But it should also be clear that it is unreasonable to buy insurance for risks one could easily bear oneself.) The second reason to buy insurance is that it puts us at ease. We don't have to be afraid of theft or of a mistake we make which would make us liable or of water damage to our house. In that sense we buy freedom of sorrow for a fee, even if the damage wouldn't in fact ruin us. That's totally legitimate. Now I want to make the argument that buying a lottery ticket follows the same logic and is therefore not economically unreasonable at all. While buying a lottery ticket is on average a loss, it provides us with a chance to obtain an amount of money we would normally never get. (Eric Lippert made this argument already.) The lottery fee buys us a small chance of something very valuable, much as the insurance frees us from a small risk of something very bad. If we don't buy the ticket, we may have 0% chance of becoming (extremely) rich. If we buy one, we clearly have a chance > 0%, which can be considered an improvement. (Imagine you'd have a 0.0000001% chance to save the life of a loved one with a ticket who'd be 100% doomed otherwise. You'd bite.) Even the second argument, that an insurance puts us at ease, can be mirrored for lotteries. The chance to win something may provide entertainment in our otherwise dull everyday life. Considering that playing the lottery only makes sense for the chance to obtain more money than otherwise possible, one should avoid lotteries which have lots of smaller prizes because we are not really interested in those. (It would be more economical to save the money for smaller amounts.) We ideally only want lotteries which lean on the big money prizes. |
How can I determine which stores are regarded as supermarkets for a rewards credit card? | Each company that has an account with the credit card network has to classify themselves as a particular type of business. The credit card company uses that classification to catagorize the transaction on your statement. If you buy a T-shirt at a grocery, amusement park, gas station, or resturant; the transaction will be labeled by the vendor type. Look at recent credit card statements, even if they are from different cards, to see how the stores you want to know about are classified. |
Paying Off Principal of Home vs. Investing In Mutual Fund | Paying off the debt is low-risk, low-reward. You're effectively guaranteed a 4% return. If you buy a mutual fund, you're going to have to take some risk to have a decent chance of getting better than 4% and change return in the long run, which probably means a fund that invests primarily in stocks. Buying a stock mutual fund is high-risk, high reward, especially when you're in significant debt. On the other hand, 4% and change is very low-interest. If you wanted to buy stocks on margin, financing stock investments directly with debt, you'd pay a heck of a lot more. Bottom line: It comes down to your personal risk tolerance. |
In Australia, how to battle credit card debt? | To confirm: you say you have credit card debt of $18,000 with min. repayment of $466.06, plus on top of this you are also paying off a car loan and another personal loan. From my calculations if your monthly interest on your credit card is $237, the interest on your credit card should be about 15.8% p.a. Is this correct? Balance Transfer If you did a balance transfer of your $18,000 to a new credit card with 0% for 14 months and keep your repayments the same ($466) you would have saved yourself a bit over $3020 in interest over those 14 months. Your credit card balance after 14 months would be about $11,471 (instead of $14,476 with your current situation). If your interest after the 14 months went back to 15.8% you would be able to pay the remaining $11,471 in 2.5 more years (keeping repayments at $466), saving 10 months off your repayments and a total of $4,781 in interest over 3 years and 8 months. The main emphasis here is that you are able to keep your repayments at least the same so you are able to pay off the debt quicker, and that your interest rate on the new credit card after the 14 months interest free is not more than your current interest rate of 15.8%. Things you should be careful about if you take this path: Debt Consolidation In regards to a Debt Consolidation for your personal loan and credit card (and possibly your car loan) into a single lower interest rate loan can be a good idea, but there are some pitfalls you should consider. Manly, if you are taking out a loan with a lower interest rate but a longer term to pay it off, you may end up paying less in monthly repayments but will end up paying more interest in the long run. If you do take this course of action try to keep your term to no longer than your current debt's terms, and try to keep your repayments as high as possible to pay the debt off as soon as possible and reduce any interest you have to pay. As you already have you credit card and personal loan with CBA talk to them to see what kind of deal they can give you. Again be wary of the fine print and read the PDS of any products you are thinking of getting. Refer to ASIC - Money Smart website for more valuable information you should consider before taking out any debt consolidation. Other Action You Can Take If you are finding that the repayments are really getting out of hand and no one will help you with any debt consolidation or reducing your interest rates on your debts, as a last resort you can apply for a Part 9 debt agreement. But be very careful as this is an alternative to bankruptcy, and like bankruptcy a debt agreement will appear on your credit file for seven years and your name will be listed on the National Personal Insolvency Index forever. Further Assistance and Help If you have trouble reading any PDS, or want further information or help regarding any issues I have raised or any other part of your financial situation you can contact Centrelink's Financial Information Service. They provide a free and confidential service that provides education and information on financial and lifestyle issues to all Australians. |
What does “Settling your Debt” entail, and how does it compare to other options? | If you are struggling with debt and cannot realistically pay your debts off with your current level of income, these businesses offer, for a fee, to negotiate with your debt providers a sum that you can realistically afford to pay. The debt providers will consider the offer because they would rather get some money back rather than nothing (as these are usually unsecured loans). For you it can be a better deal than going bankrupt or trying to struggle endlessly to pay off something you can't afford to pay off. Note, that even though you won't be bankrupt, you will be treated (by lenders) very similar to being bankrupt. In other words, it will be very hard for you to get new loans in the near future. |
How do the wealthy pay for things? | While you would probably not use your ATM card to buy a $1M worth mansion, I've heard urban legends about people who bought a house on a credit card. While can't say its reliable, I wouldn't be surprised that some have actual factual basis. I myself had put a car down-payment on my credit card, and had I paid the sticker price, the dealer would definitely have no problem with putting the whole car on the credit card (and my limits would allow it, even for a luxury brand). The instruments are the same. There's nothing special you need to have to pay a million dollars. You just write a lot of zeroes on your check, but you don't need a special check for that. Large amounts of money are transferred electronically (wire-transfers), which is also something that "regular" people do once or twice in their lives. What might be different is the way these purchases are financed. Rich people are not necessarily rich with cash. Most likely, they're rich with equity: own something that's worth a lot. In this case, instead of a mortgage secured by the house, they can take a loan secured by the stocks they own. This way, they don't actually cash out of the investment, yet get cash from its value. It is similarly to what we, regular mortals, do with our equity in primary residence and HELOCs. So it is not at all uncommon that a billionaire will in fact have tons of money owed in loans. Why? Because the billions owned are owned through stock valuation, and the cash used is basically a loan secured by these stocks. It might happen that the stocks securing the loans become worthless, and that will definitely be a problem both to the (now ex-)billionaire and the bank. But until then, they can get cash from their investment without cashing out and without paying taxes. And if they're lucky enough to die before they need to repay the loans - they saved tons on money on taxes. |
How to prevent myself from buying things I don't want | There's a reason that you get a discount code: to make you feel like you're getting a deal. A deal is what you get when there was something that you were already going to buy, and you got it for a lower price than you were going to originally spend on it. If you learn to look at "rewards" as a marketing ploy that is designed only to get your business, then it's easier to ignore them. But if you really do want a thing, and is is a thing that you are going to use, then by all means, go for it! Buy it, and use those rewards and enjoy them. Otherwise you're just giving your money to someone else for no good reason. And if you want to do that, you should just give it to me. At least I'm honest about it :) |
Should I pay my Education Loan or Put it in the Stock Market? | 2.47% is a really, really good rate, doubly so if it's a fixed rate, and quadruply so if the interest is tax-deductible. That's about as close to "free money" as you're ever going to get. Heck, depending on what inflation does over the next few years, it might even be cheaper than free. So if you have the risk tolerance for it, it's probably more effective to invest the money in the stock market than to accelerate your student loan payoff. You can even do better in the bond market (my go-to intermediate-term corporate bond fund is yielding nearly 4% right now.) Just remember the old banker's aphorism: Assets shrink. Liabilities never shrink. You can lose the money you've invested in stocks or bonds, and you'll still have to pay back the loan. And, when in doubt, you can usually assume you're underestimating your risks. If you're feeling up for it, I'd say: make sure you have a good emergency fund outside of your investment money - something you could live on for six months or so and pay your bills while looking for a job, and sock the rest into something like the Vanguard LifeStrategy Moderate Growth fund or a similar instrument (Vanguard's just my personal preference, since I like their style - and by style, I mean low fees - but definitely feel free to consider alternatives). You could also pad your retirement accounts and avoid taxes on any gains instead, but remember that it's easier to put money into those than take it out, so be sure to double-check the state of your emergency fund. |
Question about dividends and giant companies [duplicate] | Dividends are a way of distributing profits from operating a business to the business owners. Why would you call it "wasting money" is beyond me. Decisions about dividend distribution are made by the company based on its net revenue and the needs of future capital. In some jurisdictions (the US, for example), the tax policy discourages companies from accumulating too much earnings without distributing dividends, unless they have a compelling reason to do so. Stock price is determined by the market. The price of a stock is neither expensive nor cheap on its own, you need to look at the underlying company and the share of it that the stock represents. In case of Google, according to some analysts, the price is actually quite cheap. The analyst consensus puts the target price for the next 12 months at $921 (vs. current $701). |
Why UK bank charges are not taken account when looking on interest for taxation? | Because your profit from the capital IS 100 quid. Capital gains is not like running a business and doesn't come with tax deductions. It's up to you to pick saving scheme that maximizes your profit (either via low costs or highest possible rate). |
Is there any truth to the saying '99% of the world's millionaires have become rich by doing real estate'? | I can name far more non-real estate millionaires than those who are. That statistic isn't only not valid, it's not even close. Update: The correct quote is "90% of all Millionaires become so through owning Real Estate" and it's attributed to Andrew Carnegie. Given that he was born in 1835, I can imagine that his statement was true at he time, but not today. |
I'm in the U.S. What are vehicles to invest in international stocks? | You can look into specific market targeted mutual funds or ETF's. For Norway, for example, look at NORW. If you want to purchase specific stocks, then you'd better be ready to trade on local stock exchanges in local currency. ETrade allows trading on some of the international stock exchanges (in Asia they have Hong Kong and Japan, in Europe they have the UK, Germany and France, and in the Americas they have the US and Canada). Some of the companies you're interested in might be trading there. |
How should I interpret this industry research? | As BobbyScon said in the comments, invest in a company that is developing in that field. Or invest in a company which supplies that field. The people who got rich in the California gold rush were those selling shovels and other miners' supplies. Or bet against whatever you think this will displace. If automobiles are the hot new thing, it might be a bad time to invest in harness leather. Or ... figure out how else it might impact the economy and invest appropriately. But you have to do that evaluation yourself. Or ignore it and stick with your existing strategy, which should have been diversified enough to deliver reasonable results whether this sector takes off or not. Remember that if someone gives you a free tip, they are probably just hoping to pump up the value of their own stock rather than help you. |
How to spend more? (AKA, how to avoid being a miser) | Do you plan a monthly budget at the beginning of each month? This might seem counter-intuitive, but hear me out. Doing a budget is, of course, critically important for those who struggle with having enough money to last the month. Having this written spending plan allows people struggling with finances to control their spending and funnel money into debt reduction or saving goals. However, budgeting can also help those with the opposite problem. There are some, like you perhaps, that have enough income and live frugally enough that they don't have to budget. Their money comes in, and they spend so little that the bank account grows automatically. It sounds like a good problem to have, but your finances are still out of control, just in a different way. Perhaps you are underspending simply because you don't know if you will have enough money to last or not. By making a spending plan, you set aside money each month for various categories in three broad areas: Since you have plenty of money coming in, generously fund these spending categories. As long as you have money in the categories when you go to the store, you can feel comfortable splurging a little, because you know that your other categories are funded and the money is there to pay those other bills. Create other categories, such as technology or home improvement, and when you need an app or have a home improvement project, you can confidently spend this money, as it has already been allocated for those purposes. If you are new to budgeting, software such as YNAB can make it much easier. |
Pay online: credit card or debit card? | Credit card, without a doubt. The reason is dispute resolution. If you dispute a charge on debit card - the money has left your account already, and if the dispute was accepted - you'll get it back. If. Eventually. In the mean time your overdraft will be missing $$$. For credit cards, you can catch a fraud action before the money actually leaves your pocket and dispute it then. In this case the charge is set aside, and you will only be required to actually pay if the dispute is rejected. I.e.: The money stays in your pocket, until the business proves that the charge is legit. In both cases, if the dispute is justified (i.e.: there was indeed a fraud) neither you nor the bank will lose money at the bottom line, it's just who's got the money during the dispute resolution process (which may be lengthy) that matters. |
At what point should I go into credit card debt? | Credit cards are a reasonable if relatively expensive tool to gain liquidity. If you have $50k in liquid cash, you don't have a liquidity problem for credit to help you solve. You have 100 months of expenses in cash. I suppose you could see a balance as a motivational tool, but it's all stick and no carrot. Take the next part half seriously in the spirit of "what if" talking therapy: If you feel you need to be motivated to get back to work by the true risk of running out of cash, and take such advice from strangers on the internet, the traditional midlife crisis purchase is a sports car. At least have some fun in a (depreciating but resellable) asset instead of paying a financier's bonus in evaporated interest! If there is a luxury car tariff in your country, you may even be able to exploit a personal exemption if you drove in from the U.S. I suppose this advice could possibly get you booted from the family house as it'll probably come across as a seriously "ugly American" move though... |
Accepting high volatility for high long-term returns | This is basically what financial advisers have been saying for years...that you should invest in higher risk securities when you are young and lower risk securities when you get older. However, despite the fact that this is taken as truth by so many financial professionals, financial economists have been unable to formulate a coherent theory that supports it. By changing the preferences of their theoretical investors, they can get solutions like putting all your investments in a super safe asset until you get to a minimum survival level for retirement and then investing aggressively and many other solutions. But for none of the typically assumed preferences does investing aggressively when young and becoming more conservative as you near retirement seem to be the solution. I'm not saying there can be no such preferences, but the difficulty in finding them makes me think maybe this idea is not actually correct. Couple of problems with your intuition that you should think about: It's not clear that things "average out" over time. If you lose a bunch of money in some asset, there's no reason to think that by holding that asset for a while you will make back what you lost--prices are not cyclical. Moreover, doesn't your intuition implicitly suggest that you should transition out of risky securities as you get older...perhaps after having lost money? You can invest in safe assets (or even better, the tangency portfolio from your graph) and then lever up if you do want higher risk/return. You don't need to change your allocation to risky assets (and it is suboptimal to do so--you want to move along the CAL, not the curve). The riskiness of your portfolio should generally coincide (negatively) with your risk-aversion. When you are older and more certain about your life expectancy and your assets, are you exposed to more or less risks? In many cases, less risks. This means you would choose a more risky portfolio (because you are more sure you will have enough to live on until death even if your portfolio takes a dive). Your actual portfolio consists both of your investments and your human capital (the present value of your time and skills). When you are young, the value of this capital changes significantly with market performance so you already have background risk. Buying risky securities adds to that risk. When you are old, your human capital is worth little, so your overall portfolio becomes less risky. You might want to compensate by increasing the risk of your investments. EDIT: Note that this point may depend on how risky your human capital is (how likely it is that your wage or job prospects will change with the economy). Overall the answer to your question is not definitively known, but there is theoretical evidence that investing in risky securities when young isn't optimal. Having said that, most people do seem to invest in riskier securities when young and safer when they are older. I suspect this is because with life experience people become less optimistic as they get older, not because it is optimal to do so. But I can't be sure. |
Can my broker lock my cash account if I try to use the money from a stock sale during the three-day settlement period? | Here's how this works in the United States. There's no law regarding your behavior in this matter and you haven't broken any laws. But your broker-dealer has a law that they must follow. It's documented here: The issue is if you buy stock before your sell has settled (before you've received cash) then you're creating money where before none existed (even though it is just for a day or two). The government fears that this excess will cause undue speculation in the security markets. The SEC calls this practice freeriding, because you're spending money you have not yet received. In summary: your broker is not allowed to loan money to an account than is not set-up for loans; it must be a margin account. People with margin account are able to day-trade because they have the ability to use margin (borrow money). Margin Accounts are subject to Pattern Daytrading Rules. The Rules are set forth by FINRA (The Financial Industry Reporting Authority) and are here: |
Are BID and ASK the minimum and maximum? | So in your screenshot, someone or some group of someones is willing to buy 3,000 shares at $3.45, and someone or some group of someones is willing to sell 2,000 shares at 3.88. Without getting in to the specific mechanics, you can place a market buy order for 10 (or whatever number) shares and it will probably transact at $3.88 per share because that's the lowest price for which someone will currently sell their shares. As a small fish, you can generally ignore the volume notations in the bid/ask quotes. |
How do I calculate the dwelling coverage I need from the information I have? | This is where an insurance agent is very useful. They will help you choose appropriate coverage, based on local rebuilding costs, the build quality of your house (higher quality or historic/semi-historic construction requires a different type of coverage), etc. They can also help advise you on things like the need for flood insurance, etc. Local rules can vary, and the local agent will know about them. For example, we found out that my home was in a semi-historic district, which requires using higher-cost materials for reconstruction. Also, our city separately licenses tradespeople, who tend to be unionized and thus more expensive. Had I just picked default coverages, I would have been in a pickle in the event of a loss. |
Benefits of Purchasing Company Stock at a Discount | Typically, the discount is taxable at sale time But what about taxes? When the company buys the shares for you, you do not owe any taxes. You are exercising your rights under the ESPP. You have bought some stock. So far so good. When you sell the stock, the discount that you received when you bought the stock is generally considered additional compensation to you, so you have to pay taxes on it as regular income. Source: Turbotax. Second source. Your pretax rate of return would be: 17% (100/85) In your scenario where the stock price is fixed at $100. Your tax rate would be your marginal rate. If the stock stayed at 100, you would still be taxed as income on $15/share (the discount) and would receive no benefit for holding the stock one year. Assuming you are in the 25% tax bracket, your after tax rate of return would be 13% ((15*.75)+85)/85) |
My account's been labeled as “day trader” and I got a big margin call. What should I do? What trades can I place in the blocked period? | You need to contact the trading company and ask them what's going on. If it's simply a matter of needing to add more cash because you are now classified as a day trader, then call them, ask them what you need to do to not be considered a day trader, and do that. It would likely consist of not trading for a week and then trading less than you were going forward to avoid getting classified as a day trader again. That would be the easy problem to solve, so I hope that's right. |
I'm 13. Can I buy supplies at a pet store without a parent/adult present? | My 12 year old routinely makes purchases with cash or a gift card (either a store's card or a Visa/Amex card that acts like credit card but is a gift card) and has never had an issue. Clothing, make-up, bath items, etc. I understand in some areas you need to be over 18 to buy certain markers, spraypaint, or other propellant items that can be fatal if inhaled. I see little issue with buying pet supplies, but it wouldn't hurt to have your sibling nearby if you think there will be an issue. |
When are equal-weighted index funds / ETFs preferable to market-cap-weighted funds? | Equal-weight ETFs remove the large cap bias found in most popular indexes. What results behaves very much like a small-cap or mid-cap index. Observe RSP vs IJR over a 5 year period: IJR (iShares S&P SmallCap 600 ETF) vs RSP (Rydex S&P Equal Weight ETF) I'm not sure if equal-weighting is worth the reduced efficiency. Mid-cap and small-cap funds have lower expenses (%0.20 for IJR vs %0.40 for RSP) and appear to do better over the long run. We don't know if that pattern will continue, but expense is one of the strongest long-term predictors of performance. |
Dealing with Form 1099 | Am I required to send form 1099 to non-US citizens who are not even residing in the US? Since they're not required to file US taxes, do I still have to send the form to them? That's tricky. You need to get W8/W9 from them, and act accordingly. You may need to withhold 30% (or different percentage, depending on tax treaty they claim on W8). If you withhold taxes, you also need to file form 1042. I suggest you talk to a tax professional. Is it fine to expose my ITIN (taxpayer identification number) to individuals or companies who I send the form to them. Since the form requires me to write my TIN/EIN, what would be the risks of this and what precautions should be taken to avoid inappropriate/illegal use? No, it is not OK. But if you pay these people directly - you don't have much choice, so deal with it. Get a good insurance for identity theft, and don't transact with people you don't trust. One alternative would be to pay through a payment processor (Paypal or credit cards) - see your next question. I send payments via PayPal and wire transfer. Should I send form 1099-MISC or 1099-K? Paypal is a corporation, so you don't need to send 1099 to Paypal. Whatever Paypal sends to others - it will issue the appropriate forms. Similarly if you use a credit card for payment. When you send money through Paypal - you don't send money directly to your business counterparts. You send money to Paypal. |
Why do banks require small businesses to open a business bank account instead of a cheaper personal one? | The bank won't let you because: Differences in required account features — Business accounts have different features (many of them legal features) that are required by businesses. For instances: Do you want to be able to deposit cheques that are written out to your business name? You need a business account for that. Your business could be sold. Then it wouldn't be your business, so it wouldn't make sense to put the business account under your personal name. The bank account and the cash it holds is a business asset and should be owned by the business, so when the business is sold the account goes with it. This is especially the case for a corporation that has shareholders, and not a sole proprietorship. For a business, you could also, in theory, assign other people as signing authorities on the business account (e.g. your corporate treasurer), and the individuals performing that role could change over time. Business accounts allow for this kind of use. Market segmentation — The bank has consciously undertaken to segment their product offerings in order to maximize their profit. Market segmentation helps the bottom line. Even if there were zero legal reasons to have separate personal vs. business accounts, banks would still make it their policy to sell different account types according to use because they can make more money that way. Consider an example in another industry: The plain-old telephone company also practices segmentation w.r.t. personal/business. Do you want a telephone line for a business and listed as such in the phone book? You need a business line. Do you want a phone line hooked up at a non-residential address? You need a business line. Here it's clear it is less of a legal issue than with the bank account, and it doesn't matter that the technical features of the phone line may be identical for the basic product offerings within each segment. The phone company has chosen to segment and price their product offerings this way. Q. Why do companies choose to charge some kinds of customers more than others for essentially the same underlying service? A. Because they can. |
Where can I see the detailed historical data for a specified stock? | Yahoo Finance's Historical Prices section allows you to look up daily historical quotes for any given stock symbol, you don't have to hit a library for this information. Your can choose a desired time frame for your query, and the dataset will include High/Low/Close/Volume numbers. You can then download a CSV version of this report and perform additional analysis in a spreadsheet of your choice. Below is Twitter report from IPO through yesterday: http://finance.yahoo.com/q/hp?s=TWTR&a=10&b=7&c=2013&d=08&e=23&f=2014&g=d |
What should I do with my money? | Some of the other answers recommended peer-to-peer lending and property markets. I would not invest in either of these. Firstly, peer-to-peer lending is not a traditional investment and we may not have enough historical data for the risk-to-return ratio. Secondly, property investments have a great risk unless you diversify, which requires a huge portfolio. Crowd-funding for one property is not a traditional investment, and may have drawbacks. For example, what if you disagree with other crowd-funders about the required repairs for the property? If you invest in the property market, I recommend a well-diversified fund that owns many properties. Beware of high debt leverage used to enhance returns (and, at the same time, risk) and high fees when selecting a fund. However, traditionally it has been a better choice to invest in stocks than to invest in property market. Beware of anyone who says that the property market is "too good to not get into" without specifying which part of the world is meant. Note also that many companies invest in properties, so if you invest only in a well-diversified stock index fund, you may already have property investments in your portfolio! However, in your case I would keep the money in risk-free assets, i.e. bank savings or a genuine low-cost money market fund (i.e. one that doesn't invest in corporate debt or in variable-rate loans which have short duration but long maturity). The reason is that you're going to be unemployed soon, and thus, you may need the money soon. If you have an investment horizon of, say, 10 years, then I would throw stocks into the mix, and if you're saving for retirement, then I would go all in to stocks. In the part of the world where I live in, money market funds generally have better return than bank savings, and better diversification too. However, your 2.8% interest sounds rather high (the money market fund I have in the past invested in currently yields at 0.02%, but then again I live in the eurozone), so be sure to get estimates for the yields of different risk-free assets. So, my advice for investing is simple: risk-free assets for short time horizon, a mixture of stocks and risk-free assets for medium time horizon, and only stocks for long time horizon. In any case, you need a small emergency fund, too, which you should consider a thing separate from your investments. My emergency fund is 20 000 EUR. Your 50 000 AUD is bit more than 30 000 EUR, so you don't really have that much money to invest, only a bit more than a reasonably sized emergency fund. But then again, I live in rental property, so my expenses are probably higher than yours. If you can foresee a very long time horizon for part of your investment, you could perhaps invest 50% of your money to stocks (preference being a geographically diversified index fund or a number of index funds), but I wouldn't invest more because of the need for an emergency fund. |
Tax me more: Can I pay extra to the government so I don't have to deal with all this paperwork? | Actually, if you don't care about paying a bit more, either hire an accountant and dump the paper on them, or (may be cheaper but a bit more work) spring for tax software. Modern tax programs can often download most of your data directly. If you don't care about claiming deductions you can skip a lot of the rest. I'm perfectly capable of doing my taxes on paper or in a spreadsheet... but I spring for tax software every year because I find it a _LOT more pleasant. Remember that most of the complexity does come from policies intended to reduce your taxes. When you call for simplification, you may not like the result. It's better than it was a decade or two ago. I used to joke that the battle cry of the next revolution would be "No Taxation Without Proper Instructions!" |
Insider Trading? | Nope, its not legal. Easy to explain: If you know something that isn't public known ("inside") it's called insider trading. Hard to prove (impossible), but still illegal. To clarify: If the CEO says it AND its known in public its not illegal. In any case the CEO could face consequences (at least from his company). |
“Inflation actually causes people not to spend”… could it be true? | Not always. You always consider economic factors in conjunction with each other rather than in isolation, which leads to weird assumptions. People spending isn't what you should look at always. When inflation is high, means government is spending. Government is spending on public projects, creating employment, increasing salaries, doling out loans. So you are putting money into the economy and into people's hands. Everybody will be spending, so it will also drive demand(Demand Pull inflation). But there are differences among economists regarding Cost push inflation, which is a dangerous phenomena. At the same time the interest rates, which are a monetary tool for central banks to increase(decrease) the money flow in the economy, are low. Under low interest rate conditions, businesses take loans to invest in projects. Because interest rates are low, people find it logical to spend now than spend later. As interest rates are low, there is an expectation that they cannot earn more in savings than investing in products which will generate benefits in the near term. These all goes on in cycles and after a period of inflation, you will see government taking action to rein in inflation. It will increase interest rates to suck money out of the economy. This is when people will curb spending, because they know they will earn a higher return while saving rather than investing. |
The best credit card for people who pay their balance off every month | For people who are already a Costco member. The American Express TrueEarnings Business Card is a good choice. Note: If you don't own a business, just use your name as the business. The business card is better than the regular TrueEarnings card. Pros: |
Should I finance a new home theater at 0% even though I have the cash for it? | I would never consider such an offer. As has already been mentioned, there are likely to be hidden costs and the future is never certain. If you feel that you are missing out, then negociate a lower purchase price now. People often forget that something is only worth what someone is willing to pay for it. With any significant purchase it's always worth bargaining. |
What should I be aware of as a young investor? | As a young investor, you should know that the big secret is that profitable long term investing is boring. It is is not buying one day and selling the next and keeping very close tabs on your investments and jumping on the computer and going 'Buy!' , 'Sell'. That makes brokers rich, but not you. So look at investments but not everyday and find something else that's exciting, whether it's dirt biking or WOW or competitive python coding. As a 19 year old, you have a ton of time and you don't need to swing for the fences and make 50% or 30% or even 20% returns every year to do well. And you don't have to pick the best performing stocks, and if you do, you don;t have to buy them at their lowest or sell them at their highest. Go read A Random Walk's guide to Investing by Burton Malkiel and The only Investment Guide you'll ever need by Andrew Tobias. Buy them at used bookstores because it's cheaper that way. And if you want more excitement read You Can Be a Stock Market Genius by Joel GreenBlatt, One up On Wall Street By Peter Lynch, something by Warren Buffet and if you want to be really whacked, read Fooled By Randomness by Nassim Nicholas Talib, But never forget about Tobias and Malkiel, invest a regular amount of money every month from 19 to 65 according to what they write and you'll be a wealthy guy by 65. |
Where can I find historic performance data on Barclays Aggregate Canadian Bond Index? | I couldn't find historical data either, so I contacted Vanguard Canada and Barclays; Vanguard replied that This index was developed for Vanguard, and thus historical information is available as of the inception of the fund. Unfortunately, that means that the only existing data on historical returns are in the link in your question. Vanguard also sent me a link to the methodology Barclay's uses when constructing this index, which you might find interesting as well. I haven't heard from Barclays, but I presume the story is the same; even if they've been collecting data on Canadian bonds since before the inception of this index, they probably didn't aggregate it into an index before their contract with Vanguard (and if they did, it might be proprietary and not available free of charge). |
Why do governments borrow money instead of printing it? | My own simple answer is that it will affect and reduce productivity (e.g. Zimbabwe). it will also cause inflation which mean that no one will want to work for production again. |
Are online mortgage lenders as good as local brick-and-mortar ones? | I had a pretty good experience with Lending Tree, although they are a mortgage broker, not a lender themselves. |
How to make a decision for used vs new car if I want to keep the car long term? | In a perfect world scenario you would get a car 2-5 years old that has very little mileage. One of the long standing archaic rules of the car world is that age trumps mileage. This was a good rule when any idiot could roll back an odometer. Chances are now that if you rolled your odometer back the car was serviced somewhere, had inspection or whatever and it is on a report. If seller was found to do this they could face jail time and obviously now their car is almost worthless. Why do I mention this? Because you can take a look at 2011 cars. Those with 20K miles go for just a little more than those with 100K miles. As an owner you will start incurring heavy maintenance costs around 100K on most newer cars. By buying cars with lower mileage, keeping them for a year or two, and reselling them before they get up in miles, you can stay in that magic area where you can drive a pretty good car for $200-300 a month. Note that this takes work on both the buying and selling side and you often need cash to get these cars (dealers are good about siphoning really good used cars to employees/friends). This is a great strategy for keeping costs down and car value up but obviously a lot of people try to do this and it takes work and you have to be willing to settle sometimes on a car that is fine, but not exactly what you want. As for leasing this really gets into three main components: If you are going to do EVERYTHING at a dealership and you want something new or newish you might as well lease. At least then you can shop around for apples to apples. The problem with buying a new/used car from the dealers in perpetuity isn't the buying process. It is the fact that they will screw you on the trade-in. A car that books for 20K may trade-in for 17K. Even if the dealer says they are giving you 20K, then they make you pay list price for the car. I have many many times negotiated a price of a car and then wife brought in our car separately and I can count on ZERO fingers how many times that the dealership honored both sides of the negotiations. Not only did they not honor them but most refused to talk with us after they found out. With a lease you don't have to worry about losing this money in the negotiations. You might pay a little extra (or not since you can shop around) but after the lease you wash your hands of the car. The one caveat to this is the high-end market. When you are talking your Acura, Mercedes, Lexus... It is probably better to buy and trade in every couple years. You lose too much equity by leasing, where it won't cover the trade-in gap and cost of your money being elsewhere. I have a friend that does this and gets a slightly better car every 2-3 years with same monthly payment. Another factor to consider is the price of a car. If your car will be worth over $15K at time of sale you are going to have a hard time selling it by owner. When amounts get this high people often need financing. Yes they can get personal financing but most people are too lazy to do this. So the number of used car buyers on let's say craigslist are way way fewer as you start getting over $10-12K and I have found $15K to be kind of that magic amount. The pro-buy-used side is easy. Aim for those cars around $12-18K that are out there (and many still under warranty). These owners will have issues finding cash buyers. They will drop prices somewhere between book price and dealer trade-in. In lucky cases where they need cash maybe below dealer trade-in. And remember these sellers aren't dealing with 100s let alone 10 buyers. You drive the car for 3-4 years. Maybe it is $7-10K. But now you will get much much closer to book price because there will be far more buyers in this range. |
Is there a free, online stock screener for UK stocks? | Although this is an old question, it's worth pointing out that the Google Stock Screener now supports stocks traded on the London Stock Exchange. From the country dropdown on the left, select "United Kingdom" and use the screener as before. |
Selecting between investment vehicles for income | You have a comparatively small sum to invest, and since you're presumably expecting to go to college.university soon, where you may well need the money, you also have a short timescale for your investment. I don't think anything stock-related would be good for you -- you need a longer timescale for stock market investments, at least five years and preferably ten or more. I don't know the details of Australian savings, but I'd suggest just finding a bank that is giving a good interest rate for a one-year fixed-term savings account. |
How do you report S-corporation Shareholder loans / capital contributions? | As the owner of the S-corp, it is far easier for you to move money in/out of the company as contributions and distributions rather than making loans to the company. Loans require interest payments, 1099-INT forms, and have tax consequences, whereas the distributions don't need to be reported because you pay taxes on net profits regardless of whether the money was distributed. If you were paid interest, disregard this answer. I don't know if or how you could re-categorize the loan once there's a 1099-INT involved. If no interest was ever paid, you just need to account for it properly: If the company didn't pay you any interest and never issued you a 1099-INT form (i.e. you wrote a check to the company, no promissory note, no tax forms, no payments, no interest, etc.) then you can categorize that money as a capital contribution. You can likewise take that money back out of the company as a capital distribution and neither of these events are taxable nor do they need to be reported to the IRS. In Quickbooks, create the following Equity accounts -- one for each shareholder making capital contributions and distributions: When putting money into the company, deposit into your corporate bank account and use the Capital Contribution equity account. When taking money out of the company, write yourself a check and use the Distributions account. At the end of every tax year, you can close out your Contributions and Distributions to Retained Earnings by making a general journal entry. For example, debit retained earnings and credit distributions on Dec 31 every year to zero-out the distributions account. For contributions, do the reverse and credit retained earnings. There are other ways of recording these transactions -- for example I think some people just use a Member Capital equity account instead of separate accounts for contributions and distributions -- and QB might warn you about posting journal entries to the special Retained Earnings account at the end of the year. In any case, this is how my CPA set up my books and it's been working well enough for many years. Still, never a bad idea to get a second opinion from your CPA. Be sure to pay yourself a reasonable salary, you can't get out of payroll taxes and just distribute profits -- that's a big red flag that can trigger an audit. If you're simply distributing back the money you already put into the company, that should be fine. |
how does one start an investing club (as a company)? | Taxes are the least of your concerns. Your friends need licenses. Although this COULD be avoided entirely with certain craftily worded disclaimers and exemptions and the WAY that money is given to them. |
What can I take from learning that a company's directors are buying or selling shares? | You can learn very little from it. Company directories are often given share options or shares as a bonus, and because of that they are unlikely to buy shares. When they sell shares, you'll hear people shouting "so-and-so sold his or her shares, they must know something bad about the company". The truth is that you can't eat or drink shares. If that company director owning shares worth a million dollars wants to buy a new Ferrari, he will find that Ferrari doesn't give free cars to people owning lots of shares. He actually has to sell the shares to get the money for the car, and that's what he does. |
Ethics and investment | Are there businesses which professionally invest ethically? Yes. The common term for this is "socially responsible investing". Looking at that page and googling that term should provide you with plenty of pointers to funds to investigate. Of course, the definitions of "ethical" and "socially responsible" vary from person to person and fund to fund. You'll have to take a look at each fund to see which ones match your principles. |
Strategies for paying off my Student loans | Considering I'm in a nearly identical situation, I'll speak to my personal strategy and maybe there's some value for you as well. You have ~$22k in loans, which you say you could pay off today. So, what I read is that you're sitting there with a $22k investment and want to know which investment to make: pay down debt, invest in yourself/start up, or some variation between those options. Any investor worth his salt will ask a couple of questions: what is my risk, and what is my gain? Paying off your student loans offers no financial risk at the cost of opportunity risk, and gains you returns of 3.4%, 6.8%, 3.4%, 4.5%, and 6.8%. Those percentage gains are guaranteed and the opportunity risk is unknown. Investing in a startup is inherently risky, with the potential for big payoffs. But with this investment, you are accepting a lot of risk for potentially some gain (it could be the next Apple, it could also fail). So, with your situation (like mine), I'd say it's best to accept the easy investment for now and fully vet out your tech start up idea in the meantime. |
Capital improvement and depreciation in restaurant LLC | First, you should probably have a proper consultation with a licensed tax adviser (EA/CPA licensed in your State). In fact you should have had it before you started, but that ship has sailed. You're talking about start-up expenses. You can generally deduct up to $5000 in the year your business starts, and the expenses in excess will be amortized over 180 months (15 years). This is per the IRC Sec. 195. The amortization starts when your business is active (i.e.: you can buy the property, but not actually open the restaurant - you cannot start the depreciation). I have a couple questions about accounting - should all the money I spent be a part of capital spending? Or is it just a part of it? If it qualifies as start-up/organizational expenses - it should be capitalized. If it is spent on capital assets - then it should also be capitalized, but for different reasons and differently. For example, costs of filing paperwork for permits is a start-up expense. Buying a commercial oven is a capital asset purchase which should be depreciated separately, as buying the tables and silverware. If it is a salary expense to your employees - then it is a current expense and shouldn't be capitalized. Our company is LLC if this matters. It matters to how it affects your personal tax return. |
International (ex-US) ETFs with low exposure to financial sector? | If you are looking for a European financials ETF to short, you could take a look at the iShares EURO STOXX Banks, which is traded on a a few German stock exchanges (Frankfurt etc.): iShares Euro Stoxx Banks Website You find its current holdings here: holdings. |
Pay off car loan entirely or leave $1 until the end of the loan period? | a link to this article grabbed my Interest as I was browsing the site for something totally unrelated to finance. Your question is not silly - I'm not a financial expert, but I've been in your situation several times with Carmax Auto Finance (CAF) in particular. A lot of people probably thought you don't understand how financing works - but your Car Loan set up is EXACTLY how CAF Financing works, which I've used several times. Just some background info to anyone else reading this - unlike most other Simple Interest Car Financing, with CAF, they calculate per-diem based on your principal balance, and recalculate it every time you make a payment, regardless of when your actual due date was. But here's what makes CAF financing particularly fair - when you do make a payment, your per-diem since your last payment accrued X dollars, and that's your interest portion that is subtracted first from your payment (and obviously per-diem goes down faster the more you pay in a payment), and then EVerything else, including Any extra payments you make - goes to Principal. You do not have to specify that the extra payment(S) are principal only. If your payment amount per month is $500 and you give them 11 payments of $500 - the first $500 will have a small portion go to interest accrued since the last payment - depending on the per-diem that was recalculated, and then EVERYTHING ELSE goes to principal and STILL PUSHES YOUR NEXT DUE DATE (I prefer to break up extra payments as precisely the amount due per month, so that my intention is clear - pay the extra as a payment for the next month, and the one after that, etc, and keep pushing my next due date). That last point of pushing your next due date is the key - not all car financing companies do that. A lot of them will let you pay to principal yes, but you're still due next month. With CAF, you can have your cake, and eat it too. I worked for them in College - I know their financing system in and out, and I've always financed with them for that very reason. So, back to the question - should you keep the loan alive, albeit for a small amount. My unprofessional answer is yes! Car loans are very powerful in your credit report because they are installment accounts (same as Mortgages, and other accounts that you pay down to 0 and the loan is closed). Credit cards, are revolving accounts, and don't offer as much bang for your money - unless you are savvy in manipulating your card balances - take it up one month, take it down to 0 the next month, etc. I play those games a lot - but I always find mortgage and auto loans make the best impact. I do exactly what you do myself - I pay off the car down to about $500 (I actually make several small payments each equal to the agreed upon Monthly payment because their system automatically treats that as a payment for the next month due, and the one after that, etc - on top of paying it all to principal as I mentioned). DO NOT leave a dollar, as another reader mentioned - they have a "good will" threshold, I can't remember how much - probably $50, for which they will consider the account paid off, and close it out. So, if your concern is throwing away free money but you still want the account alive, your "sweet spot" where you can be sure the loan is not closed, is probably around $100. BUT....something else important to consider if you decide to go with that strategy of keeping the account alive (which I recommend). In my case, CAF will adjust down your next payment due, if it's less than the principal left. SO, let's say your regular payment is $400 and you only leave a $100, your next payment due is $100 (and it will go up a few cents each month because of the small per-diem), and that is exactly what CAF will report to the credit bureaus as your monthly obligation - which sucks because now your awesome car payment history looks like you've only been paying $100 every month - so, leave something close to one month's payment (yes, the interest accrued will be higher - but I'm not a penny-pincher when the reward is worth it - if you left $400 for 1.5 years at 10% APR - that equates to about $50 interest for that entire time - well worth it in my books. Sorry for rambling a lot, I suck myself into these debates all the time :) |
Why ADP does not accurately withhold state and federal income tax (even if W4 is correct)? | I see several interesting statement in your question. A. my only income is from my Employer B. I also receive employer stock (ESPP, RSU, NSO). However, employer withholds taxes for these stock transactions through my broker (I see them broken down on my W2). C. I have been subject to Alternative Minimum Tax. A implies a simple tax return. B and C tell the opposite story. In fact if B is not done correctly The amount withheld due to payroll may be perfect but the under withholding could be due to the ESPP's, RSUs and NSOs. The AMT can throw everything else out the window. If a person has a very simple tax situation: Income doesn't change a lot from paycheck to paycheck; they take the standard deduction; the number of exemptions equals the number of people in the family. Then the withholding is very close to perfect. The role of the exemptions on the W-4 is to compensate for situations that go above the standard deduction. The role of extra withholding is when the situation requires more withholding due to situations that will bring in extra income or if the AMT is involved. |
How is initial stock price (IPO) of a stock determined | Who determines company value at IPO? The Owners based on the advice from Lead Bankers and other Independent auditors who would determine the value of the company at the time of listing. At times instead of determining a fixed price a range is given [lower side and higher side]. The Market participants [FI / Institutional Investor Segments] then decide the price by bidding at an amount. There are multiple aspects in play that help stabalize the IPO and roles of various parties. A quick read of question with IPO tag is recommended Edits: Generally at a very broad level, one of the key purpose of the IPO is to either encash Owner equity [Owner wants some profits immediately] or Raise additional Capital. More often it is a mix of both. If the price is too low, one loose out on getting the true value, this would go to someone else. If the price is too high, then it may not attract enough buyers or even there are buyers, there is substantial -ve sentiment. This is not good for the company. Read the question From Facebook's perspective, was the fall in price after IPO actually an indication that it went well? This puts determining the price of IPO more in the realm of art than science. There are various mechanism [Lead bankers, Institutional Investors, Underwriters] the a company would put in place to ensure the IPO is success and that itself would moderate the price to realistic level. More often the price is kept slightly lower to create a positive buzz about the stock. |
Should I pay cash or prefer a 0% interest loan for home furnishings? | There are several issues with paying for furniture and appliances with 0% credit instead of paying with cash. When you pay with 0% credit, you might be tempted to spend more on something than you would have if you paid with cash, because it feels like free money, and you've justified in your mind that the extra you earn will help pay for the more expensive item. Businesses don't offer 0% credit for free, and they don't lose money on the deal. When you shop at a store that offers 0% credit, you are generally overpaying for the item. By shopping at a store that does not offer 0% credit, you might be able to get a better price. Your savings account is likely earning very little interest. You might invest the money you intend for your purchases in a place that gets better returns, but in most of these places the returns are not guaranteed, and you might not do as well as you think. 0% loans typically come with lots of conditions that have very heavy penalties and interest rate hikes for late payments. You can mitigate this risk by setting up automatic payments, but things can still go wrong. Your bank might change your account number, making the automated payment fail. As you mentioned, you might also forget to put the proper amount of money in the account. A single mistake can negate all of the tiny gains you are trying to achieve. Ultimately, the decision is yours, of course, but in my opinion, there is very, very little to gain with buying something on 0% credit when you could be paying cash. |
As co-founder, does Steve Jobs still own enough Apple shares to control Apple Inc.? | Everyone that owns a share of stock in a company is part owner. Some just own more than others. According to Apple's latest proxy statement he owns 5.5 million shares of the 914 million shares outstanding. So he owns approximately 0.6% of the company. If he owned more than 50% of the company's outstanding stock he would effectively control the board of directors by being able to pick whoever he wanted. Then he would control the company. Very few publicly traded companies are that way. Most have sold off parts of the company to the public in order to raise cash for the company and make their investment more liquid. |
Please explain: What exactly is a CDS or “Credit Default Swap”? | From my understanding, a CDS is a financial product to buy protection against an event of "default" (default of payment). Example: if General Motors owes me money $10,000,000 (because I own GM bonds for example) and I wish to protect myself against the event of GM not repaying the money they owe me (event called "credit default"), I pay FinancialCompany_X (the seller of the CDS) perhaps $250,000 per year against the promise that FinancialCompany_X will pay me in case GM is not paying me. This way I protected myself against that risk. FinancialCompany_X took the risk (against money). A CDS is in fact an insurance. Except they don't call it an insurance which enabled the financial industry to avoid the regulation that applies to insurances. There is a lot of infos here: http://en.wikipedia.org/wiki/Credit_default_swap |
Books, Videos, Tutorials to learn about different investment options in the financial domain | Those are some very broad questions and I don't think I can answer them completely, but I will add what I can. Barron's Finance and Investment Handbook is the best reference book I have found. It provides a basic description/definition for every type of investment available. It covers stocks, preferred stocks, various forms of bonds as well as mortgage pools and other exotic instruments. It has a comprehensive dictionary of finance terms as well. I would definitely recommend getting it. The question about how people invest today is a huge one. There are people who simply put a monthly amount into a mutual fund and simply do that until retirement on one side and professional day traders who move in and out of stocks or commodities on a daily basis on the other. |
A friend wants to use my account for a wire transfer. Is this a scam or is it legitimate? | 100% scam. This is classic of mixing real (Exxon) with fiction. This gives credibility to story. Don't give any thing, there is no damage yet. If you take the bait, there are multiple ways to get money from you. |
My bank refused to do a charge back | You can't make your bank do a charge back. This function is to assist with straight up fraud, not a customer service mistake. (Think spoofed or stolen card or if a vendor intentionally acted fraudulently.) While you may believe what they did is fraud, your bank will require that you provide the vendor with the opportunity to rectify the situation themselves. Trying to call back and giving up after a long hold time won't meet their standards. If banks started letting anyone unhappy with a vendor start doing charge backs, they would be doing nothing else all day. The issues you're describing has not reached the threshold for the bank to authorize a charge back. Comcast has local and regional offices, and you could go in person to speak with someone. Maybe there isn't one near you. There are non-peak hours which wait times will be less. You'll just have to grin and bear it if you truly want the money back. Then, take your business elsewhere and post bad reviews online. Always keep in mind that when you eventually speak with someone, they will not be the person that messed up, and you should be overly nice and polite to them. I promise it will yield far better results than being surly and demanding. Another way to get Comcast's attention would be to file a complaint with the BBB. It might take longer, but I've had this work with big companies, usually with good results. Again, be nice to whomever contacts you. In reference to your recent duplicate question: Mastercard won't be able to help at all. They play no part in the transaction at all. |
Will my wife's business losses offset my income on a joint tax return? | First, filing status. If you and your wife are legally married, you should be filing your tax returns as married, either jointly or separately. In the US, "head of household" has a specific meaning and is for unmarried people who are supporting one or more relatives, per the IRS. If you are working full-time and your wife is not, then likely you will file a joint return, including all your income and all the expenses for your wife's business. So yes, the losses in her business will offset your income. Depending on how complex things are, you may want to hire a professional to help with your taxes. The rules for what can and cannot be deducted as a business expense can be opaque. |
In the stock market, why is the “open” price value never the same as previous day's “close”? | The two answers so far are right, but there's a third factor - for many stocks, there's after hours trading. So the official 4PM close is not what the stock's last trade was when they open again. Regardless, even that after hour price is not the starting point as Muro points out. |
Is there an ETF or Mutual Fund which tracks James O'Shaugnessy's Trending 25 stock strategy? | Funds can't limit themselves to a small number of stocks without also limiting themselves to a small amount of total investment. I think 25 companies is too small to be practical from their point of view. |
What is the options industry changing about option symbols in February, 2010? | Here is what I could find on the net: http://education.wallstreetsurvivor.com/options-symbol-changes-coming-february-12th-2010 So it sounds like it does not affect how you invest in options but only how you look them up. I remember using a Bloomberg terminal and it wasn't clear what the expiry date of the option you were looking at was. It looks like the new quote system addresses this. HTH. |
How do I keep an S-Corporation open when it has no revenues | If you have no net income or loss, you can usually get away without filing a tax return. In Illinois, the standard is: Filing Requirements You must file Form IL-1120 if you are a corporation that has net income or loss as defined under the IITA; or is qualified to do business in the state of Illinois and is required to file a federal income tax return (regardless of net income or loss). http://tax.illinois.gov/Businesses/TaxInformation/Income/corporate.htm Just keep your filing fee and any business licenses up to date, paying those fees personally and not out of business money (that would make for a net loss and trigger needing a tax return). Frankly, with how easy it is to register a new corp, especially an LLC which has many simplicity advantages from an S-corp in certain cases, you might still be better off shutting it down until that time. |
May I Invest as a non accredited investor? | Without knowing the specifics it is hard to give you a specific answer, but most likely the answer is no. If they limit the participation in the site to accredited investors, this is probably not something they are doing willingly, but rather imposed by regulators. Acredited investors have access to instruments that don't have the same level of regulatory protection & scrutiny as those offered to the general public, and are defined under Regulation D. Examples of such securities are 144A Shares, or hedgefunds. |
Do money markets fluctuate during market crashes? | Wikipedia has a solid article on Money Market Funds which includes a section on "Breaking the Buck" when the money market fund fails to return its full dollar. Money market funds smoothing out the daily (generally small) fluctuations of investing in short-term treasuries directly but have similar risk over longer periods. Some funds can and have lost money in market crashes, though even the worst performers still returned 95+ cents on the dollar. While few investments are guaranteed and likely none in your retirement account, money-market funds are likely the choice you have with the least fluctuation and similar minimal risk to short term treasuries. However, a second important risk to consider is inflation. Money market funds generally have returns similar or less than the inflation rate. While money markets funds help you avoid the fluctuations of the stock market the value of your retirement account falls behind the cost of goods over time. Unless the investor is fairly old most financial professionals would recommend only a small portion of a retirement account be in money market instruments. Vanguard also has a set of target retirement investment funds that are close to what many professionals would recommend. Consulting a financial professional to discuss your particular needs is a good option as well. |
Is paying off your mortage a #1 personal finance priority? | For some people, it should be a top priority. For others, there are higher priorities. What it should be for you depends on a number of things, including your overall financial situation (both your current finances and how stable you expect them to be over time), your level of financial "education", the costs of your mortgage, the alternative investments available to you, your investing goals, and your tolerance for risk. Your #1 priority should be to ensure that your basic needs (including making the required monthly payment on your mortgage) are met, both now and in the near future, which includes paying off high-interest (i.e. credit card) debt and building up an emergency fund in a savings or money-market account or some other low-risk and liquid account. If you haven't done those things, do not pass Go, do not collect $200, and do not consider making advance payments on your mortgage. Mason Wheeler's statements that the bank can't take your house if you've paid it off are correct, but it's going to be a long time till you get there and they can take it if you're partway to paying it off early and then something bad happens to you and you start missing payments. (If you're not underwater, you should be able to get some of your money back by selling - possibly at a loss - before it gets to the point of foreclosure, but you'll still have to move, which can be costly and unappealing.) So make sure you've got what you need to handle your basic needs even if you hit a rough patch, and make sure you're not financing the paying off of your house by taking a loan from Visa at 27% annually. Once you've gotten through all of those more-important things, you finally get to decide what else to invest your extra money in. Different investments will provide different rewards, both financial and emotional (and Mason Wheeler has clearly demonstrated that he gets a strong emotional payoff from not having a mortgage, which may or may not be how you feel about it). On the financial side of any potential investment, you'll want to consider things like the expected rate of return, the risk it carries (both on its own and whether it balances out or unbalances the overall risk profile of all your investments in total), its expected costs (including its - and your - tax rate and any preferred tax treatment), and any other potential factors (such as an employer match on 401(k) contributions, which are basically free money to you). Then you weigh the pros and cons (financial and emotional) of each option against your imperfect forecast of what the future holds, take your best guess, and then keep adjusting as you go through life and things change. But I want to come back to one of the factors I mentioned in the first paragraph. Which options you should even be considering is in part influenced by the degree to which you understand your finances and the wide variety of options available to you as well as all the subtleties of how different things can make them more or less advantageous than one another. The fact that you're posting this question here indicates that you're still early in the process of learning those things, and although it's great that you're educating yourself on them (and keep doing it!), it means that you're probably not ready to worry about some of the things other posters have talked about, such as Cost of Capital and ROI. So keep reading blog posts and articles online (there's no shortage of them), and keep developing your understanding of the options available to you and their pros and cons, and wait to tackle the full suite of investment options till you fully understand them. However, there's still the question of what to do between now and then. Paying the mortgage down isn't an unreasonable thing for you to do for now, since it's a guaranteed rate of return that also provides some degree of emotional payoff. But I'd say the higher priority should be getting money into a tax-advantaged retirement account (a 401(k)/403(b)/IRA), because the tax-advantaged growth of those accounts makes their long-term return far greater than whatever you're paying on your mortgage, and they provide more benefit (tax-advantaged growth) the earlier you invest in them, so doing that now instead of paying off the house quicker is probably going to be better for you financially, even if it doesn't provide the emotional payoff. If your employer will match your contributions into that account, then it's a no-brainer, but it's probably still a better idea than the mortgage unless the emotional payoff is very very important to you or unless you're nearing retirement age (so the tax-free growth period is small). If you're not sure what to invest in, just choose something that's broad-market and low-cost (total-market index funds are a great choice), and you can diversify into other things as you gain more savvy as an investor; what matters more is that you start investing in something now, not exactly what it is. Disclaimer: I'm not a personal advisor, and this does not constitute investing advice. Understand your choices and make your own decisions. |
Additional credit card with different limit on same account? | You can look into getting a business credit card. When I had my Chase business credit card, I could add authorized users to the main account and set a spending limit on each card. |
Which U.S. online discount broker is the best value for money? | For self-service type online customers, OptionsXpress gives me far better trading features(like technicals advanced conditions) and tools, ACH money management & scheduling, fullfillment too. $9 stock trades. I don't know if they yet share Schwab's (their new parent company?) commission-free ETFs getting so trendy nowadays. |
Where can I find accurate historical distribution data for mutual funds? | I keep spreadsheets that verify each $ distribution versus the rate times number of shares owned. For mutual funds, I would use Yahoo's historical data, but sometimes shows up late (a few days, a week?) and it isn't always quite accurate enough. A while back I discovered that MSN had excellent data when using their market price chart with dividends "turned on," HOWEVER very recently they have revamped their site and the trusty URLs I have previously used no longer work AND after considerable browsing, I can no longer find this level of detail anywhere on their site !=( Happily, the note above led me to the Google business site, and it looks like I am "back in business"... THANKS! |
In a reverse split, what happens to odd lots? | There are two reasons to do a reverse split. Those partial shares will then be turned into cash and returned to the investors. For large institutional investors such as mutual funds or pension funds it results in only a small amount of cash because the fund has merged all the investors shares together. If the company is trying to meet the minimum price level of the exchange they have little choice. If they don't do the reverse split they will be delisted. If the goal is to reduce the number of investors they are using one of the methods of going private: A publicly held company may deregister its equity securities when they are held by less than 300 shareholders of record or less than 500 shareholders of record, where the company does not have significant assets. Depending on the facts and circumstances, the company may no longer be required to file periodic reports with the SEC once the number of shareholders of record drops below the above thresholds. A number of kinds of transactions can result in a company going private, including: |
Resources to begin trading from home? | So you're 23 with no higher graduation, certificates etc which would allow you to study / training but with a high passion for logical thinking and math? Im 31 now, i was in a similar position back then when i was 23. The very best thoughts i want to throw you over: FORGET IT (AT LEAS THIS WAY) - You need cash equity (not borrowed) to even get a foot in the door (read on why) . The fact that you even consider to trade with a few hundred dollar shows how desperate you're, it would very likely result in loss, resignation and mental pain. Let me get you a reality check: If you think you can quadruple your money within months with ease and no risk your wrong - this mindset is gambling - don't end up as gambler. To make 24K a year or 2K a month (taxes are not included) would mean 10% a month on a 20K account which would be almost impossible on a long run (show me a hedge-fund with that performance) - What do you do on draw down months - 3 months no profit would mean you're 8K behind - you wont make a living wit ha 20K account in a western civilization and normal lifestyle. Big question, how do you want to trade? Everything newsfeed / latency based is very hard to compete in. So called technical systems drawing lines, fancy indicators etc are bogus in my opinion (read taleb black swan). Trading/speculation based on fundamentals is a different animal - It to be able to do that you would need to understand the market you trade and what influences it, takes lot time, brainpower , tools ready (ugh, hard to write the picture on my mind). Im 31 years into trading now, seen so many faces come and most of them go in that time , to me it sounds like you quietly hope for a lotto ticket. To speak about hardware, ie the tools you need depends on your trading style (again a hint that a lot more study is needed. If you're really hooked, readreadread and get in touch with people - always question yourself. |
If earning as freelancer, is it better to be a Sole Trader or Limited Company? | As I understand it (please correct me if i'm wrong, i've looked at this before and i've been a sole trader briefly but I've never formed a LTD company) there are pros and cons to forming a limited company. Pros Cons |
Can housing prices rise faster than incomes in the long run? | When over the long term housing costs in a area rise faster than wages rise, the demographic of who lives in the area changes. The size and income parameters change. A region that was full of young singles is now populated with couples with adult children, that means that the businesses and amenities have to change. At a national level it isn't sustainable unless other items change. The portion of monthly income that can be safely allocated to housing would have to change. One adjustment could be the the lengthening of home loan periods, thus dropping the monthly payment. This has been seen with car loans, over the last few decades the length of loans has increased. In interesting related event could be the change in deduction of mortgage interest and property tax. If this was to change abruptly, there could be an abrupt change the estimated value of housing, because the calculus of affordability would change. |
Personal Loan issuer online service | It is pretty easy to setup a spreadsheet for calculating interest payments and remaining balance. Do a quick search online. You may want to put it in something like Google Docs, where brother can view the status, but only you can edit it. When you get a payment, a portion goes to interest and another to principle. The formulas will do the work for you. However, I feel that there is a bigger issue. The math may seem like a good deal for the both of you, but I would be very hesitant to loan a family member money. What if he does not pay? What if he is late with a payment and goes on a vacation himself? What if his significant other resents the payment that you collect which precludes her from buying a new TV, etc... People come to hate/resent big corporations that they have to make payments. How much more so one that has a face....that comes over and eats? While this loan is outstanding holidays may never be the same. Is the loan a real need? Are you in a position to give them the money? You may want to consider the latter. Is there a reason he can't just borrow the money from the bank? |
Why would a company care about the price of its own shares in the stock market? | Investors are typically a part of the board of directors of the company. Because of their ownership in the company, they have a vested interest in its stock price. The same is true for management also in cases where they hold a certain percentage of equity in the company. Their incentives also get aligned to the stock price. |
GAAP or non-GAAP numbers in nasdaq.com? | You're interpreting things correctly, at least at a high level. Those numbers come from the 10Q filing and investor summary from Microsoft, but are provided to NASDAQ by Zacks Investment Research, as noted on the main page you linked to. That's a big investment data firm. I'm not sure why they reported non-GAAP Microsoft numbers and not, say, AAPL numbers; it's possible they felt the non-GAAP numbers reflect things better (or have in the past) for some material reason, or it's possible they made a typo, though the last three quarters at least all used non-GAAP numbers for MSFT. MSFT indicates that the difference in GAAP and non-GAAP revenue is primarily deferred revenue (from Windows and Halo). I did confirm that the SEC filing for MSFT does include the GAAP number, not the non-GAAP number (as you'd expect). I will also note that it looks like the 10Q is not the only source of information. Look at ORCL for example: they had in the March 2016 report (period ending 2/29/16) revenues of .50/share GAAP / .64/share non-GAAP. But the NASDAQ page indicates .59/share for that quarter. My suspicion is that the investment data firm (Zack's) does additional work and includes certain numbers they feel belong in the revenue stream but are not in the GAAP numbers. Perhaps MS (and Oracle) have more of those - such as deferred software revenues (AAPL has relatively little of that, as most of their profit is hardware). |
Investing in low cost index fund — does the timing matter? | If you're worried about investing all at once, you can deploy your starting chunk of cash gradually by investing a bit of it each month, quarter, etc. (dollar-cost averaging). The financial merits and demerits of this have been debated, but it is unlikely to lose you a lot of money, and if it has the psychological benefit of inducing you to invest, it can be worth it even if it results in slightly less-than-optimal gains. More generally, you are right with what you say at the end of your question: in the long run, when you start won't matter, as long as you continue to invest regularly. The Boglehead-style index-fund-based theory is basically that, yes, you might save money by investing at certain times, but in practice it's almost impossible to know when those times are, so the better choice is to just keep investing no matter what. If you do this, you will eventually invest at high and low points, so the ups and downs will be moderated. Also, note that from this perspective, your example of investing in 2007 is incorrect. It's true that a person who put money in 2007, and then sat back and did nothing, would have barely broken even by now. But a person who started to invest in 2007, and continued to invest throughout the economic downturn, would in fact reap substantial rewards due to continued investing throughout the post-2007 lows. (Happily, I speak from experience on this point!) |
For a car, would you pay cash, finance for 0.9% or lease for 0.9%? | While this question is old and I generally agree with the answers given I think there's another angle that needs a little illuminating: insurance. If you go with an 84 month loan your car will likely be worth less than the amount owed for substantially all of the entire 84 month loan period; this will be exacerbated if you put zero down and include the taxes and fees in the amount borrowed. Your lender will require you to carry full comprehensive/collision/liability coverage likely with a low maximum deductible. While the car is underwater it will probably also be a good idea to carry gap insurance because the last thing you want to do is write a check to your lender to shore up the loan to value deficit if the thing is totaled. These long term car loans (I've seen as high as 96 months) are a bear when it comes to depreciation and related insurance costs. There is more to this decision than the interest calculation. Obviously, if you had the cash at the front of this decision presumably you'll have the cash later to pay off the loan at your convenience. But while the loan is outstanding there are costs beyond interest to consider. |
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