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Want to buy above market price? | Yes, you can do this buy placing a conditional order to buy at market if the price moves to 106 or above. Once the price hits 106 your market order will hit the market and you will purchase the stock at 106 or above. You can also place a tack profit order at 107 linked to your initial conditional buy order, so that once you buy order is executed and you buy at 106, a take profit order will be executed only if the price reaches 107 or above. If the price never reaches 106, neither your market buy order or take profit order will hit the market and you won't buy or sell anything. |
Gap in domestic Health Insurance coverage, expect higher premiums? | I bought Health Insurance for myself after a period without it, and my premiums were not terrible. I was a 27 year old man, living in California, no preexisting conditions, and I paid approximately 90$ a month. This was for a standard Health Insurance plan. However, when I moved back to NY a little while later, insurance companies wanted almost $500/month for catastrophic coverage. So, from personal experience, my answer is that price varies widely by state. Different states have different regulations as to what Health Insurance Companies need to cover and at what price. In NY, Health Insurance companies can't charge different rates according to age. Also, in NY, there is a price spiral, where the price is so high, few people buy it, so they have to raise the price because not enough well people are in the pool, so fewer people buy it.... To test it out, go to an online insurance broker, like ehealthinsurace, and put in your proposed information, including that you haven't been covered for a period. This way you will know. |
Opening American credit cards while residing in the UK | To build a US credit record, you need a Social Security Number (SSN), which is now not available for most non-residents. An alternative is an ITIN number, which is now available to non-residents only if they have US income giving a reason to file a US tax return (do you really want to get into all that...). Assuming you did have a reason to get a ITIN (one reason would be if you sold some ebooks via Amazon US, and need a withholding refund under the tax treaty), then recent reports on Flyertalk give mixed results on whether it's possible to get a credit card with an ITIN, and whether that would build a credit record. It does sound possible in some cases. A credit record in any other country would not help. You would certainly need a US address, and banks are increasingly asking for a physical address, rather than just a mailbox. Regardless, building this history would be of limited benefit to you if you later became a US resident, at that point you would be eligible for a new SSN (different from the ITIN) and have to largely start again. If getting a card is the aim, rather than the credit record, you may find some banks that will offer a secured card (or a debit card), to non-residents, especially in areas with lots of Canadian visitors (border, Florida, Arizona). You'd find it a lot easier with a US address though, and you'd need to shop around a lot of banks in person until you find one with the right rules. Most will simply avoid anyone without an SSN. |
UK: Personal finance book for a twenty-something | As you are in UK, you should think in terms of Tax Free (interest and accumulated capital gains) ISA type investments for the long term AND/OR open a SIPP (Self Invested Pension Plan) account where you get back the tax you have paid on the money you deposit for your old age. Pensions are the best bet for money you do not need at present while ISAs are suitable for short term 5 years plus or longer. |
Can banks deny that you've paid your loan? | If the loan is for a car, or mortgage there is specific paperwork that is processed when the loan payments have been completed. For other types of loans ask the lender, what will they give you regarding the payoff of the loan. Keep this paperwork, in hard copy and electronic form forever. |
How will the net assets of a bankrupt company be divided among the common share holders | All investors of equal standing get the same proportion of the net assets on bankruptcy but not all shareholders are of equal standing. In general, once all liabilities are covered, bond holders are paid first as that type of investment is company debt, then preferred stock holders are paid out and then common shareholders. This is the reason why preferred stock is usually cheaper - it is less risky as it has a higher claim to assets and therefore commands a lower risk premium. The exact payout schedule is very corporation dependent so needs research on a per firm basis. |
Balance sheet, Net Increase | The changes to Equity given are: Since the total change is 42,500, the difference would be change in Retained Earnings (net income), so net income is |
Growth rate plus dividend yieid total? | The sum of the dividend yield plus capital growth is called total return. In your examples, you get to a total return of 7% through several different (and theoretically equivalent) paths. That is the right way of thinking. |
What are overnight fees? [duplicate] | From the etoro website: In the financial trading industry, rollover is the interest paid or earned for holding currency overnight. Each currency has an interest rate associated with it, and because currencies are traded in pairs, every trade involves two different interest rates. If the interest rate on the currency you bought is lower than the interest rate on the currency you sold, then you will pay rollover fees. If the interest rate on the currency you bought is higher than the interest rate of the currency/commodity you sold, then you will earn rollover fees. http://www.etoro.com/blog/product-updates/05062014/important-upcoming-change-fee-structure/ |
Multiple hard inquiry for a single loan from car dealer? | (I'm a bit surprised that nobody talked about the impact of multiple inquiries on a loan, since OP is concerned with credit building. Probably an answer as opposed to a comment is justified.) Yes. In fact when you shop for auto loan you are expected to have your credit score/report be pulled by different banks, credit unions, and/or the financing arm of the car manufacturer or the dealership, so that you can hopefully get the best rate possible. This is especially true if the dealer is requesting quotes on rates on your behalf, as they would probably use a batch process to send out applications to multiple financial institutions all at once. Yes, and a bit unusual - CALVERT TOYO (your dealer) pulled your report twice on the same day. Presumably they are not getting any new information on the second pull. Maybe a fat finger? Regardless, you should not worry about this too much (to be explained below). I would say "don't bother". The idea behind hard inquiries lowering credit score is that lenders see the number of hard inquiries as your desire for credit. Too high a number is often viewed as either "desperate for credit" or "unable to qualify for credit". But as explained above, it is very common for a person to request quotes for multiple financial institutions and thus to have multiple hard inquiries in a short period of time when shopping for loans. To account for that, the credit bureau's model would usually combine hard inquiries for a same type of loan (auto, mortgage, etc.) within 30 days. Hence a person sending quote request to 3 banks won't be rated higher for credit than if he were to request quotes from 5 banks. Therefore in your case your credit profile is not going to be different if you had been pulled just once. my credit score goes down for 15 points I'm assuming you are talking about the credit score provided by Credit Karma. The score CK provided is FAKO. The score lenders care about is FICO. They are well correlated but still different. Google these two terms and you should be able to figure out the difference quickly. You can also refer to my answer to a different question here: Equifax credit score discrepancy in 1 month, why? |
Can Health-Releated Services be a Business Expense? | Chris, since you own your own company, nobody can stop you from charging your personal expenses to your business account. IRS is not a huge fan of mixing business and personal expenses and this practice might indicate to them that you are not treating your business seriously, and it should classify your business as a hobby. IRS defines deductible business expense as being both: ordinary AND necessary. Meditation is not an ordinary expense (other S-corps do not incur such expense.) It is not a necessary expense either. Therefore, you cannot deduct this expense. http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Deducting-Business-Expenses |
What is a good way to save money on car expenses? | Don't buy the first model year of a new model unless the fuel economy is much better in the latest model. Buying a car in later years just before the changeover will result in a slightly higher quality vehicle or in some cases dramatically higher quality. Find the best forum for your make/model/year of car. Join the forum, check the FAQ, sticky threads and post questions when you have trouble. Do NOT rely passively on the dealer or even private mechanics as they do not drive the car every day. You are in the best position to identify problems but only if you have some help. Preventive maintenance is the best if you intend to keep the car for a really long time. Forums are a really good place to find the typical problems of a particular model and potentially head them off. |
Cost Basis in Retirement Accounts Irrelevant? | Cost basis is irrelevant because the entire distribution is taxed as ordinary income even if the custodian distributes stock or mutual fund shares to you. Such distributions save you the brokerage fees that you would incur had you taken a cash distribution and promptly bought the shares outside the retirement account for yourself but they have no effect on the tax treatment of the distribution: the market value of the shares distributed to you is taxed as ordinary income, and your basis in the newly acquired shares outside the retirement account is the market value of the shares, all prices being as of the date of the distribution. |
Can a Roth IRA be used as a savings account? | (To be clear, IRA accounts are just wrappers, and can contain a large variety of investments. I'm restricting myself to the usual setup of investment in the stock market.) So, let's say you have $5000 in savings, as an emergency fund. Of the top of my head, putting some of it into a Roth IRA could backfire in the following ways: The basic principle here is that the stock market is not a good place for storing your emergency cash, which needs to be secured against loss and immediately accessible. Once you're happy with your level of emergency cash, however, tax-advantaged investment accounts are a reasonable next step. |
Does girlfriend have too much savings, time to invest? | It's time she look into what employer provided retirement plan she can use. She's at the point where she should think about investing for the long term, with retirement in mind. |
Are lottery tickets ever a wise investment provided the jackpot is large enough? | Others have already explained why lotteries have negative expected value, so in that sense it is never wise to buy a lottery ticket. I will provide an alternative view, that it is not always unwise to buy a lottery ticket even though the expected value of the lottery ticket is lower than its cost (i.e. a loss). The question is what you mean with "wise" A (not completely unlikely) scenario is one where your life (financially) suck, and even if you saved the cost of the ticket (instead of buying it) your life would still suck. Even if you saved the cost for a ticket every week for 10 years, your live would not be essentially better. You could maybe afford a TV, or a new car in 40 years, but if you were to quantify the happiness of your life it would still be essentially crappy. But winning the lottery would significantly improve your life and make you happy. So in this scenario there are two choices, either save the money for 0% chance of a happy life, or spend it on a ticket for a (extremely) small chance of a good life. Yes, the expected value of saving the money is higher than when buying the ticket, but "expected happiness" is higher when buying the ticket (non-zero). This is clearly an extreme example, but variants of this might apply (the essence is that your valuation of the money is non-linear, 1 million will make you more than 1000 times as happy as 1000.) |
What Did Benjamin Graham Mean by Earnings Stability in The Intelligent Investor? | Please note that the following Graham Rating below corresponds to five years: Earnings Stability (100% ⇒ 10 Years): 50.00% Benjamin Graham - once known as The Dean of Wall Street - was a scholar and financial analyst who mentored legendary investors such as Warren Buffett, William J. Ruane, Irving Kahn and Walter J. Schloss. Buffett describes Graham's book - The Intelligent Investor - as "by far the best book about investing ever written" (in its preface). Graham's first recommended strategy - for casual investors - was to invest in Index stocks. For more serious investors, Graham recommended three different categories of stocks - Defensive, Enterprising and NCAV - and 17 qualitative and quantitative rules for identifying them. For advanced investors, Graham described various "special situations". The first requires almost no analysis, and is easily accomplished today with a good S&P500 Index fund. The last requires more than the average level of ability and experience. Such stocks are also not amenable to impartial algorithmic analysis, and require a case-specific approach. But Defensive, Enterprising and NCAV stocks can be reliably detected by today's data-mining software, and offer a great avenue for accurate automated analysis and profitable investment. For example, given below are the actual Graham ratings for International Business Machines Corp (IBM), with no adjustments other than those for inflation. Defensive Graham investment requires that all ratings be 100% or more. Enterprising Graham investment requires minimum ratings of - N/A, 75%, 90%, 50%, 5%, N/A and 137%. International Business Machines Corp - Graham Ratings Sales | Size (100% ⇒ $500 Million): 18,558.60% Current Assets ÷ [2 x Current Liabilities]: 62.40% Net Current Assets ÷ Long Term Debt: 28.00% Earnings Stability (100% ⇒ 10 Years): 100.00% Dividend Record (100% ⇒ 20 Years): 100.00% Earnings Growth (100% ⇒ 30% Growth): 172.99% Graham Number ÷ Previous Close: 35.81% Not all stocks failing Graham's rules are necessarily bad investments. They may fall under "special situations". Graham's rules are also extremely selective. Graham designed and backtested his framework for over 50 years, to deliver the best possible long-term results. Even when stocks don't clear them, Graham's rules give a clear quantifiable measure of a stock's margin of safety. Thank you. |
Standard Deviation with Asset Prices? | James Roth provides a partial solution good for stock picking but let's speed up process a bit, already calculated historical standard deviations: Ibbotson, very good collection of research papers here, examples below Books |
I received $1000 and was asked to send it back. How was this scam meant to work? | The initial story sounds normal. Happens every day. Checksums cannot prevent this, since it is a typo by the sender. The sender typed in a wrong account number. That account number happened to exist (so the sender wouldn't get any immediate error message), your account. But, that innocent story can also be used as part of a money laundering plan. Namely, to give the money a legitimate source. Also can be used in a scheme to frame you for something. The question of how the person got your phone number raises suspicion. The bluffs to avoid the normal paperwork, and then disappearing, make it incriminating. No doubt. Take this to the police. The question arises: even if the plan (whatever it was) failed, why didn't he do the paperwork and get the money back? The answer is that that would leave a trail to possibly be picked up in a future investigation. |
Does dollar cost averaging really work? | Here is a deliberately simple example of Dollar Cost averaging: Day 1: Buy 100 shares at $10. Total value = $1,000. Average cost per share = $10.00/share (easy). Day 2: Buy 100 more shares at $9. Total value = $1,900. Average cost per share = $9.50/share (1,900/200). Notice how your average cost per share went from $10.00 to $9.50. Now instead of hoping the stock rises above $10.00 a share to make a profit, you only need it to go to $9.50 a share (assuming no commissions or transaction fees). It's easy to see how this could work to your advantage. The only catch is that you need buy more of a stock that is dropping (people might think you're crazy). This could easily backfire if the stock continues to drop. |
Legality of facilitating currency exchange between private accounts | Disclaimer: it's hard to be definitive as there may be some law or tax rule I'm not aware of. From a UK perspective, this should be perfectly legal. If it's just a one-off or occasional thing for personal reasons, rather than being done in the course of a business, there probably aren't any tax implications. In theory if there's an identifiable profit from the transaction, e.g. because you originally obtained the INR at a lower exchange rate, then you might be liable to capital gains tax. However this is only payable above approximately £10K capital gains (see http://www.hmrc.gov.uk/rates/cgt.htm) so unless this is a very large transaction or you have other gains in the tax year, you don't need to worry about that. I would only recommend doing this if you trust each other. If one side transfers the money and the other doesn't, the international nature will make it quite hard in practice to enforce the agreement legally, even though I think that in theory it should be possible. If the sums involved are large, you may find that the transaction is automatically reported to the authorities by your bank under money laundering regulations, or they may want documentation of the source of the funds/reason for the transaction. This doesn't automatically mean you'll have a problem, but the transaction may receive some scrutiny. I think that reporting typically kicks in when several thousand pounds are involved. |
How will a 1099 work with an existing W-2? | You can have multiple W2 forms on the same tax return. If you are using software, it will have the ability for you to enter additional W2 forms. If you are doing it by paper, just follow the instructions and combine the numbers at the correct place and attach both. Similarly you can also have a 1099 with and without a W2. Just remember that with a 1099 you will have to pay the self employment tax ( FICA taxes, both employee and employer) and that no taxes will be withheld. You will want to either adjust the withholding on your main job or file quartely estimated taxes. Travel reimbursement should be the same tax exempt wise. The difference is that with a 1098, you will need to list your business expenses for deduction on the corresponding tax schedule. The value on the 1099 will include travel reimbursement. But then you can deduct your self employment expenses. I believe schedule C is where this occurs. |
What ways are there to invest in stocks, options, indexes, etc, and where should one start (what funds)? | I take the route of the tortoise. I subscribe to the adage that you invest in an excellent index fund like VFINX and forget about day trading and trying to make short term gains. Just like I would do at a casino I do gamble a bit for fun. Using etrade you can purchase some Vanguard or a billion of other things. I purchased some Apple, Google, Verizon, and Ford (when it was at 1.3) and all of those have been good investments. However, I don't invest the majority of my money in to individual stocks. I just do this with some 'play' money. After maxing out 401k, etc. I put away my 6 months of safety net in a money mark and put the rest in Vanguard. |
Free Historical Commodity Prices in txt? | Goldprice.org has different currencies and historical data. I think silverprice.org also has historical data. |
How do rich people guarantee the safety of their money, when savings exceed the FDIC limit? | Rich people use "depositor" banks the same way the rest of us use banks; to keep a relatively small store of wealth for monthly expenses and a savings account for a rainy day. The bulk of a wealthy person's money is in investments. Money sitting in a bank account is not making you more money, and in fact as Kaushik correctly points out, would be losing value to inflation. Now, all investments have risk; that's why interest exists. If, in some alternate universe, charging interest were illegal across the board, nobody would loan money, because there's nothing to be gained and a lot to lose. You have to make it worth my while for me to want to loan you my money, because sure as shootin' you're going to use my loan to make yourself wealthier. A wealthy person will choose a set of investments that represent an overall level of risk that he is comfortable with, much like you or I would do the same with our retirement funds. Early in life, we're willing to take a lot of risk, because there's a lot of money to be made and time to recover from any losses. Closer to retirement, we're much more risk-averse, because if the market takes a sudden downturn, we lose a significant portion of our nest egg with little hope of regaining it before we have to start cashing out. The very wealthy have similar variances in risk, with the significant difference that they are typically already drawing a living from their investments. As such, they already have some risk aversion, but at the same time they need good returns, and so they must pay more attention to this balancing act between risk and return. Managing their investments in effect becomes their new job, once they don't have to work for anyone else anymore. The money does the "real work", and they make the executive decisions about where best to put it. The tools they use to make these decisions are the same ones we have; they watch market trends to identify stages of the economic cycle that predicate large movements of money to or from "safe havens" like gold and T-debt, they diversify their investments to shield the bulk of their wealth from a sudden localized loss, they hire investment managers to have a second pair of eyes and additional expertise in navigating the market (you or I can do much the same thing by buying shares in managed investment funds, or simply consulting a broker; the difference is that the wealthy get a more personal touch). So what's the difference between the very wealthy and the rest of us? Well first is simple scale. When a person with a net worth in the hundreds of millions makes a phone call or personal visit to the financial institutions handling their money, there's a lot of money on the line in making sure that person is well looked-after. If we get screwed over at the teller window and decide to close our acocunts, the teller can often give us our entire account balance in cash without batting an eyelid. Our multimillionaire is at the lower end of being singlehandedly able to alter his banks' profit/loss statements by his decisions, and so his bank will fight to keep his business. Second is the level of control. The very wealthy, the upper 1%, have more or less direct ownership and control over many of the major means of production in this country; the factories, mines, timber farms, software houses, power plants, recording studios, etc that generate things of value, and therefore new wealth. While the average Joe can buy shares in these things through the open market, their investment is typically a drop in the bucket, and their voice in company decisions equally small. Our decision, therefore, is largely to invest or not to invest. The upper 1%, on the other hand, have controlling interests in their investments, often majority holdings that allow them far more control over the businesses they invest in, who's running them and what they do. |
Saving up for an expensive car | I've read online that 20% is a reasonable amount to pay for a car each month - Don't believe everything you read on the internet. But, let me ask, does your current car have zero expense? No fuel, no oil change, no repairs, no insurance? If the 20% is true, you are already spending a good chunk of it each month. My car just celebrated her 8th birthday. And at 125,000 miles, needed $3000 worth of maintenance repairs. The issue isn't with buying the expensive car, you can buy whatever you can afford, that's a personal preference. It's how you propose to budget for it that seems to be bad math. Other members here have already pointed out that this financial decision might not be so wise. |
How can I improve my credit score if I am not paying bills or rent? | Buy a car. Vehicle loans, like mortgages, are installment loans. Credit cards are revolving lines of credit. In the US, your credit score factors in the different types of credit you have. Note that there are several methods for calculating credit scores, including multiple types of FICO scores. You could buy a car and drive for Uber to help cash flow the car payments and/or save for your next purchase. As others have suggested, you should be very careful with debt and ask critical questions before taking it on. Swiping a credit card is more about your behavior and self-control than it is logic and math. And if you ever want to start a business or make multi-million dollar purchases (e.g. real estate), or do a lot of other things, you'll need good credit. |
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? | The SEC considers a day trade to be any trade that is opened and closed within the same trading day, and considers a day trader to be any trader that completes 4 or more day trades within 5 business days. If so they would label you day trader and in the US you are required to have at least $25K in your account. Maybe that's why they require you to add more money to your account? See more at Day trading restriction on US stocks and Wikipedia - Pattern day trader. |
Shouldn't a Roth IRA accumulate more than 1 cent of interest per month? | There are a couple of misconceptions I think are present here: Firstly, when people say "interest", usually that implies a lower-risk investment, like a government bond or a money market fund. Some interest-earning investments can be higher risk (like junk bonds offered by near-bankrupt companies), but for the most part, stocks are higher risk. With higher risk comes higher reward, but obviously also the chance for a bad year. A "bad year" can mean your fund actually goes down in value, because the companies you are invested in do poorly. So calling all value increases "interest" is not the correct way to think about things. Secondly, remember that "Roth IRA fund" doesn't really tell you what's "inside" it. You could set up your fund to include only low-risk interest earning investments, or higher risk foreign stocks. From what you've said, your fund is a "target retirement date"-type fund. This typically means that it is a mix of stocks and bonds, weighted higher to bonds if you are older (on the theory of minimizing risk near retirement), and higher to stocks if you are younger (on the theory of accepting risk for higher average returns when you have time to overcome losses). What this means is that assuming you're young and the fund you have is typical, you probably have ~50%+ of your money invested in stocks. Stocks don't pay interest, they give you value in two ways: they pay you dividends, and the companies that they are a share of increase in value (remember that a stock is literally a small % ownership of the company). So the value increase you see as the increase due to the increase in the mutual fund's share price, is part of the total "interest" amount you were expecting. Finally, if you are reading about "standard growth" of an account using a given amount of contributions, someone somewhere is making an assumption about how much "growth" actually happens. Either you entered a number in the calculator ("How much do you expect growth to be per year?") or it made an assumption by default (probably something like 7% growth per year - I haven't checked the math on your number to see what the growth rate they used was). These types of assumptions can be helpful for general retirement planning, but they are not "rules" that your investments are required by law to follow. If you invest in something with risk, your return may be less than expected. |
Making $100,000 USD per month, no idea what to do with it | I know your "pain". But don't worry about investing the money right now -- leave it uninvested in the short term. You have other stuff you need to school up on. Investment will come, and it's not that hard. In the short term, focus on taxes. Do some "mock" run-throughs of your expected end-of-year taxes (use last year's forms if this year's aren't available yet). Must you pay estimated tax periodically throughout the year? The tax authorities charge hefty penalties for "forgetting" to do it or "not knowing you have to". Keep an eye out for any other government gotchas. Do not overlook this! This is the best investment you could possibly make. Max out your government sanctioned retirement funds - in the US we have employer plans like 401K or Keogh, and personal plans like the IRA. This is fairly straightforward. Avoid any "products" the financial advisors want to sell you, like annuities. Also if you have the Roth type IRA, learn the difference between that and a normal one. There are some tricks you can do if you expect to have an "off" year in the future. Charitable giving is worth considering at high income levels. Do not donate directly to charities. Instead, use a Donor Advised Fund. It is a charity of its own, which accepts your tax deductible donation, and holds it. You take the tax deduction that year. Then later, when the spirit moves, tell your DAF to donate to the charity of your choice. This eliminates most of the headaches associated with giving. You don't get on the soft-hearted sucker lists, because you tell the DAF not to disclose your address, phone or email. You don't need the charity's acknowledgement letter for your taxes, since your donation was actually to the DAF. It shuts down scams and non-charities, since the DAF confirms their nonprofit status and sends the check to their official address only. (This also bypasses those evil for-profit "fundraising companies".) It's a lot simpler than they want you to know. So-called "financial advisors" are actually salesmen working on commission. They urge you to invest, because that's what they sell. They sell financial products you can't understand because they are intentionally unduly complex, specifically to confuse you. They are trying to psych you into believing all investments are too complex to understand, so you'll give up and "just trust them". Simple investments exist. They actually perform better since they aren't burdened down with overhead and internal complexity. Follow this rule: If you don't understand a financial product, don't buy it. But seriously, do commit and take the time to learn investment. You are the best friend your money will have - or its worst enemy. The only way to protect your money from inflation or financial salesmen is to understand investment yourself. You can have a successful understanding of how to invest from 1 or 2 books. (Certainly not everything; those ingenious salesmen keep making the financial world more complicated, but you don't need any of that junk.) For instance how do you allocate domestic stocks, foreign stocks, bonds, etc. in an IRA if you're under 40? Well... how do smaller universities invest their endowments? They all want the same thing you do. If you look into it, you'll find they all invest about the same. And that's quite similar to the asset mix Suze Orman recommends for young people's IRAs. See? Not that complicated. Then take the time to learn why. It isn't stupid easy, but it is learnable. For someone in your tier of income, I recommend Suze Orman's books. I know that some people don't like her, but that segues into a big problem you'll run into: People have very strong feelings about money. Intense, irrational emotions. People get it from their parents or they get sucked into the "trust trap" I mentioned with so-called financial advisors. They bet their whole savings on whatever they're doing, and their ego is very involved. When they push you toward their salesman or his variable annuity, they want you to agree they invested well. So you kinda have to keep your head low, not listen too much to friends/family, and do your research for yourself. John Bogle's book on mutual funds is a must-read for picking mutual funds and allocating assets. Certain financial advisors are OK. They are "fee only" advisors. They deal with all their customers on a fee-only basis, and are not connected to a company which sells financial products. They will be happy for you to keep your money in your account at your discount brokerage, and do your own trading on asset types (not brands) they recommend. They don't need your password. Here's what not to do: A good friend strongly recommended his financial advisor. In the interview, I said I wanted a fee-only advisor, and he agreed to charge me $2000 flat rate. Later, I figured out he normally works on commissions, because he was selling me the exact same products he'd sell to a commission (free advice) customer, and they were terrible products of course. I fired him fast. |
Sell or keep rental Property? | And he has to pay for it every home repair and every month the property sets empty. His loss each month is not $250, but probably closer to $500. In generally you need to clear at least $200 ABOVE PTI (principle, taxes and interest) to cover repair and the like to property. From your post, it sounds like your dad was forced into the land-lord business by the recession. Unless he plans to hold the property until its rental value has increased by $500 a month, he should consider selling it and writing-off the loss. Losing money bit by bit on a house isn't a tax write-off event. Selling a property for less than you bought it for generally is. FYI, I got the $500/month loss by assuming that repairs/emptiness/etc will cost you about $200 a month, and added $50 for your dad's time managing the property. |
Paying taxes on income earned in the US, but from a company based in Norway | I don't see why you would need an "international tax specialist". You need a tax specialist to give you a consultation and training on your situation, but it doesn't seem too complicated to me. You invoice your client and get paid - you're a 1099 contractor. They should issue you a 1099 at the end of the year on everything they paid you. Once you become full-time employee - you become a W2 employee and will get a W2 at the end of the year on the amounts paid as such. From your perspective there's nothing international here, regular business. You have to pay your own taxes on the 1099 income (including SE taxes), they have to withhold taxes from your W2 income (including FICA). Since they're foreign employers, they might not do that latter part, and you'll have to deal with that on your tax return, any decent EA/CPA will be able to accommodate you with that. For the employer there's an issue of international taxation. They might have to register as a foreign business in your state, they might be liable for some payroll taxes and State taxes, etc etc. They might not be aware of all that. They might also be liable (or exempt) for Federal taxes, depending on the treaty provisions. But that's their problem. Your only concern is whether they're going to issue you a proper W2 and do all the withholdings or not when the time comes. |
How does owning a home and paying on a mortgage fit into family savings and investment? | A home is an investment, but the value it returns isn't primarily financial ($$) - they are consumption (a place to live). This gives it different characteristics than other investments (e.g. increasing the amount invested by buying a more expensive home doesn't do much to assist your financial well-being and future income, and isn't necessarily the "responsible" thing to do). You may get some capital gains, typically in line with inflation, sometimes less, sometimes more, but those aren't the most reliable, and it's difficult to realize them (it involves selling your house and moving). Its main value as a hedge is a hedge against rising rent. But if you're still working full-time and can expect cost-of-living increases, that hedge may not be as valuable to you as it would to, say, someone living on a fixed income. But as for treating it as a "low-risk investment"? That's very problematic. Real low-risk investments are things like government bonds, where you can't lose principal. Unless you're going to live into your house until the day you die, the real estate crash should have disabused you of any notion that housing values never go down. Rather, your house is a single, indivisible, undiversified, illiquid investment. Imagine, if you will, going to your brokerage and borrowing a hundred thousand dollars or more on margin to invest in a single real estate investment trust... then take away whatever diversification the trust offered by holding multiple properties. Also, you can't sell any of it until you move away, and the transaction fee will take something like 3%. Still sound "safe"? Moreover, it's exactly the wrong kind of risk. Your house's value is tied to what people are willing to pay for housing where your house is, which is usually subject to the whims of the local economy. This means that in a recession and housing bust in the local economy, you can lose your job and have your mortgage go underwater at the same time. It totally makes sense to treat your house as an investment to some extent, and it makes double sense for a financial adviser to consider it as part of your investment recommendations. "Safety" is not the way you should be thinking of it, though. |
If a country can just print money, is global debt between countries real? | Debt can be denominated either in a currency the country controls or a currency the country doesn't control. If the debt is denominated in a currency the country controls then they have the option of "printing their way out of it". That option doesn't come for free, it will devalue their currency on the global market and hurt savers in their country but it is an option. If the debt is denominated in a currency the country does not control then they don't have that option. As I understand it the US debt is in the first category. It's denominated in US dollars so the US government could if they so wished print their way out of it. On the other hand greece's debt is denominated in euros putting them at the mercy of european bankers. |
Are AAA private-sector corporate bonds safer than government bonds? | If you are afraid of your government defaulting, then you also have reason to fear that your country's so-called "AAA" corporate bonds might not be a safe investment. When governments default, they often do things like: In these scenarios, it is not predictable whether government bonds will suffer more or less than any particular corporate bonds. You might want to diversify into precious metals, foreign currencies, and/or foreign securities. For the most security, you might want to choose investment vehicles that your government would have a hard time confiscating. Of course, you will face currency fluctuation risks if you do so. |
Shouldn't a Roth IRA accumulate more than 1 cent of interest per month? | Unfortunately for investors, returns for equity-based investments are not linear - you'll see (semi-random) rises and dips as you look at the charted per-share price. Without knowing what the investments are in the target date retirement fund that you've invested in, you could see a wide range of returns (including losses!) for any given period of time. However, over the long term (usually 10+ years), you'll see the "average" return for your fund as your gains and losses accumulate/compound over that period. |
Should I make more conservative investments in my company 401(K) if I'm going to leave the job in a couple of years? | It doesn't make a difference if you will be keeping it in the 401K or transferring it to an IRA, it is still retirement money that you plan on investing for decades. Pre-Enron many employees invested significant amounts of their retirement funds with the employer. One of the risks was that if a single stock was down at the wrong time, you were hurt if you needed to sell. If you are going from an S&P 500 in the 401K to an S&P 500 in the IRA, it doesn't matter if the the market is up or down, the two funds will be pretty much in synch. |
Is it OK to use a credit card on zero-interest to pay some other credit cards with higher-interest? | Here's the issue as I see it. The fact that one has high interest debt says a lot about the potential borrower. Odds are very good that person will not pay the zero card off before the rate expires, and will likely charge more along the way. I'd love to be able to say "great idea, borrowing at a low rate to pay off a high rate card will be the first step to getting you all paid off" but chances are in a year's time you will not be better off. You said you know a lot of people that have done this. Have they all been successful? It's possible, but I'd heed the warnings of those here and first think how you got into the credit card debt. |
Loan to son - how to get it back | I started a business a few years ago. At one point it wasn't going so well and my father "loaned" me an amount not too dissimilar to what you've done. From a personal perspective, the moment I took that loan there was a strain the relationship. Especially when I was sometimes late on the interest payments... Unfortunately thoughts like "he doesn't need this right now, but if I don't pay the car loan then that is taken away" came up a few times and paying the interest fell to the bottom of the monthly bill payment stack. At some point my wife and I finally took a hard look at my finances and goals. We got rid of things that simply weren't necessary (car payment, cable tv, etc) and focused on the things we needed to. Doing the same with the business helped out as well, as it helped focus me to to turn things around. Things are now going great. That said, two of my siblings ran into their own financial trouble that our parents helped them on. When this happened my father called us together and basically forgave everyone's debt by an equal amount which covered everything plus wrote a check to the one that was doing fine. This "cleared the air" with regards to future inheritance, questions about how much one sibling was being helped vs another, etc. Honestly, it made family gatherings more enjoyable as all that underlying tension was now gone. I've since helped one of my children. Although I went about it an entirely different way. Rather than loan them money, I gave it to them. We also had a few discussions on how I think they ought to manage their finances and a set of goals to work towards which we co-developed. Bearing in mind that they are an individual and sometimes you can lead a horse... Given the current state of things I consider it money well "spent". |
What kind of trade is this? | A limit order is simply an order to buy at a maximum price or sell at a minimum price. For example, if the price is $100 and you want to sell if the price rises to $110, then you can simply put a limit order to sell at $110. The order will be placed in the market and when the price reaches $110 your order will be executed. If the price gaps at the open to $111, then you would end up selling for $111. In other words you will get a minimum of $110 per share. A stop limit order is where you put a stop loss order, which when it gets triggered, will place a limit order in the market for you. For example, you want to limit your losses by placing a stop loss order if the price drops to $90. If you chose a market order with your stop loss as soon as the price hits $90 your stop loss would be triggered and the shares would sell at the next available price, usually at $90, but could be less if the market gaps down past $90. If on the other hand you placed a limit order at $89.50 with your stop loss, when the stop loss order gets triggered at $90 your limit order will be placed into the market to sell at $89.50. So you would get a minimum of $89.50 per share, however, if the market gaps down below $89.50 your order will be placed onto the market but it won't sell, unless the price goes back to or above $89.50. Hope this helps. |
Why certain currencies are considered safe havens in times of turmoil | It's a combination of neutrality, economic power, economic freedom, a history of stability, and tradition. In the case of the Japanese yen, it's obviously economic power that is the determining factor, as Japan is the world's third largest economy. Switzerland, on the other hand, is only the 19th largest economy, but ranks very high in all the other criteria. |
How to build a U.S. credit history as a worker on a visa? | Credit is important for many reasons. Establishing credit is an important step and should be no challenge for someone who already has good habits. The same lessons and advice that you would find for a student to establish credit would be applicable to your case as well. Factors that influence credit score, Since you are already established in your home country (Australia), you probably have a credit card (and references) that you can provide for the first few challenges (renting a car, renting an apartment). Here are the steps, Your credit score should improve quickly as the first couple of credit cards and the installment loan show good payment history, low utilization, and gain some age. After 1-2 years, you should have a good score. |
Wash sale rule with dividend reinvestment | I was not able to find any authority for the opinion you suggest. Wash sale rules should, IMHO, apply. According to the regulations, you attribute the newly purchased shares to the oldest sold shares for the purposes of the calculation of the disallowed loss and cost basis. (c) Where the amount of stock or securities acquired within the 61-day period is less than the amount of stock or securities sold or otherwise disposed of, then the particular shares of stock or securities the loss from the sale or other disposition of which is not deductible shall be those with which the stock or securities acquired are matched in accordance with the following rule: The stock or securities acquired will be matched in accordance with the order of their acquisition (beginning with the earliest acquisition) with an equal number of the shares of stock or securities sold or otherwise disposed of. You can resort to the claim that you have not, in fact, entered into the contract within 30 days, but when you gave the instructions to reinvest dividends. I don't know if such a claim will hold, but to me it sounds reasonable. This is similar to the rules re short sales (in (g) there). In this case, wash sale rules will not apply (unless you instructed to reinvest dividends within the 30 days prior to the sale). But I'd ask a tax professional if such a claim would hold, talk to a EA/CPA licensed in your state. |
Harmony Gold Mining Company is listed on the NYSE and JSE at different prices? | On NYSE it isn't the equity which is listed but is an ADR(American Depositary Receipt). Source A negotiable certificate issued by a U.S. bank representing a specified number of shares (or one share) in a foreign stock that is traded on a U.S. exchange. ADRs are denominated in U.S. dollars, with the underlying security held by a U.S. financial institution overseas. ADRs help to reduce administration and duty costs that would otherwise be levied on each transaction. Else people would make a killing on the arbitrage opportunity. Frankly speaking arbitrage opportunities are more or less non existent. They occur for maybe seconds or milliseconds and the HFT firms and banks trade on it to remove the arbitrage. |
Should I lease, buy new, or buy used? | Rule of thumb is always BUY, NEVER lease, unless you plan to use it for a business where you can expense the lease payments. Leasing is the biggest scam. Lease is just a fancy word for renting and the dealerships PRAY that people like us lease. As for new or old, new cars have better warranty but you may get a great deal on a 1-3 year old used car. |
Washington State tax filing extension? | Washington State doesn't have a state income tax for individuals, so unless you've got a business there's nothing to file. Find out more on their website. |
Should the bank cover money lost due to an unsuccessful transfer? | Since the transaction was not your bank's mistake (but a decision by the Indian government) why should your bank bear the cost of the unsuccessful transaction? Your bank charged a fee for a service that you were willing to pay for. You might be able to negotiate a full or partial refund, and I have done the same with my own bank for fees that I didn't feel were appropriate. Your bank will agree or not based on how much they value your business. If you are an otherwise profitable customer, they may agree to refund the fee. |
Making your first million… is easy! (??) | I think there's a measure of confirmation bias here. If you talk to somebody that started a successful business and got a million out of it, he'd say "it's easy, just do this and that, like I did". If you consider this as isolated incident, you would ignore thousands of others that did exactly the same and still struggle to break even, or are earning much less, or just went broke and moved on long time ago. You will almost never hear about these as books titled "How I tried to start a business and failed" sell much worse than success stories. So I do not think there's a guaranteed easy way - otherwise we'd have much more millionaires than we do now :) However, it does not mean any of those ways is not worth trying - whatever failure rate there is, it's less than 100% failure rate of not trying anything. You have to choose what fits your abilities and personality best - frugality, risk, inventiveness? Then hope you get as lucky as those "it's easy" people are, I guess. |
I earn $75K, have $30K in savings, no debt, rent from my parents who are losing their home. Should I buy a home now or save? | This solution obviously wouldn't work for everyone, and is contingent on the circumstances of your parents' finances with regards to their house, but... Have you considered buying your parents' house? This way your parents' desire for you to get a house as an investment would be satisfied, they wouldn't have to worry about losing their home, and you might even be able to work out a financing/rent deal that is beneficial to everyone involved. There are definitely fewer costs going this route anyway, for instance, your parents won't have any marketing costs associated with selling the house and could pass this savings along to you. Also, having lived in the house for a large part of your life you will also know what you are getting in to. |
Do you have to be mega-rich to invest in companies pre-IPO? | There are a couple of ways to buy into a private company. First, the company can use equity crowd funding (approved under the JOBS act, you don't need to be an accredited investor for this). The offering can be within one state (i.e. Intrastate offerings) which don't have the same SEC regulations but will be governed by state law. Small companies (small assets, under $1 million) can be made under Regulation D, Rule 504. For assets under $5 million, there is Rule 505, which allows a limited number of non-accredited investors. Unfortunately, there aren't a lot of 504 and 505 issues. Rule 506 issues are common, and it does allow a few non-accredited investors (I think 35), but non-accredited investors have to be given lots of disclosure, so often companies use a Rule 506 issue but only for accredited investors. |
As a total beginner, how do I begin to understand finance & stocks? | Let me first give you my definitions of the words 'investor' and 'speculator'. To me, anyone looking to 'buy low, sell high' is a speculator. Only 'buy and hold' people are investors. The news agencies love to report on changes in the price of a stock. This gives them something to talk about. So speculation is encouraged by the news media. What investors care about is dividends. In my opinion whatwhat news agencies should report on are changes to the dividend provided by a security. I used to be a speculator, but now that I am retired I am an investor. |
why is the money withdrawn from traditional IRA taxed at the ordinary income tax rate? | Basically, the idea of an IRA is that the money is earned by you and would normally be taxed at the individual rate, but the government is allowing you to avoid paying the taxes on it now by instead putting it in the account. This "tax deferral" encourages retirement savings by reducing your current taxable income (providing a short-term "carrot"). However, the government will want their cut; specifically, when you begin withdrawing from that account, the principal which wasn't taxed when you put it in will be taxed at the current individual rate when you take it out. When you think about it, that's only fair; you didn't pay taxes on it when it came out of your paycheck, so you should pay that tax once you're withdrawing it to live on. Here's the rub; the interest is also taxed at the individual rate. At the time, that was a good thing; the capital gains rate in 1976 (when the Regular IRA was established) was 35%, the highest it's ever been. Now, that's not looking so good because the current cap gains rate is only 15%. However, these rates rise and fall, cap gains more than individual rates, and so by contributing to a Traditional IRA you simplify your tax bill; the principal and interest is taxed at the individual rate as if you were still making a paycheck. A Roth IRA is basically the government trying to get money now by giving up money later. You pay the marginal individual rate on the contributions as you earn them (it becomes a "post-tax deduction") but then that money is completely yours, and the kicker is that the government won't tax the interest on it if you don't withdraw it before retirement age. This makes Roths very attractive to retirement investors as a hedge against higher overall tax rates later in life. If you think that, for any reason, you'll be paying more taxes in 30 years than you would be paying for the same money now, you should be investing in a Roth. A normal (non-IRA) investment account, at first, seems to be the worst of both worlds; you pay individual tax on all earned wages that you invest, then capital gains on the money your investment earns (stock gains and dividends, bond interest, etc) whenever you cash out. However, a traditional account has the most flexibility; you can keep your money in and take your money out on a timeline you choose. This means you can react both to market moves AND to tax changes; when a conservative administration slashes tax rates on capital gains, you can cash out, pay that low rate on the money you made from your account, and then the money's yours to spend or to reinvest. You can, if you're market- and tax-savvy, use all three of these instruments to your overall advantage. When tax rates are high now, contribute to a traditional IRA, and then withdraw the money during your retirement in times where individual tax rates are low. When tax rates are low (like right now), max out your Roth contributions, and use that money after retirement when tax rates are high. Use a regular investment account as an overage to Roth contributions when taxes are low; contribute when the individual rate is low, then capitalize and reinvest during times when capital gains taxes are low (perhaps replacing a paycheck deduction in annual contributions to a Roth, or you can simply fold it back into the investment account). This isn't as good as a Roth but is better than a Traditional; by capitalizing at an advantageous time, you turn interest earned into principal invested and pay a low tax on it at that time to avoid a higher tax later. However, the market and the tax structure have to coincide to make ordinary investing pay off; you may have bought in in the early 90s, taking advantage of the lowest individual rates since the Great Depression. While now, capital gains taxes are the lowest they've ever been, if you cash out you may not be realizing much of a gain in the first place. |
Do I need to file a tax return as a student? | In the U.S., Form 1040 is known as the tax return. This is the form that is filed annually to calculate your tax due for the year, and you either claim a refund if you have overpaid your taxes or send in a payment if you have underpaid. The form is generally due on April 15 each year, but this year the due date is April 18, 2016. When it comes to filing your taxes, there are two questions you need to ask yourself: "Am I required to file?" and "Should I file?" Am I required to file? The 1040 instructions has a section called "Do I have to file?" with several charts that determine if you are legally required to file. It depends on your status and your gross income. If you are single, under 65, and not a dependent on someone else's return, you are not required to file if your 2015 income was less than $10,300. If you will be claimed as a dependent on someone else's return, however, you must file if your earned income (from work) was over $6300, or your unearned income (from investments) was over $1050, or your gross (total) income was more than the larger of either $1050 or your earned income + $350. See the instructions for more details. Should I file? Even if you find that you are not required to file, it may be beneficial to you to file anyway. There are two main reasons you might do this: If you have had income where tax has been taken out, you may have overpaid the tax. Filing the tax return will allow you to get a refund of the amount that you overpaid. As a student, you may be eligible for student tax credits that can get you a refund even if you did not pay any tax during the year. How to file For low income tax payers, the IRS has a program called Free File that provides free filing software options. |
Do I even need credit cards? | Try to buy an airline ticket, rent a hotel room, or rent a car without a credit card. Doable? Perhaps. Easy? Nope. With a debit card, you run the risk of a hotel reserving more than your stay's cost for room service, parking, etc and potentially having a domino effect if other payments bounce. We just spent 3 nights in NYC, room was just over $1000. Do I really want to carry that much cash? |
Where can I find open source portfolio management software? | Take a look at this: http://code.google.com/p/stock-portfolio-manager/ It is an open source project aimed to manage your stock portfolio. |
How can I get the car refinanced under my name if my girlfriend signed for the loan? | Your best bet would be to add your name to the title through the bank or have her sell it to you for the amount she owes then you get a loan for that amount like they said before. If you guys split up at this point she'll legally get to keep the car you've been paying for. You could apply for a new loan and have her cosign but it'll make your monthly payments higher. Have her sell you the car for the amount owed them you get a loan for that amount. Since you are together and you've been paying for it you won't lose any money and your monthly payments won't be expensive if you don't owe that much on the car. Pretty much having her sell it to you would be the smartest idea cause keeping Her name on the title will allow Her to legally drive away in your car if you split and you don't want that lol |
What is the process of getting your first share? | Let's handle this as a "proof of concept" (POC); OP wants to buy 1 share of anything just to prove that they can do it before doing the months of painstaking analysis that is required before buying shares as an investment. I will also assume that the risks and costs of ownership and taxes would be included in OP's future analyses. To trade a stock you need a financed broker account and a way to place orders. Open a dealing account, NOT an options or CFD etc. account, with a broker. I chose a broker who I was confident that I could trust, others will tell you to look for brokers based on cost or other metrics. In the end you need to be happy that you can get what you want out of your broker, that is likely to include some modicum of trust since you will be keeping money with them. When you create this account they will ask for your bank account details (plus a few other details to prevent fraud, insider trading, money laundering etc.) and may also ask for a minimum deposit. Either deposit enough to cover the price of your share plus taxes and the broker's commission, plus a little extra to be on the safe side as prices move for every trade, including yours, or the minimum if it is higher. Once you have an account the broker will provide an interface through which to buy the share. This will usually either be a web interface, a phone number, or a fax number. They will also provide you with details of how their orders are structured. The simplest type of order is a "market order". This tells the broker that you want to buy your shares at the market price rather than specifying only to buy at a given price. After you have sent that order the broker will buy the share from the market, deduct the price plus tax and her commission from your account and credit your account with your share. |
Best way to buy Japanese yen for travel? | Unless you need extremely large sums of money, I suggest you use an ATM or look for a credit card that has no foreign transaction fees (rare). AFAIK, it's not possible for a retail buyer to purchase currency at the current exchange rate quoted online. You are always going to be paying some spread above that, and the ATM gets you the closest. You could also try to use a bank that has branches in your country and Japan (like HSBC) and do your banking there. Then you likely wouldn't have to pay as much in fees (and possibly could draw on your account in Japan). |
Got charged ridiculous amount for doctor's walk in visit. What are my options? | You should start by calling the clinic and asking them to tell you how the visit was coded. Some clinics have different billing codes based on the complexity of the visit. If you have one thing you are seeing the doctor about, that could be coded differently than if you have 4 things you are seeing the doctor about. In fact, even if you are there just for one ailment, but while you are there you happen to ask a few quick questions about other possible ailments, the doctor could decide to use the billing code for the higher complexity. If when speaking to the billing department it is determined that the visit is using a higher complexity billing code (and a higher charge as a result), you could then request that it be re-coded with the lower complexity visit. Realize if you request that they will probably have to first get approval from the doctor that saw you. Note: I am basing this answer on first hand experience about 6 months ago in Illinois, where the situation I described happened to me because I asked some unrelated questions about other possible ailments at the end of a visit to an after hours clinic. The billing department explained that my visit was coded for 4 issues. (3 of them were quick questions I asked about at the end of the visit, one of which she referred me to another doctor. My additional questions probably extended the visit by 3-4 minutes.) In my case I never got the bill reduced, mainly due to my own laziness and my knowing that I would hit my deductible anyway this year. Of course I can't say for sure if this is what happened in your case, or even if this practice is widespread. This was the first and only time in my life that I encountered it. As a side note, your primary doctor would likely rarely ever bill you for a more complex visit, as it likely wouldn't lead to much repeat business. As for your last question regarding your credit: if the provider decides to lower the price, and you pay the lower price, this in no way can affect your credit. Surprising Update: When I called the billing office months ago, I had asked if they could confirm the code with the doctor, and I was told they would look into it. I never heard back, never followed up, and assumed that was the end of it. Well, today I got a call back (months later) and was informed that they had re-coded the visit which will result in a lower charge! It's still pending the insurance adjustment but at some point in the future I expect to receive either a credit on my next statement or a check in the mail. (The price difference pre-insurance in my case has gone from $359 to $235.) Update: I did receive a check for the difference. The check was dated July 20, 2016, which is just over 2 months after the phone call informing me I would receive it. |
Why can't the Fed lower interest rates below zero? | Why can't the Fed simply bid more than the bond's maturity value to lower interest rates below zero? The FED could do this but then it would have to buy all the bonds in the market since all other market participants would not be willing to lend money to the government only to receive less money back in the future. Not everyone has the ability to print unlimited amounts of dollars :) |
How do I handle fund minimums as a beginning investor? | If you are comfortable picking individual stocks and can get into Robinhood you only need $1000 to get started. This means buying one stock of this, two stocks of that, etc. but it works. |
Is it possible to make money by getting a mortgage? | the mortgage interest deduction alone couldn't make this work, but if you realize less income by living off the mortgage funds, then it could definitely reduce your taxes by much more than the cost of the mortgage interest. particularly, if you are waiting for some future cut-off date (e.g. turning 59.5 and getting access to roth funds, turning 70 and getting social security, simply doing a roth conversion with strategic recharacterization at age 40 and waiting 5 years to get the money out penalty-free, etc.). and that future date could be quite far off if you only use a small fraction of the total mortgage each year. plus, it is fairly reasonable to assume that equity market returns will outpace mortgage rates, especially if you are "rich" and don't need to worry about living on the street even if the market hits unprecedented lows. while i find most financial advisers to be incompetent (most people really...), i wouldn't write this guy off, just because he left out the specific details that made the strategy work for one particular client. |
What is most time-efficient way to track portfolio asset allocation? | I found that an application already exists which does virtually everything I want to do with a reasonable interface. Its called My Personal Index. It has allowed me to look at my asset allocation all in one place. I'll have to enter: The features which solve my problems above include: Note - This is related to an earlier post I made regarding dollar cost averaging and determining rate of returns. (I finally got off my duff and did something about it) |
Is this formula accurate for weighing the difference between an S-Corp and LLC? | It might be best to step back and look at the core information first. You're evaluating an LLC vs a Corporation (both corporate entities). Both have one or more members, and both are seen similarly (emphasis on SIMILAR here, they're not all the same) to the IRS. Specifically, LLC's can opt for a pass-through tax system, basically seen by the IRS the same way an S-Corp is. Put another way, you can be taxed as a corporate entity, or it's P/L statements can "flow through" to your personal taxes. When you opt for a flow-through, the business files and you get a separate schedule to tie into your taxes. You should also look at filing a business expense schedule (Schedule C) on your taxes to claim legitimate business expenses (good reference point here). While there are several differences (see this, and this, and this) between these entities, the best determination on which structure is best for you is usually if you have full time employ while you're running the business. S corps limit shares, shareholders and some deductions, but taxes are only paid by the shareholders. C corps have employees, no restrictions on types or number of stock, and no restrictions on the number of shareholders. However, this means you would become an employee of your business (you have to draw monies from somewhere) and would be subject to paying taxes on your income, both as an individual, and as a business (employment taxes such as Social Security, Medicare, etc). From the broad view of the IRS, in most cases an LLC and a Corp are the same type of entity (tax wise). In fact, most of the differences between LLCs and Corps occur in how Profits/losses are distributed between members (LLCs are arbitrary to a point, and Corps base this on shares). Back to your question IMHO, you should opt for an LLC. This allows you to work out a partnership with your co-worker, and allows you to disburse funds in a more flexible manner. From Wikipedia : A limited liability company with multiple members that elects to be taxed as partnership may specially allocate the members' distributive share of income, gain, loss, deduction, or credit via the company operating agreement on a basis other than the ownership percentage of each member so long as the rules contained in Treasury Regulation (26 CFR) 1.704-1 are met. S corporations may not specially allocate profits, losses and other tax items under US tax law. Hope this helps, please do let me know if you have further questions. As always, this is not legal or tax advice, just what I've learned in setting several LLCs and Corporate structures up over the years. EDIT: As far as your formulas go, the tax rate will be based upon your personal income, for any pass through entity. This means that the same monies earned from and LLC or an S-corp, with the same expenses and the same pass-through options will be taxed the same. More reading: LLC and the law (Google Group) |
Are marijuana based investments promising, or just another scam? | Any advertisement for a "business opportunity" is nearly always a scam of some kind. In such deals, the seller is the one making the money. They rely on the fantasy of the average person who imagines themself with a profitable business. Real businessmen do not get their businesses from flyers on the sides of telephone poles. Real businessmen already know every aspect and detail of their business already. They do not need to pay some clown $10,000 to "get them started". If you are reading such advertisements, it means you have money, but do not know what to do with it. Although I cannot tell you what to do with your money. I can tell you this: giving it to somebody who advertises a "great business opportunity" would be a mistake. |
Where can I find announcements of official GDP figures for the US and other countries? | There are tons of data provided on the CIA - The World Factbook webpage. Among the rest, there are the GDP values as well. The World Factbook provides information on the history, people, government, economy, geography, communications, transportation, military, and transnational issues for 267 world entities. Our Reference tab includes: maps of the major world regions, as well as Flags of the World, a Physical Map of the World, a Political Map of the World, a World Oceans map, and a Standard Time Zones of the World map. |
Is a car loan bad debt? | Just to argue the other side, 1.49% is pretty low for a loan. Let's say you have the $15k cash but decide to get the car loan at 1.49%. Then you take the rest of the money and invest it in something that pays a ~4% dividend (a utility stock, etc.). You're making money on the difference. Of course, there's no guarantee that the underlying stock won't drop in value, but it might go up, too. And you'll likely pay income tax on the dividends. Still, you have a good chance of making money by taking the loan. So I will argue that there are scenarios where taking advantage of a low interest rate loan can be "good" as an investment opportunity when the risk/reward is acceptable. Be careful, though. There's nothing wrong with paying cash for a car! |
Boyfriend is coowner of a house with his sister, he wants to sell but she doesn't | It seems likely that the mortgage is not in your boyfriend's name because he never would have qualified if he can't even afford utilities after paying the mortgage. It also seems unfair that his sister continues to have a 50% share of the equity if your boyfriend has been making the entire payment on the mortgage every month. What would happen if your boyfriend stopped making the payments? His sister would have no choice if the property went into foreclosure. Your boyfriend has all the leverage he needs by simply refusing to continue making the payments. Why he won't push his sister to make a deal is the real question you need to ask him. In the meantime, if he wants out, all he has to do is decide not to keep paying whether his sister feels attached or not. |
What does the average log-return value of a stock mean? | Knowing the log return is useful - the log return can help you to work out the annual return over the period it was estimated - and this should be comparable between stocks. One should just be careful with the calculation so that allowance for dividends is made sensibly. |
How can an Indian citizen get exposure to global markets? | There are some ETF's on the Indian market that invest in broad indexes in other countries Here's an article discussing this Be aware that such investments carry an additional risk you do not have when investing in your local market, which is 'currency risk' If for example you invest in a ETF that represents the US S&P500 index, and the US dollar weakens relative to the indian rupee, you could see the value if your investment in the US market go down, even if the index itself is 'up' (but not as much as the change in currency values). A lot of investment advisors recommend that you have at least 75% of your investments in things which are denominated in your local currency (well technically, the same currency as your liabilities), and no more than 25% invested internationally. In large part the reason for this advice is to reduce your exposure to currency risk. |
Buying my first car out of college | Buy the BMW and enjoy it. An MBA? Now that is a true waste of money. |
operating income | Judgement, settlement, insurance proceeds, etc etc. These would probably be recorded as a negative expense in the same category where the original expense was recorded. |
Student loan payments and opportunity costs | I agree with the advice given, but I'll add another angle from which to look at it. It sounds like you are already viewing the money used to either pay off the loan early or invest in the market as an investment, which is great. You are wise to think about opportunity cost, but like others pointed out, you are overlooking the risk factor. The way I would look at this is: I could take a guaranteed 6.4% return by paying off the loan or a possible 7% return by investing the money. If the risk pays off modestly, all you've done is earned 0.6%, with a huge debt still hanging over you. Personally, I would take the guaranteed 6.4% return by paying off the debt, then invest in the stock market. Now this is looking at the investment as a single, atomic pool of money. But you can split it up a bit. Let's say the amount of extra disposable income you want to invest with is $1,000/mo. Then you could pay an extra $500/mo to your student loan and invest the other $500 in the stock market, or do a 400/600 split, or whatever suits your risk tolerance. You mentioned multiple loans and 6.4% is the highest loan. What I would do, based on what I value personally, is put every extra penny into paying off the 6.4% loan because that is high. Once that is done, if the next loan is 4% of less, then split my income between paying extra to it and investing in the market. Remember, with each loan you pay off, the monthly income that previously went to it is now available, and can be used for the next loan or the other goals. |
How long to wait after getting a mortgage to increase my credit limit? | I'm not sure what raising your credit limit would do to your score in the short term. I don't think it's a clear win, though. Your percent utilization will go down (more available credit for the same amount of debt) but your available credit will also go up, which may be a negative, since potentially you can default on more debt. If you're interested in monitoring your score, Credit Karma will let you do that for free. |
How risky is it to keep my emergency fund in stocks? | I know this is heresy but if you have funds for significantly more than 6 months of expenses (let's say 12 months), how risky would it be to put it all into stock index funds? Quite risky as if you do need to dip into it, how fast could you get the cash? Also, do you realize the tax implications when you do sell the shares should you have an emergency? In the worst-case scenario, let's say you have a financial emergency at the same time the stock market crashes and loses half its value. You could still liquidate the rest and have sufficient funds for 6 months. Am I underestimating the risks of this strategy? That's not worst case scenario though. Worst case scenario would be another 9/11 where the markets are closed for nearly a week and you need the money but can't get the funds converted to cash in the bank that you can use. This is in addition to the potential wait for a settlement in the case of using ETFs if you choose to go that way. In the case of money market funds, CDs and other near cash equivalents these can be accessed relatively easily which is part of the point. A staggered approach where some cash is kept in house, some in accounts that can easily accessed and some in other investments may make sense though the breakdown would differ depending on how much risk people are willing to take. If it truly is an emergency fund then the odds of needing it should be very slim, so why live with near zero return on that money? Something to consider is what is called an emergency here? For some people a sudden $1,000 bill to fix their car that just broke down is an emergency. For others, there could be emergency trips to visit family that may have gotten into accidents or gotten a diagnosis that they may pass away soon. Consider what do you want to call an emergency here as chances are you may not be considering all that people would think is an emergency. There is the question of what other sources of money do you have to cover should issues arise. |
Legitimate unclaimed property that doesn't appear in any state directory? | So while these companies are not a scam, 30% feels pretty darn high. How about you negotiate a much lower rate? 10% or 15%? Here is why: You will spend time and effort (which technically isn't free) to find the money. I bet you can find it if you look hard enough. But you could also just collect it and give this company a cut for their expertise. However if 30% bugs you (and it would bug me) then consider their reality. They spent money to find the funds and contact you. HOWEVER, that is a sunk cost. It is already spent. You can find it on your own and they get zip. Or you negotiate a lower percentage, they get enough to cover their costs and make some profit and you save a ton of time. Since they took the time to explain themselves here, they are either scammers trying to bully you into compliance, or they are legit. It is field that people might look down on, but it isn't criminal. I would look for the money if it were me, but I feel I have enough free time that it would be worth it. |
Do credit ratings (by Moody's, S&P, and Fitch) have any relevance? | The problems with ratings and the interpretation of ratings is that they are retrospective, and most people read them as prospective. They basically tell you that debtor is solvent right now. What does that mean? It means that the ratings are based on the audited financial statements of a company, government or other organization issuing debt. So, in the best case scenario where the rating agency is acting properly, they are still dependent on folks with fiduciary responsibility telling the truth. And even if they are telling the "truth", accounting rules make it possible to obscure problems for years in some cases. Municipal goverments are a great example of this... the general obligation bonds cities and even states with deep structural budget problems still get good ratings, because they are solvent and have sufficient operating cash to meet obligations today. But towards the end of a 30-year bond's life, that may not be the case anymore unless they dramatically alter their budgets. At the end of the day, ratings are one aspect of due diligence. They are useful screening devices, but you need to understand who you are lending money to by purchasing bonds and diversify your holdings to protect your wealth. The problem, of course, is when the trustees of your pension fund invests in garbage assets after getting a sales pitch on the beach in Hawaii, then conveniently place all of the blame for that bad investment on the rating agency. You unfortunately have zero control over that. |
Eligibility for stock rights offering | Yes, there is a delay between when you buy a stock and when you actually take ownership of it. This is called the settlement period. The settlement period for US equities is T+2 (other markets have different settlement periods), meaning you don't actually become a shareholder of record until 2 business days after you buy. Conversely, you don't stop being a shareholder of record until 2 business days after you sell. Presumably at some point in the (far) future all public markets will move to same-day changes of ownership, at which point companies will stop making announcements of the form all shareholders of record as of September 22nd and will switch to announcements of the form all shareholders of record as of September 22nd at 13:00 UTC |
How to pay myself as a single person corporation in Ontario? Should I get an accountant? | Get an accountant. Now. There are many subtle things that you do not know especially if you are just starting with your own corporation. There is also an issue of corporate tax return that you will have to face pretty soon. You should be looking for accountant that does accounting for corporations, there are companies specializing in small business. I do not think you can "just" transfer money to your personal account. They have to be treated as dividends and treated as such for income tax purposes. Or, as you described, you may pay yourself a salary, but then you have to pay CPP and EI on top of that. When you pay yourself dividends your corporation will need to issue T5 slip for you (accountant will do that) that you will need to use when preparing personal tax return. If you pay yourself salary, corporation will need to give you T4 In terms of tax treatment, if we do not take RRSP contributions dividend tax treatment will leave little bit more money in your hands. I'd say if you have RRSP room and/or TFSA room, pay yourself dividends and then do contributions as you see fit, if you need RRSP room, pay yourself salary. TFSA room does not depend on the type of income, so if you have room there, consider filling it first. |
What is the best source of funding to pay off debt? | Please take a look a Dave Ramsey's Baby Step plan. It has all the details that you need to clean up your personal finance situation. None of your options are good. As some of the other answers mentioned, behavior modification is the key. Any idea will be worthless if you just wind up in debt again. Many, many people, including me, have made the change using Dave's plan. You can too. With regard to helping your son with tuition, are there better or cheaper options? It does not make sense to put yourself in financial peril in order to cover college expenses. I understand that is a tough decision but he is a man now and needs to be part of the real world solution. Following the Baby Steps: The biggest factor is a belief that you can fix the mess. 30k is not really that much, with a good plan and focus, you can clean it up. Good luck. |
Are stories of turning a few thousands into millions by trading stocks real? | I made upwards of 3M from 200K by trading stocks, which I made from a business that I invested 20K in. HOWEVER, DO NOT use trading stocks as a source of income, you're gambling with your precious cash. There are safer alternatives. |
What does “check payable to” mean? | They are basically asking for the name of the legal entity that they should write on the check. You, as a person, are a legal entity, and so you can have them pay you directly, by name. This is in effect a "sole proprietorship" arrangement and it is the situation of most independent contractors; you're working for yourself, and you get all the money, but you also have all the responsibility. You can also set up a legal alias, or a "Doing Business As" (DBA) name. The only thing that changes versus using your own name is... well... that you aren't using your own name, to be honest. You pay some trivial fee for the paperwork to the county clerk or other office of record, and you're now not only John Doe, you're "Zolani Enterprises", and your business checks can be written out to that name and the bank (who will want a copy of the DBA paperwork to file when you set the name up as a payable entity on the account) will cash them for you. An LLC, since it was mentioned, is a "Limited Liability Company". It is a legal entity, incorporeal, that is your "avatar" in the business world. It, not you, is the entity that primarily faces anyone else in that world. You become, for legal purposes, an agent of that company, authorized to make decisions on its behalf. You can do all the same things, make all the same money, but if things go pear-shaped, the company is the one liable, not you. Sounds great, right? Well, there's a downside, and that's taxes and the increased complexity thereof. Depending on the exact structure of the company, the IRS will treat the LLC either as a corporation, a partnership, or as a "disregarded entity". Most one-man LLCs are typically "disregarded", meaning that for tax purposes, all the money the company makes is treated as if it were made by you as a sole proprietor, as in the above cases (and with the associated increased FICA and lack of tax deductions that an "employee" would get). Nothing can be "retained" by the company, because as far as the IRS is concerned it doesn't exist, so whether the money from the profits of the company actually made it into your personal checking account or not, it has to be reported by you on the Schedule C. You can elect, if you wish, to have the LLC treated as a corporation; this allows the corporation to retain earnings (and thus to "own" liquid assets like cash, as opposed to only fixed assets like land, cars etc). It also allows you to be an "employee" of your own company, and pay yourself a true "salary", with all the applicable tax rules including pre-tax healthcare, employer-paid FICA, etc. However, the downside here is that some money is subject to double taxation; any monies "retained" by the company, or paid out to members as "dividends", is "profit" of the company for which the company is taxed at the corporate rate. Then, the money from that dividend you receive from the company is taxed again at the capital gains rate on your own 1040 return. This also means that you have to file taxes twice; once for the corporation, once for you as the individual. You can't, of course, have it both ways with an LLC; you can't pay yourself a true "salary" and get the associated tax breaks, then receive leftover profits as a "distribution" and avoid double taxation. It takes multiple "members" (owners) to have the LLC treated like a partnership, and there are specific types of LLCs set up to handle investments, where some of what I've said above doesn't apply. I won't get into that because the question inferred a single-owner situation, but the tax rules in these additional situations are again different. |
Can I deduct work equipment I am not required to purchase by my employer? | Old question, but in the comments of the accepted answer, I believe Nate Eldredge is correct and littleadv is incorrect. Nate copied the actual quote from the IRS guidelines, quoted below: An expense is ordinary if it is common and accepted in your trade, business, or profession. An expense is necessary if it is appropriate and helpful to your business. An expense doesn't have to be required to be considered necessary. Noise cancelling headphones certainly count as "appropriate and helpful to your business" in the software industry, especially with the trend of open office layouts. And because of the ubiquitous distractions inherent in the aforementioned office space, noise cancelling headphones are becoming quite "common and accepted" for use by developers. I'd be more hesitant about the keyboard and monitor, as presumably the employer is providing those already. As using your own could be said to just be a personal preference over those provided, the argument that providing your own version is "appropriate and helpful" is a little more shaky. I am not a tax lawyer, so don't come after me if you get audited, but my guess from reading the actual IRS guidelines is noise cancelling headphones: probably, keyboard and monitor: maybe. |
Strategies for putting away money for a child's future (college, etc.)? | I know this is a little off the wall but I bought a rental property for my son's tuition. The tenants pay down the mortgage for the next 12 years and it (hopefully) also appreciates in value. Worst case scenario is I come out with a rental and a kid with no education. He doesn't go then there's no skin off my back. |
At what point should I begin paying off student loans? | Its almost always better to pay off loans sooner rather than later. Being debt free is amazingly liberating. However, in your case, I'd be reluctant to make significant headway on a loan repayment program. Here's why: The best investment you can make, right now, is in yourself. Completing your education should be the top priority. The next would be to meet the requirements of a job after received after school is complete. So what I would do is estimate the amount of money it would take to complete school. Add to that an estimate of an amount to move to a new city and setup a household. That amount should be held in reserve. Anything above that can used to pay down loans. Once you complete school and get settled into a job, you can then take that money and also throw it at your loans. |
How to understand the caculation of interest for credit cards? | Suppose you have been paying interest on previous charges in the past. Your monthly statement is issued on April 12, and (since you just received your income tax refund), you pay it off in full on April 30. You don't charge anything to the card at all after April 12. Thus, on April 30, your credit card balance shows as zero since you just paid it off. But your April 12 statement billed you for interest only till April 12. So, on May 12, your next monthly bill will be for the interest for your nonzero balance from April 13 through April 30. Assuming that you still are not making any new charges on your card and pay off the May 12 bill in timely fashion, you will finally have a zero bill on June 12. What if you charge new items to your credit card after April 12? Well, your balance stopped revolving on April 30, and that's when interest is no longer charged on the new charges. But you do owe interest for a charge on April 13 (say) until April 30 when your balance is no longer revolving, and this will be added to your bill on May 12. Purchases made after April 30 will not be charged interest unless you fall off the wagon again and don't pay your May 12 bill in full by the due date of the bill (some time in early June). |
Can a retail trader do bid-ask spread scalping through algo-trading? | In US public stock markets there is no difference between the actions individual retail traders are "permitted" to take and the actions institutional/corporate traders are "permitted" to take. The only difference is the cost of those actions. For example, if you become a Registered Market Maker on, say, the BATS stock exchange, you'll get some amazing rebates and reduced transaction prices; however, in order to qualify for Registered Market Maker status you have to maintain constant orders in the book for hundreds of equities at significant volumes. An individual retail trader is certainly permitted to do that, but it's probably too expensive. Algorithmic trading is not the same as automated trading (algorithmic trading can be non-automated, and automated trading can be non-algorithmic), and both can be anywhere from low- to high-frequency. A low-frequency automated strategy is essentially indistinguishable from a person clicking their mouse several times per day, so: no, from a legal or regulatory perspective there is no special procedure an individual retail trader has to follow before s/he can automate a trading strategy. (Your broker, on the other hand, may have all sorts of hoops for you to jump through in order to use their automation platform.) Last (but certainly not least) you will almost certainly lose money hand over fist attempting bid-ask scalping as an individual retail trader, whether your approach is algorithmic or not, automated or not. Why? Because the only way to succeed at bid-ask scalping is to (a) always be at/near the front of the queue when a price change occurs in your favor, and (b) always cancel your resting orders before they are executed when a price change occurs against you. Unless your algorithms are smarter than every other algorithm in the industry, an individual retail trader operating through a broker's trading platform cannot react quickly enough to succeed at either of those. You would have to eschew the broker and buy direct market access to even have a chance, and that's the point at which you're no longer a retail trader. Good luck! |
How to explain quick price changes early in the morning | http://www.marketwatch.com/optionscenter/calendar would note some options expiration this week that may be a clue as this would be the typical end of quarter stuff so I suspect it may happen each quarter. http://www.investopedia.com/terms/t/triplewitchinghour.asp would note in part: Triple witching occurs when the contracts for stock index futures, stock index options and stock options expire on the same day. Triple witching days happen four times a year on the third Friday of March, June, September and December. Triple witching days, particularly the final hour of trading preceding the closing bell, can result in escalated trading activity and volatility as traders close, roll out or offset their expiring positions. June 17 would be the 3rd Friday as the 3rd and 10th were the previous two in the month. |
Trying to figure out my student loans | Is there anything here I should be deathly concerned about? A concern I see is the variable rate loans. Do you understand the maximum rate they can get to? At this time those rates are low, but if you are going to put funds against the highest rate loan, make sure the order doesn't change without you noticing it. What is a good mode of attack here? The best mode of attack is to pay off the one with the highest rate first by paying more than the minimum. When that is done roll over the money you were paying for that loan to the next highest. Note if a loan balance get to be very low, you can put extra funds against this low balance loan to be done with it. Investigate loan forgiveness programs. The federal government has loan forgiveness programs for certain job positions, if you work for them for a number of years. Some employers also have these programs. What are the payoff dates for the other loans? My inexact calculations put a bunch in about 2020 but some as late as 2030. You may need to talk to your lender. They might have a calculator on their website. Why do my Citi loans have a higher balance than the original payoff amounts? Some loans are subsidized by the federal government. This covers the interest while the student is still in school. Non-subsidized federal loans and private loans don't have this feature, so their balance can grow while the student is in school. |
Why do VAT-registered businesses in the EU charge VAT to each other? | But why can't two companies exchange goods directly without paying VAT? This would make the famous carousel fraud scam impossible and businesses won't have to deal with complicated refunds. Sales tax in the United States works as you describe. Sales tax is charged only to end customers, not to businesses that themselves charge sales tax. But this means that a criminal business can charge tax and just pocket it unless someone else reports it. They can also evade income tax the same way. Not to mention other issues like cross jurisdiction taxes (e.g. internet sales often evade sales tax). The whole point of a Value Added Tax (VAT) is that they charge at each level. This creates a system where each buyer reports the tax paid to the seller so as to be able to deduct it. So the seller has to pay the VAT that they charged. Or the tax authorities know and can revoke their VAT license. If only the end user is charged tax, then fraud is easier than under a VAT. So easy, I doubt they have a special name for it. The fraudulent business just collects tax from end users and disappears. Or simply fails to record those transactions. You could call it missing transaction record fraud, but why bother? It's just straight up tax fraud. The complexity of the carousel fraud arises from the difficulty of evading a VAT. |
Will a credit card issuer cancel an account if it never incurs interest? | Remember, the card company gets a percentage at the time of purchase, as well as any interest you let them collect from you. Yes, they're still making a profit on our accounts, and they can always hope that at some point we'll run up a high enough bill to be willing to pay some interest. They may kill completely inactive cards, since they need a bit of income to pay for processing the account. But if you're actively using it, they aren't very likely to tell you to go away (though they may change which plan(s) they offer you). |
What is an “International Equity”? | International equity are considered shares of companies, which are headquartered outside the United States, for instance Research in Motion (Canada), BMW (Germany), UBS (Switzerland). Some investors argue that adding international equities to a portfolio can reduce its risk due to regional diversification. |
Can I negotiate a credit card settlement by stopping payments? | This would be on your credit for ~8 years. If it goes according to your plan, it will take 6 months to a year to do the settlement by getting behind enough to let it go to collections and then settling. The write-off will then be on your credit record for 7 years before it "falls off". Your cash out refinance would have to cover you for at least the next 8 years to be valuable. And you have a lot of assumptions to get there: In short, there's one way (or only a few ways) this works out well in your favor. There are many ways that this has the chance to hurt you. I don't like "investments" with those kind of odds. |
Is it possible to quantify the probability of sudden big movements for a high-volume stock? | In general, when companies are regarded as "hot" growth stocks, they are expected to keep up an accelerated level of growth for a good long time. That accelerated growth justifies a high PE relative to a slow-growth stock. When companies that are supposed to grow miss expectations or (worse) lose money, the markets punish the stock severely... Particularly if the company doesn't make analysts aware of problems early on. Netflix is a great example of a company bungling a few different business problems, creating a much bigger one in the process. A poorly conceived rate hike killed the reliable cash flow of the company, and that crazy Quixter thing just confused everyone. Now nobody trusts the management. BlackBerry is another example of a high performing company that just screwed up, damaging shareholders in the process. We're living in a very challenging era today, but growth stocks are always risky by nature -- growing a company rapidly is very difficult. |
What argument(s) support the claim that long-term housing prices trend upward? | The Shiller data is inflation adjusted. In effect, a flat line means that long term, housing rises with inflation, no more no less. There's no argument, just the underlying data to support his charts. This, among them. As much as I respect Nobel Prize winning Robert Shiller, his approach and analysis of the boom ignored interest rates. Say we look at a $50K earning couple. This is just below median income. At 9%, they qualify to borrow $145K. As rates fell to 4%, they qualify for $244K. Same fixed 30 term. Ignoring all other factors, the swing in rates will generate an oscillation around the long term trend. And my own data crunching suggests the equilibrium median home price will tend toward the price supported by the median income. A similar, but not identical question - Why can't house prices be out of tune with salaries? In response to Chan-Ho's comment - I'd imagine Shiller understood the interest impact. To clarify, the chart, as presented, ignores it. |
If I put dividend-paying stocks in my IRA, where does the dividend go when paid? | The dividend goes into the IRA (either reinvested automatically or remains as cash until you invest it, per your choice). You're not taxed on this dividend (IRA is a taxed-deferred account - you're taxed on the distributions, but not on the capital gains within the account). |
I'm 23, living at home, and still can't afford my own property. What could I do? | When I was 23, the Toronto housing market was approaching a record high, and I thought, "I must buy a place or I'll be locked out." And I did. Bad decision. I should have waited and saved my money. For the record, I thought I would never recover, but I did. Patience grasshopper. In actual fact the U.K. housing market is probably approaching a low, and you have a job that is paying you well enough. BUT the lesson I learned wasn't about buying at a high or a low, it was about the need never to let external factors rush your decision making. Your decisions have to make sense for your own unique situation. If you're living at home and you have domestic bliss, mum and dad aren't crimping your style (if you know what I mean), then, enjoy it. Your credit balance sounds understandable. It's not fatal. But it's a budget killer. Make adjustments (somehow/anyhow) so that you are paying it down month by month. Take it down to £0. You will feel amazing once you do it. After that, use the money that you were paying onto your credit card and start saving it. Whether you ultimately use the money for a house down-payment or your retirement, doesn't matter. Just get into the situation where you're saving. |
Bollinger Bands and TRENDING market | Bollinger Bands are placed standard deviations away from the moving average. Therefore if the price is volatile, the bands diverge from the mean. During consolidation the bands would converge. They do not provide a clear indication of whether the price is trending or not. |
In what ways can a public company ask for money? | There are many different methods for a corporation to get money, but they mostly fall into three categories: earnings, debt and equity. Earnings would be just the corporation's accumulation of cash due to the operation of its business. Perhaps if cash was needed for a particular reason immediately, a business may consider selling a division or group of assets to another party, and using the proceeds for a different part of the business. Debt is money that (to put it simply) the corporation legally must repay to the lender, likely with periodic interest payments. Apart from the interest payments (if any) and the principal (original amount leant), the lender has no additional rights to the value of the company. There are, basically, 2 types of corporate debt: bank debt, and bonds. Bank debt is just the corporation taking on a loan from a bank. Bonds are offered to the public - ie: you could potentially buy a "Tesla Bond", where you give Tesla $1k, and they give you a stated interest rate over time, and principal repayments according to a schedule. Which type of debt a corporation uses will depend mostly on the high cost of offering a public bond, the relationships with current banks, and the interest rates the corporation thinks it can get from either method. Equity [or, shares] is money that the corporation (to put it simply) likely does not have a legal obligation to repay, until the corporation is liquidated (sold at the end of its life) and all debt has already been repaid. But when the corporation is liquidated, the shareholders have a legal right to the entire value of the company, after those debts have been paid. So equity holders have higher risk than debt holders, but they also can share in higher reward. That is why stock prices are so volatile - the value of each share fluctuates based on the perceived value of the entire company. Some equity may be offered with specific rules about dividend payments - maybe they are required [a 'preferred' share likely has a stated dividend rate almost like a bond, but also likely has a limited value it can ever receive back from the corporation], maybe they are at the discretion of the board of directors, maybe they will never happen. There are 2 broad ways for a corporation to get money from equity: a private offering, or a public offering. A private offering could be a small mom and pop store asking their neighbors to invest 5k so they can repair their business's roof, or it could be an 'Angel Investor' [think Shark Tank] contributing significant value and maybe even taking control of the company. Perhaps shares would be offered to all current shareholders first. A public offering would be one where shares would be offered up to the public on the stock exchange, so that anyone could subscribe to them. Why a corporation would use any of these different methods depends on the price it feels it could get from them, and also perhaps whether there are benefits to having different shareholders involved in the business [ie: an Angel investor would likely be involved in the business to protect his/her investment, and that leadership may be what the corporation actually needs, as much or more than money]. Whether a corporation chooses to gain cash from earnings, debt, or equity depends on many factors, including but not limited to: (1) what assets / earnings potential it currently has; (2) the cost of acquiring the cash [ie: the high cost of undergoing a public offering vs the lower cost of increasing a bank loan]; and (3) the ongoing costs of that cash to both the corporation and ultimately the other shareholders - ie: a 3% interest rate on debt vs a 6% dividend rate on preferred shares vs a 5% dividend rate on common shares [which would also share in the net value of the company with the other current shareholders]. In summary: Earnings would be generally preferred, but if the company needs cash immediately, that may not be suitable. Debt is generally cheap to acquire and interest rates are generally lower than required dividend rates. Equity is often expensive to acquire and maintain [either through dividend payments or by reduction of net value attributable to other current shareholders], but may be required if a new venture is risky. ie: a bank/bondholder may not want to lend money for a new tech idea because it is too risky to just get interest from - they want access to the potential earnings as well, through equity. |
What constitutes illegal insider trading? | It becomes illegal when it is both material and nonpublic information. Material being defined as: Information that you would want and significantly alters the perception of the stock. To your point -- "materiality" is really up to the courts Nonpublic This is a little easier to define, but need to be careful if the information is disclosed selectively -- ie to just a small number of investment analysts -- this may still be nonpublic There is also an exception to this -- Mosaic Theory - This is the research you are referring to where the analyst calls up suppliers, etc and obtains information that is nonmaterial (wouldn't move the price of the security) but using experience and combined with public information creates something that is meaningful and could move the price of the security. This is perfectly legal. Material examples: |
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