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Is it accurate to say that if I was to trade something, my probability of success can't be worse than random? | It seems to be that your main point is this: No matter what, my chances cannot be worse than random and if my trading system has an edge that is greater than the percentage of the transaction that is transaction cost, then I am probabilistically likely to make a profit? In general, yes, that is true, but... Consider this very bad strategy: Buy one share of stock and sell it one minute later, and repeat this every minute of the day. Obviously you would bleed your account dry with fees. However, even this horrible strategy still meets your criteria because: if this bad strategy had an edge beyond the transaction fees you would likely still make a profit. In other words, your conclusion reduces to an uninteresting statement: If there were no transactions fees, then if your trading system has an edge then you will likely make a profit. Sorry to be the bearer of bad news, but IMHO, that statement, and others made in the question are just obvious things stated in convoluted ways. I don't want to discourage you from thinking about these things though. I personally really enjoy these type of thought experiments. I just feel you missed the mark on this one... |
what's the best option to save money on everyday expenses? | There is a saying in business: what gets measured gets done. Track every expense you make. Later, look over what you have learned. If 5% of your total budget is going to something frivolous, maybe you could halve it? If 1% or 0.1% is going to that frivolous expense, there's not much to be gained even by eliminating it. If you spend $200/mo on coffees, dropping those will help. If you spend $10/mo on coffees, you need to look elsewhere for your big savings. Have a target: I want to put $X into savings each month. Therefore I can only spend $Y. What do you have to change about last month's spending patterns to get down to $Y? Where are the easy targets for you? They will be different than the easy targets for me. What absolutely cannot change for you? Once you know the costs of what you're doing, you will know where it's possible to save, and where it's "worth it" to economize. |
Iraqi Dinars. Bad Investment, or Worst Investment? | Once a currency loses value, it never regains it. Period. Granted there have been short term periods of deflation, as well as periods where, due to relative value fluctuation, a currency may temporarily gain value against the U.S. dollar (or Euro, Franc, whatever) but the prospect of a currency that's lost 99.99% of its value will reclaim any of that value is an impossibility. Currency is paper. It's not stock. It's not a hard commodity. It has no intrinsic value, and no government in history has ever been motivated to "re-value" its currency. Mind you, there have been plenty of "reverse splits" where a government will knock off the extraneous zeroes to make handling units of the currency more practical. |
Are the “debt reduction” company useful? | Many of the services are scams, and those that are not are just doing something you can do yourself - as Jack points out. |
Where should I be investing my money? | Pay off your debt. As you witnessed, no "investment" % is guaranteed. But your debt payments are... so if you have cash, the best way to "invest" it is to pay off your debt. Since your car is depreciating while your house may be appreciating (don't know but it's possible) you should pay off your car loan first. You're losing money in more than one way on that investment. |
Do market shares exhaust? | If the share is listed on a stock exchange that creates liquidity and orderly sales with specialist market makers, such as the NYSE, there will always be a counterparty to trade with, though they will let the price rise or fall to meet other open interest. On other exchanges, or in closely held or private equity scenarios, this is not necessarily the case (NASDAQ has market maker firms that maintain the bid-ask spread and can do the same thing with their own inventory as the specialists, but are not required to by the brokerage rules as the NYSE brokers are). The NYSE has listing requirements of at least 1.1 million shares, so there will not be a case with only 100 shares on this exchange. |
If I have a home loan preapproval letter for x, can the seller know this without me explicitely telling them? | I will preface saying that I only have personal experience to go on (purchased home in KS earlier this year, and have purchased/sold a home in AR). You do not give the seller the document stating the amount you have been approved for. Your real estate agent (I recommend having one if you don't) will want to see it to make sure you will actually be able to purchase a house though. But the contract that is sent to the Seller states the total purchase price you are willing to pay and how much of that will be financed. Link to blank KS real estate contract shows what would be listed. Looks like it is from 2012 - it is similar to the one I had back in March, but not exactly the same format. |
Are there any risks from using mint.com? | With Mint you are without a doubt telling a third party your username and password. If mint gets compromised, or hires a bad actor, technically there isn't anything to stop shenanigans. You simply must be vigilant and be aware of your rights and the legal protections you have against fraud. For all the technical expertise and careful security they put in place, we the customers have to know that there is not, nor will there ever be, a perfectly secure system. The trade off is what you can do for the increased risk. And when taken into the picture of all the Other* ways you banking information is exposed, and how little you can do about it, mint.com is only a minor increase in risk in my opinion. *See paypal, a check's routing numbers, any e-commerce site you shop at, every bank that has an online facing system, your HR dept's direct deposit and every time you swipe your debit / credit card somewhere. These are all technically risks, some of which are beyond your control to change. Short of keeping your money in your mattress you can't avoid risk. (And then your mattress catches fire.) |
What are the implications of a corporate stock repurchase or share buyback program? | The future shares will be fewer in number, yet have claim to less cash in the bank. All in all, there's little reason the shares would rise in value. Say there are 1M shares, trading at $10. Market cap is $10M of course. Now, there happens to be $2M cash in the bank so each share had about $2 cash. By taking the $2M and buying 200K shares, 800K shares remain, but why would you think they'd be valued at $12.50? The same $10 value per share is now an $8M market cap as $2M has been disbursed, no less so than if it were given out in a dividend. |
Using a FOREX platform to actually change money | FX trading platforms are not used for exchanging money, they are used for trading currencies. "I know there are cheaper services like transferwise, charging about 0.5 %, but there is little/no control over the exchange rate, you just get the rate at the time of execution." With FX trading you don't have control of the exchange rate either, just like the share market, FX markets are determined by supply and demand of one currency over an other. So an individual does not have control over the exchange rate but will just get the rate at the time of the trade being executed. |
How to keep control of shared expenses inside marriage? | I'd say its time to merge finances! |
Is Stock Trading legal for a student on F-1 Visa in USA? [duplicate] | As an F1 student, I have been investing (and occasionally buying and selling within few weeks) for several years, and I have never had problems (of course I report to IRS gains/losses every year at tax time). On the other hand, the officer in charge of foreign students at my school advised me to not run ads on a website and make a profit. So, it seems to me that investing is perfectly legit for a F1 student, as it's not considered a business activity. That's obviously my personal understanding, you may want to speak with an immigration attorney to be on the safe side. |
Determine share price from S-1 for company that was bought before going public | The value of a share depends on the value of the company, which involves a lot more than the value of its assets -- it requires making decisions about what you think will happen to the company in the future. That's inherently not something that can be reduced to a single formula, at least not unless you can figure out how to represent your guesses and your confidence in them in the formula ... and even if you could do all that it would only say what you think the stock is worth; others will be using different numbers and legitimately get different results. Disagreement over value is what the stock market is all about, I'm afraid. |
Why are Rausch Coleman houses so cheap? Is it because they don't have gas? | In northwest Arkansas, most of the houses this company offers do cost about 90 - 110 dollars per square foot. The exceptions use the Whitney plan, which has the following design features (and/or problems) which happen to save the builder a lot of money: One very nice feature is the U-shaped stairway in the center of the house. It is easy to find, and has an angled landing. It might be a bit narrow, though. Does the builder bother to put rebar in the brickwork? Arkansas is in earthquake country. What are the floors like? Is the first floor a slab concrete floor with vinyl flooring (and/or carpet on thin pad) immediately above the concrete? Is the second floor bouncy, due to using long-span joists of code-minimum size? Does the builder bother to make the rear windows look as nice as the front windows? As mentioned earlier, the builder only bothers to have one side window. Where to learn more: Fernando Pagés Ruiz is a Nebraska homebuilder who wrote a book on Building the Affordable House: Trade Secrets for High-Value, Low-Cost Construction (The Taunton Press, 2005). He has also written many articles in Fine Homebuilding, including "Building Affordable Houses". True North Consulting specializes in helping builders eliminate waste and "value-engineer" their designs. True North often works with Tim Garrison, the self-proclaimed "builder's engineer". |
How to calculate new price for bond if yield increases | The duration of a bond tells you the sensitivity of its price to its yield. There are various ways of defining it (see here for example), and it would have been preferable to have a more precise statement of the type of duration we should assume in answering this question. However, my best guess (given that the duration is stated without units) is that this is a modified duration. This is defined as the percentage decrease in the bond price for a 1% increase in the yield. So, change in price = -price x duration (as %) x change in yield (in %) For your duration of 5, this means that the bond price decreases by a relative 5% for every 1% absolute increase in its yield. Using the actual yield change in your question, 0.18%, we find: change in price = -1015 x 5% x (4.87 - 4.69) = -9.135 So the new price will be 1015 - 9.135 = £1005.865 |
Why do volatility stocks/ETFs (TVIX, VXX, UVXY) trend down in the long-term? | In an attempt to express this complicated fact in lay terms I shall focus exclusively on the most influential factor effecting the seemingly bizarre outcome you have noted, where the price chart of VIX ETFs indicates upwards of a 99% decrease since inception. Other factors include transaction costs and management fees. Some VIX ETFs also provide leveraged returns, describing themselves as "two times VIX" or "three times VIX", etc. Regarding the claim that volatility averages out over time, this is supported by your own chart of the spot VIX index. EDIT It should be noted that (almost) nobody holds VIX ETFs for anything more than a day or two. This will miminise the effects described above. Typical daily volumes of VIX ETFs are in excess of 100% of shares outstanding. In very volatile markets, daily volumes will often exceed 400% of shares outstanding indicating an overwhelming amount of day trading. |
What are the best software tools for personal finance? | GnuCash—Great for the meticulous who want to know every detail of their finances. Pros: Cons: |
Does a US LLC need to file taxes if owned by a foreign citizen? | There is no such thing as double taxation. If you pay tax in the US, you CAN claim tax credits from India tax authority. For example, if you pay 100 tax in USA and your tax liability in India is 200, then you will only pay 100 (200 India tax liability minus 100 tax credits on foreign tax paid in the USA). This is always true and not depending on any treaty. If there is a treaty, the tax rate in the United States is set on the treaty and you CAN claim that final tax rate based upon that treaty. If you operate an LLC, and the income is NOT derived from United States and you have no ties with the US and that LLC is register to a foreign person (not company but a real human) then you will not have to submit tax return in the US... I advice you to read this: http://www.irs.gov/businesses/small/article/0,,id=98277,00.html |
Identifying “Dividend Stocks” | How do you find good quality dividend stocks? That is an easy one. Past performance has always been my key to this answer. also remember why you are investing in the first place. Do you want cash flow, security or capital growth. Also let's not forget... how much time do you want to devote to this venture. There is going to be a balance in your investing and your returns. More time in... the higher returns you get. As for finding good dividend stocks, look to the Dividend Aristocrats or the Dividend Contenders. These companies have consistently increased their payouts to their investors for years. There is a trading strategy that could escalate your returns. Dividend Capturing, simply put... You buy the stock before the ex-date and sell after date of record. Thus collecting a dividend and moving on to the next one. Warning: though this is a profitable strategy, it only works with certain stocks so do your research or find a good source. |
Assessed value of my house | I had the same thing happen to my house. I bought it in 2011 for 137,000, which was the same as the FHA appraised value (because FHA won't guarantee a loan for more than their appraiser thinks its worth). January of last year, I get the letter from the tax office and see that my house has been assessed at only 122,000. I was shocked too, until I read a similar document that Phil told you to read. The short of it is, no matter what the tax assessor calls their calculation, it is an assessment. It was mass-produced along with everyone else's in your neighborhood by looking at its specs on paper (acreage, house square footage, age, beds/baths) and by driving by your home to see its general condition. The fact that your lawn may be less well-kept than the last time they drove by could have affected the decision a little. It's very unlikely to have been a major determinant of the assessment. The assessment value affects taxes, and taxes only. It is, in most states, a matter of public record, and so it could be used by a potential buyer to negotiate a lower price. However, everyone in the housing business knows that the assessed value is not the market value, and the buyer's agent will be encouraging their client to make a more realistic bid. This "assessed value" is not an "appraisal value". An appraisal is done by someone actually walking into and through your home, inspecting the general condition inside and out, to try to make a fair evaluation of what the home is actually worth. That number is almost always going to be more than the assessment value, because it takes into account all the amenities of the home; the current fixtures, the well-kept (or recently-replaced) flooring, the energy-efficient HVAC and hot water system, etc etc. It also takes into account recent comparables; what have other houses, with the same general statistics, the same amenities, relatively close in location, sold for recently? That will still generally be different from the true market value of the home. That value is nothing more or less than what a potential buyer will pay to have it at the time you decide to sell it, and that in turn depends 100% on your potential buyers' myriad situations. Someone may lowball even the assessed value because they're looking for a deal and hoping you're desperate; you just reject the offer. Someone may be looking at comparables indicating the house is maybe overpriced by $10k. You can counter and try to come to an agreement. Or, your potential buyer could work five minutes from your house, and be willing to pay at or above your asking price because the next best possibility is another 10 miles away. Since you aren't looking to sell the home, none of this matters, except to determine any escrow payments you might be making towards property taxes. Just keep making your mortgage payment, and don't worry about it. If you really wanted to, you could petition the state for a second opinion, but you think the value should be higher; if they agree with you, they'll raise the assessed value and you'll pay more in taxes. Why in the world would you want to do that? |
Does a stay at home mom need term life insurance? | Absolutely! Just because a spouse doesn't have a taxable income, doesn't mean they aren't providing real, tangible benefit to the family economy with an important job. As tragic as it is to consider losing your spouse, are you truly in a position to replace everything they do you for you? Knowing what they do for you and appreciating the effort your spouse gives is important, but don't sell short the dollar amount of what they provide. Your life insurance policy should be to keep you whole. Without your spouse, you will need childcare. You might need domestic services to the home. What about a nanny or similar service? Would $50K cover that until your child is an adult? There are a number of added expenses in the short and long term that would occur if a spouse died. How much for a funeral? Obviously you know the amount and term depends on the age of your kid. But I think you should really try to account for the number of daily hours you spouse puts in, and try to attach a cost to those hours. Then buy insurance for them just as you would for a wage earning. For example, buy a policy that is 10x the annual cost for services it would take to compensate for your spouse. Your tolerance for risk and cost can adjust it up and down from there. |
Do banks give us interest even for the money that we only had briefly in our account? | As mentioned in other answers the interest you make is negligible and the calculations would depend on the bank. In saying that the general trend is calculate daily, pay monthly. A typical scenario would be that every night at midnight the interest for your account at that point in time is calculated. This occurs every midnight and at the end of the month the sum of those calculations will be added to your account. You could have had several significant transactions pass through your account in one day although if the interest is calculated at a specific point in time some transactions may not contribute to any interest. These calculations are worth thinking about, even in circumstances of negligible returns, as it could assist when considering combining credit cards with home loan offset accounts so it is not a complete waste of time to understand how interest is calculated. The more you know ;) |
How to prevent myself from buying things I don't want | Remember where they said "Life, liberty and the pursuit of happiness? That is the essence of this problem. You have freedom including freedom to mess up. On the practical side, it's a matter of structuring your money so it's not available to you for impulse buying, and make it automatic. Have you fully funded your key necessities? You should have an 8-month emergency fund in reserve, in a different savings account. Are you fully maxing out your 401K, 403B, Roth IRA and the like? This single act is so powerful that you're crazy not to - every $1 you save will multiply to $10-100 in retirement. I know a guy who tours the country in an RV with pop-outs and tows a Jeep. He was career Air Force, so clearly not a millionaire; he saved. Money seems so trite to the young, but Seriously. THIS. Have auto-deposits into savings or an investment account. Carry a credit card you are reluctant to use for impulse buys. Make your weekly ATM withdrawal for a fixed amount of cash, and spend only that. When your $100 has to make it through Friday, you think twice about that impulse buy. What about online purchases? Those are a nightmare to manage. If you spend $40 online, reduce your ATM cash withdrawal by $40 the next week, is the best I can think of. Keep in mind, many of these systems are designed to be hard to resist. That's what 1-click ordering is about; they want you to not think about the bill. That's what the "discount codes" are about; those are a fake artifice. Actually they have marked up the regular price so they are only "discounting" to the fair price. You gotta see the scam, unsubscribe and/or tune out. They are preying on you. Get angry about that! Very good people to follow regularly are Suze Orman or Dave Ramsey, depending on your tastes. As for the ontological... freedom is a hard problem. Once food and shelter needs are met, then what? How does a free person deny his own freedom to structure his activities for a loftier goal? Sadly, most people pitching solutions are scammers - churches, gurus, etc. - after your money or your mind. So anyone who is making an effort to get seen by you and promise to help you is probably not a good guy. Though, Napoleon Hill managed to pry some remarkable knowledge from Andrew Carnegie in his book "Think and Grow Rich". Tony Robbins is brilliant, but he lets his staff sell expensive seminars and kit, which make him look like just another shyster. Don't buy that stuff, you don't need it and he doesn't need you to buy it. |
Buying a house, Bank or rent to own? | We have realized from our experience that rent to own is a scam. They want your money either way. We are at the buying part, and finding it difficult to find a lender to give us full money the seller is asking us for the the house. The house we have isn't valued at the same it was two years ago and now we are going to lose the house because we don't have the other $40 thousand they lied about at purchase price. We will not do this again but coming from bankruptcies in the past is hard as well. |
When writing a covered call, what's the difference between a “net debit” and a “net credit”? | When you enter into a multi-legged trade where one is a buy and one is a sell, the limit is expressed as either: The gist is that you don't care what each individual piece costs; you only care what the cost of the bundle is. When you put on a buy-write, you are buying stock and selling a (covered) call against that stock. That trade will always cost money. Putting on a buy-write will always be done at a net debit. This is because is is normally impossible for a call to be worth more than its underlying stock price. There are a few possible reasons there would be a"net credit" option for what's described as a "buy-write": |
What is the true value, i.e. advantages or benefits, of building up equity in your home? | The equity you have is an asset. Locked away until you sell, and sometimes pledged as a loan if you wish. The idea that it's dead money is nonsense, it's a pretty illiquid asset that has the potential for growth (at the rate of inflation or slightly higher, long term) and provides you an annual dividend in the form of free rent. In this country, most people who own homes have a disproportionate amount of their wealth in their house. This is more a testament to the poor saving rate than anything else. For me, a high equity position means that I can sell my home and buy a lesser sized house for cash. I am older and my own goal (with the mrs) is to have the house paid and college for the kid fully funded before we think of retiring. For others, it's cash they can use to rent after they retire. I hope that helped, there's nothing magic about this, just a lot of opinions. |
Best way to invest money as a 22 year old? | First off, monozok is right, at the end of the day, you should not accept what anyone says to do without your money - take their suggestions as directions to research and decide for yourself. I also do not think what you have is too little to invest, but that depends on how liquid you need to be. Often in order to make a small amount of money grow via investments, you have to be willing to take all the investment profits from that principle and reinvest it. Thus, can you see how your investment ability is governed by the time you plan to spend without that money? They mantra that I have heard from many people is that the longer you are able to wait, the more 'risk' you can take. As someone who is about the same age as you (I'm 24) I can't exactly say yet that what I have done is sure fire for the long term, but I suggest you adopt a few principles: 1) Go read "A Random Walk Down Wall Street" by Burton G. Malkiel. A key point for you might be that you can do better than most of these professional investors for hire simply by putting more money in a well selected index fund. For example, Vanguard is a nice online service to buy indexes through, but they may require a minimum. 2) Since you are young, if you go into any firm, bank, or "financial planner," they will just think you are naive and try to get you to buy whatever is best for them (one of their mutual funds, money market accounts, annuities, some flashy cd). Don't. You can do better on your own and while it might be tempting because these options look more secure or well managed, most of the time you will barely make above inflation, and you will not have learned very much. 3) One exciting thin you should start learning now is about algorithmic trading because it is cool and super efficient. quantopian.com is a good platform for this. It is a fun community and it is also free. 4) One of the best ways I have found to watch the stock market is actually through a stock game app on my phone that has realtime stock price feed. Seeking Alpha has a good mobile app interface and it also connects you to news that has to do with the companies you are interested in. |
What does “interest rates”, without any further context, generically refer to? | Generically, interest rates being charged are driven in large part by the central bank's rate and competition tends to keep similar loans priced fairly close to each other. Interest rates being paid are driven by what's needed to get folks to lend you their money (deposit in bank, purchase bonds) so it's again related. There certainly isn't very direct coupling, but in general interest rates of all sorts do tend to swing (very) roughly in the same direction at (very) roughly the same time... so the concept that interest rates of all types are rising or falling at any given moment is a simplification but not wholly unreasonable. If you want to know which interest rates a particular person is citing to back up their claim you really need to ask them. |
What is a good asset allocation for a 25 year old? | In my opinion, the key variable for you (and others) is not age, but "vintage." Your "age" suggests that you were born in the mid-1980s, in the middle of a bull market. The most remunerative investing periods for you are likely to be in your childhood (past) and middle age (forties and early fifties). Also your, "old-old" period (around age 80, in the 2060s), if you live that long. For now, you can, and perhaps should invest cautiously, like today's 40-year olds, with a heavy emphasis on bonds. The main difference between you and them is that you can shift to stocks in about ten years, in your mid to late 30s, while they will find it harder to do so when approaching old age. |
Will my Indian debit card work in the U.S.? | You can use the debit card for practically any purchase that you make. You'll have to take the usual precautions and then a few additional ones. Cards make your life really easy and convenient with some basic precautions. All the best for your travel and stay in the USA. My two cents. |
How can I avoid international wire fees or currency transfer fees? | Check global ATM alliance they are banks that use reciprocal benefits on each other in other countries without fees. For example the in the USA Bank of America and In France it is BNP Paribas. Both are banks in this alliance. I use this option between the United States and the Caribbean my banks of choice are Bank of America in the US and in the Caribbean I use Scotia Bankand since I have accounts in both weekends I can use both ATM cards on any of these two banks without any processing fees!!!! You should check the global ATM alliance to see if it is an option that you could use. |
What is the correct pronunciation of CAGR? | I always hear people pronounce it to rhyme with "bagger". |
Should I finance a new home theater at 0% even though I have the cash for it? | Read the fine print and you will be fine. The big caveat is that if you miss a payment for any reason, you will be in default as far as the promotional financing is concerned and will typically owe ALL of the accrued interest, which is usually computed at 20-25% per year. Personally, I use these sorts of offers all of the time at places like Home Depot for stuff that doesn't generally need warranty service. (Wood, tools, etc) Usually I pay the thing off over time as CDs mature. If I'm buying a TV, computer, etc. I always use my AMEX, because I get an extra year of warranty service and points for free. |
How are they earning money in the movie “Trading Places”? | Sell 200 at 142. What does that mean? I haven't seen the movie, so I won't try to put anything in story context. "Sell 200 at 142" means to sell 200 units (usually shares, but in this case it would likely be gallons or barrels of orange juice or pounds or tons of frozen juice). In general, this could mean that you have 200 units and want to sell what you have. Or you could borrow 200 units from someone and sell those--this is called a naked short. In this case, it seems that what they are selling is a futures contract. With a futures contract, you are promising to obtain orange juice by some future date and sell it for the agreed price. You could own an orange grove and plan to turn your oranges into juice. Or you could buy a futures contract of oranges to turn into juice. Or you could arbitrage two futures contracts such that one supplies the other, what they're doing here. In general people make profits by buying low and selling high. In this case they did so in reverse order. They took the risk of selling before they had a supply. Then they covered their position by purchasing the supply. They profited because the price at which they bought was lower than the price at which they sold. The reason why this is necessary is that before buying the oranges, the orange juice makers need to know that they can make a profit. So they sell orange juice on the futures market. Then they know how much they can afford to pay for oranges on a different market. And the growers know how much they can get for oranges, so they can pay people to water and pick them. Without the futures markets, growers and orange juice makers would have to take all the risk themselves. This way, they can share risks with each other and financiers. Combined with insurance, this allows for predictable finances. Without it, growers would have to be wealthy to afford the variation in crop yields and prices. |
Currently sole owner of a property. My girlfriend is looking to move in with me and is offering to pay 'rent'. Am I at risk here? | If you are living together 'casually' (no formal partnership agreement) then my option would be to ask her politely to as she has offered make a contribution by buying the groceries or some such which you share. A 'voluntary contribution' not an enforceable one. Just as between flat mates where only one is the actual tenant of the flat but the tenancy allows 'sharing' . Check your tenancy allows you to share lodgings. PS An old Scots saying is "never do business with close family". I.e do not charge your wife or living in partner rent. It mixes emotional domestic life with a formal business life which can set feuds going in case of a break up or dispute. If you enter into child bearing relationship or parent hood or formal partnership or marriage then all this changes at some time in the future. |
Why do I get a much better price for options with a limit order than the ask price? | There are usually so many different options around for the same stock that some are rarely traded. Especially if the price has moved since the option was issued, nobody might be interested in that particular option at that price anymore. So the asking price might be something that someone asked for ages ago and that is much higher than anyone would reasonably pay today. With a bid of $20 and an ask of $30, nobody is trading, but the value of that option is somewhere between $20 and $30. If the value is below $25, someone will notice your $25 bid and sell. |
Why would you ever turn down a raise in salary? | Here in Germany there is a special case. I am studying (and working a little on the side) and still receiving child benefits from the state which is like 190€/m. Because I am getting this I don't have to pay tuition which is 1k/y. If my side income would get over the boundary (which is like 9k/y) I would lose those benefits (~3.3k) and would have to pay insurance myself (I dont know how much that would be. 50-100/m I guess.) So getting a raise from 8k to 10k sounds nice as it is a 25% raise, but it actually means getting less. |
Do people tend to spend less when using cash than credit cards? | I thought I'd see if the credit card companies had anything to say about this while trying to get merchants to sign up. I went to visa.com, clicked "Run Your Business" in the top nav, then "Accept Visa Payments". This page has a "More benefits of accepting Visa" link with an overlay (which I can't easily link directly to), which includes these lines: While the average cash transaction is $17, credit card purchases average $70 while debit card purchases average $36.² ² Visa Payment Panel Study (2Q11 to 1Q12 time period); Visa MARS Data: March 2015 – May 2015 That obviously doesn't tell the entire story (I suspect people are more likely to pull out cash when they're just buying a stick of gum, and more more likely to pull out a card when they're buying large electronics), but certainly there is some evidence from the credit card companies themselves that people spend more when using cards, which is one of the aspects they use to convince merchants to accept cards. I think the best evidence that people spend more is that more and more merchants accept cards. Accepting cards comes with some significant costs (though it's important to keep in mind that accepting cash can come with some significant costs as well). I suspect that merchants wouldn't do so unless the increased sales that they get for accepting cards makes up for the fees that they need to pay and the equipment they need to buy to accept them (not to mention the risks of chargebacks and the like). |
What are some tips for getting the upper hand in car price negotiations? | I read a really good tract that my credit union gave me years ago written by a former car salesman about negotiation tactics with car dealers. Wish I could find it again, but I remember a few of the main points. 1) Never negotiate based on the monthly payment amount. Car salesmen love to get you into thinking about the monthly loan payment and often start out by asking what you can afford for a payment. They know that they can essentially charge you whatever they want for the car and make the payments hit your budget by tweaking the loan terms (length, down payment, etc.) 2) (New cars only) Don't negotiate on the price directly. It is extremely hard to compare prices between dealerships because it is very hard to find exactly the same combination of options. Instead negotiate the markup amount over dealer invoice. 3) Negotiate one thing at a time A favorite shell game of car dealers is to get you to negotiate the car price, trade-in price, and financing all at one time. Unless you are a rain-man mathematical genius, don't do it. Doing this makes it easy for them to make concessions on one thing and take them right back somewhere else. (Minus $500 on the new car, plus $200 through an extra half point on financing, etc). 4) Handling the Trade-In 5) 99.9999% of the time the "I forgot to mention" extra items are a ripoff They make huge bonuses for selling this extremely overpriced junk you don't need. 6) Scrutinize everything on the sticker price I've seen car dealers have the balls to add a line item for "Marketing Costs" at around $500, then claim with a straight face that unlike OTHER dealers they are just being upfront about their expenses instead of hiding them in the price of the car. Pure bunk. If you negotiate based on an offset from the invoice instead of sticker price it helps you avoid all this nonsense since the manufacturer most assuredly did not include "Marketing costs" on the dealer invoice. 7) Call Around before closing the deal Car dealers can be a little cranky about this, but they often have an "Internet sales person" assigned to handle this type of deal. Once you know what you want, but before you buy, get the model number and all the codes for the options then call 2-3 dealers and try to get a quote over the phone or e-mail on that exact car. Again, get the quote in terms of markup from dealer invoice price, not sticker price. Going through the Internet sales guy doesn't at all mean you have to buy on the Internet, I still suggest going down to the dealership with the best price and test driving the car in person. The Internet guy is just a sales guy like all the rest of them and will be happy to meet with you and talk through the deal in-person. Update: After recently going through this process again and talking to a bunch of dealers, I have a few things to add: 7a) The price posted on the Internet is often the dealer's bottom line number. Because of sites like AutoTrader and other car marketplaces that let you shop the car across dealerships, they have a lot of incentive to put their rock-bottom prices online where they know people aggressively comparison shop. 7b) Get the price of the car using the stock number from multiple sources (Autotrader, dealer web site, eBay Motors, etc.) and find the lowest price advertised. Then either print or take a screenshot of that price. Dealers sometimes change their prices (up or down) between the time you see it online and when you get to the dealership. I just bought a car where the price went up $1,000 overnight. The sales guy brought up the website and tried to convince me that I was confused. I just pulled up the screenshot on my iPhone and he stopped arguing. I'm not certain, but I got the feeling that there is some kind of bait-switch law that says if you can prove they posted a price they have to honor it. In at least two dealerships they got very contrite and backed away slowly from their bargaining position when I offered proof that they had posted the car at a lower price. 8) The sales guy has ultimate authority on the deal and doesn't need approval Inevitably they will leave the room to "run the deal by my boss/financing guy/mom" This is just a game and negotiating trick to serve two purposes: - To keep you in the dealership longer not shopping at competitors. - So they can good-cop/bad-cop you in the negotiations on price. That is, insult your offer without making you upset at the guy in front of you. - To make it harder for you to walk out of the negotiation and compromise more readily. Let me clarify that last point. They are using a psychological sales trick to make you feel like an ass for wasting the guy's time if you walk out on the deal after sitting in his office all afternoon, especially since he gave you free coffee and sodas. Also, if you have personally invested a lot of time in the deal so far, it makes you feel like you wasted your own time if you don't cross the goal line. As soon as one side of a negotiation forfeits the option to walk away from the deal, the power shifts significantly to the other side. Bottom line: Don't feel guilty about walking out if you can't get the deal you want. Remember, the sales guy is the one that dragged this thing out by playing hide-and-seek with you all day. He wasted your time, not the reverse. |
How to finance my trading strategy in foreign exchange trading? | how can I get started knowing that my strategy opportunities are limited and that my capital is low, but the success rate is relatively high? A margin account can help you "leverage" a small amount of capital to make decent profits. Beware, it can also wipe out your capital very quickly. Forex trading is already high-risk. Leveraged Forex trading can be downright speculative. I'm curious how you arrived at the 96% success ratio. As Jason R has pointed out, 1-2 trades a year for 7 years would only give you 7-14 trades. In order to get a success rate of 96% you would have had to successful exploit this "irregularity" at 24 out of 25 times. I recommend you proceed cautiously. Make the transition from a paper trader to a profit-seeking trader slowly. Use a low leverage ratio until you can make several more successful trades and then slowly increase your leverage as you gain confidence. Again, be very careful with leverage: it can either greatly increase or decrease the relatively small amount of capital you have. |
Where can publicly traded profits go but to shareholders via dividends? | If a company earns $1 Million in net profit (let's say all cash, which is not entirely realistic), it can do one of three things with it: On the balance sheet - profits that have not been distributed show up as "retained earnings". When dividends are paid, Retained Earnings and cash are reduced. None of the other options change the fact that it is still "profit" - they all just affect the balance sheet, not the income statement: Note that when a company issues dividends, it reduces its per-share value since cash is leaving the door with nothing in return. In Apple's case, since a significant amount of its profit was earned in other countries (where it was not taxed by the US), it would pay a significant amount in US corporate tax by bringing it back to the US by investing it or paying dividends. They are betting that at some point, the US will change the rules to make it more favorable to "repatriate" the money and reduce their tax significantly. |
Why buy insurance? | The odds could very well be in your favor, even when the insurance company expects profit. What matters to you is not the expected amount of money you'll have, but the expected amount of utility you'll get from it: getting enough money to buy food to eat is much more important than getting enough money to be able to buy that fiction book too. The more money you have, the less a dollar is worth to you: consequently, if you have enough money, it's worth spending some to prevent yourself from getting into a situation where you don't have enough money. |
Credit card transactions for personal finances | I use mint.com for tracking my finances. It works on mobile phones, tablets, and in a browser. If you don't mind the initial hassle of putting in the credentials you use to access your account online, you'll find that you're able to build a comprehensive picture of the state of your finances relatively quickly. It does a great job of separating the various types of financial transactions you engage in, and also lets you customize those classifications with tags. It's ad-supported, so there's no out-of-pocket cost to you, and it doesn't preclude you from using the personal finance software you already have on your phone. |
How to avoid getting back into debt? | First, you've learned a very good lesson that quite a few people miss out on: notice how easy it is to get out of debt when you get a windfall of money? The trouble is that if a person doesn't have the behavior to maintain their position, they will end up in the same place. Many lottery winners end up being poor in the long run because their behavior is the problem, not their finances. If you feel that you're going to end up in debt again, this means simply that somewhere in your finances, your expenses exceed your income. Simply put, there's only two fundamental things that can be done: You can do one or the other, or both. Over budgeting, I prefer automation - automate your bills and spending by setting up a bill and spending account and when the money's gone, it's gone (you can tell yourself at that point, "I have to find another source of income before I spend more"). This not only helps you show where your money is going now, it also puts a constraint on your spending, which sounds like most of the problem currently. Many of my friends and I make our saved/invested money VERY HARD to access, so that we can't get it immediately (like putting it in an account that will require three or four days to get to). The purpose of this is to shape your behavior into actions of either increasing your income, decreasing your spending, or both. |
What do brokerage firms do? | Off the top of my head, a broker: While there are stock exchanges that offer direct market access (DMA), they (nearly) always want a broker as well to back the first two points I made. In that case the broker merely routes your orders directly to the exchange and acts as a custodian, but of course the details heavily depend on the exchange you're talking about. This might give you some insight: Direct Market Access - London Stock Exchange |
Should I use put extra money toward paying off my student loans or investing in an index fund? | From a purely financial standpoint (psychology aside) the choice between paying off debt and investing on risky investments boils down to a comparison of risk and reward. Yes, on average the stock market has risen an average of 10% (give or take) per year, but the yearly returns on the S&P 500 have ranged from a high of 37.6% in 1995 to a low of -37% in 2008. So there's a good chance that your investment in index funds will get a better return than the guaranteed return of paying off the loan, but it's not certain, and you might end up much worse. You could even calculate a rough probability of coming out better with some reasonable assumptions (e.g. if you assume that returns are normally distributed, which historically they're not), but your chances are probably around 30% that you'll end up worse off in one year (your odds are better the longer your investment horizon is). If you can tolerate (meaning you have both the desire and the ability to take) that risk, then you might come out ahead. The non-financial factors, however - the psychology of debt, the drain on discretionary cash flow, etc. cannot be dismissed as "irrational". Paying off debt feels good. Yes, finance purists disagree with Dave Ramsey and his approaches, but you cannot deny the problems that debt causes millions of households (both consumer debt and student loan debt as well). If that makes them mindless "minions" because they follow a plan that worked for them then so be it. (disclosure - I am a listener and a fan but don't agree 100% with him) |
Pension or Property: Should I invest in more properties, or in a pension? | I think the real answer to your question here is diversification. You have some fear of having your money in the market, and rightfully so, having all your money in one stock, or even one type of mutual fund is risky as all get out, and you could lose a lot of your money in such a stock-market based undiversified investment. However, the same logic works in your rental property. If you lose your tennant, and are unable to find a new one right away, or if you have some very rare problem that insurance doesn't cover, your property could become very much not a "break even" investment very quickly. In reality, there isn't any single investment you can make that has no risk. Your assets need to be balanced between many different market-investments, that includes bonds, US stocks, European stocks, cash, etc. Also investing in mutual funds instead of individual stocks greatly reduces your risk. Another thing to consider is the benefits of paying down debt. While investments have a risk of not performing, if you pay off a loan with interest payments, you definitely will save the money you would have paid in interest. To be specific, I'd recommend the following plan - |
What is a good way to save money on car expenses? | Manage the fuel consumption price: check the pattern of fuel prices if you can for your area. Some areas have weekly changes which are somewhat predictable and some sites will even predict the minimum price for the next day. Some other areas will have a discount fuel day. Switch to diesel: fuel consumption by diesel engines are much better than standard combustion engines. Downside is not as many refueling stations. Switch to a hybrid: fuel consumption is better than comparable combustion engines alone but the downside is that the technology is new and still maturing. Check out this site for more information. |
How much time would I have to spend trading to turn a profit? | Don't go for the 'fast buck'. There's no such thing. There are two types of people that make money on the stock market: Investors and Speculators. Investors are people that pick a stock that's relatively low, relatively secure, and buy the stock for the long run, 5, 10 years or more. Warren Buffet said his ideal period for investing is forever. Basically, a well run company should always be a good investment. Speculators go for the fluctuations in stock prices. Day traders, Options, etc. It's risky business and you'll be able to lose a lot of money in a short term. There's always a risk when you invest your money, so go with MrChrister's advise to start with a simulator. Have fun. |
How can I deposit a check made out to my business into my personal account? | You should have a separate business account. Mixing business and personal funds is a bad practice. Shop around, you should be able to find a bank that will let you open a free checking account, especially if you are going to have minimal activity (e.g. less than 20 of checks per month) and perhaps maintain a small balance (e.g. $100 or $500). |
How to declare foreign gift of nearly $10,000 | Actually banks aren't required to (and don't) report on 8300 because they already report $10k+ cash transactions to FinCEN as a Currency Transaction Report (CTR), which is substantively similar; see the first item under Exceptions in the second column of page 3 of the actual form. Yes, 8300 is for businesses, that's why the form title is '... Received In A Trade Or Business'. You did not receive the money as part of a trade or business, and it's not taxable income to you, so you aren't required to report receiving it. Your tenses are unclear, but assuming you haven't deposited yet, when you do the bank will confirm your identity and file their CTR. It is extremely unlikely the government will investigate you for a single transaction close to $10k -- they're after whales and killer sharks, not minnows (metaphorically) -- but if they do, when they do, you simply explain where the money came from. The IRS abuses were with respect to people (mostly small businesses) that made numerous cash deposits slightly under $10k, which can be (but in the abuse cases actually was not) an attempt to avoid reporting, which is called 'structuring'. As long as you cooperate with the bank's required reporting and don't avoid it, you are fine. |
I'm thinking of getting a new car … why shouldn't I LEASE one? | You SHOULDN'T lease one if you are going to get an economy car, if you don't drive too much (<15K / year), and you want to hang on to the car for a long time. Otherwise, if you are a regular driver, driving a leased new quality car can be cost effective. Many cars now have bumper-to-bumper warranties that last as long as the lease (say 80K). So there is rarely any extra costs apart from regular maintenance. The sweet spot for most new cars is in the 5th, 6th, or 7th years, after they are paid off. But at that point, you may find you have maintenance bills that are approaching an average of $200 - $300 per month. In which case, a lease starts to look pretty good. I owned a 7 year old Honda Accord that cost only $80 less per month in maintenance than the new leased VW that replaced it. Haven't looked back after that. Into my 3rd car and 9th year of leasing. |
Why would my job recruiter want me to form an LLC? | This is pretty normal. I am in the UK and currently doing the exact same thing. As some answers state there is additional tax law called IR35. But thats all it is, an additional tax law that may be applicable to your situation (it very well may not). It is all perfectly legal and common (all my university friends now do it). You will be the director of a company, and invoice the recruiters company. This has benefits and disadvantages. Personally I love it, but each to their own. Don't do it if you don't want to. |
Question about being a resident | This sort of involves personal finance, and sort of not. But it's an interesting question, so let's call it on topic? Short answer: yes. Long answer: it depends who's asking. If you're trying to qualify for in-state tuition, for example, you need to have been in state for a certain amount of time. For tax purposes, the first year you move to a new state you need to file part-time resident returns in your previous and current state of residency |
Question about protecting yourself from company not beating earning eastimate | The best thing to do to avoid this is not to sell as you've described. What purpose does it solve? If you're speculating, set a price at which you want to cash out and put a limit order. If you're a long term investor, then unless something fundamental has changed - why would you sell? |
Does doing your “research”/“homework” on stocks make any sense? | TL;DR: Sure, "do your own homework" is sometimes a cop out. But that doesn't mean we shouldn't do our homework. I agree that in many cases this is a cop-out by commentators. However, even if you believe in perfect market efficiency, there is benefit in "doing your homework" for many reasons. One of which you already mention in the question: different stocks all with the same "value" might have widely ranging risk. Another factor that might vary between stocks is their tax consequences. High dividend stocks might be a better fit for some buyers than others. One stock might be priced at $40 because there is a small chance they might get regulatory approval for a new product. This might make this stock very risky with a 20% of being $150 in 12 months, and a 80% chance of being $20. Another stock might be priced at $40 because the company is a cash cow, declining in revenues but producing a large dividend of $0.40 per quarter. Low risk, but also with some potential tax disadvantages. Another stock might be priced at $40 because it's a high growth stock. This would be less risky than the first example, but more risky than the second example. And the risk would be more generalized, i.e. there wouldn't be one day or one event that would be make or break the stock. In short, even if we assume that the market is pricing everything perfectly, not all stocks are equal and not all stocks are equally appropriate to everyone. Sometimes when we hear an analyst say "they should have done their homework" they are really saying "This was a high risk/high reward stock. They should have known that this had a potential downside." And that all assumes that we believe in 100% pure market efficiency. Which many disagree with, at least to some extent. For example, if we instead subscribe to Peter Lynch's theories about "local knowledge", we might believe that everyone has some personal fields of expertise where they know more than the experts. A professional stock analyst is going to follow many stocks and many not have technical experience in the field of the company. (This is especially true of small and mid cap stocks.) If you happen to be an expert in LED lighting, it is entirely feasible (at least to me) that you could be able to do a better job of "doing homework" on CREE than the analysts. Or if you use a specialized piece of software from a small vendor at work, and you know that the latest version stinks, then you will likely know more than the analyst does. I think it is somewhat akin to going to a doctor. We could say to ourselves "the doctor is more knowledgeable about me than medicine, I'm just going to do what they tell me to do." And 99% of the time, that is the right thing to do. But if we do our "homework" anyway, and research the symptoms, diagnoses, and drugs ourselves as well, we can do get benefits. Sometimes we just can express our preferences amongst equal solutions. Sometimes we can ask smarter questions. And sometimes we have some piece of knowledge that the doctor doesn't have and can actually make an important discovery they didn't know. (And, just like investing, sometimes we can also have just enough knowledge to be dangerous and do ourselves harm if we go against the advice of the professionals.) |
Investing money 101 | The way to invest money in a company is to buy its shares, or derivatives of its shares. However, it seems you're way in over your head. Don't buy what you don't understand. There is plenty of material to teach you about stock investing on the internet. However, a book may be the fastest way to learn what you need to know. And yes, there is a "for dummies" book about that: Stock Investing ForDummies. I just found it by Googling, I'm sure you can find even more interesting books out there. (Note, the link is to the "cheat sheet" in the back of the book. The full book is worth reading.) |
How will going from 75% Credit Utilization to 0% Credit Utilization affect my credit score? | You really don't know how credit scoring works. Let's think about the purpose of a credit score: to assess whether you're a high default risk. A lender wants to know, in this order: Utilization factors into the solvency assessment. If you are at 100% utilization of your unsecured credit, you're insolvent -- you can't pay your bills. If you are at 0%, you're as solvent as you can be. Most people who use credit cards are somewhere in the middle. When a bank underwrites a large loan like a mortgage or car loan, they use your credit score an application information like income and employment history to figure out what kind of loan you qualify for. Credit cards are called "revolving" accounts for a reason -- you're supposed to use them to buy crap and pay your bill in full at the end of the month. My advice to you: |
Price Earnings Ratio | Your question asks us to explain why a false statement is true. From the point of view of an investor, a high price to earnings ratio is not necessarily desirable. From the point of view of an investor, a desirable stock is one that is likely to provide future dividends or price increases that more than compensates for the risk of the stock. This information cannot be inferred from the P/E ratio. So what does the P/E ratio tell us? The P/E ratio measures a stock's current price (i.e., the market's belief about its future earnings) divided by its recent past earnings. A high ratio means the market thinks earnings in the future will be higher than they are now and have therefore bid the price up. These can thought of as expensive stocks, and are often called "growth" stocks because their price is driven by the market's belief in future growth. Some individual high P/E stocks do live up to or exceed the market's expectation, but there's no evidence that this happens enough that they are more desirable as a group than low P/E stocks. If anything, the empirical evidence goes the other way. |
How can I get the car refinanced under my name if my girlfriend signed for the loan? | You should have her sell it to you for the amount of the outstanding loan. You take out a loan in your name for the amount (or at least, the amount you have to come up with). You then transfer the title from her to you, just as you would if you were buying the car from someone else. While the title is in her name, she has ownership. This isn't a technicality, this is the explicit legal situation you two have agreed to. |
Why do governments borrow money instead of printing it? | I believe there are two ways new money is created: My favorite description of this (money creation) comes from Chris Martenson: the video is here on Youtube. And yes, I believe both can create inflation. In fact this is what happened in the US between 2004 and 2007: increasing loans to households to buy houses created an inflation of home prices. |
Can saving/investing 15% of your income starting age 25, likely make you a millionaire? | Millionaire, Shmillionaire! Let's do this calculation Bruno Mars style (I wanna be a Billionaire...) If my calculations are correct, in the above scenario, at age 80, you would have more than a billion in the bank, after taxes. |
What should I do with my $25k to invest as a 20 years old? | I recommend a Roth IRA. At your age you could turn 25K into a million and never pay taxes on these earnings. Of course there are yearly limits (5.5k) on the amount your can contribute to a Roth IRA account. If you haven't filed your taxes this year yet ... you can contribute 5.5K for last year and 5.5K for this year. Open two accounts at a discount brokerage firm. Trades should be about $10 or less per. Account one ... Roth IRA. Account two a brokerage account for the excess funds that can't be placed in the Roth IRA. Each year it will be easy transfer money into the Roth from this account. Be aware that you can't transfer stocks from brokerage acct to Roth IRA ... only cash. You can sell some stocks in brokerage and turn that into cash to transfer. This means settling up with the IRS on any gains/losses on that sale. Given your situation you'd likely have new cash to bring to table for the Roth IRA anyway. Invest in stocks and hold them for the long term. Do a google search for "motley fool stock advisor" and join. This is a premium service that picks two stocks to invest in each month. Invest small amounts (say $750) in each stock that they say you should buy. They will also tell you when to sell. They also give insights into why they selected the stock and why they are selling (aka learning experience). They pick quality companies. So if the economy is down you will still own a quality company that will make it through the storm. Avoid the temptation to load up on one stock. Follow the small amount rule mentioned above per stock. Good luck, and get in the market. |
Does bull/bear market actually make a difference? | If you know what you are doing, bear markets offer fantastic trading opportunities. I'm a futures and futures options trader, and am equally comfortable trading long or short, although I have a slight preference for the short side, in that moves are typically much quicker to the down side. |
Co- Signed car loan and need to have the other signer relinquish claim to ownership | Your arrangements with the bank are irrelevant. Whoever is named on the title of the vehicle owns it. If she is the "primary", then I assume her name is on the title, therefore she owns the car. If you drive off with the car and it is titled in her name, she can report it stolen and have you arrested for grand theft auto unless you have a dated and signed permission in writing from her to use the car. Point #2: If a car loan was involved, then you didn't "purchase" the car, the bank did. If you want to gain ownership of the car, then you need to have her name removed from the title and have yours put in its place. Since the bank has possession of the title, this will require the cooperation of both your girlfriend and the bank. |
Are lottery tickets ever a wise investment provided the jackpot is large enough? | The other answers here do an excellent job of laying out the mathematics of the expected value. Here is a different take on the question of whether lottery tickets are a sensible investment. I used to have the snobbish attitude that many mathematically literate people have towards lotteries: that they are "a tax on the mathematically illiterate", and so on. As I've gotten older I've realized that though, yes, it is certainly true that humans are staggeringly bad at estimating risks, that people actually are surprisingly rational when they spend their money. What then is the rational basis for buying lottery tickets, beyond the standard explanation of "it's cheap entertainment"? Suppose you are a deeply poor person in America. Your substandard education prepared you for a job in manufacturing which no longer exists, you're working several minimum wage jobs just to keep food on the table, and you're one fall off a ladder from medical-expense-induced total financial disaster. Now suppose you have things that you would like to spend truly enormous amounts of money on, like, say, sending your children to schools with ever-increasing tuitions, or a home in a safe neighbourhood. Buying lottery tickets is a bad investment, sure. Name another legal investment strategy that has a million-dollar payout that is accessible to the poor in America. Even if you could invest 10% of your minimum-wage salary without missing the electricity bill, that's still not going to add up to a million bucks in your lifetime. Probably not even $100K. When given a choice between no chance whatsoever at achieving your goals and a cheap chance that is literally a one-in-a-million chance at achieving your goals the rational choice is to take the bad investment option over no investment at all. |
RSU vested recently | ML is a brokerage firm. Tell them to sell. If you can't or don't know how to do it on-line - call them and do it over the phone. Your citizenship might come in effect when tax are withheld, you need to fill form W8-BEN if you haven't done so yet. If US taxes are withheld, you can file 1040NR to request refund, or get it credited against your local tax liabilities. |
Should I pay off my student loan before buying a house? | Paying off your student loan before buying a house is certainly a great risk reduction move for you. It will lower your debt to income ratio allowing your mortgage approval to go easier and it will free up more of your dollars to pay for the many miscellaneous projects that come with buying a house. I think that if you are considering paying off your student loan before buying a house that means that your student loans are an amount you can fathom paying off and that you are motivated to be rid of your student loan debt. Go for it and pay off your student loan. |
What is the incentive for a bank to refinance a mortgage at a lower rate? | What are you missing? Volume. Bank of America is more than willing to refinance a loan from Wells Fargo as long as the loan is still profitable. There are some caveats with that, though. For one, many land have penalties if they are paid off within two or three years. Additionally, the fact that banks are offering to refinance at great rates doesn't mean that you'll be approved, or that you'll get those rates. If you could post some actual numbers, we could help you see if it's a good deal to refi, and explain exactly where the bank expects it's profit. |
Buying USA Stocks from Sri Lanka | I'm not aware of any method to own US stocks, but you can trade them as contract for difference, or CFDs as they are commonly known. Since you're hoping to invest around $1000 this might be a better option since you can use leverage. |
Can you beat the market by investing in double long ETFs? [duplicate] | See http://blogs.reuters.com/felix-salmon/2011/04/30/why-the-sec-should-look-at-levered-etfs/?dlvrit=60132, http://symmetricinfo.org/2011/04/are-investors-in-levered-short-treasury-etfs-a-disaster-waiting-to-happen-pt1/, and the articles linked from it: The issue with holding a levered ETF past 1 day is that investors expose themselves to path dependency in the underlying.... The reason for the difference in payouts comes from the fact that the manager of the levered ETF promises you a multiple of the daily returns of the underlying. To be able to promise you these daily returns, the ETF manager has to buy/sell some of the underlying every day to position himself to have a constant leverage ratio the next day. The short video below explains this process in detail for a 2x long ETF, but the same result holds for a 2x short ETF: the manager has to buy more of the underlying on a day when the underlying increases in value and sell more of the underlying when the underlying goes down in value . |
In a competitive market, why is movie theater popcorn expensive? | A multiplex is a concession stand which happens to show movies in order to lure you into range of the smell of their popcorn. It has nothing to do with movie theater monopolies. As it was explained to me by my manager, back when I worked in a movie theater in a small Midwestern chain, for every movie, the studios take some percentage cut of gross ticket sales, varying from movie to movie. Star Wars: The Phantom Menace in 1999 was the first film for which the studio demanded 90% of gross ticket price — continuing a long-standing trend of raising the take which possibly began with the original first Star Wars movie. The other studios quickly followed suit and raised their take to 90%, especially for the big blockbusters — the textbook term is "oligopoly pricing" — and since then the percentage has inched ever closer to 100%. I forget exactly what it was on the second Matrix movie or Lord of the Rings: Return of the King, both of which premiered while I was at the theater, but the number that sticks in my head is 94%. Obviously the studios can't directly capture any revenue from the sale of popcorn — unlike the movie, it's not their product — so every time they raise their take, the theater compensates for lost revenue by raising the price of popcorn. This trend hasn't reversed with 3D and IMAX and all the new technologies coming down the pike. The only reason they're attractive to the theaters is that the theater can charge $15 a ticket rather than $10. Even on a small percentage share, that's a 50% jump in revenue, and covers the not insignificant cost of the projection equipment. 3D is also currently getting more butts in seats than 2D was, leading to somewhat more concessions sales — going to the movies is an outing and an event again — though that's tapering off as it becomes less and less of a novelty. The ticket prices aren't coming down, though. Moral of the story: like razors or printers, theaters lose a ton of money to show you movies due to studio oligopoly pricing, and make it up on popcorn. |
What forms do I need to fill out for a super basic LLC closing? | If it is a sole proprietorship and you didn't make another mistake by explicitly asking the IRS to treat it as a corporation - there are no IRS forms to fill. You'll need to dissolve the LLC with your State, though, check the State's department of State/Corporations (depending on the State, the names of the departments dealing with business entities vary). |
How is income tax calculated in relation to selling used items? | Yes. This income would be reported on schedule SE. Normally, you will not owe any tax if the amount is less than $400. Practically, $100 in a garage sale is not why the IRS created the form SE. I wouldn't lose sleep over keeping track of small cash sales over the course of a year. However, if you have the information I'm not going to tell you not to report it. |
Cons of withdrawing money from an Roth IRA account? | One "con" I have not yet seen mentioned: retirement accounts are generally protected from creditors in a bankruptcy. There are limits and exceptions, Roth has a 1.2 million dollar limit and can be split by a divorce QDRO for instance. Link Since it seems you have no income this year, you may may be raiding your IRA for living expenses. If there is a chance you may declare bankruptcy in the next year or so, consider doing that first and raid the IRA for seed money after. |
What is the maximum I can have stored in a traditional 401(k) and a Roth 401(k)? | The numbers aside (I'd not assume 12%/yr) there is no limit to the balance. There are 401(k) accounts that have great matching and profit sharing deposits putting the per year limit closer to $45k, combine that with company stock in, say, Apple which has risen 60 fold this past decade, and balances in the tens of millions are possible. |
Do I owe taxes in the US for my LLC formed in the US but owned by an Indian citizen? | You're doing business in the US and derive income from the US, so I'd say that yes, you should file a non-resident tax return in the US. And in Connecticut, as well, since that's where you're conducting business (via your domestic LLC registered there). Since you paid more than $600 to your contractor, you're probably also supposed to send a 1099 to him on that account on behalf of your LLC (which is you, essentially, if you're the only member). |
How's the graph of after/pre markets be drawn? | the data source is the same as the live market trading. pre and after market trading are active markets and there are actual buyers and sellers getting their orders matched. |
Source(s) for hourly euro/usd exchange rate historic data? | See the FX section of the quantitative finance SE data wiki. |
How can I help my friend change his saving habits? | If he's not used to cooking, recipes might not be enough. Maybe he needs cooking lessons. I used to think if you could read, you could cook -- but I grew up "helping" my mom in the kitchen and in the process learning what all the instructions in cookbooks meant. But it also might just be force of habit, in which case about all you could do would be to go over and cook for (or with) him. Maybe if you helped him get into a good habit, he would be more likely to continue with it. Otherwise, I don't see that there's much of anything you can do. If he isn't motivated to change his habits to save for his trip, you can't make him be. |
How to calculate the value of a bond that is priced to yield X% | The idea is correct; the details are a little off. You need to apply it to the actual cash flow the bond would create. The best advice I can give you is to draw a time-line diagram. Then you would see that you receive £35 in 6 months, £35 in 12 months, £35 in 18 months, and £1035 in 24 months. Use the method you've presented in your question and the interest rate you've calculated, 3% per 6 months, to discount each payment the specified amount, and you're done. PS: If there were more coupons, say a 20 year quarterly bond, it would speed things up to use the Present Value of an Annuity formula to discount all the coupons in one step... |
How can someone with a new job but no credit history get a loan to settle another debt? | The more I think about this the more I think you are actually better off letting it go to collections. At least then you would be able to agree an affordable repayment schedule based on your real budget, and having a big dent in your credit score because it's gone to collections doesn't actually put you in any worse position (in terms of acquiring credit in the future) than you are now. Whoever is the creditor on your original loan is (IMO) quite unreasonable demanding a payment in full on a given date, especially given that you say you've only been made aware of this debt recently. The courts are usually much more reasonable about this sort of thing and recognise that a payment plan over several years with an affordable monthly payment is MUCH more likely to actually get the creditor their money back than any other strategy. They will also recognise and appreciate that you have made significant efforts to obtain the money. I'm also worried about your statement about how panicked and "ready to give up" you are. Is there someone you can talk to? Around here (UK) we have debt counselling bureaus - they can't help with money for the actual debt itself, but they can help you with strategies for dealing with debt and will explain all parts of the process to you, what your rights and responsibilities are if it does go to court, etc. If you have something similar I suggest you contact them, even just to speak to someone and find out that this isn't the end of the world. It's a sucky situation but in a few years you'll be able to look back and at least laugh wryly at it. |
How to minimise the risk of a reduction in purchase power in case of Brexit for money held in a bank account? | The mathematical answer is for you to have a diversified portfolio in your ISA. But that's easier said than done. |
Friend was brainwashed by MLM-/ponzi investment scam. What can I do? | The one thing your friend needs to understand is for every dollar paid out, there is somebody paying that dollar in. The mark of a Ponzi scheme is that it feeds on itself. The stock market has trade volumes where it almost meets the definition of a Ponzi scheme. However, it deals with shares in actual production facilities (rather than only financial institutions) and provides means of production in return for large amounts of the profits. So there is someone legitimately expecting to pay back more than he gets out, in return for the availability of money at a time where he could not finance matters except by credit. With your friend's scheme, there is nobody expected to pay more than he gets out. Nail him down with that: every dollar paid out has to be paid in. Who is the one paying? At this point of time, it sounds like there will be two possible outcomes. You'll be visiting your friend in debtors' prison, or you'll visit him in criminal prison. If you highly value your friendship, you might get him out of the former with your own money. You won't be able with the latter. And if you let him exploit his standing for scamming his community, make no mistake, it will be the latter. I don't envy you. |
Why do the 1 and 2 euro cent coins exist and why are they used? | I guess other than tradition and inflation, probably because the merchants want them. In the US, what currently costs $2.00 used to cost $0.10. So 75 years ago, those individual cents made a pretty bid difference. Inflation causes prices to go up, but doesn't get us to just change our currencies patterns. In your example, you are assuming that in an average day, the rounding errors you are willing to accept happen a couple of times. 2 or 3 cents here and there mean nothing to you. However to the merchant, doing hundreds or thousands of transactions per day, those few cents up and down mean quite a bit in terms of profit. To an individual, looking at a time frame more than a single day (because who only participates in economies for a single day) there are potentially millions of transactions in a lifetime, mean potentially giving away millions of dollars because they didn't want to wait. And as for the comment that people working each 3 cents every 10 seconds, I would assume at least some of the time when they are waiting for rounding errors, they are not at work getting paid. That concept is assuming that somebody is always willing to pay them for their time regardless of where that person is in the world; I have no facts and wild assumptions, but surely that can't be true for even a majority of workers. Finally, you should be happy if you happy to have an income high enough that you don't care about individual cents. But there are those business people who see opportunity in folks like you and profit greatly from it. I personally worry very much about who has my money; gov't gets paid to the penny and I expect returns to the penny. A super polite service employee who smiled a lot serving me a beer is getting all the rounding errors I have. |
Vanguard Target Retirement Fund vs. Similar ETF Distribution (w/ REIT) | Target Date Funds automatically change their diversification balance over time, rebalancing and reassigning new contributions to become progressively more protective of what you've already earned. (As opposed to other funds which continue to maintain the same balance of investments until you explicitly move the money around.) You can certainly make that same evolution manually; we all used to do that before target funds were made available, and many of us still do so. I'm still handling the relative allocations by hand. But I'm also close to my retirement target, so a target fund wouldn't be changing that much more anyway, and since I'm already tracking the curve... Note that if you feel a bit braver, or a bit more cautious, than the "average investor" the target fund was designed for, you can tweak the risk/benefit curve of a Target Date Fund by selecting a fund with a target date a bit later or earlier, respectively, than the date at which you intend to start pulling money back out of the fund. |
Specifically when do options expire? | Here is the answer from my brokerage: Regular equity monthly options expire on the 3rd Friday of every month. The last time to trade them is by market close at 4 PM Eastern time. The weekly options will expire on the Friday of that week, also with a last trading time of 4 PM Eastern time. Options that expire in the money by .01 or more are automatically exercised. If you are long an option that is out of the money at expiration, it will expire worthless. If you are short an option, even if it expires out of the money, you are still at risk for possible assignment since the long option holder always has the right to exercise an option prior to expiration.* |
Ways to invest my saved money in Germany in a halal way? | What is not permitted in Islam is the practice of making unethical or immoral monetary loans that unfairly enrich the lender. Originally, usury meant interest of any kind. A loan may be considered usurious because of excessive or abusive interest rates or other factors. But In case of financial markets, people borrow money to make money and both parties benefits, and no one is taking advantage of the other. I may be wrong in interpreting this way, God knows the best. |
Is it possible to physically own a share certificate in a company? | There is a company that will sell you single paper shares of stock for many companies and handle framing. But you pay a large premium over the stock price. Disney stopped doing paper share certificates a while ago, but you should be able to buy some of the old ones on eBay if you want. |
What does an options premium really mean? | Intuitive? I doubt it. Derivatives are not the simplest thing to understand. The price is either in the money or it isn't. (by the way, exactly 'at the money' is not 'in the money.') An option that's not in the money has time value only. As the price rises, and the option is more and more in the money, the time value drops. We have a $40 stock. It makes sense to me that a $40 strike price is all just a bet the stock will rise, there's no intrinsic value. The option prices at about $4.00 for one year out, with 25% volatility. But the strike of $30 is at $10.68, with $10 in the money and only .68 in time premium. There's a great calculator on line to tinker with. Volatility is a key component of options trading. Think about it. If a stock rises 5%/yr but rarely goes up any more or less, just steady up, why would you even buy an option that was even 10% out of the money? The only way I can describe this is to look at a bell curve and how there's a 1/6 chance the event will be above one standard deviation. If that standard deviation is small, the chance of hitting the higher strikes is also small. I wrote an article Betting on Apple at 9 to 2 in which I describe how a pair of option trades was set up so that a 35% rise in Apple stock would return 354% and Apple had two years to reach its target. I offer this as an example of options trading not being theory, but something that many are engaged in. What I found curious about the trade was that Apple's volatility was high enough that a 35% move didn't seem like the 4.5 to 1 risk the market said it was. As of today, Apple needs to rise 13% in the next 10 months for the trade to pay off. (Disclosure - the long time to expiration was both good and bad, two years to recover 35% seemed reasonable, but 2 years could bring anything in the macro sense. Another recession, some worldwide event that would impact Apple's market, etc. The average investor will not have the patience for these long term option trades.) |
If a put seller closes early, what happens to the buyer? | The original option writer (seller) can close his short position in the contracts he wrote by purchasing back matching contracts (i.e. contracts with the same terms: underlying, option type, strike price, expiration date) from any others who hold long positions, or else who write new matching contract instances. Rather than buyer and seller settling directly, options are settled through a central options clearing house, being the Options Clearing Corporation for exchange-listed options in the U.S. See also Wikipedia - Clearing house (finance). So, the original buyer of the put maintains his position (insurance) and the clearing process ensures he is matched up with somebody else holding a matching obligation, if he chooses to exercise his put. I also answered a similar question but in more detail, here. |
Can buying REIT's be compared to investing in Real Estate? | well yes but you should also begin to understand the sectoral component of real estate as a market too in that there can be commercial property; industrial property and retail property; each of which is capable of having slightly (tho usually similar of course) different returns, yields, and risks. Whereas you are saving to buy and enter into the residential property market which is different again and valuation principles are often out of kilter here because Buying a home although exposing your asset base to real estate risk isnt usually considered an investment as it is often made on emotional grounds not strict investment criteria. |
Does the Black-Scholes Model apply to American Style options? | Just a few observations within the Black-Scholes framework: Next, you can now use the Black-Scholes framework (stock price is a Geometric Brownian Motion, no transaction costs, single interest rate, etc. etc.) and numerical methods (such as a PDE solver) to price American style options numerically, but not with a simple closed form formula (though there are closed-form approximations). |
Should market based health insurance premiums be factored into 6 months emergency fund savings? | Yes, it should be. As, where one has insurance, its an expense one would expect one to continue to incur in a normal budgetary emergency, even drop in the extreme. |
Why are there so many stock exchanges in the world? | Why are there so many stock exchanges in the world? The simple answer is that there is a lot of money to be made by charging fees to facilitate the trading of securities, but there are other factors at play here relating to new technologies. Trading volumes have increased rapidly in recent years. According to this ITG data, in 1997, 6.5 billion shares were traded on US exchanges. By 2015 this number had increased to 40.8 billion shares. There are a number of reasons for this rapid increase in volumes. Most significant would be the introduction of new technologies that allow for high volume, high frequency trading. This increase in activity has be accompanied by an increase in the number of stock exchanges. As CQM points out in his answer, there has been considerable consolidation in the ownership of "legacy" exchanges. For example, the NYSE merged with EuroNext in 2007, and the combined group is now owned by the Intercontinental Exchange, which also owns numerous smaller stock exchanges as well as a number of derivative/commodities exchanges. However, this consolidation in ownership has been more than matched by the creation of many "virtual" exchanges. In North America these virtual exchanges are called "Alternative Trading Systems". In Europe, they are called "Multilateral Trading Facilities". These new virtual exchanges, sometimes referred to as "dark pools", have begun to significantly eat away at the volumes of the legacy exchanges. If you look at the ITG data (linked above), you will see that the total volume of shares traded on legacy exchanges actually peaked in 2008, and has since then has decreased. This coincides roughly with the appearance of the virtual exchanges and the new high frequency trading methods. According to this paper from the SEC site, dated 2013, Alternative Trading Systems accounted for 11.3% of total volumes in 2012. This will have increased rapidly in the years since 2012. It is this loss of business that has prompted the consolidation in the ownership of the legacy exchanges. These new exchange are "conceptually the same" as the legacy exchanges and must play by the same regulatory rules. |
Peer to peer lending business model (i.e. Lending Club) | This is all answered in the prospectus. The money not yet invested (available/committed to a note but not yet funded) is held in pooled trust account insured by FDIC. Money funded is delivered to the borrower. Lending Club service their notes themselves. Read also my reviews on Lending Club. |
Stocks are traded on secondary markets? | NYSE and Nasdaq are secondary markets where stocks are bought or sold. The process of creating new stocks via IPO or private placements etc are called Private Market. |
What makes a Company's Stock prices go up or down? | There are many things that can make a company's share price go up or down. Generally, over the long term, the more consistently profitable a company is the more its share price will go up. However, there are times when a company may not be making any profits yet but its share price still goes up. This can be due to forecasts that the company will start making profits in the near future. Sometimes a company may report increased profits from the previous year but makes less than what the market was expecting it to make. This can cause its share price to fall, as the market is disappointed in the results. In the shorter term greed, fear and speculation can make a company's share price move irrationally. When you think the share price should be going up it suddenly falls, and Vis-versa. When interest rates are low, companies with higher dividend yields (compared to bank account interest rates) become high in demand and their shares generally go up in price. As the share price goes up the dividend yield will be reduced unless the company continues to increase the dividend it distributes to shareholders. When interest rates start to rise these companies become less favourable as they are seen as higher risk comparable to similar returns from having one's money in the safety of the bank. This can cause the share prices to fall. These are just some of the reasons that make a company's share price move up or down. As humans are an irrational bunch often ruled by emotions, sometimes the reasons share prices move in a particular direction can be quite confusing, but that is the nature of the financial markets. |
Does doing your “research”/“homework” on stocks make any sense? | Doing your homework means to perform what's more accurately called "fundamental analysis". According to proponents of fundamental analysis (FA), it is possible to accurately determine how much a stock should trade for and then buy or sell the stock based on whether it trades above or below this target price. This target price is based on the discounted anticipated future earnings of your stock, so "doing your homework" means that you figure out how much future earnings you can expect from the stock and then figuring out at what rate you want to discount those future earnings (Are 1000 dollars that you'll earn next year worth $800 today or $900 or only $500? That depends on the overall economic and political climate...) So does this make any sense? Depends. I'm aware that there are a lot of anecdotes of people researching a stock, buying that stock and doing well with that stock. But poor decisions can at times lead to good outcomes... EDIT: Due to some criticism, I want to expand on a few points. So, is homework completely for naught? No! |
Building financial independence | For a young person with good income, 50k sitting in a savings account earning nothing is really bad. You're losing money because of inflation, and losing on the growth potential of investing. Please rethink your aversion to retirement accounts. You will make more money in the long run through lower taxes by taking advantage of these accounts. At a minimum, make a Roth IRA contribution every year and max it out ($5500/yr right now). Time is of the essence! You have until April 15th to make your 2014 contribution! Equities (stocks) do very well in the long run. If you don't want to actively manage your portfolio, there is nothing wrong (and you could do a lot worse) than simply investing in a low-fee S&P 500 index fund. |
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