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Why are residential investment properties owned by non-professional investors and not large corporations? | As other answers have pointed out, professional real estate investors do own residential investment properties. However, small residential units typically are not owned by professional real estate investors as your experience confirms. This has a fairly natural cause. The size of the investment opportunity is insufficient to warrant the proper research/due diligence to which a large investment firm would have to commit if it wanted to properly assess the potential of a property. For a small real estate fund managing, say, $50 MM, it would take 100 properties at a $500K valuation in order to fully invest the funds. This number grows quickly as we decrease the average valuation to reflect even smaller individual units. Analogously, it is unlikely that you will find large institutional investors buying stocks with market caps of $20 MM. They simply cannot invest a large enough portion of total AUM to make the diligence make economic sense. As such, institutional real estate money tends to find its way into large multi-family units that provide a more convenient purchase size for a fund. |
What can I replace Microsoft Money with, now that MS has abandoned it? | MoneyDance Is the way to go. I've been using it for years and it works well. It keeps getting better, and best of all, it's completely cross platform! Mac, Windows and linux! |
Ways to save for child's college education where one need not commit to set contributions? [duplicate] | 529 plans. They accumulate earnings over time and by the time your child goes to college you will be able to withdraw funds for college TAX FREE. The best part about 529s is that there are several different options you can choose from, and you aren't limited to the plans sponsored by your state, you can use whichever plan works best for you. For example, I live in South Carolina and use Utah's Educational Savings Plan because it has no minimum amount to open one up and it has low fees. Hope this helped. Good luck with your search! |
What are my options to deal with Student Loan debt collectors? | You should hire a lawyer. The fact that they told you your personal information shows that they actually had it, and are not imposters, which is a good thing. The fact that they mislead you means that their intentions are not pure (which is not surprising coming from a collection agency of course). When dealing with collections (or any matter of significance for that matter), don't rely on their recording of the call, because they can always conveniently lose it. Make sure to write down every single detail discussed, including the date and time of the call, and the ID/name of the person on the other side. If possible - make your own recording (notifying them of it of course). It's too late to record the calls now, but do try to reconstruct as much information as possible to provide to your lawyer to deal with it. In the end of the day they will either provide you with the recording (and then you might be surprised to hear that what they said was not in fact what you thought they said, and it was just your wishful thinking, it is very possible to be indeed the case), or claim "we lost it" and then it will be a problem to either of you to prove who said what, but they'll have the better hand (having better lawyers) in convincing the court that you're the one trying to avoid paying your debts. That is why proper representation at all stages is important. As to the bankruptcy - it won't help for student loans, student loans is one of the very few types of debts you can't really run away from. You have to solve this, the sooner the better. Get a professional advice. For the future (and for the other readers) - you should have gotten the professional advice before defaulting on these loans, and certainly after the first call. |
Can I participate in trading Facebook shares on their IPO day from any brokerage? | By definition, an IPO'd stock is publicly traded, and you can buy shares if you wish. There's often an excitement on the first day that doesn't carry over to the next days or weeks. The opening price may be well above the IPO price, depending on that demand. |
Do options always expire on third Friday of every month | Prior to 2005, the only SPY options that existed were the monthly ones that expire on the third Friday of every month. But in 2005, the Chicago Board Options Exchange introduced SPY weekly options that expire every Friday (except that there is no weekly option that expires on the same day as a monthly option). These weekly options only exist for 8 days - they start trading on a Thursday and expire 8 days later on Friday. The SPY options that expire on Friday October 31 are weekly options, and they started trading on Thursday October 23. Sources: Investopedia |
Why are earning credit card rewards often tied to groceries and gas? | Every reward program has to have a funding source. If the card gives you x percent back on all purchases. That means that their business is structured to entice you to pump more transactions through the system. Either their other costs are lower, or the increased business allows them to make more money off of late fees, and interest. If the card has you earn extra points for buying a type of item or from a type of store (home stores improvement in the Spring), they are trying to make sure you use their card for what can be a significant amount of business during a small window of time. Sometimes they cap it by saying 5% cash back at home improvement stores during the spring but only on the first $1500 of purchases. That limits it to $75 maximum. Adding more business for them, makes more money for them. Groceries and gas are a good year round purchase categories. Yes there is some variation depending on the season, and the weather, but overall there is not an annual cliff once the season ends. Gas and groceries account for thousands of dollars a year these are not insignificant categories, for many families are recession proof. If they perceive a value from this type of offer they will change their buying behavior. My local grocery store has a deal with a specific gas station. This means that they made a monetary deal. Because you earn points at the grocery store and spend points at the gas station, the grocery store is paying some compensation to the gas station every time you use points. The gas station must be seeing an increase in business so theoretically they don't get 100% compensation from the grocery store. In cases where credit cards give airline miles, the credit card company buys the miles from the airline at a discount because they know that a significant number of miles will never be used. |
How does Robinhood stock broker make money? | Robinhood seems interesting. Some say it's a gimmicky site with a nice UI not an investing or trading platform. From investopedia: 1. For now, the app stays afloat for mainly two reasons. First, the business itself is extremely lean: no physical locations, a small staff, no massive public relations campaigns and only one operating system platform to maintain. Robinhood also generates interest off of unused cash deposits from user accounts according to the Federal Funds rate. 2. Second, venture capitalists such as Index Ventures, Ribbit Capital, Google Ventures, Andreessen Horowitz, Social Leverage,and “many others” have invested more than $16 million in the app. 3. According to Barron’s, Robinhood plans to implement margin trading in 2015, eventually charging 3.5% interest for the service. E*Trade charges 8.44% for accounts under $25,000. Phone assisted trading will also be available at $10 per trade in the future. 4. Originally, Robinhood planned to make money off of order flows – a common tactic used by discount brokerages in the 1990s to generate revenue. According to the company's FAQ, Robinhood backpedaled on the idea because it executes orders through a clearing partner and, as a result, receives little to no payment for order flow. The company is willing to return to its original plan in the future if it receives order flows directly or begins to generate a lot of revenue from them. |
Is there a way to claim a car purchase in the tax return? | You've got two options. Deduct the business portion of the depreciation and actual expenses for operating the car. Use the IRS standard mileage rate of $.575/mile in 2015. Multiply your business miles by the rate to calculate your deduction. Assuming you're a sole proprietor you'll include a Schedule C to your return and claim the deduction on that form. |
How do I analyse moving averages? | If you are going to be a long term investor you are only going to buy and hold. You will not sell. Thus future price is not relevant. Only dividend payout is relevant. Divide the dividend by the price you paid to get the yeald. Edit: once again the sitesite will not allow me to add a comment, so I have to edit a previous post... What you call 'active investor' is not really investing, it is speculating. When you try to 'buy low, sell high' you have, at best, a 50-50 chance of picking the low. You then pay a commission on that buy. After you buy then you have a 50-50 chance, at best, of picking the high. You also have to pay the commission on the sell. 50% times 50% is 25%.So you have, at best a 25% chance of buying low and selling high. You are churning your account which makes money for the broker whether you make money or not. If, instead, you buy and hold a dividend paying security then the going price is irrelevant. You paid for the security once and do not have to pay for it again. Meanwhile the dividends roll in forever. 'Buy low, sell high' is a fools game. Warren Buffet does not do it, he buys and holds. |
Will a credit card company close my account if I stop using it? | The answer is maybe. I had a Chase card without a purchase in over 4 years get canceled out of the blue, without so much as a notification telling me it was at risk for cancelation. They told me they typically close accounts after 24 months of inactivity (not including card fees) but let mine go for longer because I have several other credit cards, savings and checking accounts with them. I would recommend spending at least once per year on the card. |
After a stock dividend, how do you calculate holding periods for capital gains taxes? | Stock acquired through a (non-taxable) stock dividend has the same holding period as the stock on which the dividend was paid. |
Is it a good strategy to +cash out refi every six months? | When you refinance, there is cost (guess: around $2000-$3000) to cover lawyers, paperwork, surveys, deed insurance, etc. etc. etc. Someone has to pay that cost, and in the end it will be you. Even if you get a "no points no cost" loan, the cost is going to be hidden in the interest rate. That's the way transactions with knowledgeable companies works: they do business because they benefit (profit) from it. The expectation is that what they need is different from what you need, so that each of you benefits. But, when it's a primarily cash transaction, you can't both end up with more money. So, unless value will be created somewhere else from the process (and don't include the +cash, because that ends up tacked onto the principle), this seems like paying for financial entertainment, and there are better ways to do that. |
What is the median retirement savings in the United States today? | Social security and pensions make up a big part of it. You may want to look at the source of the data. If a person, has 5K at Vanguard, 5K at Fidelity and 100K at the bank; Fidelity will report on that person as having only 5K. Vanguard will do the same. The opening pitch of a life insurance salesman sometimes includes the "100 man story". Before retirement age: 26% of people will die, 54% will be broke, 5% will work, 4% will be secure, and 1% will be wealthy. Then they sell you life insurance which is a horrible product for retirement savings. If you further dig into this subject you will find a great disparity between the mean and median retirement savings. That is because many Americans have none, and those that do skew the average upward and have no where near mean or average. Its like this with other things in personal finance. For example those with actual credit card debt have much higher than the average. As those with none, or even no credit cards skew the average downward. In my opinion it is like this because of behavior. If one saved half of the average car payment over their working life in a growth stock mutual fund, they would make it to that 4% category. If they also had a good salary, kept debt to a minimum, and saved a healthy amount they would make it to that 1% category. It was a daily choice that was made many years prior to retirement. |
How can I find out which ETFs has holdings in a particular stock? | This ETFchannel.com page shows which ETFs hold Wells Fargo and you can search other stocks the get the same information on that site. This the same information for Google This even tells you what percentage of an ETF is a particular stock. Be warned that this site is not entirely free. You will be limited to 6 pages in 6 hours unless you pay for a subscription. Additionally ETFdb.com offers a similar tool. |
What are the tax implications on selling the Share ISA portfolio? | Assets held within an ISA or New ISA are completely free of CGT, so you won't have to pay either income tax or capital gains tax. |
Clarification on student expenses - To file the tax for the next year | Assuming here that you're talking about deducting your tuition as a below the line deduction as a business expense or similar, then it depends. Per 1.162-5, if the education: Then it qualifies as a legitimate business expense and is deductible. If not - if you're going to school for a different career, such as someone employed as a waiter but going to school to get a degree in nursing, or someone employed as a teacher getting a law degree - then it's not; you'd have to qualify under one of the other (simpler, but lesser) credits. Read more on this topic at Tax topic 513. Note that the other most commonly applicable deduction - the above the line Tuition and Fees deduction - expired in 2016 and is not applicable (yet?) in 2017, and further would not require most of what you describe as it only counts tuition and fees paid directly to the institution and required as a condition of attendance, so books, parking, etc. don't count. |
What are the common moving averages used in a “Golden Cross” stock evaluation? | Technical analysis is insufficient. You're halfway to figuring it out if you start to question why a 50 day moving average vs 200 vs 173. Invest in companies that are attractively valued vs. their sales/growth/divends/anythingelsereal |
Should I buy my house from my landlord? | Can he legally break your lease if he sells the place? If not I would just keep renting. It doesn't sound like you love the house and you plan on moving or would prefer a different type of place long term. Unless you yourself plan on getting involved in being a renting it out to others in the future - just rent and move on at some point. If he can break your lease upon sale of the property then I'd be casually keeping an eye out for another place to rent if that happens. |
Why does a stock price drop as soon an I purchase several thousand shares at market price? | You might consider learning how the "matching" or "pairing" system in the market operates. The actual exchange only happens when both a buyer and a seller overlap their respect quotes. Sometimes orders "go to market" for a particular volume. Eg get me 10,000 Microsoft shares now. which means that the price starts at the current lowest seller, and works up the price list until the volume is met. Like all market it trades, it has it's advantages, and it's dangers. If you are confident Microsoft is going to bull, you want those shares now, confident you'll recoup the cost. Where if you put in a priced order, you might get only none or some shares. Same as when you sell. If you see the price (which is the price of the last completed "successful" trade. and think "I'm going to sell 1000 shares". then you give the order to the market (or broker), and then the same as what happened as before. the highest bidder gets as much as they asked for, if there's still shares left over, they go to the next bidder, and so on down the price... and the last completed "successful" trade is when your last sale is made at the lowest price of your batch. If you're selling, and selling 100,000 shares. And the highest bidder wants 1,000,000 shares you'll only see the price drop to that guys bid. Why will it drop (off the quoted price?). Because the quoted price is the LAST sale, clearly if there's someone still with an open bid on the market...then either he wants more shares than were available (the price stays same), or his bid wasn't as high as the last bid (so when you sale goes through, it will be at the price he's offering). Which is why being able to see the price queues is important on large traders. It is also why it can be important put stops and limits on your trades, een through you can still get gapped if you're unlucky. However putting prices ("Open Orders" vs "(at)Market Orders") can mean that you're sitting there waiting for a bounce/spike while the action is all going on without you). safer but not as much gain (maybe ;) ) that's the excitement of the market, for every option there's advantages...and risks... (eg missing out) There are also issues with stock movement, shadowing, and stop hunting, which can influence the price. But the stuff in the long paragraphs is the technical reasons. |
What's the purpose of having separate checking and savings accounts? | If your debit card/ATM card is stolen or lost, someone else might be able to withdraw money from the checking account that it is tied to, or buy things with the card and have the money taken out of the checking account to pay the merchant. Subject to daily withdrawal limits imposed by your bank, a considerable amount of money could be lost in this way. At least in the US, debit or ATM cards, although they are often branded Mastercard or Visa, do not provide the same level of protection as credit cards for which the liability is limited to $50 until the card is reported as lost or stolen and $0 thereafter. Note also that the money in your savings account is safe, unless you have chosen an automatic overdraft protection feature that automatically transfers money from your savings account into the checking account to cover overdrafts. So that is another reason to keep most of your money in the savings account and only enough for immediately foreseeable needs in the checking account (and to think carefully before accepting automatic overdraft protection offers). These days, with mobile banking available via smartphones and the like, transferring money yourself from savings to checking account as needed might be a preferred way of doing things on the go (until the smartphone is stolen!) |
Is it true that 90% of investors lose their money? | The game is not zero sum. When a friend and I chop down a tree, and build a house from it, the house has value, far greater than the value of a standing tree. Our labor has turned into something of value. In theory, a company starts from an idea, and offers either a good or service to create value. There are scams that make it seem like a Vegas casino. There are times a stock will trade for well above what it should. When I buy the S&P index at a fair price for 1000 (through an etf or fund) and years later it's 1400, the gain isn't out of someone else's pocket, else the amount of wealth in the world would be fixed and that's not the case. Over time, investors lag the market return for multiple reasons, trading costs, bad timing, etc. Statements such as "90% lose money" are hyperbole meant to separate you from your money. A self fulfilling prophesy. The question of lagging the market is another story - I have no data to support my observation, but I'd imagine that well over 90% lag the broad market. A detailed explanation is too long for this forum, but simply put, there are trading costs. If I invest in an S&P ETF that costs .1% per year, I'll see a return of say 9.9% over decades if the market return is 10%. Over 40 years, this is 4364% compounded, vs the index 4526% compounded, a difference of less than 4% in final wealth. There are load funds that charge more than this just to buy in (5% anyone?). Lagging by a small fraction is a far cry from 'losing money.' There is an annual report by a company named Dalbar that tracks investor performance. For the 20 year period ending 12/31/10 the S&P returned 9.14% and Dalbar calculates the average investor had an average return of 3.83%. Pretty bad, but not zero. Since you don't cite a particular article or source, there may be more to the story. Day traders are likely to lose. As are a series of other types of traders in other markets, Forex for one. While your question may be interesting, its premise of "many experts say...." without naming even one leaves room for doubt. Note - I've updated the link for the 2015 report. And 4 years later, I see that when searching on that 90% statistic, the articles are about day traders. That actually makes sense to me. |
Filing Form 7004 if an LLC's only members are husband and wife | Since you both are members of the LLC - it is not a single-member LLC, thus you have to file the tax return on behalf of the LLC (I'm guessing you didn't elect corporate treatment, so you would be filing 1065, which is the default). You need to file form 4868 on behalf of yourselves as individuals, and form 7004 on behalf of the LLC as the partnership. Since the LLC is disregarded (unless you explicitly chose it not to be, which seems not to be the case) the taxes will in fact flow to your individual return(s), but the LLC will have to file the informational return on form 1065 and distribute K-1 forms to each of you. So you wouldn't pay additional estimated taxes with the extension, as you don't pay any taxes with the form 1065 itself. If you need a help understanding all that and filling the forms - do talk to a professional (EA or CPA licensed in your state). Also, reconsider not sending any payment. I suggest sending $1 with the extension form even if you expect a refund. |
Online brokers with a minimum stock purchase lower than $500 | With InteractiveBrokers there is no minimum trade amount, they also offer Australian Equities. |
How should I begin investing real money as a student? | Without knowing what you are trying to achieve - make a bit of pocket money, become financially independent, invest for retirement, learn trading to become a trader - I'll give you a few thoughts ... The difficulty you will have trading with $400-600 is that brokerage will be a high proportion of your "profits". I'm not sure of the US (assuming US rather than AU, NZ, etc) rates for online brokers, but UK online brokers are the order of £6-10 / trade. Having a quick read suggests that the trading is similar $6-10/trade. With doing day trades you will be killed by the brokerage. I'm not sure what percent of profitable trades you have, but if it is 50% (e.g.), you will need to make twice the brokerage fees value on each profitable trade before you are actually making a profit. There can be an emotional effect that trips you up. You will find that trading with your own real money is very different to trading with fake money. Read up about it, this brief blog shows some personal thoughts from someone I read from time to time. With a $10 brokerage, I would suggest the following Another option, which I wouldn't recommend is to leverage your money, by trading CDFs or other derivatives that allow you to trade on a margin. Further to that, learn about trading/investing Plus other investment types I have written about earlier. |
Can I make my savings keep in check with or beat inflation over a long time period via index funds? | See the following information: http://www.bogleheads.org/wiki/Treasury_Inflation_Protected_Security You can buy individual bonds or you can purchase many of them together as a mutual fund or ETF. These bonds are designed to keep pace with inflation. Buying individual inflation-protected US government bonds is about as safe as you can get in the investment world. The mutual fund or ETF approach exposes you to interest rate risk - the fund's value can (and sometimes does) drop. Its value can also increase if interest rates fall. |
Covered calls: How to handle this trade? | Your broker likely didn't close your position out because it is a covered position. Why interfere with a trade that has no risk to it, from their perspective? There's no risk for the broker since your account holds the shares available for delivery (definition of covered), for if and when the options you wrote (sold) are exercised. And buyers of those options will eventually exercise the options (by expiration) if they remain in-the-money. There's only a chance that an option buyer exercises prematurely, and usually they don't because there's often time value left in the option. That the option buyer has an (ahem) "option" to exercise is a very key point. You wrote: "I fully expected my position to be automatically liquidated by whoever bought my call". That's a false assumption about the way options actually work. I suggest some study of the option exercise FAQs here: Perhaps if your position were uncovered – i.e. you wrote the call without owning the stock (don't try this at home, kids!) – and you also had insufficient margin to cover such a short position, then the broker might have justifiably liquidated your position. Whereas, in a covered call situation, there's really no reason for them to want to interfere – and I would consider that interference, as opposed to helpful. The situation you've described is neither risky for them, nor out of the ordinary. It is (and should be) completely up to you to decide how to close out the position. Anyway, your choices generally are: |
Question about being a resident | One thing to consider besides what rules Oregon has, is what rules your old state have. Of course the lack of income tax in Nevada means that most people are trying to convince their new state they are still a resident of Nevada. You are a full-year Oregon resident if you live in Oregon all year. You are also a full-year Oregon resident, even if you live outside Oregon, if all of the following are true: Part-year resident: You are a part-year resident if you moved into or out of Oregon during the tax year. The requirement for financial life means that you should: change all your Nevada banks to Oregon banks; Change all your mail to Oregon; Sell any property or end any leases you have in Nevada. Or course you need to research the rules for in state college tuition, death with dignity if any apply to you. In border areas you must be careful to establish residency for children to attend public schools. Some families try to cheat to get their children into a better school. |
What is the best, low risk investment I can make now? | First of all, bear in mind that there's no such thing as a risk-free investment. If you keep your money in the bank, you'll struggle to get a return that keeps up with inflation. The same is true for other "safe" investments like government bonds. Gold and silver are essentially completely speculative investments; over the years their price tends to vary quite wildly, so unless you really understand how those markets work you should steer well clear. They're certainly not low risk. Repeatedly buying a property to sell in a couple of years time is almost certainly a bad idea; you'll end up paying substantial transaction fees each time that would wipe out a lot of the possible profit, and of course there's always the risk that prices would go down not up. Buying a property to keep - and preferably live in - might be a decent option once you have a good deposit saved up. It's very hard to say where prices will go in future, on the one hand London prices are very high by historical standards, but on the other hand supply is likely to remain severely constrained for years to come. I tend to think of a house as something that I need one of for the rest of my life, and so in one sense not owning a house to live in is a gamble that house prices and rents won't go up substantially. If you own a house, you're insulated from changes in rent etc and even if prices crash at least you still have somewhere to live. However that argument only works really well if you expect to keep living in the same area under most circumstances - house prices might crash in your area but not elsewhere. |
Have my parents been bilked? If so, what to do? | If they made deposits 20 years ago, and none since, the S&P is up over 300% since then. i.e. a return of $40,000 on $10,000 invested. We wouldn't expect to see that full return, as a prudent mix of stock and bonds (or any treasury bills/CDs, etc) would lower the overall return during this period. Advice "Transfer the money, directly to an IRA at a broker, Fidelity, Schwab, Vanguard, etc." For most people, going after the advisor isn't worth it, unless the sums are large and the poor management, pretty clear. The lesson for readers here - monitor your investments. Ask questions. It's not about "beating the market" which can actually create more risk, but about understanding the returns you see, and the fees you are spending. The mistake didn't occur at the time the money was invested, but every year it wasn't monitored. |
What is a good investment vehicle for introducing kids to investing? | Buy them a physical stock certificate... you can request them from a broker, or buy through a company like http://www.oneshare.com. Other options: |
How can I calculate interest portion of income when selling a stock? | When you sell the stock your income is from the difference of prices between when you bought the stock and when you sold it. There's no interest there. The interest is in two places: the underlying company assets (which you own, whether you want it or not), and in the distribution of the income to the owners (the dividends). You can calculate which portion of the interest income constitutes your dividend by allocating the portions of your dividend in the proportions of the company income. That would (very roughly and unreliably, of course) give you an estimate what portion of your dividend income derives from the interest. Underlying assets include all the profits of the company that haven't been distributed through dividends, but rather reinvested back into the business. These may or may not be reflected in the market price of the company. Bottom line is that there's no direct correlation between the income from the sale of the stake of ownership and the company income from interest, if any correlation at all exists. Why would you care about interest income of Salesforce? Its not a bank or a lender, they may have some interest income, but that's definitely not the main income source of the company. If you want to know how much interest income exactly the company had, you'll have to dig deep inside the quarterly and annual reports, and even then I'm not sure if you'll find it as a separate item for a company that's not in the lending business. |
First job: Renting vs get my parents to buy me a house | I would strongly try to influence circumstances so that buying is feasible. That means: Buy something where it is likely that you can resell it at the same price or even higher - or, at the least for significantly more than "total cost of ownership - rent payed elsewhere". For example, if it is in an area where you have good reasons to assume that prices will go up in the future. Or if the object needs refurbishing and you are sure that you can do it yourself. You will, no doubt, sell it later. You will near certainly not live in such a small house for all time. So the question of "whether" you will sell it is moot. So, when you have a potential house to buy, you will have to calculate everything very carefully, with an estimate of how long you will stay. You need to make your calculation as optimistic/pessimistic as you like (this is more a question of your character). Whatever calculation comes out better, wins. It goes without saying that if you miscalculate (for example, overestimating your ability or time to refurbish; forgetting to calculate non-obvious costs of refurbishing; being surprised by hidden damage to the object; misjudging the price development in the area) you run a considerable risk. So, the question of whether you are able to calculate the risks correctly will need to influence the calculation itself (add 20% or whatever risk buffer if you are not sure, etc.). But the potential is for you to have a very good start in the whole financial game of your life. Your house will likely be for a considerable time the biggest single part of costs in your life, and getting that under control from the get-go is a huge benefit. |
What ETF best tracks the price of gasoline, or else crude oil? | UNG United States Natural Gas Fund Natural Gas USO United States Oil Fund West Texas Intermediate Crude Oil UGA United States Gasoline Fund Gasoline DBO PowerShares DB Oil Fund West Texas Intermediate Crude Oil UHN United States Heating Oil Fund Heating Oil I believe these are as close as you'd get. I'd avoid the double return flavors as they do not track well at all. Update - I understand James' issue. An unmanaged single commodity ETF (for which it's impractical to take delivery and store) is always going to lag the spot price rise over time. And therefore, the claims of the ETF issuer aside, these products will almost certain fail over time. As shown above, When my underlying asset rises 50%, and I see 24% return, I'm not happy. Gold doesn't have this effect as the ETF GLD just buys gold, you can't really do that with oil. |
What types of receipts do I need to keep for itemized tax deductions? | I err on the side of saving all of mine for a while. Just toss them in a box at least. A years' worth is about the size of a shoebox. I started doing this because one year, about a week after I tossed my receipts for the year, I realized that I had a fair bit of allotment left on my flexible savings account to use up. I could have used those to substantiate over-the-counter medicines I purchased. Even if you don't use them for tax purposes, you can use them for budget-tracking purposes. |
How to find a good third-party, 401k management/advice service? | Any fee based financial adviser should be able to help you. I don't think you need to worry about finding a 401K specific adviser. I'm not even sure that's a thing. A good place to start is the National Association of Personal Financial Advisors. The reason I specifically mentioned a fee based adviser is that the free ones are working on sales commissions, which may influence them to give advice that is in their own best interest more than yours. |
Getting (historical) Standard & Poor Stock Guides | Log in to your Scottrade account, and goto Markets --> Analyst Views --> Click the PDF link for the company. Also, there is also the 'Views and News' part of the web page which has additional information beyond what exist in the reports. |
Privacy preferences on creditworthiness data | See the first item in the list: For our everyday business purposes – such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus Note that there's no option for you to limit this sharing. Credit reporting is the business need of the bank, not of the bureaus. They rely on them and others reporting it in their main business: lending. While you can limit the sharing with other banks/insurance companies/service providers so that you won't get offers from them based on the data shared by the bank, you cannot limit the credit reports themselves. |
What's the point of a benchmark? | One reason it matters whether or not you're beating the S&P 500 (or the Wilshire 5000, or whatever benchmark you choose to use) is to determine whether or not you'd be better off investing in an index fund (or some other investment vehicle) instead of pursuing whatever your current investment strategy happens to be. Even if your investment strategy makes money, earning what the S&P 500 has averaged over multiple decades (around 10%) with an index fund means a lot more money than a 5% return with an actively managed portfolio (especially when you consider factors like compound interest and inflation). I use the S&P 500 as one of my criteria for judging how well (or poorly) my financial adviser is doing for me. If his recommendations (or trading activity on my behalf, if authorized) are inferior to the S&P 500, for too long, then I have a basis to discontinue the relationship. Check out this Wikipedia entry on stock market indices. There are legitimate criticisms, but on the whole I think they are useful. As an aside, the reason I point to index funds specifically is that they are the one of the lowest-cost, fire-and-forget investment strategies around. If you compare the return of the S&P 500 index over multiple decades with most actively managed mutual funds, the S&P 500 index comes out ahead. |
First time home buyer. How to negotiate price? | In this case, trust the real estate agent; negotiating experience is one of the things you selected them for. Especially if they're suggesting a lower number than you expected, since they get paid on commission and so may be biased the other way. Part of their job is to look for hints about how motivated this seller is and what price they might accept, as opposed to what price they hope to get. And remember that the default assumption is that the two parties will meet in the middle somewhere, which means it's customary to offer 10% less to signal that you could probably be talked into it if they drop the price about 5%. This is like bridge-hand bidding: it's a semi-formalized system of hints about levels of interest, except with fewer conventions and less rationality. As far as the seller paying the closing costs: that's really part of the same negotiation, and doing it that way makes the discussion more complicated for the seller since they need to figure out how much more to charge you to cover this cost. If they offer, great, factor that into what you are willing to pay... but I wouldn't assume it or ask for it. Edit: Yes, unless you have engaged a Buyer's Agent (which I recommend for first-time buyers and maybe all huyers), their fiduciary duty is to the seller. But part of that duty is to make the sale happen. If the price goes too high and you walk away, neither the agent nor the seller make money. A bad agent can be as bad as a bad car salesman, sure. But if you don't like and mostly trust your agent, you are working with the wrong agent. That doesn't mean you give them every bit of information the seller might want, but it does mean you probably want to listen to their input and understand their rationalle before deciding what your own strategy will be. |
Can stock brokerage firms fail? | Brokerages are supposed to keep your money separate from theirs. So, even if they fail as a company, your money and investments are still there, and can be transferred to another brokerage. It doesn't matter if it's an IRA or taxable account. Of course, as is the case with MF Global, if illegally take their client's money (i.e., steal), it may be a different story. In such cases, SIPC covers up to $500K, of which $250K can be cash, as JoeTaxpayer said. You may be interested in the following news item from the SEC. It's about some proposed changes, but to frame the proposal they lay out the way it is now: http://www.sec.gov/news/press/2011/2011-128.htm The most relevant quote: The Customer Protection Rule (Rule 15c3-3). This SEC rule requires a broker-dealer to segregate customer securities and cash from the firm’s proprietary business activities. If the broker-dealer fails, these customer assets should be readily available to be returned to customers. |
Who can truly afford luxury cars? | Most of the people I know that own them are slightly older, and thus in their prime earning years, and many have paid off their homes. That can free up $1000 a month or more in monthly expenses, which would easily cover a nice luxury car payment. If you've got it, and are into cars, why not? What's the point in having the biggest tombstone in the graveyard? |
Strategies for paying off my Student loans | My advice is that if you've got the money now to pay off your student loans, do so. You've saved up all of that money in one year's time. If you pay it off now, you'll eliminate all of those monthly payments, you'll be done paying interest, and you should be able to save even more toward your business over the next year. Over the next year, you can get started on your business part time, while still working full time to pile up cash toward your business. Neither you nor your business will be paying interest on anything, and you'll start out in a very strong position. The interest on your student loans might be tax deductible, depending on your situation. However, this doesn't really matter a whole lot, in my opinion. You've got about $22k in debt, and the interest will cost you roughly $1k over the next year. Why pay $1k to the bank to gain maybe $250 in tax savings? Starting a business is stressful. There will be good times and bad. How long will it take you to pay off your debt at $250 a month? 5 or 6 years, probably. By eliminating the debt now, you'll be able to save up capital for your business even faster. And when you experience some slow times in your business, your monthly expenses will be less. |
US citizen married to non-resident alien; how do I file taxes? | Congrats on the upcoming wedding! Here is the official answer to this question, from the IRS. They note that you can choose to treat your spouse as a US resident for tax purposes and file jointly if you want to, by attaching a certain declaration to your tax return. Though I'm not a tax expert, if your partner has significant income it seems like this might increase your taxes due. You can also apply for an SSN (used for tax filings, joint or separate return) at a social security office or US consulate, by form SS-5, or file form W-7 with the IRS to get a Taxpayer Identification Number which is just as useful for this purpose. Without that, you can write "Non Resident Alien" (or "NRA") in the box for your partner's SSN, and mail in a paper return like that. See IRS Publication 17 page 22 (discussions on TurboTax here, here, etc.). |
Ways to establish credit history for international student | I think you should try to talk with the credit union at your campus first, they may have offer you a credit card even you don't have any credit history. |
How smart is it really to take out a loan right now? | You are not "the economy". The economy is just the aggregate of what is going on with everyone else. You should make the decision based on your own situation now and projected into the future as best you can. Loan rates ARE at historical lows, so it is a great time to take a loan if you actually need one for some reason. However, I wouldn't go looking for a loan just because the rates are low for the same reason it doesn't make sense to buy maternity clothes if you are a single guy just because they are on sale. |
Options for dummies. Can you explain how puts & calls work, simply? | A 'Call' gives you the right, but not the obligation, to buy a stock at a particular price. The price, called the "strike price" is fixed when you buy the option. Let's run through an example - AAPL trades @ $259. You think it's going up over the next year, and you decide to buy the $280 Jan11 call for $12. Here are the details of this trade. Your cost is $1200 as options are traded on 100 shares each. You start to have the potential to make money only as Apple rises above $280 and the option trades "in the money." It would take a move to $292 for you to break even, but after that, you are making $100 for each dollar it goes higher. At $300, your $1200 would be worth $2000, for example. A 16% move on the stock and a 67% increase on your money. On the other hand, if the stock doesn't rise enough by January 2011, you lose it all. A couple points here - American options are traded at any time. If the stock goes up next week, your $1200 may be worth $1500 and you can sell. If the option is not "in the money" its value is pure time value. There have been claims made that most options expire worthless. This of course is nonsense, you can see there will always be options with a strike below the price of the stock at expiration and those options are "in the money." Of course, we don't know what those options were traded at. On the other end of this trade is the option seller. If he owns Apple, the sale is called a "covered call" and he is basically saying he's ok if the stock goes up enough that the buyer will get his shares for that price. For him, he knows that he'll get $292 (the $280, plus the option sale of $12) for a stock that is only $259 today. If the stock stays under $280, he just pocketed $12, 4.6% of the stock value, in just 3 months. This is why call writing can be a decent strategy for some investors. Especially if the market goes down, you can think of it as the investor lowering his cost by that $12. This particular strategy works best in a flat to down market. Of course in a fast rising market, the seller misses out on potentially high gains. (I'll call it quits here, just to say a Put is the mirror image, you have the right to sell a stock at a given price. It's the difference similar to shorting a stock as opposed to buying it.) If you have a follow up question - happy to help. EDIT - Apple closed on Jan 21, 2011 at $326.72, the $280 call would have been worth $46.72 vs the purchase price of $12. Nearly 4X return (A 289% gain) in just over 4 months for a stock move of 26%. This is the leverage you can have with options. Any stock could just as easily trade flat to down, and the entire option premium, lost. |
Best steps to start saving money for a fresh grad in Singapore? | Firstly, make sure annual income exceeds annual expenses. The difference is what you have available for saving. Secondly, you should have tiers of savings. From most to least liquid (and least to most rewarding): The core of personal finance is managing the flow of money between these tiers to balance maximizing return on savings with budget constraints. For example, insurance effectively allows society to move money from savings to stocks and bonds. And a savings account lets the bank loan out a bit of your money to people buying assets like homes. Note that the above set of accounts is just a template from which you should customize. You might want to add in an FSA or HSA, extra loan payments, or taxable brokerage accounts, depending on your cash flow, debt, and tax situation. |
Is there any downside to using temporary credit card numbers with subscription services? | If you've agreed to pay the money, then you owe them whether they have a valid credit card number of yours or not. If they want to report your debt to a collections agency and/or credit bureau, they can. Which would suck for you. It may not be that likely over $9.99 or whatever, but my point is that it's still a small risk even with a temporary card number. |
Stock options: what happens if I leave a company and then an acquisition is finalized? | Having stock options means that you have worked for and rightfully earned a part of the company's capital appreciation. Takeover of the company would indicate someone is interested in the company (something should be valuable). It would be unwise to not strike before the period lapses since the strike price is always lower than market price and takeovers generally increases stock values ... it is capital gains all the way my friend. Good luck. *observations not in professional capacity. pls consult a professional for investment related advice. |
Changes in Capital Gains Tax in the US - Going to 20% in 2011? | Consider doing things that will allow for tax deductions, such as short selling. The IRS has regulations on this as well. And consider that Futures are taxed more favorably than other kinds of investments. (60% taxed as long term, 40% taxed as short term) |
What is the best way for me to invest my money into my own startup? | Ask your accountant about convertable preference shares. This would permit you to loan money to your company and then convert the debt to equity, should you so choose, at a later stage. As with the answer by bstpierre, these are all contractual arrangements conducted at arms-length. |
Does my net paycheck decrease as the year goes on due to tax brackets filling up? | Most countries with income tax, including the USA, design their withholding system so that in straightforward cases, tax is withheld from each month's paycheck on an annualized basis: tax for a month is calculated on the assumption that you will keep earning the same monthly amount for the rest of the year, and the withholding is set so that the tax is spread evenly across the year. Another way of putting that is that in practice you only get the tax brackets allocated proportionately throughout the year - so up till the end of August you'll only have been assigned 8/12 of the $37450 bracket, and so on. So if your income doesn't change and your general tax affairs don't change, your paycheck also shouldn't change. If your income is irregular or changes during the year then things can get more complicated. As other answers have noted, withholdings are calculated according to tables that normally just take into account that specific month's income. There are various possible changes to your tax affairs that might cause the withholdings to change. For example there'd be an impact from any change in your contributions to tax advantaged things like health insurance or retirement, health or education savings. You might also use form W-4 to change your withholdings yourself. Note that even with a regular income that doesn't change through the year, you might find yourself either owing money or being owed a refund when you file your taxes after the end of the year. It's worth making sure that your W-4 accurately records the allowances you are entitled to, to minimize or eliminate this adjustment. |
Investing small amounts at regular intervals while minimizing fees? | You could just commingle your funds. That way, she also learns how to keep track of things and how to figure things out, rather just learning to have the guy at the brokerage hand her an account statement which she blindly accepts. It might cause some tax problems though if the money grows to be substantial. |
Are in-kind donations from my S-Corp tax-deductible in any way? | The relevant IRS publication is 526, Charitable Contributions. The section titled "Contributions you cannot deduct" begins on page 6; item 4 reads: "The value of your time or services." I read that to mean that, if the website you built were a product, you could deduct its value. I don't understand the legal distinction between goods and services I originally said that I believe that a website is considered a service. Whether a website is a service or a product appears to be much more controversial that I originally thought. I cannot find a clear answer. I'm told that the IRS has a phone number you can call for rulings on this type of question. I've never had to use it, so I don't know how helpful it is. The best I can come up with is the Instructions for Form 1120s, the table titled "Principal Business Activity Codes," starting on page 39. That table suggests to me that the IRS defines things based on what type of business you are in. Everything I can find in that table that a website could plausibly fall under has the word "service" in its name. I don't really feel like that's a definitive answer, though. Almost as an afterthought, if you were able to deduct the value of the website, you would have to subtract off whatever the value of the advertisement is. You said that it's not much, but there's probably a simple way of estimating that. |
Why can't you just have someone invest for you and split the profits (and losses) with him? | You are conflating two different types of risk here. First, you want to invest money, and presumably you're not looking at the "lowest risk, lowest returns" end of the spectrum. This is an inherently risky activity. Second, you are in a principal-agent relationship with your advisor, and are exposed to the risk of your advisor not maximizing your profits. A lot has been written on principal-agent theory, and while incentive schemes exist, there is no optimal solution. In your case, you hope that your agent will start maximizing your profits if they are 100% correlated with his profits. While this idea is true (at least according to standard economic theory, you could find exceptions in behavioral economics and in reality), it also forces the agent to participate in the first risk. From the point of view of the agent, this does not make sense. He is looking to render services and receive income for it. An agent with integrity is certainly prepared to carry the risk of his own incompetence, just like Apple is prepared to replace your iPhone should it not start one day. But the agent is not prepared to carry additional risks such as the market risk, and should not be compelled to do so. It is your risk, a risk you personally take by deciding to play the investment gamble, and you cannot transfer it to somebody else. Of course, what makes the situation here more difficult than the iPhone example is that market-driven losses cannot be easily distinguished from incompetent-agent losses. So, there is no setup in which you carry the market risk only and your agent carries the incompetence risk only. But as much as you want a solution in which the agent carries all risk, you probably won't find an agent willing to sign such a contract. So you have to simply accept that both the market risk and the incompetence risk are inherent to being an investor. You can try to mitigate your own incompetence by having an advisor invest for you, but then you have to accept the risk of his incompetence. There is no way to depress the total incompetence risk to zero. |
Should I set a stop loss for long term investments? | My broker offers the following types of sell orders: I have a strategy to sell-half of my position once the accrued value has doubled. I take into account market price, dividends, and taxes (Both LTgain and taxes on dividends). Once the market price exceeds the magic trigger price by 10%, I enter a "trailing stop %" order at 10%. Ideally what happens is that the stock keeps going up, and the trailing stop % keeps following it, and that goes on long enough that accrued dividends end up paying for the stock. What happens in reality is that the stock goes up some, goes down some, then the order gets cancelled because the company announces dividends or something dumb like that. THEN I get into trouble trying to figure out how to re-enter the order, maintaining the unrealized gain in the history of the trailing stop order. I screwed up and entered the wrong type of order once and sold stock I didn't want to. Lets look at an example. a number of years ago, I bought some JNJ -- a hundred shares at 62.18. - Accumulated dividends are 2127.75 - My spreadsheet tells me the "double price" is 104.54, and double + 10% is 116.16. - So a while ago, JNJ exceeded 118.23, and I entered a Trailing Stop 10% order to sell 50 shares of JNJ. The activation price was 106.41. - since then, the price has gone up and down... it reached a high of 126.07, setting the activation price at 113.45. - Then, JNJ announced a dividend, and my broker cancelled the trailing stop order. I've re-entered a "Stop market" order at 113.45. I've also entered an alert for $126.07 -- if the alert gets triggered, I'll cancel the Market Stop and enter a new trailing stop. |
My boss wants to buy me a gift. How do I account for taxes for this? | Gifts given and received between business partners or employers/employees are treated as income, if they are beyond minimal value. If your boss gives you a gift, s/he should include it as part of your taxable wages for payroll purposes - which means that some of your wages should be withheld to cover income, social security, and Medicare taxes on it. At the end of the year, the value of the gift should be included in Box 1 (wages) of your form W-2. Assuming that's the case, you don't need to do anything special. A 1099-MISC would not be appropriate because you are an employee of your boss - so the two of you need to address the full panoply of employment taxes, not just income tax, which would be the result if the payment were reported on 1099-MISC. If the employer wants to cover the cost to you of the taxes on the gift, they'll need to "gross up" your pay to cover it. Let's say your employer gives you a gift worth $100, and you're in a 25% tax bracket. Your employer has to give you $125 so that you end up with a gain of $100. But the extra $25 is taxable, too, so your employer will need to add on an extra $6.25 to cover the 25% tax on the $25. But, wait, now we've gotta pay 25% tax on the $6.25, so they add an extra $1.56 to cover that tax. And now they've gotta pay an extra $.39 . . . The formula to calculate the gross-up amount is: where [TAX RATE] is the tax rate expressed as a percentage. So, to get the grossed-up amount for a $100 gift in a 25% bracket, we'd calculate 1/(1-.25), or 1/.75, or 1.333, multiply that by the target gift amount of $100, and end up with $133.33. The equation is a little uglier if you have to pay state income taxes that are deductible on the federal return but it's a similar principle. The entire $133.33 would then be reported as income, but the net effect on the employee is that they're $100 richer after taxes. The "gross-up" idea can be quite complicated if you dig into the details - there are some circumstances where an additional few dollars of income can have an unexpected impact on a tax return, in a fashion not obvious from looking at the tax table. If the employer doesn't include the gift in Box 1 on the W-2 but you want to pay taxes on it anyway, include the amount in Line 7 on the 1040 as if it had been on a W-2, and fill out form 8919 to calculate the FICA taxes that should have been withheld. |
What happens to my stocks when broker goes bankrupt? | Here is my perception of the situation, obtained from reading Degiro's Client Agreement. If Degiro shuts down, it will notify you about the fact at least one month in advance, and you will have enough time to order a transfer of your positions to a different broker. If Degiro shuts down unexpectedly, your assets will remain to be held at SPV, a separate legal entity which Degiro uses to hold the financial instruments belonging to the clients. Since SPV does nothing else but holding the assets, it is very unlikely that something bad will happen with it on its own. With some help from Degiro and/or the regulator (AFM) you should be able to transfer your assets from SPV to a different custodian and broker and thus regain control over them. If you have a non-Custody account, you have slightly higher chances of losing your assets, because Degiro can borrow your securities held at SPV. If both the client for whom Degiro borrowed a security and Degiro itself go bankrupt at the same time, the lent security will not be returned to SPV, there will arise a shortage, which will be proportionally distributed among the accounts of the clients holding this particular security. However, then the investor compensation scheme should kick in and help you recover up to 20000 EUR of your losses. |
How will going from 75% Credit Utilization to 0% Credit Utilization affect my credit score? | I wrote an article about FICO scoring which shows that 30% of your score is based on utilization or amount owed. I can't say exactly how much your score will rise, or how long it will take, but your score will improve dramatically from what you propose. This chart is from Credit Karma, and it shows how zero utilization is actually bad when it comes to your score. I wrote an article on my blog titled Too Little Debt in which I discuss further. Under 20% is ideal, just not zero. |
Can my rent to own equity be used as a downpayment? | I think you need to go to a local bank and ask. The key thing is paper trail. For any mortgage I've gotten on a new purchase, the bank needs to see where the down payment came from and how it got to the seller. In this case, it can go either way. If the value is truly 100% to the 80% you are looking to finance, and the paper trail is legit, this may work just fine. The issue others seem to have is that simply buying at a 20% discount is not a legit way to finance the 80%. Here, it appears to me that the 20% came from you in installments, via the rent. |
Is there legal reason for restricting someone under 59-1/2 from an in-service rollover from a 401K to an IRA? | I don't think there's a rule -- (I can't comment) but Brick cited IRS rules...but IMO Brick missed one thing -- @ashur668 is not looking for a distribution, but is looking for a rollover. My best guess: that this part of the ruleset is not well defined, and your (and my) employer have chosen to interpret any withdrawl as a "distribution", even if better characterized a rollover. A few months ago, I went so far as to explore if I could use a loophole -- my company had just gone through a merger; I was hoping I could rollover some or maybe all of my 401k to my IRA (I remember now, it would have been everything before starting roth 401k contributions). My company asserted this was not permitted, and further asserted that the rumors I had heard were mistaken that when we went through a company spin-off a few years before, that nobody under 59 1/2 was permitted to roll over. I did a quick search and found IRS topic 413 As far as I can tell, this topic is silent on the matter at hand. Topic 413 referred me to IRS Publication 575, where I started looking at the section on rollovers. I read some of it then got bored. Note that we're one step removed -- we are reading IRS publications and interpretations of IRS rules. I don't know that anybody here has read the actual tax law. There may be something in there that prevents companies from rolling over before 59 1/2 that is not well codified in IRS publications. |
Malaysian real estate: How to know if the market is overheated or in a bubble? | I think the only sure way to know if there is a bubble is to wait till it bursts and buy then. If it would be easy to tell there wouldn't be any bubbles. |
Is a fixed-price natural gas or electricity contract likely to save money? | The answer to this question will vary considerably by state and how utilities are regulated in your area. In New York, ESCOs (Energy Supply Companies) are almost always a ripoff for consumers versus the old-style regulated utility (in NY the utility supply markups are tightly regulated, but ESCOs are less regulated). You also need to really understand the marketplace rules for "locking in" a price. If you can lock in the July price for natural gas for a year, that rocks. There are other factors as well. But even then its a real bet, since weather and supply factors can have a dramatic effect on gas prices in the winter. IMO, the best bet is to run with the market rates and bank the efficiency improvements that you build into your home over time. Some utilities offer "budget plans" that smooth out your payments without interest -- I'd recommend that route if predictable bills are your goal. |
How does Value Averaging work in practice? | Value averaging has you shift the balance of your portfolio over time, not the amount of contributions. So you can only do it if you have a portfolio holding both risky assets (shares etc) and some cash. You start out by making a plan about how much you will contribute every month and at what rate you expect the share part of the portfolio to grow. Perhaps based on 20th century data you think an 8% growth rate is reasonable. Or alternatively if you know your desired final amount obviously you can work backwards to a desired rate from that. If in any month the share part is falling below its expected growth path, you would put more money into it: possibly your whole paycheck contribution plus some from the savings cash account. On the other hand if the share component is growing "too fast" you would put all your additional savings into cash. So if your investments are doing well, you're not supposed to spend the excess money, but rather to put it aside into a dedicated cash account to top up your share component when prices fall. In theory, this has the auto-levelling benefit of Dollar Cost Averaging, but even better: when prices are high, you'll automatically buy fewer shares, or even sell some; conversely when prices are low you'll buy extra shares from your reserve account. If it turns out your estimate was unreasonably optimistic, and over your lifetime shares only ever average 3%, you'll end up with an entirely share portfolio, and a bumpier ride than you might have liked. If you have horrible luck and over your entire investing life shares return less than cash (which has happened, though not yet in the USA), then this will be worse than a standard balanced portfolio. The original book Value Averaging by Edelson has a pretty good explanation of various cases, though I would say some of the examples are worked in excessive detail. I have not implemented this myself, one reason being that the amount I'm able to save from year to year varies, as it probably does for you, and so predicting a path is not quite so simple as he assumes. You could still do it I suppose. I think you could get a very crude approximation to this by simply directing your savings into cash when the share market's rate of growth over the last several years is above what you think is the long term average. |
Regarding Australian CBS takeover of TEN | they are purchasing the company" is this correct? Yes this is correct. If I purchase a "company" here in Australia, I also purchase its assets and liabilities Yes that is correct. How can it be NIL? How can it be legal? The value of shares [or shareholders] is Assets - liabilities. Generally a healthy company has Assets that are greater than its liabilities and hence the company has value and shareholders have value of the shares. In case of TEN; the company has more liabilities; even after all assets are sold off; there is not enough money left out to pay all the creditors. Hence the company is in Administration. i.e. it is now being managed by Regulated Australian authority. The job of the administrator is to find out suitable buyers so that most of the creditors are paid off and if there is surplus pay off the shareholder or arrive at a suitable deal. In case of TEN; the liabilities are so large that no one is ready to buy the company and the deal of CBS will also mean nothing gets paid to existing shareholders as the value is negative [as the company is separate legal entity, they can't recover the negative from shareholders]. Even the current creditors may not be paid in full and may get a pro-rated due and may lose some money. |
Saving up for an expensive car | The question is how does $16,000/year for 6.5 years fit into your budget. Or to put it another way, what won't you be spending that money on? Housing, food, vacations, retirement fund, investments (though you can invest your car fund in the meantime), building a hefty emergency fund, kids college funds, saving for a down payment on a home, charity, etc... are all other places that money could go. I don't know what your needs are today let alone 6.5 years into the future, but I'd encourage you to consider all your financial goals and evaluate where this expense would fit. It seems your plan is to save up to the total cost of the car and then buy it in cash. That's a valid strategy, but it means you'll have no car (unless you already own one) for 6.5 years. Do you need a car? If so, what will you drive in the meantime (and even if you already own another car outright, you'll have gas and maintenance expenses)? If you don't need a car, then $100,000 is a rather extravagant purchase for something we just established you don't need. Would you be happier having this expensive car in 6.5 years, or having a series of less expensive cars starting now? Or buying a used model of the expensive car sooner? Or having no car at all? Also, a lot can change in 6.5 years. Cars will evolve and there'll be different models and options available. Maybe your salary will have doubled, or maybe you'll be unemployed. You could be living in a different city, have a different commute, and maybe you'll need a minivan to haul kids around or live in a place with bad winters and want a 4-wheel-drive. You'll also need to be prepared for the additional expenses that generally come with expensive cars, such as higher insurance and maintenance rates, and parking could be costly if you live in an expensive city. The other option, of course, if the car is truly something you need, want, and can afford, would be to save up a sizable down payment and finance the rest so you can get the car sooner. Finally, there's nothing wrong with saving your money for 6.5 years, building up that fund, and then reevaluating what makes the most sense for you at that time. Maybe it will the car, maybe something else, but the nice thing about having savings is that it gives you more options. |
Does Apple have $0 of treasury stock? | Treasury stock is not really represented in the Balance Sheet as a "Treasury stock" line item in the assets. Some companies will break out Treasury Shares as a line item in the "Shareholders Equity" heading of the balance sheet but Apple hides it in the "Shares Issued and Outstanding" counts under the "Shareholders Equity" heading. As of the most recent Q2 2017 quarterly report There are 5,205,815,000 shares issued against 5,336,166,000 shares outstanding. This indicates that Apple is retaining about 130,351,000 shares in treasury. On the Q1 10-Q you can see that Apple had 5,255,423,000 shares issued which indicates roughly 49mm shares were repurchased by the end of Q2. You can roughly verify this by looking at page 18 of the Q2 filing in the summary of the share repurchase program. Repurchased as part of an Accelerated Share Repurchase arrangement bleeds between quarters but from February 2017 through May 2017 there have been 17.5mm shares repurchased. 31mm shares were also repurchased on the open market in Q2. The "shares issued" total is on a downward trend as part of Apple's share repurchase initiative that has been underway for the last couple of years. |
Why are credit cards preferred in the US? | Personally, I use my credit cards for everything because I get reward points (or, cash back, depending on the card), and I build credit history. I've had credit cards since I was 18 (now 22), and my credit score is in the higher end 700s which I'm told is pretty good for my age. Additionally, since I put my rent and large purchases on my credit card, I have a lot of reward points. I use these to buy things I wouldn't normally buy to try them out and see if they bring any value into my life. If not, I didn't really lose anything, but I have found value in some of those things. I realize most of this is gamification and consumerism at play, but getting that extra little thing once in a while for "free" which is pretty nice. |
Taxes due for hobbyist Group Buy | From the poster's description of this activity, it doesn't look like he is engaged in a business, so Schedule C would not be appropriate. The first paragraph of the IRS Instructions for Schedule C is as follows: Use Schedule C (Form 1040) to report income or loss from a business you operated or a profession you practiced as a sole proprietor. An activity qualifies as a business if your primary purpose for engaging in the activity is for income or profit and you are involved in the activity with continuity and regularity. For example, a sporadic activity or a hobby does not qualify as a business. To report income from a nonbusiness activity, see the instructions for Form 1040, line 21, or Form 1040NR, line 21. What the poster is doing is acting as a nominee or agent for his members. For instance, if I give you $3.00 and ask you to go into Starbucks and buy me a pumpkin-spice latte, you do not have income or receipts of $3.00, and you are not engaged in a business. The amounts that the poster's members are forwarding him are like this. Money that the poster receives for his trouble should be reported as nonbusiness income on Line 21 of Form 1040, in accordance with the instructions quoted above and the instructions for Form 1040. Finally, it should be noted that the poster cannot take deductions or losses relating to this activity. So he can't deduct any expenses of organizing the group buy on his tax return. Of course, this would not be the case if the group buy really is the poster's business and not just a "hobby." Of course, it goes without saying that the poster should document all of this activity with receipts, contemporaneous emails (and if available, contracts) - as well as anything else that could possibly be relevant to proving the nature of this activity in the event of an audit. |
Why does it take so long to refund to credit card? | It's not usually apparent to the average consumer, but there's actually two stages to collecting a payment, and two ways to undo it. The particular combination that occurs may lead to long refund times, on top of any human delays (like Ben Miller's answer addresses). When you pay with a credit card, it is typically only authorized - the issuing bank says "I'm setting this money aside for this transaction", but no money actually changes hands. You'll typically see this on your statement as a "pending" charge. Only later, in a process called "settlement", does your bank actually send money to the merchant's bank. Typically, this process starts the same day that the authorization happens (at close of business), but it may take a few days to complete. In the case of an ecommerce transaction, the merchant may not be allowed to start it until they ship whatever you ordered. On the flip side, a given transaction can be voided off or money can be sent back to your card. In the first case, the transaction will just disappear altogether; in the second, it may disappear or you may see both the payment and the refund on your statement. Voids can be as fast as an authorization, but once a transaction has started settlement, it can't be voided any more. Sending money back (a "refund") goes through the same settlement process as above, and can take just as long. So, to specifically apply that to your question: You get the SMS when the transaction is authorized, even though no money has yet moved. The refund money won't show up until several days after someone indicates that it should happen, and there's no "reverse authorize" operation to let you or your bank know that it's coming. |
How high should I set my KickStarter funding goal in order to have $35,000 left over? | I think you might be missing something important here. If you are running a business, then any expenses that your business incurs are deductible. Yes, Kickstarter would report the full amount. The IRS requires them to report everything that you raised. However, the Kickstarter and Amazon fees would be a business expense. Your cost on the backer rewards are deductible business expenses as well. Legal fees, accounting fees: deductible. Money that you spend on equipment may not be deductible all in one year; you may have to depreciate it over multiple years. This is where the accountant that you are paying accounting fees to will come in handy. People who do an iOS app Kickstarter campaign for $5000 might have a few things going on that you don't: |
What is an “at close order” in the stock market? | Usually backtests for (long-term) strategies are evaluated on a end-of-day basis where you only consider close prices. If your strategy performs well in these backtests, hopes are that if you use a market-on-close (MOC) order your performance will not diverge too much from the backtest. The fact that it won't diverge much is important if you keep backtesting the strategy along with the real trading to see regime changes or similar. If you used end-of-day prices for the backtests but some arbitrary intraday market order, you'd have some difficulties to explain deviations between the two. What it is: MOC orders can be submitted during the day, but they won't be executed until shortly before the market (or more precise the current session) closes. |
If I have all this stock just sitting there, how can I lend it out to people for short selling? | You just disclosed that you are new investor to the stock market. I'd advise that you first understand investing a bit better, as most will advise that investors need to be above a certain level before picking individual stocks. That said, most stocks trade in high enough volume and have low enough short interest that they don't fall under the category you seek. You want to first ask your broker if they have such a process, not all do. If so, they would need to provide you with the stocks that fall into this odd situation, specifically, the shares that have traders seeking to short the stock, but the stock is unavailable. Even then, the broker may have requirements that you don't fall into, minimum history with broker, minimum size account, etc. Worse, they are not likely to offer this for 100 shares, but may have a 1000 or higher share requirement. Are you willing to buy some obscure $50/sh priced stock to lend out at 1%/mo? The guy trying to short it is far smarter than both you and I, at least regarding this particular stock. This strategy is more appropriate for the 7 figure net worth investor. If any reader has actual experience with this, I'm happy to hear it. This response is from my recollection of two articles I read about 3 years ago, coincidence they both were published within weeks of each other. |
Is it safer to send credit card number via unsecured website form or by e-mail? What safer options are there? | Here's one option: Telephone is a lower-tech yet relatively more secure means for transmitting your payment information when a secure web site isn't available. And yet another option: You could send them an encrypted email, but this would require tools (e.g. GPG), setup (public keys), and expertise on their end which they are unlikely to already have. However, ChrisInEdmonton raised a good point in his comment. How can you consider them to be a reputable seller when they don't take basic precautions to protect customers' payment information online? The seller may with good faith charge your card the correct amount and deliver the goods that you expect, but how will they protect your credit card information once in their hands? Would you trust their internal systems if they can't even set up an HTTPS web site? |
If I put a large down payment (over 50%) towards a car loan, can I reduce my interest rate and is it smart to even put that much down? | As others have already pointed out, the bank isn't getting your money upfront - the cash goes to the dealer and the bank will be financing you a much smaller amount. They really don't have any incentive to give you a better interest rate, but it never hurts to ask. The more important (and unasked) question is should you do this? Keeping in mind that a loan with good credit could be in the 1.8% range. Average long-term returns in the market are over 3x that, so by paying upfront you're trading the opportunity for 6%+ returns for the ability to save -2% fees. |
Are large companies more profitable than small ones? | There is no general theory to support the notion that larger companies will be more profitable than smaller companies. Economies of scale are not always positive, one can have diseconomies of scale too. It is more common to talk about an optimal firm size, even going back to Stigler's (1958) "The Economies of Scale." Intuitively, if economies of scale extended indefinitely, then natural monopolies would dominate all industries in the long run. A profit ratio, unfortunately, wouldn't quite get at scale economies. Consider, for example, that the denominator of your metric would be profit+cost and that you are trying to get at the cost reduction that derives from scale. Then, you are measuring the size of a company by the exact metric that should be reduced if scale economies exist, so the calculation would be a bit confounded. It is my understanding that such assessments are usually conducted at the industry level by determining whether the industry is becoming increasingly concentrated among fewer firms over time. (Again see Stigler). If concentration is increasing, there is an implication that, at current firm sizes, there are economies of scale in the industry. |
How does stock dilution work in relation to share volume? | Let me answer with an extreme example - I own the one single share of a company, and it's worth $1M. I issue 9 more shares, and find 9 people willing to pay $1M for each share. I know find my ownership dropped by 90%, and I am now a 10% owner of a business that was valued at $1M but with an additional $9M in the bank for expansion. (Total value now $10M) Obviously, this is a simplistic view, but no simpler than the suggestion that your company would dilute its shares 90% in one transaction. |
Multiple people interested in an Apartment | I don't know how many people "a ton" is, but if you are getting more than, say, 6 people who are qualified to rent, you've priced it too low. Better to ask for $1200, and have a potential tenant haggle or ask you to reduce the price than to have 6 people want it for $900. It's worth it to run a credit report, and let that help you choose. I agree with Victor, a bidding war is appropriate for a house sale, not rental apartments. You didn't mention your country, but I'd be sure to find out the local laws regarding tenant choice. You may not (depending where you are) discriminate based on gender, sexual orientation, marital status, race, or religion. |
Should I refi a rental property to reduce income tax from positive cash flow and use the equity pulled out to fund an annuity? | You need to do a bit more research and as @littleadv often wisely advises, consult a professional, in this case a tax layer or CPA. You are not allowed to just pull money out of a property and write off the interest. From Deducting Mortgage Interest FAQs If you own rental property and borrow against it to buy a home, the interest does not qualify as mortgage interest because the loan is not secured by the home itself. Interest paid on that loan can't be deducted as a rental expense either, because the funds were not used for the rental property. The interest expense is actually considered personal interest, which is no longer deductible. This is not exactly your situation of course, but it illustrates the restriction that will apply to you. Elsewhere in the article, it references how, if used for a business, the interest deduction still will not apply to the rental, but to the business via schedule C. In your case, it's worse, you can never deduct interest used to fund a tax free bond, or to invest in such a tax favored product. Putting the facts aside, I often use the line "don't let the tax tail wag the investing dog." Borrowing in order to reduce taxes is rarely a wise move. If you look at the interest on the 90K vs 290K, you'll see you are paying, in effect, 5.12% on the extra 200K, due the higher rate on the entire sum. Elsewhere on this board, there are members who would say that given the choice to invest or pay off a 4% mortgage, paying it off is guaranteed, and the wiser thing to do. I think there's a fine line and might not be so quick to pay that loan off, an after-tax 3% cost of borrowing is barely higher than inflation. But to borrow at over 5% to invest in an annuity product whose terms you didn't disclose, does seem right to me. Borrow to invest in the next property? That's another story. |
Should I have more than one brokerage account? | I believe the answer here is no: SIPC protection of customers with multiple accounts is determined by "separate capacity." Each separate capacity is protected up to $500,000 for securities and cash (including a $250,000 limit for cash only). Accounts held in the same capacity are combined for purposes of the SIPC protection limits. So even having 2 individual accounts - you would only be covered for $500,000/$250,000. You can see more about the type of accounts that would give your more coverage here. Also note: If you own a stock - the record probably exist. Therefore you would not lose your ownership or shares. The SIPC is there to protect the times this does not happen. |
Is there anything I can do to prepare myself for the tax consequences of selling investments to buy a house? | Have you changed how you handle fund distributions? While it is typical to re-invest the distributions to buy additional shares, this may not make sense if you want to get a little cash to use for the home purchase. While you may already handle this, it isn't mentioned in the question. While it likely won't make a big difference, it could be a useful factor to consider, potentially if you ponder how risky is it having your down payment fluctuate in value from day to day. I'd just think it is more convenient to take the distributions in cash and that way have fewer transactions to report in the following year. Unless you have a working crystal ball, there is no way to definitively predict if the market will be up or down in exactly 2 years from now. Thus, I suggest taking the distributions in cash and investing in something much lower risk like a money market mutual fund. |
Are there special exceptions to the rule that (US) capital gains taxes are owed only when the gain materializes? | In addition to the expatriation case already mentioned by Ben Miller, traders/investors are required to use mark-to-market accounting on certain investments. These go by Section 1256 contracts due to the part of the law that defines them. Mark-to-market is also required on straddles (combination of a long and and a short position in equities that are expected to vary inversely to each other). Mark-to-market means that you have to treat the positions as if you closed them at their end-of-year market value (even if you still have the position across the new year). |
What should I be aware of as a young investor? | I'm 39 and have been investing since my very early 20's, and the advice I'd like to go back and give myself is the following: 1) Time is your friend. Compounding interest is a powerful force and is probably the most important factor to how much money you are going to wind up with in the end. Save as much as you possibly can as early as you can. You have to run twice as hard to catch up if you start late, and you will still probably wind up with less in the end for the extra effort. 2) Don't invest 100% of your investment money It always bugged me to let my cash sit idle in an investment account because the niggling notion of inflation eating up my money and I felt I was wasting opportunity cost by not being fully invested in something. However, not having enough investable cash around to buy into the fire-sale dips in the market made me miss out on opportunities. 3) Diversify The dot.com bubble taught me this in a big, hairy painful way. I had this idea that as a technologist I really understood the tech bubble and fearlessly over-invested in Tech stocks. I just knew that I was on top of things as an "industry insider" and would know when to jump. Yeah. That didn't work out so well. I lost more than 6 figures, at least on paper. Diversification will attenuate the ups and downs somewhat and make the market a lot less scary in the long run. 4) Mind your expenses It took me years of paying huge full-service broker fees to realize that those clowns don't seem to do any better than anyone else at picking stocks. Even when they do, the transaction costs are a lead weight on your returns. The same holds true for mutual funds/ETFs. Shop for low expense ratios aggressively. It is really hard for a fund manager to consistently beat the indexes especially when you burden the returns with expense ratios that skim an extra 1% or so off the top. The expense ratio/broker fees are among the very few things that you can predict reliably when it comes to investments, take advantage of this knowledge. 5) Have an exit strategy for every investment People are emotional creatures. It is hard to be logical when you have skin in the game and most people aren't disciplined enough to just admit when they have a loser and bail out while they are in the red or conversely admit when they have a winner and take profits before the party is over. It helps to counteract this instinct to have an exit strategy for each investment you buy. That is, you will get out if it drops by x% or grows by y%. In fact, it is probably a good idea to just enter those sell limit orders right after you buy the investment so you don't have to convince yourself to press the eject button in the heat of a big move in the price of that investment. Don't try to predict tops or bottoms. They are extremely hard to guess and things often turn so fast that you can't act on them in time anyway. Get out of an investment when it has met your goal or is going to far in the wrong direction. If you find yourself saying "It has to come back eventually", slap yourself. When you are trying to decide whether to stay in the investment or bail, the most important question is "If I had the current cash value of the stock instead of shares, would I buy it today?" because essentially that is what you are doing when you stick with an investment. 6) Don't invest in fads When you are investing you become acutely sensitive to everyone's opinions on what investment is hot and what is not. If everyone is talking about a particular investment, avoid it. The more enthusiastic people are about it (even experts) the MORE you should avoid it. When everyone starts forming investment clubs at work and the stock market seems to be the preferred topic of conversation at every party you go to. Get out! I'm a big fan of contrarian investing. Take profits when it feels like all the momentum is going into the market, and buy in when everyone seems to be running for the doors. |
My friend wants to put my name down for a house he's buying. What risks would I be taking? | Wrong way round. Transitional arrangements are non-binding guidelines that the lenders can observe if they choose to. The borrower - like your friend - doesn't get to choose whether to use them or not. Your friend obviously can't afford the property, so if you do this, all I can say is congratulations on buying your new house, and I hope you got a deal on the mortgage. |
Employer reported ESPP ordinary income on wrong year's W-2 | You mentioned that the 1099B that reports this sale is for 2014, which means that you got the proceeds in 2014. What I suspect happened was that the employer reported this on the next available paycheck, thus reporting it in the 2015 period. If this ends up being a significant difference for you, I'd argue the employer needs to correct both W2s, since you've actually received the money in 2014. However, if the difference for you is not substantial I'd leave it as is and remember that the employer will not know of your ESPP sales until at least several days later when the report from the broker arrives. If you sell on 12/31, you make it very difficult for the employer to account correctly since the report from the broker arrives in the next year. |
Lease vs buy car with cash? | If you are talking straight dollars then leasing is always a losing proposition when compared with purchasing. The financial workings of leasing are so confusing that people don’t realize that leasing invariably costs more than an equivalent loan. And even if they did, the extra cost is difficult to calculate. Still, many people can’t afford the higher payments of a typical loan, at least not without putting a substantial amount down. If payments are an issue, consider buying a lower-cost vehicle or a reliable used car. http://www.consumerreports.org/cro/2012/12/buying-vs-leasing-basics/index.htm If you are talking about convenience, lifestyle, ability to purchase a car you could not pay for outright, then you will have to evaluate that. |
What is a bond fund? | As Michael Pryor answered, a bond fund is a mutual fund that invests in bonds. I'd also consider an ETF based on bonds to be a bond fund, but I'm not sure that all investors would consider these as "bond funds". Not all bond funds are the same -- just like stock funds. You can classify bond funds based on the issuer of the bonds: You can also classify funds based on the time to maturity: In general, bond funds have lower risk and lower expected return than stock funds. Sometimes bond funds have price movements that are not tightly correlated to the price movements in the equity markets. This can make them a decent hedge against declines in your equity investments. See Michal Pryor's answer for some info on how you can get tax free treatment for your bond fund investments. |
In Australia, how to battle credit card debt? | Short-term, getting a balance transfer will help. It'll reduce the interest you pay. You can also reduce the interest you pay on your cars if you are able to consolidate your debt into a personal loan. To your question about debt consolidation companies, as far as I know, that's all they do. However, long-term, there's only two ways to stay on top of debt: increase your income, or reduce your spending. Basically, if you can't or won't get a raise or a job that pays more (or a second job), you need to cut back on your spending. You might need to do something radical, like move somewhere with cheaper rent (as long as increased travel costs doesn't offset the saving). But you'll be much better off in the long run if you step back and take a look at your situation now, and make adjustments accordingly. |
Having a separate bank account for business/investing, but not a “business account?” | Having a separate checking account for the business makes sense. It simplifies documenting your income/expenses. You can "explain" every dollar entering and exiting the account without having to remember that some of them were for non-business items. My credit union allowed me to have a 2nd checking account and allowed me to put whatever I wanted as the name on the check. I think this looked a little better than having my name on the check. I don't see the need for a separate checking account for investing. The money can be kept in a separate savings account that has no fees, and can even earn a little interest. Unless you are doing a lot of investment transactions a month this has worked for me. I fund IRAs and 529 plans this way. We get paychecks 4-5 times a month, but send money to each of the funds once a month. You will need a business account if the number of transactions becomes large. If you deposit dozens of checks every time you go to the bank, the bank will want to move you to a business account. |
How is “The People's Trust” not just another Investment Trust? | Well the People's Trust's IPO prospectus is now (2017-09-08) available for all to read (or there's a smaller "information leaflet"). (May need some disclaimers to be clicked to get access). Both have a "highlights" bullet-point list: Coverage here has a comment thread with some responses by the founder attempting to answer the obvious objection that there's other multi-manager trusts on a discount (e.g Alliance Trust on ~ -5.5%), so why would you buy this one on a (very small) premium? (Update: There's also another recent analysis here.) Personally, I'm thinking the answer to the original question "How is The People's Trust not just another Investment Trust?" is pretty much: "it's just another Investment Trust" (albeit one with its own particular quirks and goals). But good luck to them. |
How do I get rid of worthless penny stocks if there is no volume (so market/limit orders don't work) and my broker won't buy them from me? | I dug up an old article on Motley Fool and one approach they mention is to get the stock certificates and then sell them to a friend: If the company was liquidated, you should receive a 1099-DIV form at year's end showing a liquidating distribution. Treat this as if you sold the stock for the amount of the distribution. The date of "sale" is the date that the distribution took place. Using your original cost basis in the shares, you can now compute your loss. If the company hasn't actually been liquidated, you'll need to make sure it's totally worthless before you claim a loss. If you have worthless stock that's not worth the hassle of selling through your broker, you can sell it to a friend (or cousin, aunt, or uncle) for pennies. (However, you can't sell the stock to a spouse, siblings, parents, grandparents, or lineal descendants.) Here's one way to do it: Send the certificate to your stock-transfer agent. Explain that the shares have been sold, and ask to cancel the old shares and issue a new certificate to the new owner. Some brokerages will offer you a quicker alternative, by buying all of your shares of the stock for a penny. They do it to help out their customers; in addition, over time, some of the shares may actually become worth more than the penny the brokers paid for them. By selling the shares, you have a closed transaction with the stock and can declare a tax loss. Meanwhile, your friend, relative, or broker, for a pittance, has just bought a placemat or birdcage liner. |
Why would preferred shares have less potential for capital gain compared to common stock? | True blue preferred shares are considered loose hybrids of credit and equity. They are more senior than common equity in bankruptcy liquidation but pay out a dividend which is not mandatory. Financial institutions issue the bulk of genuine preferred shares because of their need for more flexibility than a bond but not so much that they can afford the cost to shareholders by diluting common equity. Since it is a credit-like security that receives none of the income from operations but merely pays out a potentially unpredictable yet fixed amount of income, it will perform much more like a bond, rising when interest rates fall and vice versa, and since interest rates do not move to the extent of common equity valuations, preferreds' price variances will correspond much more to bonds than common equities. If the company stops paying the preferred dividend or looks to become in financial trouble, the price of the preferred share should be expected to fall. There are more modern preferred however. It has now become popular to fund intermediate startups with convertible preferred shares. Because these are derivatives based upon the common equity, they can be expected to be much more variant. |
What can I replace Microsoft Money with, now that MS has abandoned it? | www.mint.com is a very good web site that can upload your financial data from your bank and analyze it for you. Security concerns seem to have been addressed reassuringly. |
How to take advantage of home appreciation | There are basically two ways to get value out of an appreciating asset such as a home: (a) Sell it and take the profit. In the case of a home, you presumably still have to live somewhere, so unless you buy a cheaper home to replace it, this doesn't get you anywhere. If you can get another house that is just as nice and in just as nice a location -- whatever you consider "nice" to be -- than this sounds like a winning option. If it means moving to a less desirable home, then you are getting the cash but losing the nice home. You'll have to decide if it's worth it. (b) Use it as collateral for a loan. In this case, that means a second mortgage, home equity loan, or a home equity line of credit. But this can be dangerous. House prices are very volatile these days. If the value of the house falls, you could be stuck with debts greater than your assets. In my humble opinion, you should be very careful about doing this. Borrowing against your house to send the kids to college or pay for your spouse's life-saving operation may be reasonable. Borrowing against your house to go on a fancy vacation is almost surely a bad idea. The vacation will be over within a couple of weeks, but you could be paying off the debt for decades. |
For very high-net worth individuals, does it make sense to not have insurance? | It depends. "High net worth individuals" is very subjective. Lets say a person is worth 1.5 million. High, but not super high. For one, they should have an umbrella policy. Until your net worth is above 300K, you really don't need an umbrella policy. They should insure their home and cars, but should probably have high deductibles. Health insurance is a must as a bad illness can wipe them out. They should have long term care insurance when they reach age 60. Now lets say a person is worth about 10 million. They might be able to self insure basic transportation and probably don't need long term care insurance. However, they may choose to carry the full coverage car insurance, or other lines, because it is a value. In conclusion insurance needs change based on a person's net worth and income. It is very hard to make a blanket statement without details of the makeup of one's net worth and how they earn their income. Having said all of that, a high net worth (HNW) individual may never be able to drop certain coverage. Lets say that a HNW owns a 50K condo, 1K square foot condo. Given that the outside structure is covered by the HOA the insurance on such a unit only covers the contents and liability. The contents could easily be floated by the HNW individual, but not the liability. It is probably a requirement, on their umbrella policy, that they carry the maximum liability protection on their vehicles and properties. In the case above they would carry a policy for the purposes of liability protection. This could also be true of their dependents. Say for example, their adult child receives some financial assistance from their parents (like college being paid for). The HNW individuals should have their child cover the maximum liability on the auto policy. According to this site: A person with a net worth of 1.5 million would be in the 90-95 percentile, a person with 10 million in the 99th. This article does a decent job of describing what constitutes a HNW person or household. Namely 1 million in investable assets, which is of course a bit different then net worth. |
How to decide which private student loan is right for me? | I speak from a position of experience, My BS and MS are both in Comp Sci. I know very little about loans or finances. That is very unfortunate as you are obviously an intelligent human being. Perhaps this is a good time to pause your formal education and get educated in personal finance. To me, it is that important. I study computer science, and am thus confident that I will be able to find work after I finish school. This kind of attitude can lead to trouble. You will likely have a high salary, but that does not always translate into prosperity. Personal finance is more about behavior then mathematics. I currently work with people that have high salaries in a low cost of living area. Some have lost homes due to foreclosure some are very limited in their options because of high student loan balances. Some are millionaires without hitting the IPO/startup lotto. The difference is behavior. It's possible that someone in my family will be able to cosign and help me out with this loan. This is indicative of lack of knowledge and poor financial behavior. This kind of thing can lead to strained relationships to the point where people don't talk to each other. Never co-sign for anyone, and if you value the relationship with a person never ask them to co-sign. I'll be working as a TA again for a $1000 stipend. Yikes! Why in the world would you work for 1K when you need 4K? You should find a way to earn 6K this semester so you can save some and put some toward the loans you already acquired. Accepting this kind of situation "raises red flags" on your attitude towards personal finance. And yes it is possible, you can earn that waiting tables and if you can find a part time programming gig you can make a lot more then that. Consider working as a TA and wait tables until you find that first programming gig. I am just about done with my undergraduate degree, and will be starting graduate school at the same university next semester. To me this is a recipe for failure in most cases. You have expended all your financing options to date and are planning to go backwards even more. Why not get out of school with your BS, and go to work? You can save up some of your MS tuition and most companies will provide tuition reimbursement. Computer Science/Software Engineering can be a fickle market. Right now things are going crazy and times are really good. However that was not always the case during my career and unlikely for yours. For example, Just this year I bypassed my highest rate of pay that occurred in 2003. I was out of work most of 2004, and for part of 2005 I actually made less then when I was working while in college. In 2009 my company cut our salaries by 5%, but the net cost to me was more like a 27% cut. In 2001 I worked as a contractor for a company that had a 10% reduction in full time employees, yet they kept us contractors working. Recently I talked with a recruiter about a position doing J2EE, which is what I am doing now. It required a high level security clearance which is not an easy thing to get. The rub was that it was located in a higher cost of living area and only paid about 70% of what I am making now. They required more and paid less, but such is the market. You need to learn about these things! Good luck. |
What are some good ways to control costs for groceries? | If you are willing to use one main credit card for shopping, use a grocery points rewards card like PC Financial Mastercard. Pay for the groceries using the card to earn points and use those points to reduce costs. The only limitation is that you must shop at Loblaws, Superstore, No Frills, Zehrs, Fortinos. It works out to $1 = 10 points and 20,000 points = $20. So that works out to spend $1 to earn back $0.01. |
Diversification reduces risk, but does this base on the assumption that expected return of each asset is always in proportion to its risk? | If you have 100% of your money in one security that is inherently more risky than splitting your money 50/50 between two securities, regardless of the purported riskiness of the two securities. The calculations people use to justify their particular breed of diversification may carry some assumptions related risk/reward calculations. But these particular justifications don't change the fact that spreading your money across different assets protects your money from value variances of the individual assets. Splitting your $100 between Apple and Microsoft stock is probably less valuable (less well diversified) than splitting your money between Apple and Whole Foods stock but either way you're carrying less risk than putting all $100 in to Apple stock regardless of the assumed rates of return for any of these companies stock specifically. Edit: I'm sure the downvotes are because I didn't make a big deal about correlation and measuring correlation and standard deviations of returns and detailed portfolio theory. Measuring efficacy and justifying your particular allocations (that generally uses data from the past to project the future) is all well and good. Fact of the matter is, if you have 100% of your money in stock that's more stock risk than 25% in cash, 25% in bonds and 50% in stock would be because now you're in different asset classes. You can measure to your hearts delight the effects of splitting your money between different specific companies, or different industries, or different market capitalizations, or different countries or different fund managers or different whatever-metrics and doing any of those things will reduce your exposure to those specific allocations. It may be worth pointing out that currently the hot recommendation is a plain vanilla market tracking S&P 500 index fund (that just buys some of each of the 500 largest US companies without any consideration given to risk correlation) over standard deviation calculating actively managed funds. If you ask me that speaks volumes of the true efficacy of hyper analyzing the purported correlations of various securities. |
Why are capital gains taxed at a lower rate than normal income? | Here are three key factors that you do not explicitly state: So while I cannot say exactly why the tax law is the way it is, I can infer that it encourages long-term investments rather than short-term, which would seem to be a good thing for society overall. The fast that capital gains are taxed at all somewhat discourages cashing out investments (although I suspect it's more of a nuisance factor - the cash received is likely more on an incentive that the tax is a disincentive). |
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