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How can I legally and efficiently help my girlfriend build equity by helping with a mortgage? | Have her pay something like a friendly monthly rent. This should be less than half of the monthly mortgage cost, since you are assuming the risk (and benefits) of a mortgage and closer to the rent of similar places near you. For when you get married and she is to have half the apartment, have a pre-agreed way to calculate a lump-sum that she needs to provide to match your own contributions up to that time, as if you two had equal contributions from the beginning. The financially precise way to do it would be to have her pay more than the mere sum of the amount (since she will be providing the amount at a later time than you), but I would be generous and skip this in your place if the difference is not too big. If you break up, she will have payed what would be a fair amount of rent, as if you two were renting, so, in this sense, it is fair that she would not have a claim on the apartment. In case that you two would like that she keeps the apartment, you can just sell it to her, having her pay this same amount as above and assume responsibility for the rest of the mortgage. |
How can I figure out how a stock's price would change after I buy shares? | It is unlikely that buying 100 shares will have any effect on a stock's price, unless the stock's average trading volume is incredibly low. That being said, no matter how many share you buy, there's no way to know what the impact on the price will be, because that's only one factor in how shares are priced. If anyone could figure out the answer to your question then they'd be extremely rich, because they'd simply watch for big share trades and then buy those stocks on the way up. The market makers who actually execute the trades are the ones who set the prices, and most stocks have multiple market makers trading the stock, so the bid/ask you see is the highest bid and lowest ask. The market makers set the price based on what the trend of the stock is. If, for instance, there's a large number of sell orders against a stock, the market makers will start dropping the bid prices as they fill execution orders, and as they see buy orders increase, they'll raise ask prices as they fill execution orders. The market makers earn the difference between what they paid to buy someone's stock who was selling and what they get from someone else who buys it. This is a simplified explanation, so pro traders, don't beat me up! (grin) So, basically, it takes quite a bit of share volume in one direction or another to affect a stock's price. I can guarantee a 100-share trade wouldn't even be noticed by market makers. I hope this helps. Good luck! |
what is a mortgage gift exchange? | I'm guessing since I don't know the term, but it sounds like you're asking about the technique whereby a loan is used to gather multiple years' gift allowance into a single up-front transfer. For the subsequent N years, the giver pays the installments on the loan for the recipient, at a yearly amount small enough to avoid triggering Gift Tax. You still have to pay income tax on the interest received (even though you're giving them the money to pay you), and you must charge a certain minimum interest (or more accurately, if you charge less than that they tax you as if the loan was earning that minimum). Historically this was used by relatively wealthy folks, since the cost of lawyers and filing the paperwork and bookkeeping was high enough that most folks never found out this workaround existed, and few were moving enough money to make those costs worthwhile. But between the "Great Recession" and the internet, this has become much more widely known, and there are services which will draw up standard paperwork, have a lawyer sanity-check it for your local laws, file the official mortgage lien (not actually needed unless you want the recipient to also be able to write off the interest on their taxes), and provide a payments-processing service if you do expect part or all of the loan to be paid by the recipient. Or whatever subset of those services you need. I've done this. In my case it cost me a bit under $1000 to set up the paperwork so I could loan a friend a sizable chunk of cash and have it clearly on record as a loan, not a gift. The amount in question was large enough, and the interpersonal issues tricky enough, that this was a good deal for us. Obviously, run the numbers. Websearching "family loan" will find much more detail about how this works and what it can and can't do, along with services specializing in these transactions. NOTE: If you are actually selling something, such as your share of a house, this dance may or may not make sense. Again, run the numbers, and if in doubt get expert advice rather than trusting strangers on the web. (Go not to the Internet for legal advice, for it shall say both mu and ni.) |
What are some good ways to control costs for groceries? | All excellent answers. Scott W. already mentioned to look out for sales and many other answers are ways to be smart with portions: don't overbuy, or be smart with bulk buys. But, I'm surprised nobody mentioned one of the things I'd consider obvious about saving money on groceries: coupons! Coupons can save cash. We'll sometimes use coupons for brands we'd be buying anyway, or other comparably-priced brands that we're willing to try. The thing to be careful of with coupons is when the manufacturer is attempting to up-sell you to a premium brand, or trying to get you to buy a product you'd never have bought anyway. Anyway, we especially like the coupons that Costco sends in the mail once in a while, or those they hand out at the warehouse entrance. What better way to save than to: All the better if the items aren't perishable. When we have the space and those grocery savings stars are all in alignment, we load up on such items as paper towels, oatmeal/cereal bars, soap, etc. |
What does “profits to the shareholders jumped to 15 cents a share” mean? | What does it mean in terms of share price? Should the share price increase by 15 cents? No, but you're on the right track. In theory, the price of a share reflects it's "share" of time discounted future earnings. To put it concretely, imagine a company consistently earning 15 cents a share every year and paying it all out as dividends. If you only paid 25 cents for it, you could earn five cents a share by just holding it for two years. If you imagine that stocks are priced assuming a holding period of 20 years or so, so we'd expect the stock to cost less than 3 dollars. More accurately, the share price reflects expected future earnings. If everyone is assuming this company is growing earnings every quarter, an announcement will only confirm information people have already been trading based on. So if this 15 cents announcement is a surprise, then we'd expect the stock price to rise as a function of both the "surprise" in earnings, and how long we expect them to stay at this new profitability level before competition claws their earnings away. Concretely, if 5 cents a share of that announcement were "earnings surprise," you'd expect it to rise somewhere around a dollar. |
I'm only spending roughly half of what I earn; should I spend more? | Aside from what everyone else has said about your money (saving, investing, etc.), I'd like to comment on what else you could spend it on: Spend it all on small/stupid things that, while stupid, would make me happier. For example take taxis more often, eat often in nice restaurants, buy designer clothes, etc. I'll be young only one time. You could also put the money towards something more... productive? Like a home project. Convert a room in your living space into an office or a theater-like room. Install hardwood floors yourself. Renovate a bathroom. Plant a garden of things you would enjoy eating later. Something that you would enjoy having or doing and can look back at and be proud of putting your money towards something that you accomplished. |
Does a stock's price represent current liquidation of all shares? | What if everyone decided to sell all the shares at a given moment, let's say when the stock is trading at $40? I imagine supply would outweigh demand and the stock would fall. Yes this is the case. Every large "Sell" order results in price going down and every large "Buy" order results in price going up. Hence typically when large orders are being executed, they are first negotiated outside for a price and then sold at the exchange. I am not talking about Ownership change event. If a company wants a change in ownership, the buyer would be ready to pay a premium over the market price to get controlling stake. |
Carry-forward of individual losses, with late-filed past taxes [US] | The 2012 return was due 4/15/2013 (I'm assuming it didn't fall on a weekend). No late filing penalty if there was no tax due, but he has until 4/15/2016 to file for a refund or to document anything that should have carried forward. |
How come I can't sell short certain stocks? My broker says “no shares are available” | Shorts are difficult because you have to find someone to lend the stock to you. In contrast, put options don't require that. They also have some nice properties like you're only out the contract price. The options chain for BSFT will give you an idea of where the market is. Keep in mind that BSFT only IPO'd last year and announced blowout earnings recently. Make sure the P:E you're looking at is using recent earnings reports! |
What to do with your savings in Japan | The reason for these low interests is that the Japanese central bank is giving away money at negative interests to banks. Yes, negative. So, short of opening your own bank, you'll have to either choose less liquid investments or more risky ones. Get Japanese government bonds. Not a great interest, band not that liquid, but for a 5 years bond you'll do better than the bank can. Get Japanese corporate bonds. Still not great, and a bit more risky, it's better than nothing. Get a Japanese mutual fund. I can't recommend any though. Buy Japanese stock. Many Japanese stock have interesting kickbacks. For example if you buy enough stock of Book-Off you'll get some free books every month. it's risky though because I believe the next NIKKEI index crash is imminent. |
Price movement behaviour before earnings announcements | This depends entirely on what the market guesses the news will be and how much of that guess has already been factored into the price. There is no general answer beyond that. Note that this explains the apparently paradoxical responses where a stock good down on good news (the market expected better) or up on bad news (the market expected worse). |
Canceling credit cards - insurance rate increase? | Your credit score can be part of the algorithm for setting your rates for auto insurance. It is one of many factors including sex, age, zip code, driving record, type of car... There are some states that are concerned about using credit scores, some sates have passed legislation regarding this issue |
Why does the biotechnology industry have such a high PE ratio? | Most biotech companies do not have a product they are selling. They have a set of possible drugs that they are developing. If any of these drugs get proven to be better than the current drugs they can be sold at a great profit. Therefore as soon as a biotech company proves a drug candidate is likely to pass large scale trials the company is often taken over by a large pharmaceutical company and is therefore no longer listed on the stock market. So mostly profit comes after the company stops being listed, therefore the profit will be negative for most biotech companies that are publicly traded. |
Can a company block a specific person from buying its stock? | In the UK, this is the very definition of a Public Limited Company. A Limited Company can restrict how its stock is trades and who can buy and sell and when, a Public Limited Company cannot. Most stock exchanges will only allow Public Limited Company stock to be traded. Therefore a company can control who its stock holders are or be traded on a Stock Exchange. |
Reducing taxable income in US in December | Assuming that what you want to do is to counter the capital gains tax on the short term and long term gains, and that doing so will avoid any underpayment penalties, it is relatively simple to do so. Figure out the tax on the capital gains by determining your tax bracket. Lets say 25% short term and 15% long term or (0.25x7K) + (0.15*8K) or $2950. If you donate to charities an additional amount of items or money to cover that tax. So taking the numbers in step 1 divide by the marginal tax rate $2950/0.25 or $11,800. Money is easier to donate because you will be contributing enough value that the IRS may ask for proof of the value, and that proof needs to be gathered either before the donation is given or at the time the donation is given. Also don't wait until December 31st, if you miss the deadline and the donation is counted for next year, the purpose will have been missed. Now if the goal is just to avoid the underpayment penalty, you have two other options. The safe harbor is the easiest of the two to determine. Look at last years tax form. Look for the amount of tax you paid last year. Not what was withheld, but what you actually paid. If all your withholding this year, is greater than 110% of the total tax from last year, you have reached the safe harbor. There are a few more twists depending on AGI Special rules for farmers, fishermen, and higher income taxpayers. If at least two-thirds of your gross income for tax year 2014 or 2015 is from farming or fishing, substitute 662/3% for 90% in (2a) under the General rule, earlier. If your AGI for 2014 was more than $150,000 ($75,000 if your filing status for 2015 is married filing a separate return), substitute 110% for 100% in (2b) under General rule , earlier. See Figure 4-A and Publication 505, chapter 2 for more information. |
Totally new to finance, economy, where should I start? | I'm going to be a bit off topic and recommend 'The Only Investment Book You'll Ever Need' by Andrew Tobias. It doesn't start with describe the workings of the stock market. Instead, it starts with making sure you have a budget and have your basic finances in order BEFORE going into the stock market. This may not sound like what you are looking for, but it really is a valuable book to read, even if you think you are all set up in that department. |
Do Americans really use checks that often? | Many small businesses are still cash and check. For example my landlord does not take credit card or online transfer. My choices are cash and check, and I prefer checks for the paper trail. |
What can I replace Microsoft Money with, now that MS has abandoned it? | Uh, Quicken is virtually identical to MS Money. If you liked money and don't want to change, use that. |
Why should I choose a business checking account instead of a personal account? | Some benefits of having a business checking account (versus a personal checking account) are: The first 3 should be pretty easy to determine if they are important to you. #4 is a little more abstract, though I see you have an LLC taxed as a sole proprietorship, and so I'm guessing protecting your personal assets may have been one of the driving reasons you formed the LLC in the first place. If so, "following through" with the business account is advised. |
When a stock price goes down, does the money just disappears into thin air? | Yes and no. There is no actual money involved - just assumed value. Imagine you own a picture that you painted yourself, and all your friends agree it is worth 1000 $. You feel like you have a 1000 $-picture. Now a guy with some more knowledge visits you, and tells you that it is really only worth about a 100 $. Did you just lose 900 $? If yes, where did the money go? |
Calculating return on a series of stock positions with multiple uneven transactions | Generally if you are using FIFO (first in, first out) accounting, you will need to match the transactions based on the number of shares. In your example, at the beginning of day 6, you had two lots of shares, 100 @ 50 and 10 @ 52. On that day you sold 50 shares, and using FIFO, you sold 50 shares of the first lot. This leaves you with 50 @ 50 and 10 @ 52, and a taxable capital gain on the 50 shares you sold. Note that commissions incurred buying the shares increase your basis, and commissions incurred selling the shares decrease your proceeds. So if you spent $10 per trade, your basis on the 100 @ 50 lot was $5010, and the proceeds on your 50 @ 60 sale were $2990. In this example you sold half of the lot, so your basis for the sale was half of $5010 or $2505, so your capital gain is $2990 - 2505 = $485. The sales you describe are also "wash sales", in that you sold stock and bought back an equivalent stock within 30 days. Generally this is only relevant if one of the sales was at a loss but you will need to account for this in your code. You can look up the definition of wash sale, it starts to get complex. If you are writing code to handle this in any generic situation you will also have to handle stock splits, spin-offs, mergers, etc. which change the number of shares you own and their cost basis. I have implemented this myself and I have written about 25-30 custom routines, one for each kind of transaction that I've encountered. The structure of these deals is limited only by the imagination of investment bankers so I think it is impossible to write a single generic algorithm that handles them all, instead I have a framework that I update each quarter as new transactions occur. |
If I sell a stock that I don't have, am I required to buy it before a certain amount of time? | I don't actually have any of this stock. Apparently, it's quite common strategy This is called naked short selling. It's not illegal per se, but there can be some major penalties so you should call your broker and ask them these questions. Intentionally naked short selling is not looked upon favorably. They'll probably try to recommend you a safer shorting system by which: |
How does Robinhood stock broker make money? | Charging very high prices for additional standard services: See Commission & Fees: https://brokerage-static.s3.amazonaws.com/assets/robinhood/legal/RHF%20Retail%20Commisions%20and%20Fees%20Schedule.pdf Link is down in the footer, to the left... |
Ideas for patenting/selling a trading strategy | If you have a great technical trading system that gets you winning trading 80-85% of the time in backtesting, the question should be why are you not trading it? To get a better idea of how good your trading system is you should work out your expectancy per trade. This will tell you how much you should make on average for every trade you take. Expectancy not only considers your win rate but also you win size to loss size ratio. For example if you are getting winning trades 80% of the time but your average win size is $100, and your 20% of losses average $500, then you will still be losing money. You should be aiming for an average win size of at least 2.5 to 3 times you average loss size. This will provide you a profitable trading system even if your win rate is 50%. If your trading system is really that good and provides a win size of at least 2.5 times your loss size then you should be actively trading it. Also, if you put your trading system out there in the public domain together with your trading results you will actually find that, quite opposite to what the consensus above is, your results from your trading plan should actually improve further. The more people acting on the outcome of a signal in the same direction the higher the probability that the movement in the desired direction will actually occur. If you are looking to make money from your trading ideas, no one will pay anything unless you have real results to back it up. So if you are so confident about your system you should start trading it with real money. Of course you should start off small and build it up over time as your results eventuate as per your simulations. |
F-1 student investing in foreign markets | You cannot have off-campus employment in your first year, but investments are considered passive income no matter how much time you put into that effort. Obviously you need to stay enrolled full-time and get good enough grades to stay in good standing academically, so you should be cautious about how much time you spend day trading. If the foreign market is also active in a separate time zone, that may help you not to miss class or otherwise divert your attention from your investment in your own education. I have no idea about your wealth, but it seems to me that completing your degree is more likely to build your wealth than your stock market trades, otherwise you would have stayed home and continued trading instead of attending school in another country. |
Interest on self assessment tax | Assuming you are Resident Indian. As per Indian Income Tax As per section 208 every person whose estimated tax liability for the year exceeds Rs. 10,000, shall pay his tax in advance in the form of “advance tax”. Thus, any taxpayer whose estimated tax liability for the year exceeds Rs. 10,000 has to pay his tax in advance by the due dates prescribed in this regard. However, as per section 207, a resident senior citizen (i.e., an individual of the age of 60 years or above) not having any income from business or profession is not liable to pay advance tax. In other words, if a person satisfies the following conditions, he will not be liable to pay advance tax: Hence only self assessment tax need to be paid without any interest. Refer the full guideline on Income tax website |
Why do people buy new cars they can not afford? | Many reasons So in general you are paying more for peace of mind when you buy a new car. You expect everything to be working and if not you can take it back to the dealer to have them fix it for free. |
Maintaining “Woman Owned Business” while taking on investor | In addition to finding another woman investor, you have an equitable option that is not unreasonable: ask your partner to buy out 3% worth of shares from you (which then gives her 54%, allowing you to then sell 5% to an investor and have it not dilute her below 51%: .54 * .95 = .513). That keeps you whole but also keeps your woman-owned-business status. |
Importance of dividend yield when evaluating a stock? | Dividend yields can also reflect important information about the company's status. For example, a company that has never lowered or stopped paying dividends is a "strong" company because it has the cash/earnings power to maintain its dividend regardless of the market. Ideally, a company should pay dividends for at least 10 years for an investor to consider the company as a "consistent payer." Furthermore, when a company pays dividend, it generally means that it has more cash than it can profitably reinvest in the business, so companies that pay dividends tend to be older but more stable. An important exception is REIT's and their ilk - to avoid taxation, these types of funds must distribute 90% of their earnings to their shareholders, so they pay very high dividends. Just look at stocks like NLY or CMO to get an idea. The issue here, however, is two fold: So a high dividend can be great [if it has been paid consistently] or risky [if the company is new or has a short payment history], and dividends can also tell us about what the company's status is. Lastly, taxation on dividend income is higher than taxation on capital gains, but by reinvesting dividends you can avoid this tax and lower your potential capital gain amount, thus limiting taxes. http://www.tweedy.com/resources/library_docs/papers/highdiv_research.pdf is an excellent paper on dividend yields and investing. |
What one bit of financial advice do you wish you could've given yourself five years ago? | I wish I would have: |
Turning 30 and making the right decision with my savings and purchasing home | I love the idea of #1, keep that going. I don't think #2 is very realistic. Given the short time frame putting money at risk for a higher yield may not work in your favor. If it was me, I'd stick to a "high interest" savings account (around 1%). I don't mind #3 either, however, I'd be socking whatever you could to mortgage principle so you can get out of PMI sooner rather than later. That would be my top priority. Given the status of interest rates, you may end up saving money in the long run. I doubt it, but you may. If you choose to go with #3, don't settle for a house that you really don't like. Get something that you want. Who knows it may take you a year or so to find something! |
What return are you getting on your money from paying down a mortgage on a rental property? | There are a few ways to look at this question. Assumptions. Per the original post's assumptions, this answer: In other words, if the owner paid the mortgage on its original schedule, the deal could boil down to a $ 40,000 up-front payment, in exchange for $ 200,000 of equity after 30 years. Or the deal could boil down to a $ 40,000 up-front payment, in exchange for a $ 810.70 monthly payment starting in 30 years. While the owner is paying down the mortgage, the return on equity is the principal payment divided by the equity. The principal payment is the net rent minus non-financing costs and interest, so it is actually a profit. The initial return on equity is 6.321 % APR, or 6.507 % APY. This is calculated by dividing the $ 210.70 monthly principal payment by the initial $ 40,000 equity, and converting from monthly return to annual return. After 30 years, the return on equity is 4.864 % APR, or 4.974 % APY. This is calculated by dividing the $ 810.70 monthly cash flow (which is no longer reduced by mortgage payments) by the $ 200,000 equity after 30 years, and converting from monthly return to annual return. The cap rate is the same as the return on equity in the absence of debt. In this example, 4.864 % APR, or 4.974 % APY. The return on equity declines from 6.507 % APY initially to 4.974 % APY after 30 years. This is because the cap rate exceeds the note rate (4.974 % APY vs. 4.594 % APY), and the leverage decreases from 5x to 1x. The weighted average compound annual growth rate of the equity during the 30 years is 5.511 % APY. Per the original poster's answer, this is computed by taking the 30th root of the 5-fold increase in equity. Because the owner made no extra principal payments (besides those already discussed), the relevant amounts are the initial $ 40,000 owner payment and the final $ 200,000 owner equity. 5.511 % APY corresponds to a 5.377 % APR. The internal rate of return if the owner never sells can be computed by treating the deal as a $ 40,000 up-front payment, in exchange for an $ 810.70 monthly payment starting in 30 years. The internal rate of return (IRR) is not a very useful number, because it assumes that you can somehow reinvest the eventual dividends at the same rate. In this example, the IRR is 5.172 % APR, or 5.296 % APY. In this example, the IRR is calculated by (iteratively) finding an interest rate for which (initial investment) * (1 + IRR) ^ (number periods before dividends start) = (periodic dividend) / (IRR - growth rate of dividend). For example: $ 40,000 * (1.004309687)^360 = $ 810.70 / (0.004309687 - 0) = $ 188,111 I then converted the 0.431 % monthly IRR to an annual IRR. The deal can be thought of as a return on equity, plus a return on paying down the mortgage. When computing the return from paying down the mortgage, the initial equity is irrelevant. It does not matter whether you start with a $ 160,000 mortgage on a $ 160,000 property, a $ 160,000 mortgage on a $ 200,000 property, or a $ 160,000 mortgage on a $ 1,000,000 property. All that matters is the note rate on the mortgage, which is the applicable compound interest rate. The return on paying down the mortgage equals the note rate of the mortgage. For a 4.5% note rate, this works out to a 4.594% annual percentage yield (APY). You can confirm this by looking at your amortization schedule. Suppose you have a $ 160,000 mortgage with a fixed 4.5% APR note rate for 360 months. Your monthly payment is $ 810.70. In the first month, $ 600 goes toward interest, and $ 210.70 reduces the principal. In other words, the $ 210.70 principal payment eliminated the need for a $ 810.70 payment 30 years later. Notice that: . $ 210.70 * (1 + 0.045 / 12)^360 = $ 210.70 * (1.00375)^360 = $ 210.70 * 3.8477 = $ 810.71 which is within rounding error of $ 810.70. The interest rate is 3/8 % per month, which is an APR of 4.5%, and an APY of 4.594 %. |
What does it mean that stocks are “memoryless”? | With my current, limited knowledge (see end), I understand it the following way: Are share prices really described as "memoryless"? Yes. Is there a technical meaning of the term? What does it really mean? The meaning comes from Markov Models: Think of the behavior of the stock market over time as a Markov Chain, i.e. a probabilistic model with states and probabilistic transitions. A state is the current price of all stocks of the market, a transition is a step in time. Memoryless means that transitions that the stock market might make can be modelled by a relation from one state to another, i.e. it only depends on the current state. The model is a Markov Chain, as opposed to a more general Stochastic Process where the next state depends on more than the current state. So in a Markov Chain, all the history of one stock is "encoded" already in its current price (more precisely in all stock's prices). The memorylessness of stocks is the main statement of the Efficient Market Theory (EMT). If a company's circumstances don't change, then a drop in its share price is going to be followed by a rise later. So if the EMT holds, your statement above is not necessarily true. I personally belief the EMT is a good approximation - only large corporations (e.g. Renaissance Technologies) have enough ressources (hundreds of mathematicians, billions of $) to be able to leverage tiny non-random movements that stem from a not completely random, mostly chaotic market. The prices can of course change when the company's circumstances change, but they aren't "memoryless" either. A company's future state is influenced by its past. In the EMT, a stock's future state is only influenced by its past as much as is encoded in its current price (more precisely, the complete market's current state). Whether that price was reached by a drop or a rise makes no difference. The above is my believe, but I'm by far no finance expert. I am working professionally with probabilistic models, but have only read one book on finance: Kommer's "Souverän investieren mit Indexfonds und ETFs". It's supposed to contain many statements of Malkiel's "A Random Walk Down Wall Street". |
What are reasonable administrative fees for an IRA? | Zero. Zero is reasonable. That's what Schwab offers with a low minimum to open the IRA. The fact is, you'll have expenses for the investments, whether a commission on stock purchase or ongoing expense of a fund or ETF. But, in my opinion, .25% is criminal. An S&P fund or ETF will have a sub-.10% expense. To spend .25% before any other fees are added is just wrong. |
Looking for good investment vehicle for seasonal work and savings | Most online "high yield" savings accounts are paying just above 1%. That would be 1.05% for American Express personal savings, or 1.15% for Synchrony Bank (currently). Depending on the length of the season, you might want to work in some CD's. Six months CDs can be had at 1.2%, and 9 month at 1.25%. So if you know you won't need some of your earnings for 9 months, you could earn 1.25% on your money. However, I would proceed with caution on anything other than the high yield savings account. With your one friend having such a low emergency fund, there is very little room for error. Perhaps until that amount is built up into something significant, it is just best to stick with the online savings. Of course, one solution would be to find a way to create income during the off season. That will go a long way into helping one build wealth. |
Where can one find intraday prices for mutual funds? | Look at morningstar holdings.It will list the top 25 holdings and their current price.This will give you a good idea of the intra-day price of the fund. |
What are some time tested passive income streams? | Renting a house out using a management company is mostly passive income. Earning affiliate income from companies that pay on a recurring basis is closer to passive income. |
Potential pitfalls of this volume trading strategy | I wouldn't be turned off due to the difficult of parsing English, for a few reasons. Firstly, you don't have to perfectly parse to find meaning. You can look for keywords and write some algorithms to approximate, and of course if you get enough of a statistical advantage (and can repeat it) you can make money. Second, it probably isn't long before third-party software is made available either to do something like this or to provide a framework for it. In fact, it probably already is available somewhere. (Note the influx of Silicon Valley types to New York as more machine intelligence is applied to trading and journalism.) Thirdly, as hinted by the mention above of journalism, there's already software using numerical data to write pretty human articles. Some are pretty robotic and you can catch them (I noticed one and searched for a key phrase to discover several very much like it, each having a different fake author name). This will mean not only a continued improvement of parsing but also more push for more data to be released in machine-readable formats, such that press releases will be increasingly parsible. Finally, to vindicate your idea, the keyword approach has been done with some success. Try this link and note the additional links on the same topic. If you have the time and processing resources, you might like to try your idea by training a neural network to find correlations of keywords (and phrases -- that's important, too) with trends in the market. |
Something looks off about Mitsubishi financial data | All but certainly, Mitsubishi is selling so cheaply because of the fuel scandal. It has been providing false fuel efficiency data for decades. As a result, it may face significant penalties and may have lost the trust of consumers, who will now be less likely to purchase a Mitsubishi vehicle. Nissan is taking a controlling stake in Mitsubishi. This is important news for the company, too. The stock price reflects the consensus of investors on how significant these issues are. It's quite possible the stock will recover over the next few years, in which case it's a bargain at the moment. On the other hand, it's quite possible the company will never recover. |
My previous and current employers both use Fidelity for 401(k). Does it make sense to rollover? | I would always suggest rolling over 401(k) plans to traditional IRAs when possible. Particularly, assuming there is enough money in them that you can get a fee-free account at somewhere like Fidelity or Vanguard. This is for a couple of reasons. First off, it opens up your investment choices significantly and can allow you significantly reduced expenses related to the account. You may be able to find a superior offering from Vanguard or Fidelity to what your employer's 401(k) plan allows; typically they only allow a small selection of funds to choose from. You also may be able to reduce the overhead fees, as many 401(k) plans charge you an administrative fee for being in the plan separate from the funds' costs. Second, it allows you to condense 401(k)s over time; each time you change employers, you can rollover your 401(k) to your regular IRA and not have to deal with a bunch of different accounts with different passwords and such. Even if they're all at the same provider, odds are you will have to use separate accounts. Third, it avoids issues if your employer goes out of business. While 401(k) plans are generally fully funded (particularly for former employers who you don't have match or vesting concerns with), it can be a pain sometimes when the plan is terminated to access your funds - they may be locked for months while the bankruptcy court works things out. Finally, employers sometimes make it expensive for you to stay in - particularly if you do have a very small amount. Don't assume you're allowed to stay in the former employer's 401(k) plan fee-free; the plan will have specific instructions for what to do if you change employers, and it may include being required to leave the plan - or more often, it could increase the fees associated with the plan if you stay in. Getting out sometimes will save you significantly, even with a low-cost plan. |
If accepting more than $10K in cash for a used boat, should I worry about counterfeiting? | If you get counterfeit money, then you're dealing with the criminal who is going to be punished by the law for doing that. The portion of the total sum that was paid with the counterfeit currency is considered unpaid and you can claim the money from the criminal and sue him, while he's in jail. He'll work hard on those license plates to pay you off. However, making false statements and assisting in a tax evasion scheme compromises your ability to go to the law enforcement in case of any wrongdoing, and then you should worry about the counterfeit money, because the law won't be on your side to help you. And you don't even get anything out of it... Why on earth are you willing to take this risk? Just so you know, it may also be money laundering, which may get you in trouble even more with the law. |
Are there online brokers in the UK which don't require margin account? | Most UK stock brokers don't require or allow margin trading. A quick web search for 'UK share dealing comparison' shows entries from money.co.uk and moneysupermarket.com who both provide lists of different brokers, e.g. Barclays, Hargraves Lansdown, IG Share Dealing, The Share Centre, TD Direct, Interactive Investor, YouInvest, etc. Some of the UK banks also provide a share dealing service, from quickly looking at their websites, Barclays, HSBC and Halifax all appear to provide share dealing services. |
Is the “Bank on Yourself” a legitimate investment strategy, or a scam? | Oddly enough, I started to research the "Bank on Yourself" strategy today as well (even before I'd ran across this question!). I'd heard an ad on the radio for it the other day, and it caught my attention because they claimed that the strategy isn't prone to market fluctuations like the stock market. It seemed in their radio ad that their target market was people who had lost serious money in their 401k's. So I set about doing some research of my own. It seems to me that the website bankonyourself.com gives a very superficial overview of the strategy without truly ever getting to the meat of it. I begin having a few misgivings at the point that I realized I'd read through a decent chunk of their website and yet I still didn't have a clear idea of the mechanism behind it all. I become leery any time I have to commit myself to something before I can be given a full understanding of how it works. It's shady and reeks of someone trying to back you into a corner so they can bludgeon you with their sales pitch until you cry "Mercy!" and agree to their terms just to stop the pain (which I suspect is what happens when they send an agent out to talk to you). There were other red flags that stood out to me, but I don't feel like getting into them. Anyway, through the use of google I was able to find a thread on another forum that was a veritable wealth of knowledge with regard to the mechanism of "Bank on Yourself" how it works. Here is the link: Bank on Yourself/Infinite Banking... There are quite a few users in the thread who have excellent insights into how all of it works. After reading through a large portion of the thread, I came away realizing that this strategy isn't for me. However, it does appear to be a potential choice for certain people depending upon their situation. |
To rebalance or not to rebalance | An asset allocation formula is useful because it provides a way to manage risk. Rebalancing preserves your asset allocation. The investment risk of a well-diversified portfolio (with a few ETFs or mutual funds in there to get a wide range of stocks, bonds, and international exposure) is mostly proportional to the asset class distribution. If you started out with half-stocks and half-bonds, and stocks surged 100% over the past few years while bonds have stayed flat, then you may be left with (say) 66% stocks and 33% bonds. Your portfolio is now more vulnerable to future stock market drops (the risk associated with stocks). (Most asset allocation recommendations are a little more specific than a stock/bond split, but I'm sure you can get the idea.) Rebalancing can be profitable because it's a formulaic way to enforce you to "buy low, sell high". Massive recessions notwithstanding, usually not everything in your portfolio will rise and fall at the same time, and some are actually negatively correlated (that's one idea behind diversification, anyway). If your stocks have surged, chances are that bonds are cheaper. This doesn't always work (repeatedly transferring money from bonds into stocks while the market was falling in 2008-2009 could have lost you even more money). Also, if you rebalance frequently, you might incur expenses from the trading (depending on what sort of financial instrument you're holding). It may be more effective to simply channel new money into the sector that you're light on, and limit the major rebalancing of the portfolio so that it's just an occasional thing. Talk to your financial adviser. :) |
What percent of a company are you buying when you purchase stock? | What percent of a company are you buying when you purchase stock? The percent of a company represented by a single share can be calculated by percent = 1/number_of_shares*100% Apple comprises 5,250,000,000 shares, so one share makes up about 1.9e-8% of a company, or 0.000000019% of Apple. |
Working on a tax free island to make money? | According to Wikipedia, import duties on goods range from 5-22% on everything but cars (30-100%) and a handful of other goods (no import duties). Since almost everything must be imported, you will still be paying the taxman, just on the consumption side. |
How much does taking a Microeconomics course help you understand the field of investing? | Not much at all, especially an introductory level Microeconomics class. There are a few reasons for this: That's not to say that Economics isn't worth studying. I loved both my Micro and Macro class. But I probably got more useful investing knowledge from a class on linear regression. |
I want to invest and save for my house downpayment at the same time | Yes you should invest; and yes you should save for the house down payment. These should be two separate pools of money and the goals and time frames for them are different. With a 3 year time frame for the down payment on the house, the risk you should accept should be essentially zero. That means it is less of an investment and more plain vanilla savings account, or maybe a higher interest account, or a CD. The worst thing to have happen would be to try and save for the house while the value of your investment keeps dropping. You have to decide how to allocate your income between retirement accounts and saving for the house, while still meeting all your other obligations. The exact balance depends on how much you need to save for retirement, and things such as rules for the company match. |
Should I open a credit card when I turn 18 just to start a credit score? | Assuming I only use it to buy things I can afford (which I trust myself to do), essentially treating it as a debit card, is this a good idea? This is definitely a good idea. From my own experience, before I got my first credit card through my local bank (age 18), I tired to apply for a card that has cash back rewards and was rejected because I didn't have any credit history. After I had the card from my bank for 6 months, I applied for this Capital One card that I've had ever since. |
Will depositing $10k+ checks each month raise red flags with the IRS? | Contractors regularly deposit checks like this; if the income is legitimate don't worry. Report it to the IRS as income whether or not the customer issues you a 1099. With deposits like this you should be making quarterly payments to the IRS for your projected income. |
Is it legal to not get a 1099-b until March 15? | If one looks at the "Guide to Information Returns" in the Form 1099 General Instructions (the instructions that the IRS provides to companies on how to fill out 1099 and other forms), it says that the 1099-B is due to recipient by February 15, with a footnote that says "The due date is March 15 for reporting by trustees and middlemen of WHFITs." I doubt that exception applies, though it may. There's also a section in the instructions on "Extension of time to furnish statements to recipients" which says that a company can apply to the IRS to get an extension to this deadline if needed. I'm guessing that if you were told that there were "complications" that they may have applied for and been given this extension, though that's just a guess. While you could try calling the IRS if you want (and in fact, their web site does suggest calling them if you don't receive a W-2 or 1099-R by the end of February), my honest opinion is that they won't do much until mid-March anyway. Unfortunately, you're probably out of luck being able to file as early as you want to. |
Why does gold have value? | I use to play marbles at school. Marbles were like gold the more you had the richer you were. They were a scarce commodity only a few in circulation. Once I secured a wealth of marbles I realized they were of little real value. They were only of illusory value. As long as we all were deceived into believe they had value they I was rich. Sure marble could be used to make marble floors ;) they were lovely to look at, and every one wanted them. Then one day, I discovered the emperor had no clothes. Wow, the day that everyone sees the true value of gold, what a stock market crash that will be. I tried to avoid gold as much as possible, but this is hard to do in todays stock market. My solace is that we will all be in the same golden (Titanic) boat, only I hope to limit my exposure as much as possible. Anyone want a gold watch for a slice of bread? |
How to learn about doing technical analysis? Any suggested programs or tools that teach it? | A great way to learn is by watching then doing. I run a very successful technical analysis blog, and the first thing I like to tell my readers is to find a trader online who you can connect with, then watch them trade. I particularly like Adam Hewison, Marketclub.com - This is a great website, and they offer a great deal of eduction for free, in video format. They also offer further video based education through their ino.tv partner which is paid. Here is a link that has their free daily technical analysis based stock market update in video format. Marketclub Daily Stock Market Update Corey Rosenblum, blog.afraidtotrade.com - Corey is a Chartered Market Technician, and runs a fantastic technical analysis blog the focuses on market internals and short term trades. John Lansing, Trending123.com - John is highly successful trader who uses a reliable set of indicators and patterns, and has the most amazing knack for knowing which direction the markets are headed. Many of his members are large account day traders, and you can learn tons from them as well. They have a live daily chat room that is VERY busy. The other option is to get a mentor. Just about any successful trader will be willing to teach someone who is really interested, motivated, and has the time to learn. The next thing to do once you have chosen a route of education is to start virtual trading. There are many platforms available for this, just do some research on Google. You need to develop a trading plan and methodology for dealing with the emotions of trading. While there is no replacement for making real trades, getting some up front practice can help reduce your mistakes, teach you a better traders mindset, and help you with the discipline necessary to be a successful trader. |
Do shares purchased on FTSE AIM move with company to other markets? | Any shares you buy when a company is listed on one market will remain yours if the company moves to another market. Markets and exchanges like AIM are just venues for dealing in shares - indeed you can deal in those shares anywhere else that will allow you as well as on the AIM. The benefit of being listed in a market is that trade in the shares will be more "liquid" - there's more likely to be people who want to buy and sell them at any given time. The bigger concern would be what happens if the company does badly and drops out of the AIM entirely. You'd still be able to sell your shares to any willing buyer, but finding that buyer might get harder. |
Perform exercise-and-hold AND exercise-and-sell-to-cover? | Ask the folks administering your plan. They're the ones who define and implement the available choices for that specific plan. |
How safe is a checking account? | In the case of bank failures You are protected by FDIC insurance. At the time I wrote this, you are insured up to $250,000. In my lifetime, it has been as high as $1,000,000 and as low as $100,000. I attached a link, which is updated by FDIC. In the case of fraud It depends. If you read this story and are horrified (I was too), you know that the banking system is not as safe as the other answers imply: In February 2005, Joe Lopez, a businessman from Florida, filed a suit against Bank of America after unknown hackers stole $90,000 from his Bank of America account. The money had been transferred to Latvia. An investigation showed that Mr. Lopez’s computer was infected with a malicious program, Backdoor.Coreflood, which records every keystroke and sends this information to malicious users via the Internet. This is how the hackers got hold of Joe Lopez’s user name and password, since Mr. Lopez often used the Internet to manage his Bank of America account. However the court did not rule in favor of the plaintiff, saying that Mr. Lopez had neglected to take basic precautions when managing his bank account on the Internet: a signature for the malicious code that was found on his system had been added to nearly all antivirus product databases back in 2003. Ouch. But let's think about the story for a second - he had his money stolen because of online banking and he didn't have the latest antivirus/antimalware software. How safe is banking if you don't do online banking? In the case of this story, it would have prevented keyloggers, but you're still susceptible to someone stealing your card or account information. So: In the bank's defense, how does a bank not know that someone didn't wire money to a friend (which is a loss for good), then get some of that money back from his friend while also getting money back from the bank, which had to face the loss. Yes, it sucks, but it's not total madness. As for disputing charges, from personal experience it also depends. I don't use cards whatsoever, so I've never had to worry, but both of my parents have experienced banking fraud where a fake charge on their card was not reversed. Neither of my parents are rich and can't afford lawyers, so crying "lawsuit" is not an option for everyone. How often does this occur? I suspect it's rare that banks don't reverse the charges in fraudulent cases, though you will still lose time for filing and possibly filling out paperwork. The way to prevent this: As much as I hate to be the bearer of bad news, there is no absolutely safe place to keep your money. Even if you bought metals and buried them in the ground, a drifter with a metal detector might run across it one day. You can take steps to protect yourself, but there is no absolute guarantee that these will work out. Account Closures I added this today because I saw this question and have only seen/heard about this three times. Provided that you get the cashier's check back safely, you should be okay - but why was this person's account closed and look at how much funds he had! From his question: In the two years I banked with BoA I never had an overdraft or any negative marks on my account so the only thing that would stick out was a check that I deposited for $26k that my mom left me after she passed. Naturally, people aren't going to like some of my answers, especially this, but imagine you're in an immediate need for cash, and you experience this issue. What can you do? Let's say that rent is on the line and it's $25 for every day that you're late. Other steps to protect yourself Some banks allow you to use a keyword or phrase. If you're careful with how you do this and are clever, it will reduce the risk that someone steals your money. |
Why do credit cards require a minimum annual household income? | I don't know, but I can guess. You'll notice the Elite card has higher rewards. A card might want to convince merchants that they represent high end buyers, and use that to negotiate higher merchant discounts. Issuing bank: "Our 10 million card holders are sophisticated and have lots of discretionary income. If you don't agree to this rate, we'll terminate the contract and they will take their business elsewhere." Merchant: "But it's twice the rate of everyone else! I'm sure these customers have other means of payment, and besides, how many of those card holders are actually using it?" Issuing bank: "Our cardholders signal their interest in the benefits of cardholding by paying us an annual fee. If they didn't want one, they'd stop paying right? They clearly know they have one and our records indicate they use them regularly. We're pretty sure if you don't wise up they'll shop at your biggest competitor, another client of ours. pause Frankly, they already do." |
Everyone got a raise to them same amount, lost my higher pay than the newer employees | This is one effect of rising minimum wages: compression of lower pay tiers. The new employees might have been offered a lower starting rate than the result of your raise, but your employer did not have that option as a matter of law. |
I want to invest in Gold. Where do I go and buy it? | I do not know anything about retail investing in India, since I am in the US. However, there are a couple of general things to keep in mind about gold that should be largely independent of country. First, gold is not an investment. Aside from a few industrial uses, it has no productive value. It is, at best, a hedge against inflation, since many people feel more comfortable with what they consider "real" money that is not subject to what seems to be arbitrary creation by central banks. Second, buying tiny amounts of gold as coin or bullion from a retail dealer will always involve a fairly significant spread from the commodity spot price. The spot price only applies to large transactions. Retail dealers have costs of doing business that necessitate these fees in order for them to make a profit. You must also consider the costs of storing your gold in a way that mitigates the risk of theft. (The comment by NL7 is on this point. It appeared while I was typing this answer.) You might find this Planet Money piece instructive on the process, costs, and risks of buying gold bullion (in the US). If you feel that you must own gold as an inflation hedge, and it is possible for residents of India, you would be best off with some kind of gold fund that tracks the price of bullion. |
Advice on strategy for when to sell | It was not 100% clear if you have held all of these stocks for over a year. Therefore, depending on your income tax bracket, it might make sense to hold on to the stock until you have held the individual stock for a year to only be taxed at long-term capital gains rates. Also, you need to take into account the Net Investment Income Tax(NIIT), if your current modified adjusted income is above the current threshold. Beyond these, I would think that you would want to apply the same methodology that caused you to buy these in the first place, as it seems to be working well for you. 2 & 3. No. You trigger a taxable event and therefore have to pay capital gains tax on any gains. If you have a loss in the stock and repurchase the stock within 30 days, you don't get to recognize the loss and have to add the loss to your basis in the stock (Wash Sales Rules). |
How far do I go with a mortgage approval process when shopping around? | As per my comments, I think this is up to you and how much work you want to put forth. I do not feel it is trivial to provide documentation even with 90% of it will be the same among lenders. See this question: First answer, third and fourth paragraphs. You need to go as far as understanding the total cost of the loan, you probably need a good faith estimate. I would also compare a minimum of three lenders. |
Homeowners: How can you protect yourself from a financial worst-case scenario? | I am lucky enough to have chosen a flexible mortgage that allows me to change payment amounts at certain, very lenient intervals (to a minimum amount). So when I was laid off, the first thing I did was call my bank to lower my payments to a level that allowed me some breathing room, at my new, lower income. If and when my family's income increases, I'll re-adjust my payments to a higher amount. But if you're concerned about the "what if"s in this economy, I'd definitely choose a mortgage that allows for flexibility so that you don't lose your house if you don't have to, particularly if your situation is temporary. |
What are dividends, when are they paid, and how do they affect my position? | Dividends are declared by the board of directors of a corporation on date A, to stock holders of record on date B (a later date). These stockholders then receive the declared dividend on date C, the so-called payment date. All of these dates are announced on the first (declaration) date. If there is no announcement, no dividend will be paid. The stock typically goes down in price by approximately the amount of the dividend on the date it "goes ex," but then moves in price to reflect other developments, including the possibility of another declaration/payment, three months hence. Dividends are important to some investors, especially those who live on the income. They are less important to investors who are out for capital gains (and who may prefer that the company reinvest its money to seek such gains instead of paying dividends). In actual fact, dividends are one component of "total" or overall return. The other component is capital gains, and the sum of the two represents your return. |
Can saving/investing 15% of your income starting age 25, likely make you a millionaire? | If by being a millionaire you mean dollar millionaire then I doubt that it is really that easy in Pakistani context. At present the exchange rate is 107 Pakistani rupees per US dollar so even with this exchange rate, to have a million US dollars means having 107 million rupees of wealth. Now with this maths in mind you can very well calculate how much possible it is for an average 25 years old Pakistani to have that much wealth. And by the time you have 107 million Pakistani rupees of wealth the exchange rate against the US dollar would have only gone up against Pakistani currency. That article which you have mentioned makes calculations in US context and dollar terms. However if you talk only in terms of your country's context then being a millionaire means having 1 million rupees of wealth and that is something which is quite achievable with your salary and within very short span of time. |
Is it possible to trade CFD without leverage? | Generally not, however some brokers may allow it. My previous CFD Broker - CMC Markets, used to allow you to adjust the leverage from the maximum allowed for that stock (say 5%) to 100% of your own money before you place a trade. So obviously if you set it at 100% you pay no interest on holding open long positions overnight. If you can't find a broker that allows this (as I don't think there would be too many around), you can always trade within your account size. For example, if you have an account size of $20,000 then you only take out trades that have a face value up to the $20,000. When you become more experienced and confident you can increase this to 2 or 3 time your account size. Maybe, if you are just starting out, you should first open a virtual account to test your strategies out and get used to using leverage. You should put together a trading plan with position sizing and risk management before starting real trading, and you can test these in your virtual trading before putting real money on the table. Also, if you want to avoid leverage when first starting out, you could always start trading the underlying without any leverage, but you should still have a trading plan in place first. |
How to prevent myself from buying things I don't want | One approach is to control your budget more effectively. For example work out your essential living expenses things like food, rent and other bills you are committed to and compare this to your regular income. Then you can set up a regular automatic payment to a savings account so you limit the disposable income in your current account. If you keep a regular check on this balance it should make you feel like you have less 'spare' money and so less temptation to spend on impulse purchases. Similarly it may help to set a savings goal for something you really do want, even if this is itself a bit frivolous it will at least help you to discipline yourself. Equally it may be useful to set a fixed budget for luxuries, then you have a sense that when it's gone it's gone but you don't have to completely deny yourself. |
Getting Cash from Credit Card without Fees | Nope. Or at least, if it were possible the company offering such a credit card would quickly go out of business. Credit card companies make money off of fees from the merchants the user is buying from and from the users themselves. If they charged no fees to the user on cash advances and, in fact, gave a 3% back on cash advances, then it would be possible for a user to: The company would lose money until they stopped the loophole or went out of business. |
Can company owners use lay offs to prevent restricted stock from vesting before an acquisition? | As littleadv says it depends on the local laws. Normally one shouldn't be too worried. Typically the stocks given to the employees are a very small portion of the overall stocks ... the owners would not try to jeopardize the deal just so that they make an incrementally small amount of money ... they would rather play safe than get into such a practice. |
What U.S. banks offer two-factor authentication (such as password & token) for online banking? | E*Trade offers banking services, and will provide you with a security token free if you have sufficient assets there ($50,000). Otherwise they'll charge you a $25 fee. |
Does the Black-Scholes Model apply to American Style options? | The difference between an American and European option is that the American option can be exercised at any time, whereas the European option can be liquidated only on the settlement date. The American option is "continuous time" instrument, while the European option is a "point in time" instrument. Black Scholes applies to the latter, European, option. Under "certain" (but by no means all) circumstances, the two are close enough to be regarded as substitutes. One of their disciples, Robert Merton, "tweaked" it to describe American options. There are debates about this, and other tweaks, years later. |
Simplifying money management | Many banks will allow you to open multiple accounts. Create a secondary checking account that has no automatic withdrawals and doesn't allow overdraft. This is the account you'll use for you discretionary spending. Get an account with a debit card and always use it as a debit card (never as a credit card, even if it allows that). Your employer may allow you to split your direct deposit so that a certain amount of money goes into this account each month. When it gets to $0, you have to stop spending. It will automatically refill when you get your paycheck. |
Analysis of Valuation-Informed Indexing? | My reaction to this is that your observation @D.W. is spot on correct: It sounds like long-term market timing: trying to do a better job than the rest of the market at predicting, based upon a simple formula, whether the market is over-priced or under-priced. I read the post by the founder of Valuation Informed Indexing, Rob Bennet. Glance at the comments section. Rob clearly states that he doesn't even use his own strategy, and has not owned, nor traded, any stocks since 1996! As another commenter summarizes it, addressing Rob: This is 2011. You’ve been 100% out of stocks — including indexes — since 1996? That’s 15 years of taking whatever the bond market, CDs or TIPS will yield (often and currently less than 2%)... I’m curious how you defend not following your own program even as you recommend it for others? Rob basically says that stocks haven't shown the right signals for buying since 1996, so he's stuck with bonds, CD's and fixed-income instead. This is a VERY long-term horizon point of view (a bit of sarcasm edges in from me). Answering your more general question, what do I think of this particular Price/ Earnings based ratio as a way to signal asset allocation change i.e. Valuation Informed Investing? I don't like it much. |
Why is retirement planning so commonly recommended? | You don't have to retire. But the US government and other national governments have programs that allow you to set aside money when you are young to be used when you are older. To encourage you to do this, they reduce your taxes either now or when your are older. They also allow your employer to match your funds. In the US they have IRAs, 401Ks, and Social Security. You are not required to stop working while tapping into these funds. Having a job and using these funds will impact your taxes, but your are not forbidden from doing both. Decades ago most retirement funds come from pensions and Social Security. Most people are going to reach their senior years without a pension, or with only a very small pension because they had one in one of their early jobs. So go ahead, gamble that you will not need to save for retirement. Then hope that decades later you were right about it, because you can't go back in time and fix your choice. Some never save for retirement, either because they can't or they think they can't. Many that don't save end up working longer than they imagined. Some work everyday until they die, or are physically unable to work. Sometimes it is because they love the job, but often it is because they cannot afford to quit. |
Multi-Account Budgeting Tools/Accounts/Services | I know of websites that do this, but I don't know of banks that do. Is there any reason you want to do this at a bank rather than use a service? My main concern with using a bank for this would be the risk of overdraft fees |
What are the implications of lending money to my sole member S-corp? | You can make a capital contribution, not a loan. It's not a taxable event, no interest, and you can take a distribution later when the business has the money to pay you back. So yes, transfer the money. If you use software like Quickbooks, make use of unique accounts for tracking the contribution |
How do you calculate the rate of return (ROR) when buying and selling put options? | What Jaydles said. I think of each strategy in terms of Capital at Risk (CaR). It's a good thing to know when considering any position. And then conveniently, the return is always profit / CaR. With covered calls it's pretty easy. Pay $1000 for stock, receive $80 in premium, net CaR is $920. If you own the stock and write calls many times (that expire worthless, or you that you buy back), there are two measurements to consider. First, treat every covered call as a buy-write. Even if you already own the stock, disregard the real cost basis, and calculate from the moment you write the call, using the stock price at that time. The second measure is more complicated, but involves using something like the XIRR function in a spreadsheet. This tracks the series as a whole, even accounting for times where there is no written call outstanding. For the written put, even though your broker may only require 30% collateral in a margin account, mentally treat them as cash-secured. Strike less premium is your true CaR. If the stock goes to zero by expiration, that's what you're on the hook for. You could just compute based on the 30% collateral required, but in my view that confuses cash/collateral needs with true risk. Note: a written put is exactly identical to a covered call at the same strike. If you tend to favor puts over CCs, ask yourself why. Just like a loaded gun, leverage isn't inherently bad, but you sure want to know when you're using it. |
What gives non-dividend stocks value to purchasers? [duplicate] | Dividends are not fixed. A profitable company which is rapidly expanding, and thus cash-strapped may very well skip dividends, yet that same fast growth makes it valuable. When markets saturate, and expansion stops, the same company may now have a large free cash flow so it can pay dividends. |
Why doesn't the market capitalization of a company match its acquisition price during a takeover? | Short answer: google finance's market cap calculation is nonstandard (a.k.a. wrong). The standard way of computing the market capitalization of a firm is to take the price of its common stock and multiply by the number of outstanding common stock shares. If you do this using the numbers from google's site you get around $13.4B. This can be verified by going to other sites like yahoo finance and bloomberg, which have the correct market capitalization already computed. The Whole Foods acquisition appears to be very cut-and-dry. Investors will be compensated with $42 cash per share. Why are google finance's numbers wrong for market cap? Sometimes people will add other things to "market capitalization," like the value of the firm's debt and other debt-like securities. My guess is that google has done something like this. Whole Foods has just over $3B in total liabilities, which is around the size of the discrepancy you have found. |
Meaning of capital market | Just to clarify, In wikipedia when it says It is defined as a market in which money is provided for periods longer than a year They are referring to the company which is asking for money. So for example the stock market provides money to the issuing company of an IPO, indefinitely. Meaning the company that just went public is provided with money for a period longer than a year. The definition in Investopedia basically says the same thing Wikipedia does it is just phrased slightly different and leaves out the "for periods longer than a year". For example Wikipedia uses the term "business enterprises" and "governments" while Investopedia uses the term private sector and public sector, in this context "business enterprise" is "private sector" and "governments" is "public sector" So in the sense of the length debt is issued yes, money market would be the opposite of a capital market but both markets still offer a place for governments and companies to raise money and both are classified as financial markets. |
First job: Renting vs get my parents to buy me a house | Firstly, I'm going to do what you said and analyze your question taking your entire family's finances into account. That means giving you an answer that maximizes your family's total wealth rather then just your own. If instead of that your question really was, should I let my parents buy me a house and live rent free, then obviously you should do that (assuming your parents can afford it and you aren't taking advantage people who need to be saving for retirement and not wasting it on a 25 y/o who should be able to support him / herself). This is really an easy question assuming you are willing to listen to math. Goto the new york times rent vs buy calculator and plug in the numbers: http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html Firstly, if you do what you say you want to do buy the house all cash and live there for 4 years, it would be the equivalent of paying 1151 / month in rent once you factor in transaction costs, taxes, opportunity costs, etc. Take a look at the calculator, it's very detailed. This is why you should never buy houses all cash (unless its a negotiating tactic in a hot market, and even then you should refi after). Mortgage rates are super low right now, all that money sitting in the house is appreciating at maybe the rate of inflation (assuming the house value isn't going down which it can very easily do if you don't maintain it, another cost you need to factor in). Instead, you could be invested in the stock market getting 8%, the lost opportunity cost there is huge. I'm not even considering your suggestion that you hang onto the house after you move out in 4 years. That's a terrible idea. Investment properties should be at a maximum value of 10x the yearly rent. I wouldn't pay more then 72K for a house / apartment that rents for only 600 / month (and even then I would look for a better deal, which you can find if you time things right). Don't believe me? Just do the numbers. Renting your 200K house for 600 / month is 7200 / year. Figure you'll need to spend 1% / year (I'm being optimistic here) on maintanence / vacancy (and I'm not even considering your time dealing with tenants). Plus another 1% or so on property tax. That's 4K / year, so your total profit is 3200 which is a return of only 1.6% on your 200K. You can get 1% in an ally savings account for comparison. Really you are much better off investing in a diversified portfolio. You only need 6 months living expenses in cash, so unless your family is ridicuouly wealthy (In which case you should be asking your financial planner what to do and not stack exchange), I have no idea why your parents have 200K sitting around in a savings account earning 0. Open a vanguard account for them and put that money in VTI and your family will be much better off 5 years from now then if you buy that money pit (err house). If risk is a concern, diversify more. I have some money invested with a robo advisor. They do charge a small fee, but it's set it and forget it with auto diversification and tax loss harvesting. Bottom line is, get that money invested in something, having it sitting in a bank account earning 0 is probably the second worst thing you could do with next to buying this house. |
Why does the calculation for IRR use revenue, not profit? | The short answer is that you would want to use the net inflow or net outflow, aka profit or loss. In my experience, you've got a couple different uses for IRR and that may be driving the confusion. Pretty much the same formula, but just coming at it from different angles. Thinking about a stock or mutual fund investment, you could project a scenario with an up-front investment (net outflow) in the first period and then positive returns (dividends, then final sale proceeds, each a net inflow) in subsequent periods. This is a model that more closely follows some of the logic you laid out. Thinking about a business project or investment, you tend to see more complicated and less smooth cashflows. For example, you may have a large up-front capital expenditure in the first period, then have net profit (revenue less ongoing maintenance expense), then another large capital outlay, and so on. In both cases you would want to base your analysis on the net inflow or net outflow in each period. It just depends on the complexity of the cashflows trend as to whether you see a straightforward example (initial payment, then ongoing net inflows), or a less straightforward example with both inflows and outflows. One other thing to note - you would only want to include those costs that are applicable to the project. So you would not want to include the cost of overhead that would exist even if you did not undertake the project. |
ETF S&P 500 with Reinvested Dividend | The problem there is that there's a tax due on that dividend. So, if you wish, you can buy the ETF and specify to reinvest dividends, but you'll have to pay a bit of tax on them, and keep track of your basis, if the account isn't a retirement account. |
What is a good service that will allow me to practice options trading with a pretend-money account? | Try https://sparkprofit.com/ You practice with real market prices, and it's free. Plus you can get real money pay outs if you do well. I earned 1 cent! hahaha I gave up trying to make money from it, but you get an idea of doing trades and how impossible it is to predict what the price will be. It has some tutorials and helpful things too. |
What are the implications of a corporate stock repurchase or share buyback program? | A stock buy back reduces the number of stocks available on the open market. Since stocks are literally a share in ownership a buy back of the stock then when the company repurchases it has the effect of increasing the percent of ownership of the company of each stock. Zynga has a Market Cap of ~1810M so a 200M buy back will increase the ownership value of each stock by ~12%. This has had the effect of an immediate stock price bump of around 12% which is to be expected as the value becomes the expected post buyback value. However long term gains will require Zynga to turn around their business. This bump will only be sustainable if they can. If their business continues to decline then its stock price will continue to slide. There are some who would rather see Zynga invest that 200m in getting a new product to market to bring revenues up rather than spending precious capital on a plan to temporarily bump a stock that is headed towards the floor. If on the other hand the revenue is poised to recover and the company has the excess capitol buying back stock low is a great way to get the most back for your shareholders bucks. Can they repurchase at any price and any time? They can write a buy order for any price at any time in the future, though they have some restrictions from the SEC mostly involving disclosures. But it is up to the sellers to choose to sell at that price. If they execute the buy back at a rate comparable to market rate then they are more likely to get takers than if they attempt to buy it back at a significant reduction from market price. So since today(10-25-2012) the it is selling for ~2.30 A buy order for 2.30 is going to get more action than one at 2.00. Investors will often look at the companies buy back offer for a company in decline(like Zynga has been) as the true value of the company. If so then a lowball buyback offer could add downward pressure on the stock price. |
Someone asks you to co-sign a loan. How to reject & say “no” nicely or politely? | I'll take an alternate route: honesty + humor. Say something like this with a smile and a laugh, like you know they're crazy, but they maybe don't know it yet. "Are you crazy? Co-signing a loan can put us both in a lot of potential danger. First, you shouldn't get a loan that you can't afford/attain on your own, and second, I'd be crazy to agree to be liable for a loan that someone else can't get on their own. You want something bad enough, you get your credit rating in order, or you save up the money - that's how I bought (my car/house/trip to Geneva). I'd be happy to point you in the right direction if you want to put a plan together." You're offering help, but not the kind that puts you in danger. Declining to co-sign a loan can't damage your relationship with this person as much as failure to pay will. |
How can a Canadian establish US credit score | set up a US company (WY is cheap and easy), go south and open a personal and business bank account, ask for the itin form. file for the itin. set up your EIN for the company. get a credit card for both. pay some mail forwarding service with it. file for taxes in the next year using your itin. prepaid cards do not link to your tax id |
Strategies for putting away money for a child's future (college, etc.)? | Saving for college you have a couple of options. 529 plans are probably the best bet for most people wanting to save for their kids college education. You can put a lot of money away ~$300k and you may get a state tax deduction. The downside is if you're kid doesn't go to college you may end up eating the 10% penalty. State specific prepaid tuition plans. The upside is you know roughly the return you are going to get on your money. The downside is your kid has to go to a state school in the state you prepaid or there are likely withdrawal penalties. For the most part these really aren't that great of a deal any more. ESAs are also an option but they only allow you to contribute $2k/year, but you have more investment options than with the 529 plans. Traditional and ROTH IRA accounts can also be used to pay for higher education. I wouldn't recommend this route in general but if you maxed out your 401k and weren't using your IRA contribution limits you could put extra money here and get more or really different flexibility than you can with a 529 account. I doubt IRA's will ever be asked for on a FAFSA which might be helpful. Another option is to save the money in a regular brokerage account. You would have more flexibility, but lower returns after taxes. One advantage to this route is if you think your kid might be borderline for financial aid a year or two before he starts college you could move this money into another investment that doesn't matter for financial aid purposes. A few words of caution, make sure you save for retirement before saving for your kids college. He can always get loans to pay for school but no one is going to give you a loan to pay for your retirement. Also be cautious with the amount of money you give your adult child, studies have shown that the more money that parents give their adult children the less successful they are compared to their peers. |
Buying a house, how much should my down payment be? | I'm going to answer your questions out of order. Emergency fund: Depending on how conservative you are and how much insurance you have, you may want anywhere from 3-12 months of your expenses on hand. I like to keep 6 months worth liquid in a "high-yield" savings account. For your current expenses that would be $24k, but when this transaction completes, you will have a mortgage payment (which usually includes home-owners insurance and property taxes in addition to your other expenses) so a conservative guess might be an additional $3k/month, or a total of $42k for six months of expenses. So $40-$100k for an emergency fund depending on how conservative you are personally. Down payment: You should pay no less than 20% down ($150k) on a loan that size, particularly since you can afford it. My own philosophy is to pay as much as I can and pay the loan off as soon as possible, but there are valid reasons not to do that. If you can get a higher rate of return from that money invested elsewhere you may wish to keep a mortgage longer and invest the other money elsewhere. Mortgage term: A 15-year loan will generally get you the best interest rate available. If you paid $400k down, financing $350k at a 3.5% rate, your payment would be about $2500 on a 15-year loan. That doesn't include property taxes and home-owners insurance, but without knowing precisely where you live, I have no idea whether those would keep you inside the $3000 of additional monthly home expenses I mentioned above when discussing the emergency fund. That's how I would divide it up. I'd also pay more than the $2500 toward the mortgage if I could afford to, though I've always made that decision on a monthly basis when drawing up the budget for the next month. |
What is the equivalent of the QQQ in the UK for the FTSE 100? | I'm not familiar with QQQ, but I'm guessing this is something like IShares Ftse 100 (see description here) |
Avoiding Capital Gains Long Term | It's correct. Be sure of your personal opportunity cost and not that you're letting the tax tail wag the dog just to score "tax free". Your upside is $3,700 (single) or $7,000 (married) in taxes saved until you're out of the 0% zone. Is that worth not receiving an income? Even if your savings are such that you don't need to work for income for a fiscal year, how would this affect the rest of your career and lifetime total earning prospects? Now, maybe: Otherwise, I'd hope you have solid contacts in your network who won't be fazed by a resume gap and be delighted to have a position open for you in 2019 (and won't give you the "mother returning to the workforce" treatment in salary negotiations). |
Is foreign stock considered more risky than local stock and why? | It is very important to note the strength and reputation of the country's regulatory agency. You cannot assume the standards of say the SEC (US Securities and Exchange Commission) apply in other countries (even well-developed ones). These regulations force companies to disclose certain information to inform and protect investors. The standards for such practices vary internationally. |
Got a “personal” bonus from my boss. Do I have to pay taxes and if so, how do I go about that? | Yes, it's taxable. If anyone suggests it's a gift, they are mistaken. There's a line on the 1040 for "other" and as long as you claim it, you're fine with the IRS. It's 2012 income as you already got it. Edit - mhoran makes two good points I'm not really able to address. (a) does a late bonus such as this effect one's penalty? (b) since it skipped payroll, will there be an issue by not having FICA withheld? |
When a stock price goes down, does the money just disappears into thin air? | Price and value are two different things. Price is determined by supply and demand. Value does affect the demand. People are willing to pay more if they value the item more but value is not price. |
How much more than my mortgage should I charge for rent? | I think you are trying to figure out what will be a break-even rental rate for you, so that then you can decide whether renting at current market rates is worth it for you. This is tricky to determine because future valuations are uncertain. You can make rough estimates though. The most uncertain component is likely to be capital appreciation or depreciation (increase or decrease in the value of your property). This is usually a relatively large number (significant to the calculation). The value is uncertain because it depends on predictions of the housing market. Future interest rates or economic conditions will likely play a major role in dictating the future value of your home. Obviously there are numerous other costs to consider such as maintenance, tax and insurance some of which may be via escrow and included in your mortgage payment. Largest uncertainty in terms of income are the level of rent and occupancy rate. The former is reasonably predictable, the latter less so. Would advise you make a spreadsheet and list them all out with margins of error to get some idea. The absolute amount you are paying on the mortgage is a red herring similar to when car dealers ask you what payment you can afford. That's not what's relevant. What's relevant is the Net Present Value of ALL the payments in relation to what you are getting in return. Note that one issue with assessing your cost of capital is, what's your opportunity cost. ie. if you didn't have the money tied up in real estate, what could you be earning with it elsewhere? This is not really part of the cost of capital, but it's something to consider. Also note that the total monthly payment for the mortgage is not useful to your calculations because a significant chunk of the payment will likely be to pay down principal and as such represents no real cost to you (its really just a transfer - reducing your bank balance but increasing your equity in the home). The interest portion is a real cost to you. |
Will there always be somebody selling/buying in every stock? | No, Mark is right, if you place a market order there will always be someone to buy or sell at the market price. Only if you place a limit order on the price can it not sell or be bought. Just research on your computer and you will find your answer. You must be specify about open order or limit order when asking. |
How can I compare the performance of a high dividend funds with other funds and or an index | Vanguard (and probably other mutual fund brokers as well) offers easy-to-read performance charts that show the total change in value of a $10K investment over time. This includes the fair market value of the fund plus any distributions (i.e. dividends) paid out. On Vanguard's site they also make a point to show the impact of fees in the chart, since their low fees are their big selling point. Some reasons why a dividend is preferable to selling shares: no loss of voting power, no transaction costs, dividends may have better tax consequences for you than capital gains. NOTE: If your fund is underperforming the benchmark, it is not due to the payment of dividends. Funds do not pay their own dividends; they only forward to shareholders the dividends paid out by the companies in which they invest. So the fair market value of the fund should always reflect the fair market value of the companies it holds, and those companies' shares are the ones that are fluctuating when they pay dividends. If your fund is underperforming its benchmark, then that is either because it is not tracking the benchmark closely enough or because it is charging high fees. The fact that the underperformance you're seeing appears to be in the amount of dividends paid is a coincidence. Check out this example Vanguard performance chart for an S&P500 index fund. Notice how if you add the S&P500 index benchmark to the plot you can't even see the difference between the two -- the fund is designed to track the benchmark exactly. So when IBM (or whoever) pays out a dividend, the index goes down in value and the fund goes down in value. |
Retirement Funds: Betterment vs Vanguard Life strategy vs Target Retirement | Life Strategy funds are more appropriate if you want to maintain a specific allocation between stocks and bonds that doesn't automatically adjustment like the Target Retirement funds which have a specific date. Thus, it may make more sense to take whichever Life Strategy fund seems the most appropriate and ride with it for a while unless you know when you plan to retire and access those funds. In theory, you could use Vanguard's Total Market funds,i.e. Total Stock Market, Total International, and Total Bond, and have your own allocations between stocks and bonds be managed pretty easily and don't forget that the fees can come in a couple of flavors as betterment doesn't specify where the transaction fees for buying the ETFs are coming out just as something to consider. |
Selling mutual fund and buying equivalent ETF: Can I 1031 exchange? | I don't believe you can do that. From the IRS: Finally, certain types of property are specifically excluded from Section 1031 treatment. Section 1031 does not apply to exchanges of: I highlighted the relevant items for emphasis. |
Why did gold dip in 2011 | The cause of the increase in 2006-2011 was the financial crisis, where, if you recall, the global banking system came close to collapse for reasons that are well documented. Rightly or wrongly, gold is seen as a safe haven asset in times of crisis. The price of gold began to decline in 2011 when the markets decided that the risk of a global banking system collapse had passed without further incident. In the period leading up to 2006, the price of gold was in a flat-to-down trend because there was little net buying interest in gold and large gold sales had been executed by various central banks around the world who felt that gold no longer had a place in central bank reserves. In modern economies gold is seen as a "fringe" asset. It has no role to play. The recent financial crisis may have dented that perception, but those dents are now being forgotten and the price of gold is returning to its long-term downward trend. When the next financial/banking crisis is upon us, the price of gold will again (probably) rally. The extent of the rally will depend on the extent of the crisis. |
Is it a good idea to get an unsecured loan to pay off a credit card that won't lower a high rate? | I am answering this in light of the OP mentioning the desire to buy a house. A proper mortgage uses debt to income ratios. Typically 28/36 which means 28% of monthly gross can go toward PITI (principal, interest, tax, insurance) and the total debt can go as high as 36% including credit cards and car payment etc. So, if you earn $5000/mo (for easy math) the 8% gap (between 28 and 36) is $400. If you have zero debt, they don't let you use it for the mortgage, it's just ignored. So a low interest long term student loan should not be accelerated if you are planning to buy a house, better put that money to the down payment. But for credit cards, the $400/mo carries $8000 (banks treat it as though the payment is 5% of debt owed). So, I'd attack that debt with a vengeance. No eating out, no movies, beer, etc. Pay it off as if your life depended on it, and you'll be happier in the long run. |
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