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Is there an advantage to keeping a liquid emergency fund if one also has an untapped line of credit? | Stop trying to make money with your emergency fund. It's purpose is to sit there idly waiting for a bad day. A day when you need that cash (liquid) not in a bank or a line-of-credit. The few dollars you might make trying to chase interest/investments with your emergency fund aren't worth it if a true emergency came up and you couldn't get to your cash in time. Once you have a fully funded EF then start investing heavily. That's your future game plan. Not the EF. |
What are the advantages of a Swiss bank account? | For an American it nearly impossible to open a Swiss bank account. Even a Swiss person want to open a bank account, we have to fill out a document, which asks us if we have a greencard or other relationships with the united states. Some Swiss banks have transferred the money of Americans to Singapore to protect their clients. So you see, the Swiss banks do very much for their clients. And yes, we don't ask very much about money ;) And we are a politically neutral country, but we like the United States more than Russia and of course we have enemies, like the ISIS |
A guy scammed me, but he gave me a bank account number & routing number. Can I use that to take out what he owes me? | OK, reading between the lines here it looks like the services offered by your company are of an "adult" (possibly illegal?) nature and that this individual has actually paid you in full for the services rendered up to this point. The wrinkle here is that you say that you've been offered large cash "gifts" in return for unspecified future favours, but that your client hasn't provided a real Paypal account to do so. When you pressed him on it, he sent a fake email and invented a "financial adviser" to fob you off, then hasn't contacted you since. It's pretty clear that he hasn't got any intention of making these payments to you. What you're now proposing to do is to use his known banking details to collect money to cover those verbal promises. In pretty much every part of the world, that's a crime. Without a written agreement to use that payment method for those promises, he could easily call the police and have you arrested for theft of funds. The further wrinkle is that his actions (claiming to have made payment via paypal, forged email headers, etc) strongly suggest that this individual is involved in cyber-crime and may well have used a fake bank account to pay for your initial services. The bottom line here is that you need real legal advice, from an actual lawyer. |
Will a credit card company close my account if I stop using it? | The workaround solution is to simply avoid having an exactly zero balance on your account. Thus for inactive credit cards that I want to keep around for emergency use, I always leave a small positive balance on the card. The credit card company reserves the right to cancel my card at any time, but a positive balance would force them to send me a check for the privilege of doing so. A positive balance avoids making the account appear inactive and makes it cheaper for them to simply leave the account open. |
Do property taxes get deducted 100% from the Annual Tax Return or only a fraction of them? | Any deductable expense will reduce your taxable income not your tax payable. Your Example 1 above is correct and gives you 100% deduction. It is like having a business where your sales are $100,000 and your expenses in making the sales is $40,000. The expenses are your tax deductions and reduce your profits on which you pay tax on to $60,000. If your Example 2 was correct then the situation above would change that you would pay say $30,000 tax on $100,000 sales, then apply your deductions (or expenses) of $40,000 so that you would pay no tax at all and in fact get $10,000 back in your return. In this case the government would not be collecting any taxes but paying out returns to everyone. Your Example 2 is absolutly incorrect. |
What could be the cause of a extreme high/low price in after hours market? | Many of the above comments are correct about illiquidity. If someone needs to trade at a time of low liquidity, for instance when the markets are closed, the bid/ask spread can often be large to induce someone to trade at odd times. Especially as the broker/bank on the other side of the trade can't immediately go to the market to close out the risk as they often prefer to do. In this case the jump is actually is large but not that large (~4%). Note this trade price is near the close price on the day before. The system I use shows a trade that evening for 5 shares near the price on the graph. If you called me after I was done with work and tried to buy 5 shares I'd quote you a bad price too. |
Can you buy out a pink sheet listed company by purchasing all of the oustanding shares? | Sure. No-one promises that all the outstanding stocks are ever for sale, but if you get them all - you get them all, what marketplace you used for that doesn't really matter. |
How can a 'saver' maintain or increase wealth in low interest rate economy? | Personally, I invest in mutual funds. Quite a bit in index funds, some in capital growth & international. |
How does one typically exit (close out) a large, in-the-money long put option position? | While open interest usually correlates to volume, the mark of liquidity is the bid ask spread. Even when trading options with spreads as large as an ask 2x the bid, a more realistic price that traders are willing to accept lies somewhere in the middle. Any option can easily be exited at intrinsic value: underlying price - exercise price for calls, exercise price - underlying price for puts. For illiquid options, this will be the best price obtained. For longer term options, something closer to the theoretical price is still possible. If an underlying is extremely liquid, yet the options aren't quite then options traders will be much more ready to trade at the theoretical price. For exiting illiquid options, small, < 4 contracts, and infrequent, > 30 minute intervals, orders are more likely to be filled closer to the theoretical price; however, if one's sells are the only trades, traders on the other side will take note and accept ever lowering implied volatilities. With knowledge of what traders will accept, it is always more optimal to trade out of options rather than exercise because of the added costs and uncertainty involved with exercising and liquidating. |
I made an investment with a company that contacted me, was it safe? | It is a Scam. Don't invest more money here. Their website is the proof. Investments may appreciate or depreciate and you may not receive more than you initially invested. The Peterson Group offers products that are traded on margin and entail a degree of risk. You may incur losses that exceed your initial investment. Please ensure you are aware of and fully understand the risks involved, and seek independent advice if necessary. Losses exceeding your initial investments does not sound a good investment even if it is not a scam. Not much contact information. Their contact page has only a form. No email. No phone number. No social media links. I would like to point some information from Dumbcoder's answer, Just browsed their website. Not a single name of anybody involved. Their application process isn't safe(No https usage while transferring private information). No names of the person's involved is a thing to notice. All the companies websites name their owner, CEO and the like. |
NYSE vs. Nasdaq - can I tell what exchange a ticker traded on, based solely on the ticker? | You cannot determine this solely by the ticker length. However, there are some conventions that may help steer you there. Nasdaq has 2-4 base letters BATS has 4 base letters NYSE equity securities have 1-4 base letters. NYSE Mkt (formerly Amex) have 1-4 base letters. NYSE Arca has 4 base letters OTC has 4 base letters. Security types other than equities may have additional letters added, and each exchange (and data vendors) have different conventions for how this is handled. So if you see "T" for a US-listed security it would be only be either NASDAQ, NYSE or NYSE Mkt. If you see "ANET" then you cannot tell which exchange it is listed on. (In this case, ANET Arista Networks is actually a NYSE stock). For some non-equity security types, such as hybrids, and debt instruments, some exchanges add "P" to the end for "preferreds" (Nasdaq and OTC) and NYSE/NYSE Mkt have a variety of methods (including not adding anything) to the ticker. Examples include NYSE:TFG, NYSEMkt:IPB, Nasdaaq: AGNCP, Nasdaq:OXLCN. It all becomes rather confusing given the changes in conventions over the years. Essentially, you require data that provides you with ticker, listing location and security type. The exchanges allocate security tickers in conjunction with the SEC so there are no overlaps. eg. The same ticker cannot represent two different securities. However, tickers can be re-used. For example, the ticker AB has been used by the following companies: |
Should I invest in my house, when it's in my wife's name? | I'm not going to speculate on the nature of your relationship with your wife, but the fact that you are worried about what would happen in the event of a divorce is a bit concerning. Presumably you married her with the intent of staying together forever, so what's the big deal if you spend 50k upgrading the house you live in, assuming you won't get divorced? Now, if you really are worried about something happening in the future, you might want to seek legal advice about the content of the prenup. I am guessing if the 400k were your assets before marriage, you have full claim to that amount in the event of a divorce*. If you document the loan, or make some agreement, I would think you would have claim to at least some of the house's appreciation due to the renovations if they were made with your money*. *obligatgory IANAL |
Where should I park my money if I'm pessimistic about the economy and I think there will be high inflation? | Typically in a developed / developing economy if there is high overall inflation, then it means everything will rise including property/real estate. The cost of funds is low [too much money chasing too few goods causes inflation] which means more companies borrow money cheaply and more business florish and hence the stock market should also go up. So if you are looking at a situation where industry is doing badly and the inflation is high, then it means there are larger issues. The best bet would be Gold and parking the funds into other currency. |
How much percent of my salary should I use to invest in company stock? | I would not hold any company stock for the company that provides your income. This is a too many eggs in one basket kind of problem. With a discounted stock purchase plan, I would buy the shares at a 10% discount and immediately resell for a profit. If the company prevents you from immediately reselling, I don't know if I would invest. The risk is too great that you'll see your job lost and your 401k/investments emptied due to a single cause. |
Why would a person not want to purchase a Personal Liability (Umbrella) insurance policy? | You only need umbrella policy for large amounts of liability protection (I think they usually start with $1M). So if you don't have and don't expect to have assets at such a high value - why would you need the insurance? Your homeowners/renters/car/travel insurance should be enough, and you still need to have those for umbrella since its on top of the existing coverage, not instead. Many people just don't have enough assets to justify such a high coverage. |
How does a online only bank protect itself against fraud? | There are Cyber Security and Reporting Standards which Financial Service Provider (Banks and Financial services where customers deposit and/or transact fiat currency) You can find a comprehensive list on Wikipedia under Cyber security standards Depending on the geographic location there might be local Govt requirements such as reporting issues, data security etc. Concerning point 1. We have to differ between a fraudulent customer and an attacker on the banks infrastructure. Fraudulent customers / customers that have been compromised by third parties are identified with but not limited to credit scores and merchant databases or data from firms specialized in "Fraud Prevention". Attackers (Criminals that intend to steal, manipulate or spy on data) are identified/prevented/recorded by but not limited to IDS solutions and attacker databases. For firms that get compensation by insurances the most important thing is the compilant with law and have records of everything, they rather focus on recording data to backtrack attackers than preventing attacks. Concerning point 2. For you as customer the local law and deposit insurance are the most important things. Banks are insured and usually compensate customers on money theft. The authentication and PIN / TAN methods are most crucial but standard - these authentication methods consist of one password and one offline part such as a TAN from a paperletter or a RSA generator or card reader. WRAPUP: Financial institutions have to comply with local law and meet international standards. Banks use highly advanced Intrusion detection and fraud prevention which logically must be based on databases. For the average joe customer there is seldom high risk to lose deposits even if the attackers gains full access to the bank account but this depends a lot on the country you reside in. Concerning targeted attacks: |
Got a large cash sum, wanna buy stocks. Should I buy all at once, or spread it over time? | When you hear advice to buy index funds, that usually comes with two additional pieces of investment discipline advice that are important: These two elements are important to give you relative predictability in your outcome 20 years from now. In this old blog post of mine I linked to Warren Buffett talking about this, also mentioned it in a comment on another answer: http://blog.ometer.com/2008/03/27/index-funds/ It's perfectly plausible to do poorly over 20 years if you buy 100% stocks at once, without dollar-cost averaging or rebalancing. It's very very very plausible to do poorly over 10 years, such as the last 10 in fact. Can you really say you know your financial situation in 20-30 years, and for sure won't need that money? Because predictability is important, I like buying a balanced fund and not "pure stocks": http://blog.ometer.com/2010/11/10/take-risks-in-life-for-savings-choose-a-balanced-fund/ (feel a little bad linking to my blog, but retyping all that into this answer seems dumb!) Here's another tip. You can go one step past dollar cost averaging and try value averaging: http://www.amazon.com/Value-Averaging-Strategy-Investment-Classics/dp/0470049774 However, chances are you aren't even going to be good about rebalancing if it's done "by hand," so personally I would not do value averaging unless you can find either a fund or a financial advisor to do it for you automatically. (Finance Buff blog makes a case for a financial advisor, in case you like that more than my balanced fund suggestion: http://thefinancebuff.com/the-average-investor-should-use-an-investment-advisor-how-to-find-one.html) Like rebalancing, value averaging makes you buy more when you're depressed about the market and less when it's exciting. It's hard. (Dollar cost averaging is easily done by setting up automatic investment, of course, so you don't have to do it manually in the way you would with value averaging.) If you read the usual canonical books on index funds and efficient markets it's easy to remember the takeaway that nobody knows whether the market will go up or down, and yes you won't successfully time the market. But what you can do successfully is use an investment discipline with risk control: assume that the market will fluctuate, that both up and down are likely and possible, and optimize for predictability in light of that. Most importantly, optimize to take your emotions and behavior out of the picture. Some disciplines for example are: there are dozens out there, many of them snake oil, I think these I mentioned are valid. Anyway, you need some form of risk control, and putting all your money in stocks at once doesn't give you a lot of risk control. There's no real need to get creative. A balanced fund that uses index funds for equity and bond portions is a great choice. |
What are the most efficient ways to bet on an individual stock beating the market? | You could buy options. I do not know what your time horizon is but it makes all the difference due to theta burn. There are weekly, monthly, quarterly, yearly and even longer duration options called leaps. You have decided how long of a time frame. You also have to see what the implied volatility is for the underlying because if you think hypothetically that the price of the spy is 100 dollars currently. Today is hypothetically a Thursday and you buy a weekly option expiring on Friday ( the next day) of strike 100.5 and the call option is priced at .55 cents and you buy it. This means that the underlying has to move .5 dollars in one day to be considered in the money but at time 0, the option should only be worth its intrinsic value which is the underlying, (Say the SPY moved 55 cents up from 100 to 100.55), (100.55) minus the strike (100.5) = 5 cents, so if you payed 55 cents and one day later at expiration its worth 5 cents ,you lost almost 91% of your money, rather with buying and holding you lose a lot less. The leverage is on a 10x scale typically. That is why timing is so important. Anyone can say x stock is going to go up in the future, but if you know ****when**** you can make a killing if it is not already priced into the market. Another thing you can do is figure out how much MSFT contributes to the SPX movement in terms of points. What does a 1% move in MSFT doto SPX. If you can calculate that and you think you know where MSFT is going, you can just trade the spy options synthetically as if it were microsoft. You could also buy msft stock on margin as a retail investor, but be careful. Like Rhaskett said, look into an etf that has microsoft. The nasdaq has a nasdaq-100 which microsoft is in called the triple Q. The ticker is qqq. PowerShares QQQ™, formerly known as "QQQ" or the "NASDAQ- 100 Index Tracking Stock®", is an exchange-traded fund based on the Nasdaq-100 Index®. Best of luck and always understand what you are buying before you buy it, JL |
United Kingdom: Where to save money for a property deposit | Ultimately you are as stuck as all other investors with low returns which get taxed. However there are a few possible mitigations. You can put up to 15k p.a. into a "normal" ISA (either cash or stocks & shares, or a combination) if your target is to generate the depost over 5 years you should maximise the amount you put in an ISA. Then when you come to buy, you cash in that part needed to top up your other savings for a deposit - i.e. keep the rest in for long term savings. The help to buy ISA might be helpful, but yes there is a limit on the purchase price which in London will restrict you. Several banks are offering good interest on limited sums in current accounts - Santander is probably the best you can get 3% (taxed) on up to 20K - this is a good "safe" return. Just open a 123 Account, arrange to pay out a couple of DDs and pay in £500 a month (you can take the £500 straight out again). I think Lloyds and TSB also offer similar but on much smaller ammounts. Be warned this strategy taken to the limit will involve some complexity checking your various accounts each month. After that you will end up trading better returns for greater risk by using more volatile stock market investments rather than cash deposits. |
I am the sole owner of an LLC. Does it make a difference if I file as an S-Corp or a sole-member LLC? | Be careful of the other answers here. Many are wrong or partially wrong. The question implies that you knew this, but for everyone else's benefit, you can keep you LLC organization and still elect to be treated as a S-Corp by the IRS just for tax purposes. You do this by filing Form 2553 with the IRS. (You can also, by the way, elect to be taxed as a "regular" C-Corp if you want, although that's probably not advantageous. See Form 8832.) The advantage of electing to be treated as an S-Corp is that income beyond what constitutes a "reasonable salary" are not subject to social security and medicare taxes as they would when paid was wages or counted as self-employment income on Schedule C. Depending on what you need to pay yourself to meet the "reasonable salary" test, your overall income, and other factors about your business, this could result in tax savings. Contrary to other answers here, making this election will not force you to create a board of directors. You are still an LLC for all purposes except taxes, so whatever requirements you had in organization and governance at the state level will not change. You will have to file a "corporate" tax return on Form 1120S (and likely some corresponding state tax form), so that is additional paperwork, but this "corporate" return does not mean the S-Corp pays taxes itself. With a couple of exceptions, the S-Corp pays no taxes directly (and therefore does not pay at the corporate tax rate). Instead the S-Corp apportions its income, expenses, and deductions to the owner(s) on Schedule K. The owners get their portion reported from the S-Corp on Schedule K1 and then include that on their personal Form 1040 to pay tax at their personal rate. In addition to filing Form 1120S, you will have to handle payroll taxes, which will create some additional administrative work and/or cost. Using a payroll service for this will likely be your best option and not terribly expensive. You've also got the issue of determining your reasonable salary within the rules, which is the subject of other questions on this site and other IRS guidance. |
Should I buy a house because Mortgage rates are low | As of now in 2016, is is safe to assume that mortgage rates would/should not get back to 10%? What would the rates be in future is speculation. It depends on quite a few things, overall economy, demand / supply, liquidity in market etc ... Chances are less that rates would show a dramatic rise in near future. Does this mean that one should always buy a house ONLy when mortgage rates are low? Is it worth the wait IF the rates are high right now? Nope. House purchase decision are not solely based on interest rates. There are quite a few other aspects to consider, the housing industry, your need, etc. Although interest rate do form one of the aspect to consider specially affordability of the EMI. Is refinancing an option on the table, if I made a deal at a bad time when rates are high? This depends on the terms of current mortgage. Most would allow refinance, there may be penal charges breaking the current mortgage. Note refinance does not always mean that you would get a better rate. Many mortgages these days are on variable interest rates, this means that they can go down or go up. How can people afford 10% mortgage? Well if you buy a small cheaper [Less expensive] house you can afford a higher interest rate. |
What should I be aware of as a young investor? | Consistently beating the market by picking stocks is hard. Professional fund managers can't really do it -- and they get paid big bucks to try! You can spend a lot of time researching and picking stocks, and you may find that you do a decent job. I found that, given the amount of money I had invested, even if I beat the market by a couple of points, I could earn more money by picking up some moonlighting gigs instead of spending all that time researching stocks. And I knew the odds were against me beating the market very often. Different people will tell you that they have a sure-fire strategy that gets returns. The thing I wonder is: why are you selling the information to me rather than simply making money by executing on your strategy? If they're promising to beat the market by selling you their strategy, they've probably figured out that they're better off selling subscriptions than putting their own capital on the line. I've found that it is easier to follow an asset allocation strategy. I have a target allocation that gives me fairly broad diversification. Nearly all of it is in ETFs. I rebalance a couple times a year if something is too far off the target. I check my portfolio when I get my quarterly statements. Lastly, I have to echo JohnFx's statement about keeping some of your portfolio in cash. I was almost fully invested going into early 2001 and wished I had more cash to invest when everything tanked -- lesson learned. In early 2003 when the DJIA dropped to around 8000 and everybody I talked to was saying how they had sold off chunks of their 401k in a panic and were staying out of stocks, I was able to push some of my uninvested cash into the market and gained ~25% in about a year. I try to avoid market timing, but when there's obvious panic or euphoria I might under- or over-allocate my cash position, respectively. |
effect of bond issue on income statement | No, it would not show up on the income statement as it isn't income. It would show up in the cash flow statement as a result of financing activities. |
How do you find reasonably priced, quality, long lasting clothing? | Are specific brand recommendations allowed? I'm a big fan of Lands' End. They have good quality clothing at reasonable prices in all the basic styles. They have great customer service and you con order online and avoid clothes shopping at the mall (which I hate). |
Stock prices using candlesticks | No it does not. Candlesticks really have nothing to do with this, a stock price can open different then the previous day's close. Examining the chart of TSLA provides an example it closed on 1/18 at 238.8 it opened on 1/19 at 243.7 In candlestick parlance is is known as a "gap up". |
Buying my first car out of college | You're looking at a used car, which is good, but I think you can still be much wiser with the type of car you're looking to purchase. Maybe I'm such a fuddy-duddy because I didn't own a car until I was 25, but let's break this down with a small comparison: If you drive 1,000 miles per month with gas at $4/gallon -- which is absurdly conservative, I think -- for five years, then you're looking at an extra $60/month for just gas, and probably twice the payment, compared with a perfectly reliable but more fuel-efficient car from the same year. (Disclosure: I own a 2004 Corolla and love it. I got mine in 2007 for under $10k, and I paid cash.) $300/month or so is a good chunk of change, no? I'd do even more, and pay that loan off (which will almost certainly be less than $500/month) faster by throwing $500/month at it. You'll save hundreds of dollars in interest. Edit based on your additions: There's one thing that you don't see yet that I have. It's only because you're in your early 20s and I'm pushing 40. It is far easier to sock money away when you're single and don't have a family to take care of. (I'm assuming you're not married yet and that you don't have kids. Hopefully it's not a poor assumption.) I would be saving like crazy now if I were in your position. You have a great job for fresh out of college. My first job started ten years ago after grad school at the same salary you're making. Man, it was so easy to save money back then. Now that I'm married with a daughter, a lot of that cushion goes away. I wouldn't trade it for the world, but that's the price of being head of household. If you have any intentions of not being a hermit for the rest of your life (and I hope you do) then you'd be wise to save as much as you can now. |
Is there such a thing as a deposit-only bank account? | Do you write checks? You are giving your bank account and routing number to anybody you have ever given a check to. Your employer is paying taxes on your behalf, so they need your social security number so they can pay your social security taxes. Account and routing numbers are how deposits are made. If you are concerned, create a free checking account, collect the direct deposit and each payday go to the bank and withdraw your money to put it where you like. Nothing is deposit only because you will want your money back. Finally, you would be shocked at how little it takes to make a draft on your account in the US. Certainly not your SSN, Address, or even your name. |
What's so hard about a mutual fund manager pricing their mutual fund? | Remember that in most news outlets journalists do not get to pick the titles of their articles. That's up to the editor. So even though the article was primarily about ETFs, the reporter made the mistake of including some tangential references to mutual funds. The editor then saw that the article talked about ETFs and mutual funds and -- knowing even less about the subject matter than the reporter, but recognizing that more readers' eyeballs would be attracted to a headline about mutual funds than to a headline about ETFs -- went with the "shocking" headline about the former. In any case, as you already pointed out, ETFs need to know their value throughout the day, as do the investors in that ETF. Even momentary outages of price sources can be disastrous. Although mutual funds do not generally make transactions throughout the day, and fund investors are not typically interested in the fund's NAV more than once per day, the fund managers don't just sit around all day doing nothing and then press a couple buttons before the market closes. They do watch their NAV very closely during the day and think very carefully about which buttons to press at the end of the day. If their source of stock price data goes offline, then they're impacted almost as severely as -- if less visibly than -- an ETF. Asking Yahoo for prices seems straightforward, but (1) you get what you pay for, and (2) these fund companies are built on massive automated infrastructures that expect to receive their data from a certain source in a certain way at a certain time. (And they pay a lot of money in order to be able to expect that.) It would be quite difficult to just feed in manual data, although in the end I suspect some of these companies did just that. Either they fell back to a secondary data supplier, or they manually constructed datasets for their programs to consume. |
Why is it not a requirement for companies to pay dividends? | This answer will expand a bit on the theory. :) A company, as an entity, represents a pile of value. Some of that is business value (the revenue stream from their products) and some of that is assets (real estate, manufacturing equipment, a patent portfolio, etc). One of those assets is cash. If you own a share in the company, you own a share of all those assets, including the cash. In a theoretical sense, it doesn't really matter whether the company holds the cash instead of you. If the company adds an extra $1 billion to its assets, then people who buy and sell the company will think "hey, there's an extra $1 billion of cash in that company; I should be willing to pay $1 billion / shares outstanding more per share to own it than I would otherwise." Granted, you may ultimately want to turn your ownership into cash, but you can do that by selling your shares to someone else. From a practical standpoint, though, the company doesn't benefit from holding that cash for a long time. Cash doesn't do much except sit in bank accounts and earn pathetically small amounts of interest, and if you wanted pathetic amounts of interests from your cash you wouldn't be owning shares in a company, you'd have it in a bank account yourself. Really, the company should do something with their cash. Usually that means investing it in their own business, to grow and expand that business, or to enhance profitability. Sometimes they may also purchase other companies, if they think they can turn a profit from the purchase. Sometimes there aren't a lot of good options for what to do with that money. In that case, the company should say, "I can't effectively use this money in a way which will grow my business. You should go and invest it yourself, in whatever sort of business you think makes sense." That's when they pay a dividend. You'll see that a lot of the really big global companies are the ones paying dividends - places like Coca-Cola or Exxon-Mobil or what-have-you. They just can't put all their cash to good use, even after their growth plans. Many people who get dividends will invest them in the stock market again - possibly purchasing shares of the same company from someone else, or possibly purchasing shares of another company. It doesn't usually make a lot of sense for the company to invest in the stock market themselves, though. Investment expertise isn't really something most companies are known for, and because a company has multiple owners they may have differing investment needs and risk tolerance. For instance, if I had a bunch of money from the stock market I'd put it in some sort of growth stock because I'm twenty-something with a lot of savings and years to go before retirement. If I were close to retirement, though, I would want it in a more stable stock, or even in bonds. If I were retired I might even spend it directly. So the company should let all its owners choose, unless they have a good business reason not to. Sometimes companies will do share buy-backs instead of dividends, which pays money to people selling the company stock. The remaining owners benefit by reducing the number of shares outstanding, so they own more of what's left. They should only do this if they think the stock is at a fair price, or below a fair price, for the company: otherwise the remaining owners are essentially giving away cash. (This actually happens distressingly often.) On the other hand, if the company's stock is depressed but it subsequently does better than the rest of the market, then it is a very good investment. The one nice thing about share buy-backs in general is that they don't have any immediate tax implications for the company's owners: they simply own a stock which is now more valuable, and can sell it (and pay taxes on that sale) whenever they choose. |
Can I deduct personal loans or use them as tax “write offs?” | You will have to write it off as an offset of capital gains or as bad debt against personal income, limited to $3k/ yr. Write off 3k this year, 2k next. Here's the tax code, you'll need to file a form 8949, link below. https://www.irs.gov/taxtopics/tc450/tc453 So, this requires that it is a loan, acknowledged by both you and the borrower, with terms of repayment and stated interest, as well as wording for late payments and time for delinquency. The loan document doesn't have to be fancy, but it must show a reasonable intention of repayment to distinguish it from a gift. Then send out a 1099c for cancellation of debt. This is a starting point, it's a good idea to run everything by your tax processional to make sure you're meeting the requirements for bad debt with your contact and payment communication. |
Roth vs. Whole Insurance vs. Cash | Advantage of cash: You can spend the money without having to pay any fees or taxes to get it out. Disadvantage: When inflation is greater than zero, which it has been for many decades, your cash is continually losing value. Advantages of an IRA (Roth or classic): Your money will usually grow as the investments return a profit. You get special tax benefits. Disadvantages: There's risk -- you may lose money. There are tax penalties for withdrawing the money before retirement. In general, you should only put money in an IRA if you expect to leave it there until you retire. Or at least, for a long time. Whole life is a combination of a life insurance policy and an investment. Advantages: Combines insurance and investment into one convenient monthly payment. Disadvantages: The investment portion typically has lower returns than you could get elsewhere. If you have no need for life insurance -- if you're not supporting anyone or you're confidant they could get along without you or you don't like them and don't care what happens to them when you're gone or whatever -- then there's no point buying life insurance, whole or term. You're paying for a product that you don't need. It's pretty common advice to tell people that instead of buying a whole life policy, they should buy a term policy with the same coverage, and then invest the difference in the premium. For example, if you were considering getting a $100,000 whole life policy that costs $50 per month (just making up numbers, of course it depends on your age, health, etc), and you see you could get a $100,000 term life policy for $30 per month, you will almost certainly do better in the long run to buy the $30 term policy and put the other $20 into investments. The catch to this plan is that there are usually transaction costs to investing. Even a discount broker like Ameritrade or Scott Trade charges around $10 per transaction. So if you tried to invest $20 each month, you'd lose half of it to transaction fees. Which means that in practice, you'd have to save that money up until you had at least a few hundred. And at that point many people find other things always seem to come up to spend the money on, so that while they start out with every intention of investing this money, they don't. |
How to pick a state to form an LLC in? | There are very few circumstances where forming an out of state entity is beneficial, but a website is within these circumstances in certain instances. Businesses with no physical operations do not need to care what jurisdiction they are registered in: your home state, a better united state or non-united state. The "limited liability" does it's job. If you are storing inventory or purchasing offices to compliment your online business, you need to register in the state those are located in. An online business is an example of a business with no physical presence. All states want you to register your LLC in the state that you live in, but this is where you need to read that state's laws. What are the consequences of not registering? There might be none, there might be many. In New York, for example, there are no consequences for not registering (and registering in new york - especially the city - is likely the most expensive in the USA). If your LLC needs to represent itself in court, New York provides retroactive foreign registrations and business licenses. So basically, despite saying that you need to pay over $1000 to form your LLC "or else", the reality is that you get the local limited liability protection in courts whenever you actually need it. Check your local state laws, but more times than not it is analogous to asking a barber if you need a haircut, the representative is always going to say "yes, you do" while the law, and associated case law, reveals that you don't. The federal government doesn't care what state your form an LLC or partnership in. Banks don't care what state you form an LLC or partnership in. The United States post office doesn't care. Making an app? The Apple iTunes store doesn't care. So that covers all the applicable authorities you need to consider. Now just go with the cheapest. In the US alone there are 50 states and several territories, all with their own fee structures, so you just have to do your research. Despite conflicting with another answer, Wyoming is still relevant, because it is cheap and has a mature system and laws around business entity formation. http://www.incorp.com has agents in every state, but there are registered agents everywhere, you can even call the Secretary of State in each state for a list of registered agents. Get an employer ID number yourself after the business entity is formed, it takes less than 5 minutes. All of this is also contingent on how your LLC or partnership distributes funds. If your LLC is not acting like a pass through entity to you and your partner,but instead holding its own profits like a corporation, then again none of this matters. You need to form it within the state you live and do foreign registrations in states where it has any physical presence, as it has becomes its own tax person in those states. This is relevant because you said you were trying to do something with a friend. |
What is the difference between state pension plans and defined contribution plans? | The specific "State Pension" plan you have linked to is provided by the government of the U.K. to workers resident there. More generally speaking, many countries provide some kind of basic worker's pension (or "social security") to residents. In the United States, it is called (surprise!) "Social Security", and in Canada most of us call ours "Canada Pension Plan". Such pensions are typically funded by payroll deductions distinct & separate from income tax deducted at source. You can learn about the variety of social security programs around the world courtesy of the U.S. Social Security Administration's own survey. What those and many other government or state pensions have in common, and the term or concept that I think you are looking for, is that they are typically defined benefit type of plans. A defined benefit or DB plan is where there is a promised (or "defined") benefit, i.e. a set lump sum amount (such as with a "cash balance" type of DB plan) or income per year in retirement (more typical). (Note: Defined benefit plans are not restricted to be offered by governments only. Many companies also offer DB plans to their employees, but DB plans in the private sector are becoming more rare due to the funding risk inherent in making such a long-term promise to employees.) Whereas a defined contribution or DC plan is one where employee and/or employer put money into a retirement account, the balance of which is invested in a selection of funds. Then, at retirement the resulting lump sum amount or annual income amounts (if the resulting balance is annuitized) are based on the performance of the investments selected. That is, with a DC plan, there is no promise of you getting either a set lump sum amount or a set amount of annual income at retirement! The promise was up front, on how much money they would contribute. So, the contributions are defined (often according to a matching contribution scheme), yet the resulting benefit itself is not defined (i.e. promised.) Summary: DB plans promise you the money (the benefit) you'll get at retirement. DC plans only promise you the money (the contributions) you get now. |
Are the AARP benefits and discounts worth the yearly membership cost? | Note: this answer was provided when the question was only about Life Insurance, therefore it does not address any other "benefits" Term Life Insurance is very easy to evaluate, once you have determined how much you need and for how long. For significant amounts of coverage they may require a physical to be performed. The price quotes will be for two levels of health, so you can compare costs from many companies quite easily. You have several sources in no particular order: employer, independent company, 3rd party like AARP, AAA, or via you bank or credit union. Note that the 3rd party will be getting a cut of the premium. Also some choices offered from the employer or 3rd party may be limited in size or duration. The independent companies will be able to have terms that extend for 10 years or more. So view the insurance offered by AARP as just another option that has to be compared to all your other options. |
Which practice to keep finances after getting married: joint, or separate? | We've had everything in one pot almost from day one of marriage. The key ingredients to making that arrangement work is to communicate about the money, and realize that you're in it together. Everything one person does affects the other. Separating finances compartmentalizes the "affecting one another" part and makes it a little clearer perhaps, but I can also see it creating a sense of entitlement: "This is my money." There should be a place for individual discretionary spending, of course, but I'm not sure that roping off that money is the best way to do it. It's less likely to be viable if there's one main breadwinner in the house. In our house, this is me. If we separated the finances like this, it would amount to giving my wife an allowance. Since she works harder at home than I do at work most of the time (she keeps the house, does meals and shopping, raises and schools our daughter, etc.) but just doesn't get paid for it, it would border on insult to her to treat the finances this way. |
Is giving my girlfriend money for her mortgage closing costs and down payment considered fraud? | The issue here is that the transaction (your funds to her account) looks very similar to the rent payments which you plan to make in the future. Those rental payments (if deemed to be commercial) would normally be subject to tax. Consider the scenario where rather than an up front $5000, and $5000 over 2 years, you paid her $10000, and paid no rent. That might be an attempt to avoid paying tax. A commercial transaction can't be re-labeled as a gift just based on your election - the transaction needs to be considered as a whole. However, an interest free, unsecured loan connected with you paying rent at market rate would be (depending on local laws) simply foolish (to some extent). I don't think you are able to structure the transaction as a joint purchase (since the mortgage will prevent her from allocating a part of the property to you). Its also likely that you can live in her house and contribute an adequate amount to the household costs without creating a taxable income for her. For example in the UK, up to ~£4000 pa rental income generated from the property in which you reside does not need to be declared. You need to identify the scenarios where your particular arrangement could be imagined as resulting in a taxable or potentially taxable event - then make sure you are not avoiding those events just by choosing how you label the events. |
Estimated Tax on Unplanned Capital Gains | I'm assuming your talking USA. There are two ways to look. If you know you should pay on the cap gains, the best way to handle that separately from your salary is to file a quarterly tax payment. That, I understand, is what the self-employed have to do. I'm in the situation where at some point, probably this year, the company that employs me will be bought out, and I will owe capital gains taxes on my shares gobbled up in the buy-out. It's a cash-for-stock transaction. So, in my case, I've just adjusted my W-4 to take advantage of the safe-harbor provision related to taxes I payed in 2016 and my salary. The details vary depending on your situation, but in my case, I've calculated what it will take in W-4 allowances to make sure I pay 110% of my 2016 tax payment (after refund). I'm not worrying about what the actual taxes on those shares of company stock will be, because I've met the rules for safe-harbor. Safe harbor just means that they can't penalize you for under-withholding or underpayment. It doesn't mean I won't have to write a check on april 15. |
Cheapest way to “wire” money in an Australian bank account to a person in England, while I'm in Laos? | I've used OFX quite a lot for international transfers. They are much faster than a normal international transfer from your bank. Instead it ends up being a local transfer on either end which just works a heck of a lot quicker. They also claim lower exchange rates. In the past we have compared and sometimes found them lower and sometimes found them a little higher. Their fees certainly are lower though. Only thing is I think there was a lag setting up the account initially (they need to contact you by phone), so if you're in a hurry this may be problematic. And yes, you will need internet banking to do this. Since the question is specifically about how to do this in the cheapest way possible, I think the answer is to use internet banking. |
How can my friend send $3K to me without using Paypal? | Have his bank put the money on a gift card or gift cards and have somebody send them to you in the mail. In fact, if you are going to spend the money online all you need is the numbers and codes from the card to spend the money. If you have more time have the bank send you a cashiers check or money order. |
Credit report - Not able to establish identity | The suggestion may be very delayed, have you personally gone to the Experian Office with all the documentation (in xerox copy and in original)? If not, please do so, there is always a difference between dealing with govt/semi-govt institutions over electronic channels and in person. |
Is it worth buying real estate just to safely invest money? | Consider looking into real estate investment trusts (REITs). Assuming that they are available for the area that you are considering they simplify the process of investing in this sector. Your money pooled with other investors and then invested in a broad range of properties. If you go this route make sure to only by REITs that are traded in the open market (liquidity and an honest current valuation). Even better I would consider a index fund of REITs for more diversification. Personally I do use a US based REIT index as a small part of my portfolio so as to get better diversification. |
Why do financial institutions charge so much to convert currency? | Banks do of course incur costs on currency transactions. But they're not as high as the fee charged to the customer. Most banks in most places lose a lot of money on operating bank accounts for customers, and make the money back by charging more than their costs for services like currency exchange. If you don't choose to pay those fees, use an online service instead. But bear in mind that if everyone does so then banks will be forced to charge higher fees for current accounts. |
I received $1000 and was asked to send it back. How was this scam meant to work? | Possible ways they could make money (or think they could): I would go back through your transaction history and see if it's disappeared. Even with an assumed-rubbish interface finding a reversal of the transaction should be easy as you know the amount. I wouldn't spend it for a very long time if it is still there, just in case my last bullet applies. Given what they knew about you (phone number and account details) I'd be wary enough to keep an eye on all my accounts, possibly wary enough to consider credit monitoring in case they try to open other accounts with your details. Although of course plenty of people have legitimate reasons to have this information - if you've written a cheque the account details will be on it, and you might well be in the phone book or otherwise searchable. |
Will a credit card issuer cancel an account if it never incurs interest? | When you buy something with your credit card, the store pays a fee to the credit card company, typically a base fee of 15 to 50 cents plus 2 to 3% of the purchase. At least, that's what it was a few years back when I had a tiny business and I wanted to accept credit cards. Big chain stores pay less because they are "buying in bulk" and have negotiating power. Just because you aren't paying interest doesn't mean the credit card company isn't making money off of you. In fact if you pay your monthly bill promptly, they're probably making MORE off of you, because they're collecting 2 or 3% for a month or less, instead of the 1 to 2% per month that they can charge in interest. The only situation I know where you can get money from a credit card company for free is when they offer "convenience checks" or a balance transfer with no up-front fee. I get such an offer every now and then. I presume the credit card company does that for the same reason that stores give out free samples: they hope that if you try the card, you'll continue using it. To them, it's a marketing cost, no different than the cost of putting an ad on television. |
Canadian RRSPs Transfer | Probably not. For your savings to enter an RRSP account, the recipient account must itself be an RRSP (duh! I hear you say). This appears to rule out any UK-based banks as they would not offer this type of account, which appears to be confirmed with a quick Google search returning no useful result for "rrsp uk". According to Income Tax Folio S3-F10-C1, Qualified Investments – RRSPs, RESPs, RRIFs, RDSPs and TFSAs, an RRSP may include listed securities traded on designated stock exchanges, including the London Stock Exchange. While this enables some possibilities, it is not clear that Canadian banks would offer much in the form of UK RRSPs. Your best bet may be to contact your bank and ask if they offer RRSP services for expats. Here is a list of Canadian banks in the UK. Obviously, this does not mean that they offer the type of service you are looking for (or even that they offer retail services, this may be just a trading office). Finally, if you need to move money from an RRSP to anything other than an RRSP this will trigger the inclusion of the sale proceeds as taxable income in that year. |
Why do put option prices go higher when the underlying stock tanks (drops)? | When you buy a put on a stock, you buy the right to sell the stock at fixed price, F, that his usually different from the market price, M. You paid a price, P, for the put. Your potential profit, going forward, is represented by the DIFFERENCE you get to collect between your fixed price F, and that market price M, plus the price you paid for the put, or F-(M+P). (This assumes that F>(M+P). P is fixed, but the smaller M gets, the larger the term F-(M+P), and therefore the higher your potential profit from owning the put. So when M "tanks," the put goes higher. The $395 put is already in the money. If it were settled today, the value would be $395-$376 or $19. This, minus the cost of the put itself, represents your profit. The $365 put is "out of the money." The stock has to fall $11 more before the put is exercised. But if the stock went down 8 points today, that is less than the $19 difference at the start of the day. Because there is time between now and October, there is a chance for the stock to go down further, thereby going into the money. The current value of the put is represented by this "chance." Obviously, the chances of the stock going down $11 more (from today) is greater than the chance of it going down $19 more. On the other hand, the closer it gets to the expiration date, the less an out of the money put is worth. It's a race between the stock's fall, and the time to expiration. |
A stop order won't be automatically fired in after-hours trading? | Stop orders and stop limit orders typically do not execute during extended hours after the general market session has closed. Stop orders are market orders and market orders especially are not executed during extended hours. Although there are exceptions because a broker can say one thing and do another thing with the way order types are presented to customers vs what their programming actually does. The regulatory burden is a slap on the wrist, so you need to ask the broker what their practices are. Orders created during normal market hours do not execute in extended sessions, different orders would have to be made during the extended session. Your stop order should execute if the normal market hour price stays below your stop price. So a stop limit would actually be worse here, because a stop limit will create a limit order which may never get hit (since it is above the best bid best ask) |
Why is the buy price different from the sell price of a stock? [duplicate] | When there is a difference between the two ... no trading occurs. Let's look at an example: Investor A, B, C, and D all buy/sell shares of company X. Investor A wants to sell 10 shares at $20 a share (Ask price $20 x10). Investor B wants to buy 15 shares at $10 a share (Bid price $10 x15). Since the bid price and ask price are different, no sale is made. Next Investor C comes along and wants to sell 5 shares at $14 (Ask price $14 x5). Still no sale. Investor D comes along and wants to buy 5 shares for $14 each. So a sale is finally made. At this point, the stock quote moves to $14. The ask price is $20 x10 and the bid price is $10 x15. No further trading will occur until another investor is willing to buy at $20 or sell at $10. Another discussion of this topic is shown on this post. |
How can I find out the credit rating of a company | You can view Standard & Poor's credit ratings here: http://www.standardandpoors.com/ratings/en/us/ You have to register with S&P to access the ratings. |
Visitor Shopping in the US: Would I get tax refund? Would I have to pay anything upon departure? | Yes, you get a refund but only in a couple of states. If you are visiting Louisiana (e.g. New Orleans), there is sales tax refund on tangible items purchased at tax-free stores and permanently removed from the United States (http://www.louisianataxfree.com) . Clothes, shoes, makeup.. these are all items you can claim a tax refund for. Alas, I believe only Louisiana and Texas (http://taxfreetexas.com/) have this, it might be good to know if you are going there. In some states (Alaska, Delaware, Montana, New Hampshire and Oregon I believe) there is no sales tax at all. You do not pay anything at customs for gifts purchased when you leave the United States. |
How to buy stock on the Toronto Stock Exchange? | You probably bought the cross listed WestJet stock. If you wanted to buy shares on the TSE, I'd suspect you'd have to find a way to open a brokerage account within Canada and then you'd be able to buy the shares. However, this could get complicated to some extent as there could be requirements of Canadian tax stuff like a Social Insurance Number that may require some paperwork. In addition, you'd have to review tax law of both countries to determine how to appropriately report to each country your income as there are various rules around that. TD Waterhouse would be the Canadian subsidiary of TD Ameritrade though I haven't tried to create a Canadian brokerage account. |
Wardrobe: To Update or Not? How-to without breaking the bank | I buy new clothes when the old ones fall apart, literally. When jeans get holes in the knees, they're relegated to gardening or really messy jobs. Shirts go until they're worn so much that I can't reasonably wear them to work any more. Sounds like your "dress code" at work is about like mine (also a software engineer). I've found that the Dickies jeans and work pants are sturdy, long lasting, fit in reasonably at the workplace, and are very inexpensive. If you know that you're going to need to replace some pants or shirts, wait for a sale to roll around at a local store, and then stock up. I don't specifically budget for clothes since I spend so little. But I'd be at the bottom of anybody's list in terms of giving fashion advice... |
Is there any real purpose in purchasing bonds? | You ask a question, "Is there any real purpose in purchasing bonds?" and then appear to go off on a rant. Before the question is closed by members here, let me offer this: This chart reflects the 10 year bond rate. From 1960-2004 (give or take) the coupon rate was over 4%. Asset allocation suggests a mix of stocks and bonds seeking to avoid the risk of having "all of one's eggs in one basket." To that end, the simplest approach is a stock/bond mix. Over time, a 70/30 mix provides nearly 95% of the long tern return, but with a much lower volatility. I'm not going to suggest that a 2% 10 year bond is an exciting investment, but bonds may have a place in one's portfolio. I'm not going to debate each and every point you attempted, but #5 is especially questionable. If you feel this is true, you should short bonds. Or you should at least 99% of the time. Do you have data to back up this statement? |
Definition of “U.S. source” for US non-resident alien capital gains tax | The examples you provide in the question are completely irrelevant. It doesn't matter where the brokerage is or where is the company you own stocks in. For a fairly standard case of an non-resident alien international student living full time in the US - your capital gains are US sourced. Let me quote the following text a couple of paragraphs down the line you quoted on the same page: Gain or loss from the sale or exchange of personal property generally has its source in the United States if the alien has a tax home in the United States. The key factor in determining if an individual is a U.S. resident for purposes of the sourcing of capital gains is whether the alien's "tax home" has shifted to the United States. If an alien does not have a tax home in the United States, then the alien’s U.S. source capital gains would be treated as foreign-source and thus nontaxable. In general, under the "tax home" rules, a person who is away (or who intends to be away) from his tax home for longer than 1 year has shifted tax homes to his new location upon his arrival in that new location. See Chapter 1 of Publication 463, Travel, Entertainment, Gift, and Car Expenses I'll assume you've read this and just want an explanation on what it means. What it means is that if you move to the US for a significant period of time (expected length of 1 year or more), your tax home is assumed to have shifted to the US and the capital gains are sourced to the US from the start of your move. For example: you are a foreign diplomat, and your 4-year assignment started in May. Year-end - you're not US tax resident (diplomats exempt), but you've stayed in the US for more than 183 days, and since your assignment is longer than 1 year - your tax home is now in the US. You'll pay the 30% flat tax. Another example: You're a foreign airline pilot, coming to the US every other day flying the airline aircraft. You end up staying in the US 184 days, but your tax home hasn't shifted, nor you're a US tax resident - you don't pay the flat tax. Keep in mind, that tax treaties may alter the situation since in many cases they also cover the capital gains situation for non-residents. |
What is the buy-hold-sell indication based on? | To dig a little deeper, a number of analysts within (and without) Reuters are polled for their views on individual stocks and markets on buy-hold-sell. The individual analysts will be a varied bunch of fundamentalists, technical, quant and a mixture of the three plus more arcane methodologies. There may be various levels of rumors that aren't strong enough to be considered insider trading, but all of these will give an analyst an impression of the stock/market. Generally I think there isn't much value there, except from the point of view if you are a contrarian trader, then this will form a part of the input to your trading methodology. |
When a fund drops significantly, how can I research what went wrong? [duplicate] | Usually there are annual or semi-annual reports for a mutual fund that may give an idea for when a fund will have "distributions" which can cause the NAV to fall as this is when the fund passes the taxable liabilities to shareholders in the form of a dividend. Alternatively, the prospectus of the fund may also have the data on the recent distribution history that is likely what you want. If you don't understand why a fund would have a distribution, I highly suggest researching the legal structure of an open-end mutual fund where there more than a few rules about how taxes are handled for this case. |
Why do governments borrow money instead of printing it? | Governments borrowing money doesn't create new money. When banks "borrow" money (i.e. take deposits), it does effectively create money because the depositor expects to be able to get the money back at any time, but the bank assumes that most won't actually do this and lends out most of the money to other people. If everyone did actually ask for their money back at once, the illusion of the extra money created by this process would collapse, and the bank would go bust. In contrast when governments borrow money, the loan isn't repayable on demand, it has a fixed maturity and the money is only repaid at the end of that period (plus interest at defined points during the period). So holders of government debt don't have money they can spend (they can turn it into money they can spend but only by finding someone else to buy it). So government debt doesn't create inflation in itself. If they printed money, then they'd be devaluing the money of everyone who had saved or invested, whereas if they borrow money and use taxes to repay it, the burden falls more evenly across the economy and doesn't disproportionately penalise certain sets of people. |
Can a dealer keep my deposit (on a non-existant car) if my loan is not approved? | Without the contract it's hard to say for sure, but Consumer Reports indicates that it's pretty easy to lose these deposits; they're not as well protected as other deposits or purchases (depending on your state and other details). You should make an effort to comply with all of the requests from the financing arm promptly, and in particular you should probably highlight that you could afford to pay for the car in cash (and be prepared to show bank/money market/investment statements to back that up). Credit is mostly a numbers game, but there is a human on the other side making the decision (assuming you're remotely close) and that makes a big difference. I would be prepared to walk away from your deposit if they come back and offer you a 5% APR or similar (and you're uncomfortable with the loan at that rate) - over 5 years, a $20k loan at 5% APR will cost you several thousand dollars; it might be worth it even if they don't give you your deposit back. And if you're clearly ready to walk away from the deposit, that might cause them to negotiate in better faith. Some tips, both from that article and my general experience: |
Effective returns on investment in housing vs other financial instruments | The assumption that house value appreciates 5% per year is unrealistic. Over the very long term, real house prices has stayed approximately constant. A house that is 10 years old today is 11 years old a year after, so this phenomenon of real house prices staying constant applies only to the market as a whole and not to an individual house, unless the individual house is maintained well. One house is an extremely poorly diversified investment. What if the house you buy turns out to have a mold problem? You can lose your investment almost overnight. In contrast to this, it is extremely unlikely that the same could happen on a well-diversified stock portfolio (although it can happen on an individual stock). Thus, if non-leveraged stock portfolio has a nominal return of 8% over the long term, I would demand higher return, say 10%, from a non-leveraged investment to an individual house because of the greater risks. If you have the ability to diversify your real estate investments, a portfolio of diversified real estate investments is safer than a diversified stock portfolio, so I would demand a nominal return of 6% over the long term from such a diversified portfolio. To decide if it's better to buy a house or to live in rental property, you need to gather all of the costs of both options (including the opportunity cost of the capital which you could otherwise invest elsewhere). The real return of buying a house instead of renting it comes from the fact that you do not need to pay rent, not from the fact that house prices tend to appreciate (which they won't do more than inflation over a very long term). For my case, I live in Finland in a special case of near-rental property where you pay 15% of the building cost when moving in (and get the 15% payment back when moving out) and then pay a monthly rent that is lower than the market rent. The property is subsidized by government-provided loans. I have calculated that for my case, living in this property makes more sense than purchasing a market-priced house, but your situation may be different. |
Having trouble with APR calculation | I have answered your question in detail here https://stackoverflow.com/questions/12396422/apr-calculation-formula The annuity formula in FDIC document is at first finding PVIFAD present value annuity due factor and multiplying it with annuity payment and then dividing it by an interest factor of (1+i) to reduce the annuity to an ordinary annuity with end of period payments They could have simply used PVIFA and multiplying it with annuity payment to find the present value of an ordinary annuity In any case, you should not follow the directions in FDIC document to find interest rate at which the present value of annuity equals the loan amount. The method they are employing is commonly used by Finance Professors to teach their students how to find internal rate of return. The method is prone to lengthy trial and error attempts without having any way of knowing what rate to use as an initial guess to kick off the interest rate calculations So this is what I would suggest if you are not short on time and would like to get yourself familiar with numerical methods or iterative techniques to find internal rate of return There are way too many methods at disposal when it comes to finding interest rates some of which include All of the above methods use a seed value as a guess rate to start the iterative calculations and if results from successive calculations tend to converge within a certain absolute Error bound, we assume that one of the rates have been found as there may be as many rates as the order of the polynomial in this case 36 There are however some other methods that help find all rates by making use of Eigenvalues, but for this you would need a lengthy discourse of Linear Algebra One of the methods that I have come across which was published in the US in 1969 (the year I was born :) ) is called the Jenkins Traub method named after the two individuals who worked jointly on finding a solution to all roots of a polynomial discarding any previous work on the same subject I been trying to go over the Jenkins Traub algorithm but am having difficulty understanding the complex nature of the calculations required to find all roots of the polynomial In summary you would be better of reading up on this site about the Newton Raphson method to find IRR |
car loan but 2 people on title | Yes, but then either of you will need the other's permission to sell the car. I strongly recommend you get an agreement on that point, in writing, and possibly reviewed by a lawyer, before entering into this kind of relationship. (See past discussions of car titles and loan cosigners for some examples of how and why this can go wrong.) When doung business with friends, treating it as a serious business transaction is the best way to avoid ruining the friendship. |
Stranger in Asia wants to send me $3000 in Europe over Western Union because he “likes me”? [duplicate] | how are the ways he could scam me? There are hundreds of different ways the scam can progress ... broadly; |
Does buying and selling a stock OR holding onto it make a company look better? | Share prices change (or not) when shares are bought and sold. Unless he's sitting on a large percentage of the total shares, the fact that he isn't selling or buying means he's having no effect ar all on the stock price, and unless there's a vote war going on in the annual meeting his few stockholder votes aren't likely to have much effect there either (though there's always the outside chance of his being a tiebreaker). On the other hand, there's nothing inherently wrong with holding shares for a very long time and just taking the dividends ("clipping coupons"). Buy-and-hold is a legitimate strategy. Basically: His reason is wrong, but his action may be right, and you should probably just not ask. |
First time investor and online brokerage accounts | Most mutual funds are designed to make the investment banks that sell them money, not to make investers money. They do this by taking significant fees out. Because they make lots of money on these funds, they advertise them a lot, and give them important-sounding names, like "Advanced technology global diversity long term appreciation". Index funds are the exception; they attempt to mirror the performance of a specific index (such as the S&P 500 index). They generally have very low fees. |
Why do financial institutions charge so much to convert currency? | All institutions, financial or otherwise, seek to maximize profits. In a free market, each bank would price its services to be competitive with the current state of the market. Since the currency conversion fee is generally a small part of the decision as to which bank to choose, banks can be non-competitive in this area. If this is an important consideration for you then you would need to find a bank with a lower conversion fee, but be prepared to have higher fees in other areas. TL;DR: The market bears it. |
Idea for getting rich using computers to track stocks | There are many ways to trade. Rules based trading is practiced by professionals. You can indeed create a rule set to make buy and sell decisions based on the price action of your chosen security. I will direct you to a good website to further your study: I have found that systemtradersuccess.com is a well written blog, informative and not just a big sales pitch. You will see how to develop and evaluate trading systems. If you decide to venture down this path, a good book to read is Charles Wright's "Trading As A Business." It will get a little technical, as it discusses how to develop trading systems using the Tradestation trading platform, which is a very powerful tool for advanced traders and comes with a significant monthly usage fee (~$99/mo). But you don't have to have tradestation to understand these concepts and with an intermediate level of spreadsheet skills, you can run your own backtests. Here is a trading system example, Larry Connors' "2 period RSI system", see how it is evaluated: http://systemtradersuccess.com/connors-2-period-rsi-update-2014/, and this video teaches a bit more about this particular trading system: https://www.youtube.com/watch?v=i_h9P8dqN4Y IMPORTANT: This is not a recommendation to use this or any specific trading system, nor is it a suggestion that using these tools or websites is a path to guaranteed profits. Trading is a very risky endeavor. You can easily lose huge sums of money. Good luck! |
How can I improve my auto insurance score? | As a recent college grad who switched to his own car insurance, many of the things I did myself are reflected here. The #1 thing I did was find out what coverages I had, what coverages some friends of mine had (car enthusiasts mostly - they're the most informed on this stuff), and then figured out what kind of coverages I wanted. From there, I went around getting quotes from anyone and everyone and eventually built out a sizeable spreadsheet that made it obvious which company was going to offer me the best rate at a given coverage level. Something else to remember - not all insurance companies look at past accidents and violations (speeding, etc) the same. In my search, I found some have a 3-year scope on accidents and violations, while others were as much as 5 years. So, if your driving record isn't a shining example (mine isn't perfect), you could potentially save money by considering insurance through a company that will see fewer violations/incidents than another because of the size of their scope. I ended up saving $25/mo by choosing a company that had a 3-year scope, which was on the cusp of when my last violation/incident occurred. Insurance companies will also give out discounts for younger drivers based on GPA average. If you have kids and they maintain a high GPA, you might be able to get a discount there. Not all companies offer it, so if they do it's worth finding out how much it is |
If stock price drops by the amount of dividend paid, what is the use of a dividend | I'm fairly convinced there is no difference whatsoever between dividend payment and capital appreciation. It only makes financial sense for the stock price to be decreased by the dividend payment so over the course of any specified time interval, without the dividend the stock price would have been that much higher were the dividends not paid. Total return is equal. I think this is like so many things in finance that seem different but actually aren't. If a stock does not pay a dividend, you can synthetically create a dividend by periodically selling shares. Doing this would incur periodic trade commissions, however. That does seem like a loss to the investor. For this reason, I do see some real benefit to a dividend. I'd rather get a check in the mail than I would have to pay a trade commission, which would offset a percentage of the dividend. Does anybody know if there are other hidden fees associated with dividend payments that might offset the trade commissions? One thought I had was fees to the company to establish and maintain a dividend-payment program. Are there significant administrative fees, banking fees, etc. to the company that materially decrease its value? Even if this were the case, I don't know how I'd detect or measure it because there's such a loose association between many corporate financials (e.g. cash on hand) and stock price. |
The doctor didn't charge the health insurance in time, am I liable? | I work for a health billing company. It is completely the provider's responsibility to bill your health insurance in a timely manner if they have your health insurance information on file (it sounds like they did). If you can gather a copy of your EOB (Explanation of Benefits) from your health insurance, it will likely say something to the extent of: "claim was submitted after the timely filing limit, therefore no payment was made. The patient is not liable for the remaining balance." Don't let the hospital/physician bully you into paying for something they should have submitted to the insurance in the first place. |
Why doesn't Japan just divide the Yen by 100? | Think about moving the decimal point in a bunch of accounting software and price stickers. Think about getting confused, "is that price in old yen or new yen?" - not just immediately, but every time you hear a historical price figure. Think of the inconveniences. How many billions of yen would that cost the Japanese economy? It could be a lot. How many billions of yen would the Japanese economy save by enacting such a conversion? Because I doubt it's anywhere that much. |
Superannuation: When low risk options have higher return, what to do? | The long term view you are referring to would be over 30 to 40 years (i.e. your working life). Yes in general you should be going for higher growth options when you are young. As you approach retirement you may change to a more balanced or capital guaranteed option. As the higher growth options will have a larger proportion of funds invested into higher growth assets like shares and property, they will be affected by market movements in these asset classes. So when there is a market crash like with the GFC in 2007/2008 and share prices drop by 40% to 50%, then this will have an effect on your superannuation returns for that year. I would say that if your fund was invested mainly in the Australian stock market over the last 7 years your returns would still be lower than what they were in mid-2007, due to the stock market falls in late 2007 and early 2008. This would mean that for the 7 year time frame your returns would be lower than a balanced or capital guaranteed fund where a majority of funds are invested in bonds and other fixed interest products. However, I would say that for the 5 and possibly the 10 year time frames the returns of the high growth options should have outperformed the balanced and capital guaranteed options. See examples below: First State Super AMP Super Both of these examples show that over a 5 year period or less the more aggressive or high growth options performed better than the more conservative options, and over the 7 year period for First State Super the high growth option performed similar to the more conservative option. Maybe you have been looking at funds with higher fees so in good times when the fund performs well the returns are reduced by excessive fees and when the fund performs badly in not so good time the performance is even worse as the fees are still excessive. Maybe look at industry type funds or retail funds that charge much smaller fees. Also, if a fund has relatively low returns during a period when the market is booming, maybe this is not a good fund to choose. Conversely, it the fund doesn't perform too badly when the market has just crashed, may be it is worth further investigating. You should always try to compare the performance to the market in general and other similar funds. Remember, super should be looked at over a 30 to 40 year time frame, and it is a good idea to get interested in how your fund is performing from an early age, instead of worrying about it only a few years before retirement. |
Previous owner of my home wants to buy it back but the property's value is less than my loan… what to do? | A short-sale seems like an extreme and unethical course to take. You should read your mortgage documents or work with your attorney to read the mortgage and determine whether it is an "assumable" mortgage. If so, you might be able to get the former owner to take over the mortgage. |
Split buying a house 3 ways. How do I approach this? | Get everything in writing. That includes ownership %, money in, money out, who is allowed to use the place, how much they need to pay the other partners, who pays for repairs, whether to provide 'friends and family' discounts, who is allowed to sell, what happens if someone dies, how is the mortgage set up, what to do if one of you becomes delinquent, etc. etc. etc. Money and friends don't mix. And that's mostly because people have different ideas in their head about what 'fair' means. Anything you don't have in writing, if it comes up in a disagreement, could cause a friendship-ending fight. Even if you are able to agree on every term and condition under the sun, there's still a problem - what if 5 years from now, someone decides that a certain clause isn't fair? Imagine one of you needs to move into the condo because your primary residence was pulled out from under you. They crash at the condo because they have no where else to go. You try to demand payment, but they lost their job. The agreement might say "you must pay the partnership if you use the condo personally, at the standard monthly rate * # of days". But what is the penalty clause - is everything under penalty of eviction, and forced sale of the condo and distribution of profits? Following through on such a penalty means the friendship would be over. You would feel guilty about doing it, and also about not doing it [at the same time, your other partner loses their job, and can't make 1/3rd of the mortgage payments anymore! They need the rent or the bank will foreclose on their house!] etc etc etc Even things like maintenance - are the 3 of you going to do it yourselves? Labour distributed how? Will anyone get a management fee? What about a referral fee for a new renter? Once you've thought of all possible circumstances and rules, and drafted it in writing, go talk to a lawyer, and maybe an accountant. There will be many things you won't have considered yet, and paying a few grand today will save you money and friends in the future. |
Are variable rate loans ever a good idea? | What's going on here is that the variable rate loan is transferring some of the risk from the bank to you. In a reasonable deal taking on risk brings with it reward. It's the same thing as deductibles on insurance--they're transferring some risk to you and thus your expected total cost goes down. Thus the proper evaluation of such deals is whether you can afford the outcome if you draw the short straw. If you feel you can afford the highest payment that can result then the variable rate is a good deal. If you're near your limit then stay with the safe option of the fixed rate. For a house this is easy enough to evaluate--run the calculations assuming the highest payment and see what the debt-to-income ratio is. Note that when we were getting mortgages there was another factor involved: the variable rate loans had a higher initiation cost. Combined with the very low difference between fixed and ARM rates at the time we went fixed but given the rates you quote going variable would have been a no-brainer for us. |
Currently sole owner of a property. My girlfriend is looking to move in with me and is offering to pay 'rent'. Am I at risk here? | The rent payment is in principle taxable. However, you should be able to take advantage of the "rent a room" scheme, and the proposed rent falls well under the £7,500/year tax threshold for that. So no tax will be actually payable and you don't have to formally declare it as long as you stay below that threshold. You should also be fairly well legally protected in case you do split up in future and you want to remove her. As you would be living there too, she would just be a lodger, not a tenant (technically, an "excluded occupier"). If you did want her to leave you would only need to give reasonable notice and wouldn't need a formal court order if you needed to force her to go. As JBentley points out, there have been court cases where domestic partners contributing to household expenses while the other partner paid the mortgage have later been able to claim that this implied joint ownership. This was on the basis of a "constructive trust" being implicitly setup by the way they arranged their finances. In your case, if there's a clear intention, formalised in writing, for the money to be treated as rent rather than a contribution towards purchasing the property, I think it should make it very hard to claim the contrary later. I would also suggest you be clear about whether the rent includes a share of the utility bills, and that things like groceries would be handled separately and split 50:50 or whatever. As pointed out in a comment, there are template agreements for lodgers you could use a starting point (e.g. this one), but it's likely you'd need to customise it to your circumstances. Another point made in another answer is that there's potential upcoming legislation to give some rights to cohabiting partners. In the current draft, those would kick in after three years or having children. If the bill does come into effect, you'd also be able to sign an opt out, but only after getting legal advice, and it would still be possible (though presumably hard) to persuade a court to overturn an opt out. Overall that does create a small risk to you, but not one that comes directly from your girlfriend paying rent. It's likely that if you are both on an equal financial footing and had always kept your finances separate, that there wouldn't be any award made anyway. And you can't run your entire life on hypothetical risks. |
Question about stock taxes buy/sell short term | If you have made $33k from winning trades and lost $30k from loosing trades your net gain for the year would be $3k, so obviously you would pay taxes only on the net $3k gains. |
Death and Capital Gains Taxes (United States) | Stocks (among other property) currently is allowed a "stepped-up basis" when valuing for estate tax purpose. From the US IRS web page: To determine if the sale of inherited property is taxable, you must first determine your basis in the property. The basis of property inherited from a decedent is generally one of the following: The fair market value (FMV) of the property on the date of the decedent's death. The FMV of the property on the alternate valuation date if the executor of the estate chooses to use alternate valuation. See the Instructions for Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return. If you or your spouse gave the property to the decedent within one year before the decedent's death, see Publication 551, Basis of Assets. Your question continues "the person that died still has to pay taxes on their profits in the year they died, right?" Yes. The estate would be subject to tax on realized gains/losses prior to death. |
Where do large corporations store their massive amounts of cash? | You can find out the general types of investments by reading the public corporation 10-Q report that is filed with the SEC it can be accessed via the EDGAR system. It will not tell you what securities they have, but it does identify the short term and long term investments categories and their value. |
IRR vs. Interest Rates | IRR is not subjective, this is a response to @Laythesmack, to his remark that IRR is subjective. Not that I feel a need to defend my position, but rather, I'm going to explain his. My company offered stock at a 15% discount. We would have money withheld from pay, and twice per year buy at that discount. Coworkers said it was a 15% gain. I offered some math. I started by saying that 100/85 was 17.6%, and that was in fact, the gain. But, the funds were held by the company for an average of 3 months, not 6, so that gain occurred in 3 months and I did the math 1.176^4 and resulted in 91.5% annual return. This is IRR. It's not that it's subjective, but it assumes the funds continue to be invested fully during the time. In our case the 91.5% was real in one sense, yet no one doubled their money in just over a year. Was the 91% useless? Not quite. It simply meant to me that coworkers who didn't participate were overlooking the fact that if they borrowed money at a reasonable rate, they'd exceed that rate, especially for the fact that credit lines are charged day to day. Even if they borrowed that money on a credit card, they'd come out ahead. IRR is a metric. It has no emotion, no personality, no goals. It's a number we can calculate. It's up to you to use it correctly. |
From ACH direct debit to Prepaid card? | This would be exactly the sort of product that a thief would want, if they had got ahold of some account numbers and wanted to steal the money from those accounts, in a way that would let them spend it as conveniently as possible. That should explain why I think it's unlikely that any such product exists. |
Is it wise to invest in bond fund when interest rates are low? | This is just a pedestrian (my) opinion: Yes, It is wise to invest in bond funds even in a low interest environment. Check out the lazy man's portfolio on bogleheads. The reason is: |
Interactive Brokers Margin Accounts | Scenario 1 - When you sell the shares in a margin account, you will see your buying power go up, but your "amount available to withdraw" stays the same until settlement. Yes, you can reallocate the same day, no need to wait until settlement. There is no margin interest for this scenario. Scenario 2 - If that stock is marginable to 50%, and all you have is $10,000 in that stock, you can buy another $10,000. Once done, you are at 50% margin, exactly. |
Losing Money with Norbert's Gambit | Can someone please clarify if Norbert's gambit is the optimal procedure to exchange CAD to USD? I'm not sure I'd call an arbitrage trade the "optimal procedure," because as you point out you're introducing yet another point of risk in to the transaction. I think buying the foreign currency for an agreed upon price is the "optimal procedure." If you must use this arbitrage trade, try with a government bond fund; they're typically very stable. |
What exactly can a financial advisor do for me, and is it worth the money? | Technically, anyone who advises how you should spend or proportion your money is a financial adviser. A person that does it for money is a Financial Advisor (difference in spelling). Financial Advisors are people that basically build, manage, or advise on your portfolio. They have a little more institutional knowledge on how/where to invest, given your goals, since they do it on a daily basis. They may know a little more than you since, they deal with many different assets: stocks, ETFs, mutual funds, bonds, insurances (home/health/life), REITs, options, futures, LEAPS, etc. There is risk in everything you do, which is why what they propose is generally according to the risk-level you want to assume. Since you're younger, your risk level could be a little higher, as you approach retirement, your risk level will be lower. Risk level should be associated with how likely you're able to reacquire your assets if you lose it all as well as, your likelihood to enjoy the fruits from your investments. Financial Advisors are great, however, be careful about them. Some are payed on commissions, which are given money for investing in packages that they support. Basically, they could get paid $$ for putting you in a losing situation. Also be careful because some announce that they are fee-based - these advisers often receive fees as well as commissions. Basically, associate the term "commission" with "conflict-of-interest", so you want a fee-only Advisor, which isn't persuaded to steer you wrong. Another thing worth noting is that some trading companies (like e*trade) has financial services that may be free, depending how much money you have with them. Generally, $50K is on the lower end to get a Financial Advisors. There has been corruption in the past, where Financial Advisors are only given a limited number of accounts to manage, that means they took the lower-valued ones and basically ran them into the ground, so they could get newer ones from the lot that were hopefully worth more - the larger their portfolio, the more $$ they could make (higher fees or more commissions) and subjectively less work (less accounts to have to deal with), that's subjective, since the spread of the wealth was accross many markets. |
Where can I find a good online fundamental data provider for Hong Kong stocks? | If you check out China Stock Markets Web provides details on all things that trade on there. It covers the Hang Seng Index, SSE Index, and SSE Component Index. There is also tons of information for investors on the exchange website here. |
What does the term “match the market” mean? | If your returns match the market, that means their rate of return is the same as the market in question. If your returns beat the market, that means their rate of return is higher. There's no one 'market', mind you. I invest in mutual funds that track the S&P500 (which is, very roughly, the U.S. stock market), that track the Canadian stock market, that track the international stock market, and which track the Canadian bond market. In general, you should be deeply dubious of any advertised investment option that promises to beat the market. It's certainly possible to do so. If you buy a single stock, for example, that stock may go up by 40% over the course of a year while the market may go up by 5%. However, you are likely taking on substantially more risk. So there's a very good chance (likely, a greater chance) that the investment would go down, losing you money. |
Credit Card Approval | Three big ones that are common in almost all banks (though, individually, they may have other criteria): Other criteria I've seen (while working in the banking industry - varying by bank): the average balance you keep on deposit accounts (checking/savings/CDs/etc), number of overdraft fees in the past 12 months (one bank I worked for wouldn't approve a credit card if a customer had more than 5 overdrafts in the past year), the length of time a customer had been with the bank. Note that a credit card only company, like AmEx, may have different criteria in that they don't offer all the other type of accounts that other other banks do. |
Does “cash in lieu of dividend” incur any tax consequences in an IRA? | In a (not Roth) IRA, withdrawals are generally already taxed as regular income. So there should be no tax disadvantage to earning payment in lieu of dividends. It's possible that there is an exception for IRAs but I was unable to find one and I cannot see the reason for one since the dividend tax rate is usually lower than the income tax rate (which is why some company owners elect to receive part of the company profits via dividend rather than all through their salary). |
Retirement & asset allocation of $30K for 30 year old single guy | If you want to invest in stocks, bonds and mutual funds I would suggest you take a portion of your inheritance and use it to learn how to invest in this asset class wisely. Take courses on investing and trading (two different things) in paper assets and start trading on a fantasy exchange to test and hone your investment skills before risking any of your money. Personally I don't find bonds to have a meaningful rate of return and I prefer stocks that have a dividend over those that don't. Parking some of your money in an IRA is a good strategy for when you do not see opportunities to purchase cashflow-positive assets right away; this allows you to wait and deploy your capital when the opportunity presents itself and to educate yourself on what a good opportunity looks like. |
Is there a benefit, long term, to life insurance for a youngish, debt, and dependent free person? | There are a few questions that need qualification, and a bit on the understanding of what is being 'purchased'. There are two axioms that require re-iteraton, Death, and Taxes. Now, The First is eventually inevitable, as most people will eventually die. It depends what is happening now, that determines what will happen tomorrow, and the concept of certainty. The Second Is a pay as you go plan. If you are contemplating what will heppen tomorrow, you have to look at what types of "Insurance" are available, and why they were invented in the first place. The High seas can be a rough travelling ground, and Not every shipment of goods and passengers arrived on time, and one piece. This was the origin of "insurance", when speculators would gamble on the safe arrival of a ship laden with goods, at the destination, and for this they received a 'cut' on the value of the goods shipped. Thus the concept of 'Underwriting', and the VALUE associated with the cargo, and the method of transport. Based on an example gallion of good repair and a well seasoned Captain and crew, a lower rate of 'insurance' was deemed needed, prior to shipment, than some other 'rating agency - or underwriter'. Now, I bring this up, because, it depends on the Underwriter that you choose as to the payout, and the associated Guarantee of Funds, that you will receive if you happen to need to 'collect' on the 'Insurance Contract'. In the case of 'Death Benefit' insurance, You will never see the benefit, at the end, however, while the policy is in force (The Term), it IS an Asset, that would be considered in any 'Estate Planning' exercise. First, you have to consider, your Occupation, and the incidence of death due to occupational hazards. Generally this is considered in your employment negotiations, and is either reflected in the salary, or if it is a state sponsored Employer funded, it is determined by your occupational risk, and assessed to the employer, and forms part of the 'Cost-of-doing-business', in that this component or 'Occupational Insurance' is covered by that program. The problem, is 'disability' and what is deemed the same by the experience of the particular 'Underwriter', in your location. For Death Benefits, Where there is an Accident, for Motor Vehicle Accidents (and 50,000 People in the US die annually) these are covered by Motor Vehicle Policy contracts, and vary from State to State. Check the Registrar of State Insurance Co's for your state to see who are the market leaders and the claim /payout ratios, compared to insurance in force. Depending on the particular, 'Underwiriter' there may be significant differences, and different results in premium, depending on your employer. (Warren Buffet did not Invest in GEICO, because of his benevolence to those who purchase Insurance Policies with GEICO). The original Poster mentions some paramaters such as Age, Smoking, and other 'Risk factors'.... , but does not mention the 'Soft Factors' that are not mentioned. They are, 'Risk Factors' such, as Incidence of Murder, in the region you live, the Zip Code, you live at, and the endeavours that you enjoy when you are not in your occupation. From the Time you get up in the morning, till the time you fall asleep (And then some), you are 'AT Risk' , not from a event standpoint, but from a 'Fianancial risk' standpoint. This is the reason that all of the insurance contracts, stipulate exclusions, and limits on when they will pay out. This is what is meant by the 'Soft Risk Factors', and need to be ascertained. IF you are in an occupation that has a limited exposure to getting killed 'on the job', then you will be paying a lower premium, than someone who has a high risk occupation. IT used to be that 'SkySkraper Iron Workers', had a high incidence of injury and death , but over the last 50 years, this has changed. The US Bureau of Labor Statistics lists these 10 jobs as the highest for death (per 100,000 workers). The scales tilt the other way for these occupations: (In Canada, the Cheapest Rate for Occupational Insurance is Lawyer, and Politician) So, for the rest in Sales, management etc, the national average is 3 to 3.5 depending on the region, of deaths per 100,000 employed in that occupation. So, for a 30 year old bank worker, the premium is more like a 'forced savings plan', in the sense that you are paying towards something in the future. The 'Risk of Payout' in Less than 6 months is slim. For a Logging Worker or Fisher(Men&Women) , the risk is very high that they might not return from that voyage for fish and seafood. If you partake in 'Extreme Sports' or similar risk factors, then consider getting 'Whole Term- Life' , where the premium is spread out over your working lifetime, and once you hit retirement (55 or 65) then the occupational risk is less, and the plan will payout at the age of 65, if you make it that far, and you get a partial benefit. IF you have a 'Pension Plan', then that also needs to be factored in, and be part of a compreshensive thinking on where you want to be 5 years from today. |
Using Fibonacci Extensions to set profit targets? | fibonacci levels (retracements,expansions, arcs) are all arbitrary numbers with no statistical significance. that said thousands of traders world over use, view and depend on fib numbers in their trading ranging from forex, stock commodities etc the point is if it's traded a fibonacci number has been used on it, because of this unanimity on their significance & application the fibonacci's thus act as valid anchors since so many traders are looking at the same levels (self-fulfilling prophecy). the values of the fib numbers are all equally significant i.e the 23.6. 38.2, 50, or 61.8 are statistically all equally likely to occur. you just have to be vigilant as your trade approaches the fib levels. |
Rental Application Fees | Slightly abbreviated version of the guidance from NOLO.com California state law limits credit check or application screening fees landlords can charge prospective tenants and specifies what landlords must do when accepting these types of fees. (Cal. Civ. Code § 1950.6.) Here are key provisions: I am not a lawyer, but it would seem you have two options if you catch a landlord violating these rules. An idea to avoid the whole problem in the first place: Get a copy of your credit report yourself and take a copy with you to meet the landlord. If they want an application fee, ask why they need it making it clear you know the above law. If they say for a credit report offer to give them a copy in lieu of the fee. |
Why buy insurance? | There are many situations where injecting a certain amount of cash at the right time may reap rewards far in excess of the value of the cash injected. For example, if someone who needs a car to get to work gets in a wreck and that person does not have ready money to make it driveable may have no choice but to secure very expensive financing. Receipt of $1000 in ready money to repair the car may thus save the person from having to take out a loan that would cost $1200 or more to repay. While the insurance business has sufficient overhead that it is unlikely that insurance would generally have a positive net expectation even considering such factors, it is at least theoretically possible that insurance could have a positive expected value for both the insurer and the insured (and in some cases it may have positive expected values for both parties in practice as well). |
Why would a stock opening price differ from the offering price? | The offering price is what the company will raise by selling the shares at that price. However, this isn't usually what the general public sees as often there will be shows to drive up demand so that there will be buyers for the stock. That demand is what you see on the first day when the general public can start buying the stock. If one is an employee, relative or friend of someone that is offered, "Friends and Family" shares they may be able to buy at the offering price. Pricing of IPO from Wikipedia states around the idea of pricing: A company planning an IPO typically appoints a lead manager, known as a bookrunner, to help it arrive at an appropriate price at which the shares should be issued. There are two primary ways in which the price of an IPO can be determined. Either the company, with the help of its lead managers, fixes a price ("fixed price method"), or the price can be determined through analysis of confidential investor demand data compiled by the bookrunner ("book building"). Historically, some IPOs both globally and in the United States have been underpriced. The effect of "initial underpricing" an IPO is to generate additional interest in the stock when it first becomes publicly traded. Flipping, or quickly selling shares for a profit, can lead to significant gains for investors who have been allocated shares of the IPO at the offering price. However, underpricing an IPO results in lost potential capital for the issuer. One extreme example is theglobe.com IPO which helped fuel the IPO "mania" of the late 90's internet era. Underwritten by Bear Stearns on November 13, 1998, the IPO was priced at $9 per share. The share price quickly increased 1000% after the opening of trading, to a high of $97. Selling pressure from institutional flipping eventually drove the stock back down, and it closed the day at $63. Although the company did raise about $30 million from the offering it is estimated that with the level of demand for the offering and the volume of trading that took place the company might have left upwards of $200 million on the table. The danger of overpricing is also an important consideration. If a stock is offered to the public at a higher price than the market will pay, the underwriters may have trouble meeting their commitments to sell shares. Even if they sell all of the issued shares, the stock may fall in value on the first day of trading. If so, the stock may lose its marketability and hence even more of its value. This could result in losses for investors, many of whom being the most favored clients of the underwriters. Perhaps the best known example of this is the Facebook IPO in 2012. Underwriters, therefore, take many factors into consideration when pricing an IPO, and attempt to reach an offering price that is low enough to stimulate interest in the stock, but high enough to raise an adequate amount of capital for the company. The process of determining an optimal price usually involves the underwriters ("syndicate") arranging share purchase commitments from leading institutional investors. Some researchers (e.g. Geoffrey C., and C. Swift, 2009) believe that the underpricing of IPOs is less a deliberate act on the part of issuers and/or underwriters, than the result of an over-reaction on the part of investors (Friesen & Swift, 2009). One potential method for determining underpricing is through the use of IPO Underpricing Algorithms. This may be useful for seeing the difference in that "theglobe.com" example where the offering price is $9/share yet the stock traded much higher than that initially. |
Do I have to pay a capital gains tax if I rebuy different stocks? | Yes. As long as the stock is in a taxable account (i.e. not a tax deferred retirement account) you'll pay gain on the profit regardless of subsequent purchases. If the sale is a loss, however, you'll risk delaying the claim for the loss if you repurchase identical shares within 30 days of that sale. This is called a wash sale. |
How do I explain why debt on debt is bad to my brother? | This is not the case with your brother only. There are many business which run on this premise. It goes till the time all the conditions are in control and get busted when things goes out of way. You have mentioned the loan amount and not the monthly repayment amount. Even if you say, a new loan will not solve his problem, what are the way out ? Telling things nicely sometime does not work especially when facts are otherwise. Hence you need to make a compete case study which should also consider his capacity to pay. As of now it seems he has debts of around 20 months of his earning, which can be considered high, depending upon the terms of major loan such as car loan and personal loan. A case study is way out. You can explain him with such case study that he should not go for further loans. |
Why would a tender offer be less than the market price? | Rational shareholders wouldn't accept such an offer. The company making the offer is simply trying to get a deal with questionable — though not illegal — tactics. Your answer is actually in the link you provided. Quoting from the fourth paragraph [emphasis is mine]: The SEC has cautioned investors about mini-tender offers, noting that "[s]ome bidders make mini-tender offers at below-market prices, hoping that they will catch investors off guard if the investors do not compare the offer price to the current market price." The SEC's tips for investors regarding mini-tender offers may be found on the SEC's Web site at http://www.sec.gov/investor/pubs/minitend.htm. There's a lot more information at the SEC web page mentioned. One part I'll highlight from the SEC web page mentions another reason for a mini-tender: Investors need to scrutinize mini-tender offers carefully. Some bidders make mini-tender offers at below-market prices, hoping that they will catch investors off guard if the investors do not compare the offer price to the current market price. Others make mini-tender offers at a premium – betting that the market price will rise before the offer closes and then extending the offer until it does or improperly canceling if it doesn't. You'll also find a lot more information at Wikipedia - Mini-tender offer. |
“No taxes to be paid with owning Berkshire” | It depends on your investment profile but basically, dividends increase your taxable income. Anyone making an income will effectively get 'lower returns' on their investments due to this effect. If you had the choice between identical shares that either give a dividend or don't, you'll find that stock that pays a dividend has a lower price, and increases in value more slowly than stock that doesn't. (all other things being equal) There's a whole bunch of economic theory behind this but in short, the current stock price is a measure of how much the company is worth combined with an estimation of how much it will be worth in the future (NPV of all future dividends is the basic model). When the company makes profit, it can keep those profits, and invest in new projects or distribute a portion of those profits to shareholders (aka dividends). Distributing the value to shareholders reduces the value of the company somewhat, but the shareholders get the money now. If the company doesn't give dividends, it has a higher value which will be reflected in a higher stock price. So basically, all other things being equal (which they rarely are, but I digress) the price and growth difference reflects the fact that dividends are paying out now. (In other words, if you wanted non-dividend shares you could get them by buying dividend shares and re-investing the dividend as new shares every time there was a payout, and you could get dividend-share like properties by selling a percentage of non-dividend shares periodically). Dividend income is taxable as part of your income right away, however taxes on capital gains only happen when you sell the asset in question, and also has a lower tax rate. If you buy and hold Berkshire Hatheway, you will not have to pay taxes on the gains you get until you decide to sell the shares, and even then the tax rate will be lower. If you are investing for retirement, this is great, since your income from other sources will be lower, so you can afford to be taxed then. In many jurisdictions, income from capital gains is subject to a different tax rate than the rest of your income, for example in the US for most people with money to invest it's either 15% or 20%, which will be lower than normal income tax would be (since most people with money to invest would be making enough to be in a higher bracket). Say, for example, your income now is within the 25% bracket. Any dividend you get will be taxed at that rate, so let's say that the dividend is about 2% and the growth of the stock is about 4%. So, your effective growth rate after taxation is 5.5% -- you lose 0.5% from the 25% tax on the dividend. If, instead, you had stock with the same growth but no dividend it would grow at a rate of 6%. If you never withdrew the money, after 20 years, $1 in the dividend stock would be worth ~$2.92 (1.055^20), whereas $1 in the non-dividend stock would be worth ~$3.21 (1.06^20). You're talking about a difference of 30 cents per dollar invested, which doesn't seem huge but multiply it by 100,000 and you've got yourself enough money to renovate your house purely out of money that would have gone to the government instead. The advantage here is if you are saving up for retirement, when you retire you won't have much income so the tax on the gains (even ignoring the capital gains effect above) will definitely be less then when you were working, however if you had a dividend stock you would have been paying taxes on the dividend, at a higher rate, throughout the lifetime of the investment. So, there you go, that's what Mohnish Pabrai is talking about. There are some caveats to this. If the amount you are investing isn't large, and you are in a lower tax bracket, and the stock pays out relatively low dividends you won't really feel the difference much, even though it's there. Also, dividend vs. no dividend is hardly the highest priority when deciding what company to invest in, and you'll practically never be able to find identical companies that differ only on dividend/no dividend, so if you find a great buy you may not have a choice in the matter. Also, there has been a trend in recent years to also make capital gains tax progressive, so people who have a higher income will also pay more in capital gains, which negates part of the benefit of non-dividend stocks (but doesn't change the growth rate effects before the sale). There are also some theoretical arguments that dividend-paying companies should have stronger shareholders (since the company has less capital, it has to 'play nice' to get money either from new shares or from banks, which leads to less risky behavior) but it's not so cut-and-dried in real life. |
What factors make someone buy or sell a stock? | Stock price is determined by the buyers and sellers, correct? Correct! "Everything is worth what its purchaser will pay for it"-Publius Syrus What causes people to buy or sell? Is it news? earnings? stock analysis and techniques? All of these things influence investors' perception of how much a stock is worth. If AMZN makes a lot of money one quarter, then the price might go up. But maybe public perception of AMZN changes because of a large scandal. This could cause the share price to decline even with the favorable earnings report. Why do these 'good' or 'bad' news make people want to buy/sell a stock? People invest to make money. If it looks like a company is going to take a turn for the worst, people will sell. If it looks like the company has a bright, cash-laden future in front of them, people will buy. News is one of the many factors people use to determine how well a company will do. Theoretically could a bunch of people short AMZN and drive down the price regardless of how well it is doing? Say investors wanted to boycott AMZN in order to drive down the cost and get some cheap shares. This is pretty silly, but say for the sake of the argument that everyone who owned AMZN decided to sell their shares and no other investor was willing to buy the shares for less than $0.01, then AMZN shares would be "worth" $0.01 in that aspect. That is extremely unlikely to happen, though, for two reasons: |
What assets would be valuable in a post-apocalyptic scenario? | Gold and silver are for after the crisis, not during. Gold and silver are far more likely to be able to be exchanged for things you need, since they are rare, easily divided, etc. Getting land away from where the crap is happening is also good, but it's more than that. Say you have land somewhere. How will the locals view you if you move there to hunker down only when things go bad? They won't really trust you, and you'll inherit a new set of problems. Building relationships in an off-the-beaten-path area requires a time investment. Investing in lifestyle in general is good. Lifestyle isn't just toys, but it's privacy, peace of mind, relationships with people with whom you can barter skills, as well as the skills you might think you'd need to do more than just get by in whatever scenario you envision. For the immediate crisis, you'd better have the things you'll need for a few months. Stores probably won't be supplied on any regular basis, and the shelves will be bare. Trying to use gold or silver during the crisis just makes you a target for theft. With regard to food, it's best to get acclimated to a diet of what you'd have on hand. If you get freeze-dried food, eat it now, so that it's not a shock to your system when you have to eat it. (Can you tell I've been thinking about this? :) ) |
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