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Trouble sticking to a budget when using credit cards for day to day transactions? | Discipline. If you have to have a hard limit on your account that prevents you from spending - credit cards are not for you. If you can discipline yourself not to make purchases in excess of your budget even if the plastic technically allows it - then you can go on using the credit card. Make sure to stay on top of your spendings by frequently checking your current activity on the card (on line, don't wait for statements), and making sure you're below the limit you have set for your budget. Mint.com visualizes your spendings and shows where you are with regards to your preset budgets on various types of spendings, you should consider using it as an aid. |
23 and on my own, what should I be doing? | Assuming the numbers in your comments are accurate, you have $2400/month "extra" after paying your expenses. I assume this includes loan payments. You said you have $3k in savings and a $2900 "monthly nut", so only one month of living expenses in savings. In my opinion, your first goal should be to put 100% of your extra money towards savings each month, until you have six months of living expenses saved. That's $2,900 * 6 or $17,400. Since you have $3K already that means you need $14,400 more, which is exactly six months @ $2,400/month. Next I would pay off your $4K for the bedroom furniture. I don't know the terms you got, but usually if you are not completely paid off when it comes time to pay interest, the rate is very high and you have to pay interest not just going forward, but from the inception of the loan (YMMV--check your loan terms). You may want to look into consolidating your high interest loans into a single loan at a lower rate. Barring that, I would put 100% of my extra monthly income toward your 10% loan until its paid off, and then your 9.25% loan until that's paid off. I would not consider investing in any non-tax-advantaged vehicle until those two loans (at minimum) were paid off. 9.25% is a very good guaranteed return on your money. After that I would continue the strategy of aggressively paying the maximum per month toward your highest interest loans until they are all paid off (with the possible exception of the very low rate Sallie Mae loans). However, I'm probably more conservative than your average investor, and I have a major aversion to paying interest. :) |
Withdrawing cash from investment: take money from underperforming fund? | Bob should treat both positions as incomplete, and explore a viewpoint which does a better job of separating value from volatility. So we should start by recognizing that what Bob is really doing is trading pieces of paper (say Stocks from Fund #1 or Bonds from Fund #2, to pick historically volatile and non-volatile instruments.*) for pieces of paper (Greenbacks). In the end, this is a trade, and should always be thought of as such. Does Bob value his stocks more than his bonds? Then he should probably draw from Fund #2. If he values his bonds more, he should probably draw from Fund #1. However, both Bob and his financial adviser demonstrate an assumption: that an instrument, whether stock bond or dollar bill, has some intrinsic value (which may raise over time). The issue is whether its perceived value is a good measure of its actual value or not. From this perspective, we can see the stock (Fund #1) as having an actual value that grows quickly (6.5% - 1.85% = 4.65%), and the bond (Fund #2) as having an actual value that grows slower (4.5% - 1.15$ = 3.35$). Now the perceived value of the stocks is highly volatile. The Chairman of the Fed sneezes and a high velocity trader drives a stock up or down at a rate that would give you whiplash. This perspective aligns with the broker's opinion. If the stocks are low, it means their perceived value is artificially low, and selling it would be a mistake because the market is perceiving those pieces of paper as being worth less than they actually are. In this case, Bob wins by keeping the stocks, and selling bonds, because the stocks are perceived as undervalued, and thus are worth keeping until perceptions change. On the other hand, consider the assumption we carefully slid into the argument without any fanfare: the assumption that the actual value of the stock aligns with its historical value. "Past performance does not predict future results." Its entirely possible that the actual value of the stocks is actually much lower than the historical value, and that it was the perceived value that was artificially higher. It may be continuing to do so... who knows how overvalued the perceived value actually was! In this case, Bob wins by keeping the bonds. In this case, the stocks may have "underperformed" to drive perceptions towards their actual value, and Bob has a great chance to get out from under this market. The reality is somewhere between them. The actual values are moving, and the perceived values are moving, and the world mixes them up enough to make Scratchers lottery tickets look like a decent investment instrument. So what can we do? Bob's broker has a smart idea, he's just not fully explaining it because it is unprofessional to do so. Historically speaking, Bobs who lost a bunch of money in the stock market are poor judges of where the stock market is going next (arguably, you should be talking to the Joes who made a bunch of money. They might have more of a clue.). Humans are emotional beings, and we have an emotional instinct to cut ties when things start to go south. The market preys on emotional thinkers, happily giving them what they want in exchange for taking some of their money. Bob's broker is quoting a well recognized phrase that is a polite way of saying "you are being emotional in your judgement, and here is a phrasing to suggest you should temper that judgement." Of course the broker may also not know what they're doing! (I've seen arguments that they don't!) Plenty of people listened to their brokers all the way to the great crash of 2008. Brokers are human too, they just put their emotions in different places. So now Bob has no clear voice to listen to. Sounds like a trap! However, there is a solution. Bob should think about more than just simple dollars. Bob should think about the rest of his life, and where he would like the risk to appear. If Bob draws from Fund #1 (liquidating stocks), then Bob has made a choice to realize any losses or gains early... specifically now. He may win, he may lose. However, no matter what, he will have a less volatile portfolio, and thus he can rely on it more in the long run. If Bob draws from Fund #2 (liquidating bonds) instead, then Bob has made a choice not to realize any losses or gains right away. He may win, he may lose. However, whether he wins or loses will not be clear, perhaps until retirement when he needs to draw on that money, and finds Fund #1 is still under-performing, so he has to work a few more years before retirement. There is a magical assumption that the stock market will always continue rewarding risk takers, but no one has quite been able to prove it! Once Bob includes his life perspective in the mix, and doesn't look just at the cold hard dollars on the table, Bob can make a more educated decision. Just to throw more options on the table, Bob might rationally choose to do any one of a number of other options which are not extremes, in order to find a happy medium that best fits Bob's life needs: * I intentionally chose to label Fund #1 as stocks and Fund #2 as bonds, even though this is a terribly crude assumption, because I feel those words have an emotional attachment associated to them which #1 and #2 simply do not. Given that part of the argument is that emotions play a part, it seemed reasonable to dig into underlying emotional biases as part of my wording. Feel free to replace words as you see fit to remove this bias if desired. |
Is this Employee Stock Purchase Plan worth it when adding my student loan into the equation? | The closer the contribution is to the December 31st date, the more profitable that specific contribution is, only taking into consideration the 5% discount. On your case, the first contribution that beats your student loans interest rate is the August one, where you get about 9% annual return, the remaining contributions go up from there. |
Is it possible for an individual to refuse a cheque in France? | In any country, individuals (and shops) can reject any form of payment that is not Legal Tender - defined by law as a payment form that must be accepted. Shops are typically more generous, because they want to do business with you, but individuals are in a different position. In France, only official coins and bills are declared as Legal Tender (so if they don't want to, individuals don't even need to accept bank transfers). This is for doubts you need to pay. In addition, as you are not forced to do business with them, people and shops can require whatever they feel like to require - if you want to buy their car, they can ask you to stand on your head and spit coins, and if you don't like it, they don't sell to you. (They won't do much business then, probably) |
Will the stock market continue to grow forever? | The answer to your question depends on what you mean when you say "growth". If you mean a literal increase in the aggregate market capitalization of companies, across the entire market, then, no, this sort of growth is not possible without concomitant economic growth. The reason why is that the market capitalization of each company is proportional to its gross revenue, and the sum of all revenue from selling "final goods" (i.e., things purchased and used by consumers) is, apart from a few technicalities, the definition of GDP. The exact multiplier might fluctuate up or down depending on investors' expectations about how sales will grow or decline going forward, but in a zero-growth economy this multiplier should be stable over the long run. It might, however, still fluctuate over the short term, but more about that in a minute. Note that all of this applies to aggregate growth across all firms. Individual firms can still grow, of course, but as they must do this by gaining market share from other companies such growth would be balanced by a decline for some other firm. Also, I've assumed zero net exports (that's one of the "technicalities" I mentioned above) because obviously you could have export-driven growth even if the domestic economy were stationary. However, often when people talk about "growth" in the market, what they really mean is "return". That is, how much does your investment earn for you. This isn't really the same thing as growth, but people often think of it that way, particularly in the saving phase of their investing career, when they are reinvesting their returns, and therefore their account balances are growing. It is possible to have a positive return, averaged across the market, even in a stationary economy. The reason why is that there are really only two things a firm can do with its net profits. One possibility is that it could invest it in growing the business. However, there is not much point in doing that in a stationary economy because by assumption no increase in aggregate consumption (and therefore, in the long run, aggregate production) are possible. Therefore, firms are left with only the second option, which is to pay them out to investors as dividends. Those dividends provide a return that is independent of economic growth. Would the stock market still be a good investment in such an economy? Yes. Well, sort of. The rate of return from firms' dividend payouts will depend on investors' demand (in aggregate) for returns on their investments. Stock prices will rise or fall, causing returns to respectively fall or rise, to find that level. If your personal desire for returns is lower than the average across the investing public, then the stock market would look like a good investment. If your desired return is higher than the average, then it will look like a poor investment. The marginal investor will, of course be indifferent. The practical upshot of this is that the people who invest in the stock market in this scenario will be precisely the ones for whom the stock market is a good investment, given their personal propensity to save and desire for returns, and so forth. Finally, you mentioned that in your scenario the GDP stagnation is due to declining population. I am less certain what this means for investment, but my first thought is that you would have a large retired population selling its investments to fund late-life consumption, and you would have a comparatively small (relative to history) working population buying those assets. This would lead to low asset prices, and therefore high rates of return. However, that's assuming that retirees need to sell assets to fund their retirement consumption. If the absolute returns on retirees' assets are large enough to fund their retirement consumption then you would wind up with relatively few sellers, resulting in high prices and therefore relatively low rates of return. It's not obvious to me which effect would dominate, and so it's hard to say whether or not the resulting returns would look attractive to the working-age population. |
Home Renovations are expensive.. Should I only pay cash for them? | I have a different take on this. If it would only take 3 months to save up to pay for it, line up the work now. Shop with your spouse to find the exact floor you want. By the time you hire the store to do the install, a month will have gone by, by the time the charge bill comes in, you'll be able to pay 2/3 off, and pay in full next month. Note: I see this was asked in December. For those carrying no debt at all, I'm not adverse to a purchase of this type getting partially floated on a credit card for a month or two. Not a pair of shoes, or golf clubs, but a kitchen floor? The $10 interest is worth it to not walk over a ripped up floor in your home. |
Books, Videos, Tutorials to learn about different investment options in the financial domain | Just by chance I recently encountered this link - Do It Yourself MFE, which describes an attempt to self-educate to the level of Master of Financial Engineering. It lists books, online courses, etc. which I think may be interesting for you too. |
Account that is debited and account that is credited | The terms debit and credit come from double-entry book-keeping. In this system, every transaction is applied against two accounts: it debits one and credits the other by equal amounts. (Or more technically, it affects two or more accounts, and the total of the credits equals the total of the debits.) Whether a debit or a credit adds or subtracts from the balance depends on the type of account. The types of accounts were defined so that it is always possible to have these matching debits and credits. Assets, like cash or property that you own, are "debit accounts", that is, a debit is an increase in the balance of the account. Liabilities, like money you owe, are "credit accounts", that is, a credit is an increase. To get into all the details would require giving a tutorial on double-entry book-keeping, which I think is beyond the scope of a forum post. By a quick Bing search I find this one: http://simplestudies.com/double-entry-accounting-system.html. I haven't gone through it so I can't say if it's a particularly good tutorial. There are plenty of others on the Web and in bookstores. Note that the terminology can be backwards when someone you're doing business with is describing the account, because their viewpoint may be the opposite of yours. For example, to me, my credit card is a liability: I owe the bank money. So when I post a charge, that's a credit, and when I pay it off, that's a debit. But to the bank, my account is an asset: the customer (me) owes them money. So to the bank, a charge is a debit and a payment is a credit. |
How credible is Stansberry's video “End of America”? | I know nothing about the guy, but I think the "premium" products (Penny stock recommendations, a newsletter devoted to earning 12% per year, every year, etc) sold by his firm speak for themselves. |
question about short selling stocks | My take on this is that with any short-selling contract you are engaging in, at a specified time in the future you will need to transfer ownership of the item(s) you sold to the buyer. Whether you own the item(s) or in your case you will buy your friend's used car in the meantime (or dig enough gold out of the ground - in the case of hedging a commodity exposure) is a matter of "trust". Hence there is normally some form of margin or credit-line involved to cover for you failing to deliver on expiry. |
Can paying down a mortgage be considered an “investment”? | It very much comes down to question of semantics and your particular situation. Some people do not view a house (and most upgrades) as an investment, but rather an expense. I certainly agree that this is probably the case if you pay someone else to make the repairs and upgrades. However, if you are a serious DIYer, that may not be the case. Of course, if the house is a money pit and/or you were unfortunate to buy when prices where ridiculously high, you'll have a hard time making any money on this "investment." To continue this game of semantics, you may also consider the value you extract from your home while you are living in it. On to the mortgage itself. Chances are that it is a long term, relatively low rate loan and that the interest is deductible. So, there are some disadvantages to paying it down early, even without early payment penalties. Paying down early on the principal is a disadvantage from a tax perspective. How much of a disadvantage hinges on the rate. Now, a debt is a liability on your personal balance sheet. It drags down any returns you may have from investing. However, a home lone is not generally subject to the cardinal rule of paying off your high interest debt before investing. It should not be relatively high and it pays for something necessary. It may be that any credit card debt you have may have paid for something considered necessary. However, with the relatively high interest rates, you have to question just how necessary any credit card debt really is. Not to mention that there is no tax advantage. So, it comes down to the fact that a home loan should be relatively low interest, paying for something you must have and that you hopefully have some tax advantage from the interest you pay on it. |
How exactly does dealing in stock make me money? | This is a very good question! The biggest difference is that when you put money in a savings bank you are a lender that is protected by the government, and when you buy stocks you become an owner. As a lender, whether the bank makes or loses money on the loans it makes, they still maintain your balance and pay you interest, and your principal balance is guaranteed by the government (in the USA). The bank is the party that is primarily at risk if their business does not perform well. As an owner, you participate fully in the company's gains and losses, but you also put your money at risk, since if the company loses money, you do too. Because of this, many people prefer to buy funds made up of many stocks, so they are not at risk of one company performing very poorly or going bankrupt. When you buy stock you become a part owner and share in the profitability of the company, often through a dividend. You should also be aware that stocks often have years where they do very poorly as well as years when they do very well. However, over a long period of time (10 years or more), they have historically done better in outpacing inflation than any other type of investment. For this reason, I would recommend that you only invest in the stock market if you expect to be able to leave the money there for 10 years or more, ideally, and for 5 years at the very least. Otherwise, you may need to take the money out at a bad time. I would also recommend that you only invest in stocks if you already have an emergency fund, and don't have consumer debt. There isn't much point in putting your money at risk to get a return if you can get a risk-free return by paying off debt, or if you would have to pull your money back out if your car broke down or you lost your job. |
Schwab wants to charge me interest on the money I received for selling TSLA short | I agree with Mark. I was quite confuse about the short position at first but then I did a lot of learning and found out that as long as you have enough cash to cover your margin requirement you do not pay any interest since you do not have a debit on your margin balance. This is not true for a long position though, supposed you have 5k cash and 5k margin balance, if you buy 10K worth of stocks then you will need to pay interest on the 5k of the margin balance since it is a debit. Since shorting is done at a credit basis, you actually get interest from the transaction but you still may need to pay the borrowing fees for the stocks so they could simply balance each other out. I have shorted stocks twice through two different companies and neither time I noticed any interest charges. But make sure you have enough cash to cover your margin requirement, because once your margin balance is used to covered your position then interest would accrual. Learn. |
How can online trading platforms be trustworthly? | Most investors vote with their wallets. I expect ZERO glitches from a trading platform. If someone was actually causing trades to fail maliciously, their reputation would immediately suffer and their business would dry up over night. You can't just play dumb and not respond to a button click. I can watch and replay the traffic I'm sending out to their server and see if they are responding to verify this. If their system goes down and has no redundancy, that is their fault and opens them to lawsuits. No trading platform could withstand scrutiny from its users if it was dishonest in the scenario you imagine. |
How do I figure out if I will owe taxes | If you want to predict the, the easiest solution is to get hold of a copy of last year's tax forms and fill them in with estimated numbers. Odds are that none of the more complicated deductions will apply to you this first time around, so I'd suggest just using the federal 1040EZ, and your state's equivalent, for this purpose. If it turns out that you can claim anything more than the standard deduction, that would reduce your taxes, so this is leaning toward the safe side. |
If earning as freelancer, is it better to be a Sole Trader or Limited Company? | As I understand it (please correct me if i'm wrong, i've looked at this before and i've been a sole trader briefly but I've never formed a LTD company) there are pros and cons to forming a limited company. Pros Cons |
Hedging against Exchange Rate Risk | You can calculate your exposure intuitively, by calculating your 'fx sensitivity'. Take your total USD assets, let's assume $50k. Convert to EUR at the current rate, let's assume 1 EUR : 1.1 USD, resulting in 45.5k EUR . If the USD strengthens by 1%, this moves to a rate of ~1.09, resulting in 46k EUR value for the same 50k of USD investments. From this you can see that for every 1% the USD strengthens, you gain 500 EUR. For every 1% the USD weakens, you lose 500 EUR. The simplest way to reduce your exchange rate risk exposure, is to simply eliminate your foreign currency investments. ie: if you do not want to be exposed to fluctuations in the USD, invest in EUR only. This will align your assets with the currency of your future expenses [assuming you intend to continue living in Europe].This is not possible of course, if you would like to maintain investments in US assets. One relatively simple method available to invest in the US, without gaining an exposure to the USD, is to invest in USD assets only with money borrowed in USD. ie: if you borrow $50k USD, and invest $50k in the US stock market, then your new investments will be in the same currency as your debt. Therefore if the USD strengthens, your assets increase in relative EUR value, and your debt becomes more expensive. These two impacts wash out, leaving you with no net exposure to the value of the USD. There is a risk to this option - you are investing with a higher 'financial leverage' ratio. Using borrowed money to invest increases your risk; if your investments fall in value, you still need to make the periodic interest payments. Many people view this increased risk as a reason to never invest with borrowed money. You are compensated for that risk, by increased returns [because you have the ability to earn investment income without contributing any additional money of your own]. Whether the risk is worth it to you will depend on many factors - you should search this site and others on the topic to learn more about what those risks mean. |
If a stock has only buyers and no sellers how does its price go up? | Depending on what currency the price is quoted in and is originally sold, currency fluctuation can also carry over onto the price in your currency. An example for that would be bitcoin prices which sometimes show heavy ups and downs in one currency, but seem totally stable in another and can be tracked back to changed exchange rates between currencies. Also like others have said, prices on stocks are not actually fixed. You can offer to buy or sell at any price. Only if 2 people want to buy or sell for the same price there will actually be a transaction. |
What exactly is the interest rate that the Fed is going to adjust? | The Fed rate is so important because it sets a cost on lending institutions (banks, credit unions). It is the rate of interest that a bank gets by loaning its cash overnight to the Fed. Presumably, the Fed then loans the cash to other institutions around the world. The banks loan money to individuals at a higher rate. Savers get a rate between what the Fed gives and what the bank gets. When times are tough the Fed will lower their rate to try to increase the lending that banks do. This is called Qualitive Easing. The overnight rate is very low right now. That means that the Fed cannot lower rates to try to stimulate the economy. So to enable the Fed to do its voodoo they have to raise rates so that later they can lower them if needed. |
What is the opposite of a hedge? | I'd say the opposite of hedging is speculating. If you are convinced an asset will appreciate in value, or rather the probability of gains is enough to induce you to hold the asset, you are a speculator. There are lots of ways of speculating, including holding risky assets without hedging that risk and possibly magnifying that risk and return via leverage or the embedded leverage in a derivative contract. Generally speaking, if in expectation you are paying to reduce your risk, you are a hedger. If you are (in expectation) being paid to bear the risk that otherwise someone else would bear, you are a speculator. The word speculation has been tainted by politicians and others trying to vilify the practice, but at the end of the day it's what we are all doing when we buy stock or any other risky asset. |
Using pivot points to trade in the short term | What are Pivot Points? Pivot Points indicate price levels that are of significance in technical analysis of securities. Pivot Points are used to provide clarity for a trader as they are a predictive indicator of where a security might go. There are at least 6 different types of Pivot Points (Woodie Pivot Point, Fibonacci Pivot, Demark etc..) and they are different based on their formulas but generally serve the same concept. I will be answering your question using the Camarilla Pivot Point formula. Camarilla Pivot Point Formula Generally any Pivot Point formula uses a combination of the Open, High, Low and Close of the previous timeframe. Since you are technically a swing trader indicated by say between a couple of days to a couple of weeks, as I don't want to do day trading you should use a weekly 5 to 30 minute chart but you can also use a daily chart as well. So for example if you use a daily chart, you would use the Open, High, Low and Close of the previous day. Example of fictitious stock: MOSEX (Money Stack Exchange) 01/14/16: Open: 10.25, High: 12.55, Low: 9.65, Close: 11.50 On 01/15/16: R4 Level: 13.10, R3 Level: 12.30, R2 Level: 12.03, R1 Level: 11.77, Pivot Point: 11.23, S1 Level: 11.23, S2 Level: 10.97, S3 Level: 10.70, S4 Level: 9.91 R = Resistance, S = Support How to identify these Pivot Points? Most charting software already have built in overlays that will identify the pivot points for you but you can always find and draw them yourself with an annotation tool. Since we are using the Camarilla Pivot Point formula, the important Pivot Point levels are the R4 which is considered as the Breakout Pivot, the S4 which is considered as the Breakdown Pivot. R3 and S3 are Reversal Pivot Points. Once identify the Pivot Points how should you proceed in a trade? This is the million dollar question and without spoon feeding you requires you to come up with your own strategy. To distinguish yourself from being a novice and pro trader is to have a strategy in a trade. Now I don't really have the time to look for actual charts to provide examples with but generally this is what you should look for to proceed in a trade: Potential Buy/Short Signals: Potential Sell Signals: If a stock moves above the R3 Level but then crosses below it, this would be a sell signal. This is confirmed when their is a lower lower then the candle that first crosses below it. Sell a stock when S4 Level is confirmed. See above for the confirmation. Other Useful Tips: Use the Pivot Point as your support or resistance. The Pivot Point levels can be used for your stop loss. For example, with an S3 reversal buy signal, the S4 should be used as a stop loss. Conversely, the Pivot Point levels can also be used for your target prices. For example, with an S3 reversal buy signal, you should take some profits at R3 level. You should also use a combination of other indicators to give you more information to confirm if a signal is correct. Examples of a good combination is the RSI, MACD and Moving Averages. Read that book in my comment above!! |
Does inflation equal more loans? | In terms of operations, banks are indifferent to inflation. Short rates except right before a recession or near-recession are always lower than long rates, regardless of inflation level, assuming no quotas or price controls. Banks produce credit by borrowing short to lend long, so as long as short rates are lower than long rates, they can be expected to produce loans, again assuming no quotas or price controls. In short, from the banks' perspective, inflation does not affect their desire to produce credit. |
Retirement & asset allocation of $30K for 30 year old single guy | IMHO bonds are not a good investment at this present time, nor generally. Appreciate for a moment that the yield of an investment is DIRECTLY related to the face/trading value. If a thing (bond/stock) trades for $100 and yields 3%, it pays $3. In the case of a bond, the bond doesn't pay a % amount, it pays a $ amount. Meaning it pays $3. SO, for the yield to rise, what has to happen to the trading price? It has to decrease. As of 2013/14 bonds are trading at historically LOW yields. The logical implication of this is if a bond pays a fixed $ amount, the trading price of the bond has to have increased. So if you buy bonds now, you will see a decrease in its face value over the long term. You may find the first tool I built at Simple Stock Search useful as you research potential investments. |
Should I re-allocate my portfolio now or let it balance out over time? | Personally I'm not a huge fan of rebalancing within an asset class. I would vote for leaving the HD shares alone and buying other assets until you get to the portfolio you want. Frequent buying and selling incurs costs and possible tax consequences that can really hurt your returns. |
Is it a good practice to keep salary account and savings account separate? | My wife and I do this. We have one account for income and one for expenditures (and around 7 others for dedicated savings.) Doing this we are forcing ourselves to keep track of all expenditures as we have to manually transfer funds from one to the other, we try to do this periodically (every Wednesday) and then keep the expenditures within what is actually on the account. It is a really good way to keep track of everything. Bear in mind that our bank provides a fast handy smartphone app where we both can check our account as well as transfer funds in less than 10 seconds. (Fingerprint authentication, instant funds transfer as well as zero fees for transfers.) Right now we have a credit card each attached to the expenditures account, but earlier we only had a debit card each and no credit cards. Meaning that when the weekly funds ran out we where simply not able to pay. We did this to mimic living only on cash and when the cash runs out you simply have to stop buying stuff. And at the same time we could accrue quite a bit of savings. I would definitely recommend this if you have problems with over expenditures. |
Debit cards as bad as credit cards? | If your goal is to make it harder for you to use to make impulse purchases then YES. Having to always have cash for purchases will make you less likely to make impulse purchases you don't really need. |
What is a Discount Called in the Context of a Negative Interest Rate? | Even though the article doesn't actually use the word "discount", I think the corresponding word you are looking for is "premium". The words are used quite frequently even outside of the context of negative rates. In general, bonds are issued with coupons close to the prevailing level of interest rates, i.e. their price is close to par (100 dollar price). Suppose yields go up the next day, then the price moves inversely to yields, and that bond will now trade at a "discount to par" (less than 100 dollar price). And vice versa, if yields went down, prices go up, and the bond is now at a "premium to par" (greater than 100 dollar price) |
In the stock market, why is the “open” price value never the same as previous day's “close”? | Prices reflect all available information. (Efficient markets hypothesis) A lot can happen between the time a stock closes on one day and opens on another. Particularly in a heavily traded stock such as IBM. Basically, you have a different "information set" the following day, which implies a different price. The instances where you are most likely to have a stock where the price opens at the same price is at the previous close is a thinly traded stock on which you have little information, meaning that the "information set" changes less from day to day. |
Capital gains tax: Retirement vehicle (IRA, 401k) vs. anything else? | First of all, there are some differences between the retirement accounts that you mentioned regarding taxes. Traditional IRA and 401(k) accounts allow you to make pre-tax contributions, giving you an immediate tax deduction when you contribute. Roth IRA, Roth 401(k) are funded with after tax money, and a non-retirement account is, of course, also funded with after tax money. So if you are looking for the immediate tax deduction, this is a point in favor of the retirement accounts. Roth IRA & Roth 401(k) accounts allow the investment to grow tax-free, which means that the growth is not taxed, even when taking the investment out at retirement. With Traditional IRA and 401(k) accounts, you need to pay tax on the gains realized in the account when you withdraw the money, just as you do with a non-retirement account. This is a point in favor of the Roth retirement accounts. To answer your question about capital gains, yes, it is true that you do not have a capital gain until an investment is sold. So, discounting the contribution tax deductions of the retirement accounts, if you only bought individual stocks that never paid a dividend, and never sold them until retirement, you are correct that it really wouldn't matter if you had it in a regular brokerage account or in a traditional IRA. However, even people dedicated to buy-and-hold rarely actually buy only individual stocks and hold them for 30 years. There are several different circumstances that will generally happen in the time between now and when you want to withdraw the money in retirement that would be taxable events if you are not in a retirement account: If you sell an investment and buy a different one, the gains would be taxable. If you want to rebalance your holdings, this also involves selling a portion of your investments. For example, if you want to maintain an 80% stock/20% bond ratio, and your stock values have gone up to 90%, you might want to sell some stock and buy bonds. Or if you are getting closer to retirement, you might decide to go with a higher percentage of bonds. This would trigger capital gains. Inside a mutual fund, anytime the management sells investments inside the fund and realizes capital gains, these gains are passed on to the investors, and are taxable. (This happens more often with managed funds than index funds, but still happens occasionally with index funds.) Dividends earned by the investments are taxable. Any of these events in a non-retirement account would trigger taxes that need to be paid immediately, even if you don't withdraw a cent from your account. |
Money transfer to the U.K | I'd recommend an online FX broker like XE Trade at xe.com. There are no fees charged by XE other than the spread on the FX conversion itself (which you'll pay anywhere). They have payment clearing facilities in several countries (including UK BACS) so provided you're dealing with a major currency it should be possible to transfer money "free" (of wire charges at least). The FX spread will be much better than you would get from a bank (since FX is their primary business). The additional risk you take on is settlement risk. XE will not pay the sterling amount to your UK bank account until they have received the Euro payment into their account. If XE went bankrupt before crediting your UK account, but after you've paid them your Euros - you could lose your money. XE is backed by Custom House, which is a large and established Canadian firm - so this risk is very small indeed. There are other choices out there too, UKForex is another that comes to mind - although XE's rates have been the best of those I've tried. |
What is the lifespan of a series of currency? | US currency doesn't expire, it is always legal tender. I can see some trouble if you tried to spend a $10,000 bill (you'd be foolish to do so, since they are worth considerably more). Maybe some stores raise eyebrows at old-style $100's (many stores don't take $100 bills at all), but you could swap them for new style at a bank if having trouble with a particular store. Old-series currency can be an issue when trying to exchange US bills in other countries, just because it doesn't expire here, doesn't mean you can't run into issues elsewhere. Other countries have different policies, for example, over the last year the UK phased in a new five pound note, and as of last month (5/5/2017) the old fiver is no longer considered legal tender (can still swap out old fivers at the bank for now at least). Edit: I mistook which currency you took where, and focused on US currency instead of Canadian, but it looks like it's the same story there. |
Why do people always talk about stocks that pay high dividends? | Dividends indicate that a business is making more profit than it can effectively invest into expansion or needs to regulate cash-flow. This generally indicates that the business is well established and has stabilized in a dominant market position. This can be contrasted against businesses that: Dividends are also given preferential tax treatment. Specifically, if I buy a stock and sell it 30 days later, I will be taxed on the capital gains at the regular income rate (typically 25-33%), but the dividends would be taxed at the lower long-term capital gains rate (typically 15%). |
What options do I have at 26 years old, with 1.2 million USD? | Windfalls can disappear in a heartbeat if you're not used to managing large amounts of money. That said, if you can read a bank statement and can exercise a modicum of self control over spending, you do not need a money manager. (See: Leonard Cohen) First, spend $15 on J.L. Collins' book The Simple Path to Wealth. https://www.goodreads.com/book/show/30646587-the-simple-path-to-wealth. Plan to spend about 4% of your wealth annually (4% of $1.2 million = $48,000) Bottom line: ALWAYS live within your means. Own your own home free and clear. Don't buy an annuity unless you have absolutely no self control. If it feels like you're spending money too fast, you almost certainly are. |
What is the smartest thing to do in case of a stock market crash | If you know the market will crash, you could opt for going short. However, if you think this is too risky, not investing at all is probably your best move. In case of crises, correlation go up and almost all assets go down. |
mortgage vs car loan vs invest extra cash? | Without knowing actual numbers it's tough to say. Personally, I would pay off the car then, going forward, use the money that would have been paid on your car note toward your mortgage. I always think of things in the worst possible scenario. It's easier, and faster, to repossess a car than to foreclose on real estate. Also, in an emergency situation, depleting your fund for your car loan and your mortgage would be significantly more detrimental than only paying a mortgage with a car owned outright. Fewer obligations means fewer things to draw down your funds in an emergency. Whether the tax deductability of the mortgage interest outweighs the lower rate on your car loan will depend on a lot of factors that haven't been shared. I think it's safe to assume with only 1% of separation the real difference isn't significant. I think when determining which credit cards to pay off, choosing the one with the highest rate is smart. But that's not the situation you're in. If you don't have foreclosure concerns I'd still pay off the car then start investing. |
Should I sell my stocks when the stock hits a 52-week high in order to “Buy Low, Sell High”? | As per the chart pattern when ever a stock breaks its 52 week high. This information may differ for penny stocks,small caps and mid cap stocks |
Might it make sense not to look into debt that is in collections? | It's your business to pay what you owe but it's not your business to determine what you owe. The "Fair Debt Collections Practices act" FDCPA proscribes certain steps creditors must go through to contact you. You appear to not have received any active contact or demand, but you can still cite the FDCPA to make it their problem. Write to the creditor's address (I assume its the hospital, the OP isn't clear), use USPS Certified Mail Return Receipt Requested, asking them to validate that you owe this debt by mail in 5 days, as is your right under the FDCPA. If they get back to you and you agree (or its reasonably plausible) you do owe it, pay it especially if it's on the order of $100. At least you will know it is settled at the source. Cross reference to your insurance claims to be sure its not double billed or a miscredited copay, but you may see many legit separate charges from one ER visit (hospital, doctor, anesthesiologist, etc) and it would not be the first time a medical billing system crapped the bed. If you don't hear anything after a few weeks, use the credit report protest process (or write to them, cc: the Federal Trade Commission) contesting the validity of this report. The creditor did not respond to your FDCPA request for validation (copy of the Return Receipt); and you otherwise believe you are current with the hospital. Per the Fair Credit Reporting act, they must investigate. Fight bureaucratic fire with fire: conduct all business by mail, and make liberal use of certified mail return receipts. Its a $6 way to telegraph you know that they have specific federal law timeliness requirements; and you have a federal timestamp signed by someone in their organization. |
How can I compare the risk of different investing opportunities? | Let us consider the risks in the investment opportunities: Now, what are the returns in each of the investment: What are the alternatives to these investments, then? |
Pros/Cons of Buying Discounted Company Stock | The major pros tend to be: The major cons tend to be: Being in California, you've got state income tax to worry about as well. It might be worth using some of that extra cash to hire someone who knows what they're doing to handle your taxes the first year, at least. I've always maxed mine out, because it's always seemed like a solid way to make a few extra dollars. If you can live without the money in your regular paycheck, it's always seemed that the rewards outweighed the risks. I've also always immediately sold the stock, since I usually feel like being employed at the company is enough "eggs in that basket" without holding investments in the same company. (NB: I've participated in several of these ESPP programs at large international US-based software companies, so this is from my personal experience. You should carefully review the terms of your ESPP before signing up, and I'm a software engineer and not a financial advisor.) |
I am turning 18 and I am a Student, I need strategies on building great credit soon. Where should I start? | The details of credit score calculation tend to change periodically, but the fundamentals are mostly consistent. Pay your bills, keep your average account age high, overpay your credit card minimums, and keep your overall debt low. And do soft pulls on your credit report to see what's happening. First, the simplest route: pay all your bills early or on time. Automatic deduction may be useful in this regard, especially for bills with predictable amounts. A corollary to this tip is to never leave an unpaid bill. What often happens to young people is in the course of moving around they leave the final bill unpaid and it gets reported to collections. Make sure you follow up online with all bills, even after canceling the service. Second, average account age and oldest account age matter. Open an account like a credit card and never close it, so you'll have an older account (hopefully a zero-fee card). Try to keep other accounts open rather than closing them (no need to cancel a zero-fee credit card) so your average account age stays higher. A card that works on internal systems (like a gift card) is not going to show up on a credit report; a card that works like any VISA/MC is likely going to show up. The rule of thumb is if they need your SSN to run a credit check for the application, then the card will appear on a credit report. You can pull your credit report to find out if the card is listed (you may have to allow time for lag before the card appears, but I'm not sure how long that might be). Third, a tip for extra credit score is to pay more than the minimum required on credit card bills. You can achieve this by either using your credit card at least once a month or by leaving a small hanging balance each month so there's always something to overpay next month. Credit card reporting will be either: unpaid, underpaid, minimum paid, or overpaid. Minimum payment helps your score and overpayment helps more. If you can use your credit card every month, that will give you something to overpay every month. Otherwise, you can leave a small debt left on the card but still pay over the monthly minimum. However, your total debt load, especially debt carried on your cards, counts against your score; aim for less than 10% of your limit. Finally, of course, is to pull your credit report periodically. You need to know what others are seeing. Since debt load utilization matters, make sure the reported card maximum is correct on your credit report. Talk to your bank or account issuer if the limit is wrong. If a collection appears, then you need to handle it. Often you can negotiate with the collector, but be careful to negotiate how they will report the resolution. You want them to agree to remove any negative information (either in exchange for payment or because of a mistake). Failing that, you want them to mark it paid in full or satisfied in full; letting them notate your score that you only partially paid is what you want to avoid, since it most signals someone with cash flow problems and credit issues. They control their reporting to credit bureaus, so if the person on the phone demurs, ask to speak to their supervisor or someone with negotiating authority. Try to get any agreements in writing. Remember that your total debt load is a factor in your credit score. Home loans and student loans do affect credit score. If you take on a smaller home loan, then it will affect your credit less harshly (and leave you with smaller monthly payments). |
May 6, 2010 stock market decline/plunge: Why did it drop 9% in a few minutes? | Part of it was an Oops, but not all of it. There were reports that the sudden drop was caused by a trader who mistyped an order to sell a large block of stock. The drop in that stock's price was enough to trigger "sell" orders across the market. Source: http://www.msnbc.msn.com/id/36983596/ns/business-stocks_and_economy/ |
What happens if someone destroy money? | Depending on the country, nothing. For example, the US has about $1.3 trillion dollars of cash in circulation. Which means that if you were to burn a million dollars of it, that would be 0.000077% of the circulating cash. But cash is a small portion of the actual money in the US. Only about 8% of all money is in cash, the rest is in other forms of value, which means that you'd only be destroying 0.0000062% of the US's money if you burned a full $1,000,000. |
Do rental car agencies sell their cars at a time when it is risky for the purchaser? | Every car model/type has a know interval when things need maintenance or replacement. This info comes mainly from the manufacturer and the rental companies use these info to determine how long and at what rate a car should be rented (I mean in total, not rented to an individual) This is easiest calculated with a long term rental (3, or 4 years time. Leasing business) But is also used for short term rental. There is a point in time were a car gets to have more maintenance and replacements then before. The rental company will always try to sell the car just before big replacements or maintenance are necessary. Of course your local mechanic can also now when those big 'events' need to take place. So he can know what to expect the next kms. I'm talking about foreseen replacements and maintenance (like every x km replace drive belt, replace oil ... I'm not referring to the exceptionals. These latter are the risk the rental companies take during the rental period. |
Confirming that stocks are listed under my name | Street name is not what you think it is in the question. The broker is the owner in street name. There is no external secondary owner information. I don't know if there is available independent verification, but if the broker is in the US and they go out of business suddenly, you can make a claim to the SIPC. |
What is a typical investment portfolio made up of? | Paying off the high-interest debt is a good first start. Paying interest, or compound interest on debt is like paying somebody to make you poor. As for your 401k, you want to contribute enough to get the full match from your employer. You might also consider checking out the fees associated with your 401k with an online fee analyzer. If it turns out you're getting reamed with fees, you can reduce them by fiddling with your investments. Checking your investment options is always a good idea since jobs frequently change them. Opening an IRA is a good call. If you're eligible for both Roth and Traditional IRAs, consider the following: Most financial institutions (brokers or banks) can help you open an IRA in a matter of minutes. If you shop around, you will find very cheap or even no fee options. Many brokers might try to get your business by giving away something for ‘free.' Just make sure you read the fine print so you understand the conditions of their promotional offer. Whichever IRA you choose, you want to make sure that it's managed properly. Some people might say, ‘go for it, do it yourself’ but I strongly disagree with that approach. Stock picking is a waste of time and market timing rarely works. I'd look into flat fee financial advisors. You have lots of options. Just make sure they hear you out, and can design/execute an investment plan specific to your needs At a minimum, they should: Hope this is helpful. |
Why would you ever turn down a raise in salary? | My answer has nothing to do with tax brackets or mathematics (I'm taking advantage of the leeway your question allowed), but rather it has to do with career goals and promotion. Large companies often have large "Policies & Procedures" booklets to go with them. One policy that sometimes exists which would make it a bad idea to accept a raise is: Employee cannot be given more than one salary increase in a 12-month period This means that if you accept a standard-of-living or merit increase of say, 2% or 3% in April, and then you apply for a job that would otherwise warrant a pay grade increase, you may be forced to wait until the following year to get bumped to the proper pay grade. Of course, this totally depends on the company, but it would be advisable to check your company's H.R. policy on that, if you're considering a move (even a lateral one) in the future. |
Tenant wants to pay rent with EFT | It's safe. You give people those numbers every time you write a check. If a check is forged, and doesn't have your signature on it, the bank has to return the money to you; they get it back from the other bank, who takes whatever action it deems necessary against the forger. They've been doing this for a few hundred years, remember. |
Do companies only pay dividends if they are in profit? | Yes the company can still pay dividends even if they aren't making a profit. 1) If the firm has been around, it might have made profits in the past years, which it might be still carrying (check for retained earnings in the financial statements). 2) Some firms in the past have had taken up debt to return the money to shareholders as dividends. 3) It might sell a part of it's assets and return the gain as dividends. 4) They might be bought by some other firm, which returns cash to shareholders to keep them happy. It pays to keep an eye on the financial statements of the company to check how much liquid money they might be carrying around to pay shareholders as dividends. They can stop paying dividends whenever they want. Apple didn't pay a dividend while Steve Jobs was around, even though they were making billions in profits. Many companies don't pay dividends because they find it more beneficial to continue investing in their business rather than returning money to shareholders. |
How to properly collect money from corporate sponsors? | http://www.legalzoom.com/business-management/starting-your-business/turn-your-calling Answering this, but I expect an expert to give an answer with some insight too There are many more steps, but not having done them personally I suggest you read the legalzoom.com site. |
Should you keep your stocks if you are too late to sell? | If the stock starts to go down DO NOT SELL!! My reasoning for this is because, when you talk about the stock market, you haven't actually lost any money until you sell the stock. So if you sell it lower than you bought it, you loose money. BUT if you wait for the stock to go back up again, you will have made money. |
Do I pay a zero % loan before another to clear both loans faster? | Wow, you guys get really cheap finance. here a mortage is 5.5 - 9% and car loans about 15 - 20%. Anyway back to the question. The rule is reduce the largest interest rate first ("the most expensive money"). For 0% loans, you should try to never pay it off, it's literally "free money" so just pay only the absolute minimum on 0% loans. Pass it to your estate, and try to get your kids to do the same. In fact if you have 11,000 and a $20,000 @ 0% loan and you have the option, you're better to put the 11,000 into a safe investment system that returns > 0% and just use the interest to pay off the $20k. The method of paying off the numerically smallest debt first, called "snowballing", is generally aimed at the general public, and for when you can't make much progress wekk to week. Thus it is best to get the lowest hanging fruit that shows progress, than to try and have years worth of hard discipline just to make a tiny progress. It's called snowballing, because after paying off that first debt, you keep your lifestyle the same and put the freed up money on as extra payments to the next target. Generally this is only worth while if (1) you have poor discipline, (2) the interest gap isn't too disparate (eg 5% and 25%, it is far better to pay off the 25%, (3) you don't go out and immediately renew the lower debt. Also as mentioned, snowballing is aimed at small regular payments. You can do it with a lump sum, but honestly for a lump sum you can get better return taking it off the most expensive interest rate first (as the discipline issue doesn't apply). Another consideration is put it off the most renewable finance. Paying off your car... so your car's paid off. If you have an emergency, redrawing on that asset means a new loan. But if you put it off the house (conditional on interest rates not being to dissimilar) it means you can often redraw some or all of the money if you have an emergency. This can often be better than paying down the car, and then having to pay application fees to get a new unsecured loan. Many modern banks actually use "mortgage offsetting" which allows them to do this - you can keep your lump sum in a standard (or even fixed term) and the value of it is deducted "as if" you'd paid it off your mortgage. So you get the benefit without the commitment. The bank is contracted for the length of the mortgage to a third party financier, so they really don't want you to change your end of the arrangement. And there is the hope you might spend it to ;) giving them a few more dollars. But this can be very helpful arragement, especially if you're financing stuff, because it keeps the mortgage costs down, but makes you look liquid for your investment borrowing. |
Tools for comparing costs between different healthcare providers? | There really isn't any good ways that I'm aware of. (The exception is in New York or California, where hospitals must post prices.) The law sets price floors on many procedures by setting Medicare and Medicaid reimbursement rates. As a result, the "list price" for a given procedure is dramatically inflated, and various health insurers negotiate rates somewhere in the middle. I'd recommend talking to the business offices or financial counselors at medical groups that you do business with. Ask about "self pay discounts" or other programs appropriate for folks in your position. |
Pay team mates out of revenues on my name | Note: This is not professional tax advice. If you think you need professional tax advice, find a licensed professional in your local area. What are the expected earnings/year? US$100? US$1,000? US$100,000? I would say if this is for US$1,000 or less that registering an EIN, and consulting a CPA to file a Partnership Tax return is not going to be a profitable exercise.... all the earnings, perhaps more, will go to paying someone to do (or help do) the tax filings. The simplest taxes are for a business that you completely own. Corporations and Partnerships involve additional forms and get more and more and complex, and even more so when it involves foreign participation. Partnerships are often not formal partnerships but can be more easily thought of as independent businesses that each participants owns, that are simply doing some business with each other. Schedule C is the IRS form you fill out for any businesses that you own. On schedule C you would list the income from advertising. Also on schedule C there is a place for all of the business expenses, such as ads that you buy, a server that you rent, supplies, employees, and independent contractors. Amounts paid to an independent contractor certainly need not be based on hours, but could be a fixed fee, or based on profit earned. Finally, if you pay anyone in the USA over a certain amount, you have to tell the IRS about that with a Form 1099 at the beginning of the next year, so they can fill out their taxes. BUT.... according to an article in International Tax Blog you might not have to file Form 1099 with the IRS for foreign contractors if they are not US persons (not a US citizen or a resident visa holder). |
Investing tax (savings) | You'd want the money to be "liquid" and ready for you to use when tax time comes around. You also don't want to lose "principal", i.e. if you put it into stocks and have the value of what you put in be less than what you invested—which is possible—when you need the money, again, at tax time. That doesn't leave you with many good choices or an amazingly good way to profit from investing your savings that you put aside for taxes. CDs are steady but will not give you much interest and they have a definite deposit timeframe 6 months, 1 yr, 2 yrs and you can't touch it. So, the only reasonable choice you have left is an interest bearing checking or savings account with up to 1% interest (APR)—as of this writing Ally Bank offers 1% interest in an online interest savings acct.—which will give you some extra money on your deposits. This is what I do. |
What would a stock be worth if dividends did not exist? [duplicate] | Unrealistic assumption, but I'll play along. Ultimately, dividends would exist because some innovative shareholder of some company, at some time, would desire income from their investment and could propose the idea of sharing the profit. Like-minded investors also desiring income could vote for dividends to come into existence — or, rather, vote for a board of directors that supports enactment of the idea. (In your fictitious world, shareholders do still control the corporation, right?) In this world, though, dividends wouldn't be called "dividends", a terrible name that's too "mathy" for the inhabitants of that world. Rather, they would institute a quarterly or annual shareholder profit share. Governments would enact legislation to approve of—nay, encourage such an innovation because it becomes a new source of recurring income they can tax. Alternatively, even if the idea of a cash dividend didn't occur to anybody in that world, investors would realize the stock price is depressed and could propose and vote for the board to institute share buybacks. The company repurchasing some portion of shares periodically would provide income to shareholders participating in the buyback. If the buyback were oversubscribed, they could structure it fairly (pro-rata participation, etc.) Alternatively, shareholders would pressure the board (or fire them and vote in a new board) to put the company up for sale and find a larger buyer, who would purchase the shares for cash. This can't scale forever, though, so the pressure will increase for solutions like #1 and #2. |
How can I profit on the Chinese Real-Estate Bubble? | Perhaps buying some internationally exchanged stock of China real-estate companies? It's never too late to enter a bubble or profit from a bubble after it bursts. As a native Chinese, my observations suggest that the bubble may exist in a few of the most populated cities of China such as Beijing, Shanghai and Shenzhen, the price doesn't seem to be much higher than expected in cities further within the mainland, such as Xi'an and Chengdu. I myself is living in Xi'an. I did a post about the urban housing cost of Xi'an at the end of last year: http://www.xianhotels.info/urban-housing-cost-of-xian-china~15 It may give you a rough idea of the pricing level. The average of 5,500 CNY per square meter (condo) hasn't fluctuated much since the posting of the entry. But you need to pay about 1,000 to 3,000 higher to get something desirable. For location, just search "Xi'an, China" in Google Maps. =========== I actually have no idea how you, a foreigner can safely and easily profit from this. I'll just share what I know. It's really hard to financially enter China. To prevent oversea speculative funds from freely entering and leaving China, the Admin of Forex (safe.gov.cn) has laid down a range of rigid policies regarding currency exchange. By law, any native individual, such as me, is imposed of a maximum of $50,000 that can be converted from USD to CNY or the other way around per year AND a maximum of $10,000 per day. Larger chunks of exchange must get the written consent of the Admin of Forex or it will simply not be cleared by any of the banks in China, even HSBC that's not owned by China. However, you can circumvent this limit by using the social ID of your immediate relatives when submitting exchange requests. It takes extra time and effort but viable. However, things may change drastically should China be in a forex crisis or simply war. You may not be able to withdraw USD at all from the banks in China, even with a positive balance that's your own money. My whole income stream are USD which is wired monthly from US to Bank of China. I purchased a property in the middle of last year that's worth 275,000 CNY using the funds I exchanged from USD I had earned. It's a 43.7% down payment on a mortgage loan of 20 years: http://www.mlcalc.com/#mortgage-275000-43.7-20-4.284-0-0-0.52-7-2009-year (in CNY, not USD) The current household loan rate is 6.12% across the entire China. However, because this is my first property, it is discounted by 30% to 4.284% to encourage the first house purchase. There will be no more discounts of loan rate for the 2nd property and so forth to discourage speculative stocking that drives the price high. The apartment I bought in July of 2009 can easily be sold at 300,000 now. Some of the earlier buyers have enjoyed much more appreciation than I do. To give you a rough idea, a house bought in 2006 is now evaluated 100% more, one bought in 2008 now 50% more and one bought in the beginning of 2009 now 25% more. |
Why do 10 year Treasury bond yields affect mortgage interest rates? | You’ve really got three or four questions going here… and it’s clear that a gap in understanding one component of how bonds work (pricing) is having a ripple effect across the other facets of your question. The reality is that everybody’s answers so far touch on various pieces of your general question, but maybe I can help by integrating. So, let’s start by nailing down what your actual questions are: 1. Why do mortgage rates (tend to) increase when the published treasury bond rate increases? I’m going to come back to this, because it requires a lot of building blocks. 2. What’s the math behind a bond yield increasing (price falling?) This gets complicated, fast. Especially when you start talking about selling the bond in the middle of its time period. Many people that trade in bonds use financial calculators, Excel, or pre-calculated tables to simplify or even just approximate the value of a bond. But here’s a simple example that shows the math. Let’s say we’ve got a bond that is issued by… Dell for $10,000. The company will pay it back in 5 years, and it is offering an 8% rate. Interest payments will only be paid annually. Remember that the amount Dell has promised to pay in interest is fixed for the life of the bond, and is called the ‘coupon’ rate. We can think about the way the payouts will be paid in the following table: As I’m sure you know, the value of a bond (its yield) comes from two sources: the interest payments, and the return of the principal. But, if you as an investor paid $14,000 for this bond, you would usually be wrong. You need to ‘discount’ those amounts to take into account the ‘time value of money’. This is why when you are dealing in bonds it is important to know the ‘coupon rate’ (what is Dell paying each period?). But it is also important to know your sellers’/buyers’ own personal discount rates. This will vary from person to person and institution to institution, but it is what actually sets the PRICE you would buy this bond for. There are three general cases for the discount rate (or the MARKET rate). First, where the market rate == the coupon rate. This is known as “par” in bond parlance. Second, where the market rate < the coupon rate. This is known as “premium” in bond parlance. Third, where the market rate > coupon rate. This is known as a ‘discount’ bond. But before we get into those in too much depth, how does discounting work? The idea behind discounting is that you need to account for the idea that a dollar today is not worth the same as a dollar tomorrow. (It’s usually worth ‘more’ tomorrow.) You discount a lump sum, like the return of the principal, differently than you do a series of equal cash flows, like the stream of $800 interest payments. The formula for discounting a lump sum is: Present Value=Future Value* (1/(1+interest rate))^((# of periods)) The formula for discounting a stream of equal payments is: Present Value=(Single Payment)* (〖1-(1+i)〗^((-n))/i) (i = interest rate and n = number of periods) **cite investopedia So let’s look at how this would look in pricing the pretend Dell bond as a par bond. First, we discount the return of the $10,000 principal as (10,000 * (1 / 1.08)^5). That equals $6,807.82. Next we discount the 5 equal payments of $800 as (800* (3.9902)). I just plugged and chugged but you can do that yourself. That equals $3,192.18. You may get slightly different numbers with rounding. So you add the two together, and it says that you would be willing to pay ($6,807.82 + $3,192.18) = $10,000. Surprise! When the bond is a par bond you’re basically being compensated for the time value of money with the interest payments. You purchase the bond at the ‘face value’, which is the principal that will be returned at the end. If you worked through the math for a 6% discount rate on an 8% coupon bond, you would see that it’s “premium”, because you would pay more than the principal that is returned to obtain the bond [10,842.87 vs 10,000]. Similarly, if you work through the math for a 10% discount rate on an 8% coupon bond, it’s a ‘discount’ bond because you will pay less than the principal that is returned for the bond [9,241.84 vs 10,000]. It’s easy to see how an investor could hold our imaginary Dell bond for one year, collect the first interest payment, and then sell the bond on to another investor. The mechanics of the calculations are the same, except that one less interest payment is available, and the principal will be returned one year sooner… so N=4 in both formulae. Still with me? Now that we’re on the same page about how a bond is priced, we can talk about “Yield To Maturity”, which is at the heart of your main question. Bond “yields” like the ones you can access on CNBC or Yahoo!Finance or wherever you may be looking are actually taking the reverse approach to this. In these cases the prices are ‘fixed’ in that the sellers have listed the bonds for sale, and specified the price. Since the coupon values are fixed already by whatever organization issued the bond, the rate of return can be imputed from those values. To do that, you just do a bit of algebra and swap “present value” and “future value” in our two equations. Let’s say that Dell has gone private, had an awesome year, and figured out how to make robot unicorns that do wonderful things for all mankind. You decide that now would be a great time to sell your bond after holding it for one year… and collecting that $800 interest payment. You think you’d like to sell it for $10,500. (Since the principal return is fixed (+10,000); the number of periods is fixed (4); and the interest payments are fixed ($800); but you’ve changed the price... something else has to adjust and that is the discount rate.) It’s kind of tricky to actually use those equations to solve for this by hand… you end up with two equations… one unknown, and set them equal. So, the easiest way to solve for this rate is actually in Excel, using the function =RATE(NPER, PMT, PV, FV). NPER = 4, PMT = 800, PV=-10500, and FV=10000. Hint to make sure that you catch the minus sign in front of the present value… buyer pays now for the positive return of 10,000 in the future. That shows 6.54% as the effective discount rate (or rate of return) for the investor. That is the same thing as the yield to maturity. It specifies the return that a bond investor would see if he or she purchased the bond today and held it to maturity. 3. What factors (in terms of supply and demand) drive changes in the bond market? I hope it’s clear now how the tradeoff works between yields going UP when prices go DOWN, and vice versa. It happens because the COUPON rate, the number of periods, and the return of principal for a bond are fixed. So when someone sells a bond in the middle of its term, the only things that can change are the price and corresponding yield/discount rate. Other commenters… including you… have touched on some of the reasons why the prices go up and down. Generally speaking, it’s because of the basics of supply and demand… higher level of bonds for sale to be purchased by same level of demand will mean prices go down. But it’s not ‘just because interest rates are going up and down’. It has a lot more to do with the expectations for 1) risk, 2) return and 3) future inflation. Sometimes it is action by the Fed, as Joe Taxpayer has pointed out. If they sell a lot of bonds, then the basics of higher supply for a set level of demand imply that the prices should go down. Prices going down on a bond imply that yields will go up. (I really hope that’s clear by now). This is a common monetary lever that the government uses to ‘remove money’ from the system, in that they receive payments from an investor up front when the investor buys the bond from the Fed, and then the Fed gradually return that cash back into the system over time. Sometimes it is due to uncertainty about the future. If investors at large believe that inflation is coming, then bonds become a less attractive investment, as the dollars received for future payments will be less valuable. This could lead to a sell-off in the bond markets, because investors want to cash out their bonds and transfer that capital to something that will preserve their value under inflation. Here again an increase in supply of bonds for sale will lead to decreased prices and higher yields. At the end of the day it is really hard to predict exactly which direction bond markets will be moving, and more importantly WHY. If you figure it out, move to New York or Chicago or London and work as a trader in the bond markets. You’ll make a killing, and if you’d like I will be glad to drive your cars for you. 4. How does the availability of money supply for banks drive changes in other lending rates? When any investment organization forms, it builds its portfolio to try to deliver a set return at the lowest risk possible. As a corollary to that, it tries to deliver the maximum return possible for a given level of risk. When we’re talking about a bank, DumbCoder’s answer is dead on. Banks have various options to choose from, and a 10-year T-bond is broadly seen as one of the least risky investments. Thus, it is a benchmark for other investments. 5. So… now, why do mortgage rates tend to increase when the published treasury bond yield rate increases? The traditional, residential 30-year mortgage is VERY similar to a bond investment. There is a long-term investment horizon, with fixed cash payments over the term of the note. But the principal is returned incrementally during the life of the loan. So, since mortgages are ‘more risky’ than the 10-year treasury bond, they will carry a certain premium that is tied to how much more risky an individual is as a borrower than the US government. And here it is… no one actually directly changes the interest rate on 10-year treasuries. Not even the Fed. The Fed sets a price constraint that it will sell bonds at during its periodic auctions. Buyers bid for those, and the resulting prices imply the yield rate. If the yield rate for current 10-year bonds increases, then banks take it as a sign that everyone in the investment community sees some sign of increased risk in the future. This might be from inflation. This might be from uncertain economic performance. But whatever it is, they operate with some rule of thumb that their 30-year mortgage rate for excellent credit borrowers will be the 10-year plus 1.5% or something. And they publish their rates. |
Pension or Property: Should I invest in more properties, or in a pension? | I think the real answer to your question here is diversification. You have some fear of having your money in the market, and rightfully so, having all your money in one stock, or even one type of mutual fund is risky as all get out, and you could lose a lot of your money in such a stock-market based undiversified investment. However, the same logic works in your rental property. If you lose your tennant, and are unable to find a new one right away, or if you have some very rare problem that insurance doesn't cover, your property could become very much not a "break even" investment very quickly. In reality, there isn't any single investment you can make that has no risk. Your assets need to be balanced between many different market-investments, that includes bonds, US stocks, European stocks, cash, etc. Also investing in mutual funds instead of individual stocks greatly reduces your risk. Another thing to consider is the benefits of paying down debt. While investments have a risk of not performing, if you pay off a loan with interest payments, you definitely will save the money you would have paid in interest. To be specific, I'd recommend the following plan - |
Is my employee stock purchase plan a risk free investment? | It's a risk free investment only if you have 100% warranty that you will be able to sell these stocks for a better price than what you've paid. And that's virtually impossible. I don't think there is any "risk free investment" when stocks are involved. You can try to minimize the risks and consider them low, but IMO it's dangerous. |
Can stock market gains be better protected under an LLC arrangement? | All corporate gains are taxed at the same rate as corporate income, for the corporate entity, so this actually can be WORSE than the individual capital gains tax rates. There are a lot of things you can do with trading certain asset classes, like opening you up to like-kind re-investment tax perks, but I can't think of anything that helps with stocks. Also, in the US there is now a law against doing things solely to avoid tax if they have no other economic purpose. So be conscious about that, you'll need to be able to rationalize at least a thin excuse for why you jumped through all the hoops. |
Is there any instance where less leverage will get you a better return on a rental property? | I would say that you should keep in mind one simple idea. Leverage was the principal reason for the 2008 financial meltdown. For a great explanation on this, I would HIGHLY recommend Michael Lewis' book, "The Big Short," which does an excellent job in spelling out the case against being highly leveraged. As Dale M. pointed out, losses are greatly magnified by your degree of leverage. That being said, there's nothing wrong with being highly leveraged as a short-term strategy, and I want to emphasize the "short-term" part. If, for instance, an opportunity arises where you aren't presently liquid enough to cover then you could use leverage to at least stay in the game until your cash situation improves enough to de-leverage the investment. This can be a common strategy in equities, where you simply substitute the term "leverage" for the term "margin". Margin positions can be scary, because a rapid downturn in the market can cause margin calls that you're unable to cover, and that's disastrous. Interestingly, it was the 2008 financial crisis which lead to the undoing of Bernie Madoff. Many of his clients were highly leveraged in the markets, and when everything began to unravel, they turned to him to cash out what they thought they had with him to cover their margin calls, only to then discover there was no money. Not being able to meet the redemptions of his clients forced Madoff to come clean about his scheme, and the rest is history. The banks themselves were over-leveraged, sometimes at a rate of 50-1, and any little hiccup in the payment stream from borrowers caused massive losses in the portfolios which were magnified by this leveraging. This is why you should view leverage with great caution. It is very, very tempting, but also fraught with extreme peril if you don't know what you're getting into or don't have the wherewithal to manage it if anything should go wrong. In real estate, I could use the leverage of my present cash reserves to buy a bigger property with the intent of de-leveraging once something else I have on the market sells. But that's only a wise play if I am certain I can unwind the leveraged position reasonably soon. Seriously, know what you're doing before you try anything like this! Too many people have been shipwrecked by not understanding the pitfalls of leverage, simply because they're too enamored by the profits they think they can make. Be careful, my friend. |
Finding Uncorrelated Assets | Have a look at: Diversify Portfolio. The site provides various tools all focused on correlation, diversification and portfolio construction. You can scan through every stock and ETF listed on the NASDAQ and NYSE to find any kind of correlation you're looking for. You can also create a portfolio and then analyze all the correlations within it, or search for specific stocks that can be added to the portfolio based on correlation and various other factors. |
Unmarried Couple Splitting up with Joint Ownership of Home | Because you're not married, its a partnership agreement, and unless there's a written contract, either the two of you agree on how to handle the home, or it's off to court you go. If you were both supposed to pay for the home, and he failed to for a a while, that would put him in breach of contract which I would think gives you a good position in court. On the other hand, if you are at all concerned about your safety from this louse, remember, he knows exactly where the house is. |
Why could the serious financial woes of some EU member states lead to the end of the Euro? | The Euro is a common currency between various countries in Europe. This means that individual countries give up their traditional sovereign control of their own currency, and cede that control to the EU. Such a system has many advantages, but it also means that individual countries cannot deal with their unique situations as easily. For instance, if the US were a part of the EU, then the Fed couldn't issue $600B the way they are to bolster the economy. The danger to the Euro is that countries will withdraw their participation in order to micromanage their economies more effectively. If a major country withdraws its participation, it could start a domino effect where many countries withdraw so that they too can manage their economies more effectively. As more countries withdraw, a shared currency becomes less and less appealing. |
What is the options industry changing about option symbols in February, 2010? | Here is what I could find on the net: http://education.wallstreetsurvivor.com/options-symbol-changes-coming-february-12th-2010 So it sounds like it does not affect how you invest in options but only how you look them up. I remember using a Bloomberg terminal and it wasn't clear what the expiry date of the option you were looking at was. It looks like the new quote system addresses this. HTH. |
Prices go up and salary doesn't: where goes delta? | I expected a word or two on the price elasticity of demand here :) Andrey, Your question needs slight revision in its current form. Rising prices actually do not mean increased profitability for a company. The quantity they sell also pays a huge part and actually is correlated to the price at which they sell the goods (and other factors such as the price at which their competitor sells the goods etc., but we will ignore it for simplicity). The net profit of sales for any firm is equal to (Qty x Sale Price) - COGS - SG&A - taxes - other expenses where, COGS means cost of goods sold SG&A means sales, general and admin costs (e.g., cleaning the inventory storage area daily so that the goods stay fresh etc.) other expenses include any miscellaneous other costs that the firm incurs to make the sale. Now, if everything in that equation remains same (COGS, SG&A, taxes, and other expenditures), rising prices will only translate into a higher profit if the quantity does not fall by the same margin. Prices may also rise simply as a response to risking COGS, SG&A or other expenditures --the latter may be observed in inflationary environments. In such a case, the supplying firm can end up losing its profit margin if the quantity falls by more than the price rise. |
Multi-Account Budgeting Tools/Accounts/Services | I know of websites that do this, but I don't know of banks that do. Is there any reason you want to do this at a bank rather than use a service? My main concern with using a bank for this would be the risk of overdraft fees |
Learning investment--books to read? Fundamental/Value/Motley Fool | You are smart to read books to better inform yourself of the investment process. I recommend reading some of the passive investment classics before focusing on active investment books: If you still feel like you can generate after-tax / after-expenses alpha (returns in excess of the market returns), take a shot at some active investing. If you actively invest, I recommend the Core & Satellite approach: invest most of your money in a well diversified basket of stocks via index funds and actively manage a small portion of your account. Carefully track the expenses and returns of the active portion of your account and see if you are one of the lucky few that can generate excess returns. To truly understand a text like The Intelligent Investor, you need to understand finance and accounting. For example, the price to earnings ratio is the equity value of an enterprise (total shares outstanding times price per share) divided by the earnings of the business. At a high level, earnings are just revenue, less COGS, less operating expenses, less taxes and interest. Earnings depend on a company's revenue recognition, inventory accounting methods (FIFO, LIFO), purchase price allocations from acquisitions, etc. If you don't have a business degree / business background, I don't think books are going to provide you with the requisite knowledge (unless you have the discipline to read textbooks). I learned these concepts by completing the Chartered Financial Analyst program. |
How to check the paypal's current exchange rate? | fx-rate.net offers a AUDUSD exchange rate comparison, which includes paypal: Currencyfair $1.14 Transferwise $ 2.29 Worldremit $ 3.50 Xendpay $ 3.71 Tranzfers $ 5.52 Ukforex $ 7.35 Skrill $ 15.13 Paypal $ 25.77 Kantox $ 27.76 http://fx-rate.net/currency-transfer/?c_input=AUD&cp_input=USD |
why do I need an emergency fund if I already have investments? | Emergency funds have a very specific and obvious benefit; you'll have money sitting around in case you need it. A lot of people think a big car repair or some unexpected home repair is an emergency, and that's fine. Emergency also expands up to "I lost my job four months ago and we're a year in to a recession, the stock market is down 30% and I need to pay my rent or mortgage." Sure, you could just sell some of your stocks that have lost 30% and pay your rent. I know nobody likes to think about it, but the stock market can go down. I know nobody likes to think about it, but the economy can slink in to a recession. In fact, here's a small list of recent U.S. recessions: No competent investment adviser would advise that your emergency funds should be subject to market volatility because that completely defeats the purpose of an emergency fund. It's possible that this manager wants you to indicate a separate emergency fund to allocate a portion of your account to a low volatility US Treasury fund or something of the like, this would be materially different than investing in a broad market/large cap fund like VOO or VTI. The effects of inflation are not so bad that you should put your emergency money in the market. Who cares what inflation was if you have to sell an asset at a loss to pay rent? One last point. Index fund ETFs are not "safe." Investing in diversified funds is safER than buying individual company stocks. |
Why do people always talk about stocks that pay high dividends? | The answer, for me, has to do with compounding. That drop in price post-ex-div is not compounded. But if you reinvest your dividends back into the stock then you buy on those post-ex-div dips in price and your money is compounded because those shares you just bought will, themselves, yeald dividends next quarter. Also, with my broker, I reinvest the dividend incurring no commission. My broker has a feature to reinvest dividends automatically and he charges no commission on those buys. Edit:I forgot to mention that you do not incurr the loss from a drop in price until you sell the security. If you do not sell post-ex-div then you have no loss. As long as the dividend remains the same (or increases) then the theoretical ROI on that security goes up. The drop in price is actually to your benefit because you are able to acquire more shares with the money you just received in the dividend So the price coming down post-ex-div is a good thing (if you buy and hold). |
Is there such thing as a Checking account requiring pre-approval / white-list? | The account you are looking for is called a "Positive Pay" account. It generally is only for business accounts, you provide a list of check numbers and amounts, and they are cross-referenced for clearing. It normally has a hefty monthly fee due to the extra labor involved. |
What does it mean when my Money Market account lists both a dividend share and an APY? | The dividend is what represents your ownership in the CU. The APY is a calculated figure that will help you compare apples to apples the return of the investment from many vendors and many types. (I think you CU might have had two different people writing that portion of the website, because the comparisons pages don't make that clear, and the pages don't layout the same way.) |
Should I pay myself a dividend or a salary? | In cases like this you should be aware that tax treaties may exist and that countries are generally willing to enter into them. Their purpose is to help prevent double taxation. Tax treaties often times give you a better tax rate than even being a resident of the countries in question! (For instance, the Italy to US tax rate is lower than simply doing business in many United States) This should guide your google search, here is something I found for Germany/Spain http://tmagazine.ey.com/wp-content/uploads/2011/03/2011G_CM2300_Spain-Germany-sign-new-tax-treaty.pdf It appears that the dividend tax rate under that treaty is 5% , to my understanding, the income tax rates are often multiples higher! I read that spain's income tax rate is 18% So what I would do is see if there is the possibility of deferring taxes in the lower tax jurisidiction and then doing a large one time dividend when conveninet. But Germany isn't really known for its low taxes, being a Federal Republic, the taxes are levied by both the states and the federal government. Look to see if your business structure can avoid being taxed as the entity level: ie. your business' earnings are always distributed to the owners - which are not germany citizens or residents - as dividends. So this way you avoid Germany's 15% federal corporate tax, and you avoid Spain's 18% income tax, and instead get Spanish dividends at 5% tax. Anyway, contact a tax attorney to help interpret the use of the regulations, but this is the frame of mind you should be thinking in. Because it looks like spain is willing to do a tax credit if you pay taxes in germany, several options here to lower your tax footprint. |
Is there any emprical research done on 'adding to a loser' | This is basically martingale, which there is a lot of research on. Basically in bets that have positive expected value such as inflation hedged assets this works better over the long term, than bets that have negative expected value such as table games at casinos. But remember, whatever your analysis is: The market can stay irrational longer than you can stay solvent. Things that can disrupt your solvency are things such as options expiration, limitations of a company's ability to stay afloat, limitations in a company's ability to stay listed on an exchange, limitations on your borrowings and interest payments, a finite amount of capital you can ever acquire (which means there is a limited amount of times you can double down). Best to get out of the losers and free up capital for the winners. If your "trade" turned into an "investment", ditch it. Don't get married to positions. |
Remit money to India from balance transfer of credit card | As Dheer has already told you in his answer, your plan is perfectly legal, and there are no US tax issues other than making sure that you report all the interest that you earn in all your NRE accounts (not just this one) as well as all your NRO accounts, stock and mutual fund dividends and capital gains, rental income, etc to the IRS and pay appropriate taxes. (You do get a credit from the IRS for taxes paid to India on NRO account income etc) You also may also need to report the existence of accounts if the balance exceeds $10K at any time etc. But, in addition to the foreign exchange conversion risk that Dheer has pointed out to you, have you given any thought to what is going to happen with that credit card? That 0% interest balance of $5K does not mean an interest-free loan 0f $5K for a year (with $150 service charge on that transaction). Instead, consider the following. If you use the card for any purchases, then after the first month, your purchases will be charged interest from the day that you make them till the day they are paid off: there is no 25-day grace period. The only way to avoid this is to pay off the full balance ($5K 0% interest loan PLUS $150 service charge as well as any other service charges, annual fees etc PLUS all purchases PLUS any interest) shown on the first monthly statement that you receive after taking that loan. If you choose this option, then, in effect, have taken a $5K loan for only about 55 days and have paid 3% interest (sorry, I meant to write) service fee for the privilege. If you don't use the card for any purchases at all, then the first monthly statement will show a statement balance of $5130 and (most likely) a minimum required payment of $200. By law, the minimum required payment is all interest charged for that month($0) PLUS all service fees charged during that month ($150) PLUS 1% of the rest ($50). Well, actually the law says something like "a sufficient fraction of the balance to ensure that a person making the required minimum payment each month can pay off the debt in a reasonable time" and most credit card companies choose 1% as the sufficient fraction and 108 months as a reasonable time. OK, so you pay the $200 and feel that you have paid off the service fee and $50 of that 0% interest loan. Not so! If you make the required minimum payment, the law allows that amount to be be applied to any part of the balance owing. It is only the excess over the minimum payment that the law says must be applied to the balance being charged the highest rate. So, you have paid off $200 of that $5K loan and still owe the service fee. The following month's statement will include interest on that unpaid $150. In short, to leave only the 0% balance owing, you have to pay $350 that first month so that next month's statement balance will be $4800 at 0%. The next month's required minimum payment will be $48, and so on. In short, you really need to keep on top of things and understand how credit-card payments really work in order to pull off your scheme successfully. Note also that the remaining part of that 0% interest balance must be paid off by the end of the period or else a humongous rate of interest will be applied retroactively from Day One, more than enough to blow away all that FD interest. So make sure that you have the cash handy to pay it off in timely fashion when it comes due. |
How risky is it to keep my emergency fund in stocks? | A major danger of keeping "emergency" funds in the form of stocks is that many of the scenarios where one would need quick access to the money will also momentarily depress the stock market. Someone whose emergency funds were in some other form could avoid selling stocks during a momentary downturn, but someone who has no other emergency funds would have no choice but to sell during the downturn (thus losing money as well as making the downturn more significant for everyone else). |
How much of my home loan is coming from a bank, how much it goes back? | When you get a loan (car, home, student) the lending company (bank) give the (auto dealer, previous home owner, school) money. You as the borrow promise to pay this money back with interest. So in your case the 100,000 you borrow requires a payment for principal and interest of ~965 per month. After 240 payments you will have paid the bank ~231,605. So who got the ~131,000 in interest. The bank did. It was used to pay interest to the people who made deposits into the bank. It was also used to pay the expenses of the bank: salaries, retirement, rent, electricity, computers, etc. If the bank is a company with investors they may have to pay dividends to them to. Of course not all loans are successfully paid back, so some of the payment goes to cover the loans that are in default. In many cases loans are also refinanced, or the house is sold long before the 20-30 year term is up. In these cases the amount of interest received for that loan is much less than anticipated, but the good news is that it can be loaned out again. |
How much is one “lot” of EUR/USD? | A lot (sometimes called a round lot) always refers to the quantity of physical good that you're getting, like a carton of eggs or a barrel of oil. The tricky thing in the case of forex is that the physical good also happens to be a currency. A spot currency product trades in the denomination on the right-hand side (RHS) of the product name. So if you're buying EUR/USD you are paying USD currency to get EUR "units", and if you're selling EUR/USD you are receiving USD by giving away EUR "units". The EUR is the "physical good" in this case. The way I remember it is to think of all products (not just currencies) as trading pairs. So AAPL in my mind is AAPL/USD. When I buy AAPL/USD I am paying USD to get AAPL units. When I sell AAPL/USD I am receiving USD by giving away AAPL units. The thing on the left is the physical good (even if it happens to be money) that you are exchanging, and the thing on the right is the money that you are exchanging. So, when I buy a lot of AAPL, I am buying 100 shares at their current price in dollars. Similarly, when I buy a lot of EUR/USD, I am buying 100K Euros at their current price in dollars. |
How to record business income tax paid, in QuickBooks? | Federal income taxes are indeed expenses, they're just not DEDUCTIBLE expenses on your 1120. Federal Income Tax Expense is usually a subcategory under Taxes. This is one of the items that will be a book-to-tax difference on Schedule M-1. I am presuming you are talking about a C corporation, as an S corporation is not likely to be paying federal taxes itself, but would pass the liability through to the members. If you're paying your personal 1040 taxes out of an S-corporation bank account, that's an owner's draw just like paying any of your personal non-business expenses. I would encourage you to get a tax professional to prepare your corporate tax returns. It's not quite as simple as TurboTax Business makes it out to be. ;) Mariette IRS Circular 230 Notice: Please note that any tax advice contained in this communication is not intended to be used, and cannot be used, by anyone to avoid penalties that may be imposed under federal tax law. |
Estimated Taxes after surge in income | You will not necessarily incur a penalty. You can potentially use the Annualized Income Installment method, which allows you to compute the tax due for each quarter based on income actually earned up to that point in the year. See Publication 505, in particular Worksheet 2-9. Form 2210 is also relevant as that is the form you will use when actually calculating whether you owe a penalty after the year is over. On my reading of Form 2210, if you had literally zero income during the first quarter, you won't be expected to make an estimated tax payment for that quarter (as long as you properly follow the Annualized Income Installment method for future quarters). However, you should go through the calculations yourself to see what the situation is with your actual numbers. |
What does the settlement date of short interest mean? | At the bottom of the page you linked to, NASDAQ provides a link to this page on nasdaqtrader.com, which states Each FINRA member firm is required to report its “total” short interest positions in all customer and proprietary accounts in NASDAQ-listed securities twice a month. These reports are used to calculate short interest in NASDAQ stocks. FINRA member firms are required to report their short positions as of settlement on (1) the 15th of each month, or the preceding business day if the 15th is not a business day, and (2) as of settlement on the last business day of the month.* The reports must be filed by the second business day after the reporting settlement date. FINRA compiles the short interest data and provides it for publication on the 8th business day after the reporting settlement date. The dates you are seeing are the dates the member firms settled their trades. In general (also from nasdaq.com), the settlement date is The date on which payment is made to settle a trade. For stocks traded on US exchanges, settlement is currently three business days after the trade. |
Is it better to buy this used car from Craigslist or from a dealership? | You seem to be on the right track. I feel, though, that it's worth addressing your maintenance budget. Even if both cars described in your question are from the same model year, one has been in service 2x more; one car has been on the road, in weather, twice as much as the other. I'm not sure what's being represented in the $6k of maintenance, but a whole host of systems can require maintenance or replacement at 200k+ miles. A/C compressor, all sorts of rubber parts (seals, hoses, belts, bushings), computer systems, stereo, window regulators, the list goes on. I don't know at what point the battery on a hybrid needs to be replaced, or what that replacement entails, but likely the battery or the hybrid recharge system will require something after 200k miles of service. I would learn more about what actual maintenance a high mileage prius can experience. To answer your question though, at this level of "used" I don't think the dealership adds anything to the equation. When you're buying certified pre-owned, the dealership/manufacturer relationship and warranty can be meaningful. When you're buying a 100k+ miles car from a random small used car lot it might as well be a stranger on craigslist... |
Why is the fractional-reserve banking not a Ponzi scheme? | They're not at all the same. A Ponzi scheme is a fraudulent investment method that pays off early investors with deposits from later ones. Fractional reserve banking is the practice of keeping only a fraction of a bank's demand deposits on reserve, while lending out the rest. The reserve requirement is how central banks limit the amount of money that can float around in commercial banks. In the latter case, there is no "later investor" somewhere down near the bottom of a money food chain. Every dollar, regardless of whether it was created fresh from one of the federal reserve banks or created via several chained loans, is worth the same. If the dollars depreciate for whatever reason, they do so for everyone. Now, if you want a good example of a Ponzi scheme that is actually legal, look at Social Security. Edit: A "debt-based society" is separate from fractional-reserve banking. If the Fed creates $1,000,000, the total amount of money that can float around is still capped based on whatever the reserve requirement is. (For a 10% reserve requirement, it's something like $10,000,000.) We have unsustainable debt increases because of lack of self-control on the part of our leaders. The fractional-reserve process helps it along, but it's not the culprit. It's an enabler. |
Question about car loan payment | This depends on what the alternative is. Your loan of .99% is very favorable rate. If you have the 15,000 right now but only hold it in your checking account or cash then you might as well just pay it all off(assuming you have an adequate emergency fund). Paying the debt off sooner will save you on interest. Currently if you pay the minimum you will pay a total of $15,230 by the end of the loan, a $230 premium to $15,000. - Math credit goes to Joe If you have an investment vehicle you feel can successfully yield more then .99%, you might want to consider investing that money instead, while paying the minimum on your car loan. Also be sure to check the .99% is not an introductory rate which increases later on. It comes down to whether you can get a better return then .99% investing that money or whether you rather just pay off the debt and not worry about it. If you don't want to bother investing the money, than just pay it off... I also assumed you have no other revolving debt with a higher APR. If you do, first pay off the higher APR debt. |
Are TD e-Series Funds worthwhile, or am I better off with ETFs? Why or why not? | M Attia, the advantages of the TD e-series are that they are a low cost way to index your portfolio as well it gives you to opportunity to invest small amounts at a time. With ETF's, purchasing small amounts at a time would simply get too expensive. |
How to convert coins into paper money or deposit coins into bank account, without your bank in local? | Ask around your area. Some stores will exchange because it saves them having to go to the bank to stock up on change. Some stores have machines that will convert the coins for a small percentage fee. Some banks may do this exchange for folks who aren't customers, though that's uncommon. My solution was to open a small account locally specifically as a place to dump my coins into. They'll even run a pile of coins through their counting machine for me, free, so I don't have to make up coin rolls as I did in the past. |
Should I wait a few days to sell ESPP Stock? | Usually the amount of the ESPP stocks is very small compared to the overall volume of the trading, so it shouldn't matter. But check if for your company it not so (look at the stock history for the previous ESPP dates, and volumes). |
How do I handle fund minimums as a beginning investor? | Buy the minimum of one fund now. (Eg total bond market) Buy the minimum of the next fund next time you have $2500. (Eg large-cap stocks.) Continue with those until you have enough to buy the next fund (eg small-cap stocks). Adjust as you go to balance these funds according to your planned ratios, or as close as you can reasonably get without having to actually transfer money between the funds more than once a year or so. Build up to your targets over time. If you can't easily afford to tie up that first $2500, stay with banks and CDs and maybe money market accounts until you can. And don't try to invest (except maybe through a matched 401k) before you have adequate savings both for normal life and for an emergency reserve. Note too that the 401k can be a way to buy into funds without a minimum. Check with your employer. If you haven't maxed out your 401k yet, and it has matching funds, that is usually the place to start saving for retirement; otherwise you are leaving free money on the table. |
Deductible expenses paid with credit card: In which tax year would they fall? | Assuming that it's not inventory that is sold in the following year or a depreciable asset, you can deduct it when you make the purchase. The courts have ruled that credit cards balances are considered debt. It's treated the same way as if you went to the bank, got a loan, and used cash or a check to purchase the items. On your accounting books, you would debit the expense account and credit the credit card liability account. This is only for credit cards, which are considered loans. If you use a store charge card, then you cannot deduct it until you pay. Those are considered accounts payable. I'm an IRS agent and a CPA. |
Tax question about selling a car | I don't think there's much you can do. Losses from the sale of personal-use automobiles (used for pleasure, commuting, etc) are not deductible as capital losses. See IRS Tax Topic 409, end of the first paragraph. The expenses you incurred in owning and operating the car (insurance, fuel, maintenance, service plans, etc) are not deductible either. If you used it partly for business, then some of your expenses might be deductible; see IRS Tax Topic 510. This includes depreciation (decline in value), but only according to a standard schedule; you don't generally just get to deduct the difference between your buying and selling price. Also, you'd need to have records to verify your business use. But anyway, these deductions would apply (or not) regardless of whether you sell the car. You don't get your sales tax refunded when you resell the vehicle. That's why it's a sales tax, not a value-added tax. Note, however, that if you do sell it, the sales tax on this new transaction will be the buyer's responsibility, not yours. You do have the option on your federal income tax return to deduct the state sales tax you paid when you bought the car; in fact, you can deduct all the sales taxes you paid in that year. (If you have already filed your taxes for that year, you can go back and amend them.) However, this takes the place of your state income tax deduction for the year; you can't deduct both. See Tax Topic 503. So this is only useful if your sales taxes for that year exceeded the state income tax you paid in that year. Also, note that state taxes are not deductible on your state income tax return. Again, this deduction applies whether you sell the car or not. |
Any experience with maxing out 401(k)? | Don't forget to also build up an emergency fund - retirement saving is important, but you don't want to be caught in a situation where you need money for an emergency (lose your job, get hit by a bus, etc.) and it's all locked away in your 401(k). |
Buying a multi-family home to rent part and live in the rest | First, you can look up the property tax of the building you are in for an exact number. Go to you town's tax office or look at Zillow. You need to claim the rent as income, but will take all expenses as well as depreciation on half the building. The numbers may well work in your favor, especially as a resident landlord. I still own a rental in the next state, but it's 2 hour away, so I'm paying pros to do the simplest things. On site, you can handle all maintenance and save that way. If the cash flow looks like it's better than what you have right now, it might be time to buy. Without seeing the numbers I can't point out what you might be missing. |
What does it mean for a company to have its market cap larger than the market size? | The difference between the two numbers is that the market size of a particular product is expressed as an annual number ($10 million per year, in your example). The market cap of a stock, on the other hand, is a long-term valuation of the company. |
Are cashiers required to check a credit card for a signature in the U.S.? | I'm not sure if they're required to do so, but I have been neglecting to sign my cards for some time now. If they do check, that triggers an ID check, where they'll find my signature. I know of at least one person that writes "see ID" instead of signing their cards. He began that practice over 10 years ago. |
The Benefits/Disadvantages of using a credit card | An advantage of using a major credit card is that they act as a buffer and source of recourse between you and the merchant. Cheated and the store won’t answer you letters? Call Visa (or more accuratly, call the number on the back of the card). (That is, #2 on this answer, which you can also reference for a whole list of benefits.) |
Can I place a stock limit order to buy above the current price? Can I place a stock limit order to sell below the current price? | You can place the orders like you suggested. This would be useful in a market that is moving quickly where you want to be reasonably sure of execution but don't want the full exposure of a market order. This won't jump your spot in the queue though in the sense that you won't get ahead of other orders that are "ready" for execution just because you have crossed the spread aggressively. |
How to convince someone they're too risk averse or conservative with investments? | (Leaving aside the question of why should you try and convince him...) I don't know about a very convincing "tl;dr" online resource, but two books in particular convinced me that active management is generally foolish, but staying out of the markets is also foolish. They are: The Intelligent Asset Allocator: How to Build Your Portfolio to Maximize Returns and Minimize Risk by William Bernstein, and A Random Walk Down Wall Street: The Time Tested-Strategy for Successful Investing by Burton G. Malkiel Berstein's book really drives home the fact that adding some amount of a risky asset class to a portfolio can actually reduce overall portfolio risk. Some folks won a Nobel Prize for coming up with this modern portfolio theory stuff. If your friend is truly risk-averse, he can't afford not to diversify. The single asset class he's focusing on certainly has risks, most likely inflation / purchasing power risk ... and that risk that could be reduced by including some percentage of other assets to compensate, even small amounts. Perhaps the issue is one of psychology? Many people can't stomach the ups-and-downs of the stock market. Bernstein's also-excellent follow-up book, The Four Pillars of Investing: Lessons for Building a Winning Portfolio, specifically addresses psychology as one of the pillars. |
What are good games to play to teach young children about saving money? | I know this question is closed now, but I just found this site that people might be interested in... http://www.practicalmoneyskills.com/games/ |
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