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My friend wants to put my name down for a house he's buying. What risks would I be taking? | That "something" you are signing means you are liable for the mortgage payments - yes, all of them - if he can't or won't pay at any point. The limit on what the bank will lend him based on his salary is there for a reason - they don't expect him to be able to keep up repayments if they lend him more (or more precisely, there's a big risk that he won't). Don't forget that even if he swears up and down to you that he can afford them, interest rates can rise; this is a 25 or 30 year commitment you would be making. Interest rates are at a historic low and the only way from here is up; in my living memory rates have been 12% or even 15%. As a very rough rule of thumb, for every £100k borrowed, every additional 1% on the interest rates costs an additional £100 on your monthly payment. Also, the "Transitional Arrangement" is not without its own fees and the bank won't let him simply take you off the mortgage unless they are convinced he can keep up the repayments on his own, which they clearly aren't. Also thanks to @Kat for the additional good point that being on the hook for your friend's mortgage will prevent you from being able to get a mortgage yourself while the liability still exists, or at least severely limit your options. No matter how many times you protest "but I'm not paying any money for that!" - it won't help. Another point: there are various schemes available to help first time buyers. By signing up for this, you would exclude yourself from any of those schemes in the future. |
New car price was negotiated as a “cash deal”. Will the price change if I finance instead? | There is no rule that says the dealer has to honor that deal, nor is there any that says he/she won't. However, if you are thinking of financing through though the dealership they are likely to honor the deal. They PREFER you finance it. If you finance it through the dealer the salesman just got TWO sales (a car and a loan) and probably gets a commission on both. If you finance it through a third party it makes no difference to the dealer, it is still a cash deal to them because even though you pay off the car loan over years, the bank pays them immediately in full. |
How does stock dilution work in relation to share volume? | Let me answer with an extreme example - I own the one single share of a company, and it's worth $1M. I issue 9 more shares, and find 9 people willing to pay $1M for each share. I know find my ownership dropped by 90%, and I am now a 10% owner of a business that was valued at $1M but with an additional $9M in the bank for expansion. (Total value now $10M) Obviously, this is a simplistic view, but no simpler than the suggestion that your company would dilute its shares 90% in one transaction. |
As an investor what are side effects of Quantitative Easing in US and in EU? | Well if your looking to explain inflation to children, I would use this example. Take two fruits they like IE: Apples and Oranges. Give them both 2 of each. Ask them how many of your apples would you give for 1 orange and how many apples would you want to get 1 orange(most likely they will say 1). Now give them 5 more apples each. Then ask them the same question. In economics and finance many things can not be proven, so to tell you what QE will do for a fact can't be said, you can only be told theories. There are to many variables. |
Should I collect receipts after paying with a card? | It is probably safe to throw away the receipt. Without a system to process and store receipts, they are of little use. With regards to personal finances I'm guilty of preaching without practicing 100% of the time, but here are some arguments for keeping receipts. To reconcile your statement to receipts before paying the credit card bill - people make mistakes all the time. I bet if you have an average volume of transactions, you will find at least one mistake in 12 months. To establish baseline spending and calculate a realistic budget. So many people will draft a budget by 'estimating' where their money goes. When it comes to this chore, I think people are about as honest with themselves as exercise and counting calories. Receipts are facts. To abide by record keeping requirements for warranty, business, IRS, etc... Personally, the only thing I've caught so far is Bank of America charging me interest when I pay my bill in full every month! |
Most common types of financial scams an individual investor should beware of? | If an offer "is only valid right now" and "if you don't act immediately, it will expire" that is almost always a scam. |
One Share Stock Reverse Split | Any time there is a share adjustment from spin-off, merger, stock split, or reverse slit; there is zero chance for the stockholders to hang on to fractional shares. They are turned into cash. For the employees in the 401K program or investors via a mutual fund or ETF this isn't a problem. Because the fraction of a share left over is compared to the thousands or millions of shares owned by the fund as a collective. For the individual investor in the company this can be a problem that they aren't happy about. In some cases the fractional share is a byproduct that will result from any of these events. In the case of a corporate merger or spin-off most investors will not have an integer number of shares, so that fraction leftover that gets converted to cash isn't a big deal. When they want to boost the price to a specific range to meet a regulatory requirement, they are getting desperate and don't care that some will be forced out. In other cases it is by design to force many shareholders out. They want to go private. They to 1-for-1000 split. If you had less than 1000 shares pre-split then you will end up with zero shares plus cash. They know exactly what number to use. The result after the split is that the number of investors is small enough they they can now fall under a different set of regulations. They have gone dark, they don't have to file as many reports, and they can keep control of the company. Once the Board of Directors or the majority stockholders votes on this, the small investors have no choice. |
Which practice to keep finances after getting married: joint, or separate? | My wife and I have a different arrangement. I like to track everything down to the transaction level. She doesn't want everything tracked. We have everything joint and I track everything except she has one credit card where I do not see the statements only the total. She is more comfortable, because she can buy things without me seeing the price for individual transactions. |
Do I live in a state for tax purposes if my permanent home is in another state? | You're most likely required to file in both for 2013 - since you've lived in both. From 2014 and on you're definitely a NY resident (since you're renting a place there and live there), and you may very well continue being NJ resident (since you're essentially continue being domiciled there). I suggest talking to a EA/CPA licensed in NY and NJ to try and see what you can do to avoid being resident in both the states, or see if it is at all an issue other than filing everything double. |
Swiss-style Monetary Policy | I'm not sure what is traditionally meant by "Swiss-style monetary policy" but lately it has meant the same thing as US monetary policy, or Japanese monetary policy, or Euro monetary policy: PRINT. Look how many Swiss Francs it takes to buy a currency that cannot be printed: I'm not sure why they would be touting "Swiss-style monetary policy". That hasn't been too stellar lately. |
What are my tax-advantaged investment options at a university job? | Yes. Two years after your first contribution to the SIMPLE IRA, you can roll it to a traditional IRA. You can still contribute "pre-tax", but the mechanism will be slightly different, since with an employer plan the contribution was automatically deducted from your paycheck. With an individual plan, you make the contributions yourself and then get a tax deduction when you file. Since contributions to traditional and Roth IRAs combined are capped at $5,500 if you're under 50, some sort of employer-sponsored plan might be better from a contribution standpoint. If your institution offers some sort of plan other than a 401(k), you might still want to roll to a traditional IRA, since you will have much more flexibility in the investments you choose. On the flip side, if that thought is overwhelming, having a smaller set of options might be better for your peace of mind. |
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 would a long-term investor ever chose a Mutual Fund over an ETF? | I see a couple of reasons why you could consider choosing a mutual fund over an ETF In some cases index mutual funds can be a cheaper alternative to ETFs. In the UK where I am based, Fidelity is offering a management fee of 0.07% on its FTSE All shares tracker. Last time I checked, no ETF was beating that There are quite a few cost you have to foot when dealing ETFs In some cases, when dealing for relatively small amounts (e.g. a monthly investment plan) you can get a better deal, if your broker has negotiated discounts for you with a fund provider. My broker asks £12.5 when dealing in shares (£1.5 for the regular investment plan) whereas he asks £0 when dealing in funds and I get a 100% discount on the initial charge of the fund. As a conclusion, I would suggest you look at the all-in costs over total investment period you are considering for the exact amount you are planning to invest. Despite all the hype, ETFs are not always the cheapest alternative. |
Can I apply prior years' capital losses against my employee stock option exercise? | As I recall, the gain for ISOs is considered ordinary income, and capital losses can only negate up to $3000 of this each year. If you exercised and held the stock, you have ordinary income to the exercise price, and cap gain above that, if you hold the stock for two years. EDIT - as noted below, this answer works for USians who found this question, but not for the OP who is Canadian, or at least asked a question at it relates to Canada's tax code. |
The doctor didn't charge the health insurance in time, am I liable? | Here's my thought - call the insurance company back. Ask them to just tell you what the "reasonable and customary" approved payment would be. Offer that exact amount to the hospital, it's what they would have gotten anyway, and you learned a cheap lesson. |
Are stock investments less favorable for the smaller investor? | If you are looking at long-term investments then you can look to Dheer's answer and see that it doesn't matter whether the money is large or small, the return will be the same. When it comes to shorter-term investments, it can actually pay to be a smaller investor. Consider a stock that may not be trading in high volume. If I want to take a position for 2,000 shares, I can probably buy it quite quickly without moving the market considerably. If I was managing your hypothetical portfolio opening a position for 1,000,000 shares, it can cause the price to go up significantly because I have to execute the order very carefully in order to not tip my hand to the market that I want a million shares. Algorithmic traders will see the volume increasing on those shares and will raise their asking price. High speed traders and market makers will also cause a lot of purchasing overhead. Then later when it comes time to sell, I will lose a percentage to the price drop as I start flooding the market with available shares. |
Why do 10 year-old luxury cars lose so much value? | I believe one of the main reasons cars -- luxury or otherwise -- depreciate so quickly is that many auto accidents can cause serious engine/frame damage but are easily cosmetically repaired. If you smash up the car but get the body fixed, and you don't go through insurance, it will be indistinguishable from the same car that hasn't been in a crash. |
What happens if the term insurance company closes? | This depends on the jurisdiction, but such companies are typically subject to regulations (and audits) that require them to keep the customers' accumulated premiums very strictly separated from the company's own assets, liabilities and expenses. Additionally, they are typically only allowed to invest the capital in very safe things like government bonds. So, unless something truly catastrophic happens (like the US government defaulting on its bonds) or people in the company break the regulations (which would invovle all kinds of serious crimes and require complicity or complete failure of the auditors), your premiums and the contractual obligation to you would still be there, and would be absorbed by a different insurance company that takes over the defunct company's business. Realistically, what all this means is that insurance companies never go bankrupt; if they do badly, they are typically bought up by a competitor long before things get that bad. |
How can I deal with a spouse who compulsively spends? | Perhaps it seems harsh, but I would get separate accounts: credit cards, savings, retirement, all the way down the line. Your only joint account should be for paying mortgage/rent and other bills. And as another poster said, delete all your saved info from browsers &c. Perhaps you even need to set up separate user ids. If this really is a case of compulsive spending, curing it is likely to be a long, hard process, if it's even possible. You need to put yourself in a position where you won't be dragged down with him. |
Why is a stock trade flat on large volume? | Large volume just means a lot of market participants believe they know where the stock price will be (after some amount of time). The fact that the price is not moving just means that about 50% of those really confident traders think the stock will be moving up, and about 50% of those really confident traders think the stock will be moving down. |
Option on an option possible? (Have a LEAP, put to me?) | There are many stategies with options that you have listed. The one I use frequently is buy in the money calls and sell at the money staddles. Do this ONLY on stocks you do not mind owning because that is the worse thing that can happen and if you like the company you stand less of a chance of being scared out of the trade. It works well with high quality resonable dividend paying stocks. Cat, GE, Mrk, PM etc. Good luck |
Calculate investment's interest rate to break-even insurance cost [duplicate] | I wouldn't call it apples and oranges. This is literally an opportunity cost calculation. You can safely assume S&P500 will perform at least 11% over any 10 year period. Since failing companies are delisted and replaced with new growing companies, the market should continue to grow. No, it's not guaranteed. Lets use an aggressive number for inflation, 4%, leaving a 7% ROR estimate for S&P500. I assume OP has better credit than me, assume a rate around 3.5%. So it looks like net 3.5% ROR. The PMI erases that. You have to continue paying it until you pay off the loan. Put 20% down, get a 15 year fixed at lowest rate. Pay it off quicker. |
Is there a country that uses the term “dollar” for currency without also using “cents” as fractional monetary units? | Wikipedia has a nice list of currencies that use "cents" and currencies that use 1/100th division that is not called "cent". Cent means "100" in Latin (and French, and probably all the Roman family of languages), so if the currency is divided by 100 subunits - it will likely to be called "cent" or something similar in the local language. The list of currencies (on the same page) where it is not the case is significantly shorter, and includes countries with relatively ancient currency units that were invented before the introduction of the decimal system (even though now they are in fact decimal they still kept the old names, like the British "pence" or the Russian "kopek"). The point is that "Dollar" and "cent" are not directly related, many currencies that are not called "Dollar" are using cents as well (Euro, among others). It just means "1/100th", and it is safe to assume that most (if not all) of the modern currencies are divided into 1/100th. |
Home Valuation in a Dodgy neighborhood | I wouldn't personally spend any money on an appraisal. Spend some time yourself looking at Zillow.com and maybe Realtor.com and other sites to review recent sales in your specific area. Not the houses a mile away. Try to find comparables to yours. The key factor is dollars per square foot. See if the trend over the last couple of years is upwards or downwards in dollars per square foot of living area. If it's downwards, I wouldn't invest for sure. |
Why do I get a much better price for options with a limit order than the ask price? | There are usually so many different options around for the same stock that some are rarely traded. Especially if the price has moved since the option was issued, nobody might be interested in that particular option at that price anymore. So the asking price might be something that someone asked for ages ago and that is much higher than anyone would reasonably pay today. With a bid of $20 and an ask of $30, nobody is trading, but the value of that option is somewhere between $20 and $30. If the value is below $25, someone will notice your $25 bid and sell. |
How to amend an amended return? | File a 2nd amended return that corrects the mistake I made on the 1st amended return This. Pay the $500 before April 27th and try to get it back later This. |
Impact of EIN on taxation | Is it possible if (After getting EIN) I change my LLC type (disregarded entity or C type or S type or corporation or change in number of members) for tax saving ? You marked your question as "real-estate", so I'm guessing you're holding rental properties in your LLC. That means that you will not be able to qualify for S-Corp, only C-Corp treatment. That in turn means that you'll be subject to double taxation and corporate tax rate. I fail to see what tax savings you're expecting in this situation. But yes, you can do it, if you so wish. I suggest you talk to a licensed tax adviser (EA/CPA licensed in your State) before you make any changes, because it will be nearly impossible to reverse the check-the-box election once made (for at least 5 years). |
How should I handle taxes for Minecraft server donations? | Technically, this is considered "income" for you, and is actually not considered a "donation" for your donors, but is instead a "gift" (not tax-deductible for your donors). So, you are technically required to report it, and there is a pretty significant audit trail that can be followed to prove you made that money. I don't know if PayPal is required to file 1099s for payments received, but if you've ever received such a document, so has the IRS, and they'll match it to the income you claimed and see a discrepancy, triggering an audit. Depending on the amount that it affects your taxes (it can be significant; if you have a $50k/yr day job, you'd owe the government 25 cents on every dollar donated), they can let it slide, they may simply dock your next return, or they may come after you for interest and penalties or even charge you with criminal tax fraud if they could prove you maliciously attempted to conceal this revenue. Now, if you already itemize using a Schedule A, then you can erase this income by deducting the costs of the server, not to exceed the amount of the donations. The best you can do is offset it; you cannot use this deduction to reduce taxable income from other sources. Also, you must itemize; you can't take your standard deduction, and with a maximum possible deduction of the actual costs of running the server ($1500, IF you receive enough donations to fully pay for it) compared to one person's standard deduction ($5800), you'll want to take the standard deduction if you don't have other significant deductions (medical expenses, mortgage interest/property taxes, etc). If you were charging users a monthly fee for use of the server, then you've basically created a de facto sole proprietorship, and you would still have to count the fees as income, but could then deduct the full cost of running the server. You'd fill out a Schedule C listing the revenue and expenses, and back them up with statements from your ISP/hosting company and from PayPal. Now, this would apply if you were running the server with the primary goal of making a regular profit; Schedule C cannot be used for income from a "hobby", undertaken primarily for enjoyment and where a few bucks in revenue is gravy. Whether you think you can get away with that in your current situation is your prerogative; I don't think you would, given that the donations are solicited and optional, and thus there is no expectation of ever turning a profit on this game server. |
My account's been labeled as “day trader” and I got a big margin call. What should I do? What trades can I place in the blocked period? | I assume that whatever you're holding has lost a considerable amount of its value then? What sort of instrument are we talking about? If the margin call is 14k on something you borrowed against the 6900 you're a bit more leveraged than "just" another 100%. The trading company you're using should be able to tell you exactly what happens if you can't cover the margin call, but my hunch is that selling and taking the cash out ceased to be an option roughly at the time they issued the margin call. Being labelled as a day trader or not most likely did not have anything to do with that margin call - they're normally issued when one or more of your leveraged trades tank and you don't have enough money in the account to cover the shortfall. Not trying to sound patronising but the fact that you needed to ask this question suggests to me that you shouldn't have traded with borrowed money in the first place. |
Trading on forex news, Interactive Brokers / IDEALPRO, and slippage | In my experience thanks to algorithmic trading the variation of the spread and the range of trading straight after a major data release will be as random as possible, since we live in an age that if some pattern existed at these times HFT firms would take out any opportunity within nanoseconds. Remember that some firms write algorithms to predict other algorithms, and it is at times like those that this strategy would be most effective. With regards to my own trading experience I have seen orders fill almost €400 per contract outside of the quoted range, but this is only in the most volatile market conditions. Generally speaking, event investing around numbers like these are only for top wall street firms that can use co-location servers and get a ping time to the exchange of less than 5ms. Also, after a data release the market can surge/plummet in either direction, only to recover almost instantly and take out any stops that were in its path. So generally, I would say that slippage is extremely unpredictable in these cases( because it is an advantage to HFT firms to make it so ) and stop-loss orders will only provide limited protection. There is stop-limit orders( which allow you to specify a price limit that is acceptable ) on some markets and as far as I know InteractiveBrokers provide a guaranteed stop-loss fill( For a price of course ) that could be worth looking at, personally I dont use IB. I hope this answer provides some helpful information, and generally speaking, super-short term investing is for algorithms. |
Why invest in becoming a landlord? | why does it make sense financially to buy property and become a landlord? Because then your investment generates cash instead of just sitting idle. All taxes, fees and repairs aside it would take almost 21 years before I start making profits. No - your profit will be the rents that you collect (minus expenses). You still have an asset that is worth roughly what you paid for it (and might go up in value), so you don't need to recoup the entire cost of the property before making a profit. Compared to investing the same 150k in an ETF portfolio with conservative 4% in annual returns I would have made around 140k € after taxes in the same 21 years i.e. almost doubled the money. If you charge 600 € / month (and never miss a month of rental income), after 21 years you have made 151k € in rents plus you still have a property. That property is most likely going to be worth more than you paid for it, so you should have at least 300k € in assets. Having said all that, it does NOT always make sense to invest in rental property. Being a landlord can be a hard job, and there are many risks involved that are different that risks in financial investments. |
New 1099 employee with Cobra insurance | For the first four months of the year, when you were an employee, the health insurance premiums were paid for with pre-tax money. When you receive your W-2 at the end of the year, the amount in Box 1 of the W-2 will be reduced by the amount you paid for health insurance. You can't deduct it on your tax return because it has already been deducted for you. Now that you are a 1099 independent contractor, you are self-employed and eligible for the self-employed health insurance deduction. However, as you noted, the COBRA premiums are likely not eligible for this deduction, because the policy is in your old employer's name. See this question for details, but keep in mind that there are conflicting answers on that question. |
Buying a multi-family home to rent part and live in the rest | A professional home inspection will clue you in on any problems you might be buying, so it's important in any real estate transaction. If the seller finances the loan, you need a lawyer. It might be a nice opportunity - being in the right place at the right time. You just have to investigate all angles. |
Buy or sell futures contracts | Futures contracts are a member of a larger class of financial assets called derivatives. Derivatives are called such because their payoffs depend on the price of other assets (financial or real). Other kinds of derivatives are call options, put options. Fixed income assets that mimic the behavior of derivatives are callable bonds, puttable bonds etc. A futures contract is a contract that specifies the following: Just like with any other contract, there are two parties involved. One party commits to delivering the underlying asset to the other party on expiration date in exchange for the futures price. The other party commits to paying the futures price in exchange for the asset. There is no price that any of the two parties pay upfront to engage in the contract. The language used is so that the agent committing to receiving the delivery of the underlying asset is said to have bought the contract. The agent that commits to make the delivery is said to have sold the contract. So answer your question, buying on June 1 a futures contract at the futures price of $100, with a maturity date on August 1 means you commit to paying $100 for the underlying asset on August 1. You don't have to pay anything upfront. Futures price is simply what the contract prescribes the underlying asset will exchange hands for. |
Why and why would/wouldn't a company split their stock? | From Investopedia, A stock split is usually done by companies that have seen their share price increase to levels that are either too high or are beyond the price levels of similar companies in their sector. The primary motive is to make shares seem more affordable to small investors even though the underlying value of the company has not changed. From Wikipedia, It is often claimed that stock splits, in and of themselves, lead to higher stock prices; research, however, does not bear this out. What is true is that stock splits are usually initiated after a large run up in share price...stock splits do increase the liquidity of a stock; there are more buyers and sellers for 10 shares at $10 than 1 share at $100. Some companies have the opposite strategy: by refusing to split the stock and keeping the price high, they reduce trading volume. Berkshire Hathaway is a notable example of this. Something more to munch on, Why Warren Buffett Is Against Stock Splits. |
Can you please explain what the information in this stock quote means? | Yes, that's what it means. Also, it tells you that the share price went up by $0.39 yesterday, which was an increase of 1.43% from the previous day's price, and that the total value of all of Microsoft's shares is $232.18 billion (from which we can deduce that there are a bit less than 10 billion Microsoft shares in total). |
Paying Off Principal of Home vs. Investing In Mutual Fund | Paying off the debt is low-risk, low-reward. You're effectively guaranteed a 4% return. If you buy a mutual fund, you're going to have to take some risk to have a decent chance of getting better than 4% and change return in the long run, which probably means a fund that invests primarily in stocks. Buying a stock mutual fund is high-risk, high reward, especially when you're in significant debt. On the other hand, 4% and change is very low-interest. If you wanted to buy stocks on margin, financing stock investments directly with debt, you'd pay a heck of a lot more. Bottom line: It comes down to your personal risk tolerance. |
Making $100,000 USD per month, no idea what to do with it | Your #1 problem is the Government both in it's form as a taxation outfit and as a 'law and order' outfit. You'd be very surprised at how fast a bank seizes your bank account in response to a court order. Purchase 100 Mexican 50 Peso Gold (1.2 oz/ea). These coins are cheap (lowest cost to get into) and will not be reportable on sale to taxing authorities. That money is out of the banking system and legal system(s). Do not store them in a bank! You need to find a tax strategist, probably a former IRS agent / CPA type. With the rest remaining money... There's an old saying, Don't fight the Fed. As well as "The trend is your friend". So, the Fed wants all savers fully invested right now (near 0 interest rates). When investing, I find that if you do exactly opposite what you think is the smart thing, that's the best thing. Therefore, it follows: 1) Don't fight the Fed 2) Do opposite of smart 3) Do: Fight the Fed (and stay 100% out of the market and in cash) We're looking like Japan so could remain deflationary for decades to come. Cash is king... |
When following a buy and hold investment strategy, on what conditions should one sell? | You talk about an individual not being advised to sell (or purchase) in response to trends in the market in such a buy and hold strategy. But think of this for a moment: You buy stock ABC for $10 when both the market as a whole and stock ABC are near the bottom of a bear market as say part of a value buying strategy. You've now held stock ABC for a number of years and it is performing well hitting $50. There is all good news about stock ABC, profit increases year after year in double digits. Would you consider selling this stock just because it has increased 400%. It could start falling in a general market crash or it could keep going up to $100 or more. Maybe a better strategy to sell ABC would be to place a trailing stop of say 20% on the highest price reached by the stock. So if ABC falls, say in a general market correction, by less than 20% off its high and then rebounds and goes higher - you keep it. If ABC however falls by more than 20% off its high you automatically sell it with your stop loss order. You may give 20% back to the market if the market or the stock crashes, but if the stock continues going up you benefit from more upside in the price. Take AAPL as an example, if you bought AAPL in March 2009, after the GFC, for about $100, would you have sold it in December 2011 when it hit $400. If you did you would have left money on the table. If instead you placed a trailing stop loss on AAPL of 20% you would have been still in it when it hit its high of $702 in September 2012. You would have finally been stopped out in November 2012 for around the $560 mark, and made an extra $160 per share. And if your thinking, how about if I decided to sell AAPL at $700, well I don't think many would have picked $700 as the high in hindsight. The main benefit of using stop losses is that it takes your emotions out of your trading, especially your exits. |
What are reasons a company would want to be listed on one exchange vs. another? | Listing on NYSE has more associated overhead costs than listing on NASDAQ. In the case of young technology companies, this makes NASDAQ a more attractive option. Perhaps the most important factor is that NYSE requires that a company has an independent compensation committee and an independent nominating committee while NASDAQ requires only that executive compensation and nominating decisions are made by a majority of independent directors. No self-respecting, would-be-instant-billionare tech entreprenuer is going to want some independent committee lording it over their pay packet. Additionally, listing on NYSE requires a company have stated guidance for corporate governance while NASDAQ imposes no such requirement. Similarly, NYSE requires a company have an internal audit team while NASDAQ imposes no such requirement. Fees on NYSE are also a bit higher than NASDAQ, but the difference is not significant. A good rundown of the pros/cons: http://www.investopedia.com/ask/answers/062215/what-are-advantages-and-disadvantages-listing-nasdaq-versus-other-stock-exchanges.asp |
I'm 20 and starting to build up for my mortgage downpayment, where should I put my money for optimal growth? | The highest growth for an investment has historically been in stocks. Investing in mature companies that offer dividends is great for you since it is compound growth. Many oil and gas companies provide dividends. |
Bank statements - should I retain hardcopies for tax or other official purposes (or keep digital scanned copies)? | I am in the United States. There is no need to keep the statements in any form forever. Once the bank gives you a 1099 stating how much interest you have earned, you don't need to keep them. If you only have them in electronic form, that is good enough for the IRS. When you do need to show a bank statement, such as when applying for a loan, the loan company will be keeping a copy. It doesn't matter if it was a scan from the original, from a printed PDF, or if you printed it from your archives. In the US they used send the original check back to the person who wrote it, so they could keep it for their records. Then many banks went to carbons, but if you paid extra they would send you the original. Now the bank that cashes the check scans the check and destroys the original. If you want a copy for your records it only exists as a scanned image. |
What can I do when the trading price of a stock or ETF I want to buy is too high? | You have a couple of options: Auto-investing in an open-end mutual fund. Some companies may waive a minimum if you sign up for an automatic investing, e.g. T. Rowe Price will waive its minimum if you agree to invest $100/month. There may be some lower ones out there as well. Some brokers like ShareBuilder have programs where someone could auto-invest getting fractional shares with each purchase. However, something to consider is what percentage is it costing you to buy each time as it may be quite a bit of friction if you are paying $4 a purchase and only buying $40, this is 10% of your investment being eaten up in costs that I'd highly advise taking the first option. |
Are there any issues with registering an LLC in a foreign state? | No, there are no issues. When you form the corp in DE, you pick a business there to serve as your "agent" (essentially someone who knows to get in contact with you). The "agent" will notify you about taxes and any mail you get, but besides the fee they charge you for being the agent, you should file all the taxes directly with DE (franchise tax is easy to file on the web) instead of going through the agent and paying a surcharge. When your LLC files taxes, you'll do so in DE and then the LLC will issue you a federal and state K1. You'll file taxes where you reside and use the federal K1, but I think you might have to file DE state taxes (unsure about this part, feel free to edit or comment and I'll correct). |
Oversimplify it for me: the correct order of investing | I am a firm believer in the idea of limiting debt as much as possible. I would not recommend borrowing money for anything other than a reasonably sized mortgage. As a result, my recommendations are going to be geared toward that goal. The top priorities for me, then, would be to make sure, first, that we don't have to go further into debt, and second, that we eliminate the debt that we already have as soon as possible. Here is how I would rate your list: A small emergency fund, perhaps $1000 USD, is going to ensure that, while you are funding other things, you don't end up so cash poor that, if something unexpected and urgent comes up, you are forced to add to your credit card debt. Make this small fund your top priority, and it shouldn't take much more than a month or two to do it. Getting out of debt is important, but if your employer hands out free money, you have to take it. It is just too good of a deal. Get rid of this debt as fast as possible. When you are done, you'll have more income available to you than you've ever had before. Now that you have just gotten done eliminating your debt as fast as possible, don't stop there. Take the income you had been throwing at your debt, and build up your emergency fund to a few months' worth of your expenses. Finishing this fund up will enable you to withstand a small crisis without borrowing anything. You are now in a very strong position financially, and can confidently invest. Deciding which type of retirement account is best for you depends on the details of your situation. Once you are contributing a healthy amount to your retirement funds, you may want to consider paying off your mortgage early. As I said before, I recommend getting down to the last step as quickly as possible. Depending on how much debt you actually have, if you sacrifice for a year or two you could be debt free and in a position to keep all of your investment gains. If you take your time paying off debt, like many people do, you could find yourself 10 years from now still making payments on your loans, still making car payments, and still needlessly sending interest to the banks, eating away at the gains you are making in your investments. If you aren't committed to eliminating your debt quickly, and plan on having payments for a long time, then skip this advice and put retirement savings at the top. |
Is there a rule that a merchant must identify themself when making a charge | In some case the customer wants the name to be cryptic or misleading. They don't want to advertise the true nature of the business they visited. In other cases the transaction may be reported through another business. A few years ago the local PTA was having a silent auction as a fundraiser. A local business allowed the PTA to use their credit card reader to process transactions over a certain amount. Of course when the credit card statement arrived it looked like you spent $500 at the florist. I have seen PayPal listed when donating to some small charities. I have noted another case where confusion can occur. I used a debit card to buy a soda from a vending machine: the name and location were the name of the vending machine company and the location of their main office. It didn't say soda machine city A. It said Joe's vending company city B. In most cases the business and the credit card company want to make it easy to identify the transactions to keep the cost of research and charge backs to a minimum. |
In general, is it financially better to buy or to rent a house? | Forget, for the moment, which will pay off most over the long term. Consider risk exposure. You've said that you (hypothetically) have "little or no money": that's the deal-breaker. From a risk-management perspective, your investment portfolio would be better off diversified than with 90% of your assets in a house. Consider also the nature of the risk which owning a house exposes you to: Housing prices are generally tied to the state of the economy. If the local economy crashes, not only could you lose your job, but you could lose a good part of the value of your house... and still owe a lot on your loan. (You also might not be able to move as easily if you found a new job somewhere else.) You should almost certainly rent until you're more financially stable and could afford to pay the new mortgage for a year (or more) if you suddenly lost your job. Then you can worry more about maximizing your investments' rate of return. |
using credit card and paying back quickly | Yes, however you would have to wait for the $900 to actually be available in your credit card account if making the transaction from an account from another bank or provider, as it usually might take one to two business days for this to happen. If both the chequing account and credit card account are with the same bank, then usually this will go through straight away, and you will be able to make your next purchase on the same day, but I would check your credit card balance first before making that purchase. |
In what category would I put a loan I took to pay an expense | A loan is most generally a liability, a part of the balance sheet. Expenses & income are part of the income statement. Income is the net of revenues after expenses. The interest is an expense on the income statement, but the loan itself does not reside there unless if it is defaulted and forgiven. Then it would become a revenue or contra-expense, depending on the methodology. The original purpose of the income statement is to show the net inflows of short term operational accruals which would exclude new borrowing and repaid loans. The cash flow statement will better show each cash event such as borrowing debt, repaying debt, or paying off a bill. To show how a loan may have funded a bill, which in theory it directly did not because an entity, be it a person or business, is like a single tank of water with multiple pipes filling and multiple pipes extracting, so it is impossible to know which exact inflow funded which exact outflow unless if there is only one inflow per period and one outflow per the same period. That being said, with a cash flow statement, the new loan will show a cash inflow when booked under the financing portion, and paying a bill will show a cash outflow when booked under the operating portion. With only those two transactions booked and an empty balance sheet beforehand, it could be determined that a new loan funded a bill payment. |
Can I participate in trading Facebook shares on their IPO day from any brokerage? | By definition, an IPO'd stock is publicly traded, and you can buy shares if you wish. There's often an excitement on the first day that doesn't carry over to the next days or weeks. The opening price may be well above the IPO price, depending on that demand. |
New or Used Car Advice for Recent College Grad | 17.5 thousand miles/year is pretty high mileage. You could find an Accord or Civic of comparable age with much lower mileage than that, and it wouldn't be a stretch for someone (even with your limited credit history) to get a loan on an old car like that. You might try to have your parents cosign on a loan depending on their financial circumstances. That's how I bought my first car 13 years ago. The biggest surprise you might want to consider is the cost of full collision auto coverage which will be required by whatever bank you finance through. Get quotes for that before signing any papers. (I spent $2000 more on a motorcycle because the more powerful one cost $2000 less/year to insure just a few years after I bought that first car.) Speaking of which, another thing to consider given the nice LA weather is a motorcycle. The total cost of ownership is much lower than a car. You will probably not want to pursue that option if you do not have medical insurance, and you may not want to anyway. |
Why is company provided health insurance tax free, but individual health insurance is not? | During World War II, the United States (US) instituted wage and price controls. To attract better employees, companies would offer benefits to get around salary limits. Health insurance was one of the more successful benefits. At that time, income taxes were newer and there were many ways to evade them. Companies could generally deduct expenses. So at that time, health care was deductible because everything was. And at that time, only wages were taxable compensation from employer to employee. Since that time, many other benefits have become non-deductible for employers, e.g. housing or the reduced deduction for meals and entertainment. But health care is generally regarded as different, as a necessity. While everyone needs to eat, not everyone needs to eat at a $100 a meal restaurant. People who need expensive health care really need it. People who eat expensive food just prefer it. And of course, health care is more intermittent where food is relatively consistent. You don't need ten thousand calories one day and zero the next. But some families have no health care expenses in a year while another might have cancer or a pregnancy. Note that medical care expenses can be deducted for individuals if they are large enough in aggregate and you itemize. And of course both businesses and workers have incentives to maintain the current system with deductibility. Health insurance is a common benefit. Housing is not (although it's worth noting that travel housing and meals are deductible). So there have been few people impacted by making housing taxable while many people would be impacted by taxable health insurance. You can deduct health insurance costs if self-employed. It's also not true that health insurance is the only benefit with preferential tax treatment. Retirement and child care are also deductible. Even meals and housing can be deducted in certain circumstances. The complex rules about what and how much is deductible. There have been rumbles about normalizing the tax treatment of health insurance and medical care, but there is a lot of opposition. Insurance companies oppose making all healthcare expenses deductible, as that reduces their effective benefit. They would prefer only insurance premiums be deductible. Traditionally employed individuals oppose making health insurance taxable, as that would increase their taxes. So the situation persists. There isn't quite enough support to move in either direction, although the current compromise is economically silly. |
Learn investing as a programmer | My master's thesis was on using genetic algorithms and candle stick method. If you are familiar, the AI was used to answer questions like "what is a long day", which is not formally defined in most candle stick texts. So in theory unlimited potential for learning including teaching machines to learn. Wall street pays pretty well for such developers, and if you are young and single man Manhattan is pretty sweet place to be. In practicality your formula for building wealth is the same as everyone else's: get out of debt, build an emergency fund, and invest. Initially invest in growth stock mutual funds through a 401K (assuming US). |
Multiple accounts stagnant after quitting job. | You ask multiple question here. The 401(k) - move it to an IRA. As others stated,this will lower your costs, and open up a potential I didn't see mentioned, the conversion to a Roth IRA. A year in which your income is lower than average is a great opportunity to convert a bit of the IRA enough to "top off" the lower bracket in which you may find yourself. The company stock? If you never worked for the company would you have bought this stock? Would you buy it now? If not, why keep it? The loan is the toughest decision. Will you sleep better if it were paid in full? What's the rate? 6% or more, I'd pay it off, under 4%, less likely. I'd invest much of the cash and the $8000 in stock in a Dilip-recommended VFINX, and use the dividends to pay the loan each month. |
When will the U.K. convert to the Euro as an official currency? | Not anytime soon, I suspect, but not necessarily for financial reasons. I found this interesting, including the link to the five tests, but I think that this topic is only partially judged through financial eyes, there's a lot of political issues around this with national identity/immigration issues already in the spot light as well as political aspirations. If there will be a call in the near future to join the Euro, how would that reflect on the financial industry in the UK from a PR perspective? and on the political leadership and how it managed the financial crisis? I believe that it is in the interest of all the people in the high positions to show the country getting back on track rather than making ground shaking moves. But what do I know....:-) |
Equity - date of offer, or date of joining? | Options or Shares vest by date they are granted. It would strike me as odd for anyone to say their shares were given with 4 year vesting, but the clock was pre-started years prior. In my opinion, you have nothing to complain about. |
Tax withheld by USA working in UK (Form 1042-S and Form 1099) | The shares are "imputed income" / payment in kind. You worked in the UK, but are you a "US Person"? If not, you should go back to payroll with this query as this income is taxable in the UK. It is important you find out on what basis they were issued. The company will have answers. Where they aquired at a discount to fair market value ? Where they purchased with a salary deduction as part of a scheme ? Where they acquired by conversion of employee stock options ? If you sell the shares, or are paid dividends, then there will be tax withheld. |
Why do cash back credit cards give a higher rate for dining and gasoline purchases? | These two categories ensure you will carry the card in your wallet (since they only work for physical locations), but don't tend to have excessive spending (most people maxing out at $200 or so per month, so $2 for the bonus). You then use the same card for other purchases, because you have it on you, where you only get the 1%. It worked for me, I started carrying the Amazon card when I found out it had a higher percentage for gas purchases. I only use it for gas though. |
Why would anyone want to pay off their debts in a way other than “highest interest” first? | If you have a debt that has very low interest now, but you are aware that it's not going to stay that way (0% introductory APR on a credit card, for example), it can make sense to pay that off before the higher rate kicks in. |
Is the address on 1040 and MD resident 502 my previous address in 2013 or my current address? | No, always give the most current address information to the IRS, not least because they will use this address to send you important communications, such as refund checks or notices of deficiency. Per the 1040 Instructions, you should put in your address, with no mention of past addresses. Moreover, if you will change addresses after filing, the IRS has provided Form 8822 to notify them of the new address. There is a similar Form 8822-B for business addresses. They will use your Social Security Number (SSN), Individual Taxpayer Identification Number (ITIN), or Employer Identification Number (EIN) to track who you are. There's no point to purposely giving an invalid address, and in fact it's technically illegal since you will sign and certify the return as true and accurate to the best of your knowledge. |
I cosigned for a friend who is not paying the payment | I am not sure how anyone is answering this unless they know what the loan was for. For instance if it is for a house you can put a lien on the house. If it is for the car in most states you can take over ownership of it. Point being is that you need to go after the asset. If there is no asset you need to go after you "friend". Again we need more specifics to determine the best course of action which could range from you suing and garnishing wages from your friend to going to small claims court. Part of this process is also getting a hold of the lending institution. By letting them know what is going on they may be able to help you - they are good at tracking people down for free. Also the lender may be able to give you options. For example if it is for a car a bank may help you clear this out if you get the car back plus penalty. If a car is not in the red on the loan and it is in good condition the bank turns a profit on the default. If they can recover it for free they will be willing to work with you. I worked in repo when younger and on more than a few occasions we had the cosigner helping. It went down like this... Co-signer gets pissed like you and calls bank, bank works out a plan and tells cosigner to default, cosigner defaults, banks gives cosigner rights to repo vehicle, cosigner helps or actually repos vehicle, bank gets car back, bank inspects car, bank asks cosigner for X amount (sometimes nothing but not usually), cosigner pays X, bank does not hit cosigners credit, bank releases loan and sells car. I am writing this like it is easy but it really requires that asset is still in good condition, that cosigner can get to the asset, and that the "friend" still is around and trusts cosigner. I have seen more than a few cosigners promise to deliver and come up short and couple conspiring with the "friend". I basically think most of the advice you have gotten so far is crap and you haven't provided enough info to give perfect advice. Seeking a lawyer is a joke. Going after a fleeing party could eat up 40-50 billable hours. It isn't like you are suing a business or something. The lawyer could cost as much as repaying the loan - and most lawyers will act like it is a snap of their fingers until they have bled you dry - just really unsound advice. For the most part I would suggest talking to the bank and defaulting but again need 100% of the details. The other part is cosigning the loan. Why the hell would you cosign a loan for a friend? Most parents won't cosign a loan for their own kids. And if you are cosigning a loan, you write up a simple contract and make the non-payment penalties extremely costly for your friend. I have seen simple contracts that include 30% interests rates that were upheld by courts. |
Why does the Fed use PCE over CPI? | (the average person doesn't care nor are they affected by how much their employer spends in healthcare) It may be true that the average person doesn't care how much their employer spends on healthcare, but it's not true that we aren't affected. From an employer's perspective, healthcare, wages, and all other benefits are part of the cost of having an employee. When healthcare goes up, it increases the total employee cost. Employers can handle this in several ways. They could reduce the amount they give investors (as dividends, stock buybacks, etc.). But then the stock is worth less and they have to make up the money somewhere else. They could pass the expense on to customers. But then the loss in business can easily cost more than the revenue raised. They can cut wages or other benefits. Then the average person will start caring...and might get a different job. (I found this article saying that 12M households spend >=50% of income on rent, so I'm assuming that an even greater number spend more than the recommended 30%, which means rent should be weighted as high as it is in CPI.) According to the census, that's only about 10% of households. It also notes that 64.4% of households are owner-occupied. They don't pay rent. The CPI makes up a number called owner's equivalent rent for those households to get to the higher percentage. The CPI is intended for things like wages. This makes it a good choice for a cost of living adjustment, but it doesn't quite represent the overall economy. And for investments, it's the broader economy that matters. Household consumption is less important. What the Fed says. |
What should I be doing to protect myself from identity theft? | Here are a handful of measures I take myself: I check my credit reports once in a while and look for anything out of the ordinary. If somebody calls me on the telephone claiming to be from my bank or credit card company, utility, etc. I ask for their number, check it, and call them back. I don't give personal information to people merely claiming to be from a place I do business with. I never fill out ballots for free contests. Most of the time these are scams. When I get a call telling me "you won a free cruise" for a ballot I supposedly filled out at the mall, I say they're lying through their teeth. For excitement, I'll sometimes buy a lotto ticket instead. I'm careful when I surf the web. I don't give my personal information to web sites I can't trust. If they look the least bit shady, I'm out. Also, I use different passwords at different web sites. I avoid using a password from a public terminal, but when I must, I change my password soon after. I'm careful when I download software. I don't install anything I didn't get from a trusted source. I pay for software when necessary, so finding a trusted source is not hard. But, I've heard of people who – to save a buck – would download a pirated application from a shady warez site only to be "gifted" a trojan horse key logging or other spyware along with it. When I no longer need a bill, receipt, statement, etc. or any document containing personal information, I shred it, and I use a shredder that does a micro-cut, not just a strip- or cross-cut. The micro-cut remains go in the green bin with wet and yucky organic waste. When I no longer need a hard drive, I use a secure wiping tool like Darik's Boot & Nuke before reusing. If the drive isn't worth reusing, I'll wipe first then take apart with my Torx screwdriver. Once I have the drive platter, I scratch the heck out of it. Remains go to the community recycling depot. That's all I can think of right now; I probably missed a few :-) So, what do others do? I'm curious, too. |
Has anyone compared an in-person Tax Advisor to software like Turbo Tax? | I did my own taxes previously using both H&R Block Tax Cut and TurboTax. When I had a simple return and was single, it worked great. Once I got married it was a little more complicated. When I started a small side business, I switched to an accountant. He does a great job of adjusting deductions between my wife and I and filing separately. This minimizes the amount of taxes we have to pay. It has been a few years since I used the software, but I did not see the ability to easily make adjustments like that. |
Won an incentive trip in 2013, left employer in 2014, received an earning statement with no cash but a huge tangible bonus listed | I had experience working for a company that manufactures stuff and giving products to the employees. The condition was to stay employed for a year after the gift for the company to cover its cost (I think they imputed the tax), otherwise they'd add the cost to the last paycheck (which they did when I left). But they were straight-forward about it and I signed a paper acknowledging it. However, in your case you didn't get a product (that you could return when leaving if you didn't want to pay), but rather a service. The "winning" trip was definitely supposed to be reported as income to you last year. Is it okay for them to treat me differently than the others for tax purposes? Of course not. But it may be that some strings were attached to the winning of the incentive trip (for example, you're required to stay employed for X time for the company to cover the expense). See my example above. Maybe it was buried somewhere in small letters. Can they do this a year after the trip was won and redeemed? As I said - in this case this sounds shady. Since it is a service which you cannot return - you should have been taxed on it when receiving it. Would the IRS want to know about this fuzzy business trip practice? How would I report it? Here's how you can let them know. Besides now understanding the new level of slime from my former employer is there anything else I should be worried about? Could they do something like this every year just to be annoying? No, once they issued the last paycheck - you're done with them. They cannot issue you more paychecks after you're no longer an employee. In most US States, you are supposed to receive the last paycheck on your last day of work, or in very close proximity (matter of weeks at most). |
What are the consequences of being classified as a day trader, in Australia? | In Australia the ATO can determine if you are considered a shareholder or a share trader. The ATO defines a shareholder as: A shareholder is a person who holds shares for the purpose of earning income from dividends and similar receipts. Whilst they define a share trader as: A share trader is a person who carries out business activities for the purpose of earning income from buying and selling shares. To find out the differences between them you can refer to the following link describing The difference between a share trader and a shareholder. The ATO also describes: To be classed as a share trader, you may be asked to provide evidence that demonstrates you are carrying on a business of share trading, for example: the purchase of shares on a regular basis through a regular or routine method a trading plan use of share trading techniques in managing your share acquisitions, such as decisions based on thorough analysis of relevant market information a contingency plan in the event of a major shift in the market. Losses incurred in the business of share trading are treated the same as any other losses from business. If your activities change from investor to trader, your investment changes from a CGT (capital gains tax) asset to trading stock. This can trigger CGT event for any investments you currently hold as they change from CGT assets to trading stock. Once you have changed over to a trader you will not be entitled to the 50% CGT discount for stocks held over 12 months. You will, however, be able to count any paper losses at the end of Financial Year to reduce your other income. |
Personal Loan issuer online service | It is pretty easy to setup a spreadsheet for calculating interest payments and remaining balance. Do a quick search online. You may want to put it in something like Google Docs, where brother can view the status, but only you can edit it. When you get a payment, a portion goes to interest and another to principle. The formulas will do the work for you. However, I feel that there is a bigger issue. The math may seem like a good deal for the both of you, but I would be very hesitant to loan a family member money. What if he does not pay? What if he is late with a payment and goes on a vacation himself? What if his significant other resents the payment that you collect which precludes her from buying a new TV, etc... People come to hate/resent big corporations that they have to make payments. How much more so one that has a face....that comes over and eats? While this loan is outstanding holidays may never be the same. Is the loan a real need? Are you in a position to give them the money? You may want to consider the latter. Is there a reason he can't just borrow the money from the bank? |
Company is late in paying my corporate credit card statement - will it hurt my credit? | According to an article on Bankrate.com from 2011, yes, it can hurt your credit: With individual liability accounts, the employee holds all responsibility for the charges, even if the company pays the issuer directly. Joint liability means the company and employee share the responsibility for payments, says Mahendra Gupta, author of the RPMG survey. In both cases, if the card isn't paid and the account becomes delinquent, it will pop up on the employee's credit report and dent his or her credit score, says Barry Paperno, consumer affairs manager at myFICO.com. It doesn't matter if the company was supposed to make the payment; the repercussions fall on the employee. "It will impact your score no differently than if you were late on one of your own accounts," Paperno says. Usually, with corporate credit cards, the employee is liable along with the employer for charges on the card. The intent is to provide the employee with an incentive not to misuse the card. However, this can be a problem if your company is late in paying bills. In the distant past, I had a corporate credit card. I was not supposed to have to pay the bill, but I did receive a bill in the mail every month. And occasionally, the payment was late. In my case, these late payments never showed up on my credit report. I can't remember now whether or not this card was reported on my credit report at all. And I remember being told when I got the card that I was jointly responsible for the card with the company. However, your experience may be different. Do the on-time payments show up on your credit report? If so, that may be an indication that a late payment might appear. |
Does the IRS reprieve those who have to commute for work? | When I have a question about my income taxes, the first place I look is generally the Giant Book of Income Tax Information, Publication 17 (officially called "Your Federal Income Tax"). This looks to be covered in Chapter 26 on "Car Expenses and Other Employee Business Expenses". It's possible that there's something in there that applies to you if you need to temporarily commute to a place that isn't your normal workplace for a legitimate business reason or other business-related travel. But for your normal commute from your home to your normal workplace it has this to say: Commuting expenses. You cannot deduct the costs of taking a bus, trolley, subway, or taxi, or of driving a car between your home and your main or regular place of work. These costs are personal commuting expenses. You cannot deduct commuting expenses no matter how far your home is from your regular place of work. You cannot deduct commuting expenses even if you work during the commuting trip. |
What is the difference between a scrip dividend and a stock split? | Most corporations have a limit on the number of shares that they can issue, which is written into their corporate charter. They usually sell a number that is fewer than the maximum authorized number so that they have a reserve for secondary offerings, employee incentives, etc. In a scrip dividend, the company is distributing authorized shares that were not previously issued. This reduces the number of shares that it has to sell in the future to raise capital, so it reduces the assets of the company. In a split, every share (including the authorized shares that haven't been distributed) are divided. This results in more total shares (which then trade at a price that's roughly proportional to the split), but it does not reduce the assets of the company. |
Long term investment for money | I know of no way to answer your question without 'spamming' a particular investment. First off, if you are a USA citizen, max out your 401-K. Whatever your employer matches will be an immediate boost to your investment. Secondly, you want your our gains to be tax deferred. A 401-K is tax deferred as well as a traditional IRA. Thirdly, you probably want the safety of diversification. You achieve this by buying an ETF (or mutual fund) that then buys individual stocks. Now for the recommendation that may be called spamming by others : As REITs pass the tax liability on to you, and as an IRA is tax deferred, you can get stellar returns by buying a mREIT ETF. To get you started here are five: mREITs Lastly, avoid commissions by having your dividends automatically reinvested by using that feature at Scottrade. You will have to pay commissions on new purchases but your purchases from your dividend Reinvestment will be commission free. Edit: Taking my own advice I just entered orders to liquidate some positions so I would have the $ on hand to buy into MORL and get some of that sweet 29% dividend return. |
Personal Loan issuer online service | http://www.calcamo.net/loancalculator/simulation/fixed-rate-loan.php5 This website is a calculator only and has some extra features that take into account late payments, paying extra to reduce principal, and has the ability to export amortization table to excel that you could use to keep track of the loan. If you are looking for a web site to manage and keep track of the whole process, reminder emails, accepting credit card payments, etc.. paybaq.com may be right for you. |
How to read a chart after a split? | The share price on its own has little relevance without looking at variations. In your case, if the stock went from 2.80 to 0.33, you should care only about the 88% drop in value, not what it means in pre-split dollar values. You are correct that you can "un-split" to give you an idea of what would have been the dollar value but that should not give you any more information than the variation of 88% would. As for your title question, you should read the chart as if no split occurred as for most intents and purposes it should not affect stock price other than the obvious split. |
Side work and managing finances? | I've done various side work over the years -- computer consulting, writing, and I briefly had a video game company -- so I've gone through most of this. Disclaimer: I have never been audited, which may mean that everything I put on my tax forms looked plausible to the IRS and so is probably at least generally right, but it also means that the IRS has never put their stamp of approval on my tax forms. So that said ... 1: You do not need to form an LLC to be able to claim business expenses. Whether you have any expenses or not, you will have to complete a schedule C. On this form are places for expenses in various categories. Note that the categories are the most common type of expenses, there's an "other" space if you have something different. If you have any property that is used both for the business and also for personal use, you must calculate a business use percentage. For example if you bought a new printer and 60% of the time you use it for the business and 40% of the time you use it for personal stuff, then 60% of the cost is tax deductible. In general the IRS expects you to calculate the percentage based on amount of time used for business versus personal, though you are allowed to use other allocation formulas. Like for a printer I think you'd get away with number of pages printed for each. But if the business use is not 100%, you must keep records to justify the percentage. You can't just say, "Oh, I think business use must have been about 3/4 of the time." You have to have a log where you write down every time you use it and whether it was business or personal. Also, the IRS is very suspicious of business use of cars and computers, because these are things that are readily used for personal purposes. If you own a copper mine and you buy a mine-boring machine, odds are you aren't going to take that home to dig shafts in your backyard. But a computer can easily be used to play video games or send emails to friends and relatives and lots of things that have nothing to do with a business. So if you're going to claim a computer or a car, be prepared to justify it. You can claim office use of your home if you have one or more rooms or designated parts of a room that are used "regularly and exclusively" for business purposes. That is, if you turn the family room into an office, you can claim home office expenses. But if, like me, you sit on the couch to work but at other times you sit on the couch to watch TV, then the space is not used "exclusively" for business purposes. Also, the IRS is very suspicious of home office deductions. I've never tried to claim it. It's legal, just make sure you have all your ducks in a row if you claim it. Skip 2 for the moment. 3: Yes, you must pay taxes on your business income. If you have not created an LLC or a corporation, then your business income is added to your wage income to calculate your taxes. That is, if you made, say, $50,000 salary working for somebody else and $10,000 on your side business, then your total income is $60,000 and that's what you pay taxes on. The total amount you pay in income taxes will be the same regardless of whether 90% came from salary and 10% from the side business or the other way around. The rates are the same, it's just one total number. If the withholding on your regular paycheck is not enough to cover the total taxes that you will have to pay, then you are required by law to pay estimated taxes quarterly to make up the difference. If you don't, you will be required to pay penalties, so you don't want to skip on this. Basically you are supposed to be withholding from yourself and sending this in to the government. It's POSSIBLE that this won't be an issue. If you're used to getting a big refund, and the refund is more than what the tax on your side business will come to, then you might end up still getting a refund, just a smaller one. But you don't want to guess about this. Get the tax forms and figure out the numbers. I think -- and please don't rely on this, check on it -- that the law says that you don't pay a penalty if the total tax that was withheld from your paycheck plus the amount you paid in estimated payments is more than the tax you owed last year. So like lets say that this year -- just to make up some numbers -- your employer withheld $4,000 from your paychecks. At the end of the year you did your taxes and they came to $3,000, so you got a $1,000 refund. This year your employer again withholds $4,000 and you paid $0 in estimated payments. Your total tax on your salary plus your side business comes to $4,500. You owe $500, but you won't have to pay a penalty, because the $4,000 withheld is more than the $3,000 that you owed last year. But if next year you again don't make estimated payment, so you again have $4,000 withheld plus $0 estimated and then you owe $5,000 in taxes, you will have to pay a penalty, because your withholding was less than what you owed last year. To you had paid $500 in estimated payments, you'd be okay. You'd still owe $500, but you wouldn't owe a penalty, because your total payments were more than the previous year's liability. Clear as mud? Don't forget that you probably will also owe state income tax. If you have a local income tax, you'll owe that too. Scott-McP mentioned self-employment tax. You'll owe that, too. Note that self-employment tax is different from income tax. Self employment tax is just social security tax on self-employed people. You're probably used to seeing the 7-whatever-percent it is these days withheld from your paycheck. That's really only half your social security tax, the other half is not shown on your pay stub because it is not subtracted from your salary. If you're self-employed, you have to pay both halves, or about 15%. You file a form SE with your income taxes to declare it. 4: If you pay your quarterly estimated taxes, well the point of "estimated" taxes is that it's supposed to be close to the amount that you will actually owe next April 15. So if you get it at least close, then you shouldn't owe a lot of money in April. (I usually try to arrange my taxes so that I get a modest refund -- don't loan the government a lot of money, but don't owe anything April 15 either.) Once you take care of any business expenses and taxes, what you do with the rest of the money is up to you, right? Though if you're unsure of how to spend it, let me know and I'll send you the address of my kids' colleges and you can donate it to their tuition fund. I think this would be a very worthy and productive use of your money. :-) Back to #2. I just recently acquired a financial advisor. I can't say what a good process for finding one is. This guy is someone who goes to my church and who hijacked me after Bible study one day to make his sales pitch. But I did talk to him about his fees, and what he told me was this: If I have enough money in an investment account, then he gets a commission from the investment company for bringing the business to them, and that's the total compensation he gets from me. That commission comes out of the management fees they charge, and those management fees are in the same ballpark as the fees I was paying for private investment accounts, so basically he is not costing me anything. He's getting his money from the kickbacks. He said that if I had not had enough accumulated assets, he would have had to charge me an hourly fee. I didn't ask how much that was. Whew, hadn't meant to write such a long answer! |
Why do people build a stock portfolio if one could get a higher return from bank interest than dividend per annum? | Large companies whose shares I was looking at had dividends of the order of ~1-2%, such as 0.65%, or 1.2% or some such. My savings account provides me with an annual return of 4% as interest. Firstly inflation, interest increases the numeric value of your bank balance but inflation reduces what that means in real terms. From a quick google it looks like inflation in india is currently arround 6% so your savings account is losing 2% in real terms. On the other hand you would expect a stable company to maintain a similar value in real terms. So the dividend can be seen as real terms income. Secondly investors generally hope that their companies will not merely be stable but grow in value over time. Whether that hope is rational is another question. Why not just invest in options instead for higher potential profits? It's possible to make a lot of money this way. It's also possible to lose a lot of money this way. If your knowlage of money is so poor you don't even understand why people buy stocks there is no way you should be going near the more complicated financial products. |
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. |
question regarding W4 | There are still ways that the default values on the W4 can lead you to get a refund or owe the IRS. If there was a big delta in your paychecks, it can lead to problems. If you make 260,000 and get 26 paychecks that means each check had a gross of 10,000. Your company will withhold the same amount from each check. But If you earned a big bonus then the smaller regular paychecks may not have been withholding enough. When bonus checks are involved the payroll office has to treat them as irregular pay to be able to make it work out. Some companies don't do this, so you may under or over pay during the year. If you changed companies during the year, this can lead to under or over payment. The lower paying company would not know about the higher rate of pay at the other company. so at one you would under pay, and the other you would over pay. There are also social security issues with more than one employer. |
Is real (physical) money traded during online trading? | This is somewhat of a non-answer but I'm not sure you'll ever find a satisfying answer to this question, because the premises on which the question is based on are flawed. Money itself does not "exist physically," at least not in the same sense that a product you buy does. It simply does not make sense to say that you "physically own money." You can build a product out of atoms, but you cannot build a money out of atoms. If you could, then you could print your own money. Actually, you can try to print your own money, but nobody would knowingly accept it and thus is it functionally nonequivalent to real money. The paper has no intrinsic value. Its value is derived from the fact that other people perceive it as valuable and nowhere else. Ergo paper money is no different than electronic money. It is for this reason that, if I were you, I would be okay with online Forex trading. |
How prudent would it be to invest (stocks/equity) in businesses that are based on Cash transactions? | Every listed company needs to maintain book of accounts, when you are investing in companies you would have to look at what is stated in the books and along with other info decide to invest in it. |
Borrowing 100k and paying it to someone then declaring bankruptcy | This is called a fraudulent conveyance because its purpose is to prevent a creditor from getting repaid. It is subject to claw back under US law, which is a fancy way of saying that your friend will have to pay the bank back. Most jurisdictions have similar laws. It is probably a crime as well, but that varies by jurisdiction. |
If someone gives me cash legally, can my deposit trigger an audit for them? | Am I right to worry about both of these? Of course. Who carries $75K in cash for no good reason? Your friend got the cash from somewhere, didn't he? If its legit - there's paper trail to show. Same for your parents. If you/they can show the legit paper trail - there's nothing to worry about, the hassle, at worse, is a couple of letters to the IRS. If the money is not legit (your friend is selling crack to the kids in the hood and your parents robbed a 7/11 to give you the money, for example) - there may be problems. |
Premium classification when selling covered calls in a traditional IRA? | If you hold stock in a traditional IRA and sell a covered call against that stock, the premium received for writing that call belongs to the IRA just as would any other gain, dividend, or interest. It is not a contribution but simply adds to the balance in the IRA. The nature of the gain (capital or ordinary) is not relevant since all parts of the IRA balance are treated the same when funds are (eventually) withdrawn. |
Employer rollover from 403b to 401k? | 403b plans are used by school districts, colleges and universities, nonprofit hospitals, charitable foundations and the like for their employees while 401k plans are used by most everybody else. I would suspect that a school district etc can use a 401k plan instead of a 403b plan if it chooses to do so, but the reverse direction is most likely forbidden: a (for-profit) company cannot use a 403b plan. One difference between a 403b plan and a 401k plan is that the employer can choose to offer, and the employee can choose to purchase, stock in the company inside the 401k plan. This option obviously is not available to charities etc. which don't issue stock. Your comment that the 403b plan invests solely in (variable) annuities suggests that the plan administrator is an insurance company and that the employer is moving to more "modern" version that allows investments in mutual funds and the like. Forty years ago, my 403b plan was like that; the only investment choice was an annuity, but some time in the 1980s, the investment choices were broadened to include mutual funds (possibly because the 1986 Tax Reform Act changed the rules governing 403b plans). So, are you sure that your employer is changing from a 403b plan to a 401k plan, or is it just a change of 403b plan administrator from the insurance company to another administrator who offers investment choices other than an annuity? Note, of course, that insurance companies have changed their options too. For example, TIAA (the Teachers' Insurance and Annuity Association) which was the 403b plan administrator for many schools and colleges became TIAA/CREF (College Retirement Equities Fund) where the CREF mutual funds actually were pretty good investments. |
Gap in domestic Health Insurance coverage, expect higher premiums? | The insurance company is must assume you do have a preexisting condition you are unaware of. The reason for that is that Affordable Care Act precludes the Insurance company from denying coverage of them if you do. Insurance companies are businesses. They are in business to make money(unless you have a nonprofit insurer). They can not do that if you can buy insurance only when you need for them to pay out. So even though you may not have a preexisting condition, they are precluded from requiring an examination that would detect the most expensive preexisting conditions (hidden cancers, neurological, autoimmune disorders). So the companies must do what takes business sense and either deny you coverage or charge a rate that covers the risk they would be forced to take. In your question on travel there was a response that suggested you get international health insurance instead of travel health insurance that would be considered credible coverage. You are trying to save money which on a personal level is a good idea. However that is against the societal and business need that you maintain health coverage during your healthy times to cover the costs of those who need expensive treatment. So you will be monetarily penalized should you choose to reenter the society of insured people. Once you have paid the higher rate for up to 18 months you should be able to get a better policy for people who have had continuous coverage. Alternately you may be lucky enough to start working for a company that provides health insurance with out requiring continuous coverage. |
Why invest for the long-term rather than buy and sell for quick, big gains? | On Black Friday, 1929,the market fell from over 350 to just above 200. If you were following your plan then you would buy in at about 200. But look what the market did for two years after Black Friday. It went down to about 50. You would have lost around 75% of your capital. |
What are some good ways to control costs for groceries? | If you are willing to use one main credit card for shopping, use a grocery points rewards card like PC Financial Mastercard. Pay for the groceries using the card to earn points and use those points to reduce costs. The only limitation is that you must shop at Loblaws, Superstore, No Frills, Zehrs, Fortinos. It works out to $1 = 10 points and 20,000 points = $20. So that works out to spend $1 to earn back $0.01. |
How is it possible that a stock has a P/E of 0.01? | See Berkshire Hathaway Inc. (BRK-A) (The Class A shares) and it will all be clear to you. IMHO, the quote for the B shares is mistaken, it used earning of A shares, but price of B. strange. Excellent question, welcome to SE. Berkshire Hathaway is a stock that currently trades for nearly US$140,000. This makes it difficult for individual investors to buy or sell these shares. The CEO Warren Buffet chose to reinvest any profits which means no dividends, and never to split the shares, which meant no little liquidity. There was great pressure on him to find a way to make investing in Berkshire Hathaway more accessible. In June '96, the B shares were issued which represented 1/30 of a share of the Class A stock. As even these "Baby Berks" rose in price to pass US$4500 per share, the stock split 50 to 1, and now trade in the US$90's. So, the current ratio is 1500 to 1. The class B shares have 1/10,000 the voting rights of the A. An A share may be swapped for 1500 B shares on request, but not vice-versa. |
Executing a stop loss at the purchase price? | You will lose out on your spread, you always pay a spread. Also, if you are looking at a strategy for using stop losses, try taking into account the support lines if you are going long. So, if the stock is on an upward trend but is dropping back from profit taking, your best best is to take a position closest to the next support line. You place your stop just below the support. this will give you the best chance of a winning position as most technical analysts will have looking towards the support as a buy back area. Obviously, in a bear market the opposite is true. If you have taken your position and the market move past the first resistance line, then bring your stop to just below that line as once resistance is broken, it then becomes support. You then have a profitable position with profit locked in. Leave the position to break the next resistance and repeat. |
Are there any benefits to investing with a group of friends vs. by myself? | The benefits of pooling your money with others: The drawbacks of pooling your money with others: Practically Speaking - I say go for it. You stand to gain a lot of knowledge about how money works without having too much on the line. Good luck! |
How FTB and IRS find mistakes in amended tax returns? Are their processes reliable? | The FTB, as any government agency, is understaffed and underpaid. Even if someone took a glance and it wasn't just an automated letter - consider the situation: you filed as a LLC and then amended to file as a partnership. Unless someone really pays attention - the obvious assumption would be that you had a limited partnership. Yes, you'll need to call them and work with them on fixing this. They do have all the statements you've attached. However, there's a lot of automation and very little attention to details when it comes to matching errors, so don't get surprised if no-one even looked at these statements. Next time your elected government officials talk about "small government" and "cutting government expenses" - you can remind yourself how it looks in action with this experience. |
When are investments taxed? | Unless your investments are held within a special tax-free account, then every sale transaction is a taxable event, meaning a gain or loss (capital gain/loss or income gain/loss, depending on various circumstances) is calculated at that moment in time. Gains may also accrue on unrealized amounts at year-end, for specific items [in general in the US, gains do not accrue at year-end for most things]. Moving cash that you have received from selling investments, from your brokerage account to your checking account, has no impact from a tax perspective. |
What is a subsidy? | It means a government giving out money to encourage a particular product (or service) to be bought or sold. Some people will use the word more loosely to refer to any financial incentive, even if it's not coming from the government. Wikipedia has a list of examples that may be helpful: http://en.wikipedia.org/wiki/Subsidy A commonly-mentioned one is farm subsidies, where farmers are paid to produce certain crops. |
Credit Card Purchase - 'it is the bank's money no[t] yours' ? | Yes, they're referring to the credit card dispute (chargeback) process. In the case of dispute, credit card company will refund/freeze your charge so you don't have to pay until the dispute is resolved (or at all, if resolved in your favor). If the dispute is resolved in your favor, your credit card company will charge back the merchant's service provider which in turn will charge back (if it can) the merchant itself. So the one taking the most risk in this scenario is the merchant provider, this is why merchants that are high risk pay significantly higher fees or get dropped. |
“Top down” and “bottom-up approach” | I think it's an argument for Keynesian economic policy, basically an abridged version of this paragraph from the Wikipedia article: Keynesian economists often argue that private sector decisions sometimes lead to inefficient macroeconomic outcomes which require active policy responses by the public sector, in particular, monetary policy actions by the central bank and fiscal policy actions by the government, in order to stabilize output over the business cycle. "private sector decisions" are bottom-up: millions of businesses and individuals make economic decisions and "the economy" is the sum of what they do. "monetary policy actions by the central bank and fiscal policy actions by the government" are top-down: central institutions implement measures that are intended to have a positive effect (such as reducing unemployment) on millions of individuals. |
250k USD in savings. What's next? | A good answer to the question really depends on where you want to live, ultimately. Where you want to live pretty much dictates your investment priorities. If you want to invest in "terrain" so you can build a house next to all the "cool," people in Guayaquil that should be your first priority. Your new wife may have an opinion on that matter, you should consult her. In real life, most people are less concerned about their absolute level of wealth than with "keeping up" with their friends, or other reference group. If you don't buy the "terrain," the danger is that in five years, it may go up three, four, five times and be out of your reach, even if your other investments do well on the absolute standard. While it's fairly easy to invest the equivalent of $250K in Ecuadorian land, it's hard to invest that much in Ecuadorian stocks. If you want to buy stocks with that kind of money, it will be U.S., European, or maybe other Latin American, e.g., Brazilian stocks. That kind of asset allocation would tell me that you are thinking of leaving your country at some point. If you're "undecided," a sensible allocation might be 50-50. But in any event, first decide how you want to live your life, then adopt the investment strategy that best supports that life. |
Book or web site resources for an absolute beginner to learn about stocks and investing? | There is only one book worth reading in my opinion: One Up on Wall Street. It's short and no other book even comes close to it for honesty, correctness and good sense. Also, it is written by the second most successful investor of all time, Peter Lynch. The Intelligent Investor has some good technical content, but the book is dated and a lot of it is irrelevant to the modern investment environment. When I was younger I used to ready books like this and when a friend of mine asked for investment advice. I said "Look at stocks with a PE ratio of 5-10". A few days later he comes back to me and says "There are none". Right. That pretty much sums up the problem with the I.I. Graham himself in interviews during the 1970s said that his book was obsolete and he no longer recommended those methods. |
Electric car lease or buy? | There are some who argue that you should lease an electric car. These factors are in addition to all the normal pros and cons of leasing vs. buying. The technology is still new and is advancing rapidly. In 2-3 years, the newer model may have significantly improved features, range, and efficiency, as well as lower prices. If you are the type of person to upgrade regularly to the latest and greatest, leasing can make it a smoother transition. It is hard to predict the depreciation of the vehicles. This is both because of the above factors, but also because these kinds of cars are newer and so the statistical models used to predict their future values are less refined. The models for predicting gas car prices have been honed for decades. EV Manufacturers have in the past made some mistakes in their residual value estimations. When you lease a car, you get essentially an option to buy the car at the future predicted residual value. If, at the end of the lease, the market value of the car is higher than the residual value, you can purchase the car at the predetermined price, making yourself some extra money. If the value is lower than the residual, you can return the car or renegotiate. I know a relatively large number of electric vehicle owners. Most or all of the ones who got the vehicle new leased it. The rest bought used vehicles coming off lease, which can also be a good deal. |
Options for dummies. Can you explain how puts & calls work, simply? | Great answer by @duffbeer. Only thing to add is that the option itself becomes a tradeable asset. Here's my go at filling out the answer from @duffbeer. "Hey kid... So you have this brand-new video game Manic Mazes that you paid $50 for on Jan 1st that you want to sell two months from now" "Yes, Mr. Video Game Broker, but I want to lock in a price so I know how much to save for a new Tickle Me Elmo for my baby sister." "Ok, for $3, I'll sell you a 'Put' option so you can sell the game to me for $40 in two months." Kid says "Ok!", sends $3 to Mr Game Broker who sends our kid a piece of paper saying: The holder of this piece of paper can sell the game Manic Mazes to Mr Game Broker for $40 on March 1st. .... One month later .... News comes out that Manic Mazes is full of bugs, and the price in the shops is heavily discounted to $30. Mr Options Trader realizes that our kid holds a contract written by Mr Game Broker which effectively allows our kid to sell the game at $10 over the price of the new game, so maybe about $15 over the price in the second-hand market (which he reckons might be about $25 on March 1st). He calls up our kid. "Hey kid, you know that Put option that Mr Game Broker sold to you you a month ago, wanna sell it to me for $13?" (He wants to get it a couple of bucks cheaper than his $15 fair valuation.) Kid thinks: hmmm ... that would be a $10 net profit for me on that Put Option, but I wouldn't be able to sell the game for $40 next month, I'd likely only get something like $25 for it. So I would kind-of be getting $10 now rather than potentially getting $12 in a month. Note: The $12 is because there could be $15 from exercising the put option (selling for $40 a game worth only $25 in the second-hand market) minus the original cost of $3 for the Put option. Kid likes the idea and replies: "Done!". Next day kid sends the Put option contract to Mr Options Trader and receives $13 in return. Our kid bought the Put option and later sold it for a profit, and all of this happened before the option reached its expiry date. |
Formula for recalculation of a bad loan, i.e. where payments were missed? | It sounds like there are no provisions in the loan document for how to proceed in this case. I would view this as creating a brand new loan. The amount owed is going to be (Principal remaining + interest from 2 years + penalties). If you created a new loan for 13 years, that would not be how I would expect a lender to behave. I would expect most repayment plans to be something like make double payments until you are caught up or pay an extra $1000 per month until caught up and then resume normal payments. |
Should I have a higher credit limit on my credit card? | As long as you're not trying to get a higher limit in order to actually spend more money, or might be tempted to do so, it's generally advantageous to have a higher limit if available. A large part of credit score is based on utilization rate (balance due at statement closing divided by credit limit). Basically, you want more than 0% and less than 30% or preferably less than 10% used. Doubling your credit limit halves your utilization rate. And it can be comforting to have it there "in case you need it" in some sort of emergency scenario. Caveats: There's no "right" or "default" amount of credit that you "should have" at any given point in your life. If you're using credit responsibly, and don't need more credit, there's no particular reason to ask for more credit. If you work at it and are patient, it's easy to eventually have tens of thousands of dollars of unused credit limits, but that doesn't really get you anywhere you need to be by itself. |
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