Question stringlengths 14 166 | Answer stringlengths 3 17k |
|---|---|
Common practice for start/end date of balance sheet | One's paycheck typically has a YTD (year to date) number that will end on the latest check of the year. I am paid bi-weekly, and my first 2012 check was for work 12/25 - 1/7. So, for my own balance sheet, brokerage statements and stock valuations end 12/31, but my pay ended 12/24. And then a new sheet starts. |
How is gold shared in worldwide economies? | You might want to read about about the Coase Theorem. "In law and economics, the Coase theorem, attributed to Ronald Coase, describes the economic efficiency of an economic allocation or outcome in the presence of externalities. The theorem states that if trade in an externality is possible and there are no transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of property rights. In practice, obstacles to bargaining or poorly defined property rights can prevent Coasian bargaining." This is similar to what you are asking. Each country has an endowment of gold, and they must create a set amount of money to represent their endowment of gold. This will establish an exchange rate. If I have 5 tons of gold and you have 5 tons, and I print 10 dollars and you print 20, then one of my dollars is worth two of your dollars. Thus, the amount of money is not relevant- it's the exchange rate between the countries. If all the nations know each other's gold endowment, then we will have a perfect exchange rate. If we don't, then currency printing will vary but arbitrage should drive it to an accurate price. Gold and diamonds are both valuable in part due to scarcity, but gold has been used as a measure of value because it's been historically used as a medium of exchange. People just realized that swapping paper was safer and cheaper than physically transporting gold, but the idea of gold as a measure of value is present because "that's how it's always been." Nobody "creates/supervises" these procedures, but organizations like the IMF, ECB, Fed Reserve, etc implement monetary policy to regulate the money supply and arbitrage drives exchange rates to fair values. |
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. |
Are my parents ripping me off with this deal that doesn't allow me to build my equity in my home? | To expand on what @fishinear and some others are saying: The only way to look at it is that the parents have invested, because the parents get a % of the property in the end, rather than the original loan amount plus interest. It is investment; it is not a loan of any kind. One way to understand this is to imagine that after 20 years, the property triples in value (or halves in value). The parents participate as if they had invested in 75% ownership of the property and the OP as if 25% ownership of the property. Note that with a loan, there is a (potentially changing) outstanding loan balance, that could be paid to end the loan (to pay off the loan), and there is an agreed upon an interest rate that is computed on the outstanding balance — none of those apply to this situation; further with a loan there is no % of the property: though the property may be used to secure the loan, that isn't ownership. Basically, since the situation bears none of the qualities of a loan, and yet does bear the qualities of investment, the parents have bought a % ownership of the property. The parents have invested in 75% of the real estate, and the OP is renting that 75% from them for: The total rent the OP is paying the parents for their 75% of the property is then (at least) $1012.50/mo, A rental rate of $1012.50/mo for 75% of the property equates to a rental price of $1350/mo for the whole property. This arrangement is only fair to both parties when the fair-market rental value of the whole property is $1350/mo; it is unfair to the OP when the fair-market rental value of property is less, and unfair to the parents when the fair-market rental value of property is more. Of course, the fair-market rental value of the property is variable over time, so the overall fairness would need to understand rental values over time. I feel like this isn't actually a loan if I can never build more equity in the condo. Am I missing something? No, it isn't a loan. You and your parents are co-investing in real estate. Further, you are renting their portion of the investment from them. For comparison, with a loan you have 100% ownership in the property from the start, so you, the owner, would see all the upside/downside as the property valuation changes over time whether the loan is paid off or not. The borrower owes the loan balance (and interest) not some % of the property. A loan may be secured by the property (using a lien) but that is quite different from ownership. Typically, a loan has a payment schedule setup to reduce the loan balance (steadily) over time so that you eventually pay it off. With a loan you gain equity % — the amount you own outright, free & clear — in two ways, (1) by gradually paying off the loan over time so the unencumbered portion of the property grows, and (2) if the valuation of the property increases over time that gain in equity % is yours (not the lenders). However note that the legal ownership is all 100% yours from the start. Are my parents ripping me off with this deal that doesn't allow me to build my equity in my home? You can evaluate whether you are being ripped off by comparing the $1350/mo rate to the potential rental rate for the property over time (which will be a range or curve, and there are real estate websites (like zillow.com or redfin.com, others) to help estimate what fair-market rent might be). Are there similar deals like this...? A straight-forward loan would have the borrower with 100% legal ownership from the start, just that the property secures the loan. Whereas with co-investment there is a division of ownership % that is fixed from the start. It is unusual to have both investment and loan at the same time where they are setup for gradual change between them. (Investment and loan can certainly be done together but would usually be done as completely separate contracts, one loan, one investment with no adjustment between the two over time.) To do both investment and loan would be unusual but certainly be possible, I would imagine; however that is not the case here as being described. I am not familiar with contracts that do both so as to take over the equity/ownership/investment over time while also reducing loan balance. Perhaps some forms of rent-to-own work that way, something to look into — still, usually rent-to-own means that until the renter owns it 100%, the landlord owns 100%, rather than a gradual % transfer over time (gradual transfer would imply co-ownership for a long time, something that most landlords would be reluctant to do). Transfer of any particular % of real estate ownership typically requires filing documents with the county and may incur fees. I am not aware of counties that allow gradual % transfer with one single filing. Still, the courts may honor a contract that does such gradual transfer outside of county filings. If so, what should I do? Explain the situation to your parents, and, in particular, however far out of balance the rental rate may be. Decide for yourself if you want to rent vs. buy, and where (that property or some other). If your parents are fair people, they should be open to negotiation. If not, you might need a lawyer. I suspect that a lawyer would be able to find several issues with which to challenge the contract. The other terms are important as well, namely gross vs. net proceeds (as others point out) because selling a property costs a % to real estate agents and possibly some taxes as well. And as the others have pointed out, if the property ultimately looses value, that could be factored in as well. It is immaterial to judging the fairness of this particular situation whether getting a bank loan would be preferable to renting 75% from the parents. Further, loan interest rates don't factor into the fairness of this rental situation (but of course interest rates do factor into identifying the better of various methods of investment and methods of securing a place to live, e.g. rent vs. buy). Contributed by @Scott: If your parents view this as an investment arrangement as described, then you need to clarify with them if the payments being made to them are considered a "buy out" of their share. This would allow you to gain the equity you seek from the arrangement. @Scott: Terms would have to be (or have been) declared to that effect; this would involve specifying some schedule and/or rates. It would have to be negotiated; this it is not something that could go assumed or unstated. -- Erik |
When trading put options, is your total risk decreased if you are in a position to exercise the option? | The risk situation of the put option is the same whether you own the stock or not. You risk $5 and stand to gain 0 to $250 in the period before expiration (say $50 if the stock reaches $200 and you sell). Holding the stock or not changes nothing about that. What is different is the consideration as to whether or not to buy a put when you own the stock. Without an option, you are holding a $250 asset (the stock), and risking that money. Should you sell and miss opportunity for say $300? Or hold and risk loss of say $50 of your $250? So you have $250 at risk, but can lock in a sale price of $245 for say a month by buying a put, giving you opportunity for the $300 price in that month. You're turning a risk of losing $250 (or maybe only $50 more realistically) into a risk of losing only $5 (versus the price your stock would get today). |
How to choose a good 401(k) investment option? | I agree with the others that the ROTH is probably better. See this list of benefit/cost comparison (as opposed to rule differences)http://en.wikipedia.org/w/index.php?title=Comparison_of_401%28k%29_and_IRA_accounts&oldid=582368417 |
How to receive packages pseudonymously? | I've done this before for startup companies where I didn't want the mailing address to really obviously be my apartment or home address. Just for appearances. What you should be Googling are terms like "private mailbox center." If I recall correctly, I used to do this with Mail Boxes Etc before they were bought by UPS. This seems to be the equivalent offering these days: https://www.theupsstore.com/mailboxes I haven't looked at a dummy office for receiving mail -- I imagine that is a bit more expensive. Unless people are delivering things in person I think that would be overkill -- the Fedex guy doesn't care if his package delivery is to a UPS mailbox center. |
How to get rid of someone else's debt collector? | Suing is a legitimate option as well as screening your calls but here's another idea which has personally worked and relates to the collections I did for awhile. Talk with the collector. Outstanding debt gets sold many times and each time a new collector gets their hands on an account they do their due diligence which means calling every single number multiple times. Collectors a looking for consumers who actively evade collections calls for years. My recommendation is to use logic and explain the situation. Give your first name and describe when you received the phone number and then ask a simple question. When in the last 3 1/2 years have you or any collector had a successful hit from this number. They'll respond never in 3 1/2 years. The collector notes the account for themselves and future collectors. Debt collectors are about about making money, not wasting time and they do review all notes pertaining to an account. Will it work? Maybe not but hopefully it will stop the calls with a short conversation. Good luck. |
Who are the sellers for the new public stocks? | In an IPO the seller is the Company selling new shares. Some of the IPOs also include something called "secondary" sales which are existing holders selling at the same time at the IPO price. But that is a but more unusual. And as someone noted, the $68 is the price paid for the people who bought at the IPO (the aggregate group usually called the syndicate). The $85 is the price that it is trading at once there is trading in the open market. People that are able to get into the syndicate to buy the stock at $68 sometimes quickly sell if the price is much higher when trading starts. This is called "flipping" the stock. Hedge funds do this much more often than institutional buyers like Fidelity. |
Are SPDR funds good for beginners? | No, SPDR ETFs are not a good fit for a novice investor with a low level of financial literacy. In fact, there is no investment that is safe for an absolute beginner, not even a savings account. (An absolute beginner could easily overdraw his savings account, leading to fees and collections.) I would say that an investment becomes a good fit for an investor as soon as said investor understands how the investment works. A savings account at a bank or credit union is fairly easy to understand and is therefore a suitable place to hold money after a few hours to a day of research. (Even after 0 hours of research, however, a savings account is still better than a sock drawer.) Money market accounts (through a bank), certificates of deposit (through a bank), and money market mutual funds (through a mutual fund provider) are probably the next easiest thing to understand. This could take a few hours to a few weeks of research depending on the learner. Equities, corporate bonds, and government bonds are another step up in complexity, and could take weeks or months of schooling to understand well enough to try. Equity or bond mutual funds -- or the ETF versions of those, which is what you asked about -- are another level after that. Also important to understand along the way are the financial institutions and market infrastructure that exist to provide these products: banks, credit unions, public corporations, brokerages, stock exchanges, bond exchanges, mutual fund providers, ETF providers, etc. |
Why do Americans have to file taxes, even if their only source of income is from a regular job? | One of the reasons is also general distrust to the government. Another one is that there exist special interest group which profits from the complicated scheme, keep adding special cases, and has stronger financial situation that the opponents of such complex scheme. People do not trust government, or companies, to act in their best interests. So they (we) waste huge amount of time and/or money to comply with byzantine income laws. In 2004 Democratic presidential primary, presidential candidate Wes Clark (who beyond being 4-star general has also master degree in economics from Oxford, and taught economics in West point) proposed similar scheme: for people with income under 50K, employer would do all the (simple) paperwork, if desired, and get return. In the noise of the campaign, idea how to simplify taxes for half of the population was lost. Funny how the only candidate in recent history who was both professor of economics (not MBA, which is about business and profits) and distinguished military hero, could not get any traction in Democratic party. |
Scammer wants details and credentials for my empty & unused bank account. What could go wrong? | First off, do not ever tell someone your password. Nobody who actually works for the bank would need your password to access the account. Also, it may or may not be a scam (it almost assuredly is), but it is not a good idea to let someone use your bank account in your name. What if they use your account to launder money for illegal or terrorist activities? Then you would potentially face criminal charges. There is no way this story makes sense. A company would never put their payroll in some random stranger's account; they would create an account in the company's name for handling payroll and use that. |
Income in zero-interest environment | Dividends. There are blue chip companies that have paid and raised their dividends for 20 or more years. As an example: Altria (MO). There are also ETFs that specialize in such stocks such as SDY. |
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! |
Is there a good strategy to invest when two stock companies either merge or acquisition? | There's an old adage in the equities business - "buy on rumor, sell on fact". Sometimes the strategy is to buy as soon as the rumor is out about a potential merger and then sell off into the news when it is actually announced, since this is normally when the biggest bounce occurs as part of a merger. The other part of the analysis you should do is to understand which of the companies benefits most (or is hurt the worst) by the merger and then make your play accordingly. Sometimes the company being acquired will see a bounce while the acquiring firm takes a hit, which is an indication the experts think the acquisition will be a drag on the acquiring company (perhaps because it is taking on a great deal of debt to make the acquisition, or because the acquiring firm is paying too much of a premium for what it's getting in return). Other times the exact opposite is true, where the company being acquired takes a hit while the buyer bounces, and again, the reasons for this can vary widely. If you wait until the merger is actually announced then by the time you get in, most of the premium from the announcement will likely have already been realized, and you'll be buying near the top of the market for the stock. The key is to be ahead of the other sellers by seeing the opportunities before they do and then knowing when to get out before everyone else does. Not an easy thing to pull off when you're trying to anticipate the markets, but it can be done if you do the right research and have patience. Good luck! |
Bonds vs equities: crash theory | I would suggest looking into Relative Strength Asset Allocation. This type of investment strategy keeps you invested in the best performing asset classes. As a result of investing in this manner it removes the guesswork and moves naturally (say into cash) when the stock market turns down. There is a good whitepaper on this subject by Mebane Faber titled Relative Strength Strategies for Investing. |
What gives non-dividend stocks value to purchasers? [duplicate] | Instead of giving part of their profits back as dividends, management puts it back into the company so the company can grow and produce higher profits. When these companies do well, there is high demand for them as in the long term higher profits equates to a higher share price. So if a company invests in itself to grow its profits higher and higher, one of the main reasons investors will buy the shares, is in the expectation of future capital gains. In fact just because a company pays a dividend, would you still buy it if the share price kept decreasing year after year? Lets put it this way: Company A makes record profits year after year, continually keeps beating market expectations, its share price keeps going up, but it pays no dividend instead reinvests its profits to continually grow the business. Company B pays a dividend instead of reinvesting to grow the business, it has been surprising the market on the downside for a few years now, it has had some profit warnings lately and its share price has consistently been dropping for over a year. Which company would you be interested in buying out of the two? I know I would be interested in buying Company A, and I would definitely stay away from Company B. Company A may or may not pay dividends in the future, but if Company B continues on this path it will soon run out of money to pay dividends. Most market gains are made through capital gains rather than dividends, and most people invest in the hope the shares they buy go up in price over time. Dividends can be one attractant to investors but they are not the only one. |
How much power does a CEO have over a public company? | The shareholders elect the board of directors who in turn appoint a CEO. The CEO is responsible for the overall running of the company. To answer your specific questions: Yes, Steve Jobs could make decisions that are harmful to the well-being of the company. However, it's the responsibility of the board of directors to keep his decisions and behavior in check. They will remove him from his position if they feel he could be a danger to the company. |
Car financed at 24.90% — what can I do? | If you are a subprime borrower, that may not be an unreasonable rate given the risk they are accepting. In any case, it's what you agreed to. As others have said, you could/should have shopped elsewhere for the loan. In fact, you can still shop elsewhere for a loan to refinance that vehicle and thus lower the rate, unless the existing loan has equally obnoxious rules about that. |
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). |
ESPP taxes after relocating from Europe to the United States? | If you haven't been a US resident (not citizen, different rules apply) at the time you sold the stock in Europe but it was inside the same tax year that you moved to the US, you might want to have a look at the "Dual Status" part in IRS publication 519. |
If a country can just print money, is global debt between countries real? | The debt is absolutely real. China loans money to US via buying the US treasury bonds. The bond is essentially a promise to pay back the money with interest, just like a loan. As you point out, the US can print money. If this were to happen, then the USD that the owner of a treasury bond receives when the bond matures are worth less that than the USD used to purchase the bonds. There are lots of reasons why the US doesn't want to print lots of money, so the purchaser of the bond is probably confident it won't happen. If for some reason they think it is possible, then they will want to cover that risk by only purchasing bonds that have a higher interest rate. The higher interest offsets the risk of the USD being worth less. Of course, there are lots more details, e.g., the bonds themselves are bought and sold before maturity, but this is the basic idea. |
How Do Scammers / Money Launderers Profit From Loans To Victims | If they have your account numbers (which are necessary for direct deposits) they could possibly initiate ACH withdrawals from your accounts too (requires some setup but they may have accomplices). Note that even if you didn't have money there, depending on the local bank rules you may be still on the hook for overdrafts they create, at least by default. You may be able to prove later that this was fraud but the burden of proof will be on you, and in the meantime they might be gone with the money. They could use your documents to either establish other accounts in your name (identity theft) or take over your accounts (e.g. by contacting customer service of the bank and claiming to be you, and presenting the documents you sent as a proof), request credits under your identity (possibly using the money on the account as a collateral since the bank may not know where the money is from), etc. This is even easier given you will give them all the documents and information needed for a loan, your signature, etc. And the fact that they ask you to send documents to a specific address doesn't mean they could be found at that address when the problems start - it may be rented short-term, belong to either knowing or unknowing accomplice, be a forwarding service, etc. Could be money laundering of course too. That's just what comes to mind after a short while thinking about it. |
Are there online brokers in the UK which don't require margin account? | You can open an account with HSBC and use InvestDirect - their online share trading service - to trade LSE-traded shares. https://investments.hsbc.co.uk/product/9/sharedealing |
What explains the enormous increase in gold price in the early 21st century? | Since 2007 the world has seen a period of striking economic and financial volatility featuring the deepest recession since the 1930s despite this gold has performed strongly with its price roughly doubling since the global financial crisis began in mid-2007. 1. Gold and real interest rates: One of the factor that influences gold prices is real interest rate which is to some extent related to inflation. Since gold lacks a yield of its own, the opportunity cost of holding gold increases with a real interest rate increase and decreases with a fall in real interest rates. 2. Gold and the US dollar: The external value of the US dollar has been a significant influence on short-term gold price movements. The IMF estimated6 in 2008 that 40-50% of the moves in the gold price since 2002 were dollar-related, with a 1% change in the effective external value of the dollar leading to a more than 1% change in the gold price (Source). 3. Gold and financial stress: It is a significant and commonly observed influence on the short-term price of gold. In periods of financial stress gold demand may rise for a number of reasons: 4. Gold and political instability: It is another factor that can boost gold prices. Investor concerns about wars, civil conflicts and international tensions can boost demand for gold for similar reasons to those noted above for periods of financial stress. Gold‟s potential function as a „currency of last resort‟ in case of serious system collapse provides a particular incentive to hold it in case the political situation is especially severe. (Source) 5. Gold and official sector activity: The behaviour of central banks and other parts of the official sector can have an important impact on gold prices. One reason for this is that central banks are big holders of gold, possessing some 30,500 metric tons in 2010, which is approximately 15% of all above-ground gold stocks. As a result, central bank policies on gold sales and purchases can have significant effects, and these policies have been subject to considerable shifts over the decades. (Source) (Source of above graphs) |
Why is being “upside down” on a mortgage so bad? | tl;dr: when everything is going great, it's not really a problem. It's when things change that it's a problem. Finally, home loans are extended over extremely long periods (i.e. 15 or 30 years), making any fluctuations in their value short-lived - even less reason to be obsessed over their current value relative to the loan. Your post is based on the assumption that you never move. In that case, you are correct - being underwater on a mortgage is not a problem. The market value of your house matters little, except if you sell it or it gets reassessed. The primary problem arises if you want to sell. There are a variety of reasons you might be required to move: In all of these scenarios it is a major problem if you cannot sell. Your options generally are: In the first option, you will destroy your credit. This may or may not be a problem. The second is a major inconvenience. The third is ideal, but often people in this situation have money related problems. Student loans can deferred if needed. Mortgages cannot. A car is more likely to be a lower payment as well as a lower amount underwater. Generally, the problem comes when people buy a mortgage assuming certain things - whether that's appreciation, income stability/growth, etc. When these change they run into these problems and that is exactly a moment where being underwater is a problem. |
Investing using leverage | Let's do a real example of leverage on the SPY. Imagine you have $20K today and plan on having $100K by JAN 2018. You could get 100 shares of SPY and ride it out. Maybe buying another 100 shares every few months until 2018, ending up with less than 500 shares to your name ( and zero cash in the bank ). or You could lever with DEC 2017 LEAP CALLS. They'll expire in 2.5 years, so you'd have to re-up sooner than your plan. With 20K starting cash, in my example we'll go with 5 contracts to start with. If we choose the $230 strike they'd cost $1250 each (putting roughly $6250 at risk). The plan in is if the stock market goes up, you've got leverage. You are the proud owner of contracts worth 500 shares of SPY and have only spent 1/3rd of your present day dollars. If the market goes down in the next two years, sure, you lost the entire $6250, but likely saved $93,750 powder dry and can try your luck with the 2021 LEAPS. Probably get down votes for this, but I'll even argue that proper use of leverage can very much reduce your risk. One truth is you'll never get a margin call from holding long options. |
Can a US bank prevent you from making early payments to the principal on a home mortgage? | Are there any known laws explicitly allowing or preventing this behavior? It's not the laws, it's what's in the note - the mortgage contract. I read my mortgage contracts very carefully to ensure that there's no prepayment penalty and that extra funds are applied to the principal. However, it doesn't have to be like that, and in older mortgages - many times it's not like that. Banks don't have to allow things that are not explicitly agreed upon in the contract. To the best of my knowledge there's no law requiring banks to allow what your friend wants. |
Purchase same stock twice | how does the trading company know which one I want to sell? It doesn't need to know. You just sell one. From taxation point of view depending on the country / tax jurisdiction, it can be only be FIFO or specific stock. |
Why haven't there been personal finance apps or softwares that use regression modeling or A.I.? | Consumer facing finance is heavily regulated. You are liable for the recommendations you make; if they are based on a black box you risk problems when sued. It is difficult to explain in a court of law why a neural network came to a particular conclusion. It is much easier to provide advice (models) in the "educated counterparty" market. Not only do institutional investors in general expect to pay for a quality advice (consumers in general expect to get online advice for free) but the legal implications are different. |
How does spot-futures arbitrage work in the gold market? | As proposed: Buy 100 oz of gold at $1240 spot = -$124,000 Sell 1 Aug 2014 Future for $1256 = $125,600 Profit $1,600 Alternative Risk-Free Investment: 1 year CD @ 1% would earn $1240 on $124,000 investment. Rate from ads on www.bankrate.com "Real" Profit All you are really being paid for this trade is the difference between the profit $1,600 and the opportunity for $1240 in risk free earnings. That's only $360 or around 0.3%/year. Pitfalls of trying to do this: Many retail futures brokers are set up for speculative traders and do not want to deal with customers selling contracts against delivery, or buying for delivery. If you are a trader you have to keep margin money on deposit. This can be a T-note at some brokerages, but currently T-notes pay almost 0%. If the price of gold rises and you are short a future in gold, then you need to deposit more margin money. If gold went back up to $1500/oz, that could be $24,400. If you need to borrow this money, the interest will eat into a very slim profit margin over the risk free rate. Since you can't deliver, the trades have to be reversed. Although futures trades have cheap commissions ~$5/trade, the bid/ask spread, even at 1 grid, is not so minimal. Also there is often noisy jitter in the price. The spot market in physical gold may have a higher bid/ask spread. You might be able to eliminate some of these issues by trading as a hedger or for delivery. Good luck finding a broker to let you do this... but the issue here for gold is that you'd need to trade in depository receipts for gold that is acceptable for delivery, instead of trading physical gold. To deliver physical gold it would likely have to be tested and certified, which costs money. By the time you've researched this, you'll either discover some more costs associated with it or could have spent your time making more money elsewhere. |
Is there any instance where less leverage will get you a better return on a rental property? | If you are calculating simple ROI, the answer is straightforward math. See This Answer for some examples, but yes, with more leverage you will always see better ROI on a property IF you can maintain a positive cash flow. The most complete answer is to factor in your total risk. That high ROI of a leveraged property is far more volatile and sensitive to any unexpected expenses. Additionally, a loss of equity in the property (or an upside-down mortgage) will further impact your long term position. To put this more simply (as noted in the comments below), your losses will be amplified. You cannot say a leveraged property will always give you a better ROI because you cannot predict your losses. |
Resources on Buying Rental Properties | The book HOLD: How to Find, Buy, and Rent Houses for Wealth by Chader et al. was one of the best I've read on the subject. It has all of the basics, explanations, examples, and gives you real-life assumptions for your inputs when you do your analysis. It does contain some less-relevant information now that was more realistic before 2007, but it's a worthwhile read (or listen). They have some good starter worksheets, as well, on their website to help you do your analysis, which I found useful despite already having my own. |
What's the catch with biweekly mortgage payments? | Pete and Noah addressed the math, showing how this is, in effect, converting a 30yr to a ~23yr mortgage, at a cost, plus payment about 8% higher (1 extra payment per year). No magic there. The real issue, as I see it, is whether this is the best use of the money. Keep in mind, once you pay extra principal, which in effect is exactly what this is, it's not easy to get it back. As long as you have any mortgage at all, you have the need for liquidity, enough to pay your mortgage, tax, utilities, etc, if you find yourself between jobs or to get through any short term crisis. I've seen people choose the "sure thing" prepayment VS the "risky" 401(k) deposit. Ignoring a match is passing up a 50% or 100% return in most cases. Too good to pass up. 2 points to add - I avoided the further tangent of the tax benefit of IRA/401(k) deposits. It's too long a discussion, today's rate for the money saved, vs the rate on withdrawal. Worth considering, but not part of my answer. The other discussion I avoid is Nicholas' thoughts on the long term market return of 10% vs today's ~4% mortgage rate. This has been debated elsewhere and morphs into a "pre-pay vs invest" question. |
Covered call when stock position is at a loss | If your shares get called on stock at a price below what you paid for the stock, your gain or loss depends on what premium you got for the options you sold. "can I deliver shares at that assigned strike using margin or additional capital if I have it? Can the broker just take care of it and let me collect the time premium? " You don't need margin or any cash because you already hold the shares. A covered call means your cash requirements are 'covered'. So they'll just buy your shares at the strike price of $50. And you still get to keep the premium (which you should have gotten when you sold the covered call). You only need cash or margin when you've sold an uncovered call or put. |
I just made $50K from selling my house. How should I invest the proceeds? | I know an answer has been accepted, but you need an emergency fund, ideally enough to cover at least 3 months of after-tax basic living expenses. As a free-lancer, 6 months would be even better. This isn't a fun way to tie up your money, but it is a prudent way. What if you lose your job, or decide you want to change your line of work? What if you're told a close family member has only months to live and you want to take significant time off unpaid? What if your car breaks down and you need a new one? What if your freelance business hits a dry patch for a few months? What if you want to move but can't sell your next house quickly? I've known people who had these types of situations come up unexpectedly. Some were financially prepared and had the freedom to make the choices they wanted to make, others didn't and now have regrets. Once you have a basic emergency fund in place, then go for investing with the rest of the money. Best of luck! |
How to pay bills for one month while waiting for new job? | This is just a partial answer, but I believe the following observations are relevant: |
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). |
What option-related strategies are better suited to increasing return potential? | It definitely depends on your risk appetite as Joe Taxpayer pointed out in his answer. Covered calls are a good choice for someone who already own's the stock, because the premium collected reduces the cost basis for the position. The downside is that if the calls are exercised, there is a good chance that you are missing out on additional upside in the stock price (because the strike is obviously below the market value for the stocks). Another good option trade is the spread option. This would allow you to capture the difference between the two strikes of the options in the spread. This is also one of the less risky choices because your initial cost an potential profit/loss are known in advance of entering the position. |
Do my 401k/Roth accounts benefit from compounding? | During the course of the year, the S&P individual stocks will have some dividends. Not every last stock but a good number of them. Enough that the average dividend for the S&P has been about 2% recently. So if the S&P index goes up, say 10%, an S&P fund should go up closer to 12%. For a fund holder, you'd normally see a declared dividend and cap gain distribution toward the end of each year. When you hold shares in a 401(k), dividends are reinvested into the fund, usually with no involvement from the members. |
Is there a good rule of thumb for how much I should have set aside as emergency cash? | Between 6 months and a year is normally regarded as the "standard". Plan out what your monthly expenses are and save that money away. One thing to consider is what extras can you give up. If you are currently eating steak and lobster every day can you live with switching to ramen noodles for a period of time? Can you switch from premium cable to basic cable (or cancel it altogether)? Questions like this can greatly impact the amount you have to set aside. I personally have my emergency fund in CDs that mature the first of every month. I know there is less liquidity in this approach but I'm ok with that. My emergency fund is a sum of cash I'll always have so I wanted to reap the benefits of a higher yield. If it comes down to it I can place an expense on a credit card and pay off the credit card when funds become available. |
What could be the best tax saving option before a month of financial year end | I was thinking to do mix of ELSS and Tax Saving FDs. But is my choice correct? Also what other options I am left with? This depends on individual's choice and risk appetite. Generally at younger age, investment in ELSS / PPF is advisable. Other options are Life Insurance, Retirement Plans by Mutual Funds, NSC, etc |
S-Corp partnership startup. How to pay owners with minimal profit? | S-Corp income is passed through to owners and is taxed on their 1040 as ordinary income. If you take a wage (pay FICA) and then take additional distributions these are not subject to FICA. A lot of business owners will buy up supplies/ necessary expenses right before the end of the tax year to lower their tax liability. |
Alternatives to Intuit's PayTrust service for online bill viewing and bill payment? | Paytrust seems to be the only game in town. We've changed banks several times over the last 15 years and I can tell you that using a bank's bill pay service locks you in, big time. I loved paytrust because I could make one change if we changed banks. If you're using a bank directly for your bills, the ides of recreating your payee list is daunting. |
Is Stock Trading legal for a student on F-1 Visa doing CPT in USA? | There are no legal reasons preventing you from trading as a F-1 visa holder, as noted in this Money.SE answer. Per this article, here are the things you need to set up an account: What do I need to have for doing Stock trading as F1 student ? Typically, most of the stock brokerage firms require Social Security Number (SSN) for stock trading. The reason is that, for your capital gains, it is required by IRS for tax purposes. If you work on campus, then you would already get SSN as part of the job application process…Typically, once you get the on-campus job or work authorization using CPT or OPT , you use that offer letter and take all your current documents like Passport, I-20, I-94 and apply for SSN at Social Security Administration(SSA) Office, check full details at SSA Website . SSN is typically used to report job wages by employer for tax purposes or check eligibility of benefits to IRS/Government. I do NOT have SSN, Can I still do stock trading as F1 student ? While many stock brokerage firms require SSN, you are not out of luck, if you do not have one…you will have to apply for an ITIN Number ( Individual Taxpayer Identification Number ) and can use the same when applying for stock brokerage account. While some of the firms accept ITIN number, it totally depends on the stock brokering firm and you need to check with the one that you are interested in. The key thing is that you'll need either a SSN or ITIN to open a US-based brokerage account. |
How do I adjust to a new social class? | Beware of keeping up with the Joneses. Many of your free-spending neighbors are broke. Basically, the prices of things like what you're noticing will rise as incomes in the area rise. A great example of this can be found in state capitals and college towns, where battalions of government workers or students all make just about the same amount of money and drive prices accordingly. For example, a college town tends to have a tight rental market. |
Free brokerage vs paid - pros and cons | The first consideration for the banking part of your portfolio is safety. In the United States that is FDIC protection, or the equivalent for a Credit Union. The second consideration is does it have the level of service you need. For this I mean the location of branches, ATMs, or its online services meet your needs for speed, accuracy, and ability to access or move the money as you need. The rest are then balanced on the extras. For your situation those extras include the ability to make free trades. For other it might be a discount on their mortgage. For others it is free checking. In your current situation if the first two things are met, and you are using those extra benefits then don't change. For me the free trades wouldn't be a benefit, so any major degradation in the safety and service would cause me to leave. Keep in mind that free services exist to entice you to make a deposit: which they can then make money by lending it out; or they offer a free service to entice you to use a service they can charge you to use. All Free services come with a cost. I earned a completely paltry $3.33 YTD over the last 9 months on my savings at my bank presumably in exchange for these "free" trades. Without knowing how much you had deposited in your savings account there is no way to know how much you could have made at the bank across the street. But with the low rates of the last decade there is not big money to be made off the emergency savings of a typical american family. |
What would be the signs of a bubble in silver? | @fennec is right, no one knows. Here's a link that may help: http://pragcap.com/silver-prices-display-some-bubbly-characteristics I don't follow markets enough to comment, but I have read enough of Cullen's stuff to know he's not off his rocker. |
Why does short selling require borrowing? | Selling short is simply by definition the selling, then later re-buying of stock you don't initially own. Say you tally your entire portfolio balance: the quantity of each stock you own, and your cash assets. Let's call this your "initial position". We define "profit" as any increase in assets, relative to this initial position. If you know a particular stock will go down, you can realize a profit by selling some of that stock, waiting for the price to go down, then buying it back. In the end you will have returned to your initial position, except you will have more cash. If you sell 10 shares of a stock valued at £1.50, then buy them back at £1.00, you will make a £5.00 profit while having otherwise returned to your previous position. If you do the same, but you initially owned 1000 shares, sold just 10 of those, then bought 10 back, that's still a profit of £5.00. Selling short is doing the same thing, but with an initial and ending balance of 0 shares. If you initially own 0 shares, sell 10, then buy 10 back, you return to your initial position (0 shares) plus a profit of £5.00. (And in practice you must also pay a borrowing fee to do this.) The advantage of selling short is it can be done with any stock, not just those currently owned. |
Brief concept about price movement of a particular stock [duplicate] | The problem with predicting with accuracy what a stock price will do in any given situation is that there are two main factors that affect a stocks price. The first factor is based somewhat in math as it takes into account numbers such as supply and demand, earnings per share, expected earnings, book value, debt ratio and a wide variety of other numbers. You can compile all those numbers into a variety of formulas and come up with a rational estimate of what the stock should sell for. This is all well and good and if the market were entirely rational it would rarely make news because it would be predictable and boring. This is where our second factor throws a wrench in the works. The second factor affecting stock price is emotional. There are many examples of people's emotions affecting stock price but if you would like a good example look up the price fluctuations of Apple (AAPL) after their last couple earnings reports. Numerically their company looks good, their earnings were healthy, their EPS is below average yet their price fell following the report. Why is that? There really isn't a rational reason for it, it is driven by the emotions behind unmet expectations. In a more general sense sometimes price goes down and people get scared and sell causing further decline, sometimes people get excited and see it as opportunity to buy in and the price stabilizes. It is much more difficult to anticipate the reaction the market will have to people's emotional whims which is why predicting stock price with accuracy is near impossible. As a thought along the same line ask yourself this question; if the stock market were entirely rational and price could be predicted with accuracy why is there such a wide range of available strike prices available in the options market? It seems that if stock price could be predicted with anything remotely reassembling accuracy the options market need a much smaller selection of available strike prices. |
Is a property that comes with tenants a risk? | The perceived risk depends on the entire situation, but often it is considered more risk, especially if you want to occupy yourself. Things you need to consider: It can be very difficult to show a property with tenants occupying it. There are many reasons for this and most homes show / sell better empty. I have found many tenants make it difficult on the seller. Leaving their areas a mess, being unaccommodating and especially in markets that are flooded with options, a lot of buyers just won't bother with the difficulty of scheduling a showing in occupied properties. I've tried to purchase many properties where the renter insists on being there during a showing, but won't open the door and there's no recourse for the landlord because his lease or laws in the area don't allow you to enter without permission. Also, it can be difficult to look past a lot of clutter and other people's decorating and aroma "preferences" to be kind. :) Is the property currently under lease and what is the period of that lease? It could be that the lease is month to month, or it could be years remaining on the lease period. It is likely a legal requirement in most areas that you honor the existing lease. I would never buy a property that has multiple years remaining. While some amateur landlords will allow 2 or even 5 year leases, this is a very bad idea for many reasons! What are laws like in your area for evicting tenants? You should know this regardless of whether or not you intend to occupy or keep it a rental. It can be a very difficult process evicting tenants and this process is vastly different from country to country and state to state here in the USA. Look into the security deposit - assuming there is one. How much is the deposit? Will it cover damage that may not exist yet? Don't think that just because you plan on evicting them soon, it isn't important. People can trash a place on the way out and an expensive lawsuit could be your only recourse. It is far easier to take a deposit than sue. I would absolutely demand that the deposit transfer to you upon sale. View the current renters with a fresh eye. Especially if you are considering leave it a rental, look into all of the typical requirements: Their monthly income, their credit history, their criminal record, their payment history, their references. Are they likely to be good or terrible renters? If you're interested in the property, consider an offer which requires the current landlord to evict within the time-frame of the buy/sell agreement. This isn't an uncommon requirement. I think the first thing to do is go look at the property and see if you can determine for yourself why it hasn't sold yet. Properties all have different reasons for not selling in a reasonable time to the local market. Having renters alone in most markets shouldn't be that big of a factor. I would suspect bad smells, nasty renters, or an unfavorable lease agreement exists. |
Can travel expenses be deducted from Form 1040A if they were used to gather material for a book? | Hobby expenses are not tax deductible. Business expenses are, but only if it's a bona fide business. First they look at profitability: if you reported a net profit (i.e. paid taxes) in your first 3 years, they will believe you rant on Youtube for a living. Remember, by the time they get around to auditing you, you'll likely be well into, or through, your third year. There is an exception for farms. Other than that, if you lose money year after year, you better be able to show that you look, walk and quack like a business; and one with a reasonable business reason for delayed profitability. For instance Netflix's old business model of mailing DVDs had very high fixed infrastructure expense that took years to turn profitable, but was a very sensible model. They're fine with that. Pets.com swandived into oblivion but they earnestly tried. They're fine with that too. You can't mix all your activities. If you're an electrician specializing in IoT and smart homes, can you deduct a trip to the CES trade show, you bet. Blackhat conference, arguable. SES? No way. Now if you had a second business of a product-reco site which profited by ads and affiliate links, then SES would be fine to deduct from that business. But if this second business loses money every year, it's a hobby and not deductible at all. That person would want separate accounting books for the electrician and webmaster businesses. That's a basic "duck test" of a business vs. a hobby. You need to be able to show how each business gets income and pays expense separate from every other business and your personal life. It's a best-practice to give each business a separate checking account and checkbook. You don't need to risk tax penalties on a business-larva that may never pupate. You can amend your taxes up to 3 years after the proper filing date. I save my expense reciepts for each tax year, and if a business becomes justifiable, I go back and amend past years' tax forms, taking those deductions. IRS gives me a refund check, with interest! |
How are mortgage payments decided? [duplicate] | It's easiest to get your payment from the PMT function in Excel or Google Sheets. So a $100,000 30 year mortgage at 3% looks like this: The basic calculation is pretty simple. You take the annual interest rate, say 3%, divided by 12, times the existing principal balance: The idea is that borrowers would like to have a predictable payment. The earlier payments are proportionally more interest than principal than later payments are but that's because there is much more principal outstanding on month 1 than on month 200. |
Resources on Buying Rental Properties | I would also suggest finding the training resource within your state for real estate agent license exam prep... When I was getting started, I took the "101" level course and it was worth the few hundred bucks for the overview I gleaned. |
What laws/regulations are there regardings gifts in the form of large sums of money? | This forum is not intended to be a discussion group, but I would like to add a different perspective, especially for @MrChrister, on @littleadv's rhetorical question "... estates are after-tax money, i.e.: income tax has been paid on them, yet the government taxes them again. Why?" For the cash in an estate, yes, that is after-tax money, but consider other assets such as stocks and real estate. Suppose a rich man bought stock in a small computer start-up company at $10 a share about 35 years ago, and that stock is now worth $500 a share. The man dies and his will bequeaths the shares to his son. According to US tax law, the son's basis in the shares is $500 per share, that is, if the son sells the shares, his capital gains are computed as if he had purchased the shares for $500 each. The son pays no taxes on the inheritance he receives. The deceased father's last income tax return (filed by the executor of the father's will) does not list the $490/share gain as a capital gain since the father did not sell the stock (the gain is what is called an unrealized gain), and so there is no income tax due from the father on the $490/share. Now, if there is no estate tax whatsoever, the father's estate tax return pays no tax on that gain of $490 per share either. Would this be considered an equitable system? Should the government not tax the gain at all? It is worth noting that it would be possible for a government to eliminate estate taxes entirely, but instead have tax laws that say that unrealized gains on the deceased's property would be taxed (as capital gains) on the deceased's final tax return. |
“Infinite Banking” or “Be Your Own Bank” via Whole Life Insurance…where to start? | Why would you give them the money and borrow it back? If you didn't give it to them in the first place you wouldn't need to borrow! It makes no sense at all. It USED to have a different use--as a tax dodge. You would buy "life insurance" for a low amount of coverage and way overfund it. Let the money grow and in your later years you would "borrow" against the extra value you had built up in the policy. Since this was a loan rather than a payout it wasn't income. When you died the tax liability went poof. Thus so long as what you had to pay in life insurance + the inefficiency of the insurance company was less than the tax rate it was a good deal. Congress closed this loophole a long time ago by prohibiting too great overfunding. |
Saving up for an expensive car | The question is how does $16,000/year for 6.5 years fit into your budget. Or to put it another way, what won't you be spending that money on? Housing, food, vacations, retirement fund, investments (though you can invest your car fund in the meantime), building a hefty emergency fund, kids college funds, saving for a down payment on a home, charity, etc... are all other places that money could go. I don't know what your needs are today let alone 6.5 years into the future, but I'd encourage you to consider all your financial goals and evaluate where this expense would fit. It seems your plan is to save up to the total cost of the car and then buy it in cash. That's a valid strategy, but it means you'll have no car (unless you already own one) for 6.5 years. Do you need a car? If so, what will you drive in the meantime (and even if you already own another car outright, you'll have gas and maintenance expenses)? If you don't need a car, then $100,000 is a rather extravagant purchase for something we just established you don't need. Would you be happier having this expensive car in 6.5 years, or having a series of less expensive cars starting now? Or buying a used model of the expensive car sooner? Or having no car at all? Also, a lot can change in 6.5 years. Cars will evolve and there'll be different models and options available. Maybe your salary will have doubled, or maybe you'll be unemployed. You could be living in a different city, have a different commute, and maybe you'll need a minivan to haul kids around or live in a place with bad winters and want a 4-wheel-drive. You'll also need to be prepared for the additional expenses that generally come with expensive cars, such as higher insurance and maintenance rates, and parking could be costly if you live in an expensive city. The other option, of course, if the car is truly something you need, want, and can afford, would be to save up a sizable down payment and finance the rest so you can get the car sooner. Finally, there's nothing wrong with saving your money for 6.5 years, building up that fund, and then reevaluating what makes the most sense for you at that time. Maybe it will the car, maybe something else, but the nice thing about having savings is that it gives you more options. |
Moving Coin Collection to Stapled Coin Pockets | I would be wary of having coins in containers with cardboard. Ideally you want the coins to be in an airtight envelope made of plastic to minimize any chance of oxidation or reaction with chemicals in the air. Cheap, retail coins like you would find in a Whitman collection are not generally going to hold value well. Sometimes you can sell a collection and break even if you have a nice complete set, but in general VF coins with common dates will not appreciate at all. Investment coins usually are high-priced items that sell for thousands each, not the sort thing you find in Whitman folders. In general, collectibles are bad investments in the US because IRS rules tax gains as ordinary income. So, unless you sell them under the table or have really low income, you lose a lot of your profit. If you enjoy collecting, focus on the fun of it, worrying about investment in coin collections is a joy killer. A Parting Anecdote... When I was a kid I painstakingly assembled a lot of BU rolls, because that was the hot thing back then. I wrote on them "DO NOT OPEN FOR 10 YEARS". You know how much a 1980 BU roll of Lincoln cents is worth now, 40 years later? $2.00 on eBay. Some days I spend more on lunch than the worth of my entire Lincoln cent collection. |
How to execute a large stock purchase, relative to the order book? | I am able to place an 'all or none' order with my broker. But doing so reduces the number of potential sources to fulfill the order. As others have mentioned, try a limit order to get a specific price. |
What is a maximum amount that I can wire transfer out of US? | The limit, if any, would be established by your financial institutions. You would need to contact both your sending and receiving bank to ascertain any limitation they impose on wire transfers. Generally, taxes aren't imposed on transference of funds between accounts you own, but I'm not familiar with tax in Thailand and I could be wrong on that half of the question. |
Who can truly afford luxury cars? | Not a direct answer, but... a friend pointed out to me that z proper luxury limo, if loaded with four sales reps going to the same meeting, is cheaper than airfares would be and lets them hold a planning meeting en route. Yeah, most of it is conspicuous consumption. But some of the road yachts have legitimate uses. |
Does a bond etf drop by the amount of the dividend just like an equity etf | It may be true for a bond fund. But it is not true for bond etf. Bond etf will drop by the same amount when it distribute dividend on ex-dividend date. |
Taxable income on full-time job + business earnings | I'm not sure I am fully understanding the nuance of your question, but based on your answer in the comments you and your business are not separate legal entities. So your income is the full $70K, there is no distinct business to have income. If you clarify your question to include why you want to know this I might be able to give a more meaningful answer for your situation. |
What's the catch in investing in real estate for rent? | Several, actually: Maintenance costs. As landlord, you are liable for maintaining the basic systems of the dwelling - structure, electrical, plumbing, HVAC. On top of that, you typically also have to maintain anything that comes with the space, so if you're including appliances like a W/D or fridge, if they crap out you could spend a months' rent or more replacing them. You are also required to keep the property up to city codes as far as groundskeeping unless you specifically assign those responsibilities to your tenant (and in some states you are not allowed to do so, and in many cases renters expect groundskeeping to come out of their rent one way or the other). Failure to do these things can put you in danger of giving your tenant a free out on the lease contract, and even expose you to civil and criminal penalties if you're running a real slum. Escrow payments. The combination of property tax and homeowner's insurance usually doubles the monthly housing payment over principal and interest, and that's if you got a mortgage for 20% down. Also, because this is not your primary residence, it's ineligible for Homestead Act exemptions (where available; states like Texas are considering extending Homestead exemptions to landlords, with the expectation it will trickle down to renters), however mortgage interest and state taxes do count as "rental expenses" and can be deducted on Schedule C as ordinary business expenses offsetting revenues. Income tax. The money you make in rent on this property is taxable as self-employment income tax; you're effectively running a sole proprietorship real-estate management company, so not only does any profit (you are allowed to deduct maintenance and administrative costs from the rent revenues) get added to whatever you make in salary at your day job, you're also liable for the full employee and employer portions of Medicare/Medicaid/SS taxes. You are, however, also allowed to depreciate the property over its expected life and deduct depreciation; the life of a house is pretty long, and if you depreciate more than the house's actual loss of value, you take a huge hit if/when you sell because any amount of the sale price above the depreciated price of the house is a capital gain (though, it can work to your advantage by depreciating the maximum allowable to reduce ordinary income, then paying lower capital gains rates on the sale). Legal costs. The rental agreement typically has to be drafted by a lawyer in order to avoid things that can cause the entire contract to be thrown out (though there are boilerplate contracts available from state landlords' associations). This will cost you a few hundred dollars up front and to update it every few years. It is deductible as an ordinary expense. Advertising. Putting up a "For Rent" sign out front is typically just the tip of the iceberg. Online and print ads, an ad agency, these things cost money. It's deductible as an ordinary expense. Add this all up and you may end up losing money in the first year you rent the property, when legal, advertising, initial maintenance/purchases to get the place tenant-ready, etc are first spent; deduct it properly and it'll save you some taxes, but you better have the nest egg to cover these things on top of everything your lender will expect you to bring to closing (assuming you don't have $100k+ lying around to buy the house in cash). |
Can I invest in the USA or EU from an Asian 3rd-world country, over the Internet? | Absolutely. It does highly depend on your country, as US brokerages are stricter with or even closed to residents of countries that produce drugs, launder money, finance terror, have traditional difficulty with the US, etc. It also depends on your country's laws. Some countries have currency controls, restrictions on buying foreign/US securities, etc. That said, some brokerages have offices world-wide, so there might be one near you. If your legal situation as described above is fortunate, some brokers will simply allow you to setup online using a procedure not too different from US residents: provide identification, sign tons of documents. You'll have to have a method to deliver your documentation in the ways you'd expect: mail, fax, email. E*Trade is the best starter broker, right now, imo. Just see how far you can go in the sign-up process. |
Does a stay at home mom need term life insurance? | Absolutely! Just because a spouse doesn't have a taxable income, doesn't mean they aren't providing real, tangible benefit to the family economy with an important job. As tragic as it is to consider losing your spouse, are you truly in a position to replace everything they do you for you? Knowing what they do for you and appreciating the effort your spouse gives is important, but don't sell short the dollar amount of what they provide. Your life insurance policy should be to keep you whole. Without your spouse, you will need childcare. You might need domestic services to the home. What about a nanny or similar service? Would $50K cover that until your child is an adult? There are a number of added expenses in the short and long term that would occur if a spouse died. How much for a funeral? Obviously you know the amount and term depends on the age of your kid. But I think you should really try to account for the number of daily hours you spouse puts in, and try to attach a cost to those hours. Then buy insurance for them just as you would for a wage earning. For example, buy a policy that is 10x the annual cost for services it would take to compensate for your spouse. Your tolerance for risk and cost can adjust it up and down from there. |
Why do 10 year Treasury bond yields affect mortgage interest rates? | The yield on treasury bond indicates the amount of money anyone at can make at virtually zero risk. So lets say banks have X [say 100] amount of money. They can either invest this in treasury bonds and get Y% [say 1%] interest that is very safe, or invest into mortgage loans [i.e. lend it to people] at Y+Z% [say at 3%]. The extra Z% is to cover the servicing cost and the associated risk. (Put another way, if you wanted only Y%, why not invest into treasury bonds, rather than take the risk and hassle of getting the same Y% by lending to individuals?) In short, treasury bond rates drive the rate at which banks can invest surplus money in the market or borrow from the market. This indirectly translates into the savings & lending rates to the banks' customers. |
Will progressively investing with moderate-to-high risk help secure a future? | There are a few flaws in your reasoning: I know my portfolio will always keep going up, No, it won't. You'll have periods of losses. You are starting your investing in a bull market. Do NOT be fooled into believing that your successes now will continue indefinitely. The more risky your portfolio, the bigger the losses. The upside of a risky portfolio is that the gains generally outweigh the losses, but there will be periods of losses. I honestly don't believe that it's possible for me to end up losing in the long term, regardless of risk. I think you vastly underestimate the risk of your strategy and/or the consequences of that risk. There's nothing wrong with investing in risky assets, since over time you'll get higher-than-average returns, but unless you diversify you are exposing yourself to catastrophic losses as well. |
What emergencies could justify a highly liquid emergency fund? | Since no one else mentioned it, there are sometimes amazing deals that require being the first person to take advantage of them. I'm not talking about black Friday sales, I'm talking about the woman who decided to sell the Porsche (she had bought for her cheating husband) for $1000. You might not run into those types of deals often, but having liquid investments will allow you to take advantage of them instead of kicking yourself. I just bought some real estate with some of my emergency fund that needed several months before I could properly finance it due to some legal issues with the deed that needed to go through court because there was a deceased person on the title. I will make far more on the deal when it's done than I ever could have made with that money invested in the market. |
Why is stock dilution legal? | Here's another way that I look at it: Say you and me were 50-50 partners in a small business. Suppose we wanted to expand our business but that needed money. Someone (let's call him Warren) has the money we need & hence in return for the money we offer Warren an equal stake in the business. i.e. All three of us own 33% stake now. For both you and me our stake reduced from 50% that it was before Warren's entry to only 33% now. While that reduction in our share may seem at first sight a bad deal for us, we both agreed to give Warren his share consciously not out of altruism but because it made business sense to helps us expand. Ergo, what matters is not just your share of the pie but the size of the pie itself! And hence dilution of stake can make sense under certain circumstances. Two small points: (a) This doesn't in any way show the dilution must make sense. Only that it can sometimes make sense (b) Of course, in the case of a large corporation they do not need your personal approval for the dilution. But hey, neither do they ask you when they buy a new plant or start a new product. |
Is there any reason to choose my bank's index fund over Vanguard? | Extortionate expense ratio aside, comparing the fund to the vanguard balanced fund (with an expense ratio of 0.19%) shows that your bank's fund has underperformed in literally every shown time period. Mind you, the vanguard fund is all US stocks and bonds which have done very well whereas the CIBC fund is mostly Canadian. Looking at the CIBC top 10 holdings does seem to suggest that it's (poorly) actively managed instead of being an index tracker for what that's worth. Maybe your bank offers cheaper transaction costs when buying their own funds but even then the discount would have to be pretty big to make up for the underperformance. Basically, go Vanguard here. |
Are lottery tickets ever a wise investment provided the jackpot is large enough? | Is playing the lottery a wise investment? --Probably not. Is playing the lottery an investment at all? --Probably not though I'll make a remark on that further below. Does it make any sense to play the lottery in order to improve your total asset allocation? --If you follow the theory of the Black Swan, it actually might. Let me elaborate. The Black Swan theory says that events that we consider extremely improbable can have an extreme impact. So extreme, in fact, that its value would massively outweigh the combined value of all impacts of all probable events together. In statistical terms, we are speaking about events on the outer limits of the common probablity distribution, so called outliers that have a high impact. Example: If you invest $2000 on the stock market today, stay invested for 20 years, and reinvest all earnings, it is probable within a 66% confidence interval that you will have an 8 % expected return (ER) per year on average, giving you a total of roughly $9300. That's very much simplified, of course, the actual number can be very different depending on the deviations from the ER and when they happen. Now let's take the same $2000 and buy weekly lottery tickets for 20 years. For the sake of simplicity I will forgo an NPV calculation and assume one ticket costs roughly $2. If you should win, which would be an entirely improbable event, your winnings would by far outweigh your ER from investing the same amount. When making models that should be mathematically solvable, these outliers are usually not taken into consideration. Standard portfolio management (PM) theory is only working within so called confidence intervals up to 99% - everything else just wouldn't be practical. In other words, if there is not at least a 1% probability a certain outcome will happen, we'll ignore it. In practice, most analysts take even smaller confidence intervals, so they ignore even more. That's the reason, though, why no object that would fall within the realms of this outer limit is an investment in terms of the PM theory. Or at least not a recommendable one. Having said all that, it still might improve your position if you add a lottery ticket to the mix. The Black Swan theory specifically does not only apply to the risk side of things, but also on the chance side. So, while standard PM theory would not consider the lottery ticket an investment, thus not accept it into the asset allocation, the Black Swan theory would appreciate the fact that there is minimal chance of huge success. Still, in terms of valuation, it follows the PM theory. The lottery ticket, while it could be part of some "investment balance sheet", would have to be written off to 0 immediately and no expected value would be attached to it. Consequently, such an investment or gamble only makes sense if your other, safe investments give you so much income that you can easily afford it really without having to give up anything else in your life. In other words, you have to consider it money thrown out of the window. So, while from a psychological perspective it makes sense that especially poorer people will buy a lottery ticket, as Eric very well explained, it is actually the wealthier who should consider doing so. If anyone. :) |
Why do credit cards require a minimum annual household income? | Here's one reason that's being overlooked in answers so far. (@ChrisInEdmonton, this is for your comment on @Chad's answer.) How do credit card companies make money? Sure, there's interest charges, but those are offset significantly by the cost of borrowing money, and by people defaulting on their debt / entering bankruptcy. The other way they make money is by processing transactions. They get a cut of whatever you buy. If you're a high-income person, and you're going to process a lot of expenditures with this credit card, your business is worth more. They will be willing to bribe you with things like cash-back, frequent flier miles, and insurance on your auto rentals, so that they can be your #1 go-to card. (This works in concert with the way that some credit card vendors with richer clientele overall - American Express - get to charge higher merchant fees for access to these customers' wallets. But that was mentioned in other answers.) If you're not a high-income person, your business is worth less. If you go somewhere asking for credit, they're going to try and give you a card which will earn them the most money - which probably isn't the one where they give you back 50% of their transaction fee in rewards. It's a calculated risk, since they still have to compete against cash, debit cards, and all the other credit card companies, so they don't have you totally over a barrel, but you shouldn't expect as many freebies, either. |
What actions should I be taking to establish good credit scores for my children? | Until they're old enough to be legally responsible for their own credit, the only thing you can really do is show them by example how to manage money and credit in your own finances. Teach them budgeting, immerse them in understanding how credit and financing work, and teach them smart ways to make their money work for them. When they're teenagers, you could potentially approach small banks or credit unions about ways to perhaps co-sign loans for them and let them make payments to learn good habits for managing their responsibilities, but that's not always easy either. It won't do anything for their credit, but having the responsibility of coming in to make payments might instill good habits and help their self-esteem at the same time. You have great intentions, but as has been pointed out here already, from a legal standpoint there's not much you can do. All you can do is prepare them for the day when they are on their own and can enter into credit agreements. Kids going to college get into real trouble with credit because cards are handed out like candy to them by the banks, so teaching them money management skills is invaluable and something you can do now. |
Legal right to ask for someone bank records UK | You might want to head on over to https://law.stackexchange.com/ and ask the same question. However from a personal finance perspective this kind of drama is somewhat common when someone is deceased and financial expectations are not met by the heirs. It sounds like the daughter was expecting a lot more in inheritance than was actually received. There was probably an overestimation of dad's net worth and an underestimation of the cost of his care toward the end of his life. Its best not to participate in this drama, and I feel that you are correct that the daughter does not have a right to see the bank account statements prior to dad's passage. The question is also if she has a right to see it now. Here in the US a joint account can be setup so the ownership transfers to other account holder(s) up death of an owner. So in this case your mother would own the account. If the account is setup as such, then the estate has no right to that money. You may want to check with the bank for some free advice. What is the classification of the account now that dad has passed? When a person grants someone else the power of attorney they have the ability to act as if they were that person. Most of the time POAs are limited in scope so If I give a person the POA to register a car in my name, they cannot apply for a credit card in my name (legally). In this case, however, the POA was probably general so pretty much your mom could do whatever she pleased. So if your mom took good care of the dad and bought herself some nice jewelry that is perfectly allowable with a general POA. I strongly doubt this daughter has any rights to the past records and may not even have the rights to the joint bank account currently. |
Does buying and selling a stock OR holding onto it make a company look better? | I have watched the ticker when I have made a transaction. About ¼ of the time my buy (or sell) actually moves the going price. But that price movement is wiped out by other transactions within two (or so) munites. Is your uncle correct? Yes. Will anyone notice? No. |
How can I get a home loan within 2 years of bankruptcy? | Your only option might be finding a seller-financed property with a motivated seller who is willing to take the risk of loaning you money. However, be prepared to pay a hefty rate on that loan if you can even pull it off. |
I'm only spending roughly half of what I earn; should I spend more? | Goodness, I wish I could put away half my paycheck. Not to rain on your parade, but a 6-month emergency fund is not quite "very good." It is the typical starting time frame. Personally, I would feel more comfortable with a 2+ year fund. That is a bit extreme, but only because many of us can barely seem to make it around to a 6-month fund. So, we focus on the more attainable goal. I say you do all three. Make saving money your priority, but do enjoy some of it; in moderation. Do not plan on making any big purchases with it, but know that you will eventually be able able to do so. Money not spent is worthless Idle money is worthless. Make some -- hopefully -- prudent investments with some of your money. A small portion of that investment portfolio can/should be in speculative investments. Maybe even as much as 20% of your investment portfolio, since you are young. Consider that money gone and you will hopefully be surprised by one of those speculative investments. That is the crucial point: earmark a small portion of your investment portfolio which you are willing to lose. However, do not gamble with it. Research the hot emerging technologies, for example, and find a way to make an investment. So, in summary: You may have more money that you know what do with, right now. However, that does not mean you need to go out and spend it all. Trust me, as you get older you will think of plenty of good uses for that money. |
Clarify on some Stocks Terminology | Yep, you have it pretty much right. The volume is the number of shares traded that day. The ticker is giving you the number of shares bought at that price in a given transaction, the arrow meaning whether the stock is up or down on the day at that price. Institutional can also refer to pensions, mutuals funds, corporates; generally any shareholder that isn't an individual person. |
What does volume and huge daily price increases say about stock prices? | Stock B could be considered to be more risky because it seems to be more volatile - sharp rises on large volume increases can easily be followed by sharp drops or by further rises in the start of a new uptrend. However, if both A and B are trading on low volume in general, they can both be more on the risky side due to having relatively low liquidity, especially if you buy a large order compared to the average daily volume. But just looking at the criteria you have included in your question is not enough to determine which stock is riskier than the other, and you should look at this criteria in combination with other indicators and information about each stock to obtain a more complete picture. |
I'm self-employed with my own LLC. How should I pay myself, given my situation? | You're conflating LLC with Corporation. They're different animals. LLC does not have "S" or "C" designations, those are just for corporations. I think what you're thinking about is electing pass through status with the IRS. This is the easiest way to go. The company can pay you at irregular intervals in irregular amounts. The IRS doesn't care about these payments. The company will show profit or loss at the end of the year (those payments to you aren't expenses and don't reduce your profit). You report this on your schedule C and pay tax on that amount. (Your state tax authority will have its own rules about how this works.) Alternatively you can elect to have the LLC taxed as a corporation. I don't know of a good reason why someone in your situation would do this, but I'm not an accountant so there may be reasons out there. My recommendation is to get an accountant to prepare your taxes. At least once -- if your situation is the same next year you can use the previous year's forms to figure out what you need to fill in. The investment of a couple hundred dollars is worthwhile. On the question of buying a home in the next couple of years... yes, it does affect things. (Pass through status? Probably doesn't affect much.) If all of your income is coming from self-employment, be prepared for hassles when you are shopping for a mortgage. You can ask around, maybe you have a friendly loan officer at your credit union who knows your history. But in general they will want to see at least two years of self-employment tax returns. You can plan for this in advance: talk to a couple of loan officers now to see what the requirements will be. That way you can plan to be ready when the time comes. |
Why would Two ETFs tracking Identical Indexes Produce different Returns? | The top ten holdings for these funds don't overlap by even one stock. It seems to me they are targeting an index for comparison, but making no attempt to replicate a list of holdings as would, say, a true S&P index. |
If you want to trade an equity that reflects changes in VIX, what is a good proxy for it? | If you want to trade to gain from short-term volatility, you can use Derivative-based ETFs that try to track the inverse of a broad index like the S&P 500. Note that these ETFs only track the index over a 1 day period, so you shouldn't hold these. If you're looking for a longer-term investment strategy, look at low-beta stocks, which often do well or produce dividend income during volatile times. Examples include McDonald's Corp and utilities like Consolidated Edison. |
What will be the long term impact of the newly defined minimum exchange rate target from francs to euro? | The total size of the eurozone economy is $13 trillion, whereas Switzerland'd GDP is about $0.5 trillion, so the eurozone is about 26 times larger. As such, I would not expect this move to have a large effect on the eurozone economy. On the margins, this may decrease somewhat eurozone exports to Switzerland and increase imports from Switzerland, so this would be a slight negative for eurozone growth. Switzerland accounts for 5.2% of the EU's imports, and these imports will now be slightly cheaper, which puts some deflationary pressure on the EU, particularly in the Swiss-specialized industries of chemicals, medicinal products, machinery, instruments and time pieces. But overall, 5.2% is a rather small proportion. Bottom line, most common eurozone countries' people should probably not fret too much about this announcement. What it means for Switzerland and Swiss citizens, however, is a totally different (and much more interesting) question. |
What does pink-sheet mean related to stocks? | It's an over-the-counter stock quote system. Read all about it. Or visit it. |
Negative properties of continuously compounded returns | What you're missing is the continuous compounding computation doesn't work that way. If you compound over n periods of time and a rate of return of r, the formula is e^(r*n), as you have to multiply the returns together with a mulitplicative base of 1. Otherwise consider what 0 does to your formula. If I get a zero return, I have a zero result which doesn't make sense. However, in my formula I'd still get the 1 which is what I'm starting and thus the no effect is the intended result. Continuous compounding would give e^(-.20*12) = e^(-2.4) = .0907 which is a -91% return so for each $100 invested, the person ends up with $9.07 left at the end. It may help to picture that the function e^(-x) does asymptotically approach zero as x tends to infinity, but that is as bad as it can get, so one doesn't cross into the negative unless one wants to do returns in a Complex number system with imaginary numbers in here somehow. For those wanting the usual compounding, here would be that computation which is more brutal actually: For your case it would be (1-.20)^12=(0.8)^12=0.068719476736 which is to say that someone ends up with 6.87% in the end. For each $100 had in the beginning they would end with $6.87 in the end. Consider someone starting with $100 and take 20% off time and time again you'd see this as it would go down to $80 after the first month and then down to $64 the second month as the amount gets lower the amount taken off gets lower too. This can be continued for all 12 terms. Note that the second case isn't another $20 loss but only $16 though it is the same percentage overall. Some retail stores may do discounts on discounts so this can happen in reality. Take 50% off of something already marked down 50% and it isn't free, it is down 75% in total. Just to give a real world example where while you think a half and a half is a whole, taking half and then half of a half is only three fourths, sorry to say. You could do this with an apple or a pizza if you want a food example to consider. Alternatively, consider the classic up and down case where an investment goes up 10% and down 10%. On the surface, these should cancel and negate each other, right? No, in fact the total return is down 1% as the computation would be (1.1)(.9)=.99 which is slightly less than 1. Continuous compounding may be a bit exotic from a Mathematical concept but the idea of handling geometric means and how compounding returns comes together is something that is rather practical for people to consider. |
Does settlement of second mortgage count as short sale? | No that will not count as a short sale although it may still affect your chances of getting a loan because some lenders wont want to see it on your credit if you are pursuing a new FHA loan. In the best case scenario you will need an explanation letter of why you did this. In the worst case scenario the lender will want you to wait to get financing. Try and find a lender with NO FHA overages which means they don't put additional restrictions on giving you an FHA insured loan. That type of lender will be your best choice because they just follow FHA rules and don't add any additional requirements. |
Roth IRA - Vanguard or Fidelity? If a college student had to pick one? | The minimum at Schwab to open an IRA is $1000. Why don't you check the two you listed to see what their minimum opening balance is? If you plan to go with ETFs, you want to ask them what their commission is for a minimum trade. In Is investing in an ETF generally your best option after establishing a Roth IRA? sheegaon points out that for the smaller investor, index mutual funds are cheaper than the ETFs, part due to commission, part the bid/ask spread. |
Double entry for mortgage | For the purpose of personal finance, treating $500 as Interest Expense is sufficient. For business accounting, it involves making the $500 a contra-liability and amortizing it as interest expense over the course of life of the loan. |
Re-financing/consolidating multiple student loans for medical school? | Several student loans are backed by government guarantee and this will allow you to get attractive rates. This may require them to consolidate the three classes of loans separately. Many commercial banks offer consolidation services, one example is Wachovia discussed at https://www.wellsfargo.com/student/private-loan-consolidation/ Other methods of "consolidation" are of course anything that pays off the original loan. If available, using a parent's home equity line of credit to pay of the loans and then paying back the parents can save money. An additional benefit of HELOC-style loans is that they are very flexible in their payment terms. For example you may pay $25 per year to keep the account open and then only be required to make interest payments. Links: https://origin.bankrate.com/finance/college-finance/faqs-on-student-loan-consolidation-1.aspx |
Using Euros to buy and sell NASDAQ stocks | You can check whether the company whose stock you want to buy is present on an european market. For instance this is the case for Apple at Frankfurt. |
Be a partner, CTO or just a freelancer? | First, determine the workload he will expect. Will you have to quit your other work, either for time or for competition? How much of your current business will be subsumed into his business, if any? Make sure to understand what he wants from you. If you make an agreement, set it in writing and set some clear expectations about what will happen to your business (e.g. it continues and is not part of your association with the client). Because he was a client for your current business, it can blur the lines. Second, if you join him, make sure there is a business entity. By working together for profit, you will have already formed a partnership for tax purposes. Best to get an entity, both for the legal protection and also for the clarity of law and accounting. LLCs are simplest for small ventures; C corps are useful if you have lots of early losses and owners that can't use them personally, or if you want to be properly formed for easy consumption by a strategic. Most VCs and super-angels prefer everybody be a straight C. Again, remember to define, as necessary, what you are contributing to be an owner and what you are retaining (your original business, which for simplicity may already be in an entity). As part of this process, make sure he defines the cap table and any outstanding loans. Auntie June and Cousin Steve might think their gifts to him were loans or equity purchases; best to clear this issue up early before there's any more money in it. Third, with regard to price, that is an intensely variable question. It matters what the cap table looks like, how early you are, how much work he's already done, how much work remains to be done, and how much it will pay off. Also, if you do it, expect to be diluted by other employees, angels, VCs, other investors, strategics, and so on. Luckily, more investors usually indicates a growing pie, so the dilution may not be at all painful. But it should still be on your horizon. You also need to consider your faith in your prospective partner's ability to run the business and to be a trustworthy partner (so you don't get Zuckerberg'd), and to market the business and the product to customers and investors. If you don't like the prospects, then opt for cash. If you like the business but want to hedge, ask for compensation plus equity. There are other tricks you could use to get out early, like forced redemption, but they probably wouldn't help either because it'd sour your relationship or the first VC or knowledgeable angel to come along will want you to relinquish that sort of right. It probably comes down to a basic question of your need for cash, his willingness to let you pursue outside work (hopefully high) and your appraisal of the business' prospects. |
Can I profit from anticipating a drop in value? | Purchasing an option to sell the stock is probably the safest bet. This gives you reasonable leverage, and your risk is limited to the cost of the option. Say the stock currently sells for $100 per share. You think it will drop to $80 per share in the next two weeks and the market thinks the price will be stable. Now, consider an option to sell one share of that stock for $95 any time within the next two weeks. The market would consider that option nearly worthless, since in all likelihood, you would lose out by exercising it (since you could just sell the share on the market for a price expected to be higher than that). You might be able to acquire that option for $5. Now, say you're right and within two weeks, the price drops to $80. Now you can purchase a share for $80, exercise the option to sell it for $95, and pocket $15. That would make you a $10 profit on a $5 investment. If you're wrong, you just let the option lapse and are out $5. No problem. In reality, you would buy a number of such options. And you wouldn't actually buy a share and exercise the option, you would just sell the option back to its issuer for $15. |
Buying a small amount (e.g. $50) of stock via eToro “Social Trading Network” using a “CFD”? | Is eToro legitimate? If you have any doubts about eToro or other CFD providers (or even Forex providers, which are kind of similar), just type eToro scam in Google and see the results. |
Online tools for monitoring my portfolio gains/losses in real time? | This functionality is widely available, not only on brokerage sites, but also financial management and even financial information sites. For instance, two of the latter are Google Finance and Yahoo Finance. If you are logged in, they let you create "portfolios" listing your stocks and, optionally, the size of your holdings in that stock (which you don't need if you are just "watching" a stock). Then you can visit the site at any time and see the current valuations. |
Should I consolidate loans and cards, or just cards, leaving multiple loans? | First of all, congratulations on admitting your problem and on your determination to be debt-free. Recognizing your mistakes is a huge first step, and getting rid of your debt is a very worthwhile goal. When considering debt consolidation, there are really only two reasons to do so: Reason #1: To lower your monthly payment. If you are having trouble coming up with enough money to meet your monthly obligations, debt consolidation can lower your monthly payment by extending the time frame of the debt. The problem with this one is that it doesn't help you get out of debt faster. It actually makes it longer before you are out of debt and will increase the total amount of interest that you will pay to the banks before you are done. So I would not recommend debt consolidation for this reason unless you are truly struggling with your cashflow because your minimum monthly payments are too high. In your situation, it does not sound like you need to consolidate for this reason. Reason #2: To lower your interest rate. If your debt is at a very high rate, debt consolidation can lower your interest rate, which can reduce the time it will take to eliminate your debt. The consolidation loan you are considering is at a high interest rate on its own: 13.89%. Now, it is true that some of your debt is higher than that, but it looks like the majority of your debt is less than that rate. It doesn't sound to me that you will save a significant amount of money by consolidating in this loan. If you can obtain a better consolidation loan in the future, it might be worth considering. From your question, it looks like your reasoning for the consolidation loan is to close the credit card accounts as quickly as possible. I agree that you need to quit using the cards, but this can also be accomplished by destroying the cards. The consolidation loan is not needed for this. You also mentioned that you are considering adding $3,000 to your debt. I have to say that it doesn't make sense at all to me to add to your debt (especially at 13.89%) when your goal is to eliminate your debt. To answer your question explicitly, yes, the "cash buffer" from the loan is a very bad idea. Here is what I recommend: (This is based on this answer, but customized for you.) Cut up/destroy your credit cards. Today. You've already recognized that they are a problem for you. Cash, checks, and debit cards are what you need to use from now on. Start working from a monthly budget, assigning a job for every dollar that you have. This will allow you to decide what to spend your money on, rather than arriving at the end of the month with no idea where your money was lost. Budgeting software can make this task easier. (See this question for more information. Your first goal should be to put a small amount of money in a savings account, perhaps $1000 - $1500 total. This is the start of your emergency fund. This money will ensure that if something unexpected and urgent comes up, you won't be so cash poor that you need to borrow money again. Note: this money should only be touched in an actual emergency, and if spent, should be replenished as soon as possible. At the rate you are talking about, it should take you less than a month to do this. After you've got your small emergency fund in place, attack the debt as quickly and aggressively as possible. The order that you pay off your debts is not significant. (The optimal method is up for debate.) At the rate you suggested ($2,000 - 2,500 per month), you can be completely debt free in maybe 18 months. As you pay off those credit cards, completely close the accounts. Ignore the conventional wisdom that tells you to leave the unused credit card accounts open to try to preserve a few points on your credit score. Just close them. After you are completely debt free, take the money that you were throwing at your debt, and use it to build up your emergency fund until it is 3-6 months' worth of your expenses. That way, you'll be able to handle a small crisis without borrowing anything. If you need more help/motivation on becoming debt free and budgeting, I recommend the book The Total Money Makeover by Dave Ramsey. |
Selling an app, sharing income, how does it work tax-wise? | There are a few different ways to organize this, but mostly I think you need to talk to a lawyer. The 50/50 split thing should be in writing along with a bunch of other issues. You could have one of you doing a sole proprietorship where the other person is a contractor that receives half of all revenues/profits. The person that owns the sole proprietorship may be entitled to deduct certain costs of running the entity. The other person would then be 1099'd his share of revenues. You could set up a partnership, again legal paperwork is necessary. You could also setup an S-Corp, where each of you is a 50% owner. You could also setup an LLC that is organized as any of the above. I would only do this if you can self fund some additional tax preparation costs. Figure about $600/year at a minimum. There are a lot of options with a sole proprietorship being the easiest. Your first step on the new venture would be to apply for an EIN (free), and then opening a business bank account. Good luck. |
How can I know the minimum due credit card payment and date for an ANZ Visa card? | You are in luck, I have an ANZ credit card as well. I have just checked my paper statement with online, and was able to find a matching online statement in less than a minute. You simply click on your credit card account from the list of accounts. Under Date Range it will have the Current incomplete statement period. You simply click on the down arrow and select the last complete date range ending sometime in late April (depending on your credit card cycle). You then press on View next to the drop down box. This should provide you with a list of purchases and payment/credits for that period, followed by a line with your Credit Limit, Available Funds and Closing Balance. The line below that then shows your Due Date, and Overdue/Overlimit, the Minimum Payment and Amount Due Now If you are after paying only the minimum amount then you pay this amount by the due date (you will be charged interest if you only pay this amount). If, on the otherhand, you wish to avoid paying any interest then you need to pay the full Closing Balance before the due date. You should also be able to get electronic statements sent to your email address. |
What happens to my savings if my country defaults or restructures its debt? | This question is different because you are asking for actual advice vs. a more academic, "what if" scenario. The answer that I'll give will be different, and similar to another recent question on a similar vein. Basically, if you're living in a European country that's effectively in default and in need of a bailout, the range of things that can happen is difficult to predict... the fate of countries like Ireland and Greece, whatever the scenario, will be economic and social upheaval. But, this isn't the end of the world either... it's happened before and will happen again. As an individual, you need to start investing defensively in a manner appropriate for your level of wealth. Things to think about: I'd suggest reading "A Free Nation Deep in Debt: The Financial Roots of Democracy" |
Why are there many small banks and more banks in the U.S.? | In the US, paper checks are still the rule, and there is a large amount of the population that does not care to use online banking. As a result, those people need to go to the bank once a week or more often, to deposit checks they get from anywhere, to get cash, etc.; so all those little banks have traffic. This is slowly changing, and banks start to automatic the processes even in the brick-and-mortar location, but for now, they are around. |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.