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Is it possible for me to keep my credit card APR at 0% permanently? | Banks don't care that you are responsible cardholder. They care to make money. Interest rates are basically 0% by government policy and the banks charge their responsible cardholders 20% interest rates. Think about that for one second, and realize they really do not care about your ability to avoid paying interest, they only need you to 'slip up' one month during your entire lifetime to make a profit from you. It is in their interest for you to get into a spending habit, from 0% promo rates, so that eventually a frivolous purchase or life changing event causes a balance to stay on the card for over one month. |
How can my friend send $3K to me without using Paypal? | If wire transfer through your bank does not work then perhaps one of the more popular money transfer services may be what you are looking for such as MoneyGram or Western Union. Now these rely on a trusted "registered" third party to do the money transfer so you need to make sure that you are working with a legitimate broker. Each money transfer service has a site that allows you to perform the search on registered parties around your area. There are certain fees that are sometimes applied due to the amount being transferred. All of these you will want to do some detailed research on before you make the transfer so that you do not get scammed. I would suggest doing a lot of research and asking people that you trust to recommend a trusted broker. I have not personally used the services, but doing a quick search brought many options with different competitive conversion rates as well as fees. Good luck. |
What should I do with my money? | Some of the other answers recommended peer-to-peer lending and property markets. I would not invest in either of these. Firstly, peer-to-peer lending is not a traditional investment and we may not have enough historical data for the risk-to-return ratio. Secondly, property investments have a great risk unless you diversify, which requires a huge portfolio. Crowd-funding for one property is not a traditional investment, and may have drawbacks. For example, what if you disagree with other crowd-funders about the required repairs for the property? If you invest in the property market, I recommend a well-diversified fund that owns many properties. Beware of high debt leverage used to enhance returns (and, at the same time, risk) and high fees when selecting a fund. However, traditionally it has been a better choice to invest in stocks than to invest in property market. Beware of anyone who says that the property market is "too good to not get into" without specifying which part of the world is meant. Note also that many companies invest in properties, so if you invest only in a well-diversified stock index fund, you may already have property investments in your portfolio! However, in your case I would keep the money in risk-free assets, i.e. bank savings or a genuine low-cost money market fund (i.e. one that doesn't invest in corporate debt or in variable-rate loans which have short duration but long maturity). The reason is that you're going to be unemployed soon, and thus, you may need the money soon. If you have an investment horizon of, say, 10 years, then I would throw stocks into the mix, and if you're saving for retirement, then I would go all in to stocks. In the part of the world where I live in, money market funds generally have better return than bank savings, and better diversification too. However, your 2.8% interest sounds rather high (the money market fund I have in the past invested in currently yields at 0.02%, but then again I live in the eurozone), so be sure to get estimates for the yields of different risk-free assets. So, my advice for investing is simple: risk-free assets for short time horizon, a mixture of stocks and risk-free assets for medium time horizon, and only stocks for long time horizon. In any case, you need a small emergency fund, too, which you should consider a thing separate from your investments. My emergency fund is 20 000 EUR. Your 50 000 AUD is bit more than 30 000 EUR, so you don't really have that much money to invest, only a bit more than a reasonably sized emergency fund. But then again, I live in rental property, so my expenses are probably higher than yours. If you can foresee a very long time horizon for part of your investment, you could perhaps invest 50% of your money to stocks (preference being a geographically diversified index fund or a number of index funds), but I wouldn't invest more because of the need for an emergency fund. |
High dividend stocks | You might want to look up Dividend Yield Trap. Many stocks with high dividend yields got that way not because they decided to increase their dividend, but because their prices have dropped. Usually the company is not in good shape and will reduce their dividend, and you're stuck with a low-yield stock which has also decreased in price. |
Does it make sense to buy a house in my situation? | I think your best course of action depends on the likely outcome of the divorce proceedings. The alimony/child support payments are controlled externally. I don't like to plan around things that I have no control over. In your shoes, I would probably avoid buying until things are settled down. |
Choosing a vehicle to invest a kid's money on their behalf (college, etc.)? | Roth is currently not an option, unless you can manage to document income. At 6, this would be difficult but not impossible. My daughter was babysitting at 10, that's when we started her Roth. The 529 is the only option listed that offers the protection of not permitting an 18 year old to "blow the money." But only if you maintain ownership with the child as beneficiary. The downside of the 529 is the limited investment options, extra layer of fees, and the potential to pay tax if the money is withdrawn without child going to college. As you noted, since it's his money already, you should not be the owner of the account. That would be stealing. The regular account, a UGMA, is his money, but you have to act as custodian. A minor can't trade his own stock account. In that account, you can easily manage it to take advantage of the kiddie tax structure. The first $1000 of realized gains go untaxed, the next $1000 is at his rate, 10%. Above this, is taxed at your rate, with the chance for long tern capital gains at a 15% rate. When he actually has income, you can deposit the lesser of up to the full income or $5500 into a Roth. This was how we shifted this kind of gift money to my daughter's Roth IRA. $2000 income from sitting permitted her to deposit $2000 in funds to the Roth. The income must be documented, but the dollars don't actually need to be the exact dollars earned. This money grows tax free and the deposits may be withdrawn without penalty. The gains are tax free if taken after age 59-1/2. Please comment if you'd like me to expand on any piece of this answer. |
Why would anyone want to pay off their debts in a way other than “highest interest” first? | There are non-financial costs to having a debt: you need to remember to make monthly payments, perhaps keep track of changing interest rates, be aware of conditions of the debt, archive the related paperwork. Life is simpler with fewer debts, and that has value. Of course, if the difference in interest rate is large, then that is more important and the higher interest should be paid off first. But if the difference is only half a percentage point or so, you may decide that having fewer debts is in itself worth the bit of extra interest you pay. |
Short term parking of a large inheritance? | Here's what I suggest... A few years ago, I got a chunk of change. Not from an inheritance, but stock options in a company that was taken private. We'd already been investing by that point. But what I did: 1. I took my time. 2. I set aside a chunk of it (maybe a quarter) for taxes. you shouldn't have this problem. 3. I set aside a chunk for home renovations. 4. I set aside a chunk for kids college fund 5. I set aside a chunk for paying off the house 6. I set aside a chunk to spend later 7. I invested a chunk. A small chunk directly in single stocks, a small chunk in muni bonds, but most just in Mutual Funds. I'm still spending that "spend later" chunk. It's about 10 years later, and this summer it's home maintenance and a new car... all, I figure it, coming out of some of that money I'd set aside for "future spending." |
Buying a house. I have the cash for the whole thing. Should I still get a mortgage to get the homeowner tax break? | Getting a mortgage for the interest write-off is like buying packs of baseball cards for the gum. That said, I'd refer you to The correct order of investing as much of that question really overlaps with this. This question boils down to priorities, the best use of the funds. There are those who suggest that a mortgage brings risk. Of course it does, just not for the borrower, the risk is borne by the lender. Risk comes from lack of liquidity. Say your girlfriend buys the house with cash, and leaves little reserve. She loses her job, and it's great that she has no mortgage. But she does have every other cost life brings, including a tax bill that can turn into a house getting foreclosed on. The details that you didn't disclose are those needed to look at the rest of the "priorities" list. A fully funded 401(k) with appropriate balance, and no other debt? And a 1 year emergency fund? I wouldn't argue against buying the house with cash. No real savings and passing on the 401(k) matched deposit? I'd think carefully about the longterm impact of the cash purchase. |
How do I get bill collectors who call about people I know to stop calling me? | If they really won't stop calling you, just waste their time. Usually the best thing I do to telemarketers (the ones that constantly call even through I've told them to stop) is to say "oh yes, I'm interested I'll just get a pen" - put them on hold and keep them on hold. Do it every time they call and soon they'll get the idea that you're a waste of time. |
Any experience with maxing out 401(k)? | The biggest challenge as a young person maxing out a 401k in my opinion is the challenge of saving for a house, and (if necessary) paying off student loans. You have to consider - are you OK renting for the next 3, 5, 10 years? Or do you eventually want to buy a place? how much will that cost vs your current expenses? That being said, I didn't max out but had over 8-10% of 401k contribution in the same situation you're in right now and I don't regret it. Rereading your question, I see you are considering investing in a Roth IRA. Especially at your current age, assuming your wages will go UP, investing to the company match with the 401K and then maxing out a Roth IRA would be my recommendation. THEN continue maxing out the 401k (if you wish). P.S. I highly recommend doing two things if you go down this path: |
If I deposit money as cash does it count as direct deposit? | As RonJohn points out, direct deposit is something very different. What's going on here is that they are trying to exclude the "customers" that open the account simply for the premium and then close it again as soon as the terms of the offer have been met. Most people have only one regular source of direct deposit money, either their paycheck or a retirement check. This acts to make it hard for them to simply take the offer and run. |
does interest payment on loan stay the same if I pay early | It depends on the type of loan. Fully amortized loans have a schedule of payments don't recalculate as you pay. If you want to make an additional payment you need to contact the lender to apply your payment toward principle and reamortize the loan. Otherwise all your additional payment will do is change the amount due on your next payment, or push out your next payment due date. Regarding interest calculation, you owe interest on the principle outstanding. Say you have a 10 year loan (120 Months), at 5% APR, and a $1,000 payment (this means you borrowed roughly $94,000) Each month the amount of interest owed reduces because there is less principle outstanding. The reason loans are amortized like this is so the borrower has a predictable, known, monthly amount due. |
If the put is more expensive than the call, what does it mean | There are many reasons. Here are just some possibilities: The stock has a lot of negative sentiment and puts are being "bid up". The stock fell at the close and the options reflect that. The puts closed on the offer and the calls closed on the bid. The traders with big positions marked the puts up and the calls down because they are long puts and short calls. There isn't enough volume in the puts or calls to make any determination - what you are seeing is part of the randomness of a moment in time. |
Economics Books | The free Yale Course taught by Bob Shiller called Financial Markets is really good. Find it on youtube, iTunes U, academic earth, or yale's site. |
Why is auto insurance ridiculously overpriced for those who drive few miles? | because it cost the insurer more, obviously. while this sounds snarky, it's important to realize that actual insurance companies set their insurance rates based on actual historical costs. for some reason people who report low miles have cost the company more dollars per reported mile than people who report high miles. in that sense, insurance is not overpriced. if it were truly overpriced, then an insurer would specialize in such insurance and make a killing on the free market. the more interesting questions is why do drivers who claim to travel very few miles cost the insurance companies so much per mile? that question has a host of possible answers and it's difficult to say which is the largest cost. here are just a few: |
Easiest way to diversify savings | You can apply for Foreign currency accounts. But they aren't saving accounts by any means, but more like current accounts. Taking money out will involve charges. You have to visit the bank website to figure out what all operations can be performed on your account. Barclays and HSBC allow accounts in foreign currency. Other banks also will be providing the same services. Are there banks where you can open a bank account without being a citizen of that country without having to visit the bank in person Depends on country by country. Are there any online services for investing money that aren't tied to any particular country? Get yourself a trading account and invest in foreign markets i.e. equities, bonds etc. But all in all be ready for the foreign exchange risks involved in denominating assets in multiple currencies. |
Does the Fed keeping interest rates low stimulate investment in the stock market and other investments? | Investopedia has this note where you'd want the contrapositive point: The interest rate, commonly bandied about by the media, has a wide and varied impact upon the economy. When it is raised, the general effect is a lessening of the amount of money in circulation, which works to keep inflation low. It also makes borrowing money more expensive, which affects how consumers and businesses spend their money; this increases expenses for companies, lowering earnings somewhat for those with debt to pay. Finally, it tends to make the stock market a slightly less attractive place to investment. As for evidence, I'd question that anyone could really take out all the other possible economic influences to prove a direct co-relation between the Federal Funds rate and the stock market returns. For example, of the dozens of indices that are stock related, which ones would you want that evidence: Total market, large-cap, small-cap, value stocks, growth stocks, industrials, tech, utilities, REITs, etc. This is without considering other possible investment choices such as direct Real Estate holdings, compared to REITs that is, precious metals and collectibles that could also be used. |
How to help a financially self destructive person? | You can't help people that don't want help, period. It just doesn't work, and you will waste your time and energy while making the other person mad. Both sides end up in the same place they started except now they are frustrated with each other. In a normal situation I would advise to stop enabling her by giving her money, but the court has already decided that part. There is no reason that she can't provide for her children on US$50k per year. In all honesty it sounds like she has a mental health problem and needs to see a professional. You, as the ex-husband, are probably not the right person to tell her that, though. If you really want to help her and are still on good terms with some friends or family members she trusts you could ask them to help her get help. They probably see the same mess that you and your kids do, but might need a little encouragement to act. The other option is if you sued for custody, based on living conditions, the possibility of losing her children and the child support might provide a much needed incentive to clean up her act. You probably won't win over a couple of incidents of the power being turned off and you will be putting your kids in the uncomfortable situation of telling on their mother though. |
Are there any consequences for investing in Vanguard's Admiral Shares funds instead of ETF's in a Roth IRA? | The mutual fund will price at day's end, while the ETF trades during the day, like a stock. If you decide at 10am, that some event will occur during the day that will send the market up, the ETF is preferable. Aside from that, the expenses are identical, a low .14%. No real difference especially in a Roth. |
What causes US Treasury I bond fixed interest to increase? | The Fed is trying to keep the money supply growing at a rate just slightly faster than the increase in the total production in the economy. If this year we produced, say, 3% more goods and services than last year, than they try to make the money supply grow by maybe 4% or 5%. That way there should be a small rate of inflation. They are trying to prevent high inflation rates on one hand or deflation on the other. When the interest rate on T-bills is low, banks will borrow more money. As the Fed creates this money out of thin air when banks buy a T-bill, this adds money to the economy. When the interest rate on T-bills is high, banks will borrow little or nothing. As they'll be repaying older T-bills, this will result in less growth in the money supply or even contraction. So the Feds change the rate when they see that economic growth is accelerating or decelerating, or that the inflation rate is getting too high or too low. |
How can I get a mortgage I can't afford? | If you can't afford it don't buy it, the next perfect house is just around the corner. The more time you spend researching and looking at houses, the increased chance you will find the perfect house you can afford. Also, here in Australia, we (the banks as well) factor in an interest rate rise of 2% above current rates to see if repayments can still be afforded at this increased rate. |
What are some examples of unsecured loans | Auto loans are secured agains the car. "Signature" loans, from a bank that knows and trusts you, are typically unsecured. Unsecured loans other than informal ones or these are fairly rare. Most lenders don't want to take the additional risk, or balance that risk with a high enough interest rate to make the unsecured loan unattractive. |
Is being a landlord a good idea? Is there a lot of risk? | Risk is the capital you have staked in pursuit of profit. The danger is that you lose what you have risked. For some bets (risks), you can get insurance to cover for losses. Now the "game" of Landlord and Tenant requires you to play fully by the rules set forth by your legislators. In your case, that is the legislators of the State of Texas. Without knowing those rules, you could be liable (open to civil prosecution) for violating those rules. Tenants could be savvy to those rules or savvy enough to hire someone, a lawyer, who knows those rules. As well, in the game of Landlord and Tenant, you must ascertain the creditworthiness of your would-be tenant. If the tenant fails to pay rent, that tenant can detain the residence. You will incur additional outlays to gain possession of your property (ownership in your rental). Now the game of Landlord vs Landlord is different. You can't pick up houses easily enough and even if you could, likely the expense of doing so could wipe out any would profits from having the house as a rental. So, in Landlord vs Landlord, you get constrained by where your rental sits. Thus you must forecast what will the neighborhood look like in five, ten, fifteen years. |
Why would a bank take a lower all cash offer versus a higher offer via conventional lending? | One other point to consider is that cash offers often include no contingencies. That is, the offer comes in and if the seller signs then the deal is done, without any chance that the buyer backs out. As you can imagine, this is an attractive option in some situations. |
In the stock market, why is the “open” price value never the same as previous day's “close”? | Nobody has mentioned the futures market yet. Although the stock market closes at 4pm, the futures market continues trading 24 hours a day and 5.5 days a week. Amongst the products that trade in the future market are stock index futures. That includes the Dow Jones, the S&P 500. These are weighted averages of stocks and their sectors. You would think that the price of the underlying stock dictates the price of the average, but in this day and age, the derivative actually changes the value of the underlying stock due to a very complex combination of hedging practices. (this isn't meant to be vague and mysterious, it is "delta hedging") So normal market fluctuations coupled with macroeconomic events affect the futures market, which can ripple down to individual stocks. Very popular stocks with large market caps will most certainly be affected by futures market trading. But it is also worth mentioning that futures can function completely independently of a "spot" price. This is where things start to get complicated and long winded. The futures market factor is worth mentioning because it extends even outside of the aftermarket and pre-market hours of stock trading. |
How to compare the value of a Masters to the cost? | Just looking at your question I can tell it's not worth it financially, even if you didn't borrow the money to do it. At your current rate, you'll be making 54,384 in 5 years, which is roughly a growth of 2.5% per year. If you go for the masters, in 5 years you'll be making 55,680, with roughly the same growth rate (2.5%). So it's costing you $70,000 (the cost of school plus the 2 years of reduced income) to raise your salary by $1,300. The payback period would be about 25 years. It would be MUCH worse if you borrowed the money to do it. Not a chance. |
Where can one find intraday prices for mutual funds? | Look at morningstar holdings.It will list the top 25 holdings and their current price.This will give you a good idea of the intra-day price of the fund. |
Pros/cons of borrowing money using a mortgage loan and investing it in a low-fee index fund? | Risk. That's it. No guarantees on the fund performance, while the mortgage has a guaranteed return of -3%. I'm doing this very thing. Money is cheap, I think it's wise to take advantage of it, assuming your exercise proper risk management. |
Can I rely on my home equity to finance large home repairs? | Personally, I'd use my emergency fund first. It is unlikely (though possible, of course) that I will entirely lose my income at the same time I need to replace my roof or my furnace. I'd rather pay my emergency fund back with installment payments than pay off a HELOC to my bank. The lost interest on my emergency fund, which, after all, should be in cash, is much less than the cost of the loan. I could even set up an amortization schedule in a spreadsheet and charge myself interest when paying back into the emergency fund. That said, if I didn't have the cash in my emergency fund, I'd rather borrow against the house than finance with a contractor. If they'd even do that, which is unlikely--I've never dealt with a roofer or heating contractor that required anything but full payment at time of service. Home equity borrowing is generally the cheapest kind. I'm firmly in the camp of those who look at home ownership as a consumption decision rather than an investment. If the value goes up, great, but I just build in about 1% of the cost of building a new house (excluding the land price) into the housing budget each year, right along with mortgage interest, property taxes and basic utilities. Usually, that's enough to cover the major wear-and-tear related repairs (averaged over 3-5 year periods, anyway). |
What is a bond fund? | A mutual fund that purchases bonds is a bond fund. Bond funds are considered to be less risk than a traditional stock mutual fund. The cost of this less risk is that they have earned (on average) less than mutual funds investing in stocks. Sometimes, bonds have different tax consequences than stocks. |
Finding a good small business CPA? | Look for an accountant who brings not only expertise in number crunching, but consulting and business planning - a full package. |
Will an ETF increase in price if an underlying stock increases in price | Since the market is in general rather efficient, the price of the ETF will most of the time reflects the prices of the underlying securities. However, there are times when ETF price deviates from its fundamental value. This is called trading at a premium/discount. This creates arbitrage opportunity, which is actually being studied in finance literature. |
Should you co-sign a personal loan for a friend/family member? Why/why not? | My personal rule is to not loan money (or co-sign) for any amount that I am not willing to give away. It can go wrong in so many ways, and having a family or friend involved means making a "business" decision is difficult. If a bank won't loan the person the money, why should I? Being a co-signer is the same as borrowing the money in my name and giving it right over to the borrower. There might be great reasons to do it. I would probably sign a loan to keep my family alive or healthy, but no other reason. There are many ways to help without signing a loan. Give a room and a place to live, loan a car. The other thing is if you really truly believe in the borrower, it won't do long term damage to your credit or your financial goals, and you are the only resort; go ahead. I am thinking about helping a teenager afford their first car or student loans. |
Calculate a weekly payment on a loan when payment is a month away | You'd have to look at the terms of the loan to be sure, but if the interest compounds weekly then you'd have to calculate the effect of 3 compounding periods, then compute for weekly payments. The balance after 3 weeks would be: Using Excel's PMT function for that principal balance, I get a weekly payment of $189.48. If the interest doesn't compound, the principal balance will be about $8888.37 and the weekly payment would be $189.85. Note, however, that the terms of the loan could be completely customized, so you'd need to be sure that the payment and the amortization schedule make sense to you before you agree to the loan. Since the interest is very high, I suspect this is a "no credit needed" car loan which are notorious for unfavorable (to the borrower) terms. |
I am a contractor with revenue below UK's VAT threshold. Should I register for VAT? | If you are providing VAT-liable services (you probablly are) and you register normally for VAT then you will be able to reclaim VAT on your buisness purchases but you will have to charge VAT to your clients. So the question really comes down to will your clients regard you adding VAT to their invoices as a price increase or not. That is likely to depend on whether your clients are in a position to claim-back the VAT you charged them. If you are working mostly for VAT registered buisnesses who perform primerally vat-liable (including zero-rated) activities then registering for VAT is likely in your financial interests (though it does mean more paperwork). The flat-rate scheme may be better still. If you are working mostly for private individuals, non VAT registered buisnesses or buisnesses which primerally perform VAT exempt* activities then registering for VAT when you don't have to is most likely not in your financial interests. * Note: VAT exempt and zero rated for VAT are very different things even though they look similar to the customer. |
After a stock dividend, how do you calculate holding periods for capital gains taxes? | Stock acquired through a (non-taxable) stock dividend has the same holding period as the stock on which the dividend was paid. |
Can you step up your cost basis indefinitely via the 0% capital gains rate? | Your real question, "why is this not discussed more?" is intriguing. I think the media are doing a better job bringing these things into the topics they like to ponder, just not enough, yet. You actually produced the answer to How are long-term capital gains taxed if the gain pushes income into a new tax bracket? so you understand how it works. I am a fan of bracket topping. e.g. A young couple should try to top off their 15% bracket by staying with Roth but then using pretax IRA/401(k) to not creep into 25% bracket. For this discussion, 2013 numbers, a blank return (i.e. no schedule A, no other income) shows a couple with a gross $92,500 being at the 15%/25% line. It happens that $20K is exactly the sum of their standard deduction, and 2 exemptions. The last clean Distribution of Income Data is from 2006, but since wages haven't exploded and inflation has been low, it's fair to say that from the $92,000 representing the top 20% of earners, it won't have many more than top 25% today. So, yes, this is a great opportunity for most people. Any married couple with under that $92,500 figure can use this strategy to exploit your observation, and step up their basis each year. To littleadv objection - I imagine an older couple grossing $75K, by selling stock with $10K in LT gains just getting rid of the potential 15% bill at retirement. No trading cost if a mutual fund, just $20 or so if stocks. The more important point, not yet mentioned - even in a low cost 401(k), a lifetime of savings results in all gains being turned in ordinary income. And the case is strong for 'deposit to the match but no no more' as this strategy would let 2/3 of us pay zero on those gains. (To try to address the rest of your questions a bit - the strategy applies to a small sliver of people. 25% have income too high, the bottom 50% or so, have virtually no savings. Much of the 25% that remain have savings in tax sheltered accounts. With the 2013 401(k) limit of $17,500, a 40 year old couple can save $35,000. This easily suck in most of one's long term retirement savings. We can discuss demographics all day, but I think this addresses your question.) If you add any comments, I'll probably address them via edits, avoiding a long dialog below. |
Diversification reduces risk, but does this base on the assumption that expected return of each asset is always in proportion to its risk? | Diversifying your portfolio between asset A and asset B only reduces the portfolio risk if asset A and asset B are not correlated. If they have either a low correlation or a negative correlation to each other, then you benefit from combining them in a portfolio in terms of risk reduction. The standard deviation of returns will be lower in a portfolio of low or uncorrelated assets. If on the other hand you combine two correlated assets into a portfolio you are doubling down on the same assumption, which means you are not reducing your risk. You are also wasting capital because now you have allocated capital to 2 separate trades / investments yet they have shown a high tendency of moving together. Here is an article that discusses this further: Why Diversify your Stock Portfolio |
In what state should I register my web-based LLC? | I would prefer to see you register in your home state, and then focus on making money, rather than spending time looking to game the system to save a few bucks. People worry way too much about these trivial fees when they should be focused on making their business successful. Get registered, get insurance, and then pour it on and start making money. Make $650 your target for a week's income - you can do it! Next year's goal should be spending $50 a month on a payroll service because you're SO BUSY you can't take the extra time to pay your own social security taxes. |
Why does it seem unnecessary to fully save for irregular periodic expenses? | Another way of explaining the puzzling balance: Right after a particular bill is paid, you have $0 saved to pay that bill the next time. Just before the bill is next due, you wisely have the whole amount saved; that's the purpose of the whole process. So, for that bill, on average over time, you'll have one-half that upcoming bill in the account. But the same argument holds for every one of the upcoming bills. So, for a large number of bills, with varying sizes and times between occurrence, the average amount in the account will be approximately one-half of the total amount of all the bills that you're saving for. |
Fundamentals of creating a diversified portfolio based on numbers? | Good question. There are plenty of investors who think they can simply rely on intuition, and although luck is always present it is not enough to construct a proper portfolio. First of all there are two basic types of portfolio management: Passive and Active. The majority of abnormal gains are made with active portfolio management although passive managers are less likely to suffer loses. Both types must be created with some kind of qualitative and quantitative research, but an active portfolio requires constant adjustments (Market Timing) to preserve the desired levels of risk and return. The topic is extremely broad and every manager has his own preferred methods of quantitative analysis. I will try to list here some most common, in my opinion, ways of stock-picking and portfolio management. Roy's Criterion: The best portfolio is that with the lowest probability that the return will be below a specified level. This is achieved by maximising the number of standard deviations between the return on the portfolio and minimum specified level: Max k = (Rp-Rl)/Sp Where (Rp) - return on portfolio, (Rl) - specified minimum return, (Sp) - standard deviation of portfolio return. Kataoka's Criterion: Maximise the minimum return (Rl) subject to constraint that the chance of a return below (Rl) is less than or equal to a specified value (a). Maximise (Rl) Subject to Prob (Rp < Rl) =< a For example, assume that the specified value is 20% - this will be met provided (Rl) is at least 0.84 standard deviations below (Rp). Therefore the best portfolio is the one that maximises (Rl) where: Rl = Rp-0.84*Sp Telser's Criterion: Maximise expected return subject to the constraint that the chance of a return below the specified minimum is less than or equal to some specified minimum (a) Maximise (Rp) subject to Prob (Rp < Rl) =< a Assuming same data as previously: Rl =< Rp-0.84*Sp and select the portfolio with highest expected return. Security Selection Now let's look at some methods of security selection. This is important when a manager believes some shares are mispriced. The required return on security 'i' is given by: Ri = Rf+(Rm-Rf)Bi Where (Rf) - is a risk-free rate, (Rm) - return on the market, (Bi) - security's beta. The difference between the required return and the actual return expected is known as the security's alpha (Ai). Ai = Rai - Ri, where (Rai) is actual return on security 'i'. Stock Picking One way of stock-picking is to select portfolios of securities with positive alphas. Alpha of a portfolio is simply the weighted average of the alphas of the securities in the portfolio. Ap = {(n*Ai) Where ({) is sigma (sorry for such weird typing, haven't figured out yet how to type proper-looking formulas), (n) - share of 'i'th security in portfolio. So another way of stock-picking is ranking securities by their excess return to beta (ERB): ERB = (Ri - Rf)/Bi The greater the ERB the more desirable the security and the greater the proportion it will make up of the portfolio. Thus portfolios produced by this technique will have greater proportion of some securities than the market portfolio and lower proportions of other securities. The number of securities depends on a cut-off rate (C*) for the ERB, defined so that all securities with ERB>C* are included in portfolio while if ERB The cut-off rate for a portfolio containing the first 'j' securities is given by (i'm inserting an image cut from Word below): Here comes the tricky part: Basically what you do is first calculate ERB for each security, then calculate Cj for each security mix (gradually adding new securities one by one and recalculating Cj each time). Then you select an optimum portfolio by comparing Cj of each mix to ERB's of it's securities. Let me show you a simple example: Say you have securities A,B,C and D you calculated ERB's: ERB(a)=6, ERB(b)=6.5, ERB(c)=5, ERB(d)=4 also you calculated: C(a)=4.1, C(ab)=4.8, C(abc)=4.9, C(abcd)=4.5. Then you check: ERB(a),ERB(b),ERB(c) are greater than C(a), but C(a) only contains security A so C(a) is not an optimum mix. ERB(a),ERB(b),ERB(c) are greater than C(ab), but C(ab) only contains securities A and B ERB(a),ERB(b),ERB(c) are greater than C(abc), and C(abc) contains A B and C so it is an optimum. ERB(d) is lower than C(abcd) so C(abcd) is not an optimum portfolio. Finally the most important part: Below is a formula to find the share of each security in the portfolio: Here you simply plug in already obtained values for each security to find it's proportion in your portfolio. I hope this somehow answers your question, however there is a lot more than this to consider if you decide to manage your portfolio yourself. Some of the most important areas are: Market Timing Hedging Stocks vs Bonds Good luck with your investments! And remember, the safest portfolio is the one that replicates the Global Market. The cut-off rate for a portfolio containing the first 'j' securities is given by (i'm inserting an image cut from Word below): Here comes the tricky part: Basically what you do is first calculate ERB for each security, then calculate Cj for each security mix (gradually adding new securities one by one and recalculating Cj each time). Then you select an optimum portfolio by comparing Cj of each mix to ERB's of it's securities. Let me show you a simple example: Say you have securities A,B,C and D you calculated ERB's: ERB(a)=6, ERB(b)=6.5, ERB(c)=5, ERB(d)=4 also you calculated: C(a)=4.1, C(ab)=4.8, C(abc)=4.9, C(abcd)=4.5. Then you check: ERB(a),ERB(b),ERB(c) are greater than C(a), but C(a) only contains security A so C(a) is not an optimum mix. ERB(a),ERB(b),ERB(c) are greater than C(ab), but C(ab) only contains securities A and B ERB(a),ERB(b),ERB(c) are greater than C(abc), and C(abc) contains A B and C so it is an optimum. ERB(d) is lower than C(abcd) so C(abcd) is not an optimum portfolio. Finally the most important part: Below is a formula to find the share of each security in the portfolio: Here you simply plug in already obtained values for each security to find it's proportion in your portfolio. I hope this somehow answers your question, however there is a lot more than this to consider if you decide to manage your portfolio yourself. Some of the most important areas are: Good luck with your investments! And remember, the safest portfolio is the one that replicates the Global Market. |
Why is day trading considered riskier than long-term trading? | In day trading, you're trying to predict the immediate fluctuations of an essentially random system. In long-term investing, you're trying to assess the strength of a company over a period of time. You also have frequent opportunities to assess your position and either add to it or get out. |
Bond ETFs as a means to achieve risk parity | How is it possible that long term treasury bonds, which the government has never defaulted on, can hold more risk as an ETF then the stock market index? The risk from long-term bonds isn't that the government defaults, but that interest rates go up before you get paid, so investors want bonds issued more recently at higher interest rates, rather than your older bonds that pay at a lower rate (so the price for your bonds goes down). This is usually caused by higher inflation rates which reduce the value of the interest that you will be paid. Do you assume more risk investing in bond ETFs than you would investing in individual bonds? If you are choosing the right ETFs, there should be a lower amount of risk because the ETFs are taking care of the difficult work of buying a variety of bonds. Are bond ETFs an appropriate investment vehicle for risk diversification? Yes, if you are investing in bonds, exchange traded funds are an appropriate way to buy them. The markets for ETFs are usually very liquid. |
How to calculate stock price (value) based on given values for equity and debt? | There is no formula for calculating a stock price based on the financials of a company. A stock price is set by the market and always has a component built into it that is based on something outside of the current valuation of a company using its financials. Essentially, the stock price of a company per share is whatever the best price it can get on the open market. If you are looking at how to evaluate if a stock is a good value at the current price, then look at some of the answers, but I wanted to answer this based on the way you phrased the question. |
How do amortization schedules work and when are they used? | Both Credit Card and Mortgage work on same principle. The interest is calculated on the remaining balance. As the balance reduces the interest reduces. The Mortgage schedule is calculated with the assumption that you would be paying a certain amount over a period of years. However if you pay more, then the balance becomes less, and hence the subsequent interest also reduces. This means you would pay the loan faster and also pay less then originaly forecasted. The other type of loan, typically personal loans / auto loans in older days worked on fixed schedule. This means that you need to pay principal + Pre Determined interest. This is then broken into equal monthly installment. However in such a schedule, even if you pay a lumpsum amount in between, the total amount you need to pay remains same. Only the tenor reduces. |
Help! I've cancelled their service, but this company continues to bill my credit card an annual fee. What can I do? | Short of canceling the card, you could just report the card as lost and ask for a new card number on the same account. Another option is to just make a note to look for the charge and keep disputing it. It has been a while since I did credit card processing at my business, but I think the company gets dinged if too many customers dispute charges and kicks them into a higher fee schedule with the credit card company. |
Dad paid cash for house and we want to put it in my name | If your parents are not on the deed then I am not sure how it could be their house. It seems like the sale was done unofficially. If your parents or aunt pass away this could be a real mess. Make this official ASAP. It might be possible for your aunt to gift you the house. This may have tax implication but the article below suggests that it may not be an issue. http://www.bankrate.com/finance/real-estate/aunt-be-taxed-for-bargain-price-on-house.aspx As you're probably aware, owning a house is expensive. Make sure you can afford taxes, bills, and maintenance. Things add up fast. I should have address the "rent to own" plan. If you plan on transferring the house from your aunt to you by renting with $0 monthly payment and then claiming it is all paid off, then I think this would be considered a gifting of the house from your aunt to you. It sounds like fraud to claim you paid something that you didn't. In the end, it is either a gift from your parents or from your aunt. The sooner you get the house in your name the better |
How can banks afford to offer credit card rewards? | There are 3 entities in a credit card transaction; Typically when you swipe for 100, the merchant only gets around 97.5. The 2.5 is divided amongst the 3 entities, roughly around 0.5 for the Merchant Bank, around 0.5 for the Card Network and a lions share to Issuing Bank of around 1.5 The reason Issuing Bank gets large share is because they take the risk and provide the credit to customer. Typically the Issuing Bank would pay the Merchant bank via the Card Network the money in couple of days. So the Merchant Bank is not out of funds. The Issuing Bank on the other hand would have given you a credit of say 10 to 50 days depending on when you made the transaction and when the payment is due. On an average 30 days of credit. So roughly the Acquiring Bank is lending money at the rate of 18%. It is from this money the Issuing Bank would give out rewards, which is typically less than 1%. Also in cases where say Merchant Bank and the Issuing Bank are same, Bank would make money on both the legs of transaction and hence launch co-branded cards with better rewards. The above numbers are illustrative and actual practices vary from Bank to Bank to card Network to Country Related question at How do credit card companies make profit? |
What is the best credit card for someone with no credit history | Consider getting yourself a gas card. Use it for a year. Make your payments on time. Then reapply for a credit card. |
Why are credit cards preferred in the US? | Your question is based on a false premise. Debit cards are more popular in the US than credit cards are. Indeed it seems to be the non-US part of the world that is big in credit cards. See here for example |
What options do I have at 26 years old, with 1.2 million USD? | You should invest your money. To figure out what rate of return you need, use this equation: (How Much Money You Want Per Year) / (Total Amount of Cash You Have) = (Annualized Interest Rate) If we plug in the amount of annualized interest you can expect to safely get while not managing your money personally, 2% by my estimate, we get X / 1.2m = 0.02%; X=24K/year A measly $24,000 / year. Many people say that you can get 10, 12, even 30% return on your investment. I won't speculate on if this is true, but I will guarantee that you cannot get those returns simply by handing your money over to a money manager. So your options are, 1) Earn a guaranteed $24,000 and earn the rest you need to live by working 2) Learn to invest your money (and then do so intelligently) and earn enough to live off the interest To learn how to invest your money, read Beating the Street, by Peter Lynch. https://www.amazon.ca/Beating-Street-Peter-Lynch/dp/0671891634 Good luck! |
Is there a Canadian credit card which shows holds? | It's not so much a credit card, but a financial institution's online platform that either provides this functionality or not. The following Canadian financial institutions show an itemized list of pre-authorized transactions (not an exhaustive list): The following institutions show a total value of pre-authorized transactions: Most other institutions show the available credit (e.g. Chase Financial used by Amazon Rewards), which give an indication of how much you have to spend. By subtracting the current balance and the available balance from the total credit limit, you can get an indication of the total amount of pre-authorized transactions. Example: $1000 - $500 - $400 = $100 is the amount of pre-authorized transactions. From TD's EasyWeb demo (http://tdeasywebdemo.com/v2/#/en/PFS/accounts/activity/chq), it appears that they don't include pre-authorized transactions in the Available Credit. You can verify for yourself by logging in to online banking after you make a purchase and comparing the Available Credit to [Credit Limit - Current Balance]. If it is equal, then they don't include, if it is different (most likely for the value of the transaction), then they do. |
Repaying Debt and Saving - Difficult Situation | Your mother has a problem that is typical for a woman with children. She is trying to help her children have a good life, by sacrificing to get them to a point where they can live comfortably on their own. Though she has a difficult situation now, much of the problems come from a very few choices by her and her children, and her situation can be fixed. Let me point out a few of the reasons why she has come to this point: My mother is a single mom... she is turning 50 this summer... she has about $60k in school loans from the college I attended... she has payments of $500/month ($10k) to my sisters college... she lives on her own in a 2 bedroom apartment... Mother's current 'income statement', Income Essentials (total $3131, 71%, too high, goal $2200) Lifestyle (total $150, low, she should have $500-900 to live her life) Financial (total $1350, 31%) Some observations and suggestions: Even though the $1625 rents seems high, your mom might enjoy her apartment and consider part of her rent ($300) a lifestyle choice (spending money for time), and the higher rent may make sense. But the rent is high for her income. Your mom should be spending more on food, and budget $200/month. Your mom should be saving money for investments and retirement. She should be putting 10% into savings ($440), plus any IRA/401K pretax savings. Your sister should be paying for her own college. She should take her own student loans, so that her mother can save for retirement. And since she only has $10K left, an alternative would be that you could loan her the money, and she could repay you when she graduates (you have money, as you loaned your mother $8K). You should be repaying the $500/month on the $60K student loan your mother took to help you get through college. You have benefited from the education, and the increased opportunity the college education has given you. Now is the time to accept responsibility and pay your debts. You could at least agree to split the expense with her, and were you paying even $300/month (leaving $200 for her), that would still fix her budget. Your mom should get a car that is paid for and reduce her transportation expenses, until the $350/month debt is resolved. She should resolve to spend no more than $300/month for a car, and with $100/month for insurance be under 10% for her vehicle. Since your mother lives in the US (NJ) she could avoid the $350/month debt payment though BK. But since there are other solutions she could exercise to resolve her problems, this is probably not needed. You mom could consider sharing her apartment to share expenses. Paying $1625 for an apartment for one person seems extravagant. She might enjoy sharing her apartment with a room-mate. That is about it. Once her children take responsibility for their lives, your mom will have a manageable budget, and less stress in her life. Mother's revised 'income statement', Income Essentials (total $2721, 62%, high, need to reduce by $500) Lifestyle (total $450, 10%, low) Financial (total $990, 23%) While you and your sister have these changes, Summary of changes: Some rent is lifestyle, reduced car loan by $200, sister pays her college $500, you pay your college $300, mom saves 10% of her income. Once your sister graduates and starts to repay you for your help with her college, you can take over paying the remainder of your loans, saving your mom an additional $200/month. |
What exactly is BATS Chi-X Europe? | BATS CHi-X Europe is a market maker. They provide liquidity to the order books of different kinds of equities on certain exchanges. So the London Stock Exchange lists equities and the order books show the orders of different market participants. Most of those market participants are market makers. They allow others to complete a trade of an equity closer to the price that persons wants, in a faster time period and in larger amounts, than if there were no market makers providing liquidity. |
Should I stockpile nickels? | Trying to engage in arbitrage with the metal in nickels (which was actually worth more than a nickel already, last I checked) is cute but illegal, and would be more effective at an industrial scale anyway (I don't think you could make it cost-effective at an individual level). There are more effective inflation hedges than nickels and booze. Some of them even earn you interest. You could at least consider a more traditional commodities play - it's certainly a popular strategy these days. A lot of people shoot for gold, as it's a traditional hedge in a crisis, but there are concerns that particular market is overheated, so you might consider alternatives to that. Normal equities (i.e. the stock market) usually work out okay in an inflationary environment, and can earn you a return as they're doing so.... and it's not like commodities aren't volatile and subject to the whims of the world economy too. TIPs (inflation-indexed Treasury bonds) are another option with less risk, but also a weaker return (and still have interest rate risks involved, since those aren't directly tied to inflation either). |
Is there a general guideline for what percentage of a portfolio should be in gold? | It depends on what your goals are, your age, how much debt you have, etc. Assuming -- and we all know what happens when you assume -- that your financial life is otherwise in order, the 5% to 10% range you're talking about isn't overinvesting. You won't have a lot of company; most people don't own any. One comment on this part: I have some gold (GLD), but not much ... Gold and GLD are not the same thing at all. Owning shares of the SPDR Gold Trust is not the same thing as owning gold coins or bars. You're achieving different ends by owning GLD shares as opposed to the physical yellow metal. GLD will follow the spot price of gold pretty closely, but it isn't the same thing as physical ownership. |
How can a company charge a closed credit card? | You should contact the Company who purchased your visa balance and ask/write the following questions: 1. Dispute the charge from Emusic.com as invalid. 2. Instruct that no future charges will be accepted. 3. How come Emusic.com was allowed to debit your account? 4. When did they purchased your visa account? 5. Ask for written verification that they purchased your account from the original company? such as a bill of sale? 6. Ask if the company is a registered debt collector in your state? 7. The FAIR DEBT COLLECTION PRACTICES ACT (FDCPA) may apply to your circumstance(s) and provide for $1,000 in damages to the consumer and $1,000 attorney fees from a third party debt collector per violation. You may want to seek the advice of an attorney to help determine if you have a good cause to sue the company and Emusic. If you did not receive anything form Emusic.com or your contract/agreement ended without a cancelation/early termination fee, ALso, file a written dispute with Emusic.com. Check your credit report. Many companies automatically charge your accounts through automatic payments after termination of the agreement because they get away with it in the U.S., if the consumer does not take steps to dispute the current charge and stop future charges from occurring in the future. Never use auto pay unless required and the service is essential. When using auto pay use a dedicated account not your main checking account. It is less of a pain in the neck to close the account if its your 2nd or 3rd checking account and not your only account. |
Made more than $600. Company does not issue 1099-MISC's. Enter income as general income? | I'm not sure how this gets entered in TurboTax, but this income from the company should be included in the Schedule C (or C-EZ) Line 1 Gross Receipts total, along with all of your 1099-MISC income from your business and any other income that your business took in. You don't need a 1099 from them, and the IRS doesn't care (at least from your perspective) if you got a 1099 or not; in fact, they probably expect you to have some non-1099 income. We don't know why the company chose not to issue 1099 forms, but luckily it isn't your concern. You can fill out your tax return properly without it. Note: This answer assumes that you didn't have any tax withheld from your checks from this company. If you did have tax withheld, you'll need to insist on a 1099 to show that. |
What are my best options if I don't have a lot of credit lines for housing loans? | Rather than trying to indirectly game your credit score, I would instead shop around and see if there are other lenders that will pre-qualify you with your credit the way it is today. BofA and other large banks can be very formulaic in how they qualify loans; a local bank or credit union may be more willing to bend the traditional "rules" and pre-qualify you. I'm thinking about using FHA. If you can put 20% down then a conventional mortgage will likely be cheaper than an FHA loan since FHA loans have mortgage insurance built-in while conventional mortgages typically don't require it if you borrow less than 80% of the house's value. I would shop around before jumping to an FHA loan. |
Can increasing my tax withholding from my full-time job cover FICA taxes for my freelance work? | Technically you owe 'self-employment' taxes not FICA taxes because they are imposed under a different law, SECA. However, since SE taxes are by design exactly the same rates as combining the two halves of FICA (employer and employee) it is quite reasonable to treat them as equivalent. SE taxes (and income tax also) are based on your net self-employment income, after deducting business expenses (but not non-business items like your home mortgage, dependent exemptions, etc which factor only into income tax). You owe SE Medicare tax 2.9% on all your SE net income (unless it is under $400) adjusted down by 7.65% to compensate for the fact that the employer half of FICA is excluded from gross income before the employee half is computed. You owe SE Social Security tax 12.4% on your adjusted SE net income unless and until the total income subject to FICA+SECA, i.e. your W-2 wages plus your adjusted SE net income, exceeds a cap that varies with inflation and is $127,200 for 2017. OTOH if FICA+SECA income exceeds $200k single or $250k joint you owe Additional Medicare tax 0.9% on the excess; if your W-2 income (alone) exceeds this limit your employer should withhold for it. However the Additional Medicare tax is part of 'Obamacare' (PPACA) which the new President and Republican majorities have said they will 'repeal and replace'; whether any such replacement will affect this for TY 2017 is at best uncertain at this point. Yes SE taxes are added to income tax on your 1040 with schedule SE attached (and schedule C/CEZ, E, F as applicable to your business) (virtually so if you file electronically) and paid together. You are supposed to pay at least 90% during the year by having withholding increased on your W-2 job, or by making 'quarterly' estimated payments (IRS quarters are not exactly quarters, but close), or any combination. But if this is your first year (which you don't say, but someone who had gone through this before probably wouldn't ask) you may get away with not paying during the year as normally required; specifically, if your W-2 withholding is not enough to cover your increased taxes for this year (because of the additional income and SE taxes) but it is enough to cover your tax for the previous year and your AGI that year wasn't over $150k, then there is a 'safe harbor' and you won't owe any form-2210 penalty -- although you must keep enough money on hand to pay the tax by April 15. But for your second year and onwards, your previous year now includes SE amounts and this doesn't help. Similar/related: |
How can one get their FICO/credit scores for free? (really free) | I get my credit scores from all three bureaus for free - no gimmick. I use a combination of banks that offer this service to get my scores. I wrote about this sometime back in my blog. For credit report, the only place to go is AnnualCreditReport.com. I space it out so that I get one every 4 months since there is a once a year restriction per bureau. |
Corporate Finance | Your company wants to raise $25,000,000 for a new project, but flotation costs are incurred by issuing securities (underwriting, legal fees, etc) First you must determine how much of the $25,000,000 is going to be debt and equity. The company's target D/E ratio is 50% (or .50). For every $0.50 of debt raised they want to raise $1.00 in equity. $1.00 + $0.50 = $1.50 $0.50/$1.50 = 1/3 debt, that leaves the equity portion being 2/3. $25,000,000 * (1/3) = $8,333,333.33 (DEBT) and $25,000,000 * (2/3) = $16,666,666.67 (EQUITY) Using the Weighted Average Cost then you would do something like this: = (1/3) * .04 + 2/3 * .12 = .09333333 =$25,000,000/(1-.093333) = $27,573,529.40 |
Help required on estimating SSA benefit amounts | Some details in case you are interested: Being a defined benefit kind of pension plan, the formula for your Social Security benefits isn't tied directly to FICA contributions, and I'm not aware of any calculator that performs an ROI based on FICA contributions. Rather, how much you'll get in retirement is based on your average indexed monthly earnings. Here's some information on the Social Security calculation from the Social Security Administration - Primary Insurance Amount (PIA): For an individual who first becomes eligible for old-age insurance benefits or disability insurance benefits in 2013, or who dies in 2013 before becoming eligible for benefits, his/her PIA will be the sum of: (a) 90 percent of the first $791 of his/her average indexed monthly earnings, plus (b) 32 percent of his/her average indexed monthly earnings over $791 and through $4,768, plus (c) 15 percent of his/her average indexed monthly earnings over $4,768. Here's an example. Of course, to calculate a benefit in the future, you'll need to calculate projected average indexed monthly earnings; more details here. You'll also need to make assumptions about what those bend points might be in the future. The average wage indexing values for calculating the AIME are available from the Social Security Administration's site, but future indexing values will also need to be projected based on an assumption about their inflation. You'll also need to project the Contribution and Benefit Base which limits the earnings used to calculate contributions and benefits. Also, the PIA calculation assumes benefits are taken at the normal retirement age. Calculating an early or late retirement factor is required to adjust benefits for another age. Then, whatever benefits you get will increase each year, because the benefit is increased based on annual changes in the cost of living. Performing the series of calculations by hand isn't my idea of fun, but implementing it as a spreadsheet (or a web page) and adding in some "ROI based on FICA contributions" calculations might be an interesting exercise if you are so inclined? For completeness sake, I'll mention that the SSA also provides source code for a Social Security Benefit Calculator. |
American taxes if living outside the US and get paid by US company on a US bank account | Technically, if you earn in US (being paid there, which means you have a work visa) and live in other country, you must pay taxes in both countries. International treaties try to decrease the double-taxation, and in this case, you may pay in your country the difference of what you have paid in US. ie. your Country is 20% and USA is 15%, you will pay 5%, and vice-versa. This works only with certain areas. You must know the tax legislation of both countries, and I recommend you seek for advisory. This site have all the basic information you need: http://www.irs.gov/Individuals/International-Taxpayers/Foreign-Earned-Income-Exclusion Good luck. |
Variable Annuity inside a Roth IRA? What is this and how can I switch it to something else? | This answer is provided mostly to answer your question "what is it?" A variable annuity is a contract between you and an insurance company. The insurance company takes a bunch of money up front as a lump sum, and will pay you some money yearly - like earning interest. (In this case, they will probably be paying you the money into the account itself). How much they return is, as the name suggests, variable. It can be anything, depending on what the contract says. Mostly, there will be some formula based on the stock market - frequently, the performance of the Standard & Poors 500 Index. There will typically be some minimum returns and maximum returns - if the stock market tanks, your annuity will not lose a ton of value, but if the stock market goes up a lot in one year (as it frequently does), you will not gain a lot of value either. If you are going to be in the market for a long amount of time (decades, e.g. "a few years out of college" and then a little), it makes a lot more sense to invest in the stock market directly. This is essentially what the insurance company is going to do, except you can cut out the middleman. You can get a lot more money that way. You are essentially paying the insurance company to take on some stock market risk for you - you are buying some safety. Buying safety like this is expensive. Variable annuities are the right investment for a few people in a few circumstances - mostly, if you're near retirement, it's one way to have an option for a "safe" investment, for a portion (but not all) of your portfolio. Maybe. Depending on the specifics, a lot. If you are under, like, 50 or so? Almost certainly a terrible investment which will gradually waste your money (by not growing it as fast as it deserves to be grown). Since you want to transfer it to Vanguard, you can probably call Vanguard, ask to open a Roth IRA, and request assistance rolling it over from the place it is held now. There should be no legal restrictions or tax consequences from transferring the money from one Roth IRA account to another. |
Cheapest way to wire or withdraw money from US account while living in Europe | I prefer to use a Foreign Exchange transfer service. You will get a good exchange rate (better than from Paypal or from your bank) and it is possible to set it up with no transfer fees on both ends. You can use an ACH transfer from your US bank account to the FX's bank account and then a SEPA transfer in Europe to get the funds into your bank account. Transfers can also go in the opposite direction (Europe to USA). I've used XE's service (www.xe.com) and US Forex's service (www.usforex.com). Transferwise (www.transferwise.com) is another popular service. US Forex's service calls you to confirm each transfer. They also charge a $5 fee on transfers under $1000. XE's service is more convenient: they do not charge fees for small transfers and do not call you to confirm the tramsfer. However, they will not let you set up a free ACH transfer from US bank accounts if you set up your XE account outside the US. In both cases, the transfer takes a few business days to complete. EDIT: In my recent (Summer 2015) experience, US Forex has offered slightly better rates than XE. I've also checked out Transferwise, and for transfers from the US it seems to be a bit of a gimmick with a fee added late in the process. For reference, I just got quotes from the three sites for converting 5000 USD to EUR: |
What kinds of exchange-traded funds (ETFs) should specifically be avoided? | Stay away from leveraged or synthetic ETFs. This answer talks about why leveraged ETFs are dangerous. There are numerous articles to be found by searching for "leveraged etf". My answer to this question links to one of the more accessible explanations I've read. |
Would I ever need credit card if my debit card is issued by MasterCard/Visa? | In most cases, a debit card can be charged like a credit card so there is typically no strict need for a credit card. However, a debit card provides weaker guarantees to the merchant that an arbitrary amount of money will be available. This is for several reasons: As such, there are a few situations where a credit card is required. For example, Amazon requires a credit card for Prime membership, and car rental companies usually require a credit card. The following does not apply to the OP and is provided for reference. Debit cards don't build credit, so if you've never had a credit card or loan before, you'll likely have no credit history at all if you've never had a credit card. This will make it very difficult to get any nontrivially-sized loan. Also, some employers (typically if the job you're applying for involves financial or other highly sensitive information) check credit when hiring, and not having credit puts you at a disadvantage. |
GnuCash and ledger/hledger | Answering my own question, I figured it out: yes, there is a way, with a tool called gnucash2ledger.py. Versions used: GnuCash 2.6.1, Ledger 2.6.2, hledger 0.22 |
Investing $50k + Real Estate | I have been on the same boat as you are right now. So basically, it depends on your goals, risk tolerance, upcoming life events! You want a plan not just for this particular 50K, but for your household assets and future earnings to come! My suggestion: Get a flat fee, online financial advisor to do the work for you. You don’t have to figure this out by yourself. Personally, I would invest in a portfolio that: Offers dynamic asset allocation plans that evolves over time based on changing market conditions. Offers a healthy mix of beta and alpha strategies along with the liquidity and ability to monitor activity online. Has structural risk management in place. Risk management is as much about increasing risk as it is about cutting risk. Therefore, you want a plan for de-allocating and re-allocating risk Hope this helps. |
Investing in the stock market during periods of high inflation | The answer would depend on the equities held. Some can weather inflation better than others (such as companies that have solid dividend growth) and even outpace inflation. Some industries are also safer against inflation than others, such as consumer staples and utilities since people usually have to purchase these regardless of how much $ they have. In looking over the data comparing S&P 500 returns, dividends, and inflation, the results are all over the map. In the 50's the total return was 19.3% with inflation at 2.2%. Then in the 70's returns were 5.8% with inflation at 7.4 percent, leading one to think that inflation diminished returns. But then in the 80's inflation was 5.1%, yet the return on the S&P was up to 17.3% Either way, aside from the 70's every other decade since 1950 has outpaced inflation (as long as you are including dividends; hence my first paragraph). S&P 500: Total and Inflation-Adjusted Historical Returns Also, the 7% average stock appreciation you mention is just that, an average. You are comparing a year-over-year number (7% inflation) with an aggregated one (stock performance over x number of years) and that is a misrepresentation and is not being weighted for the difference in what those numbers mean. Finally, there are thousands of things that have an effect on the stock market and stocks. Some are controllable and others are not. The idea that any one of them, such as inflation, has any sort of long-term, everlasting effect on prices that they cannot outmaneuver is improbable. This is where researching your stocks comes in...and if done prudently, who cares what the inflation rate is? |
When filing for an NOL, do you have to file the amended previous years' returns after the NOL return? | Your CPA doesn't need to file anything, so don't worry about him being sidetracked. You are the one doing the filing. Since the amended returns have to be filed on paper, you'll actually go and mail a package to the IRS (each return in a separate envelope). The reason the CPA suggests to file the amended returns after the current one, is to ensure the NOL is registered in the system before the amended returns are processed. The IRS doesn't have to automatically accept the amended returns, and if there's no NOL on the current year they may just bounce the amended returns back to you. Keep in mind that since you haven't filed your return by the due date (including extensions), you're now unable to forego the carry-back. I don't know if you discussed this with your CPA, but you're allowed, if you chose so, to not apply the NOL to prior years, and instead to apply it forward for the next 20 years (or until it runs out). Depending on your income pattern, that might have been something you could have considered, but you can only chose this if you file a statement before the due date (with extensions), which is now passed. |
Why is “cheque cashing” a legitimate business? | This answer is based on my understanding of the US banking system. We have check cashing businesses here too, which are just like what you describe, except for the spelling :-) Let's consider what "cash it for free at the bank" really means, and why it might not be an option for everyone. One key issue is "which bank?" As an example, suppose that I have an account at ABC Bank. I take out my checkbook for that account and write you a check for $500. (Terminology: In this case, I am the drawer or maker of the check, ABC Bank is the drawee bank, and you, user54609, are the payee. Disclaimer: "You" here is meant as a generic pronoun and I do not mean to insinuate that anything here actually applies to you personally.) There are two common things you might do with the check: If you have an account at some bank, say XYZ Bank, you might take the check to XYZ Bank and deposit it in your account. (You might be able to do this through an ATM, mobile app, or by mail, instead of in person.) XYZ Bank does not have a way to verify with certainty that the check is valid (e.g. they don't know what my signature looks like, nor whether I actually have $500 in my account at ABC), so they send it to ABC Bank, which verifies the check and transfers $500 to XYZ. (This is usually done through a central clearinghouse, such as the Federal Reserve in the US, and in some cases an image of the check may be sent electronically, instead of the physical check.) This process takes some time, so XYZ may not make the $500 available to you right away - there may be a hold period before you can withdraw that $500 from your account. You could take the check to ABC Bank, in person. They will verify on the spot that the check is valid and that you are in fact user54609. If everything looks good, they will hand you $500 in cash (perhaps subtracting a fee of a few dollars). Now we can see some possible problems with each of these approaches. For 1: Maybe you don't have a bank account at all. There are many possible reasons: You don't have enough money to meet the minimum balance that a bank account would require. You used to have an account, but you overdrew or otherwise misused an account, so the bank closed it. They then entered you in a registry such as ChexSystems which ensures that other banks know about this, and so no other bank will open a new account for you. You immigrated to the country illegally and cannot get the documents (driver's license, social security number, etc) that a bank normally requires to open an account. You simply don't like the idea of keeping your money in a bank. Maybe you do have an account at XYZ Bank, but it's in another town. You need the cash today, so you can't use mail or a mobile app, and third-party ATMs usually don't accept deposits. Maybe you need to spend the money today, and XYZ Bank would place a hold. For 2: ABC Bank may not have a branch you can conveniently visit. Maybe the nearest one is a long way away, in another city or across the country. Or maybe ABC is an online bank with no physical branches at all. Maybe it's in the same city, but you don't have transportation to get you there. Or maybe it's simply less convenient than the check-cashing business on the corner. Maybe it is after usual banking hours, or a weekend, and ABC Bank is closed, but you need cash now. In any of these situations, "cash it at the bank" might not be a viable option, and so you might reasonably turn to a check cashing business instead. As you say, you will pay a much higher fee there, but maybe it is worth it to you, or you just don't have any choice. Another possibility, of course, is that you are poorly educated about the banking system, and you don't really understand that 1 and 2 are options, or how to go about them. But there's this storefront on the corner that says "Check Cashing", so this seems like a low-stress, uncomplicated way to exchange this piece of paper for money. As such, there certainly are people who legitimately might want to cash a valid check at a check-cashing business. Check cashing business do of course take some risk of fraud, since they can't necessarily verify the check. There are sometimes steps they can take to minimize this risk. Sometimes they can call ABC Bank and check that I have sufficient money in my account. Maybe they'll only accept certain kinds of checks, such as payroll checks from well-known companies for which you can produce a matching pay stub. And they can demand identification from you (perhaps allowing more flexible options than a bank), which helps ensure that you are the payee, and would make you easier to track down if you did commit fraud. But they will probably lose some money this way, so they will have to make their fees high enough to cover those losses. |
When should I walk away from my mortgage? | Dan - there are other choices. What rate do you have on this mortgage? And what is the value of the home? With a bit of patience and effort, you may be able to lower your rate and save some portion of that $100k you think you can grab. There is no factual answer here. The negative will show for 7 years, and only you can determine whether that's worth it. If in that time the value comes back you may very well be in a worse position, looking to buy a new home that's now well above where it is today. It's possible the current prices are overshooting on the downside, if unemployment drops and consumer confidence returns, you may be back to break-even sooner than you think. As an aside, I find it curious that the Trumps of this world can manipulate the system, creating multiple entities, filing for bankruptcy, yet protecting his own assets, and his wealth is applauded. Yet, asking the question here so many attack you, verbally. The Donald has saved himself billions through his dealings, I don't judge you for asking this question when it comes to $100k. When Trump's net worth was negative, he should have had his property taken away, and been handed a broom. |
Recommendation on Options Back Testing tool please | As JoeTaxpayer says, there's a lot you can do with just the stock price. Exploring that a bit: Stock prices are a combination of market sentiment and company fundamentals. Options are just a layer on top of that. As such, options are mostly formulaic, which is why you have a hard time finding historical option data -- it's just not that "interesting", technically. "Mostly" because there are known issues with the assumptions the Black-Scholes formula makes. It's pretty good, and importantly, the market relies on it to determine fair option pricing. Option prices are determined by: Relationship of stock price to strike. Both distance and "moneyness". Time to expiration. Dividends. Since dividend payments reduce the intrinsic value of a company, the prospect of dividend payments during the life of a call option depresses the price of the option, as all else equal, without the payments, the stock would be more likely to end up in the money. Reverse the logic for puts. Volatility. Interest rates. But this effect is so tiny, it's safe to ignore. #4, Volatility, is the biggie. Everything else is known. That's why option trading is often considered "volatility trading". There are many ways to skin this cat, but the result is that by using quoted historical values for the stock price, and the dividend payments, and if you like, interest rates, you can very closely determine what the price of the option would have been. "Very closely" depending on your volatility assumption. You could calculate then-historical volatility for each time period, by figuring the average price swing (in either direction) for say the past year (year before the date in question, so you'd do this each day, walking forward). Read up on it, and try various volatility approaches, and see if your results are within a reasonable range. Re the Black-Scholes formula, There's a free spreadsheet downloadable from http://optiontradingtips.com. You might find it useful to grab the concept for coding it up yourself. It's VBA, but you can certainly use that info to translate in your language of choice. Or, if you prefer to read Perl, CPAN has a good module, with full source, of course. I find this approach easier than reading a calculus formula, but I'm a better developer than math-geek :) |
Should I lease, buy new, or buy used? | I think you're dancing with the line here, this question is hard to back up without opinions and could really be three different questions. I'm going to push aside the part about quality and reliability, that could be an emotional subject. So from a price standpoint, there's virtually no disagrement that it makes financial sense to buy a used car instead of a new car. The majority of new cars lose the majority of their resale value within the first year or two. If you purchase said car after someone else has used it for the first two years, you just avoided all of that depreciation yourself, and you're still going to be purchasing a perfectly reliable car as long as you are diligent in the buying process. |
Buying Fixed Deposit in India from Europe | If the intention is after maturing to convert back the Rupees into Euro, its not a good idea. Generally the interest rate in Euro and the interest rate in Rupee are offset by the predicted exchange rate. i.e. the Rupee will fall compared to Euro by similar rate. The point at Step 5 is generally what is expected to happen. At times this can be less or more depending on the local / global factors. So on average you will not make money, some times you will loose and sometimes you will gain. Plus I have shown flat conversion rates, typically there is a Buy Rate and a Sell Rate for a pair of currencies. There is a difference / spread that is the margins of Bank. Typically in the range of 2 to 4% depending on the currency pairs. |
How does a 2 year treasury note work? | Notes and Bonds sell at par (1.0). When rates go up, their value goes down. When rates go down, their value goes up. As an individual investor, you really don't have any business buying individual bonds unless you are holding them to maturity. Buy a short-duration bond fund or ETF. |
Unmarried Couple Splitting up with Joint Ownership of Home | Despite the unmarried status, you need to see a lawyer. Essentially you have a business with this person owning a home as the asset, and a mortgage for which you are responsible for. A lawyer needs to examine any paperwork you have and with knowledge of your particular jurisdiction's laws can advise you on the proper course of action. You paint a really ugly picture of this guy. I bet you are correct that he is kind of a horrible person. "Tough love" time: You willingly entered into a long term contract with this person. Why would you do such a thing? Perhaps some self reflection and counseling is in order. This is probably more important than worrying about your credit. All that being said, it is good of you to want to break ties with this person. You can rebuild. All will be good if you concentrate on the right things. |
Rate of change of beta | This is a useful metric in that it gives you a trust factor on how reliable the beta is for future expectations It is akin to velocity and acceleration First and second order derivatives of distance / time. Erratic acceleration implies the velocity is less trustworthy Same idea for beta |
Are REIT worth it and is it a good option to generate passive income for a while? | Other individuals answered how owning an REIT compares to an individual real estate investment, but did not answer your second question as readily, "are REITs a good option to generate passive income for awhile?". The "awhile" part is quite important in answering this question. If your intentions are to invest for a relatively short time period (say, 7 years or less), it may be especially advantageous to invest in a REIT. The foremost advantage comes from significantly lower transaction fees (stock/ETF trades are practically/potentially free today) compared to purchasing real estate, which involves inspection+titling fees/taxes/broker fees, which in a round-trip transaction (purchase and sale) would come to ~10%. The secondary advantage to owning a REIT is they are much more liquid than a property. If you wanted to sell your investment at a given point in time, you can easily log into your brokerage and execute your transaction, while liquidating an investment property will take time on market/potentially tossing tenants/fixing up place, etc. On the other hand, illiquid investments have generally yielded higher historical returns according to past research. |
Finance algebra | With the following variables the periodic (annual) repayment is given by The recurrence equation for the balance b at the end of month x is derived from b[x + 1] = b[x] (1 + r) - d where b[0] = s giving The interest portion of the final payment is b[n - 1] r and the total principal repaid at the end of period n - 1 is s - b[n - 1] Solving simultaneously n = 8.9998 and s = 7240 The principal repaid at the end of the first period is s - b[1] or d - r s = 479.74 |
Which technical indicators are suitable for medium-term strategies? | If I knew a surefire way to make money in FOREX (or any market for that matter) I would not be sharing it with you. If you find an indicator that makes sense to you and you think you can make money, use it. For what it's worth, I think technical analysis is nonsense. If you're just now wading in to the FOREX markets because of the Brexit vote I suggest you set up a play-money account first. The contracts and trades can be complicated, losses can be very large and you can lose big -- quickly. I suspect FOREX brokers have been laughing to the bank the last couple weeks with all the guppies jumping in to play with the sharks. |
What is the process of getting your first share? | Here's a different take: Look through the lists of companies that offer shareholder perks. Here's one from Hargreaves Lansdown. See if you can find one that you already spend money with with a low required shareholding where the perks would actually be usable. Note that in your case, being curious about the whole thing and based in London, you don't have to rule out the AGM-based perks, unlike me. My reason for this is simple: with 3 out of 4 of the companies we bought shares in directly (all for the perks), we've made several times the dividend in savings on money we would have spent anyway (either with the company in which we bought shares or a direct competitor). This means that you can actually make back the purchase price plus dealing fee quite quickly (probably in 2/4 in our case), and you still have the shares. We've found that pub/restaurant/hotel brands work well if you use them or their equivalents anyway. Caveats: It's more enjoyable than holding a handful of shares in a company you don't care about, and if you want to read the annual reports you can relate this to your own experience, which might interest you given your obvious curiosity. |
bid & ask prices and technical indicators | If you are looking to go long (buy) you would use bid prices as this is what you will be matched against for your order to be executed and a trade to go through. If you are looking to go short (sell) you would use the ask prices as this is what you will be matched against for your order to be executed and a trade go through. In your analysis you could use either this convention or the midpoint of the two prices. As FX is very liquid the bid and ask prices would be quite close to each other, so the easiest way to do your analysis is to use the convention I listed above. |
Books, Videos, Tutorials to learn about different investment options in the financial domain | Investopedia does have tutorials about investments in different asset classes. Have you read them ? If you had heard of CFA, you can read their material if you can get hold of it or register for CFA. Their material is quite extensive and primarily designed for newbies. This is one helluva book and advice coming from persons who have showed and proved their tricks. And the good part is loads of advice in one single volume. And what they would suggest is probably opposite of what you would be doing in a hedge fund. And you can always trust google to fish out resources at the click of a button. |
How do small cap stocks perform vs. large cap stocks (like Dow constituents) during bear trends? | To a certain extent, small cap companies will in general follow the same trends as large cap companies. The extent of this cointegration depends on numerous factors, but a prime reason is the presence of systemic risk, i.e. the risk to the entire market. In simple terms, sthis is the risk that your portfolio will approach asymptotically as you increase its diversification, and it's why hedging is also important. That being said, small cap businesses will, in general, likely do worse than large cap stocks, for several reasons. This was/is certainly the case in the Great Recession. Small cap businesses have, on average, higher betas, which is a measure of a company's risk compared to the overall market. This means that small cap companies, on average outperform large cap companies during boom times, but it also means that they suffer more on average during bear times. The debate over whether or not the standard beta is still useful for small cap companies continues, however. Some economists feel that small cap companies are better measured against the Russell 2000 or similar indexes instead of the S&P 500. Small cap companies may face problems accessing or maintaining access to lines of credit. During the Great Recession, major lenders decreased their lending to small businesses, which might make it harder for them to weather the storm. On a related point, small businesses might not have as large an asset base to use as collateral for loans in bad times. One notable large cap company that used its asset base to their advantage was Ford, which gave banks partial ownership of its factories during hard times. This a) gave Ford a good amount of cash with which to continue their short-term operations, and b) gave the banks a vested interest in keeping Ford's lines of credit open. Ford struggled, but it never faced the financial problems of GM and Chrysler. Despite political rhetoric about Main Street vs. Wall Street, small businesses don't receive as much government aid in times of crisis as some large cap companies do. For example, the Small Business Lending Fund, a brilliant but poorly implemented idea in 2010, allocated less than $30 billion to small businesses. (The actual amount loaned was considerably less). Compare that to the amounts loaned out under TARP. Discussions about corporate lobbying power aside, small businesses aren't as crucial to the overall stability of the financial system Small businesses don't always have the manpower to keep up with changes in regulation. When the Dodd-Frank Act passed, large banks (as an example), could hire more staff to understand it and adapt to it relatively easily; small banks, however, don't always have the resources to invest in such efforts. There are other reasons, some of which are industry-specific, but these are some of the basic ones. If you want visual confirmation that small cap businesses follow a similar trend, here is a graph of the Russell 2000 and S&P 500 indexes: Here is a similar graph for the Russell 2000 and the Dow Jones Industrial Average. If you wanted to confirm this technically and control for the numerous complicated factors (overlap between indexes, systemic risk, seasonal adjustment, etc.), just ask and I'll try to run some numbers on it when I have a chance. Keep in mind, too, that looking at a pretty picture is no substitute for rigorous financial econometrics. A basic start would be to look at the correlation between the indexes, which I calculate as 0.9133 and 0.9526, respectively. As you can see, they're pretty close. Once again, however, the reality is more complicated technically, and a sufficiently detailed analysis is beyond my capabilities. Just a quick side note. These graphs show the logarithm of the values of the indexes, which is a common statistical nuance that is used when comparing time series with radically different magnitudes but similar trends. S&P500 and Russell 2000 data came from Yahoo! Finance, and the Dow Jones Industrial Average data came from Federal Reserve Economic Data (FRED) Per usual, I try to provide code whenever possible, if I used it. Here is the Stata code I used to generate the graphs above. This code assumes the presence of russell2000.csv and sp500.csv, downloaded from Yahoo! Finance, and DJIA.csv, downloaded from FRED, in the current directory. Fidelity published an article on the subject that you might find interesting, and Seeking Alpha has several pieces related to small-cap vs. large-cap returns that might be worth a read too. |
Buying my first car out of college | Read "Stop Acting Rich" by Dr Thomas Stanley. I'm concerned that even before you've earned your first paycheck you want a flashy car. $4800/yr on $63K/yr income is just about half what I'd recommend to someone who starts working. 10% is the minimum, if and only if, the employer matches 5, for a total 15% saved. Do it in a pretax account and when you go back to grad school convert to Roth. |
0% APR first 12 months on new credit card. Can I exceed that 30% rule of thumb and not hurt my credit score? | Your utilization ratio history is irrelevant to its impact on your credit score. If you run up 80% of your utilization In January, then pay it back to 10% in March, your score in March will reflect the new reduced ratio with no memory of the 80% utilization last month. With that said, don't go around overspending just because you have 0% apr for a little bit. Spend what you would spend with cash. |
USA H1B Employee - Capital gains in India from selling selling stocks | the demat account that I have in India is not an NRI account. Since I was not sure how long I would be in the US, I never converted my account to NRI account. Is it required to convert my account to NRI account? Yes it is very much required by law. One should not buy or sell shares in the Resident account. One has to close and open a new account NRO Demat account and transfer the shares / units into it. Sell from this account. If you need to buy shares when one is NRI, an Demat PINS account is required to be opened. |
What is the meaning of the net worth of a person? | An individual's net worth is the value of the person's assets minus his debt. To find your net worth, add up the value of everything that you own: your house, your cars, your bank accounts, your retirement investments, etc. Then subtract all of your debt: mortgage, student loans, credit card debt, car loans, etc. If you sold everything you own and paid off all your debts, you would be left with your net worth. If Bill Gates' net worth is $86 Billion, he likely does not have that much cash sitting in the bank. Much of his net worth is in the form of assets: stocks, real estate, and other investments. If he sold everything that he has and paid any debts, he would theoretically have the $86 Billion. I say "theoretically" because in the amounts of stock that he owns, he could cause a price drop by selling it all at once. |
First time homeowner and getting a mortgage? | First of all, think of anyone you know in your circle locally who may have gotten a mortgage recently. Ask him, her, or them for a recommendation on what brokers they found helpful and most of all priced competitively. Second of all, you may consider asking a real estate agent. Note that this is generally discouraged because agents sometimes (and sometimes justifiably) get a bad reputation for doing anything to get themselves the highest commission possible, and so folks want to keep the lender from knowing the agent. Yet if you have a reputable, trustworthy agent, he or she can point you to a reputable, trustworthy broker who has been quoting your agent's other clients great rates. Third of all, make sure to check out the rates at places you might not expect - for example, any credit unions you or your spouse might have access to. Credit unions often offer very competitive rates and fees. After you have 2-3 brokers lined up, visit them all within a short amount of time (edit courtesy of the below comments, which show that 2 weeks has been quoted but that it may be less). The reason to visit them close together is that in the pre-approval process you will be getting your credit hard pulled, which means that your score will be dinged a bit. Visiting them all close together tells the bureaus to count all the hits as one new potential credit line instead of a couple or several, and so your score gets dinged less. Ask about rates, fees (they are required by law to give you what is called a Good Faith Estimate of their final fees), if pre-payment of the loan is allowed (required to re-finance or for paying off early), alternative schedules (such as bi-weekly or what a 20 year mortgage rate might be), the amortization schedule for your preferred loan, and ask for references from past clients. Pick a broker not only who has the best rates but also who appears able to be responsive if you need something quickly in order to close on a great deal. |
No-line-of-credit debit card? | Having worked at a financial institution, this is a somewhat simple, two-part solution. 1) The lendor/vendor/financial institution simply turns off the overdraft protection in all its forms. If no funds are available at a pin-presented transaction, the payment is simply declined. No fee, no overdraft, no mess. 2) This sticking point for a recurring transaction, is that merchants such as Netflix, Gold's Gym etc, CHOOSE to allow payments like this, BECAUSE they are assured they are going to get paid by the financial institution. It prevents them from having issues. Only a gift card will not cost you more money than you put in, BUT I know of several institutions, that too many non-payment periods can cause them to cease doing business with you in the future. TL:DR/IMO If you don't want to pay more than you have, gift cards are the way to go. You can re-charge them whenever you choose, and should you run into a problem, simply buy a new card and start over. |
FX losses on non-UK mortgage for UK property - tax deductable? | I spoke to HMRC and they said #1 is not allowable but #2 is. They suggested using either their published exchange rates or I could use another source. I suggested the Bank of England spot rates and that was deemed reasonable and allowable. |
moving family deposits away from Greece (possibly in UK) | I can't comment about your tax liability in Greece. You will have to pay tax on interest in the UK. If you are earning massive amounts of interest, unlikely with the current interest policies from Merv, then you might be bumped up a tier. The receiving bank may ask for proof of the source of the funds, particularly if it is a fair chunk of change. |
Would it ever be a bad idea to convert a traditional IRA to a Roth IRA with the following assumptions? | Taking all your assumptions: With Roth, you take $6112 from work, (let's call you tax rate 10%) pay $612 in taxes, and contribute $5500 (the max if you are younger than 50). This $5500 will grow to $21,283 in 20 years at 7% annual growth ($5500*(1.07^20)), and you will pay no additional taxes on it. With the traditional IRA, you take $6112 from work, pay $612 in taxes, and contribute $5500. You will receive a tax deduction at tax time of $612 for the contribution. This money will also grow to $21,283. This will be taxed at your ordinary income rate (which we're calling 10%), costing you $2123 at the time of withdrawal. You will have $19,155 left over. EDIT: If you invest your tax savings from every contribution to the Traditional IRA, then the numbers wash out. Perhaps a pivotal question is whether you believe you will have greater taxable earnings from your investments in retirement than you have in taxable earnings today -- affecting the rate at which you are taxed. |
What does “netting” mean in this passage? | netting means to combine cash inflows and outflows (e.g. debits/credits, payments/receipts, income/expense) by subtracting the sum of all outflows from the sum of all inflows, creating one transaction. For example, if you make two trades in one day with your broker - one to buy a security for $100 and one to sell it for $110 - rather then you sending your broker $100 and them sending you $110, the transactions are "netted" - meaning they will send you the "net" amount of $10 ($110 inflow - $100 outflow). In a more general sense ("netting of instructions") it would mean to combine all instructions and only apply the "net" effect - e.g. one step forward, two steps back would combine to a "net" one step back. Most likely it will apply to the exchange of money, but it could be applied more broadly. Note that there doesn't have to be both inflows and outflows. You can also "net" multiple inflows (or outflows) into one transaction by just adding them all up, but typical business usage is to reduce the number of transactions by combining inflows and outflows. |
Does the IRS give some help or leniency to first-time taxpayers? | There's no such thing as "leniency" when enforcing the law. Not knowing the law, as you have probably heard, is not a valid legal defence. Tax law is a law like any other. That said, some penalties and fines can be abated if the error was done in good faith and due to a reasonable cause. First time penalties can be abated in many cases assuming you're compliant otherwise (for example - first time late filing penalty can be abated if you're compliant in the last 5 years. Not many people know about that.). Examples for a reasonable cause (from the IRS IRM 20.1.1): Reliance on the advice of a tax advisor generally relates to the reasonable cause exception in IRC 6664(c) for the accuracy-related penalty under IRC 6662. See IRM 20.1.5, Return Related Penalties, and If the taxpayer does not meet the criteria for penalty relief under IRC 6404(f), the taxpayer may qualify for other penalty relief. For instance, taxpayers who fail to meet all of the IRC 6404(f) criteria may still qualify for relief under reasonable cause if the IRS determines that the taxpayer exercised ordinary business care and prudence in relying on the IRS’s written advice. IRM 20.1.1.3.2.2.5 - Erroneous Advice or Reliance. Treas. Reg. 1.6664–4(c). There are more. IRM is the "Internal Revenue Manual" - the book of policies for the IRS agents. Of course, you should seek a professional advice when you're non-compliant and want to ask for abatement and become compliant again. Talk to a CPA/EA licensed in your state. |
What are my options to deal with Student Loan debt collectors? | Never speak to a debt collector. Ask them to stop calling you and STOP talking to them. Communicate only via postal mail. Do not react in an emotional way, do not use foul language, etc. If they call you and attempt to harass or intimidate you, note the date/time, name of the caller and nature of the call. Ask them to cease communications via phone and hang up. You're missing alot of detail here. You need to understand: The key to these things is to fully understand the situation you are in and find out what your legal obligations are. |
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