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Can someone explain a stock's “bid” vs. “ask” price relative to “current” price? | Both prices are quotes on a single share of stock. The bid price is what buyers are willing to pay for it. The ask price is what sellers are willing to take for it. If you are selling a stock, you are going to get the bid price, if you are buying a stock you are going to get the ask price. The difference (or "spread") goes to the broker/specialist that handles the transaction. |
On paper I have 1 share in my company. How can I sell a smaller percentage of my company to another party? | Simple: Do a stock split. Each 1 Ordinary share now = 100 Ordinary shares (or 100,000 or whatever you choose). Then sell 20 (or 20,000) of them to your third party. (Stock splits are fairly routine occurrence. Apple for example has done several, most recently in 2014 when 1 share = 7 shares). Alternatively you could go the route of creating a new share class with different rights, preferences etc. But this is more complicated. |
How to learn about doing technical analysis? Any suggested programs or tools that teach it? | Recommended? There's really no perfect answer. You need to know the motivations of the participants in the markets that you will be participating in. For instance, the stock market's purpose is to raise capital (make as much money as possible), whereas the commodities-futures market's purpose is to hedge against producing actual goods. The participants in both markets have different reactions to changes in price. |
Purpose of having good credit when you are well-off? | Credit in general having no significant change between an income level or net worth is due to the economic reciprocity principle inherent in many societies. Although some areas of credit may be more admirable to those who aren't as well-off, such as car loans, the overall understanding of credit is a trust agreement between someone getting something (e.g., credit card user) and someone giving something (e.g., bank or company). Credit doesn't have to mean just money -- it can be anything of value, including tangible materials, services, etc. The fact is that a credit is a common element in most economical systems, and as such its use is not really variable between income levels/etc. Sure, there is variance in things like credit line amounts and rewards, but the overall gist is the same for everyone -- borrowing, paying back, benefits, etc. All of these exchanges form the same understanding we all know and follow. Credit brings along with it trust -- the form represented in a score. While not everyone may depend entirely on credit, and no one should use credit as a means of getting by entirely (money), everyone can understand and reap the benefits of a system whether they make 10K a year of 10M a year. This is the general idea behind credit in the broadest sense possible. Besides, just because one has or makes more money doesn't mean they don't prefer to get good deals. Nobody should like being taken advantage of, and if credit can help, anyone can establish trust. |
Is there a return-on-investment vs risk graph anywhere? | Yes, there is a very good Return vs Risk graph put out at riskgrades.com. Look at it soon, because it will be unavailable after 6-30-11. The RA (return analysis) graph is what I think you are looking for. The first graph shown is an "Average Return", which I was told was for a 3 year period. Three period returns of 3, 6 and 12 months, are also available. You can specify the ticker symbols of funds or stocks you want a display of. For funds, the return includes price and distributions (total return), but only price movement for stocks - per site webmaster. I've used the graphs for a few years, since Forbes identified it as a "Best of the Web" site. Initially, I found numerous problems with some of the data and was able to work with the webmaster to correct them. Lately though, they have NOT been correcting problems that I bring to their attention. For example, try the symbols MUTHX, EDITX, AWSHX and you'll see that the Risk Grades on the graphs are seriously in error, and compress the graph results and cause overwriting and poor readability. If anyone knows of a similar product, I'd like to know about it. Thanks, George |
What are the advantages of paying off a mortgage quickly? | From my experience and friends' experiences, I can say that there are advantages and disadvantages for paying off your mortgage quickly. Basically, it depends on these factors: the type of the mortgage, its interest rate, your financial stability, your skills in making investments and other outside factors, such as inflation, liquidity, oppurtunity cost, etc. Paying it off means you save on interest ratings, you decrease investment risks and your investment rates are taxable. Disadvantages are that you cannot use this money for investing, you cannot use this money for tax deductions and that in a state of inflation, not paying it off in advance could save you a lot of money. However, I always recommend to read some more on websites that deal with mortgages, and speak with the mortgage expert in your bank.Just acquire enough information to make a good assessment. An interesting article on this topic - The Advantages and Disadvantages of Paying Off Your Mortgage |
If banks offer a fixed rate lower than the variable rate, is that an indication interest rates may head down? | This is known as an inverted yield curve. It is rare, and can be caused by a few things, as discussed at the link. It can be because the view is that the economy will slow and therefore interest rates will go down. It is not caused by "secret" preparation. It could also be that there is generally in the world a move towards safer investments, making their interest rates cheaper. If I had to guess (and this guess is worth what you paid for it) it is because Australia's interest rate is significantly greater than other parts of the world, long term lower risk investment is being attracted there, as it gets a better return than elsewhere. This is pushing rates lower on long term bonds. So I would not take it as an indication of a soon-to-be economic downturn simply because in this global economy Australia is different in ways that influence investment and move interest rates. |
How to explain quick price changes early in the morning | There are lots of good answers on here already. There are actually lots of answers for this question. Lots. I have years of experience on the exchange feed side and there are hundreds and thousands of variables. All of these variables are funneled into systems owned by large financial institutions (I used to manage these - and only a few companies in the world do this so not hard to guess who I work for). Their computers then make trades based on all of these variables and equations. There are variables as whacky as how many times was a company mentioned in an aggregate news feed down to your basic company financials. But if there is a way to measure a company (or to just guess) there is an equation for it plugged into a super computer at a big bank. Now there are two important factors on why you see this mad dash in the morning: Now most of the rest of the day is also automated trades but by the time you are an hour into market open the computers for the most part have fulfilled their calendar buys. Everyone else's answer is right too. There is futures contracts that change, global exchange info changes, options expiring, basic news, whatever but all of these are amplified by the calendar day changing. |
Does investing in a company support it? | As others have said, it simply makes you a part owner. Even if you have ethical objections to a company's behavior, I'd argue that investing in it and using the proxy votes to influence the company's decisions might be even more ethical than not investing. |
How can I improve my credit score if I am not paying bills or rent? | When you say "promptly paying off the outstanding balance", do you mean you pay it off literally as soon as you have incurred the debt? It is important to actually let the debt post on a statement before you pay it off. If you pay it off before the statement posts then this won't help your credit at all. Once the statement posts you can pay the entire balance off before the due date and you will still pay no interest. Assuming you are allowing the balance to actually post on your statements, you can simply continue to do this and your credit score will improve over time as your account(s) get older and you show that you are reliable. The only other way to improve your credit score is to open more accounts. In the short term this will actually hurt your score, as it will decrease your average age of account and add an inquiry. However in the mid-long term, this will improve your score as having more accounts of a variety of types is better for your score. Having an installment loan such as an auto loan or home loan is good for your score as it is different from a credit card - however you should definitely not engage in one of these unless it makes financial sense for other reasons. Don't add debt just to build your credit score. You could just open more credit cards. Like I said it will hurt your score in the short term but improve it in the mid-long term. Open cards with a variety of benefits so you can use them for different things to get better rewards. |
Do Banks Cause Inflation? What are other possible causes? | No, it isn't generally believed that inflation is caused by individual banks printing money. Governments manage money supply through Central Banks (which may, or may not, be independent of the state). There are a number of theories about money supply and inflation (from Monetarist, to Keynesian, and so on). The Quantity Theory of Inflation says that long-term inflation is the result of money-supply but short-term inflation is related to events/local conditions. Short-term inflation is a symptom of economic change. It's like a cough for a doctor. It simply indicates an underlying event. When prices go up it encourages new producers to enter the market, create new supply which will then act to lower prices. In this way inflation is managed by ensuring that information travels throughout the economy. If prices go up for specific goods, then - all things being equal - supply should go up since the increase implies increasing demand. If prices go down then this implies demand has gone down and so producers will reduce supply. Obviously this isn't a perfect relationship. There is "stickiness" which can be caused by a whole bunch of market conditions (from banning of short-selling, to inelasticity of demand/supply). Your question isn't about quantitative easing (which is a state-led way of increasing money-supply and which could increase inflation but is hoped to increase expenditure and investment) so I won't cover that here. The important take-away is that inflation is an essential price signal to investors and business people so that they can assess market cycles. Without it we would end up with vast over- or under-supply and much greater economic disruption. |
How to calculate car insurance quote | On top of the given answers, the type of referral will also factor in. When you're up for renewal and go to a comparison site (in the UK: CompareTheMarket, MoneySupermarket, Confused, GoCompare, ... ) and struggle accurately through all their lists of questions, you see that some of the data differs (e.g., not all the same jobs can be entered; if you have had an accident, not all ask whose fault it was and/or don't leave the option "not yet resolved" --possibly forcing you to guess which way it will be adjudicated,-- and/or what the total repair cost was). So as these referrers feed slightly different data to roughly the same set of insurance providers, you will get slightly different quotes on the same providers. And expect your own provider to offer a slightly better quote than you'll get in reality for renewing: The referrer's (one-time) cut has to be still taken off, but they count it as a new client so somebody gets a bonus for that --- you they disregard as a captive client and give what boils down to a loyalty penalty. [Case in point: I had an unresolved car accident, resolved months later in my favour. With all honest data including unresolved claim and its cost and putting my 'accident-free years' factor at 0 instead of 7, my old provider quoted about 8% more than the previous year on comparison sites; but my renewal papers quoted me 290% more, upon telephone enquiry the promised to refund the difference if court found in my favour though they refused to give this in writing. So: No thanks!] Then the other set of referrals they get is from you directly going to their website asking for a quote. They know what type of link you've followed (banner, or google result, etc), they may know some info from your browser's cookies (time spent where) or other tracking service, and from your data they may guess how tech-savvy and shop-wise you are, and scale your offer accordingly. [Comparison-site shoppers are lumped together at a relatively high savvy-level, of course!]. Companies breaking down your data and their own in a particular way can find advantages and hence offer you better terms, as said in the main answer (this is like Arbitration in stock exchanges, ensuring a certain amount of sanity: if there's something to exploit, somebody will, and everybody will follow). It may be that they find a certain group of people maybe more accident-prone but cheaper to deal with (more flexible in repair-times, or easy to bully in accepting shared-fault when they weren't at fault), or they want a certain client (for women, for civil servants, for sporty drivers, for homeowners --- often for cross-selling other insurance services). Or they claim to want pensioners because the company can offer them 'a familiar voice' (same account manager always contacting them) while they're easier to bamboozle and less likely to shop around when offered a rubbish deal. Also, 100% straight comparison of competing offers isn't possible as the fine details of the T&Cs (terms & conditions) would differ, as well as various little pinpricks in the claims handling process. And depreciation of a car, and various ways of dealing with it: You insure it for the buying prices, but two years later it's worth about 40% less on paper --- so in case of total loss, replacing like-for-like will cost you still at least 80% of the value for which you've been insuring it while they'll probably offer you the 100-40= 60%. Mostly because instead of your trusted car you have something unknown that may have hidden defects, or been mistreated and about to die. [Case in point: My 3-y-old dealer-bought car's gearbox died just outside the 6month warranty period, notwithstanding its "150-item inspection you can rely on". In the end the national brand agreed to refund the parts (15% of what I paid for the car) but not the labour (a few hours).] And any car model's value differs (in descending order) from its "forecourt price", "private selling price", "part exchange price", and "auction price". Depending on your ompanies may happily insure you for forecourt price (=what you paid to dealer) but then point out that the value of that car is the theoretical P/X value, i.e., the car without anybody's profit, far less than you've been paying for. [Conversely, if you crash it after insuring below market value, they can pay you your stupidly low figure.] |
What part of buying a house would make my net worth go down? | In general, buying a house will improve your net worth over the long haul, because unlike cars, houses don't suffer as much from depreciation. The problem with real property is that markets are very cyclic and aren't very liquid assets. Farmers with thousands of acres of valuable land are often cash poor for that very reason. A lot of people here are negative about housing ownership — this is illustrative of the fact that 2010 is a year where real estate is on the down-side of the cycle. |
Prepaying a loan: Shouldn't the interest be recalculated like a shorter loan? | Forget about terms. Think about loans in terms of months. To simplify things, let's consider a $1000 loan with .3% interest per month. This looks like a ten month term, but it's equally reasonable to think about it on a month-to-month basis. In the first month, you borrowed $1000 and accrued $3 interest. With the $102 payment, that leaves $901 which you borrow for another month. So on and so forth. The payoff after five payments would by $503.54 ($502.03 principal plus $1.51 interest). You'd save $2.99 in interest after paying $13.54. The reason why most of the interest was already paid is that you already did most of the borrowing. You borrowed $502.03 for six months and about $100 each for five, four, three, two, and one month. So you borrowed about $4500 months (you borrowed $1000 for the first month, $901 for the second month, etc.). The total for a ten month $1000 loan is about $5500 months of borrowing. So you've done 9/11 of the borrowing. It's unsurprising that you've paid about 9/11 of the interest. If you did this as a six month loan instead, then the payments look different. Say You borrow $1000 for one month. Then 834 for one month. So on and so forth. Adding that together, you get about $168.50 * 21 or $3538.50 months borrowed. Since you only borrow about 7/9 as much, you should pay 7/9 the interest. And if we adding things up, we get $10.54 in interest, about 7/9 of $13.54. That's how I would expect your mortgage to work in the United States (and I'd expect it to be similar elsewhere). Mortgages are pretty straight-jacketed by federal and state regulations. I too once had a car loan that claimed that early payment didn't matter. But to get rid of the loan, I made extra payments. And they ended up crediting me with an early release. In fact, they rebated part of my last payment. I saved several hundred dollars through the early release. Perhaps your loan did not work the same way. Perhaps it did. But in any case, mortgages don't generally work like you describe. |
Are there any risks from using mint.com? | Here's a very simple answer, ask your broker/bank. Mine uses ofx. When asked if they would reimburse me for any unauthorized activity, the answer was no. Simple enough, the banks that use it don't feel its secure enough. |
Buying a house for a shorter term | When on this topic, you'll often hear general rules of thumb. And, similar to the 'only buy stocks if you plan to hold more than X years' there are going to be periods where if you buy at a bottom right before the market turns up, you might be ahead just months after you buy. I'd say that if you buy right, below market, you're ahead the day you close. Edit - I maintain, and have Schiller providing supporting data) that real estate goes up with inflation in the long term, no more, no less. If the rise were perfectly smooth, correlated 100% month to month, you'd find it would take X years to break even to the costs of buying, commission and closing costs. If we call that cost about 8%, and inflation averages 3, it points to a 3 year holding period to break even. But, since real estate rises and falls in the short term, there are periods longer than 4 years where real estate lags, and very short periods where it rises faster than the costs involved. The buy vs rent is a layer right on top of this. If you happen upon a time when the rental market is tight, you may buy, see the house decline 10% in value, and when the math is done, actually be ahead of the guy that rented. |
Should I collect receipts after paying with a card? | It surely doesn't HURT to keep a receipt. I tend to pile up receipts in my desk drawer, never look at them, and then every few months throw them all out. If a vendor writes a receipt by hand or if the cash register is not tied in to the credit card system, keeping a receipt could give you evidence against mistakes or fraud. Like if the vendor gives you a receipt for $10 and then sends a transaction to the credit card company for $20, you could use the receipt as evidence of the problem. But if the vendor is trying to really cheat you, the most likely thing for him to do is run the legitimate transaction through, and then some time later run a fake transaction. So say today you go to vendor X, buy something for $20, and he bills your credit card $20. Then a few days later he bills you another $100 even though you never came back to the store. Sure, you have a receipt for $20. But you don't have a receipt for the $100 because you never authorized that transaction. Your receipt proves nothing -- presumably you're not disputing the $20. If you complain to the bank or go to the police or whatever, saying, "Hey look, I don't have a receipt for the $100" doesn't prove anything. How do they know you didn't just throw it away? It's difficult to prove that you never had such a receipt. |
What gives non-dividend stocks value to purchasers? [duplicate] | As an owner of a share of a business you also "own" profits made by the business. But you delegate company management to reinvest those profits, on your behalf, to make even more profits. So your share of the business is a little money-making machine that should grow, without you having to pay taxes on the dividends and without you having to decide where to reinvest your share of the profit. |
What does Capital Surplus mean? | I think it's easiest to illustrate it with an example... if you've already read any of the definitions out there, then you know what it means, but just don't understand what it means. So, we have an ice cream shop. We started it as partners, and now you and I each own 50% of the company. It's doing so well that we decide to take it public. That means that we will be giving up some of our ownership in return for a chance to own a smaller portion of a bigger thing. With the money that we raise from selling stocks, we're going to open up two more stores. So, without getting into too much of the nitty gritty accounting that would turn this into a valuation question, let's say we are going to put 30% of the company up for sale with these stocks, leaving you and me with 35% each. We file with the SEC saying we're splitting up the company ownership with 100,000 shares, and so you and I each have 35,000 shares and we sell 30,000 to investors. Then, and this depends on the state in the US where you're registering your publicly traded corporation, those shares must be assigned a par value that a shareholder can redeem the shares at. Many corporations will use $1 or 10 cents or something nominal. And we go and find investors who will actually pay us $5 per share for our ice cream shop business. We receive $150,000 in new capital. But when we record that in our accounting, $5 in total capital per share was contributed by investors to the business and is recorded as shareholder's equity. $1 per share (totalling $30,000) goes towards actual shares outstanding, and $4 per share (totalling $120,000) goes towards capital surplus. These amounts will not change unless we issue new stocks. The share prices on the open market can fluctuate, but we rarely would adjust these. Edit: I couldn't see the table before. DumbCoder has already pointed out the equation Capital Surplus = [(Stock Par Value) + (Premium Per Share)] * (Number of Shares) Based on my example, it's easy to deduce what happened in the case you've given in the table. In 2009 your company XYZ had outstanding Common Stock issued for $4,652. That's probably (a) in thousands, and (b) at a par value of $1 per share. On those assumptions we can say that the company has 4,652,000 shares outstanding for Year End 2009. Then, if we guess that's the outstanding shares, we can also calculate the implicit average premium per share: 90,946,000 ÷ 4,652,000 == $19.52. Note that this is the average premium per share, because we don't know when the different stocks were issued at, and it may be that the premiums that investors paid were different. Frankly, we don't care. So clearly since "Common Stock" in 2010 is up to $9,303 it means that the company released more stock. Someone else can chime in on whether that means it was specifically a stock split or some other mechanism... it doesn't matter. For understanding this you just need to know that the company put more stock into the marketplace... 9,303 - 4,652 == 4,651(,000) more shares to be exact. With the mechanics of rounding to the thousands, I would guess this was a stock split. Now. What you can also see is that the Capital Surplus also increased. 232,801 - 90,946 == 141,855. The 4,651,000 shares were issued into the market at an average premium of 141,855 ÷ 4,651 == $30.50. So investors probably paid (or were given by the company) an average of $31.50 at this split. Then, in 2011 the company had another small adjustment to its shares outstanding. (The Common Stock went up). And there was a corresponding increase in its Capital Surplus. Without details around the actual stock volumes, it's hard to get more exact. You're also only giving us a portion of the Balance Sheet for your company, so it's hard to go into too much more detail. Hopefully this answers your question though. |
Should I take a personal loan for my postgraduate studies? | If you are eligible for FEE-HELP then this is by far the cheapest way of financing higher education in Australia. |
Is there any chance for a layperson to gain from stock exchange? [duplicate] | It depends what you mean by 'gain'. Over long period of times the market increases so using a blind monkey with a dart or index fund should be sufficient to get an average returns. The key difference is that changes in currency are close to zero sum game while money in equity or bonds is actually used for something (building a company etc.). If you mean 'get above average returns' then you will likely get answers depending on person. If you think that markets are efficient then you won't beat the market consistently - over long periods the returns are likely to be no better then average - because of large number of 'smart people' trying to beat each other (and even them are likely to have below-average returns). If you don't think so then it is possible to get above average consistently - as long as you know how to beat those 'smart people'. |
How to find SEC filings that are important to stock market | 10-Q is the quarterly report, and accordingly is filed quarterly. Similarly, 10-K is the annual report. 8-K is a general form for notification of material events. It is filed every time a material event is required to be reported to the shareholders. It may accompany the periodical reports, but doesn't have to. It can be filed on its own. If you're only interested in the financial statements, then you should be looking for the 10K/10Q forms. SEC will tell you when the forms were filed (dates), but it won't tell you what's more material and what's less. So you can plot a stock price graph on these dates, and see what was deemed more material by the investors based on the price fluctuations, but be prepared to find fluctuations that have no correlation to filings - because the market as a whole can drag the stock up or down. Also, some events may not be required to be reported to SEC, but may be deemed material by the investors. For example, a Cupertino town hall meeting discussing the zoning for the new AAPL HQ building may be deemed material by the investors, based on the sentiments, even if no decision was made to be reported to SEC. |
Can everyday people profit from unexpected world events? | The NYSE is not the only exchange in the world (or even the only one in the USA). Amazingly, the London stock exchange works on London time, the Shanghai exchange works on Shanghai time and the Australian stock exchange works on Sydney time. In addition futures exchanges work overnight. |
What are the costs to maintain an Inc? | According to this FAQ published by the state of Delaware, your annual filing fees will be: Anything above and beyond that is based on company income. If you decide to file an LLC in Delaware instead of a Corporation your annual tax is $300. As others have mentioned in comments to your original question it's worth exploring your home state or other states. Delaware is commonly used to incorporate, but if you're very small or just starting out then often times your home state can be more favorable and less costly. |
Understanding highly compensated employees within 401ks | HCE is defined as being above 120k$ or in the top 20 % of the company. The exact cutoff point might be different for each company. Typically, only the base salary is considered for that, but it's the company's (and 401(k)-plan's) decision. The IRS does not require HCE treatment; the IRS requires that 401(k) plans have a 'fair' distribution of usage between all employees. Very often, employees with lower income save (over-proportionally) less in their 401(k), and there is a line where the 401(k) plan is no longer acceptable to the IRS. HCE is a way for companies to ensure this forced balance; by limiting the amount of 401(k) savings for HCE, the companies ensure that the share of all contributions by below-HCE is appropriate. They will calculate/define the HCE cutoff point so that the required distribution is surely achieved. One of the consequences is that when you move over the HCE cutoff point, you can suddenly save a lot less in your 401(k). Nothing can be done about that. See this IRS page: https://www.irs.gov/retirement-plans/plan-participant-employee/definitions Highly Compensated Employee - An individual who: Owned more than 5% of the interest in the business at any time during the year or the preceding year, regardless of how much compensation that person earned or received, or For the preceding year, received compensation from the business of more than $115,000 (if the preceding year is 2014; $120,000 if the preceding year is 2015 or 2016), and, if the employer so chooses, was in the top 20% of employees when ranked by compensation. |
Why do people buy new cars they can not afford? | Most people today (and maybe regardless of era) are irrational and don't properly valuate many of their purchases, nor are they emotionally equipped to do the math properly, including projection into the future and applying probabilities. This compounds. Imagine that each individual is bound to others by a rubber band and can stretch in a certain direction. The more your neighbors stretch, the more you are both motivated to stretch and able to stretch. These are crudely analogous to consumer wants as well as allowed consumer debt. The banks are also within this network of rubber bands and much of their balance sheet is based on how far they've stretched on the aggregate of all connected bands (counting others debts as their credit because it will presumably be repaid), and every so often enough people's feet slip that a lot of rubber bands snap back. This is a bubble bursting. |
Choosing a vehicle to invest a kid's money on their behalf (college, etc.)? | One other advantage of a 529 versus a simple investment account (like an UGMA/UTMA) is that the treatment for the purposes of financial aid is more advantageous (FinAid.org). Even if it is a custodial account (in which the student is both the owner and beneficiary), it is treated as a parental asset when completing the FAFSA. That means the amount that will be considered available each year towards the Estimated Family Contribution (EFC) will be greatly reduced. To be sure, this does not help with all colleges (often ones that use the CSS/PROFILE in addition to the FAFSA). Some will simply assume that 25% of the 529 will be used each year. |
Debit cards as bad as credit cards? | If your goal is to make it harder for you to use to make impulse purchases then YES. Having to always have cash for purchases will make you less likely to make impulse purchases you don't really need. |
Empirical performance data of ETFs and Mutual Funds tracking identical Indexes? | Why don't you look at the actual funds and etfs in question rather than seeking a general conclusion about all pairs of funds and etfs? For example, Vanguard's total stock market index fund (VTSAX) and ETF (VTI). Comparing the two on yahoo finance I find no difference over the last 5 years visually. For a different pair of funds you may find something very slightly different. In many cases the index fund and ETF will not have the same benchmark and fees so comparisons get a little more cloudy. I recall a while ago there was an article that was pointing out that at the time emerging market ETF's had higher fees than corresponding index funds. For this reason I think you should examine your question on a case-by-case basis. Index fund and ETF returns are all publicly available so you don't have to guess. |
Is there a standard check format in the USA? | No, there is no standard. I see all kinds of paper sizes, and the amount, date, etc. is all over the place. They are all rectangular, but otherwise there seems to be a lot of freedom. |
Should I use put extra money toward paying off my student loans or investing in an index fund? | Not all debt is bad. If it carries a reasonable interest rate, you don't need to clear it immediately. As for investing in an index fund, they're an affordable, easy way to spread your money over various assets. However, asset allocation is just one of many investment strategies. Ideally, you want to invest according to your goals, tax situation, and risk tolerance. You want a portfolio that dynamically allocates to various investment strategies, both beta and alpha, according to changing market conditions. Most importantly, you want systematic risk management for every aspect of your investments. |
I own ASPIRO shares (Jay Z's new company). Now that it is going private, what about my shares? | From the press release Based on Aspiro's closing share price of SEK 0.66 as of 29 January 2015, the Offer values each Aspiro share at SEK 1.05 and the total value of the Offer at approximately SEK 464 million.[3] The Offer represents a premium of..... It seems you will get cash. I can't explain the pop to 11. You don't have any option to keep the shares. |
How to work around the Owner Occupancy Affidavit to buy another home in less than a year? | Although it may be a little late for you, the real answer is this: When you close on a mortgage for a primary residence you are affirming (in an affidavit), two intents: Now, these are affirming intentions — not guarantees; so if a homeowner has a change of circumstance, and cannot meet these affirmed intentions, there is almost always no penalty. Frankly, the mortgage holder's primary concern is you make payments on time, and they likely won't bother with any inquiry. That being said, should a homeowner have a pattern of buying primary residences, and in less than 1 year converting that primary to a rental, and purchasing a new primary; there will likely be a grounds for prosecution for mortgage fraud. In your specific situation, you cannot legally sign the owner-occupancy affidavit with the intention of not staying for 1 year. A solution would be to purchase the condo as a second home, or investment; both of which you can still typically get 80% financing. A second home is tricky, I would ask your lender what their requirements are for 2nd home classification. Outside that, you could buy the condo as a primary, stay in it for a year, then convert. If you absolutely had to purchase the 2nd property before 1 year, you could buy it as a primary with a 2 month rent back once you reach 10 months. Should you need it earlier, just buy the 2nd house as an investment, then once you move in, refinance it as a primary. This last strategy requires some planning ahead and you should explain your intention to the loan officer ahead of time so they can properly price the non-owner occupied loan. |
When is an IPO considered failure? | Different stakeholders have different views of 'failure'. Maybe from Air Berlin's point of view it was a failure, but technically speaking it is not really possible to 'fail'. As long as all shares were purchased, which is a virtual guarantee since the investment banks who underwrite the IPO by and large must do to some extent, it will always be 'successful'. A decrease in value of shares immediately after IPO means that the investment bank who did the IPO for Air Berlin didn't match its IPO price with market expectations, causing shorts on the stock, and thus a decline. No failure per se. |
For very high-net worth individuals, does it make sense to not have insurance? | The general answer to this is "yes". When you're dealing with single-digit millionaires, the answer is that their insurance habits and needs are basically the same as everyone else. When you get into the double digit and triple digit millionaires, or people worth billions, they have additional options, but those basically boil down to using "self-insurance" rather than paying a company for an insurance policy. The following is based on both what I've read and a fair deal of personal experience working for or with various stripes of millionaire, and even one billionaire. Addressing the types of insurance you mention: This is generally used to provide survivors with a replacement for income you can no longer provide when dead, in addition to paying for costs associated with dying (funeral, hospital/hospice bills, etc). Even millionaires and billionaires have this, yes, but the higher your net worth, the less value it has. If you're worth 9 or 10 figures, you probably already have trust funds set up for your family members, so an extra payout from an insurance policy is probably going to represent a small fraction of the wealth you're leaving your survivors, and as has been noted, insurance makes a profit, so the expectation by the insurance company is that they'll make more money on the policy than they'll have to pay out on death. That being said, the members of the 9+ figure club I've worked for all had multi-million dollar life insurance policies on them, which were paid for or heavily subsidized by the companies they owned or worked for. I doubt they would have held those policies if they had to pay the full cost, but when it's free or cheap, why not? Absolutely. As health insurance in America is an untaxed employment benefit, owing to regulations from World War II, all the wealthy folks I've had contact with got outrageously good plans as part of the companies they work for or owned. Having said that, even their trust fund beneficiaries held health insurance, because this type of insurance (in America, at least) is actually not really insurance, it's more of a pre-payment plan for medical expenses, and as such, it provides broader access to health care than you'd get from simply having enough money to pay for whatever treatments you need. If you walk into a hospital as a millionaire and state that you'll definitely be able to pay for your open-heart surgery with cash, you'll get a very different response than if you walk in with your insurance card and your "diamond-level" coverage. So, in this case, it's not as much as about the monetary benefits (although this is a type of "insurance" that's generally free or heavily discounted to the individual, so that's a factor) as it is about easier access to health care. Although this is required by law, it's one of the common forms of insurance that the very wealthy can, and often do handle differently than the rest of us. Most (if not all) US states have a provision to allow motorists to self-insure themselves, which amount to putting up a bond to cover claims against them. Basically, you deposit the minimum amount the state determines is required for auto insurance with the responsible state organization, get a certificate of self-insurance and you're good to go. All the high wealth individuals I know when this route, for two reasons - first of all, they didn't have to deal with insurance companies (or pay sky-high rates on account of all the speeding tickets they picked up) and secondly, they made their deposit with government bonds they had in their portfolios anyway, and they could still collect the interest on their self-insurance deposits. Of course, this meant that if they wrecked or dinged up their Maserati or Bentley or whatever, they'd be out of pocket to repair or replace it... but I guess if you can afford one $200,000 car, you can afford to buy a second one if you wreck it, or get by riding one of your other luxury automobiles instead. Since someone else mentioned kidnapping insurance, I'll point out here that what Robert DeNiro did in Casino when he put a couple million dollars into a safety deposit box for his wife to use if he was kidnapped or needed to pay off a government official is essentially the same thing as "self-insurance". Putting money away somewhere for unexpected events in lieu of buying an insurance policy against them. In real life, the very wealthy will often do this with US treasuries, government bonds and other interest-bearing, safe investments. They make a little money, diversify their portfolios and at the same time, self-insure against a potential big loss. This is another insurance area where even the very wealthy are remarkably similar to the rest of us, in that they all generally have it, yes, although the reason is a little different. For normal folks, the home they own is generally the largest part of their net worth, or at least a very substantial fraction, for those older folks with retirement savings that exceed the value of their homes. So for us, we have home owners insurance to prevent a catastrophic event from wiping out the lion's share of our net worth. If you're an ultra-wealthy individual who can afford an 8 figure home, that's not really the case (at least with the ones I've dealt with, who made their fortunes in business and are good managing their wealth and diversifying their assets - could be different for sports stars or the entertainment industry), and these people generally own multiple homes anyway, so it's not as big a deal if they lose one. However, no one actually buys a multi-million dollar home by writing a multi-million dollar check. They get a mortgage, just like the rest of us. And to get a mortgage, insurance on the property is a requirement. So yes, even the ultra wealthy generally have insurance on their home(s). There is an element of not wanting to shell out another 20 million if the place burns down, or someone breaks in and steals your valuables, but the bigger part of the reason is that it's required to get a mortgage in the first place, which is generally done for financial reasons - interest on your mortgage is a tax deduction, and you don't want to sink millions of dollars all at once into buying a property that's not going to appreciate in value, when you can get a mortgage and invest those millions of dollars to make more money instead. |
Is it better to buy US stocks on US stock exchanges as a European? | Liquidity on dual listed equities is rarely the same on both exchanges. More liquidity means you would typically get a better price assuming you execute the trades using the same order types. It's recommended to trade where the liquidity is greater unless your trading method benefits somehow from it being lower. It's important to remember that some ADRs (some European companies listed in US) have ADR fees which vary. USD/EUR transaction fees are low when using a decent broker but you're obviously participating in the currency risk. |
Shareholders meetings — the announcement of significant news | SE:Personal Finance user Ray K says in a comment on this question that his or her broker said: a company cannot release any significant news in a share-holder meeting that is not publicly accessible / open, similar to how earnings releases are available to the entire public at the same time, not just to a few attending a meeting. |
How should I value personal use television for donation? | I used TurboTax last year. It had a section for donations where it figured out the amounts of the IRS approved values for a donation. You would need to know the size of the television and the current condition it is in. He's a screenshot - though it's not from the TV section. https://turbotax.intuit.com/tax-tools/tax-tips/Taxes-101/Video--How-to-Estimate-the-Value-of-Clothing-for-IRS-Deductions/INF13870.html+&cd=8&hl=en&ct=clnk&gl=us TurboTax offers a free online tool called ItsDeductible that does the same thing (though I haven't tried it). Unfortunately, I don't have the current one with TV's to give you the range of amounts that apply to yours. --I am not affiliated with TurboTax and did not receive it for free for a review. |
As a 22-year-old, how risky should I be with my 401(k) investments? | Whatever you do, don't take your retirement savings to Vegas. Second, you should also consider investment expenses. Your investments profit after the managers pay themselves. Get the lowest expense ratio mutual funds you can. Third, most active managers do not beat the market. Index funds are your friends. They also tend to have the lower expense ratios. |
In the stock market, why is the “open” price value never the same as previous day's “close”? | It's almost like why don't you wake up in the morning feeling exactly like you slept the earlier night? yeah, once in a while that'll happen, but it's not designed to be that way. Stuff happens. The close of the stock is what happened at 4 PM (for US stocks). The "open" is simply the first price ever, or an open price auction like NimChimpsky said. Most things that trade have an open/close cycle, even what seemingly trades all the time (some markets trade 23 hours). Forex trades in different exchanges which have overlapping timing but each market will have an open, high, low and close for each day - for what is the same underlying currency. Also, it's not exactly true that close<>open. Take the GS chart, Oct 1 2010 and Oct 4 2010 (there was a weekend in between). The Oct 1 close was the same as the Oct 4 open. Note that Oct 4 was a down day so it's in red - the open is the upper end of the body (not including the wick), and Oct 1 was an up day so its close was the upper end too. (Candles are drawn so that the open ends of the wicks are the High and Low of the period respectively, and the lower end of the body is the open if it was an up-day, meaning the stock closed higher than it opened, and the body in coloured green below. If the stock went down that day from the open, the body's in red and the lower end is the close. Vice-versa for the other end) The way to get to this: Go to yahoo finance, choose a stock, go to historical prices, click download data (you should have about 10 years of data), paste into excel, insert a formula to check if prev day's close = current day's open, and I'm sure you'll see at least one instance per stock. |
Why buy bonds in a no-arbitrage market? | If by "putting money in the bank" you mean regular savings or checking, then the bond locks a rate for a period of time, whereas your savings/checking rate can vary over that period. That variation might go for you or against you. Depending on your situation, you might prefer to take a determined rate to the variations. In addition, some bond types provide tax benefits (e.g. treasuries and municipal bonds) that change the effective return - You cannot just compare the interest rates. Finally, the bonds have "resale" value on the secondary market like stock - Depending on your outlook and strategy, you might by the bond for its value as a security rather than for the interest specifically just like you'd could buy a dividend-paying stock for its value as a security rather than for the dividend. In other words, you might think that bond values are going up, so you buy bonds with the intent of making a capital gain rather than counting on the interest returned. (The bond market does depend on the interest rate, so these are not independent factors.) I see the other answer that mentions the potential for your bank busting and you losing money beyond the FDIC insurance limit. The question doesn't specify U.S. Government bonds though, so I don't think that answer is generally good. It would be good in the case that you had a lot of money (especially an institution or foreign government) and you were specifically interested in U.S. Treasury bonds. Not so much if you invest in corporate bonds where you have no government insurance / assurance of any sort. Municipal bounds are also not backed by the U.S. (federal) government, but they may have some backing at the state level, depending on the state. |
Conservative ways to save for retirement? | A 401(k) is just a container. Like real-world containers (those that are usually made out of metal), you can put (almost) anything you want in it. Signing up for your employer's match is a great thing to do. Getting into the habit of saving a significant portion of your take-home pay early in your career is even better; doing so will put you lightyears ahead of lots of people by the time you approach retirement age. Even if you love your job, that will give you options you otherwise wouldn't have. There is no real reason why you can't start out by putting your retirement money in a short-term money-market fund within that 401(k). By doing so you will only earn a pittance, probably not even enough to keep up with inflation in today's economic environment, but at this point in your (savings and investment) career, that doesn't really matter much. What really matters is getting into the habit of setting that money aside every single time you get paid and not thinking much of it. And that's a lot easier if you start out early, especially at a time when you likely have received a significant net pay increase (salaried job vs college student). I know, everyone says to get the best return you can. But if you are just starting out, and feel the need to be conservative, then don't be afraid to at least start out that way. You can always rebalance into investment classes that have the potential for higher return -- and correspondingly higher volatility -- in a few years. In the meantime, you will have built a pretty nice capital that you can move into the stock market eventually. The exact rate of return you get in the first decade matters a lot less than how much money you set aside regularly and that you keep contributing. See for example Your Investment Plan Means Nothing If You Don’t Do This by Matt Becker (no affiliation), which illustrates how it takes 14 years for saving 5% at a consistent 10% return to beat saving 10% at a consistent 0% return. So look through what's being offered in terms of low-risk investments within that 401(k). Go ahead and pick a money-market fund or a bond fund if you want to start out easy. If it gets you into the habit of saving and sticking with it, then the overall return will beat the daylights out of the return you would get from a good stock market fund if you stop contributing after a year or two. Especially (but not only) if you do pick an interest-bearing investment, do make sure to pick one that has as low fees as you can possibly find for what you want, because otherwise the fees are going to eat a lot into your potential returns, benefiting the bank or investment house rather than yourself. Just keep an open mind, and very strongly consider shifting at least some of your investments into the stock market as you grow more comfortable over the next several years. You can always keep a portion of your money in various interest-bearing investments to act as a cushion in case the market slumps. |
What should I be aware of as a young investor? | Consistently beating the market by picking stocks is hard. Professional fund managers can't really do it -- and they get paid big bucks to try! You can spend a lot of time researching and picking stocks, and you may find that you do a decent job. I found that, given the amount of money I had invested, even if I beat the market by a couple of points, I could earn more money by picking up some moonlighting gigs instead of spending all that time researching stocks. And I knew the odds were against me beating the market very often. Different people will tell you that they have a sure-fire strategy that gets returns. The thing I wonder is: why are you selling the information to me rather than simply making money by executing on your strategy? If they're promising to beat the market by selling you their strategy, they've probably figured out that they're better off selling subscriptions than putting their own capital on the line. I've found that it is easier to follow an asset allocation strategy. I have a target allocation that gives me fairly broad diversification. Nearly all of it is in ETFs. I rebalance a couple times a year if something is too far off the target. I check my portfolio when I get my quarterly statements. Lastly, I have to echo JohnFx's statement about keeping some of your portfolio in cash. I was almost fully invested going into early 2001 and wished I had more cash to invest when everything tanked -- lesson learned. In early 2003 when the DJIA dropped to around 8000 and everybody I talked to was saying how they had sold off chunks of their 401k in a panic and were staying out of stocks, I was able to push some of my uninvested cash into the market and gained ~25% in about a year. I try to avoid market timing, but when there's obvious panic or euphoria I might under- or over-allocate my cash position, respectively. |
Why are there many small banks and more banks in the U.S.? | Actually it seems you are not quite correct about the number of different banks in Canada. https://en.wikipedia.org/wiki/List_of_banks_and_credit_unions_in_Canada According to this link there are 82-86 banks in Canada plus credit unions. This may still be lower than what would correspond to the number of banks in the US, scaled for canadian population. One further reason not mentioned before could be that the population density in Canada outside of the metropolitan areas could be lower than in the US, leaving to few small towns large enough (10,000+ (a guess corrected due to comment)) to support a bank. |
Are there any viable alternatives to Paypal for a small site? | While I've never used the service, there's also Amazon Flexible Payments Services (AFPS): (emphasis below is mine) Amazon Flexible Payments ServiceTM (Amazon FPS) is the first payments service designed from the ground up for developers. It is built on top of Amazon’s reliable and scalable payments infrastructure and provides developers with a convenient way to charge Amazon’s tens of millions of customers (with their permission, of course!). Amazon customers can pay using the same login credentials, shipping address and payment information they already have on file with Amazon. [...] Considering Amazon.com is an e-commerce heavyweight, it might be worth a look. |
The Benefits/Disadvantages of using a credit card | One of the more subtle disadvantages to large credit card purposes purchases (besides what the other answer mentions), is that it makes you less prepared for emergencies. If you carry a large balance on your credit card with the idea that your income can easily handle the payments to beat the no-interest period, you never know when you'll have an unexpected emergency and you'll end up having to pay less, miss the deadline and end up paying huge interest. Even if you are fastidious about saving and budgeting, what if your family comes under a large financial burden (just as one possible example)? |
Given a certain yearly savings, how much can I spend on a capital improvement? NPV of future cash flow | The question states :- Our insurance company is offering a 30% discount on an $8200/year commercial policy, if we install sprinklers. The insurance is paid in two installments. ... This appears to mean six-monthly payments, so I'll make some comparison calculations using six-monthly loan repayments to keep things simple. Without the loan or sprinklers the insurance costs $4100 every six months. Using this loan payment formula, the calculation below shows, with the 30% discounted insurance, sprinkler maintenance and loan repayment, you would be paying $4655.28 every six months. The discount required to break even is 43.5%. I.e. rearranging the equation :- Alternatively, with the discount of 30% you would break even if the six-monthly repayment amount was $1030. Solving the payment equation for s gives an equation for the loan :- So with the 30% discount you would break even if the loan required was $25989. Checking by back-calculating the periodic payment amount, a :- Likewise we can keep the loan at $40000 and solve for t to find the break-even loan term :- (Note, in this formula Log denotes the natural logarithm.) Now we can set some values :- So with break-even payments the $40000 loan is paid off in just under 65.5 years. I.e. checking :- This just beats the $4100 cost of proceeding without the sprinklers. Notes If your loan repayment was monthly it would reduce the cost of the loan slightly. The periodic interest rate is calculated from the APR according to the method used in the EU and in some cases in US. The calculations above were run using Mathematica. |
How much (paper) cash should I keep on hand for an emergency? | Coming from an area that is hurricane prone, and seeing what happens to local businesses during evacuations/power outages/gas shortages, I think what you already have on hand should be sufficient. And it sounds like that's exactly what you're budgeting for. I'd say 2 weeks worth of fuel and food costs, with the budget for each in line with riding out a natural disaster. True "Preppers" would say keep your money in gold buried in the backyard surrounded by land mines, but that's not perhaps what you're looking for. It is not uncommon for gas stations and grocery stores to revert to cash only sales, especially if they're not big chain operations. If the internet is out, or power is spotty, they may not be able to process CCs. Again, think smaller or more rural businesses. I have seen gas stations switch to cash only during gas shortages as well to help limit how much fuel people were buying. $250 should get you through fine unless you drive a tank and need steak every night. You could probably go with less, but it's entirely dependent on your needs. As Joe rightly stated in his answer, if it's desperate enough times that you can't use a CC or debit card, cash may not even be useful to you. |
Process for dissolving a recently-opened Colorado LLC? | Forms for the Colorado LLCs are online. You can find the link to the dissolution form here, and instructions here. IRS instructions are here. That's what they want: To close your business account, send us a letter that includes the complete legal name of the entity, the EIN, the business address and the reason you wish to close your account. If you have a copy of the EIN Assignment Notice that was issued when your EIN was assigned, include that when you write to us at: Internal Revenue Service Cincinnati, Ohio 45999 Everything is pretty straight forward. Note that you might be required to file a initial/final tax return if you had any transactions. |
What can I replace Microsoft Money with, now that MS has abandoned it? | www.mint.com is a very good web site that can upload your financial data from your bank and analyze it for you. Security concerns seem to have been addressed reassuringly. |
Do you avoid tax when taking a home equity loan? | (credits to Joe's answer above which alluded to what I was not considering) You aren't "bypassing" the tax liability if you invest in a home instead of, say, stocks. It's true stocks would be subject to tax during the year you cash in on them while the proceeds of a home equity loan would not affect your tax liability. HOWEVER, by taking on a new loan, you are liable for repayments. Those repayments would be made using your income from other sources, which IS taxable. So you can't avoid tax liability when financing your child's college education by using an equity line. |
Over how much time should I dollar-cost-average my bonus from cash into mutual funds? | Canadian Couch Potato has an article which is somewhat related. Ask the Spud: Can You Time the Markets? The argument roughly boils down to the following: That said, I didn't follow the advice. I inherited a sum of money, more than I had dealt with before, and I did not feel I was emotionally capable of immediately dumping it into my portfolio (Canadian stocks, US stocks, world stocks, Canadian bonds, all passive indexed mutual funds), and so I decided to add the money into my portfolio over the course of a year, twice a month. The money that I had not yet invested, I put into a money market account. That worked for me because I was purchasing mutual funds with no transaction costs. If you are buying ETFs, this strategy makes less sense. In hindsight, this was not financially prudent; I'd have been financially better off to buy all the mutual funds right at the beginning. But I was satisfied with the tradeoff, knowing that I did not have hindsight and I would have been emotionally hurt had the stock market crashed. There must be research that would prove, based on past performance, the statistically optimal time frame for dollar-cost averaging. However, I strongly suppose that the time frame is rather small, and so I would advise that you either invest the money immediately, or dollar-cost average your investment over the course of the year. This answer is not an ideal answer to your question because it is lacking such a citation. |
Trouble sticking to a budget when using credit cards for day to day transactions? | Similar to what Adam F says above, except instead of just transfering the amount you spend on the credit card into the high interest account, why not keep the majority of your funds (apart from a small amount, say a couple of hundred for emergencies) in the high interest account until the credit card needs to be paid off. Even better, if you have a mortgage with an 100% offset account keep all your funds in this, and pay off your credit card in full from it on or before the due date. Being a 100% offset to your mortgage interest rate you will be saving at a higher rate than a high interest rate savings account, and you will be able to do all your normal banking from it unlike a high interest account which you usually have to link to an additional account to deposit and withdrawl money to and from. If you are to use a credit card keep these simple rules in mind: Hope this has helped, Regards Victor |
Selling on eBay without PayPal? | I think you need to have paypal for eBay selling, just for one reason: people will avoid buying from you if they can't pay by paypal. It decreases significantly your selling. |
What does it really mean to buy a share? | Ditto to MD-Tech, but from a more "philosophical" point of view: When you buy stock, you own it, just like you own a cell phone or a toaster or a pair of socks that you bought. The difference is that a share of stock means that you own a piece of a corporation. You can't physically take possession of it and put it in your garage, because if all the stock-holders did that, then all the company's assets would be scattered around all the stock-holder's garages and the company couldn't function. Like if you bought a 1/11 share in a football team, you couldn't take one of the football players home and keep him in your closet, because then the team wouldn't be able to function. (I might want to take one of the cheerleaders home, but that's another subject ...) In pre-electronic times, you could get a piece of paper that said, "XYZ Corporation - 1 share". You could take physical possession of this piece of paper and put it in your filing cabinet. I'm not sure if you can even get such certificates any more; I haven't seen one in decades. These days it's just recorded electronically. That doesn't mean that you don't own it. It just means that someone else is keeping the records for you. It's like leaving your car in a parking lot. It's still your car. The people who run the parking lot doesn't own it. They are keeping it for you, but just because they have physical possession doesn't make it theirs. |
what are the benefits of setting up an education trust fund for children? | Well, first off, if your children are NZ citizens, they can borrow money at 0% interest for tertiary education and I don't see any benefit to not taking free money. A saving account is your money, and will accrue a little bit of interest and you will pay tax on that. A family trust (I hope this is what you mean by trust fund) is a separate financial entity that can be set up to own assets for the benefit of multiple people. For example, if you have a rental property or business and you want the income divided between your children, rather than coming to you, or if you have a bach you want to keep in the family after you die. |
Purpose of having good credit when you are well-off? | Because even if you won the lottery, without at least some credit history you will have trouble renting cars and hotel rooms. I learned about the importance, and limitations of credit history when, in the 90's, I switched from using credit cards to doing everything with a debit card and checks purely for convenience. Eventually, my unused credit cards were not renewed. At that point in my life I had saved a lot and had high liquidity. I even bought new autos every 5 years with cash. Then, last decade, I found it increasingly hard to rent cars and sometimes even a hotel rooms with a debit card even though I would say they could precharge whatever they thought necessary to cover any expenses I might run. I started investigating why and found out that hotels and car rentals saw having a credit card as a proxy for low risk that you would damage the car or hotel room and not pay. So then I researched credit cards, credit reports, and how they worked. They have nothing about any savings, investments, or bank accounts you have. I had no idea this was the case. And, since I hadn't had cards or bought anything on credit in over 10 years there were no records in my credit files. Old, closed accounts had fallen off after 10 years. So, I opened a couple of secured credit cards with the highest security deposit allowed. They unsecured after a year or so. Then, I added several rewards cards. I use them instead of a debit card and always pay in full and they provide some cash back so I save money compared to just using a debit card. After 4 years my credit score has gone to 800+ even though I have never carried any debt and use the cards as if they were debit cards. I was very foolish to have stopped using credit cards 20 years ago but just had no idea of the importance of an established credit history. And note that establishing a great credit history does not require that you borrow money or take out loans for anything. just get credit cards and pay them in full each month. |
To rebalance or not to rebalance | In theory, investing is not gambling because the expected outcome is not random; people are expecting positive returns, on average, with some relationship to risk undertaken and economic reality. (More risk = more returns.) Historically this is true on average, that assets have positive returns, and riskier assets have higher returns. Also it's true that stock market gains roughly track economic growth. Valuation (current price level relative to "fundamentals") matters - reversion to the mean does exist over a long enough time. Given a 7-10 year horizon, a lot of the variance in ending price level can be explained by valuation at the start of the period. On average over time, business profits have to vary around a curve that's related to the overall economy, and equity prices should reflect business profits. The shorter the horizon, the more random noise. Even 1 year is pretty short in this respect. Bubbles do exist, as do irrational panics, and milder forms of each. Investing is not like a coin flip because the current total number of heads and tails (current valuation) does affect the probability of future outcomes. That said, it's pretty hard to predict the timing, or the specific stocks that will do well, etc. Rebalancing gives you an objective, automated, unemotional way to take advantage of all the noise around the long-term trend. Rather than trying to use judgment to identify when to get in and out, with rebalancing (and dollar cost averaging) you guarantee getting in a bit more when things are lower, and getting out a bit more when things are higher. You can make money from prices bouncing around even if they end up going nowhere and even if you can't predict the bouncing. Here are a couple old posts from my blog that talk about this a little more: |
What is the minimum lot size (number of shares) for the London Stock Exchange? | Good question! It seems to me that there is no minimum order size for shares trading on the LSE. Please note, I couldn't find an definite answer, but: According to the "International Order Book" document (see: http://www.londonstockexchange.com/traders-and-brokers/rules-regulations/change-and-updates/stock-exchange-notices/2010/n2210_attach1.pdf) from the LSE (page 7): Question 7: Would respondents support a revision of the minimum order size of 50 units? Whilst there was limited support for a low value based minimum order size the majority of respondents requested its complete removal. This was incorporated into the September 2010 quarterly review as per Service Announcement 001/100910 and as from 20 September 2010, the minimum order size in all IOB securities has been 1 unit Even though not all trading on the LSE is performed on this IOB system, it would be very wierd if the international stocks can be traded in any size, while domestic stocks will have an minimum size. Further, consider looking to the times and sales of various stocks (here you can find an example http://www.londonstockexchange.com/exchange/prices-and-markets/stocks/exchange-insight/trade-data.html?page=0&fourWayKey=GB0006731235GBGBXSET1&formName=frmRow&upToRow=-1). Those trades also suggest that there is no minimum order size (for example, I just saw an executed trade with an size of 13). At last, look at the Interactive Brokers (no relationship with) Exchange List at http://www.interactivebrokers.com/en/trading/exchanges.php?exch=lse&showcategories=&ib_entity=llc. Here you can click on various stock names, and in the popup window that opens, look for 'size parameters' and the size increment. I could only find stocks with an size increment of 1 (i.e. you can trade anything with a minimum of 1 stock, and more needs to be in steps of 1 stock). Even though I couldn't find official information on the LSE site (like a leaflet for beginners or such), it does seem to me that you can trade any size you want on LSE. Please note that mutual funds and illiquid OTC stocks which don't have an continuous market can have different rules, so double-check with your broker. |
Can anyone help me figure out what my monthly take-home salary will be? | If you are not taking any of the options in the Flexible Benefit Plan, then everything is taxable. Check about "Retirals", the practise differs from organization to organization. Some pay it out annually and some only pay on completion of certain duration on exit. So Deduct 47K from 7 lacs. Gross of around 653,000. Total tax for this around 53,000. After tax yearly around 600,000. Individual contribution to PF@ 12% of basic around 33,600. Net Yearly around 567,225. So net take home would be around 47,268. You can easily take items 3,6,7,8 around 62,400. Thus you will save tax of around 13,000. So take home will increase 1,080. |
Consolidating company pensions | I've been down the consolidation route too (of a handful of DC pensions; the DB ones I've not touched, and you would indeed need advice to move those around). What you should be comparing against is: what's the cheapest possible thing you could be doing? Monevators' online platform list will give you an idea of SIPP costs (if your pot is big enough and you're a buy-and-hold person, ATS' flat-fee model means costs can become arbitrarily close to zero percent), and if you're happy to be invested in something like Vanguard Lifestrategy, Target Retirement or vanilla index trackers then charges on those will be something like 0.1%-0.4%. Savings of 0.5-1.0% per year add up over pension saving timescales, but only you can decide whether whatever extra the adviser is offering vs. a more DIY approach is worth it for you. Are you absolutely sure that 0.75% pa fee isn't on top of whatever charges are built into the funds he'll invest you in? For the £1000 fee, advisers claim to have high costs per customer because of "regulatory burdens"; this is why there's talk of an "advice gap" these days: if you only have a small sum to invest, the fixed costs of advice become intolerable. IMHO, nutmeg are still quite expensive for what they offer too (although still probably cheaper than any "advised" route). |
First job: Renting vs get my parents to buy me a house | I would strongly try to influence circumstances so that buying is feasible. That means: Buy something where it is likely that you can resell it at the same price or even higher - or, at the least for significantly more than "total cost of ownership - rent payed elsewhere". For example, if it is in an area where you have good reasons to assume that prices will go up in the future. Or if the object needs refurbishing and you are sure that you can do it yourself. You will, no doubt, sell it later. You will near certainly not live in such a small house for all time. So the question of "whether" you will sell it is moot. So, when you have a potential house to buy, you will have to calculate everything very carefully, with an estimate of how long you will stay. You need to make your calculation as optimistic/pessimistic as you like (this is more a question of your character). Whatever calculation comes out better, wins. It goes without saying that if you miscalculate (for example, overestimating your ability or time to refurbish; forgetting to calculate non-obvious costs of refurbishing; being surprised by hidden damage to the object; misjudging the price development in the area) you run a considerable risk. So, the question of whether you are able to calculate the risks correctly will need to influence the calculation itself (add 20% or whatever risk buffer if you are not sure, etc.). But the potential is for you to have a very good start in the whole financial game of your life. Your house will likely be for a considerable time the biggest single part of costs in your life, and getting that under control from the get-go is a huge benefit. |
Trade? Buy and hold? Or both? | You mentioned three concepts: (1) trading (2) diversification (3) buy and hold. Trading with any frequency is for people who want to manage their investments as a hobby or profession. You do not seem to be in that category. Diversification is a critical element of any investment strategy. No matter what you do, you should be diversified. All the way would be best (this means owning at least some of every asset out there). The usual way to do this is to own a mutual or index fund. Or several. These funds own hundreds or thousands of stocks, so that buying the fund instantly diversifies you. Buy and hold is the only reasonable approach to a portfolio for someone who is not interested in spending a lot of time managing it. There's no reason to think a buy-and-hold portfolio will underperform a typical traded portfolio, nor that the gains will come later. It's the assets in the portfolio that determine how aggressive/risky it is, not the frequency with which it is traded. This isn't really a site for specific recommendations, but I'll provide a quick idea: Buy a couple of index funds that cover the whole universe of investments. Index funds have low expenses and are the cheapest/easiest way to diversify. Buy a "total stock market" fund and a "total bond fund" in a ratio that you like. If you want, also buy an "international fund." If you want specific tickers and ratios, another forum would be better(or just ask your broker or 401(k) provider). The bogleheads forum is one that I respect where people are very happy to give and debate specific recommendations. At the end of the day, responsibly managing your investment portfolio is not rocket science and shouldn't occupy a lot of time or worry. Just choose a few funds with low expenses that cover all the assets you are really interested in, put your money in them in a reasonable-ish ratio (no one knows that the best ratio is) and then forget about it. |
How do credit card payments work? What ensures the retailer charges the right amount? | When you give your credit card number and authorize a merchant to charge your credit card, the merchant then gives the information to their merchant processor which in turns bills the bank that issued the card (it's a little more complex and it all happens instantly unless the merchant is using the very old fasion imprinting gizmos). It is possible for a merchant to attempt to charge you more than you authorized but if they do they risk a fine ($25-$50 for a chargeback) from their processor, the legitimate portion of the charge as well as increasing the processing fees charged by their processor or even the possibility of loosing their merchant account entirely and being permanently blacklisted by Visa/Mastercard. In short no legitimate business is going to intentionally over charge your credit card. There really isn't significant risk in using a reputable online retailer's order forms. There is the possibility that their database could be compromised but that risk is lower than the risk of having an employee steal your credit number when you give it to them in person. Besides in the US at least the most you can legally be held liable for is $50 assuming you notice the discrepancy within 60 days of statement the charge appears on and most banks limit liability to $0. Over the years I have had a number of different credit card numbers stolen and used fraudulently and I have never had to pay any fraudulent charges. |
Investing in low cost index fund — does the timing matter? | When you start investing makes a very large difference to the outcome, but that is on the time scale of what generation you were born into, not what week you choose to open your 401(k). As you note in your last sentence, there is nothing that you can do about this, so there is no point in worrying about it. If you could successfully market time successfully, then that would make a difference even at smaller time scales. But you probably can't, so there is no point in worrying about that either. As BrenBarn points out, your statement about not regaining their net worth until 2013 applies to someone who invested a lump sum at the 2007 peak, not to someone who invested continuously throughout. By my calculation, if you started continuously investing in a broad market index at the peak (around Jun 4, 2007), you would have recovered your net worth (relative to investing in a safe instrument that merely kept up with inflation, a hard thing to find these days) around April 12, 2010. I've done the computation on each business day because that is easier, so it might be slightly worse if do the periodic investment on each payday which is much more realist for a 401(k). (And of course if you need to preserve/recover you net worth in 3 years, you shouldn't be in stocks in the first place) |
Is there any reason not to put a 35% down payment on a car? | Do you guys think it's a good idea to put that much down on the car ? In my opinion, it depends on a lot of factors. If you have nothing to pay, and are not planning to invest in something that cost a lot soon (I.E an house, etc). Then I see no problem in put "that much down on the car". Remember that the more you pay at first, the less you will pay interest on. However, if you are planning on buying something big soon, then you might want to pay less and keep moneys for your future investment. I would honestly not finance a car with the garage as I find their interest rate to high. Possibilities depends a lot of your bank accounts, but what I would personally do is pay it cash using my credit margin with the bank which is only 2.8% interest rate. Garage where I live rarely finance under 7% interest rate. You may not have a credit margin, but maybe you could get a loan with the bank instead ? Many bank keep an history of your loan which will get you a better credit name when trying to buy an home later. On the other side, having a good credit name is not really useful in a garage. What interest rate is reasonable based on my credit score? I don't think it is possible to give a real answer to this as it change a lot around the world. However, I would recommend to simply compare with the interest rate asked when being loan by the bank. |
Why does gold have value? | I think the primary reason it is so pricey now is that it is an inflation hedge, and considering how shaky the economies and out of control the spending is in many countries right now, people are running to it as a safe harbor. The increased demand raises the price as it does with any asset. This brings us to the titular question. Why does gold have value? The same reason anything has value. There is someone out there who wants it enough to trade something else of value to get it. It is in the news so much because it is so high right now, which unfortunately is going to cause a lot of people to foolishly invest in it at likely the worst possible time. |
How do you find out who the investors are in a U.S. stock? e.g. how ownership may be concentrated? | Companies absolutely know who ALL their shareholders are. Ownership is filed on Form 3/4 and in 10-Q/Ks. Look there. Guidelines for required disclosure are as follows: 1) Individuals must disclose when their ownership exceeds 5%; 2) Non-individual legal entities (read: companies; e.g. a hedge fund) must disclose when their ownership exceeds 10% (Form 13-F); and 3) All Officers and Directors Notice the word "required." For example, a entity (individual/company) may file "confidentiality letter" (which allows them to delay disclosing ownership) with the SEC as they are building a position. So at any given point in time the information that is publicaly available may not be "up-to-date." And in all cases beneficial owner(ship). |
I'm currently unemployed and have been offered a contract position. Do I need to incorporate myself? How do I do it? | I am co-owner of a business, and we incorporated federally. (Mostly to limit liability.) There is some excellent information above, and most of my wisdom I got from a trusted lawyer and accountant (find experts you trust in these two areas, they will prove invaluable in so many areas.) The one point I would add is that if you decide to incorporate, you can do so federally or provincially. We were all set to go provincially, when our lawyer asked "Is there any chance you might move the business? Any chance you might want to do work in other provinces? What about next year? Five years?" If you are going through the expenses to set up a corporation, consider doing so federally, the extra costs were insignificant, but someday you might be glad you don't have to start from scratch. In this day and age, many people end up moving out of province for work, family concerns, etc. |
Are there any credit cards with a statement period longer than 1 month? | Most credit cards will allow you to pick the closing date. In fact almost every bill with the exception of utilities that collected usage by reading a meter at the house will either let you pick the closing date each month, or at least have several to pick from. They won't let you pick the length, but they will let you pick the day of the month. When I worked a job that paid once a month. I wanted all my bills due early in the month: get paid, pay bill, know how much I have left. When I went back to every other week spreading them out made more sense. No credit card had a problem with this. The transitional cycle was not the correct length, but after that it was fine. As Dheer pointed out extending the cycle to 90 days would involve them extending credit for much longer than they would be comfortable. Also the goal of keeping utilization under 30% would be very difficult, you would have to keep your spending per month to less than 10% of your credit limit. Some people have trouble not falling behind on credit card bills, having to set aside the money to pay the bill every 90 day may be way to tough for many people. |
How do day-traders or frequent traders handle their taxes? | You need to track every buy and sell to track your gains, or more likely, losses. Yes, you report each and every transactions. Pages of schedule D. |
Is my mother eligible for SNAP? | If she lives by herself, my guess would be that she qualifies as a household of one. Either way, her monthly income is below the threshold, so she should be eligible. Per the linked website The only way to determine if your household is eligible for SNAP benefits is to apply. I'd say it's worth a try. |
Mortgage vs. Cash for U.S. home buy now | There are a number of reasons I'm in agreement with "A house that is worth $300,000, or $50,000 of equity in a house and $225,000 in the bank." So, the update to the first comment should be "A paid off house worth $300K, or a house with $150K equity and $275K in the retirement account." Edit - On reflection, an interesting question, but I wonder how many actually have this choice. When a family budgets for housing, and uses a 25% target, this number isn't much different for rent vs for the mortgage cost. So how, exactly do the numbers work out for a couple trying to save the next 80% of the home cost? A normal qualifying ration allows a house that costs about 3X one's income. A pay-in-full couple might agree to be conservative and drop to 2X. Are they on an austerity plan, saving 20% of their income in addition to paying the rent? Since the money must be invested conservatively, is it keeping up with house prices? After 10 years, inflation would be pushing the house cost up 30% or so, so is this a 12-15 year plan? I'm happy to ignore the tax considerations. But I question the math of the whole process. It would seem there's a point where the mortgage (plus expenses) add up to less than the rent. And I'd suggest that's the point to buy the house. |
Friend was brainwashed by MLM-/ponzi investment scam. What can I do? | The title of your question basically asks: What can I do? And you state this regarding the meeting and “advice” they gave towards criticism of their method: While this they also indoctrinated that you should avoid talking to people talking bad about it (or say it is scam) because you gain no money from them and they just want to destroy your business. First, you really cannot do anything to “save” your friend if they have bought this nonsense. You are right, it’s a scam. But past stating as such to your friend, there is not much you can do past shielding yourself. The reality is this: Any scenario you are in where you cannot ask basic questions and get a reasonable response or are given—at least—the option to walk away unscathed or uninsulated is basically a cult-like mentality. Simple as that. If the first thing someone tells you is “Don’t listen to others, just listen to me…” then you need to excuse yourself to go to the bathroom or something and just leave. From my personal experience meeting people who are successful and have power, they always—and I mean always—ask questions and are critical of things they invest in… Whether that investment is time, money or just basic mental energy. Rich people are just like you and me! Except they have more money so they can take bigger risks. Critical thinking and the ability to walk away from something are key life skills. Now others have talked salesman psychology which is on point. But here is something else you brought up in your question: He also wants to use his position as respected member of multiple local youth and other communities to get their members as referals or in his words “…to give them the oppurtunity to also simply earn money.” Okay, so you can set personal boundaries between you and this clown, but you cannot stop him. But if he plans on targeting people and organizations in your community, you can warn them about him and his behavior and this scam. Chances are other people will know right away it’s a scam, but honestly if you feel the need to help others, that’s the most reasonable thing you can do to help them. But whatever you do, don’t take any of this emotional crap personally. If anything, maybe you can learn some reverse salesman techniques to get this “friend” to disengage. Such as only meeting with them in public and if they say something really vile to you, repeating what they said back to them as a question… Maybe even louder so everyone can hear. Remember a harsh reality of life: Public shaming can work to change someone’s behavior but you never want to do something like that unless you have utterly no choice. That last bit of advice is pretty harsh, but the reality is at some point you need to do something to “smack” reality into the situation. |
Mortgage or not? | A primary residence can be an admirable investment/retirement vehicle for a number of reasons. The tax savings on the mortgage are negligible compared to these. A $200,000 mortgage might result in a $2000 annual savings on your taxes -- but a $350,000 house might easily appreciate $20,000 (tax free!) in a good year. Some reasons to not buy a larger house. Getting into or out of a house is tremendously expensive and inconvenient. It can make some life-changes (including retirement) more difficult. There is no way to "diversify" a primary residence. You have one investment and you are a hostage to its fortunes. The shopping center down the street goes defunct and its ruins becomes a magnet for criminals and derelicts? Your next-door neighbor is a lunatic or a pyromaniac? A big hurricane hits your county? Ha-ha, now you're screwed. As they say in the Army, BOHICA: bend over, here it comes again. Even if nothing bad happens, you are paying to "enjoy" a bigger house whether you enjoy it or not. Eating spaghetti from paper plates, sitting on the floor of your enormous, empty dining room, may be romantic when you're 27. When you're 57, it may be considerably less fun. Speaking for myself, both my salary and my investment income have varied wildly, and often discouragingly, over my life, but my habit of buying and renovating dilapidated homes in chic neighborhoods has brought me six figures a year, year after year after year. tl;dr the mortgage-interest deduction is the smallest of many reasons to invest in residential real-estate, but there are good reasons not to. |
Can I deduct equipment expenses for a job I began overseas? | A computer is a special case because the IRS thinks that you might be using it for personal applications. You may need to keep a log, or be able to state that you also have another computer for non-business use. That said, if your schedule C shows a small profit then you don't need to itemize expenses, just state the total. |
Why would a bank need to accept deposits from private clients if it can just borrow from the Federal Reserve? | They don't need to accept deposits from normal persons, but that's how they make lots of money. Banks make money off the fees they charge retailers when those folks swipe their debit cards at the retailer. It's their bread and butter. In order to facilitate you accruing swipe fees for them, they need to allow you to make deposits, on which they can charge the retailers swipe fees. |
Valuing a company and comparing to share price | There are books on the subject of valuing stocks. P/E ratio has nothing directly to do with the value of a company. It may be an indication that the stock is undervalued or overvalued, but does not indicate the value itself. The direct value of company is what it would fetch if it was liquidated. For example, if you bought a dry cleaner and sold all of the equipment and receivables, how much would you get? To value a living company, you can treat it like a bond. For example, assume the company generates $1 million in profit every year and has a liquidation value of $2 million. Given the risk profile of the business, let's say we would like to make 8% on average per year, then the value of the business is approximately $1/0.08 + $2 = $14.5 million to us. To someone who expects to make more or less the value might be different. If the company has growth potential, you can adjust this figure by estimating the estimated income at different percentage chances of growth and decline, a growth curve so to speak. The value is then the net area under this curve. Of course, if you do this for NYSE and most NASDAQ stocks you will find that they have a capitalization way over these amounts. That is because they are being used as a store of wealth. People are buying the stocks just as a way to store money, not necessarily make a profit. It's kind of like buying land. Even though the land may never give you a penny of profit, you know you can always sell it and get your money back. Because of this, it is difficult to value high-profile equities. You are dealing with human psychology, not pennies and dollars. |
What one bit of financial advice do you wish you could've given yourself five years ago? | I wish I would have known macro-economics taught by the Austrian School types at The Mises Institute. Their teachings would have compelled me to do the following: |
I have an extra 1000€ per month, what should I do with it? | 1: Low fees means: a Total Expense Ratio of less than 0,5%. One detail you may also want to pay attention to whether the fund reinvests returns (Thesaurierender Fonds) which is basically good for investing, but if it's also a foreign-based fund then taxes get complicated, see http://www.finanztip.de/indexfonds-etf/thesaurierende-fonds/ |
1031 Exchange and Taxes? | You bought a rental property in 2001. Hopefully you paid fair value else other issues come into play. Say you paid $120K. You said you have been taking depreciation, which for residential real estate is taken over 27.5 years, so you are about halfway through. Since you don't depreciate land, you may have taken a total $50K so far. With no improvements, and no transaction costs, you have $50K in depreciation recapture, taxed at a maximum 25% (or your lower, marginal rate) and a cap gain of the 5-10K you mentioned. Either can be offset by losses you've been carrying forward if you suffered large stock losses at some point. |
What is a good way to save money on car expenses? | Apparently, if you keep your tires' air filled to the recommended level, your car will burn less gas. I loved this article at WikiHow, which confirmed what I had heard about air in tires, and had others to suggest, such as removing unnecessary items from inside and on your car (such as bike racks, trailer balls) as they can add to your car's overall weight, causing more drag and using more gas. |
Do other countries have the equivalent of Australia's Negative Gearing? | I would say similar rules apply in the US. If you have a net loss from rental property, you certainly can claim that loss against your personal income. There are various rules around this though that make it a bit less clear cut. If you are a "real estate professional", which basicly means you spend at least 750 hours per year working on your rental properties (or related activities), then all losses are deductible against any other ordinary income you have. If you aren't a "real estate professional", then your rental income is considered a "passive activity" and losses you can count against regular income are limited to $25,000 per year (with a carry-forward provision) and begin to phase out entirely if your income is between $100,000 and $150,000. So, the law here is structured to allow most small-time investors to take rental real estate losses against their ordinary income, but the income phase-out provision is designed to prevent the wealthy from using rental property losses to avoid taxation. |
Does renting a room on AirBnB make all interest taxable? | It says that you are exempt "as long as such interest income is not effectively connected with a United States trade or business". So the interest is from money earned from doing business with/through AirBnb, a US company. So you will have to report it. Even if your bank doesn't send you a 1099-INT, you have to report it, unless it is under $0.49 because the IRS allows rounding. |
Buying a multi-family home to rent part and live in the rest | A professional home inspection will clue you in on any problems you might be buying, so it's important in any real estate transaction. If the seller finances the loan, you need a lawyer. It might be a nice opportunity - being in the right place at the right time. You just have to investigate all angles. |
Pending euro payment to a usd account | Currency exchange is rather the norm than the exception in international wire transfers, so the fact that the amount needs to be exchanged should have no impact at all. The processing time depends on the number of participating banks and their speeds. Typically, between Europe and the US, one or two business days are the norm. Sending from Other countries might involve more steps (banks) which each takes a bit of time. However, anything beyond 5 business days is not normal. Consider if there are external delays - how did you initiate the sending? Was it in person with an agent of the bank, who might have put it on a stack, and they type it in only a day later (or worse)? Or was it online, so it is in the system right away? On the receiver side, how did you/your friend check? Could there be a delay by waiting for an account statement? Finally, and that is the most common reason, were all the numbers, names, and codes absolutely correct? Even a small mismatch in name spelling might trigger the receiving bank to not allocate the money into the account. Either way, if you contact the sender bank, you will be able to make them follow up on it. They must be able to trace where they money went, and where it currently is. If it is stuck, they will be able to get it ‘unstuck’. |
Should I buy a home or rent in my situation? | I think the consensus is that you can't afford a home now and need to build more of a down payment (20% is benchmark, you may also need to pay mortgage insurance if you are below that) and all considered, it takes up too much of your monthly budget. You didn't do anything wrong but as mentioned by Ben, you are missing some monthly and yearly costs with home ownership. I suggest visiting a bank or somewhere like coldwell banker to discuss accurate costs and regulations in your area. I know the feeling of considering paying more now for the very attractive thought of owning a home... in 30 years. After interest, you need to consider that you are paying almost double the initial principle so don't rush for something you can do a year or two down the line as a major commitment. One major point that isn't emphasized in the current answers. You have a large family: Two children, a dog, and a cat. I don't know the kid's ages but given you are in your early twenties and your estimated monthly costs, they are probably very young before the point they really put any stress financially but you need to budget them in exponentially. Some quick figures from experience. Closing costs including inspections, mortgage origination fee, lawyer fees, checking the history of the home for liens, etc, which will set you back minimum 5% depending on the type of purchase (short sales, foreclosures are more expensive because they take longer) Insurance (home and flood) will depend on your zoning but you can expect anywhere between $100-300 a month. For many zones it is mandatory. Also depending on if it's a coop ($800+), condo($500+) or a townhouse-type you will need to pay different levels of monthly maintenance for the groundskeeping as a cooperative fee. at an estimate of a 250K home, all your savings will not be able to cover your closing costs and all 250k will need to be part of your base mortgage. so your base monthly mortgage payment at around 4% will be $1,200 a month. it's too tight. If it was a friend, I would highly suggest against buying in this case to preserve financial flexibility and sanity at such a young age. |
How to buy stuff (stocks?) in IRA account? What else? | You can buy stocks in the IRA, similarly to your regular investment account. Generally, when you open an account with a retail provider like TDAmeritrade, all the options available for you on that account are allowable. Keep in mind that you cannot just deposit money to IRA. There's a limit on how much you can deposit a year ($5500 as of 2015, $6500 for those 50 or older), and there's also a limit on top of that - the amount you deposit into an IRA cannot be more than your total earned income (i.e. income from work). In addition, there are limits on how much of your contribution you can deduct (depending on your income and whether you/your spouse have an employer-sponsored retirement plan). |
Is This Money Laundering? | or is this a form of money laundering? May not be, generally the amounts involved in money laundering are much higher. So if there are quite a few such transactions then yes it could be money laundering. It could also be for circumventing taxes, depending on country regulations one may try to do this to get around gift taxes etc. In this specific case it looks more of link harvesting / SEO optimization. Take a low cost item that is often searched and link to other product. if you see the company link on Amazon; Cougar takes you to shoes. So maybe on its own Cougar shoes does not rank high, so link it with similar name brand in different segment and try to boost the link. |
Can I buy a new house before selling my current house? | The two most common scenarios are: Since you have more control of timing when you are the buyer compared to when you are the seller, #1 is probably more common, however, a good real estate attorney should be able to walk you through your options should #2 come up. Fortunately, many real estate attorneys do not charge you anything until the sale completes, and you will likely get a discount if you involve them in both the sale and purchase, so I would start by finding an attorney. |
What taxes are assessed on distributions of an inherited IRA? | You've been taking the RMDs. Each year the RMD is calculated by taking the prior 12/31 balance and dividing by the divisor, calculated when you inherited, and dropping by 1 each year. Some great trades and your account balance goes up. That's great, but of course it sends the next RMD higher. I'd understand how marginal rates work and use the withdrawal to "top off" your current bracket. This will help slow the growth and runaway RMD increases. |
When should I walk away from my mortgage? | I'm in a similar situation, but I live in a state that doesn't allow mortgagees to "walk away" without recourse. I would consider a short sale or otherwise abandoning the property if: At the end of the day, real estate is an investment, and you don't realize gains or losses until you close the position. The "ra, ra" crowd that thought that real estate was going to boom forever in 2006 was just as wrong as the "bad news bears" crowd that thinks that real estate will never recover either. Investments rise and fall. Many people who bought houses in the 1980's boom (recall the S&L crisis) were underwater for years until prices started rising in the mid-90's. You haven't lost money until you realize that loss. |
Schwab wants to charge me interest on the money I received for selling TSLA short | Brokers have the right to charge interest on any stock that they lend you. Since you borrowed the TSLA to short it, the owner of those shares can charge you interest until you return them. If you are not getting charged interest on some shares that you have borrowed to short, consider it generosity on the part of the lender. |
gift is taxable but is “loan” or “debt” taxable? | The difference is whether or not you have a contract that stipulates the payment plan, interest, and late payment penalties. If you have one then the IRS treats the transaction as a load/loan servicing. If not the IRS sees the money transfer as a gift. |
How would I use Google Finance to find financial data about LinkedIn & its stock? | The most likely answer to your question regarding what the 'market expects' is perhaps that the market expects that currently Linked-In like a lot of other startups has been plunging almost eveything it makes into building the business and brand. So right now the net profits are pretty low percentage of income (roughly 1.5% of revenue) Given the size of the other numbers, it doesn't take a lot of movement in the right direction to get a big change in that tiny final number. The other factor is the gap between their Net and the Income Available.. I think (but I'm making a logical guess here) a large part of that gap was paying off the losses of the prior two years. If that's the case, and everything else is static, then next year's 'available' number ought to at least triple. In order to grow the net, all LI needs is to either continue current trends of growth in expenses relative to costs, keep expenses steady and experience a slight growth in income, or find a way to reduce expenses without having it impact income. Or something in between those three. If we take the first case as an example, income has been roughly doubling every year, but expenses growing less than that. if they were to continue that, but manage to get some economy of scale and have expenses grow at a slower rate, then the jump in net income ought to be substantial. most of the trends you could project end up with a big growth in the bottom line.. but yeah I gotta admit, none of that gets you 117X growth in a single year. So the conclusion I would draw is that the market is trending a few years out and being pretty optimistic given the current PE ratio. Of course you could also conclude that the market is 'social network happy' and LNKD represents one of the few opportunities for the average investor to get in on that given that facebook and myspace are not trading on the open market |
Insurance, healthcare provider, apparent abuse, lack of transparency | Just as with any other service provider - vote with your wallet. Do not go back to that doctor's office, and make sure they know why. It's unheard of that a service provider will not disclose the anticipated charges ahead of time. A service provider saying "we won't tell you how much we charge" is a huge red flag, and you shouldn't have been dealing with them to begin with. Now you know. how can we ever get health care costs under control if there's so little transparency? I'm assuming you're in the US. This is not going to change, since there's no profit in not screwing the customers. As long as health-care is a for-profit industry, you should expect everyone in it being busy figuring out a way for money to move from your wallet to their. That's what capitalism is about. |
Do stock prices drop due to dividends? | Share prices fall when dividends are paid out because the paid dividend (cash out) actually reduces the value of the company. Usually the share price falls by the amount of the dividend payment. |
How come the government can value a home more than was paid for the house? | When a house is sold at a foreclosure auction, the selling bank usually does not provide the guarantees that a normal house seller provides. Furthermore, the previous owner may have neglected the property, and/or spitefully damaged the property. Bank-owned properties are often neglected and/or vandalized. Banks are usually too short-sighted to properly market the real estate they own, and do a poor job of making it easy to buy the property. Thus, foreclosure sales usually happen at a price that is significantly below the "fair market value" of sales between competent households. It is common for a house that is worth $ 125,000 (even in a depressed market) to sell for only $ 100,000 in a short sale or foreclosure. It is possible that this property sold for an even larger discount. It is also possible that the tax assessor is (inadvertently) comparing a run-down property with well-maintained properties that have extra expensive features, without fully adjusting for the properties' conditions and features. In the latter scenario, the property owner can ask the tax assessor to re-consider the assessment. Usually this request is called an "appeal". |
Will I, as a CS student, be allowed to take loans for paying the fees of Ivy Leagues? | This article gives the very good advice to simply contact one of the schools in question and ask how to apply for financial aid as an international applicant. Most Ivy League schools admit so many international students that they will have answers to any financial question you can imagine. They may even already explain the financial aid process online. |
What percent of your portfolio should be in a money market account? | I would disagree with your analysis. To me there are two purposes for a money market (MM): Your emergency fund should be from 3 to 6 months of expenses. Think of it of an insurance policy against Murphy. You may want to have some money designated for big expenses, or even sinking funds. For example, I keep some money in a MM for a car as both the wife, daughter, and I driver older vehicles. I may need to replace them. If you were planning on making a larger purchase car, house, boat, engagement ring I would put the money in a MM fund so you are not subject to the whims of the market. After that you are free to invest all your money. Its likely that you should have some money outside of tax advantaged funds so if you want to start a business you will not have to do high cost withdrawals. |
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